STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of July
2, 2002, is made and entered into among Berkshire Hathaway Inc., a Delaware
corporation ("Parent"), BG Merger Sub Inc., a Virginia corporation and wholly
owned subsidiary of Parent ("Merger Sub"), and each party listed under the
heading "STOCKHOLDER" on the signature page hereof (each a "Stockholder" and
collectively, the "Stockholders");
W I T N E S S E T H:
WHEREAS, as of the date hereof, each Stockholder is the
beneficial owner ("beneficial owner," "beneficial ownership," "beneficially,"
and related terms, wherever used herein, within the meaning of Section
13(d)(1) of the Securities Exchange Act of 1934, as amended) of the number of
shares of common stock, no par value ("Company Common Stock"), of Garan,
Incorporated, a Virginia corporation (the "Company"), set forth opposite the
Stockholder's name on Exhibit A hereto (the total number of shares of Company
Common Stock beneficially owned by the Stockholder, and any other Company
Common Stock or any stock option that the Stockholder acquires, as record or
beneficial holder, whether by means of purchase, dividend, distribution, or
otherwise, prior to the termination of this Agreement, together with all
associated Rights, being collectively referred to as the "Shares");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company, Parent, and Merger Sub are entering into an Agreement
and Plan of Merger (the "Merger Agreement") of even date herewith, which
(upon the terms and subject to the conditions set forth therein) provides for
the merger of Merger Sub with and into the Company (the "Merger"); and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Merger Sub have requested each Stockholder to
agree, and in order to induce Parent and Merger Sub to enter into the Merger
Agreement each Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants, and agreements hereinafter set forth,
the parties hereto hereby agree as follows:
ARTICLE I
STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES
Each Stockholder hereby severally, and not jointly, represents
and warrants to Parent and Merger Sub as follows:
1.1 Due Organization and Authorization. Stockholder (if not a
natural person) is a corporation or limited liability company duly organized,
validly existing, and in good standing under the laws of the jurisdiction in
which it is formed. Stockholder possesses the requisite power and authority
to execute, deliver, and perform this Agreement, to appoint or cause to be
appointed Merger Sub and Parent (or any nominee thereof) as its Proxy (as
defined below), and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement, the appointment of
Merger Sub and Parent (or any nominee thereof) as Stockholder's Proxy, and
the consummation of the transactions contemplated hereby have been duly
authorized by all requisite action of Stockholder. This Agreement has been
duly executed and delivered by or on behalf of Stockholder and constitutes a
legal, valid, and binding obligation of Stockholder, enforceable against
Stockholder in accordance with its terms, except as enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to creditors' rights generally and (ii) is subject to general
principles of equity. Stockholder consents to each other Stockholder's
execution, delivery, and performance of this Agreement. There is no other
beneficial owner of any of the Shares or other beneficiary or holder of any
other interest in any of the Shares whose consent is required for the
execution and delivery of this Agreement or for the consummation by
Stockholder of the transactions contemplated hereby.
1.2 No Conflicts; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Stockholder do not, and the
performance of this Agreement by Stockholder will not, (i) conflict with or
violate the certificate or articles of incorporation, bylaws or other
organizational documents of Stockholder (if Stockholder is an entity), (ii)
conflict with or violate any law applicable to Stockholder or by which
Stockholder or any of Stockholder's assets is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, acceleration, or cancellation of, or result in the
creation of a lien or encumbrance on any assets of Stockholder, including,
without limitation, the Shares, pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which Stockholder is a party or by which
Stockholder or any of Stockholder's assets is bound or affected, except in
the case of clauses (ii) and (iii), for such matters as would not prevent or
in any way impair Stockholder's ability to perform its obligations under this
Agreement.
(b) The execution and delivery of this Agreement by
Stockholder do not, and the performance of this Agreement by Stockholder will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, other than (i) filings under the HSR Act and any similar foreign
requirements, and (ii) any necessary filing under the Securities Exchange Act
of 1934, as amended.
1.3 Title to Shares. Stockholder is the beneficial owner of
the shares of Company Common Stock as set forth opposite Stockholder's name
on Exhibit A hereto (or shares beneficial ownership as set forth on
Exhibit A), free and clear of any pledge, lien, security interest, mortgage,
claim, proxy, voting restriction or other voting trust, agreement,
understanding, or arrangement of any kind, right of first refusal or other
limitation on disposition, adverse claim of ownership, or other encumbrance
of any kind, other than restrictions imposed by securities laws or pursuant
to this Agreement. Exhibit A also sets forth the record owner of the Shares.
As of the date hereof, Stockholder does not own beneficially or of record any
other shares of Company Common Stock or option to acquire any such shares.
1.4 Information for Offer Documents and Proxy Statement. None
of the information relating to Stockholder and its affiliates provided in
writing to the Company by or on behalf of Stockholder or its affiliates
specifically for inclusion in the Proxy Statement will, at the times the
Proxy Statement is filed with the SEC or are first published, sent or given
to stockholders of the Company, or at the time of the special meeting of
stockholders to consider the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
1.5 Acknowledgment. Stockholder, on behalf of itself and its
affiliates, acknowledges and agrees that neither it nor they shall be paid or
shall otherwise be entitled to any broker's, finder's, financial advisor's,
or other similar fee or commission in connection with the transactions
contemplated hereby or by the Merger Agreement.
ARTICLE II
STOCKHOLDERS' COVENANTS
Each Stockholder hereby severally, and not jointly, covenants to
Parent and Merger Sub as follows:
2.1 Voting of Shares. Stockholder hereby agrees that from the
date hereof until the termination of the Agreement pursuant to Section 3.2
(the "Term"), at any meeting of the stockholders of the Company however
called and in any action by written consent of the stockholders of the
Company, in each case before the Effective Time, Stockholder shall vote (or
direct the record owner of its Shares to vote) its Shares (i) in favor of the
Merger and the Merger Agreement, (ii) if so directed by Parent, against any
Takeover Proposal and against any proposal for action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or which
could reasonably be expected to result in any of the Company's obligations
under the Merger Agreement not being fulfilled, any change in the composition
of the board of directors of the Company (except as contemplated by the
Merger Agreement), any change in the present capitalization of the Company or
any amendment to the Company's corporate structure or business, or any other
action which could reasonably be expected to impede, interfere with, delay,
postpone or materially adversely affect the transactions contemplated by this
Agreement or the Merger Agreement or the likelihood of such transactions
being consummated, and (iii) in favor of any other matter necessary for
consummation of the transactions contemplated by the Merger Agreement which
is considered at any such meeting of shareholders or in such consent, and in
connection therewith to execute any documents which are necessary or
appropriate in order to effectuate the foregoing, including documents
enabling Parent and Merger Sub or their nominee(s) to vote the Shares
directly.
2.2 Proxy. Stockholder hereby revokes all prior proxies or
powers of attorney with respect to any of its Shares. During the Term,
Stockholder hereby constitutes and appoints Parent and Merger Sub, or any
nominee designated by Parent and Merger Sub, with full power of substitution
and resubstitution at any time during the Term, as its true and lawful
attorney and proxy ("Proxy"), for and in its name, place, and stead, in the
Proxy's discretion to demand that the Secretary of the Company call a special
meeting of the stockholders of the Company for the purpose of considering any
matter referred to in Section 2.1 and to vote each Share held by Stockholder
as its Proxy in respect of any such matter, at every annual, special,
adjourned, or postponed meeting of the stockholders of the Company, including
the right to sign its name as stockholder (or to direct the record owner to
sign its name as stockholder) to any consent, certificate, or other document
relating to the Company that the law of the Commonwealth of Virginia might
permit or require. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE
AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM. Stockholder will take such
further action and execute such other documents as may be necessary to
effectuate the intent of this Section 2.2.
2.3 Restrictions on Transfer, Proxies and Non-Interference.
Stockholder hereby agrees, until the termination of this Agreement pursuant
to Section 3.2, and except as contemplated hereby, not to (i) sell, transfer,
pledge, encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of, any of the
Shares (other than to an affiliate of such Stockholder who agrees to comply
with the terms and provisions hereof with respect to the transferred Shares),
(ii) grant any proxies, deposit any Shares into a voting trust or enter into
a voting agreement with respect to any Shares, or (iii) take any action that
would make any representation or warranty of Stockholder contained herein
untrue or incorrect in any material respect or have the effect of preventing
or disabling Stockholder from performing Stockholder's obligations under this
Agreement.
2.4 No Solicitation. Stockholder covenants and agrees that,
during the Term, it shall not, directly or indirectly, solicit, initiate,
knowingly encourage, or take any other action designed to facilitate any
inquiries or the making of any proposal from any person (other than from
Parent or Merger Sub) relating to any transaction that constitutes a Takeover
Proposal. Stockholder further covenants and agrees that, during the Term, it
shall not participate in any discussions or negotiations (except with Parent
or Merger Sub) regarding, or furnish to any person (other than Parent or
Merger Sub or if required by law or compelled by subpoena or similar legal
process) any information with respect to, or otherwise cooperate in any way
with, or assist or participate in or facilitate or encourage, any effort or
attempt by any person (other than Parent and Merger Sub) to make, any
transaction that may constitute a Takeover Proposal. Stockholder immediately
shall cease and cause to be terminated any existing discussions or
negotiations of Stockholder and its agents or other representatives with any
person (other than Parent and Merger Sub) with respect to any of the
foregoing. Stockholder shall notify Parent and Merger Sub promptly of any
specific proposal or offer made to Stockholder relating to a Takeover
Proposal, or any substantive inquiry or contact made to Stockholder
specifically relating to a Takeover Proposal, and shall, in any such notice
to Parent and Merger Sub, indicate in reasonable detail the identity of the
person making such proposal, offer, inquiry, or contact and the material
terms and conditions of such proposal, offer, inquiry, or contact.
Notwithstanding the foregoing, if Stockholder or (if Stockholder is an
entity) any officer, director, partner, agent or representative of
Stockholder is an officer of the Company or a member of the Board of
Directors of the Company, such Stockholder may, in his or her capacity as
such, take such actions, if any, as are permitted by Section 5.2 of the
Merger Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Definitions. Terms used but not otherwise defined in this
Agreement, have the meanings assigned to such terms in the Merger Agreement,
as it may be amended from time to time; provided, that no amendments to the
Merger Agreement adverse to the interests of a Stockholder shall apply to
this Agreement unless consented to in writing by such Stockholder.
3.2 Termination. This Agreement shall terminate and be of no
further force and effect (i) by the written mutual consent of the parties
hereto or (ii) automatically and without any required action of the parties
hereto upon the earliest to occur of (A) the Effective Time, (B) the
termination of the Merger Agreement in accordance with its terms, (C) the
amendment of the Merger Agreement without the written consent of the
Stockholders that (x) provides for a reduction in the Merger Consideration
below $60.00 or (y) changes the form of the Merger Consideration to other
than cash, and (D) December 31, 2002. Notwithstanding the foregoing, the
provisions of this Agreement shall survive and continue in full force and
effect with respect to the Stockholder designated on Exhibit B hereto and to
that number of Shares beneficially owned by such Stockholder shown on Exhibit
B hereto for a period of twelve (12) months after the date of termination of
the Merger Agreement pursuant to Section 7.1(c)(i) or (ii) or 7.1(d)(i) or
(ii) thereof to the extent that such termination relates to or occurs
following a Takeover Proposal that is initially communicated to the Company
or publicly disseminated after August 7, 2002. The termination of this
Agreement shall not relieve any party hereto from any liability for any
breach of this Agreement prior to termination.
3.3 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the
party incurring such costs and expenses.
3.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given (i) upon hand
delivery, (ii) upon confirmation of receipt of facsimile transmission, (iii)
upon confirmed delivery by a standard overnight courier, or (iv) after five
(5) business days if sent by registered or certified mail, postage prepaid,
return receipt requested, to the following address or to such other address
that a party hereto might later specify by like notice:
(a) If to Parent or Merger Sub, to:
Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy: 000-000-0000
with copies to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: R. Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
(b) If to Stockholders, to:
c/o Garan, Incorporated
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
with copies to:
Xxxxxxxxxx Xxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
3.5 Severability. In the event that any provision in this
Agreement is held invalid, illegal, or unenforceable in a jurisdiction, such
provision shall be modified or deleted as to the jurisdiction involved but
only to the extent necessary to render the same valid, legal, and
enforceable. The validity, legality, and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby nor
shall the validity, legality, or enforceability of such provision be affected
thereby in any other jurisdiction.
3.6 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect thereto.
3.7 Assignment. No party may assign or delegate this Agreement
or any right, interest, or obligation hereunder, provided that Parent or
Merger Sub, in its sole discretion, may assign or delegate its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent without obtaining the consent of any other party hereto; provided
further that any such assignment or delegation shall not relieve Parent or
Merger Sub from liability hereunder.
3.8 No Third-Party Beneficiaries. This Agreement shall be
binding upon, inure solely to the benefit of, and be enforceable by only the
parties hereto, their respective successors, and permitted assigns, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any person, other than the parties hereto, their respective successors,
and permitted assigns, any rights, remedies, obligations, or liabilities of
any nature whatsoever.
3.9 Waiver of Appraisal Rights. Each Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger.
3.10 Further Assurance. Each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
3.11 Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to Stockholder's Shares
and shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or
otherwise. Notwithstanding any transfer of Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement.
3.12 No Waiver. The failure of any party hereto to exercise any
right, power, or remedy provided under this Agreement or otherwise available
at law or in equity, the failure of any party hereto to insist upon
compliance by any other party hereto with its obligations hereunder, or the
existence of any custom or practice of the parties at variance with the terms
hereof shall not constitute a waiver by such party of its right to exercise
any such or other right, power, or remedy or to demand such compliance.
3.13 Specific Performance. The parties hereto acknowledge that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, the parties agree that an aggrieved
party shall be entitled to injunctive relief to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court having jurisdiction, this being in addition to any other right or
remedy to which such party may be entitled under this Agreement, at law, or
in equity.
3.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Virginia,
without giving effect to provisions thereof relating to conflicts of law.
3.15 Headings. The descriptive headings in this Agreement were
included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
3.16 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be executed in a manner sufficient to bind them as of the date
first written above.
Berkshire Hathaway Inc.
By: /s/ Xxxxxx X. Buffet
----------------------------
Its:
---------------------------
BG Merger Sub Inc.
By: /s/ Xxxx X. Hamburg
----------------------------
Its:
---------------------------
Stockholders:
/s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
--------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
Exhibit A
No. of Shares of
Name of Beneficial No. of Shares of Company Common Stock
and Record Owner Company Common Stock Subject to Option
------------------ -------------------- --------------------
Xxxxxx Xxxxx 62,412
Xxxxxx Xxxxxx 140,175 20,000
Xxxxxxx Xxxxxxxxxxxx 673,738
Xxxxxxx X. Xxxxxx 62,425
Exhibit B
No. of Shares of
Name of Beneficial and Record Owner Company Common Stock
----------------------------------- --------------------
Xxxxxxx Xxxxxxxxxxxx 447,873 Shares
