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EXHIBIT (c)(1)
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AGREEMENT AND PLAN OF MERGER
AMONG
TROPICAL SPORTSWEAR INT'L CORPORATION
FOXFIRE ACQUISITION CORP.
AND
FARAH INCORPORATED
DATED MAY 1, 1998
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TABLE OF CONTENTS
THE OFFER................................................................................................2
1.01 The Offer.................................................................................2
1.02 Target Action.............................................................................3
THE MERGER...............................................................................................5
2.01 The Merger................................................................................5
2.02 Effective Time; Closing...................................................................5
2.03 Effect of the Merger......................................................................5
2.04 Articles of Incorporation; Bylaws.........................................................5
2.05 Directors and Officers....................................................................5
2.06. Conversion of Securities..................................................................6
2.07 Employee Stock Options; Restricted Stock..................................................6
2.08 Dissenting Shares.........................................................................7
2.09 Surrender of Shares; Stock Transfer Books.................................................7
REPRESENTATIONS AND WARRANTIES OF THE TARGET.............................................................9
3.01 Organization and Qualification; Subsidiaries..............................................9
3.02 Articles of Incorporation and Bylaws.....................................................10
3.03 Capitalization...........................................................................10
3.04 Authority Relative to This Agreement.....................................................10
3.05 No Conflict; Required Filings and Consents...............................................11
3.06 Permits; Compliance......................................................................12
3.07 SEC Filings; Financial Statements........................................................12
3.08 Absence of Certain Changes or Events.....................................................13
3.09 Absence of Litigation....................................................................14
3.10 Employee Benefit Plans...................................................................14
3.11 Labor Matters............................................................................16
3.12 Taxes....................................................................................17
3.13 Environmental Matters....................................................................18
3.14 Opinion of Financial Advisor.............................................................20
3.15 Brokers..................................................................................20
3.16 Tangible Property........................................................................20
3.17 Material Contracts.......................................................................21
3.18 Offer Documents; Schedule 14D-9..........................................................21
3.19 Change in Control........................................................................21
3.20 Intellectual Property....................................................................22
3.21 Insurance................................................................................23
3.22 Certain Business Practices...............................................................23
3.23 State Takeover Laws......................................................................23
3.24 Board Recommendation.....................................................................23
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REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR SUB...................................................................................23
4.01 Corporate Organization...................................................................24
4.02 Authority Relative to This Agreement.....................................................24
4.03 No Conflict; Required Filings and Consents...............................................24
4.04 Offer Documents; Proxy Statement.........................................................25
4.05 Brokers..................................................................................25
4.06 Financing................................................................................26
CONDUCT OF BUSINESS PENDING THE MERGER..................................................................26
5.01 Conduct of Business by the Target Pending the
Acquiror Sub's Election Date.............................................................26
ADDITIONAL AGREEMENTS...................................................................................28
6.01 Shareholder's Meeting....................................................................28
6.02 Proxy Statement..........................................................................29
6.03 Target Board Representation; Section 14(f)...............................................29
6.04 Access to Information; Confidentiality...................................................30
6.05 No Solicitation of Transactions..........................................................30
6.06 Directors' and Officers' Indemnification.................................................31
6.07 Obligations of Acquiror Sub..............................................................33
6.08 Public Announcements.....................................................................33
6.09 Delivery of SEC Documents................................................................33
6.10 Notification of Certain Matters..........................................................33
6.11 Further Action...........................................................................34
6.12 Employee Benefits........................................................................34
6.13 Appropriate Action; Consents; Filings....................................................34
6.14 Payments in Respect of Target Options....................................................35
6.15 Supplemental Indenture...................................................................36
6.16 Employee Stock Purchase Plan.............................................................36
6.17 Directorships............................................................................37
CONDITIONS TO THE MERGER................................................................................37
7.01 Conditions to the Merger.................................................................37
TERMINATION, AMENDMENT AND WAIVER.......................................................................37
8.01 Termination..............................................................................37
8.02 Fees and Expenses........................................................................39
8.03 Amendment................................................................................40
8.04 Waiver...................................................................................40
GENERAL PROVISIONS......................................................................................40
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9.01 Non-Survival of Representations, Warranties and Agreements...............................40
9.02 Notices..................................................................................40
9.03 Certain Definitions......................................................................42
9.04 Severability.............................................................................43
9.05 Assignment; Binding Effect; Benefit......................................................43
9.06 Incorporation of Schedules...............................................................43
9.07 Specific Performance.....................................................................43
9.08 Governing Law............................................................................43
9.09 Headings.................................................................................43
9.10 Counterparts.............................................................................44
9.11 Waiver of Jury Trial.....................................................................44
9.12 Entire Agreement.........................................................................44
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 1, 1998 (this
"Agreement"), by and among Tropical Sportswear Int'l Corporation, a Florida
corporation ("Acquiror"), Foxfire Acquisition Corp., a Texas corporation and a
direct, wholly owned subsidiary of Acquiror ("Acquiror Sub"), and Farah
Incorporated, a Texas corporation (the "Target").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Acquiror, Acquiror Sub and the
Target have each determined that it is in the best interests of their respective
shareholders for Acquiror, through Acquiror Sub, to acquire the Target upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Acquiror Sub shall make a cash tender offer (as it may be amended from time to
time as permitted by this Agreement, the "Offer") to acquire all the issued and
outstanding shares of common stock, no par value per share, of the Target
("Target Common Stock"; shares of Target Common Stock being hereinafter
collectively referred to as the "Shares") for $9.00 per Share (such amount, or
iany greater amount per Share paid pursuant to the Offer, being hereinafter
referred to as the "Per Share Amount") net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions of this Agreement
and the Offer;
WHEREAS, the Board of Directors of Acquiror and Acquiror Sub have
approved the making of the Offer and the transactions related thereto;
WHEREAS, the Board of Directors of the Target has approved the making
of the Offer and resolved and agreed, subject to the terms and conditions
contained herein, to recommend that holders of Shares tender their Shares
pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Acquiror, Acquiror Sub and the Target have each approved the merger
(the "Merger") of Acquiror Sub with and into the Target in accordance with the
Texas Business Corporation Act ("Texas Law") following the consummation of the
Offer and upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Acquiror, Acquiror Sub and the Target hereby agree as follows:
ARTICLE I
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THE OFFER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing (unless such event
shall have been waived by Acquiror Sub), Acquiror shall cause Acquiror Sub to
commence, and Acquiror Sub shall commence, the Offer at the Per Share Amount as
promptly as reasonably practicable after the date hereof, but in no event later
than five business days after the public announcement of Acquiror Sub's
intention to commence the Offer. The obligation of Acquiror Sub to accept for
payment and pay for Shares tendered pursuant to the Offer shall be subject only
to (i) the condition (the "Minimum Condition") that at least the number of
Shares that, when combined with the Shares already owned by Acquiror and its
direct and indirect subsidiaries, constitute two-thirds of the then outstanding
Shares shall have been validly tendered and not withdrawn prior to the
expiration of the Offer and (ii) the satisfaction or waiver of the other
conditions set forth in Annex A hereto. Acquiror Sub expressly reserves the
right to waive any such condition (other than the Minimum Condition), to
increase the price per Share payable in the Offer, and to make any other changes
in the terms and conditions of the Offer; provided, however, that
(notwithstanding Section 8.03) no change may be made which (A) decreases the
price per Share payable in the Offer, (B) reduces the maximum number of Shares
to be purchased in the Offer, (C) imposes conditions to the Offer in addition to
those set forth in Annex A hereto, (D) amends or changes the terms and
conditions of the Offer in any manner materially adverse to the holders of
Shares (other than Acquiror and its subsidiaries) or (E) changes or waives the
Minimum Condition. Notwithstanding clause (D) of the foregoing sentence,
Acquiror Sub may, without the consent of the Target (i) extend the Offer, if at
the scheduled expiration date of the Offer any of the conditions to Acquiror
Sub's obligations to purchase the Shares have not been satisfied, (ii) extend
the Offer from time to time for up to a maximum of an aggregate of 10 business
days beyond the initial expiration date of the Offer (which initial expiration
date shall be 20 business days following the commencement of the Offer),
notwithstanding that all conditions to the Offer are satisfied as of the date of
such extension, and (iii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer. Notwithstanding the
foregoing, the Offer may not be extended beyond the date of termination of this
Agreement pursuant to Section 8. The Per Share Amount shall, subject to
applicable withholding of taxes, be net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions of the Offer. Subject to
the terms and conditions of the Offer (including, without limitation, the
Minimum Condition), Acquiror Sub shall accept for payment and pay, as promptly
as practicable after expiration of the Offer, for all Shares validly tendered
and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Acquiror Sub shall file with the Securities and Exchange Commission
(the "SEC") and disseminate to holders of Shares to the extent required by law a
Tender Offer Statement on
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Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer and the other Transactions (as
hereinafter defined). The Schedule 14D-1 shall contain or shall incorporate by
reference an offer to purchase (the "Offer to Purchase") and forms of the
related letter of transmittal and any related summary advertisement (the
Schedule 14D-1, the Offer to Purchase and such other documents, together with
all supplements and amendments thereto, being referred to herein collectively as
the "Offer Documents"). Acquiror, Acquiror Sub and the Target agree to correct
promptly any information provided by any of them for use in the Offer Documents
which shall have become false or misleading in any material respect, and
Acquiror and Acquiror Sub further agree to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The Target
and its counsel shall be given an opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the SEC.
Acquiror and Acquiror Sub will provide the Target and its counsel with a copy of
any written comments or telephonic notification of any verbal comments Acquiror
or Acquiror Sub may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt thereof and will provide the Target and its
counsel with a copy of any written responses and telephonic notification of any
verbal response of Acquiror, Acquiror Sub or their counsel. In the event that
the Offer is terminated or withdrawn by Acquiror Sub, Acquiror and Acquiror Sub
shall cause all tendered Shares to be returned to the registered holders of the
Shares represented by the certificate or certificates surrendered to the Paying
Agent (as defined herein).
SECTION 1.02. Target Action. (a) The Target hereby approves of and
consents to the Offer and represents that (i) the Target's Board of Directors,
at a meeting duly called and held on May 1, 1998, has (A) determined that this
Agreement and the transactions contemplated hereby, including, without
limitation, the terms of each of the Offer and the Merger (the "Transactions"),
are fair to and in the best interests of the holders of Shares (other than
Acquiror and its subsidiaries), (B) approved this Agreement and the Transactions
and (C) resolved to recommend, subject to the conditions set forth herein, that
the shareholders of the Target accept the Offer and approve this Agreement and
the Transactions; and (ii) Financo, Inc. ("Target Banker") has delivered to the
Target's Board of Directors a written opinion that the consideration to be
received by the holders of Shares pursuant to each of the Offer and the Merger
is fair to such holders from a financial point of view. The Target has been
authorized by Target Banker, subject to prior review by Target Banker, to
include such fairness opinion (or references thereto) in the Offer Documents and
in the Schedule 14D-9 (as defined in paragraph (b) of this Section 1.02) and the
Proxy Statement referred to in Section 6.02. Subject to the fiduciary duties of
the Target's Board of Directors under applicable law, the Target hereby consents
to the inclusion in the Offer Documents of the recommendation of the Target's
Board of Directors described above.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Target shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing,
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subject only to the fiduciary duties of the Target's Board of Directors under
applicable law, the recommendation of the Target's Board of Directors described
in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the extent
required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any other applicable federal securities laws.
The Target, Acquiror and Acquiror Sub agree to correct promptly any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading, and the Target further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Acquiror, Acquiror Sub and their counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 and
any amendments thereto prior to the filing thereof with the SEC. The Target will
provide Acquiror and Acquiror Sub and their counsel with a copy of any written
comments or telephonic notification of any verbal comments the Target may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt thereof and will provide Acquiror and Acquiror Sub and their
counsel with a copy of any written responses and telephonic notification of any
verbal response of the Target or its counsel.
(c) The Target shall promptly furnish Acquiror Sub with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of the
most recent date reasonably practicable. The Target shall furnish Acquiror Sub
with such additional information, including, without limitation, updated
listings and computer files of shareholders, mailing labels and security
position listings, and such other assistance as Acquiror, Acquiror Sub or their
agents may reasonably request. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger,
Acquiror and Acquiror Sub shall hold in confidence the information contained in
such labels, listings and files, shall use such information only in connection
with the Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Section 8.01, shall deliver promptly to the Target all copies of
such information then in their possession and shall certify in writing to the
Target its compliance with this Section 1.02(c).
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement (including Article VII), and in accordance with
Texas Law, at the Effective Time (as hereinafter defined), Acquiror Sub shall be
merged with and into the Target. As a result of the Merger, the separate
corporate existence of Acquiror Sub shall cease and the Target shall continue as
the surviving corporation of the Merger (the "Surviving Corporation"). The name
of the Surviving Corporation shall be Savane International Corp.
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SECTION 2.02. Effective Time; Closing. As promptly as practicable and
in no event later than the first business day following the satisfaction or
waiver of the conditions set forth in Article VII (or such other date as may be
agreed by each of the parties hereto), the parties hereto shall cause the Merger
to be consummated by filing articles of merger (the "Articles of Merger") with
the Secretary of State of the State of Texas (the "Secretary") in such form as
is required by, and executed in accordance with the relevant provisions of,
Texas Law. The term "Effective Time" means the date and time of the filing of
the Articles of Merger with the Secretary (or such later time as may be agreed
in writing by each of the parties hereto and specified in the Articles of
Merger). Immediately prior to the filing of the Articles of Merger, a closing
will be held at the Dallas, Texas offices of Xxxxx & XxXxxxxx (or such other
place and time as the parties may agree).
SECTION 2.03. Effect of the Merger. The effect of the Merger shall be
as provided in the applicable provisions of Texas Law.
SECTION 2.04. Articles of Incorporation; Bylaws. (a) At the Effective
Time, the Articles of Incorporation of the Target, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time by
operation of this Agreement and by virtue of the Merger without any further
action by the shareholders or directors of the Surviving Corporation to read in
its entirety as set forth on Annex B hereto.
(b) At the Effective Time, the Bylaws of Acquiror Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation of the Surviving Corporation and such Bylaws.
SECTION 2.05. Directors and Officers. The directors of Acquiror Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation until a successor is
elected or appointed and has qualified or until the earliest of such director's
death, resignation, removal or disqualification, and the officers of the Target
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, or as otherwise provided in the Bylaws of
the Surviving Corporation.
SECTION 2.06. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Acquiror Sub, the
Target or the holders of any of the following shares of capital stock:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section 2.06(b)
and any Dissenting Shares (as hereinafter defined)) shall be canceled and shall
be converted automatically into the right to receive an amount equal to the Per
Share Amount in cash (the "Merger Consideration") payable,
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without interest, to the holder of such Share, upon surrender, in the manner
provided in Section 2.09, of the certificate that formerly evidenced such Share;
(b) Each Share held in the treasury of the Target and each Share owned
by Acquiror Sub, Acquiror or any direct or indirect wholly owned subsidiary of
Acquiror or of the Target immediately prior to the Effective Time shall be
cancelled without any conversion thereof and no payment or distribution shall be
made with respect thereto; and
(c) Each share of Common Stock, $0.01 par value per share, of Acquiror
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock, no par value per share, of the Surviving
Corporation.
SECTION 2.07. Employee Stock Options; Restricted Stock. (a) Immediately
after the Tender Offer Acceptance Date (as hereinafter defined), each
outstanding option to purchase Shares (in each case, an "Option") granted under
(a) the Target's 1991 Stock Option and Restricted Stock Plan, as amended, (b)
the Target's 1988 Stock Option Plan for Non-Employee Directors (c) the Target's
1996 Non-Employee Director Stock Option Plan, as amended, (d) the Target's 1998
Stock Option and Restricted Stock Plan, and (e) the Target's 1986 Stock Option
Plan (such plans (a) through (e) hereinafter the "Target Option Plans"), whether
or not then exercisable or vested, shall, subject to the Target's receipt of any
required consent of the holders of such Options, be cancelled by the Target, and
each holder of a cancelled Option shall be entitled to receive from Acquiror Sub
at the same time as payment for Shares is made by Acquiror Sub in connection
with the Offer, in consideration for the cancellation of such Option, an amount
in cash equal to the product of (i) the number of Shares previously subject to
such Option and (ii) the excess, if any, of the Per Share Amount over the
exercise price per Share previously subject to such Option. The term "Tender
Offer Acceptance Date" means the date on which the Acquiror Sub shall have
accepted for payment all Shares validly tendered and not withdrawn prior to the
expiration date with respect to the Offer.
(b) Immediately prior to the Tender Offer Acceptance Date, all
restrictions on any restricted stock awards granted under the Target Option
Plans shall lapse and the holders of such restricted stock shall be entitled to
receive from Acquiror Sub at the same time as payment for Shares is made by
Acquiror Sub in connection with the Offer in consideration for the restricted
stock an amount in cash equal to the product of (i) the number of Shares subject
to such restricted stock award and (ii) the Per Share Amount.
SECTION 2.08. Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by shareholders who shall not have voted in
favor of this Agreement or consented thereto in writing and who shall have
timely filed with the Target a written objection to the action contemplated by
this Agreement in accordance with Section 5.12 of Texas Law (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive
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the Merger Consideration. Such shareholders shall be entitled to receive
payment of the fair value of such Shares held by them in accordance with the
provisions of Texas Law, except that all Dissenting Shares held by shareholders
who effectively shall have withdrawn or lost their rights to demand payment of
the fair value of such Shares under Texas Law shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration, without any interest
thereon, upon surrender, in the manner provided in Section 2.09, of the
certificate or certificates that formerly evidenced such Shares. The Target
shall give Acquiror (i) prompt notice of any written notice of intent to seek
dissenters rights received by the Target and (ii) the opportunity to direct all
negotiations and proceedings with respect to any such notices. The Target shall
not, without the prior written consent of Acquiror, voluntarily make any payment
with respect to, or settle, offer to settle, or otherwise negotiate with respect
to, any such notices.
SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Acquiror Sub shall designate a bank or trust company
reasonably satisfactory to the Target to act as agent (the "Paying Agent") for
the holders of Shares in connection with the Merger to receive the funds to
which holders of Shares shall become entitled pursuant to Section 2.06(a). At
the Effective Time, Acquiror shall cause the Surviving Corporation to have
sufficient funds to deposit, and shall cause the Surviving Corporation to
deposit in trust with the Paying Agent, cash in the aggregate amount equal to
the product of (i) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares owned by Acquiror or Acquiror Sub) and (ii)
the Per Share Amount. Such funds shall be invested by the Paying Agent as
directed by the Surviving Corporation, provided that such investments shall be
in obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors
Services, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $150 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise); provided,
however, that no loss on any investment made pursuant to this Section 2.09 shall
relieve Acquiror or the Surviving Corporation of its obligation to pay the Per
Share Amount for each Share outstanding immediately prior to the Effective Time.
(b) Promptly after the Effective Time, Acquiror shall cause the
Surviving Corporation to mail to each person who was, at the Effective Time, a
holder of record of Shares entitled to receive the Merger Consideration pursuant
to Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant
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to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Target, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable. The
Surviving Corporation shall pay all charges and expenses, including those of the
Paying Agent, in connection with the distribution of the Merger Consideration.
(c) At any time following one year after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to holders of Shares (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it) and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Share for any Merger Consideration delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) Acquiror, Acquiror Sub or the Surviving Corporation, as the case
may be, shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Target Common Stock pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, or under any provision of state, local or foreign tax law.
(e) At the close of business on the day of the Effective Time, the
stock transfer books of the Target shall be closed and, thereafter, there shall
be no further registration of transfers of Shares on the records of the Target.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TARGET
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Except as set forth in the Disclosure Schedule delivered by the Target
and signed by the Target and Acquiror for identification prior to the execution
and delivery of this Agreement (the "Target Disclosure Schedule"), which shall
identify exceptions by specific section references, the Target hereby represents
and warrants to Acquiror and Acquiror Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries. The Target
is a corporation, and each subsidiary of the Target (a "Subsidiary") is a
corporation or partnership, in each case duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite corporate or partnership
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Target and each Subsidiary are duly
qualified or licensed as a foreign corporation or partnership to do business,
and are in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by them or the nature of their 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 Material Adverse Effect on the Target. As used in this
Agreement, the term "Material Adverse Effect" means with respect to any person,
any event, change or effect, individually or together with any other event,
change or effect, that is or is reasonably likely to be materially adverse (i)
to the financial condition, business or results of operations of such person and
its subsidiaries, taken as a whole, or (ii) the ability of the Target to perform
its obligations under this Agreement or to consummate any of the Transactions.
As of the date hereof, a true and correct list of all Subsidiaries, together
with the jurisdiction of organization of each Subsidiary and the percentage of
the outstanding capital stock or other equity interests of each Subsidiary owned
by the Target and each other Subsidiary, is set forth in Section 3.01 of the
Target Disclosure Schedule. Except as disclosed in Section 3.01 of the Target
Disclosure Schedule, the Target does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity.
SECTION 3.02. Articles of Incorporation and Bylaws. The Target has
heretofore furnished or made available to Acquiror a complete and correct copy
of the Articles of Incorporation and Bylaws or equivalent organizational and
governing documents, each as amended to date, of the Target and each Subsidiary.
Neither the Target nor any Subsidiary is in violation of any provision of its
Articles of Incorporation, Bylaws or equivalent organizational and governing
documents.
SECTION 3.03. Capitalization. The authorized capital stock of the
Target consists of 20,000,000 shares of Target Common Stock. As of April 30,
1998, 10,286,357 shares of Target Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable and not subject to
preemptive rights, and 1,016,500 shares of Target Common Stock were issuable
pursuant to outstanding Options or restricted stock awards under the Target
Option Plans and there are 36,275 shares of treasury stock. Except as set forth
in this Section 3.03, Section 3.03 of the Target Disclosure Schedule or in the
Target SEC Reports (as hereinafter
14
defined), as of the date of this 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, or other equity interests in, the
Target or any Subsidiary obligating the Target or any Subsidiary to issue, sell
or otherwise transfer any shares of capital stock of, or other equity interests
in, the Target or any Subsidiary. Between March 17, 1998 and the date of this
Agreement, no shares of Target Common Stock have been issued by the Target,
except pursuant to the exercise of Options or as set forth in Section 3.03 of
the Target Disclosure Schedule. There are no outstanding contractual obligations
of the Target or any Subsidiary to repurchase, redeem or otherwise acquire any
shares of Target Common Stock or any capital stock of, or any equity interest
in, any Subsidiary. Except as described in the Target SEC Reports or Section
3.03 of the Target Disclosure Schedule, each outstanding share of capital stock
of, or other equity interest in, each Subsidiary is duly authorized, validly
issued, fully paid and nonassessable and is owned by the Target or a Subsidiary
free and clear of any lien or other adverse claim. None of the outstanding
shares of capital stock or other equity interests of the Target or any
Subsidiary has been issued in violation of any preemptive rights of the current
or past shareholders or partners of the Target or any of the Subsidiaries.
SECTION 3.04. Authority Relative to This Agreement. The Target has all
necessary corporate power and authority to execute and deliver this Agreement
and, with respect to the Merger, upon the approval of this Agreement and the
Merger by the Target's shareholders in accordance with this Agreement and Texas
Law, to perform its obligations hereunder and to consummate the Transactions.
The execution and delivery of this Agreement by the Target and the consummation
by the Target of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Target are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval of this
Agreement and the Merger by the Target's shareholders in accordance with Texas
Law and the filing and recordation of appropriate Articles of Merger with the
Secretary in accordance with this Agreement and Texas Law). This Agreement has
been duly and validly executed and delivered by the Target and, assuming the due
authorization, execution and delivery of this Agreement by Acquiror and Acquiror
Sub, constitutes a legal, valid and binding obligation of the Target,
enforceable against the Target in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Target do not, and the
performance of this Agreement by the Target will not, subject to (x) with
respect to the Merger, obtaining the requisite approval of this Agreement and
the Merger by the Target's shareholders in accordance with this Agreement and
Texas Law, and (y) obtaining the consents, approvals, authorizations and permits
and making the filings described in Section 3.05(a) and Section 3.05(b) of the
Target Disclosure Schedule, (i) conflict with or violate the Articles of
Incorporation, Bylaws or equivalent organizational documents of the Target or
any Subsidiary, (ii) conflict with or violate any law applicable to the Target
or any Subsidiary or by which any property or asset of the Target or any
Subsidiary is bound or affected, or (iii) except as specified in Section
3.05(a)(iii) of the Target Disclosure
15
Schedule, 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, unilateral amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Target or any Subsidiary, or require the consent of any
third party pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Target or any Subsidiary is a party or by which the Target or any
Subsidiary or any property or asset of the Target or any Subsidiary is bound or
affected, except for such conflicts, violations, breaches, defaults or other
occurrences which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Target.
(b) The execution and delivery of this Agreement by the Target do not,
and the performance of this Agreement by the Target will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
pursuant to the Exchange Act, state securities or "blue sky" laws ("Blue Sky
Laws"), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder (the "HSR Act"), and filing
and recordation of appropriate Articles of Merger with the Secretary as required
by Texas Law, (ii) as specified in Section 3.05(b) of the Target Disclosure
Schedule and (iii) 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 Target
from performing its obligations under this Agreement and would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.06. Permits; Compliance. Except as disclosed in Section 3.06
of the Target Disclosure Schedule, each of the Target and the Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any United States (federal, state or local) or foreign government, or
governmental, regulatory or administrative authority, agency or commission or
court of competent jurisdiction ("Governmental Authority") necessary for the
Target or any Subsidiary to own, lease and operate its properties or to carry on
its business as it is now being conducted, except for those which the failure to
possess would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect on the Target (the "Target Permits") and, as of
the date hereof, no suspension or cancellation of any of the Target Permits is
pending or, to the knowledge of the Target, threatened, except such suspensions
or terminations as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Target. Except as disclosed
in Section 3.06 of the Target Disclosure Schedule or as would not reasonably be
expected to have a Material Adverse Effect on the Target, neither the Target nor
any Subsidiary is in conflict with, or in default or violation of, or, with the
giving of notice or the passage of time, would be in conflict with, or in
default or violation of, (a) any law applicable to the Target or any Subsidiary
or by which any property or asset of the Target or any Subsidiary is bound or
affected, (b) any of the Target Permits, or (c) any of the provisions of its
Articles of Incorporation or Bylaws (or other organizational or governing
instruments).
16
SECTION 3.07. SEC Filings; Financial Statements. (a) The Target has
filed all forms, reports and documents required to be filed by it with the SEC
since December 31, 1994 (collectively, the "Target SEC Reports"). The Target SEC
Reports (i) were prepared in all material respects in accordance with the
requirements of the Securities Act of 1933, as amended, and the Exchange Act, as
the case may be, and the rules and regulations thereunder and (ii) did not, at
the time they were filed (or at the effective date thereof in the case of
registration statements), 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 Subsidiary is currently required
to file any form, report or other document with the SEC under Section 12 of the
Exchange Act.
(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the Target SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("U.S. GAAP") throughout the periods indicated (except as may
be indicated in the notes thereto and except that financial statements included
with interim reports do not contain all U.S. GAAP notes to such financial
statements) and each fairly presented in all material respects the financial
position, results of operations and changes in shareholders' equity and cash
flows of the Target as at the respective dates thereof and for the respective
periods indicated 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 be material in amount or effect).
(c) Except (i) to the extent set forth on the balance sheet of the
Target and the consolidated Subsidiaries as at November 2, 1997, including the
notes thereto, (ii) as set forth in Section 3.07(c) of the Target Disclosure
Schedule or (iii) as disclosed in any SEC Report filed by the Target after
November 2, 1997, and prior to the date of this Agreement, neither the Target
nor any Subsidiary has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Target,
prepared in accordance with U.S. GAAP, except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
November 2, 1997, which would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the Target.
(d) The Target has heretofore furnished or made available to Acquiror
complete and correct copies of all amendments and modifications (if any) that
have not been filed by the Target with the SEC to all agreements, documents and
other instruments that previously had been filed by the Target as exhibits to
the Target SEC Reports and are currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since November 2,
1997, except as contemplated by, or disclosed pursuant to, this Agreement,
including Section 3.08 of the Target Disclosure Schedule, or disclosed in any
Target SEC Report filed since November 2,
17
1997, and prior to the date of this Agreement, the Target and the Subsidiaries
have conducted their business only in the ordinary course and in a manner
consistent with past practice and, since November 2, 1997, there has not been
(a) any event or events (whether or not covered by insurance), changes or
occurrences that have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Target, (b) any material change
by the Target in its tax or accounting methods, principles or practices, or
systems of internal accounting controls, except as may be appropriate to conform
to changes in the tax laws or U.S. GAAP, (c) any entry by the Target or any
Subsidiary into any commitment or transaction, except in the ordinary course of
business and consistent with past practice, (d) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
the Target or any redemption, purchase or other acquisition or exchange of any
shares, or securities convertible into any shares, of the capital stock of the
Target or a Subsidiary, (e) other than pursuant to the Plans (as defined in
Section 3.10), any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, except in the ordinary
course of business consistent with past practice, (f) any granting by the Target
or any of its Subsidiaries to any director, employee or officer of the Target or
any of its Subsidiaries of any increases in compensation, severance or
termination pay except in the ordinary course of business consistent with past
practice or any entry by the Target or any of its Subsidiaries into any
employment, severance or termination agreement with any such director, employee
or officer, or (g) incurrence of any additional debt obligations or other
obligations for borrowed money (other than indebtedness of a Subsidiary to the
Target or another Subsidiary) in excess of an aggregate of $1,000,000 except in
the ordinary course of the business of the Target consistent with past
practices.
SECTION 3.09. Absence of Litigation. Except as disclosed in Section
3.09 of the Target Disclosure Schedule or the Target SEC Reports filed prior to
the date of this Agreement, there is no claim, action, proceeding or
investigation pending or, to the best knowledge of the Target or any of the
Subsidiaries, threatened against the Target or any Subsidiary, or, to the
knowledge of Target, against any director or employee, or against any property,
asset, interest or right of any of them, before any arbitrator or Governmental
Authority which (a) individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Target or (b) seeks to and is
reasonably likely to significantly delay or prevent the consummation of the
Offer or the Merger. Neither the Target nor any Subsidiary nor any property or
asset of the Target or any Subsidiary is in violation of any order, writ,
judgment, injunction, decree, determination or award having, individually or in
the aggregate, a Material Adverse Effect on the Target.
SECTION 3.10. Employee Benefit Plans.
(a) Section 3.10 of the Target Disclosure Schedule lists (a) all
material employee benefit plans, programs and arrangements, including but not
limited to all material plans described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), currently
contributed to or maintained for the benefit of any current or
18
former employee, officer or director of the Target or any Subsidiary (the
"Plans") and (b) all written contracts and agreements relating to employment and
all severance agreements with any of the directors or officers of the Target or
any Subsidiary (other than, in each case, any such contract or agreement that is
terminable by the Target or any Subsidiary at will without penalty or other
adverse consequence) (the "Target Employment Contracts"). Section 3.10 of the
Target Disclosure Schedule sets forth the name of each officer or employee of
the Target or any Subsidiary with an annual base compensation greater than
$100,000 and the annual base compensation applicable to each such officer or
employee. The Target has made available to Acquiror a copy of each Plan, each
material document prepared in connection with each Plan and each Target
Employment Contract. Except as set forth in Section 3.10 of the Target
Disclosure Schedule, none of the Plans is a multiemployer plan within the
meaning of Section 3(37) of ERISA. Except as set forth in Section 3.10 of the
Target Disclosure Schedule, each Plan has been operated in accordance with its
terms and the requirements of applicable law except where the failure to so
operate would not have a Material Adverse Effect on the Target. The Target does
not currently have any direct or indirect material liability under, arising out
of or by operation of Title IV of ERISA in connection with the termination of,
or withdrawal from, any Plan or other retirement plan or arrangement and, as of
the date hereof, no fact exists or event has occurred that would reasonably be
expected to give rise to any such liability. The Target and the Subsidiaries
have complied in all respects with the Worker Adjustment Retraining Notification
Act, and no fact or event exists that could give rise to liability under such
act, except for such occurrences, noncompliances and liabilities as would not,
individually or in the aggregate, have a Material Adverse Effect on the Target.
(b) Neither the Target nor any Subsidiary has any liability to the
Pension Benefit Guaranty Corporation ("PBGC") other than routine premium costs,
nor has there been any application for waiver or waiver of the minimum funding
standards imposed by Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code") and no "accumulated funding deficiency" within the meaning
of Section 412(a) of the Code exists (whether or not waived) with respect to any
Plan. Except as set forth in Section 3.10 of the Target Disclosure Schedule, no
Plan has any material unfunded accrued benefits as determined per U.S. GAAP that
are not fully reflected in the Target financial statements.
(c) No Plan that is a defined benefit pension plan within the meaning
of Section 3(35) of ERISA ("Defined Benefit Plan") has been terminated or
partially terminated. The Target and any applicable Subsidiary have made full
and timely payment of all amounts required under the terms of each of the Plans
that are employee pension benefit plans as defined in Section 3(2) of ERISA.
Except as disclosed on Section 3.10 of the Target Disclosure Schedule, no
reportable event within the meaning of Section 4043 of ERISA has occurred with
respect to any Plan that is a Defined Benefit Plan.
(d) Each Plan that is intended to qualify under section 401(a) of the
Code has received a determination from the Internal Revenue Service stating that
is so qualifies and that its trust is exempt from taxation under section 501(a)
of the Code and, except as set forth in Section
19
3.10 of the Target Disclosure Schedule, nothing has occurred since the date of
such determination that could materially adversely affect such qualification or
exempt status.
(e) No breaches of fiduciary duty have occurred with respect to any
Plan that might reasonably be expected to give rise to material liability and no
prohibited transaction (within the meaning of Section 406 of ERISA or section
4975 of the Code) has occurred with respect to any Plan that gives rise to or
might reasonably be expected to give rise to material liability.
(f) Except as set forth in Section 3.10 of the Target Disclosure
Schedule, no Plan that is a "welfare plan" as defined in section 3(1) of ERISA
provides medical or death benefits with respect to current or former employees
of the Target or any Subsidiary beyond their termination of employment (other
than to the extent required by applicable law).
(g) The Target and all Subsidiaries have complied in material respects
with the continuation coverage requirements of Title X of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
(h) Except as set forth in Section 3.10 of the Target Disclosure
Schedule and except for Plans maintained pursuant to a collective bargaining
agreement, each Plan can be amended or terminated at any time and without
material liability to the Target other than for benefits accrued prior to such
amendment or termination. No agreement, commitment, or obligation exists to
increase any benefits under any Plan or to adopt any new Plan. Except where
there would not be a Material Adverse Effect on Target or its Subsidiaries, each
of the Subsidiaries that is incorporated, organized or domiciled outside the
jurisdiction of the United States has withheld or collected and paid over to the
applicable Governmental Authority or other custodial entity all material
contributions, taxes, premiums or payments required by law (whether representing
the employer's or employee's portions thereof) for any employee welfare program
existing in the applicable jurisdiction, including without limitation, any
program or fund for social security, retirement, employee savings, or mandatory
insurance for employee benefits or risks.
(i) There are no material claims, lawsuits, or arbitrations pending or,
to the knowledge of the Target or any of the Subsidiaries, threatened involving
any Plan (other than routine claims for benefits) nor is there any reasonable
basis to anticipate any such claims, lawsuits, or arbitrations involving any
Plans.
(j) Notwithstanding any of the foregoing to the contrary, for all
purposes of Section 3.10 other than the first, third and fourth sentences of
Section 3.10 (a), the term "Plan" shall not include any multi-employer plan
within the meaning of Section 3(37) of ERISA that is disclosed in Section 3.10
of the Target Disclosure Schedule.
SECTION 3.11. Labor Matters. Except as set forth in Section 3.11 of the
Target Disclosure Schedule or in the Target SEC Reports, neither the Target nor
any Subsidiary is a party to, nor does it have any obligation pursuant to, any
material oral and legally binding or
20
written agreement, collective bargaining or otherwise, with any party regarding
the rates of pay or working conditions of any of its employees, and, except as
set forth in Section 3.11 of the Target Disclosure Schedule is obligated under
any agreement to recognize or bargain with any labor organization or union on
behalf of its employees. Except as set forth in Section 3.11 of the Target
Disclosure Schedule, the Target and each Subsidiary is in compliance with all
applicable federal, state, local and foreign laws and regulations concerning the
employer-employee relationship and with all agreements relating to the
employment of its employees, including, but not limited to, applicable wage and
hour laws, immigration laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws and social security laws, except for
such non-compliance as would not have a Material Adverse Effect on the Target
and its Subsidiaries, taken as a whole. Neither the Target nor any of its
Subsidiaries is the subject of any litigation asserting that it has committed an
unfair labor practice within the meaning of the National Labor Relations Act or
comparable foreign, state or local law or seeking to compel the Target or any of
its Subsidiaries to bargain with any labor organization as to wages or
conditions of employment. There is no strike or material labor dispute involving
the Target or any Subsidiary pending or, to the knowledge of the Target or any
of the Subsidiaries, threatened.
SECTION 3.12. Taxes. (a) Except as set forth in Section 3.12 of the
Target Disclosure Schedule, the Target and each of the Subsidiaries have (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), and
all tax returns filed are accurate and complete in all material respects, (ii)
paid or accrued all taxes shown to be due on such returns and 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 Material
Adverse Effect on the Target. Except as set forth in Section 3.12 of the Target
Disclosure Schedule, neither the Internal Revenue Service nor any other federal,
state, local or foreign taxing authority has asserted any claim for taxes, or to
the best knowledge of the Target and each of the Subsidiaries, is threatening to
assert any claims for taxes, which claims, individually or in the aggregate,
could have a Material Adverse Effect on the Target. The Target and each
Subsidiary has open years for federal, state and foreign tax returns only as set
forth in Section 3.12 of the Target Disclosure Schedule. The Target and each
Subsidiary have withheld or collected and paid over to the appropriate
governmental authorities (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 Material Adverse Effect on the Target.
Neither the Target nor any of the Subsidiaries has made an election under
Section 341(f) of the Code. There are no liens for taxes upon the assets of the
Target or any Subsidiary (other than liens for taxes that are not yet due or
that are being contested in good faith by appropriate proceedings), except for
liens which would not, individually or in the aggregate, have a Material Adverse
Effect on the Target. Except as set forth in Section 3.12 of the Target
Disclosure Schedule, there has not been an ownership change, as defined in
Section 382(g) of the Code, of the Target or any of the Subsidiaries that
occurred either after September 19, 1985, or on or after any taxable period in
which the Target or any of
21
the Subsidiaries incurred a net operating loss that carries over to any taxable
period ending after November 2, 1997. Except as set forth in Section 3.12 of the
Target Disclosure Schedule, neither the Target or any of the Subsidiaries has or
has had a permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and such foreign
country.
(b) Except as set forth in Section 3.12 of the Target Disclosure
Schedules, neither the Target, any Subsidiary incorporated under the laws of the
United States of America, Farah Manufacturing (U.K.) Limited, Farah (New
Zealand) Limited, Farah (Australia) Pty. Limited, Touche Industrial, S.A. de C.
V. or Corporacion Farah - Costa Rica, S.A. has executed an extension or waiver
of any statute of limitations on the assessment or collection of any tax due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any taxes due or to become due for the Target or
any Subsidiary for the period or periods through and including the date of the
Target financial statements filed in the most recent Target SEC Report that has
been made and is reflected on such financial statements is sufficient to cover
all such taxes in all material respects.
(d) The Target and each Subsidiary is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
tax withholding requirements under federal, foreign, state, and local tax laws,
and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target.
SECTION 3.13. Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) any hazardous substance, hazardous material, hazardous
waste, regulated substance or toxic substance as defined in or regulated under
any Environmental Laws, including but not limited to 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, the Toxic Substances Control Act and the Clean Air Act; (B) petroleum and
petroleum products, byproducts and breakdown products including crude oil and
any fractions thereof; (C) natural gas, synthetic gas, and any mixtures thereof;
(D) asbestos requiring abatement, removal or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated biphenyls; (E)
any other chemicals, materials or substances defined or regulated as toxic or
hazardous or as a pollutant or contaminant or as a waste under any applicable
Environmental Law; and (F) any substance with respect to which a federal,
foreign, state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "Environmental Laws" means any federal,
state, foreign, or local law, rule
22
or regulation, now or hereafter in effect and as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment, health, safety or natural resources, including without limitation,
those relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances or (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances.
(b) Except as described in Section 3.13 of the Target Disclosure
Schedule or as would not individually or in the aggregate result in or be likely
to result in any fine, tax, assessment, penalty, loss, cost, damage, liability,
expense or other payment related thereto, that would reasonably be expected to
have a Material Adverse Effect on the Target: (i) the Target and each Subsidiary
and any property owned, leased, or operated by the Target or by any of the
Subsidiaries and, where required by the context, the owner or operator of such
property, but only with respect to such property (an "Operating Property"), and
any facility or property in which the Target or any of the Subsidiaries
participates in the management and, where required by the context, the owner or
operator of such facility or property, but only with respect to such facility or
property (a "Participation Facility"), are and have been in compliance with all
applicable Environmental Laws; (ii) the Target and each Subsidiary have obtained
all permits, approvals, identification numbers, licenses or other authorizations
required under any applicable Environmental Laws ("Environmental Permits") and
are and have been in compliance with their requirements; (iii) such
Environmental Permits are transferable to the Surviving Corporation pursuant to
the Merger without the consent of any Governmental Authority; (iv) there are no
underground or aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Substances are being or have
been treated, stored or disposed of on any Operating Property, Participation
Facility, or on any real property formerly owned, leased or occupied by the
Target or any Subsidiary; (v) there is, to the best knowledge of the Target, no
asbestos or asbestos-containing material on any Operating Property or
Participation Facility in violation of applicable Environmental Laws; (vi) the
Target and the Subsidiaries have not released, discharged or disposed of
Hazardous Substances on any Operating Property or Participation Facility or on
any real property formerly owned or leased by the Target or any Subsidiary, and
none of such property is contaminated with any Hazardous Substances; (vii)
neither the Target nor any of the Subsidiaries is undertaking, and neither the
Target nor any of the Subsidiaries has completed, any investigation or
assessment or remedial or response action relating to any such release,
discharge or disposal of or contamination with Hazardous Substances at any site,
location or operation, either voluntarily or pursuant to the order of any
Governmental Authority or the requirements of any Environmental Law; and (viii)
there are no pending or, to the knowledge of the Target, past or threatened
actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, notices of liability or potential liability,
investigations, proceedings, consent orders or consent agreements relating in
any way to Environmental Laws, any Environmental Permits or any Hazardous
Substances ("Environmental Claims") against the Target or any Subsidiary or any
Operating Property or Participation Facility, and there are no circumstances
that can reasonably be expected to form the basis of any such
23
Environmental Claim, including without limitation with respect to any off-site
disposal location presently or formerly used by the Target or any of the
Subsidiaries or any of their predecessors.
(c) The Target and the Subsidiaries have made available to Acquiror
copies of any environmental reports, studies or analyses in its possession or
under its control relating to Operating Property or Participation Facility or
the operations of the Target or the Subsidiaries.
SECTION 3.14. Opinion of Financial Advisor. The Target has received a
copy of the written opinion of Target Banker on the date of this Agreement to
the effect that the consideration to be paid by Acquiror Sub in the Offer and
the Merger is fair from a financial point of view to the Target's shareholders
as of the date thereof.
SECTION 3.15. Brokers. No broker, finder or investment banker (other
than Target 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 Target or any Subsidiary. The Target has heretofore
furnished to Acquiror a correct copy of all agreements between the Target and
Target Banker pursuant to which such firm would be entitled to any payment
relating to the Transactions.
SECTION 3.16. Tangible Property. (a) Except as described in Section
3.16 of the Target Disclosure Schedule, the Target and the Subsidiaries have
good and marketable title to all their tangible properties and assets free and
clear of all liens, with only such exceptions as, individually or in the
aggregate, would not have a Material Adverse Effect on the Target. All tangible
properties used in the businesses of the Target and the Subsidiaries are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with past practice.
(b) All items of inventory of the Target and the Subsidiaries reflected
on the most recent balance sheet included in the Target financial statements
contained in the Target SEC Reports prior to the date of this Agreement and
prior to the Effective Time consisted and will consist, as applicable, of items
of a quality and quantity usable and salable in the ordinary course of business
and conform to generally accepted standards in the industry in which the Target
and the Subsidiaries are a part.
(c) The accounts receivable of the Target and the Subsidiaries as set
forth on the most recent balance sheet included in the Target financial
statements contained in the Target SEC Reports prior to the date of this
Agreement or arising since the date thereof are valid and genuine; have arisen
solely out of bona fide sales and deliveries of goods, performance of services
and other business transactions in the ordinary course of business consistent
with past practice; are not subject to valid defenses, set-offs or
counterclaims; and are collectible in all material respects after billing at the
full recorded amount thereof less, in the case of accounts receivable appearing
on the most recent balance sheet included in the Target financial statements
contained in the Target SEC Reports prior to the date of this Agreement, the
recorded allowance for
24
collection losses on such balance sheet. The allowance for collection losses on
such balance sheet has been determined in accordance with U.S. GAAP.
(d) All Assets that are material to the Target's business on a
consolidated basis, held under leases or subleases by any of the Target and the
Subsidiaries, are held under valid contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such contract is in full force and effect.
(e) The assets of the Target and the Subsidiaries include all assets
required to operate the business of the Target and the Subsidiaries as presently
conducted.
SECTION 3.17. Material Contracts. Section 3.17 of the Target Disclosure
Schedule lists each contract which is required by its terms or is currently
expected to result in the payment or receipt by the Target or any Subsidiary of
more than $500,000 and which is not terminable by the Target or any Subsidiary
without the payment of any penalty or fine on not more than three months' notice
(a "Material Contract") to which the Target or any Subsidiary is a party, other
than contracts which have been filed as an exhibit to or have been incorporated
by reference in any Target SEC Report. Each Material Contract is in full force
and effect and is enforceable against the parties thereto (other than the
Target) in accordance with its terms, and no condition or state of facts exists
that, with notice or the passage of time, or both, would constitute a material
default by the Target or, to the knowledge of the Target, any third party under
such Material Contracts. The Target has duly complied in all material respects
with the provisions of each Material Contract to which it is a party.
SECTION 3.18. Offer Documents; Schedule 14D-9. Neither the Schedule
14D-9 nor any information supplied by the Target for inclusion in the Offer
Documents shall, at the respective times the Schedule 14D-9, the Offer
Documents, or any amendments or supplements thereto are filed with the SEC or
are first published, sent or given to shareholders of the Target, as the case
may be, 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 made therein, in the light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Target with respect to information supplied by Acquiror Sub or Acquiror for
inclusion in the Schedule 14D-9. The Schedule 14D-9 shall comply in all material
respects as to form with the requirements of the Exchange Act and the rules and
regulations thereunder.
SECTION 3.19. Change in Control. Except as set forth in Section 3.19 of
the Target Disclosure Schedule, the Target is not a party to any contract,
agreement or understanding that contains a "change in control," "potential
change in control" or similar provision, which, as a result of the consummation
of the Transactions will (either alone or upon the occurrence of any
25
additional acts or events) result in (i) any payment exceeding $500,000 (whether
of severance pay or otherwise) becoming due from the Target to any person, or
(ii) the acceleration of any obligations in excess of $500,000 under such
contract, agreement or understanding.
SECTION 3.20. Intellectual Property. Section 3.20 of the Target
Disclosure Schedule (i)(A) identifies each trademark, service xxxx, trade name,
copyright and all registrations and applications for any of the foregoing; (ii)
lists each patent, invention, industrial model, process, design and all
registrations and applications for any of the foregoing; and (iii) identifies
any know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trade dress,
labels and logos, pertaining to any product, software or service manufactured,
marketed, licensed or sold by the Target and the Subsidiaries in the conduct of
their business or used, employed or exploited in the development, license, sale,
marketing, distribution or maintenance thereof and which is material to the
business of the Target and the Subsidiaries taken as a whole and (B) lists all
contracts and other agreements to which the Target or any Subsidiary is a party,
including, such contract and agreement where the Target or any Subsidiary is
either licensee or licensor, for each of the foregoing items of intellectual
property (all of the foregoing, the "Target's Intellectual Property"). None of
the Target's affiliates, including, to the Target's knowledge, any of its
shareholders, has any interest (other than as a shareholder of the Target) in,
owns, possesses or otherwise holds in any manner any of the Target's
Intellectual Property. Except as set forth in Section 3.20 of the Target
Disclosure Schedule, all patents, copyrights, trademarks, including state,
federal and foreign registrations and applications, and other rights and
property listed in Section 3.20 of the Target Disclosure Schedule are valid and
in full force and effect. The rights and properties listed in Section 3.20 of
the Target Disclosure Schedule are subject to maintenance fees and renewal fees;
however, as of the date hereof except as set forth in Section 3.20 of the Target
Disclosure Schedule,, these rights and properties will not be subject to any
unpaid maintenance fees or renewal fees falling due within ninety (90) days
after the date hereof. Except as set forth on Schedule 3.20 of the Target
Disclosure Schedule, the Target owns or has the exclusive right to use the
Target's Intellectual Property in connection with the business now operated by
it and its Subsidiaries. The Target has taken reasonable security measures to
protect the secrecy, confidentiality and value of the Target's Intellectual
Property. Except as set forth in Section 3.20 of the Target Disclosure Schedule,
the Target has not received any notice of infringement of or conflict with
asserted rights of others with respect to any of the Target's Intellectual
Property, and there is no claim, action, suit or proceeding pending or, to the
Target's knowledge, threatened or reasonably anticipated against the Target with
respect thereto. Except as set forth in Section 3.20 of the Target Disclosure
Schedule, the Target is not required to pay any royalty or other amount to
anyone with respect to any of the Target's Intellectual Property. To the
Target's knowledge, the Target's trademarks, service marks, trade names, trade
dress, labels and logos described in Section 3.20 of the Target Disclosure
Schedule are sufficient for the conduct of its business as now conducted by it
and as described in the SEC Report. Neither the Target nor any Subsidiary is in
default under any of the Target Intellectual Property licenses.
26
SECTION 3.21. Insurance. All material assets and risks of the Target
and the Subsidiaries are covered by valid and currently effective insurance
policies in such types and amounts as are consistent with customary practices
and standards of companies engaged in businesses and operations similar to those
of the Target. None of the Target and the Subsidiaries has received notice from
any insurance carrier that (i) any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims for amounts exceeding in any individual case $100,000
pending under such policies of insurance and no notices of claims in excess of
such amounts have been given by the Target or any Subsidiary under such
policies.
SECTION 3.22. Certain Business Practices. As of the date of this
Agreement, except for such actions which would not have a Material Adverse
Effect, neither the Target, any Subsidiary nor any director, officer, or, to the
best knowledge of the Target, any agent or employee of the Target or any
Subsidiary has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
SECTION 3.23. State Takeover Laws. Prior to the date hereof, the Target
and each Subsidiary has taken all necessary action to exempt the Transactions
from, or to make inapplicable to the Transactions, any "moratorium," "fair
price," "business combination," "control share," or other anti-takeover Laws,
including Part 13 of Texas Law that are applicable or purport to be applicable
to the Transactions.
SECTION 3.24. Board Recommendation. The Board of Directors of the
Target, at a meeting duly called and held, has by vote of those directors
present (who constituted all of the directors then in office) (i) determined
that this Agreement and the Transactions, including the Offer and the Merger,
taken together, are fair to and in the best interests of the shareholders of the
Target and (ii) resolved to recommend that the holders of the shares of the
Target Common Stock approve this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR AND ACQUIROR SUB
Except as set forth in the Disclosure Schedule delivered by Acquiror to
the Target and signed by the Target and Acquiror for identification prior to the
execution and delivery of this Agreement (the "Acquiror Disclosure Schedule"),
which shall identify exceptions by specific section references, Acquiror and
Acquiror Sub hereby, jointly and severally, represent and warrant to the Target
that:
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SECTION 4.01. Corporate Organization. Each of Acquiror and Acquiror Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
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 have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the ability of Acquiror and Acquiror Sub to perform
their obligations hereunder and to consummate the Transactions.
SECTION 4.02. Authority Relative to This Agreement. Each of Acquiror
and Acquiror Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Acquiror and
Acquiror Sub and the consummation by Acquiror and Acquiror Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Acquiror or Acquiror
Sub are necessary to authorize this Agreement or to consummate the Transactions
(other than with respect to the Merger, the filing and recordation of
appropriate Articles of Merger with the Secretary, as required by this Agreement
and Texas Law). This Agreement has been duly and validly executed and delivered
by Acquiror and Acquiror Sub and, assuming the due authorization, execution and
delivery of this Agreement by the Target, constitutes a legal, valid and binding
obligation of each of Acquiror and Acquiror Sub enforceable against each of
Acquiror and Acquiror Sub in accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Acquiror and Acquiror Sub do not,
and the performance of this Agreement by Acquiror and Acquiror Sub will not,
subject to obtaining the consents, approvals, authorizations and permits and
making the filings described in Section 4.03(a) and Section 4.03(b) of the
Acquiror Disclosure Schedule, (i) conflict with or violate the Articles of
Incorporation or Bylaws of either Acquiror or Acquiror Sub, (ii) conflict with
or violate any law applicable to Acquiror or Acquiror Sub or by which any
property or asset of either of them 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 rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Acquiror or
Acquiror Sub or require the consent of any third party pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror or Acquiror Sub is
a party or by which Acquiror or Acquiror Sub or any property or asset of any of
them is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
have a Material Adverse Effect on Acquiror or prevent Acquiror and Acquiror Sub
from performing their respective obligations under this Agreement and
consummating the Transactions.
28
(b) The execution and delivery of this Agreement by Acquiror and
Acquiror Sub do not, and the performance of this Agreement by Acquiror and
Acquiror Sub will not require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) pursuant to the Exchange Act, Blue Sky Laws, the
HSR Act and filing and recordation of appropriate Articles of Merger with the
Secretary as required by this Agreement and Texas Law and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have a Material Adverse Effect on Acquiror
and would not prevent or delay consummation of the Transactions, or otherwise
prevent Acquiror or Acquiror Sub from performing their respective obligations
under this Agreement.
SECTION 4.04. Offer Documents; Proxy Statement. The Offer Documents
will not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to shareholders of the Target, as the case may be,
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
made therein, in the light of the circumstances under which they were made, not
misleading. The information supplied by Acquiror for inclusion in the proxy
statement to be sent to the shareholders of the Target in connection with the
Target Shareholders Meeting (such proxy statement, as amended and supplemented,
being referred to herein as the "Proxy Statement") and Schedule 14D-9 will not,
on the date the Proxy Statement or Schedule 14D-9 (or any amendment or
supplement thereto) is first mailed to shareholders of the Target, at the time
of the Shareholders Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Target Shareholders Meeting which shall have become false or misleading;
provided, however, that Acquiror or Acquiror Sub makes no representation or
warranty with respect to information supplied by the Target for inclusion in the
Offer Documents. The Offer Documents shall comply in all material respects as to
form with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 4.05. Brokers. No broker, finder or investment banker (other
than Prudential Securities Incorporated) 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 Acquiror or Acquiror Sub.
SECTION 4.06. Financing. Acquiror has firm commitment letters that
provide for adequate financing to Acquiror (the "Acquiror Financing") in order
for Acquiror and Acquiror Sub to fulfill their obligations under this Agreement.
Acquiror will make available to Acquiror Sub the funds to purchase all Shares
tendered pursuant to the Offer and to consummate the Merger.
29
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Target Pending the Acquiror
Sub's Election Date. The Target covenants and agrees that, between the date of
this Agreement and the election or appointment of Acquiror Sub's designees to
the Target's Board of Directors pursuant to Section 6.03 upon the purchase by
Acquiror Sub of any Shares pursuant to the Offer (the "Acquiror Sub's Election
Date"), except as set forth in Section 5.01 of the Target Disclosure Schedule or
as contemplated by any other provision of this Agreement, unless Acquiror shall
otherwise agree in writing (which agreement shall not be unreasonably withheld),
(1) the business of the Target and the Subsidiaries shall be conducted only in,
and the Target and the Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner substantially consistent with past
practice, (2) the Target shall use all reasonable efforts to preserve
substantially intact its business organization, to keep available the services
of the current officers, employees and consultants of the Target and the
Subsidiaries and to preserve the current relationships of the Target and the
Subsidiaries with customers, suppliers and other persons with which the Target
or any Subsidiary has significant business relations, (3) the Target will not,
and will not permit any Subsidiary to take any action that would (i) materially
and adversely affect the ability of any party to obtain any consents required
for the Transactions, (ii) cause any of the conditions to the Offer set forth on
Annex A, or any of the conditions to the Merger set forth in Article VII, not to
be satisfied, or (iii) materially and adversely affect the ability of any party
to perform its covenants and agreements under this Agreement, and (4) the Target
will not, and will not permit any Subsidiary to:
(a) amend or otherwise change its Articles of Incorporation or Bylaws
or other organizational or governing documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares of
capital stock of the Target or any 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 Target or any Subsidiary
(except for shares of the Target Common Stock, if any, issuable under agreements
currently in effect on the date hereof and described in Section 3.03 of the
Target Disclosure Schedule and shares of capital stock pursuant to currently
outstanding Options or Plans currently in effect on the date hereof and
described in Section 3.10 of the Target Disclosure Schedule), or (ii) any of the
Target's or any Subsidiaries' assets, except for sales in the ordinary course of
business and in a manner consistent with past practice;
(c) 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 or sell, lease,
30
mortgage or otherwise dispose of or otherwise encumber any shares of capital
stock of any Subsidiary;
(d) reclassify, combine, split, divide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or any division thereof or
any assets, other than the acquisition of assets in the ordinary course of
business consistent with past practice; (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 indebtedness incurred in the ordinary
course of business and consistent with past practice with a maturity of not more
than one year in a principal amount not, in the aggregate, in excess of
$1,000,000; (iii) enter into, modify, amend or terminate any contract or
agreement material to the business, results of operations or financial condition
of the Target other than in the ordinary course of business, consistent with
past practice; (iv) authorize any capital expenditure, other than capital
expenditures set forth in Section 5.01(e)(iv) of the Target Disclosure Schedule;
(v) impose, or suffer the imposition, on any asset of the Target or any
Subsidiary of any lien or permit any such lien to exist (other than in
connection with liens in effect as of the date hereof that are disclosed in
Section 5.01(e)(v) of the Target Disclosure Schedule or for liens incurred in
connection with indebtedness permitted under clause (ii) above); or (vi) enter
into or amend any contract, agreement, commitment or arrangement with respect to
any matter set forth in this subsection (e);
(f) except in the ordinary course of business consistent with past
practice and except in the case of officers for annual increases in compensation
payable or to become payable to any officer of the Target consistent with past
practices of the Target, (i) increase the compensation payable or to become
payable to any director, officer or other employee, or grant any bonus to, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the Target
or any Subsidiary or enter into or amend any collective bargaining agreement, or
(ii) establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation or other plan, trust or fund for the benefit of any director,
officer or class of employees;
(g) commence any litigation other than in accordance with past
practice, or settle or compromise any pending or threatened litigation which is
material or which relates to the Transactions, provided that nothing in this
Section 5.01(g) will prohibit the Target from settling or compromising any such
litigation if, after consultation with counsel, the Target's Board of Directors
believes that such action is necessary to comply with its fiduciary duties;
(h) grant or convey to any person any rights, including, but not
limited to, by way of sale, license or sublicense, in any of the Target's
Intellectual Property;
31
(i) make any significant change in any tax or accounting methods,
principles or practices or systems of internal accounting controls, except as
may be appropriate to conform to changes in tax laws or U.S. GAAP; or
(j) after the date of this Agreement, file any material tax return
without the prior consent of Acquiror, which consent will not be unreasonably
withheld.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Shareholder's Meeting. (a) If required by applicable law
in order to consummate the Merger, the Target shall, in accordance with
applicable law and the Target's Articles of Incorporation and Bylaws, (a) duly
call, give notice of, convene and hold an annual or special meeting of its
shareholders as soon as practicable following consummation of the Offer for the
purpose of considering and taking action on this Agreement and the transactions
contemplated hereby (the "Target Shareholders Meeting") and (b) subject to the
fiduciary obligations of the Target's Board of Directors as advised by
independent legal counsel, include in the Proxy Statement the recommendation of
the Target's Board of Directors that the shareholders of the Target approve this
Agreement and the Transactions, including, without limitation, the Merger and
use its reasonable best efforts to obtain such approval. To the extent permitted
by law, Acquiror and Acquiror Sub each agree to vote all Shares beneficially
owned by them in favor of the Merger.
(b) Notwithstanding the provisions of Section 6.01(a), in the event
that Acquiror and Acquiror Sub shall acquire in the aggregate at least 90% of
the outstanding Shares, pursuant to the Offer or otherwise, the parties hereto
shall, at the request of Acquiror, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of shareholders of the Target, in accordance with
Texas Law.
SECTION 6.02. Proxy Statement. If required by applicable law in order
to consummate the Merger, as promptly as practicable after the purchase of all
Shares validly tendered and not withdrawn pursuant to the Offer, the Target
shall file the Proxy Statement with the SEC under the Exchange Act, and shall
use its reasonable best efforts to have the Proxy Statement cleared by the SEC.
Acquiror, Acquiror Sub and the Target shall cooperate with each other in the
preparation of the Proxy Statement, and the Target shall notify Acquiror of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Acquiror promptly copies of all
correspondence between the Target or any representative of the Target and the
SEC. The Target shall give Acquiror and its counsel
32
the opportunity to review the Proxy Statement prior to its being filed with the
SEC and shall give Acquiror and its counsel the opportunity to review all
amendments and supplements to the Proxy Statement and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Target, Acquiror and Acquiror Sub agrees
to use its reasonable best efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement and all required amendments and supplements thereto
to be mailed to the holders of Shares entitled to vote at the Target
Shareholders Meeting at the earliest practicable time with the intent being to
complete the Merger before August 31, 1998. Without limiting the generality of
the foregoing, the Target agrees that its obligations pursuant to this Section
6.02 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Target of any Business Combination Proposal.
SECTION 6.03. Target Board Representation; Section 14(f). (a) Promptly
upon the purchase by Acquiror Sub of Shares pursuant to the Offer, and from time
to time thereafter, Acquiror Sub shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Target's Board
of Directors as shall give Acquiror Sub representation on the Target's Board of
Directors equal to the product of the total number of directors on the Target's
Board of Directors (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Acquiror Sub or any affiliate of Acquiror Sub at such time
bears to the total number of Shares then outstanding, and the Target shall, at
such time, promptly take all actions necessary to cause Acquiror Sub's designees
to be elected as directors of the Target, including increasing the size of the
Target's Board of Directors or securing the resignations of incumbent directors
or both. At such times, the Target shall use its best efforts to cause persons
designated by Acquiror Sub to constitute the same percentage as persons
designated by Acquiror Sub shall constitute of the Target's Board of Directors
of (i) each committee of the Target's Board of Directors (some of whom may be
required to be independent as required by applicable law), (ii) each board of
directors of each domestic Subsidiary and (iii) each committee of each such
board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, until the time Acquiror Sub acquires a majority
of the then outstanding Shares on a fully diluted basis, the Target shall use
its best efforts to ensure that all the members of the Target's Board of
Directors and each committee of the Target's Board of Directors and such boards
and committees of the domestic Subsidiaries as of the date hereof who are not
employees of the Target shall remain members of the Target's Board of Directors
and of such boards and committees.
(b) The Target shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include in the
Schedule 14D-9 such information with respect to the Target and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Acquiror or Acquiror Sub shall supply to the Target and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
33
(c) Following the election or appointment of designees of Acquiror Sub
pursuant to this Section 6.03, prior to the Effective Time, any amendment of
this Agreement or the Articles of Incorporation or Bylaws of the Target, any
termination of this Agreement by the Target, any extension by the Target of the
time for the performance of any of the obligations or other acts of Acquiror or
Acquiror Sub or waiver of any of the Target's rights hereunder shall require the
concurrence of a majority of the directors of the Target then in office who
neither were designated by Acquiror Sub nor are employees of the Target or if no
such directors are then in office, no such amendment, termination, extension or
waiver shall be effected which is materially adverse to the holders of Shares
(other than Acquiror and its subsidiaries).
SECTION 6.04. Access to Information; Confidentiality. Subject to the
Confidentiality Agreement (as hereinafter defined), from the date hereof to
Acquiror Sub's Election Date, the Target will provide Acquiror, during normal
business hours and upon reasonable notice, access to all financial, operating
and other data and information regarding the business of the Target as Acquiror
reasonably requests, other than information and documents that in the opinion of
Target's counsel may not be disclosed under applicable law.
SECTION 6.05. No Solicitation of Transactions.
(a) The Target shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase of
all or any material portion of the assets of, or any equity interest in, the
Target or any Subsidiary or any merger, consolidation, share exchange, business
combination or other similar transaction with the Target or any Subsidiary (an
"Business Combination Proposal") or participate in any negotiations regarding,
or furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing;
provided, however, that nothing contained in this Section 6.05 shall prohibit
the Target from furnishing information to, or entering into discussions or
negotiations with, any person in connection with an unsolicited Business
Combination Proposal by such person received by the Target after the date of the
Agreement, if, and only to the extent that, (a) a majority of the disinterested
members of the Target's Board of Directors, after consultation with Target
Banker and based on the advice of outside counsel, determines in good faith that
such action is required in order for the Target's Board of Directors not to
breach its fiduciary duties to shareholders imposed by law and (b) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, the Target (i) gives Acquiror as promptly as practicable
prior written notice of the Target's intention to furnish such information or
begin such discussions, the identity of such person and the material terms of
such Business Combination Proposal and (ii) receives from such person an
executed confidentiality agreement on terms no less favorable to the Target than
those contained in the Confidentiality Agreement. The Target agrees not to
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which the Target is a party. The Target immediately
shall cease and cause to be terminated all
34
existing discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing.
(b) Neither the Board of Directors of Target nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Acquiror or Acquiror Sub, the approval or recommendation by such
Board of Directors or any such committee of the Offer, this Agreement or the
Merger or (ii) approve or recommend, or propose to approve or recommend, any
Business Combination Proposal. Notwithstanding the foregoing, the Board of
Directors of Target, to the extent required by the fiduciary obligations
thereof, as determined in good faith by a majority of the disinterested members
thereof based on the advice of outside counsel, may approve or recommend (and,
in connection therewith, withdraw or modify its approval or recommendation of
the Offer, this Agreement and the Merger) a Superior Proposal. For purposes of
this Agreement, "Superior Proposal" means a bona fide Business Combination
Proposal made by a third party to acquire, directly or indirectly, all of the
Shares then outstanding or all or substantially all the assets of Target, and
otherwise on terms that a majority of the disinterested members of the Board of
Directors of Target determines in its good faith judgment (based on the advice
of the Target's independent financial advisor) to be more favorable to the
holders of Shares than the Offer and the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of a
majority of such disinterested members (based on the advice of Target's
independent financial advisor), is reasonably capable of being financed by such
third party.
SECTION 6.06. Directors' and Officers' Indemnification. (a) The
Articles of Incorporation and Bylaws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in the Articles of Incorporation and Bylaws of the Target, which provisions
shall not be amended, repealed or otherwise modified for a period of six (6)
years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who at any time prior to the Effective Time
were directors, officers or employees of the Target or any of the Subsidiaries,
unless such modification shall be required by Texas Law.
(b) From and after the Effective Time, Acquiror and the Surviving
Corporation shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date of this Agreement or who becomes prior to
the Effective Time, an officer, director, employee or agent of the Target or any
of the Subsidiaries (collectively, the "Indemnified Parties") against all
losses, expenses (including reasonable attorneys' fees), claims, damages,
liabilities or amounts that are paid in settlement of, with the approval of the
Surviving Corporation (which approval shall not unreasonably be withheld), or
otherwise in connection with, any threatened or actual claim, action, suit,
proceeding or investigation (a "Claim"), based in whole or in part on or arising
in whole or in part out of the fact that the Indemnified Party (or the person
controlled by the Indemnified Party) is or was a director, officer, employee or
agent of the Target or any of the Subsidiaries and pertaining to any matter
existing or arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, any Claim arising out of this
35
Agreement or any of the transactions contemplated hereby), whether asserted or
claimed prior to, at or after the Effective Time, in each case to the fullest
extent permitted under Texas Law and by Target's Articles of Incorporation and
Bylaws as in effect on the date hereof, and shall pay any expenses, as incurred,
in advance of the disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under Texas Law and by
Target's Articles of Incorporation and Bylaws as in effect on the date hereof.
Without limiting the foregoing, in the event any such Claim is brought against
any of the Indemnified Parties, Acquiror or the Surviving Corporation shall have
the right to assume the defense thereof and neither Acquiror nor the Surviving
Corporation shall be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if Acquiror or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues that raise
conflicts of interest between Acquiror or the Surviving Corporation and the
Indemnified Parties, such Indemnified Parties may retain counsel satisfactory to
them and which shall be reasonably satisfactory to Acquiror and the Surviving
Corporation and they shall pay all reasonable fees and expenses of such counsel
for such Indemnified Parties. The Indemnified Parties, or the Acquiror and the
Surviving Corporation, as the case may be, shall use all reasonable efforts to
assist in the defense of any such Claim, provided that the Acquiror and the
Surviving Corporation shall not be liable for any settlement effected without
their written consent, which consent, however, shall not be unreasonably
withheld. The Acquiror and the Surviving Corporation shall be obligated pursuant
to this paragraph to pay only one law firm to represent the Indemnified Parties
with respect to each such Claim unless there is, as determined by counsel to the
Indemnified Parties, under applicable standards of professional conduct, a
conflict or a reasonable likelihood of a conflict on any significant issue
between the positions of any two or more Indemnified Parties at the expense of
the Acquiror and the Surviving Corporation.
(c) Prior to the Effective Time the Target shall, and after the
Effective Time Surviving Corporation shall, to the fullest extent permitted by
Texas Law, make reasonable advances to the Indemnified parties to cover expenses
for which such Indemnified Parties would otherwise be entitled to
indemnification pursuant to this Section 6.06.
(d) Acquiror shall maintain in effect for three years from the
Effective Time, if available, the current directors' and officers' liability
insurance policies maintained by the Target (provided that Acquiror may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring prior to the Effective Time; provided, that neither Acquiror nor the
Surviving Corporation shall be obligated to make aggregate premium payments for
such three-year period in respect of such policy (or coverage replacing such
policy) which exceed, for the portion related to Target's directors and
officers, 150% of the annual premium payments on Target's current policy in
effect as of the date of this Agreement (the "Maximum Amount"). If the amount of
the premiums necessary to maintain or procure such insurance coverage exceeds
the Maximum Amount, Acquiror shall use its reasonable efforts to maintain the
most advantageous policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
36
SECTION 6.07. Obligations of Acquiror Sub. Acquiror shall take all
action necessary to cause Acquiror Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
SECTION 6.08. Public Announcements. (a) Acquiror, Acquiror Sub and the
Target shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such public
statement prior to such consultation and (b) prior to the Effective Time, the
Target will not issue any other press release or otherwise make any public
statements regarding its business, except as may be required by law or any
listing agreement with the NYSE, to which the Target is a party.
SECTION 6.09. Delivery of SEC Documents. The Target shall promptly
deliver to Acquiror true and correct copies of any report, statement or schedule
filed with the SEC subsequent to the date of this Agreement.
SECTION 6.10. Notification of Certain Matters. The Target shall give
prompt notice to Acquiror, and Acquiror shall give prompt notice to the Target,
of (a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (b) any failure of the Target, Acquiror or Acquiror Sub, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 6.10 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 6.11. Further Action. At any time and from time to time, each
party to this Agreement agrees, subject to the terms and conditions of this
Agreement, to take such actions and to execute and deliver such documents as may
be necessary to effectuate the purposes of this Agreement at the earliest
practicable time.
SECTION 6.12 Employee Benefits.
(a) Each of Acquiror and Acquiror Sub agrees that, during the period
commencing at the Acquiror Sub's Election Date and ending on the first
anniversary thereof, the employees of the Target and the Subsidiaries will
continue to be provided with benefits under employee benefit plans that are no
less favorable in the aggregate than those currently provided by the Target and
the Subsidiaries to such employees.
(b) Acquiror will cause the Target (and, after the Merger, the
Surviving Corporation) to honor all employee benefit obligations to current and
former employees and directors under the Target's employee benefit plans in
existence on the date hereof and disclosed in Section 3.10 of the Target
Disclosure Schedule and all employment or severance agreements
37
entered into by the Target or adopted by the Board of Directors of the Target
prior to the date hereof and disclosed in Sections 3.10 or 6.12(b) of the Target
Disclosure Schedule; provided, however, that nothing shall prevent Acquiror or
the Target (and, after the Merger, the Surviving Corporation) from taking any
action with respect to such plans, obligations or agreements or refraining from
taking any such action which is permitted or provided for under the terms
thereof or under applicable law.
(c) Employees of the Target (and, after the Merger, the Surviving
Corporation) shall be given credit for all actual service with the Target and
any Subsidiaries under all employee benefit plans, programs and policies of the
Surviving Corporation or Acquiror in which they become participants for all
purposes thereunder, except to the extent that such crediting would produce
duplication of benefits or violate any provision of ERISA or the Code.
SECTION 6.13. Appropriate Action; Consents; Filings. (a) The Target and
Acquiror shall use their best efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable law or required to be taken by any Governmental
Authority or otherwise to consummate and make effective the Transactions as
promptly as practicable, (ii) obtain from any Governmental Authorities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Acquiror or the Target or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Transactions, including, without
limitation, the Merger, and (iii) as promptly as practicable, make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Exchange Act, and any other
applicable federal or state securities laws, (B) the rules and regulations of
the NYSE, (C) Texas Law, (D) the HSR Act and any related governmental request
thereunder, and (E) any other applicable law; provided that Acquiror and the
Target shall cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection therewith.
The Target and Acquiror shall use reasonable best efforts to furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Offer Documents and the Schedule
14D-9) in connection with the transactions contemplated by this Agreement.
(b) (i) Each of Acquiror and the Target shall give (or shall cause
their respective subsidiaries to give) any notices to third parties, and use,
and cause their respective subsidiaries to use, their reasonable best efforts to
obtain any third party consents (including those set forth in Section
3.05(a)(iii)), (A) necessary to consummate the Transactions, (B) disclosed or
required to be disclosed in the Target Disclosure Schedule or the Acquiror
Disclosure Schedule or (C) required to prevent a Material Adverse Effect from
occurring prior to or after Acquiror Sub's Election Date.
38
(ii) In the event that Acquiror or the Target shall fail to obtain any
third party consent described in subsection (b)(i) above, it shall use its best
efforts, and shall take any such actions reasonably requested by the other
party, to minimize any adverse effect upon the Target and Acquiror, their
respective subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after Acquiror Sub's Election Date, from
the failure to obtain such consent.
(c) From the date of this Agreement until Acquiror Sub's Election Date,
each party shall promptly notify the other party of any pending, or to the best
knowledge of the first party, threatened, action, proceeding or investigation by
or before any Governmental Authority or any other person (i) challenging or
seeking material damages in connection with the Transactions or (ii) seeking to
restrain or prohibit the consummation of the Transactions or otherwise limit the
right of Acquiror or, to the knowledge of such first party, any Acquiror
Subsidiary to own or operate all or any portion of the businesses or assets of
the Target, which in either case is reasonably likely to have a Material Adverse
Effect on the Target prior to the Effective Time, or a Material Adverse Effect
on the Acquiror and the Acquiror Subsidiaries (including the Surviving
Corporation) after the Effective Time.
SECTION 6.14. Payments in Respect of Target Options.
(a) As soon as practicable after the date of this Agreement, the Board
of Directors of Target (or if appropriate, any committee administering the
Target Option Plans) shall adopt such resolutions or take such other actions as
are required to adjust the terms of all outstanding Options to provide that each
Option outstanding immediately after the Tender Offer Acceptance Date shall be
canceled in accordance with Section 2.07 hereof. After the date of this
Agreement, neither the Board of Directors of Target nor any committee thereof
shall cause any Option to become exercisable as a result of the execution of
this Agreement or the consummation of the Transactions; provided, however,
Acquiror acknowledges that all Options regardless of whether exercisable or
vested will be subject to Section 2.07 of this Agreement.
(b) All amounts payable pursuant to Section 2.07 shall be subject to
any required withholding of taxes and shall be paid without interest. Target
shall use its best efforts to obtain all consents of the holders of the Options
as shall be necessary to effectuate the provisions of this Agreement relating
thereto. Notwithstanding anything to the contrary contained in this Agreement,
payment shall, at Acquiror's request, be withheld in respect of any Option until
all necessary consents are obtained.
(c) The Target Option Plans shall terminate as of the Effective Time,
and the provisions in any other Plan providing for the issuance, transfer or
grant of any capital stock of Target or any interest in respect of any capital
stock of Target shall be deleted as of the Effective Time of the Merger, and
Target shall ensure that following the Effective Time of the Merger no holder of
a Option or any participant in any Target Option Plan or other Plan shall have
any right thereunder to acquire any capital stock of Target or the Surviving
Corporation.
39
SECTION 6.15. Supplemental Indenture. After the date of the acceptance
for payment of shares of Target Common Stock pursuant to the Offer and prior to
the Effective Time, Target and the Trustee (as defined below) shall enter into a
supplemental indenture (the "Supplemental Indenture") to the Indenture dated as
of February 1, 1994 (the "Indenture"), between Target and Texas Commerce Bank,
N.A., as Trustee (the "Trustee"), pursuant to the Indenture, which shall (i)
become effective upon the Effective Time and (ii) provide that, from and after
the Effective Time, each of Target's outstanding Convertible Notes shall cease
to be convertible into shares of Target Common Stock, but shall be convertible
solely into an amount of cash, without interest, equal to the product of (x) the
number of shares of Target Common Stock into which such Convertible Note was
convertible immediately prior to the Effective Time, and (y) the Merger
Consideration. Target shall give Acquiror a reasonable opportunity to comment on
the form of Supplemental Indenture prior to the execution thereof, and shall not
enter into the Supplemental Indenture if Acquiror reasonably objects thereto.
SECTION 6.16. Employee Stock Purchase Plan. As soon as practicable
after the date of this Agreement, the Board of Directors of Target shall take
such action as is necessary to terminate the Farah U.S.A. Inc Employee Stock
Purchase Plan.
SECTION 6.17. Directorships. Acquiror shall use its reasonable best
efforts to cause two members of the Board of Directors of Target, as designated
by Acquiror, to be elected to the Board of Directors of Acquiror.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Merger. The obligations of the Target,
Acquiror, and Acquiror Sub to consummate the Merger are subject to the
satisfaction of the following conditions, and only the following conditions:
(a) this Agreement shall have been approved by the affirmative vote of
the shareholders of the Target to the extent required by Texas Law, the Target's
Articles of Incorporation and Bylaws and by the NYSE.
(b) no Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any law, order, executive order, stay, decree, judgment,
injunction or other order or statute, rule or regulation (each an "Order") which
is in effect and which has the effect of making the acquisition of Shares by
Acquiror or Acquiror Sub or any affiliate of either of them illegal or otherwise
preventing or prohibiting consummation of the Transactions;
(c) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(d) Acquiror Sub or its permitted assignee shall have purchased all
Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that neither
40
Acquiror nor Acquiror Sub shall be entitled to assert the failure of this
condition if, in breach of this Agreement or the terms of the Offer, Acquiror
Sub fails to purchase any Shares validly tendered and not withdrawn pursuant to
the Offer.
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 of this Agreement and the
transactions contemplated hereby as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Acquiror, Acquiror Sub and the Target prior to Acquiror
Sub's Election Date; or
(b) by either Acquiror or the Target if the Effective Time shall not
have occurred on or before August 31, 1998; 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 such date; provided, that the passage of the period referred to in this
Section 8.01(b) shall be tolled for any part thereof during which any party to
this Agreement shall be subject to a nonfinal order or other action restraining,
enjoining or otherwise prohibiting the purchase of shares of Target Common Stock
pursuant to the Offer or the consummation of the Merger or the calling or
holding of the Target Shareholders Meeting;
(c) by Acquiror if: (i) due to an occurrence or circumstance that
results in a failure to satisfy any condition set forth in Annex A hereto,
Acquiror Sub shall have (A) failed to commence the Offer within 10 days
following the date of this Agreement, (B) terminated the Offer without having
accepted any Shares for payment thereunder or (C) failed to pay for Shares
pursuant to the Offer within 90 days following the commencement of the Offer,
unless any such failure listed above shall have been caused by or resulted from
the failure of Acquiror or Acquiror Sub to perform in any material respect any
covenant or agreement of either of them contained in this Agreement or the
material breach by Acquiror or Acquiror Sub of any representation or warranty of
either of them contained in this Agreement; or (ii) prior to the purchase of
Shares pursuant to the Offer, (A) the Target's Board of Directors withdraws its
recommendation of this Agreement or the Merger or shall have resolved to do so,
(B) shall have recommended to the shareholders of the Target any Superior
Proposal or resolved to do so, or (C) a tender offer or exchange offer for 50%
or more of the outstanding shares of capital stock of the Target is commenced
(other than by Acquiror or its affiliates) and the Target's Board of Directors
fails to recommend against the shareholders of the Target tendering their shares
into such tender offer or exchange offer; or
41
(d) by the Target if: (i) Acquiror Sub shall have (A) failed to
commence the Offer within 10 days following the date of this Agreement, (B)
terminated the Offer without having accepted any Shares for payment thereunder
or (C) failed to pay for Shares pursuant to the Offer within 90 days following
the commencement of the Offer, unless such failure to pay for Shares shall have
been caused by or resulted from the failure of the Target to satisfy the
conditions set forth in paragraph (c) of Annex A; or (ii) to the extent
permitted by Section 6.05(b), prior to the purchase of Shares pursuant to the
Offer, the Board of Directors of the Target approves or recommends a Superior
Proposal.
SECTION 8.02. Fees and Expenses. (a) The Target shall pay Acquiror a
fee (an "Alternative Proposal Fee") equal to three percent (3%) of the
aggregate amount payable by Acquiror Sub to the shareholders of Target pursuant
to the Offer and the Merger, plus all of the Acquiror Expenses (as hereinafter
defined), if:
(i) this Agreement is terminated pursuant to Section
8.01(c)(ii) or (d)(ii); or
(ii) this Agreement is terminated pursuant to Section 8.01
(other than (A) due to an occurrence or circumstance that results in a failure
to satisfy paragraphs (a), (f) or (h) of Annex A hereto or (B) pursuant to
Section 8.01(d) unless the event providing the basis for such termination is the
result of an occurrence or circumstance that results in a failure to satisfy
paragraphs (b) or (c) of Annex A hereto) and (A) the Offer shall have remained
open for at least twenty (20) business days, (B) the Minimum Condition shall not
have been satisfied, (C) a Business Combination Transaction Proposal shall have
been made prior to termination of the Offer, and (D) such Business Combination
Transaction described in clause 8.02(ii)(C) is thereafter consummated within 12
months of such termination. As used herein, the term "Business Combination
Transaction" shall mean any of the following involving the Target: (1) any
merger, consolidation, share exchange, business combination or other similar
transaction (other than the Transactions); (2) any sale, lease, exchange,
transfer or other disposition (other than a pledge or mortgage) of 50% or more
of the assets of the Target in a single transaction or series of related
transactions; or (3) the acquisition by a person or entity or any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of beneficial ownership of 50% or more of the shares of
Target Common Stock, whether by tender offer, exchange offer or otherwise.
(b) Acquiror shall be entitled to receive the Acquiror Expenses (but
not the Alternative Proposal Fee) in immediately available funds in the event
that this Agreement is terminated by Acquiror pursuant to Section
8.01(c)(i)(other than due to an occurrence or circumstance that results in a
failure to satisfy paragraphs (a), (f) or (h) of Annex A hereto in which case
such Acquiror Expenses shall not exceed $1,500,000).
(c) As used herein, "Acquiror Expenses" means all reasonable
out-of-pocket expenses and fees actually incurred by Acquiror or Acquiror Sub or
on their respective behalf in
42
connection with the Transactions prior to the termination of this Agreement
(including, without limitation, all fees and expenses of counsel, financial
advisors, banks or other entities providing financing to Acquiror (including
financing, commitment and other fees payable thereto), accountants,
environmental and other experts and consultants to Acquiror and its affiliates,
and all printing and advertising expenses) and in connection with the
negotiation, preparation, execution, performance and termination of this
Agreement, the structuring of the Transactions, any agreements relating thereto
and any filings to be made in connection therewith.
(d) Except as set forth in this Section, all costs and 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.
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 of this Agreement and the Transactions by the shareholders of the
Target, no amendment may be made which would violate Texas Law. 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 of any other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of any other party or condition benefiting such party contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
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 termination of this Agreement
pursuant to Section 8.01, as the case may be, except that (a) the
representations and warranties of the Target set forth in Article III shall
terminate on the Acquiror Sub's Election Date, and (b) the agreement set forth
in Articles II and IX and Sections 6.03(c), 6.06, 6.07, 6.12 and 6.14 shall
survive termination indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at
43
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 9.02):
if to Acquiror or Acquiror Sub:
Tropical Sportswear Int'l Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
if to the Target:
Farah Incorporated
0000 X. Xxxx
Xxxx. X, Xxxxx 000
Xx Xxxx, Xxxxx 00000-0000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx
Xxxxx & XxXxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
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;
44
(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, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any 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
such shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any rules
or regulations promulgated thereunder;
(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 New York, 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) "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
(f) "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 or has rights to
acquire, directly or indirectly, 50% or more 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
45
mutually acceptable manner in order that the Transactions be consummated as
originally contemplated to the fullest extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. 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. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article II and Sections 6.06 and 6.12, nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 9.06. Incorporation of Schedules. The Target Disclosure
Schedule and the Acquiror Disclosure Schedule referred to herein and signed for
identification by the parties hereto are hereby incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
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 equity.
SECTION 9.08. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
THE RULES OF CONFLICTS OF LAW THEREOF. ALL ACTIONS AND PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY COURT
SITTING IN THE CITY OF EL PASO, TEXAS.
SECTION 9.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.11. Waiver of Jury Trial. Each of Acquiror, the Target and
Acquiror 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 Acquiror, the
Target or Acquiror Sub in the negotiation, administration, performance and
enforcement thereof.
46
SECTION 9.12. Entire Agreement. This Agreement, the Target Disclosure
Schedule, the Acquiror Disclosure Schedule, the confidentiality agreement, dated
March 12, 1998, (the "Confidentiality Agreement"), between the Target and
Acquiror, and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
47
IN WITNESS WHEREOF, Acquiror, Acquiror Sub and the Target have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
TROPICAL SPORTSWEAR INT'L CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
FOXFIRE ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------------
Xxxxxxx Xxxxx
Secretary
FARAH INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board, Chief Executive Officer
and President
43
48
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Acquiror Sub shall
not be required to accept for payment or pay for any Shares tendered pursuant to
the Offer, and may terminate or amend the Offer and may postpone the acceptance
for payment of and payment for Shares tendered, if (i) the Minimum Condition
shall not have been satisfied, (ii) any applicable waiting period under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer or (iii) at any time on or after the date of this Agreement, and prior to
the acceptance for payment of Shares, any of the following conditions shall
exist:
(a) there shall have been any judgement, order or decree resulting from
litigation brought by any Governmental Authority or other person, or before any
court or Governmental Authority, agency or tribunal, domestic or foreign: (i)
prohibiting the acquisition by Acquiror or Acquiror Sub of any Shares; (ii)
prohibiting or limiting in any material respect the ownership or operation by
Acquiror, Acquiror Sub or any of their respective subsidiaries of any material
portion of the business or assets of Target, or to compel Acquiror, Acquiror Sub
or any of their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of Target or any of its Subsidiaries,
(iii) restraining or prohibiting the making of the Offer or the consummation of
the Merger; (iv) imposing limitations on the ability of Acquiror or Acquiror Sub
to exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Acquiror Sub
pursuant to the Offer, or otherwise on all matters properly presented to the
Target's shareholders, including, without limitation, the approval of this
Agreement and the Transactions; or (v) requiring divestiture by Acquiror or
Acquiror Sub of any Shares;
(b) (i) the Target's Board of Directors shall have withdrawn or
modified in a manner adverse to Acquiror or Acquiror Sub the approval or
recommendation of the Offer, the Merger or this Agreement or approved or
recommended any Business Combination Proposal or any other acquisition of Shares
other than the Offer and the Merger or (ii) the Target's Board of Directors
shall have resolved to do any of the foregoing;
(c) the Target shall have failed to perform or comply in any material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Acquiror Sub's Election
Date, or any of the representations and warranties of the Target contained in
this Agreement that are qualified as to materiality shall fail to be true and
correct, or any such representations and warranties that are not so qualified
shall fail to be true and correct in all material respects, each as of the
Acquiror Sub's Election Date as though made on and as of the Acquiror Sub's
Election Date, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct, or true and
correct in all material aspects, as the case may be, as of such date;
(d) this Agreement shall have been terminated in accordance with its
terms;
A-1
49
(e) Acquiror Sub and the Target shall have agreed that Acquiror Sub
shall terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;
(f) there shall have occurred (i) any general suspension of, or
limitation on prices for, or trading in securities on the New York Stock
Exchange (other than limitations on hours or numbers of days of trading); (ii) a
currency moratorium on the exchange market in New York City; (iii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States; (iv) any limitation (whether or not mandatory) by any United
States government or governmental, administrative or regulatory authority or
agency, on the extension of credit by banks or other lending institutions; or
(v) a decline of at least 25% in either the Dow Xxxxx Average of Industrial
Stocks or the Standard & Poor's 500 index from the date hereof, or any material
disruption or material adverse change in the financial or capital markets
generally, or in the markets for high yield debt in particular or affecting the
syndication or funding of the Acquiror Financing;
(g) it shall have been publicly disclosed or Acquiror or Acquiror Sub
shall have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of more than 25% of the outstanding Shares has been acquired by
any corporation (including the Target or any of its Subsidiaries or affiliates),
partnership, person or other entity or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), other than Acquiror, Acquiror Sub or any of their
Affiliates; or
(h) all consents of and notices to or filings with governmental
authorities and third parties required in connection with the Transactions shall
not have been obtained or made other than those the absence of which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Target or prevent or materially delay consummation of any of the
Transactions.
The foregoing conditions are for the sole benefit of Acquiror Sub and
Acquiror and may be asserted by Acquiror Sub or Acquiror regardless of the
circumstances giving rise to any such condition or may be waived by Acquiror Sub
or Acquiror in whole or in part at any time and from time to time in their sole
discretion. The failure by Acquiror or Acquiror Sub at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right; the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
X-0
00
XXXXX X
ARTICLES OF INCORPORATION
51
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SAVANE INTERNATIONAL CORP.
1. SAVANE INTERNATIONAL CORP. (the "Corporation"), pursuant to the
provisions of Article 4.07 of the Texas Business Corporation Act, hereby adopts
amended and restated articles of incorporation which accurately copy the
articles of incorporation and all amendments thereto that are in effect to date
and as further amended by such restated articles of incorporation as hereinafter
set forth and which contain no other change in any provision thereof.
2. The articles of incorporation of the Corporation are amended by the
restated articles of incorporation by deleting in their entirety Articles One
and Four and inserting new Articles One and Four as follows:
ARTICLE ONE
The name of the corporation is Savane International Corp.
ARTICLE FOUR
The total number of shares of stock which the Corporation
shall have authority to issue is one thousand (1000) shares, all of
which shall be common stock (par value $.01 per share).
3. The articles of incorporation prior to this amendment stated that
the Corporation's registered office was 0000 Xxxxxxx Xxxx, Xx Xxxx, Xxxxx, and
that the name of the registered agent at such address was Xxxxxxx X. Xxxxx.
However, pursuant to a filing with the Secretary of State of Texas, the
registered office of the Corporation was changed to 0000 Xxxxxxx Xxxx, Xxxxxxxx
X, Xxxxx 000, Xx Xxxx, Xxxxx 00000, and the registered agent was changed to
Xxxxxxxx Xxxx, Xx.
52
4. Effective at the time of the filing with the Secretary of State of
Texas of the Restated and Amended Articles of Incorporation of the Corporation
with respect hereto, each share of the Corporation's common stock outstanding
immediately prior to such time shall without any action on the part of the
respective holders thereof, be cancelled and exchanged for ________ shares of
common stock, and each stock certificate that, immediately prior to the time of
such filing, represented shares of the Corporation's common stock shall, from
and after such time and without the necessity of presenting the same for
exchange, represent the number of whole shares of common stock as equals the
product obtained by multiplying the number of shares of common stock formerly
represented by such certificate by __________.
5. Each such amendment made by these restated articles of incorporation
has been effected in conformity with the provisions of the Texas Business
Corporation Act and such restated articles of incorporation and each such
amendment made by the restated articles of incorporation were duly adopted by
the shareholders of the Corporation on the __th day of May, 1998.
6. The number of shares outstanding was _____; the number of shares
entitled to vote on the restated articles of incorporation as so amended was
_____; the number of shares voted for such restated articles of incorporation as
so amended was ____; and the number of shares voted against such restated
articles of incorporation as so amended was _______.
7. The articles of incorporation and all amendments and supplements
thereto are hereby superseded by the following restated articles of
incorporation which accurately copy the entire text thereof as further amended
as above set forth, and no other provision is changed except as set forth above:
-2-
53
ARTICLE ONE
The name of the Corporation is Savane International Corp.
ARTICLE TWO
The period of the Corporation's duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the Corporation is organized
are: To engage in any commercial, mercantile, industrial,
manufacturing, merchandising, transportation, marine, exploration,
mining, agricultural, research, licensing, servicing or agency business
not prohibited by law, and any, some or all of the foregoing.
ARTICLE FOUR
The total number of shares of stock which the Corporation
shall have authority to issue is one thousand (1000) shares, all of
which shall be common stock (par value $.01 per share).
ARTICLE FIVE
The post-office address of the Corporation's registered office
is 0000 Xxxxxxx Xxxx, Xxxxxxxx X, Xxxxx 000, Xx Xxxx, Xxxxx 00000, and
the name of its registered agent at such address is Xxxxxxxx Xxxx, Xx.
ARTICLE SIX
The number of directors of the Corporation may be fixed by the
by-laws, but shall not be less than three (3).
ARTICLE SEVEN
The names and addresses of the directors are:
Names Address
Xxxxx Xxxxxxx-Morodo 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
Xxxxxxx X. Xxxxxxx 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
Xxxxxx Xxxxxxx 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
Xxxxxxx Xxxxx 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
Xxxxxx X. Xxxxxxxxxxx 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
-3-
54
Xxxx Xxxxxxxx 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
Xxxx X. Xxxxxxx 0000 X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000
ARTICLE EIGHT
The shareholders of the Corporation shall not be entitled to
any preemptive right to acquire unissued or treasury shares of the
Corporation.
ARTICLE NINE
Each outstanding share of common stock shall be entitled to
one vote on all matters submitted to a vote at a meeting of
shareholders. The shareholders of the corporation shall not be entitled
to the right of cumulative voting.
ARTICLE TEN
A director of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for an act or
omission in the director's capacity as a director, except to the extent
such exemption from liability or limitation thereof is not permitted
under the Texas Miscellaneous Corporation Laws Act as currently in
effect or as the same may hereafter be amended.
No amendment, modification or repeal of this Article Ten shall
adversely affect any right or protection of a director that exists at
the time of such amendment, modification or repeal.
Dated: the ____ day of May, 1998.
SAVANE INTERNATIONAL CORP.
By
-------------------------------
Xxxxxxx X. Xxxxxxxx, President
By
-------------------------------
Xxxxx X. Xxxxxxxx, Secretary
-4-
55
State of Texas )
)
County of Dallas )
I, _________, a Notary Public, do hereby certify that on this _____ day
of May, 1998, personally appeared before me _____ and _____, the President and
Secretary, respectively, of the corporation executing the foregoing document,
and being first duly sworn, acknowledged that they signed the foregoing document
in the capacities therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
-------------------------------------
Notary Public in and for the
State of Texas
-5-
