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EXHIBIT 2
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A G R E E M E N T A N D P L A N O F M E R G E R
AMONG
RUSSELL CORPORATION
TUBECO, INC.
DESOTO MILLS, INC.
AND
CERTAIN SHAREHOLDERS OF DESOTO MILLS, INC.
____________________
February 25, 1994
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.1 Merging Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.2 Articles of Merger and Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.3 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.4 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.5 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Section 1.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
ARTICLE II
CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . II-1
Section 2.1 Capital Stock of Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.2 Capital Stock of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.3 Conversion of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.4 Closing Balance Sheet; Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
AND SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . III-1
Section 3.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
Section 3.2 Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
Section 3.3 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
Section 3.4 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3
Section 3.5 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-5
Section 3.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-6
Section 3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-6
Section 3.8 Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8
Section 3.9 Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8
Section 3.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8
Section 3.11 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8
Section 3.12 Lines of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8
Section 3.13 Trademarks, Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-9
Section 3.14 Title to Property; Condition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-9
Section 3.15 Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11
Section 3.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11
Section 3.17 Employees; Payroll Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11
Section 3.18 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11
Section 3.19 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-12
Section 3.20 No Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-12
Section 3.21 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-12
Section 3.22 No Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-13
Section 3.23 No Undue Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-13
Section 3.24 No Increase in Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-13
Section 3.25 Sales Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
Section 3.26 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
Section 3.27 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
Section 3.28 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
Section 3.29 Material Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
Section 3.30 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
Section 3.31 Correctness on Determination Date and Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . III-15
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS . . . . . . . . . . . . . IV-1
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RUSSELL AND SUBSIDIARY . . . . . . . . . . . V-1
Section 5.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.2 Approvals; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.3 No Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.4 Material Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.5 No Consents Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.6 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
ARTICLE VI
COVENANTS OF COMPANY AND SHAREHOLDERS . . . . . . . . . . . . . . . . VI-1
Section 6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
Section 6.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2
Section 6.3 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2
Section 6.4 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2
Section 6.5 Business Intact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
Section 6.6 Payment of Obligations to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
Section 6.7 Operation of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
Section 6.8 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
Section 6.9 No Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
ARTICLE VII
POST-CLOSING COVENANTS OF SHAREHOLDERS . . . . . . . . . . . . . . VII-1
Section 7.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
Section 7.2 No Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . VIII-1
Section 8.1 Indemnity by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
Section 8.2 Indemnity by Russell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
ARTICLE IX
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . IX-1
Section 9.1 Expenses of Shareholders and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
Section 9.2 Expenses of Russell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
ARTICLE X
THE CLOSING . . . . . . . . . . . . . . . . . . . . . . X-1
Section 10.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
Section 10.2 Conditions of Obligations of Russell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
Section 10.3 Conditions of Obligations of Company and Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . X-3
Section 10.4 Additional Conditions of the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-5
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ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . XI-1
Section 11.1 Warranties of the Parties Shall Survive the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
Section 11.2 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
Section 11.3 Press Releases, Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
Section 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
Section 11.5 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
Section 11.6 Table of Contents; Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.7 Incorporation of Appendices and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.8 Entire Agreement; Amendment; Modification; Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.10 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.12 Preparation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.14 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
GLOSSARY
LIST OF EXHIBITS
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"AGREEMENT") is made as of the 25th day of February, 1994, by and among Russell
Corporation, a corporation organized under the laws of the State of Alabama
(hereinafter referred to as "RUSSELL"), Tubeco, Inc., a corporation organized
under the laws of the State of Alabama (hereinafter referred to as
"SUBSIDIARY"), DeSoto Mills, Inc., a corporation organized under the laws of
the State of Alabama (hereinafter referred to as "COMPANY"), and John K.
Tcherneshoff ("TCHERNESHOFF"), Robert H. Yoe, III ("YOE") and Susan T. McCurdy
("MCCURDY") (Tcherneshoff, Yoe and McCurdy being hereinafter referred to
collectively as "SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Russell, Subsidiary and Company,
respectively, deem it advisable for the general welfare and advantage of their
respective corporations and their respective shareholders that Subsidiary merge
with and into Company pursuant to this Agreement in a transaction that
qualifies as a reorganization pursuant to Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (hereinafter referred to as the
"CODE") and pursuant to the Articles of Merger between Company and Subsidiary,
in substantially the form of Exhibit A hereto (hereinafter referred to as the
"ARTICLES OF MERGER"), and pursuant to applicable law (such transaction being
hereinafter referred to as the "MERGER");
WHEREAS, Russell, as the sole shareholder of Subsidiary, has approved, or
prior to the Closing (as defined in Section 10.1) will approve, the provisions
of this Agreement and the transactions contemplated hereby;
WHEREAS, Shareholders, together with Sandy Reece ("REECE") constituting
the owners of all of the issued and outstanding capital stock of Company, have
approved, or prior to the Closing (as defined in Section 10.1) will approve,
the provisions of this Agreement and the transactions contemplated hereby; and
WHEREAS, Russell will deliver, or cause to be delivered, to Shareholders
and Reece the consideration to be paid pursuant to the Merger in accordance
with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, agreements, covenants,
warranties and conditions herein contained, the parties hereto agree, in
accordance with the applicable provisions of the law of the State of Alabama,
that (i) Subsidiary shall be merged into Company; (ii) the outstanding shares
of Company Common Stock, as defined in Section 2.2, shall be exchanged for
shares of Russell Common Stock, as defined in Section 2.2; and (iii) the terms
and conditions of the Merger, which the parties covenant to observe, keep and
perform, and the mode of carrying the same into effect are and shall be as
hereinafter set forth:
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ARTICLE I
THE MERGER
Section 1.1 Merging Corporations. At the Effective Time, as
defined in Section 1.2, Subsidiary shall be merged into Company, and Company
shall be the surviving corporation (hereinafter referred to as the "SURVIVING
CORPORATION"), which shall continue to be governed by the laws of the State of
Alabama. The name of the Surviving Corporation shall be DeSoto Mills, Inc.
Section 1.2 Articles of Merger and Effective Time. As promptly
as practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article X, and provided this Agreement shall not have
been terminated as provided in Section 11.2, the parties hereto shall cause the
Merger to be consummated by filing the Articles of Merger with the Secretary of
State of Alabama. The Merger shall become effective (hereinafter referred to
as the "EFFECTIVE TIME") at the date and time of the filing of the Articles of
Merger with the Secretary of State of Alabama.
Section 1.3 Effect of Merger. At the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of Subsidiary and
Company. All property, real, personal and mixed, and all debts due on whatever
account, and all other choses in action and all and each and every other
interest of or belonging to or due to Subsidiary or Company shall be taken and
deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any interest therein,
vested in Subsidiary or Company shall not revert or be in any way impaired by
reason of the Merger. At the Effective Time, the Surviving Corporation shall
thenceforth be responsible and liable for all the liabilities and obligations
of Subsidiary and Company, and any claim existing or action or proceeding
pending by or against Subsidiary or Company may be prosecuted as if the Merger
had not taken place, or the Surviving Corporation may be substituted in place
of Subsidiary or Company. Neither the rights of creditors nor any liens upon
the property of Subsidiary or Company shall be impaired by the Merger.
Section 1.4 Articles of Incorporation. The Articles of
Incorporation of Subsidiary, as in effect immediately prior to the Effective
Time, shall become the Articles of Incorporation of the Surviving Corporation.
Section 1.5 Bylaws. The bylaws of Subsidiary, as in effect
immediately prior to the Effective Time, shall become the bylaws of the
Surviving Corporation.
Section 1.6 Directors and Officers. The directors and officers
of Subsidiary in office immediately prior to the Effective Time shall become
the directors and officers of the Surviving Corporation.
Section 1.7 Further Assurances. From and after the Effective
Time, as and when requested by the Surviving Corporation, the officers and
directors of Company last in office shall execute and deliver, or cause to be
executed and delivered in the name of Company such deeds and other instruments
and take or cause to be taken such further or other actions as shall be
necessary in order to vest or perfect in or confirm of record or otherwise to
the Surviving Corporation title to and possession of all of the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of Company.
[Article I ends here. The next
page of this Agreement is II-1.]
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ARTICLE II
CONVERSION OF SHARES
Section 2.1 Capital Stock of Subsidiary. Subsidiary has an
authorized capital stock consisting of 100 shares of common stock, par value
$1.00 per share (hereinafter referred to as "SUBSIDIARY STOCK"), of which 100
shares are issued and outstanding. Each one share of Subsidiary Stock issued
and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall continue to represent one share of common stock of the
Surviving Corporation.
Section 2.2 Capital Stock of Company. Company has authorized
capital stock consisting of 7,100 shares of common stock, par value $1.00 per
share, of which 5,556 shares are issued and outstanding and 1,544 shares are
held as treasury stock (hereinafter referred to as "COMPANY COMMON STOCK").
Shareholders and Reece currently own all of the issued and outstanding shares
of Company Common Stock. The number of shares of Company Common Stock owned
and held of record by each such Shareholder and Reece is set forth in Exhibit
2.2.
Section 2.3 Conversion of Company Common Stock. As of the
Effective Time and by virtue of the Merger and without any further action on
the part of Subsidiary, Company or Shareholders:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall, subject to Section
2.3(c), be converted into and exchanged for such number of shares of common
stock of Russell, par value $0.01 per share (hereinafter referred to as
"RUSSELL COMMON STOCK"), as shall equal the quotient derived by dividing (x) by
(y), where (x) is the result obtained by dividing Ten Million & No/100 Dollars
($10,000,000.00) by the average closing sales price per share of common stock
of Russell as reported on the New York Stock Exchange for the ten (10) trading
days immediately preceding the Closing Date, and (y) is Five Thousand Five
Hundred Fifty- Six (5,556); provided, however, that at the option of Russell,
the number of shares of Russell Common Stock issued in the Merger shall be
limited to Four Hundred Thousand (400,000) shares, irrespective of the result
obtained from the application of the foregoing formula; provided further,
however, that Shareholders shall be under no obligation to consummate the
transactions contemplated by this Agreement unless the value of the Russell
Common Stock to be issued in the Merger, valued at the average closing sales
price per share of common stock of Russell as reported on the New York Stock
Exchange for the ten (10) trading days immediately preceding the Closing Date,
equals or exceeds $10,000,000, as set forth in Section 10.3(i). Subject to the
provisions of Section 2.4, the shares of Russell Common Stock to be issued
hereunder shall be distributed among Shareholders and Reece on a pro rata
basis, based upon (i) the aggregate number of shares of Russell Common Stock to
be issued hereunder and (ii) the number of shares of Company Common Stock owned
beneficially and held of record by each Shareholder and Reece as set forth in
Exhibit 2.2; provided, further, that the shares of any shareholder of Company
exercising his or her dissenter's rights under Alabama law with respect to such
shares shall not be converted into and exchanged for Russell Common Stock, and
in such event, the number of shares of Russell Common Stock to be issued in the
Merger, including the maximum total number of shares of Russell Common Stock to
be issued in the Merger, shall be decreased accordingly.
(b) Each share of Company Common Stock held by Company
as treasury stock, if any, shall be canceled and retired and no consideration
shall be paid or delivered in exchange therefor.
(c) No fractional shares of Russell Common Stock shall
be issued by virtue of the Merger. A shareholder of Company who would
otherwise be entitled to receive a fraction of one share of Russell Common
Stock by virtue of the Merger shall receive, in lieu thereof, the cash value of
such fractional share determined by multiplying the average closing sales price
per share of common stock of Russell as reported on the New York Stock Exchange
for the ten (10) trading days immediately preceding the Closing Date by such
fraction.
(d) At the Effective Time, the stock transfer books of
Company shall be closed as to holders of shares of Company Common Stock
immediately prior to the Effective Time and no transfer of shares of Company
Common Stock by any such holder shall thereafter be made or recognized, and
each outstanding certificate formerly representing shares of Company Common
Stock shall ipso facto, and without any action on the part of any holder
thereof, no longer represent shares of Company Common Stock and outstanding
certificates of shares of
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Company Common Stock shall thereafter solely represent the right to receive the
consideration contemplated by this Agreement.
(e) In the event that any Shareholder or Reece is unable
to deliver the certificate which represents such shareholder's shares of
Company Common Stock, Russell, in the absence of actual notice that any shares
of Company Common Stock theretofore represented by any such certificate have
been acquired by a bona fide purchaser, may, in its discretion, deliver to such
shareholder the consideration, subject to Section 2.4, contemplated by this
Agreement and the amount of cash representing fractional shares of Russell
Common Stock to which such holder is entitled in accordance with the provisions
of this Agreement upon the presentation of all of the following:
(i) An affidavit or other evidence to the reasonable
satisfaction of Russell that any such certificate
has been lost, wrongfully taken or destroyed;
(ii) Such security or indemnity as may be reasonably
requested by Russell to indemnify and hold Russell
harmless; and
(iii) Evidence to the satisfaction of Russell that such
shareholder is the owner of the shares of Company
Common Stock theretofore represented by each
certificate claimed by such holder to be lost,
wrongfully taken or destroyed and that such holder
is the person who would be entitled to present each
such certificate for exchange pursuant to this
Agreement.
(f) No Shareholder or Reece shall be entitled to receive
any dividends or distributions declared or made with respect to the Russell
Common Stock with a record date before the Effective Time. Neither the
consideration contemplated by this Agreement, any amount of cash representing
fractional shares of Russell Common Stock nor any dividend or other
distribution with respect to Russell Common Stock where the record date thereof
is on or after the Effective Time shall be paid to the holder of any
unsurrendered certificate or certificates representing shares of Company Common
Stock, and Russell shall not be obligated to deliver any of the consideration
contemplated by this Agreement, any amount of cash representing fractional
shares of Russell Common Stock or any such dividend or other distribution with
respect to Russell Common Stock until such shareholder shall surrender the
certificate or certificates representing shares of Company Common Stock as
provided for by the Agreement. Subject to applicable laws, following surrender
of any such certificate or certificates, there shall be paid to the holder of
the certificate or certificates then representing Russell Common Stock issued
in the Merger, without interest at the time of such surrender, the
consideration, subject to Section 2.4, contemplated by this Agreement, the
amount of any cash representing fractional shares of Russell Common Stock and
the amount of any dividends or other distributions with respect to Russell
Common Stock to which such holder is entitled as a holder of Russell Common
Stock.
(g) If any of the consideration due or other payments to
be paid or delivered to any Shareholder or Reece is not paid or delivered
within the time period specified by any applicable laws concerning abandoned
property, escheat or similar laws, and if such failure to pay or deliver such
consideration occurs or arises out of the fact that such property is not
claimed by the proper owner thereof, Russell shall be entitled to dispose of
any such consideration or other payments in accordance with applicable laws
concerning abandoned property, escheat or similar laws. Any other provision of
this Agreement notwithstanding, none of Company, Russell, Subsidiary, nor any
other person acting on their behalf shall be liable to any Shareholder or Reece
for any amount paid or property delivered in good faith to a public official
pursuant to and in accordance with any applicable abandoned property, escheat
or similar law.
II-2
10
Section 2.4 Closing Balance Sheet; Escrow.
(a) The number of shares of Russell Common Stock to be
received by Shareholders and Reece in the Merger is conditioned upon Company
having a "Tangible Net Worth" (as hereinafter defined) as of the close of
business on March 31, 1994, or in the event the Closing does not occur on April
1, 1994, such other date as may be determined by Russell and Company to be
appropriate (hereinafter referred to as the "DETERMINATION DATE"), of
$4,400,000. For purposes of this Agreement, "TANGIBLE NET WORTH" means the
amount realized when the aggregate amount of all tangible assets of Company
(specifically excluding any good will or value assigned to intangibles such as
licenses or similar items) is reduced by all liabilities of Company. Promptly
following the Closing Date, Russell shall cause to be prepared by its
independent certified public accountants (hereinafter referred to as "RUSSELL'S
ACCOUNTANTS") as of the Determination Date an audited balance sheet of Company
(hereinafter referred to as the "CLOSING BALANCE SHEET"), in accordance with
generally accepted accounting principles consistent with Company's prior
practices (including appropriate accounting for accrued taxes, sick days,
vacation, doubtful accounts, any payments required under the Executive
Employment Contract, dated as of December 30, 1992, between Company and Robert
H. Yoe, III and similar items). Russell's final draft of the Closing Balance
Sheet, and such other documents and work papers as Shareholders and
Shareholders' independent certified public accountants (hereinafter referred to
as the "SHAREHOLDERS' ACCOUNTANTS") may reasonably request shall be delivered
to the Shareholders' Accountants no later than May 2, 1994 for review.
Shareholders and Shareholders' Accountants shall, within thirty (30) days of
delivery to them by Russell's Accountants of Russell's final draft of the
Closing Balance Sheet, present any adjustments proposed by Shareholders to
Russell's final draft of the Closing Balance Sheet to the attention of Russell.
Any disagreements between Russell and Shareholders with respect to the proposed
adjustments to the final draft of the Closing Balance Sheet shall be referred
to a firm of independent certified public accountants mutually acceptable to
the parties, or if the parties cannot agree on such firm to, Coopers & Lybrand,
Birmingham, Alabama (in either case, the "REFERRAL FIRM"), for final
determination if an agreement cannot be reached by Russell and Shareholders,
which final determination shall be made by the Referral Firm on or before June
15, 1994 (hereinafter referred to as the "FINAL DETERMINATION DATE"). The
final determination of the adjustments to the Closing Balance Sheet made by the
Referral Firm shall be binding upon Russell and Shareholders. Upon the final
determination of the Closing Balance Sheet, either by agreement by Russell and
Shareholders or a final determination by the Referral Firm, any adjustments
needed to cause the agreed draft or determined draft of the Closing Balance
Sheet as certified and published to reflect that the Tangible Net Worth of
Company at the Determination Date was $4,400,000 shall be made as follows:
(i) If the agreed or determined draft of the
Closing Balance Sheet shows the Tangible Net Worth of Company
as of the Determination Date to be more than $4,400,000,
Russell shall pay or cause to be paid to Shareholders and
Reece an amount equal to the amount by which the Tangible Net
Worth exceeds $4,400,000 (hereinafter referred to as the
"EXCESS PAYMENT"), regardless of whether the payment of such
amount, when added to the consideration received by the
Shareholders and Reece under Section 2.3(a) herein, results in
Shareholders and Reece receiving consideration in amount
greater than $10,000,000. The Excess Payment shall be made
either in cash or in the form of additional shares of Russell
Common Stock, subject to the following limitations: (A) the
amount of the Excess Payment which may be distributed out of
the cash assets of the Surviving Corporation shall not exceed
nine percent (9%) of the sum of: (I) the fair market value of
the total number of shares of Russell Common Stock to be
issued in the Merger as determined under Section 2.3(a); (II)
the amount of cash to be paid to dissenting shareholders, if
any; (III) the total amount of cash to be paid in lieu of
fractional shares in accordance with Section 2.3(c); and (IV)
the aggregate amount of any portion of the Excess Payment to
be made by Russell (the sum of items (I), (II), (III) and (IV)
is hereinafter referred to as the "TOTAL PURCHASE PRICE"); (B)
the maximum amount of cash which Russell may pay towards the
Excess Payment shall not exceed twenty percent (20%) of the
Total Purchase Price; (C) Section 2.3(a) hereof
notwithstanding, the amount of any Excess Payment remaining
after reduction by items (A) and (B) of this subsection (i)
shall be paid by Russell in
II-3
11
the form of additional shares of Russell Common Stock, valued
in accordance with Section 2.3(a) above. The Excess Payment
shall be made no later than ten (10) days following the
Determination Date.
(ii) If the agreed or determined draft of the
Closing Balance Sheet shows the Tangible Net Worth of Company
at the Determination Date to be less than $4,400,000, the
amount of any deficit shall (i) first be paid from the escrow
account established pursuant to the Escrow Agreement, referred
to in subparagraph (b) of this Section 2.4, in such number of
shares of Russell Common Stock issued in the Merger as shall
equal in value the amount of any deficit and (ii) thereafter,
to the extent necessary, be paid by Shareholders. For
purposes of any payment to Russell under this paragraph, the
shares of Russell Common Stock shall be treated as having the
same value on the Determination Date and on the date of
disbursement under the Escrow Agreement as the value given to
such shares on the Closing Date.
(b) At Closing, Russell shall deliver to Shareholders
and Reece seventy-five percent (75%) of the Russell Common Stock issued in the
Merger in accordance with the terms of this Agreement, and shall further
deliver to AmSouth Bank N.A., Birmingham, Alabama, as Escrow Agent (hereinafter
referred to as the "ESCROW AGENT"), under the Escrow Agreement attached hereto
as Exhibit 2.4 (hereinafter referred to as the "ESCROW AGREEMENT"), twenty-five
percent (25%) of the Russell Common Stock issued in the Merger for disbursement
pursuant to and in accordance with the terms of the Escrow Agreement and this
Agreement.
[Article II ends here. The next
page of this Agreement is III-1.]
II-4
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
AND SHAREHOLDERS
Company and each Shareholder warrants and represents to and
covenants with Russell and Subsidiary and each of their respective successors
and assigns (which warranties, representations and covenants together with the
other warranties, representations and covenants of Company or Shareholders set
forth in this Agreement or contained in any exhibit hereto, or in any
certificate or other document required to be delivered to Russell or Subsidiary
by Company or any Shareholder pursuant to this Agreement, shall, except as
otherwise expressly provided herein, survive the Merger) as follows:
Section 3.1 Corporate Status.
(a) Domicile, Powers and Qualification. Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Alabama, with full power and authority, including all
licenses, permits, authorizations and approvals (corporate, governmental or
otherwise) necessary to own its properties and conduct its business as such now
exist or are being conducted. Company is not qualified to do business as a
foreign corporation in any jurisdiction, except as set forth in Exhibit 3.1(a)
hereto, and neither the nature of the property owned, used or operated by
Company, nor the nature of the activities conducted by Company requires Company
to so qualify in any other jurisdiction. Company is in good standing in each
such jurisdiction in which it is so qualified to do business. Company and
Shareholders have delivered to Russell a true and complete copy of the
Certificate of Incorporation and bylaws and other instruments respecting the
governance of Company in effect as of the date hereof.
(b) Capital Stock. (i) The authorized capital stock of
Company consists of 7,100 shares of common stock, par value $1.00 per share,
5,556 shares of which have been duly and validly issued and are outstanding,
and are fully paid and nonassessable, and 1,544 of which are held as treasury
stock by Company. There are no outstanding rights, options or privileges
(whether by purchase, conversion of another security issued by Company or
otherwise) of any kind to acquire any additional shares of the capital stock of
Company. There are no other securities of any kind issued by Company which are
outstanding.
(ii) Shareholders and Reece in the aggregate own,
and on the Closing Date will own, all of the capital stock of Company, free and
clear of all liens, encumbrances, options, proxies, equities and claims. All
of such stock is, and on the Closing Date will be, duly and validly authorized,
issued and outstanding, and fully paid and nonassessable.
(c) Corporate and Other Records. The minute books of
Company contain reasonably complete and accurate records of all meetings and
other corporate actions in lieu of meetings of the directors, committees of the
directors, and the shareholders thereof.
All accounts, books, ledgers and other records of whatsoever
kind of Company have been properly kept and are up to date, and there are no
material inaccuracies or discrepancies of any kind known to Company or
Shareholders contained or reflected therein, and they reflect reasonably
accurately and completely all transactions of Company with which they should
deal. Company does not have any of its records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or
partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of Company.
(d) Authorization. All requisite action, corporate or
otherwise, required to be taken by Company or any Shareholder to authorize the
transactions contemplated by this Agreement has been taken, or in the case of
Company, will be taken prior to the Closing, and this Agreement constitutes,
and each other agreement executed in connection with the consummation of the
transactions contemplated hereby will constitute, a valid and binding agreement
enforceable against Company and each Shareholder in accordance with the terms
hereof or thereof. Except as set forth in Exhibit 3.1(d), neither the
execution and delivery of this Agreement or any such
III-1
13
other agreement, nor the performance of the obligations of Company or of any
Shareholder hereunder or thereunder, nor the consummation of the transactions
contemplated hereby, will conflict with or result in the breach of, or
constitute a default under, or result in the assessment of any liquidated
damages or the creation or imposition of any lien upon the capital stock of
Company or upon any of the assets of Company under any applicable law or any
contract, instrument or agreement to which Company or any Shareholder is a
party or by which Company or any Shareholder may be bound or to which the
capital stock of Company or any of the assets of Company may be subject.
Section 3.2 Financial Data.
(a) Financial Statements. Company and Shareholders have
heretofore delivered to Russell
(i) the balance sheets of Company for each of the
fiscal years of Company in the three (3) year period ended
March 31, 1993 (all such balance sheets being hereinafter
referred to collectively as the "BALANCE SHEETS"), and
(ii) the related statements of earnings,
shareholders' equity and cash flows and accompanying notes,
for each of said years,
all such documents being hereinafter referred to collectively as the "FINANCIAL
STATEMENTS." Each of the Financial Statements of Company for the years ended
March 31, 1993 has been audited or reviewed by Borders & Associates, P.C.,
Company's independent certified public accountants, and the reports of said
accountants thereon have been delivered to Russell by Company and Shareholders.
Company and Shareholders have also heretofore delivered to Russell the balance
sheets of Company as of September 30, 1993, (the "SEPTEMBER 30, 1993 BALANCE
SHEET") and September 30, 1992, and the related statements of earnings,
shareholders' equity and cash flows for the six-month periods then ended (such
balance sheets, statements of earnings, shareholders equity and cash flows
being hereinafter referred to collectively as the "INTERIM FINANCIALS").
The information contained in each of the Financial Statements
and Interim Financials presents fairly the financial position and results of
operations of Company as of the dates and for the periods specified, in
accordance with generally accepted accounting principles in each case applied
on a basis consistent with that of the prior periods.
(b) Changes in Financial Condition. Since September 30,
1993, and through the date of execution of this Agreement, and through the
Closing Date, there has not occurred and there will not occur any materially
adverse change in the financial condition of Company.
Section 3.3 Liabilities. At September 30, 1993, and on the date
of the execution of this Agreement, and as of the Closing Date, Company neither
had nor will have any liabilities or obligations of any nature, whether fixed,
accrued, absolute, contingent or otherwise, other than
(a) liabilities fully reflected or reserved against in
the September 30, 1993 Balance Sheet;
(b) liabilities arising after September 30, 1993, out of
contracts or other agreements described, or expressly excepted from
the description, in Exhibits 3.4(a)(i) through 3.4(a)(x), but only to
the extent not properly accruable as of September 30, 1993;
(c) liabilities specifically described in Exhibit 3.3;
and
(d) liabilities incurred since September 30, 1993, in
the ordinary and regular course of business which in the aggregate now
have, and as of the Closing Date will have, no material adverse effect
on Company's financial condition or on the conduct of its business.
III-2
14
Except and to the extent reflected or reserved against in the
September 30, 1993 Balance Sheet, Company was not, is not now, and at the time
of the Closing will not be, directly or indirectly liable upon or with respect
to, or obligated in any other way to provide funds in respect of or to
guarantee or assume, any debt, dividend or other liability or obligation of any
person, corporation, association, partnership or other entity (by discount,
repurchase agreement or otherwise) except for endorsements made in the ordinary
and regular course of business in connection with the deposit of items for
collection. Shareholders know, and at the time of Closing will know, of no
basis for the assertion against Company of any liabilities or obligations not
adequately reflected or reserved against in the September 30, 1993 Balance
Sheet or set forth specifically as such in Exhibits 3.4(a)(i) through
3.4(a)(x), except for liabilities incurred since September 30, 1993, in the
ordinary and regular course of business, but which in the aggregate now have,
and at the Closing will have, no material adverse effect on Company's financial
condition or on the conduct of its business. Except as described in Exhibit
3.3 to this Agreement, as of September 30, 1993, and as of the date hereof,
Company has, and as of the Determination Date and the Closing Date Company will
have, no liability or obligation of any nature, whether fixed, accrued,
absolute, contingent or otherwise, which cannot be immediately prepaid or
otherwise satisfied without any continuing duties, obligations or liabilities
on the part of Company.
At the Determination Date and on the Closing Date, Company
will have no liabilities or obligations of any nature, whether fixed, accrued,
absolute, contingent or otherwise, known or unknown, other than liabilities
fully reflected or reserved against in the Closing Balance Sheet.
Section 3.4 Certain Contracts.
(a) Description.
(i) Real Property. Exhibit 3.4(a)(i) to this
Agreement is a brief description of all interests in real property of
Company, including all leases and other agreements affecting rights in
real property which are binding on Company.
(ii) Personal Property. Exhibit 3.4(a)(ii) to
this Agreement is a brief description of all leases and other
agreements affecting rights in personal property which are binding on
Company, other than leases and other agreements affecting rights in
personal property which do not involve the payment by Company of more
than $5,000 annually each.
(iii) Purchase Orders for Non-Capital Assets.
Exhibit 3.4(a)(iii) to this Agreement is a list of all outstanding
purchase orders or other commitments for the acquisition or sale of
goods, assets or services (other than purchase orders or other
commitments for the acquisition of capital assets) that were executed
in the ordinary and regular course of business by Company and each of
which exceeds $10,000.
(iv) Employee Benefit Plans. Exhibit 3.4(a)(iv)
to this Agreement is a list by category of all "EMPLOYEE BENEFIT
PLANS" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), and all other welfare benefit plans,
pension, retirement, insurance, bonus, deferred compensation,
incentive compensation, stock purchase, stock appreciation, stock
option, stock bonus, profit sharing or other employee benefit plans or
arrangements, whether or not subject to ERISA, maintained by Company
or which provide benefits for employees of Company, and all
determination letters issued by the Internal Revenue Service with
respect thereto.
(v) Employment. Exhibit 3.4(a)(v) to this
Agreement is a list or description of all written or oral contracts or
agreements of, or commitments for, employment with any officer or
employee or former officer or employee of Company (other than those
entered into in the ordinary course of business that are immediately
terminable at will by Company without cost or other liability and that
relate to persons whose annual salary rate is less than $20,000.
III-3
15
(vi) Purchase Orders for Capital Assets. Exhibit
3.4(a)(vi) to this Agreement is a list of all outstanding purchase
orders or other commitments for the acquisition of capital assets that
were executed in the ordinary and regular course of business of
Company and each of which exceeds $1,000.
(vii) Collective Bargaining Agreements. Exhibit
3.4(a)(vii) to this Agreement is a list of all collective bargaining
agreements, labor contracts or agreements with trade unions or
organizations representing employees, or other similar agreements or
commitments respecting rights of employees, which are binding on
Company.
(viii) Business Relationships with Shareholders.
Exhibit 3.4(a)(viii) to this Agreement is a list of all interests,
direct or indirect, of any Shareholder, any affiliates of any
Shareholder or a member of any Shareholder's family in any other
business which is a party to business arrangements with Company.
(ix) Independent Contractors. Exhibit 3.4(a)(ix)
to this Agreement is a list or description of all written or oral
contracts or agreements relating to, or commitments for, utilization
by Company of any independent contractor, distributor, manufacturer's
representative or other similar organization or individual with
respect to the promotion, distribution or sale of any of Company's
products.
(x) Service Agreements. Exhibit 3.4(a)(x) to
this Agreement is a list of all agreements under which management,
management information systems processing, insurance and risk
analysis, audit and other similar services are provided to Company
other than by employees of Company and all other contracts of a
similar type binding on Company.
The list and descriptions in Exhibits 3.4(a)(i) through
3.4(a)(x) to this Agreement are true, accurate and complete as of the date
hereof, and will be true, accurate and complete as of the Determination Date
and the Closing Date.
(b) Copies. Copies of all the written agreements or
other documents referred to in Section 3.4(a) hereof and true, accurate and
complete written summaries of all oral agreements referred to in Section 3.4(a)
hereof have been furnished to Russell.
(c) No Default. Company is not in default under any of
the agreements, written or oral, referred to in Section 3.4(a) hereof; and no
act or event has occurred, and no act or event will have occurred as of the
Determination Date or the Closing Date, or as a result of the Closing, which
with any notice or lapse of time, or both, would constitute a default by
Company under any such agreement, or to the best knowledge of Shareholders, by
any other party to any such agreement, and Company has not received any
intimation or communication that any other party is or is likely to become in
default under any such agreement.
(d) No Consents Required. Except as specifically noted
in Exhibits 3.4(a)(i) through 3.4(a)(x), no consent of third persons is
necessary to be obtained by Company or any Shareholder to consummate the
transaction contemplated hereby, or to make this Agreement continually binding
upon each Shareholder after the Closing in accordance with its terms.
(e) No Other Contracts. Company is not a party to any
contract, agreement or commitment other than
(i) agreements described, or expressly identified
as being excludable from the description, in Exhibits 3.4(a)(i)
through 3.4(a)(x);
(ii) agreements described in any other exhibit or
appendix to this Agreement; or
III-4
16
(iii) agreements of Company executed after
September 30, 1993, in the ordinary and regular course of business,
none of which, and no related group of which, is material.
(f) No Adverse Contracts. Company is not a party to any
contract that is reasonably likely to materially and adversely affect its
properties, business or financial condition or the conduct of the business of
Company after Closing by Russell or the Surviving Corporation, except for those
contracts disclosed in the Exhibits 3.4(a)(i) through 3.4(a)(x). No purchase
commitments are in excess of normal requirements of the business of Company or
at an excessive price.
Section 3.5 Employee Benefit Matters. (a) Reference is made to
Section 3.4(a)(iv) and Exhibit 3.4(a)(iv) for a list of employee benefit plans
maintained by Company. No representations or communications, oral or written,
with respect to participation, eligibility for benefits, vesting, benefit
accrual or coverage under any of such plans have been made to employees of
Company which (i) are not in accordance with the terms and conditions thereof
or (ii) could have any material adverse economic consequences to Company.
(b) Company does not have or maintain any "employee
benefit plan," as defined in Section 3(3) of ERISA, except as described in
Exhibit 3.4(a)(iv).
(c) Company has not, and no pension plan maintained by
Company has, incurred any liability to the Pension Benefit Guaranty Corporation
("PBGC") or the Internal Revenue Service with respect to any pension plan
qualified under Section 401 of the Code, except liabilities to the PBGC
pursuant to Section 4007 of ERISA, all of which have been fully paid. No
reportable event under Section 4043(b) of ERISA (including events waived by
PBGC regulation) has occurred with respect to any such pension plan.
(d) Company has not incurred any material liability
under Section 4201 of ERISA for a complete or partial withdrawal from, or
agreed to participate in, any multi-employer plan as such term is defined in
Section 3(37) of ERISA.
(e) All "employee benefit plans," as defined in Section
3(3) of ERISA, that are maintained by Company comply in both form and operation
in all material respects with ERISA and all provisions of the Code that are
applicable, or intended to be applicable, to such "employee benefit plans."
Company does not have any material liability under any such plan that is not
reflected in the Financial Statements and Interim Financials of Company.
(f) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred with respect to any employee benefit plan maintained by
Company (i) which would result in the imposition, directly or indirectly, of a
material excise tax under Section 4975 of the Code or a material civil penalty
under Section 502(i) of ERISA, or (ii) the correction of which would have a
material adverse effect on the financial condition of Company; and, to the best
knowledge of Company, no actions have occurred which could result in the
imposition of a penalty under any section or provision of ERISA.
(g) No employee benefit plan which is a defined benefit
pension plan has any "unfunded current liability," as that term is defined in
Section 302(d)(8)(A) of ERISA, and the present fair market value of the assets
of any such plan exceeds the plan's "benefit liabilities," as that term is
defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements.
(h) All reporting or disclosure requirements applicable
to any such "employee benefit plan" under ERISA or the Code have been met on a
timely basis.
(i) All employee benefit plans, programs or practices
maintained by Company that are not employee benefit plans as defined in Section
3(3) of ERISA comply, in form and operation, in all material respects with all
laws applicable thereto.
III-5
17
(j) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any officer or employee of Company under any benefit plan or otherwise, (ii)
materially increase any benefits otherwise payable under any benefit plan or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits to any material extent.
(k) Exhibit 3.5(k) lists all former employees of Company
and spouses, former spouses or dependents of such former employees (hereinafter
referred to collectively as "DEPENDENTS") utilizing or eligible to use
continuation coverage under 26 U.S.C. 4980B, or 29 U.S.C. 1161 et seq., as
amended (hereinafter referred to as "COBRA"), including, without limitation,
all former employees and Dependents with respect to whom the period during
which continuation coverage under COBRA may be elected has not expired. All
employee benefit plans to which COBRA is applicable have been operated in
accordance with COBRA.
Section 3.6 Insurance. Company has in force all policies of
insurance described in Exhibit 3.6(a) hereto insuring it, which policies
provide adequate insurance with respect to all risks normally insured against
by companies similarly situated including, without limitation, insurance
against worker's compensation claims, product liability claims, business
interruption and group insurance, and Company will have in force on the Closing
Date policies of insurance of the same character and coverage as those so
described in Exhibit 3.6(a) hereto. Shareholders will cause Company to
promptly notify Russell in writing of any changes in such insurance coverage
occurring prior to the Closing. Company has not been advised of any risks or
any fact or matter which might render such policies void or voidable, or any
cancellations of insurance coverage, or increases in premium, or other costs
related to insurance, to take effect, or that are proposed, or that may or will
occur, following the Closing. All such policies are underwritten by reputable
insurers, and Shareholders know of no basis to believe the insurers are or are
likely to become financially unsound in the next twelve (12) months from the
date of the execution of this Agreement. Company has not been refused
insurance or been notified of any cancellation or modification of insurance
during the past three years. Exhibit 3.6(b) hereto lists all claims made or
due to be made by Company, or matters for which a claim could have been but was
not made, against an insurer on account of events occurring since September 30,
1993.
Section 3.7 Taxes.
(a) For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean any and all taxes, charges, fees, levies and other
governmental assessments and impositions of any kind which are payable to any
federal, state, local or foreign governmental entity or taxing authority or
agency, including, without limitation,
(i) Income, franchise, net worth, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem,
value added, sales, use, service, real or personal property,
capital stock, license, payroll, withholding, disability,
employment, social security, Medicare, workers compensation,
unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits,
transfer and capital gains taxes; and
(ii) customs duties, imposts, charges, levies or
other similar assessments of any kind; and
(iii) interest, penalties and additions imposed
with respect to any Tax;
and "Returns" shall mean any and all returns, reports, information returns and
statements with respect to Taxes required to be filed with the IRS or any other
governmental entity or taxing authority or agency, whether domestic or foreign,
including, without limitation, consolidated, combined and unitary Tax returns.
For the purposes of this Section 3.7, references to Company and to subsidiaries
of Company shall include former subsidiaries of Company for any periods during
which the stock of any such subsidiary corporations was owned, directly or
indirectly, by Company and any corporations which have previously merged with
or into Company.
III-6
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(b) For all periods prior to the date of this Agreement
and through the Closing Date, except as set forth in Exhibit 3.7 hereto,
(i) all Tax computations and Returns required to
be made and filed by Company have been and will be timely made or
filed with the appropriate governmental agencies in all jurisdictions
in which such computations and Returns are required to be made or
filed, and all of the foregoing are and will be true, correct and
complete;
(ii) all Taxes due from Company have been fully
paid or adequate provisions made therefor through the date of this
Agreement and will be paid or adequate provisions made through the
Closing Date which provisions are and will be reflected on the books
of account of Company and in the Closing Balance Sheet; and
(iii) no issues have been raised or proposed, nor
has any claim or assessment been made, asserted or threatened, with
respect to any Tax or Return of Company, nor do Shareholders know of
any basis for any such issues, claims or assessments.
(c) Except as set forth in Exhibit 3.7(c) hereto, the
Tax Returns of Company have not been audited or examined by any taxing
authority for any period through and including the Closing Date. No audit or
examination of any Tax Return by any governmental authority is currently in
progress or has been scheduled. There are no Tax liens upon any of the
property of Company. Company has not and will not have (i) granted any
extension of the limitation period applicable to the assessment of any Tax or
(ii) filed any consent under Section 341(f) of the Code relating to collapsible
corporations.
(d) Company has not, for any taxable period for which
the statute of limitations on assessment remains open, acquired, either
directly or through any subsidiary, any corporation that filed a consolidated
federal income tax return with any other corporation that was not also acquired
in the same transaction, either directly or through any subsidiary, by Company;
furthermore, no subsidiary or corporation that was included in the filing of a
Return with Company on a consolidated, combined, or unitary basis has left
Company's consolidated, combined or unitary group in a taxable year for which
the statute of limitations on assessment remains open.
(e) Neither Company nor any of its subsidiaries has been
at any time a member of any partnership or joint venture or the holder of a
beneficial interest in a trust for any period for which the statute of
limitations for any Tax potentially applicable as a result of such membership
or holding has not expired.
(f) All Taxes required to be withheld, collected or
deposited by Company or any of its subsidiaries during any taxable period for
which the statute of limitations on an assessment remains open have been timely
withheld, collected or deposited and, to the extent required, have been paid
over to or deposited with the relevant Tax authority.
(g) Neither Company nor any of its subsidiaries is a
party to any agreement, contract or arrangement that would result, separately
or in the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code by reasons of the Merger; furthermore,
neither Company nor any of its subsidiaries has made any material payment to,
or has provided any material benefit to, any officer, employee, former officer
or former employee of Company which is not allowable as a deduction for any Tax
purpose.
(h) No property of Company or any of its subsidiaries is
property that is or will be required to be treated as being owned by another
person under the provisions of section 168(f)(8) of the Code as in effect prior
to amendments by the Tax Reform Act of 1986, or is "tax-exempt use property"
within the meaning of section 168 of the Code.
(i) There is no significant difference on the books of
Company and any of its subsidiaries between the cost basis on such books and
the tax basis of assets (net of liabilities) that is not accounted for by an
accrual on the books for federal income tax purposes.
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19
(j) Neither Company nor any of its subsidiaries has or
will have any unused net operating loss, unused net capital loss, unused
credit, unused foreign tax credit, or excess charitable contribution carryovers
for federal income tax purposes as of the Closing Date.
Section 3.8 Conflicts of Interest. Except as described in
Exhibit 3.8 hereto, no officer, director or employee of Company, nor any member
of any such person's family, nor any Shareholder nor any affiliate of any
Shareholder or member of any Shareholder's family owns, or during the last
three years has owned, directly or indirectly, or has during the last three
years had a substantial ownership interest in (i) any business, corporate or
otherwise, which is a party to any business arrangements with Company or (ii)
any property which is the subject of any such business arrangements or is used
in the business of Company, and no officer, director or employee of Company,
nor any member of any such person's family, nor any Shareholder nor any
affiliate of any Shareholder or any member of any Shareholder's family owns,
directly or indirectly, or has an interest in, any business, corporate or
otherwise, which is in competition with Company. Except as set forth in
Exhibit 3.8 hereto, there are no loans outstanding to or from any of such
persons from or to Company.
Section 3.9 Fixed Assets. Exhibit 3.9 hereto is a list of all
major fixed assets owned by Company at the close of business on September 30,
1993, and all significant changes therein through the date of the execution of
this Agreement, and Shareholders will promptly report to Russell any material
changes prior to the Closing. Said list is accurate in all material respects
and, except as is otherwise indicated in said list, all of said assets which
are necessary to carry on the business of Company have been well maintained and
are in good operating condition, normal wear and tear excepted. Company has
not received notice of violation of any applicable zoning regulation, ordinance
or other law, order, regulation or requirement relating to its operations or
its owned or leased properties, the violation of which zoning regulation,
ordinance or other law, order, regulation or requirement could have a material
adverse effect on its business and to the knowledge of Shareholders, there are
no such violations.
Section 3.10 Inventories.
(a) All inventories shown in the September 30, 1993
Balance Sheet and in each of the Balance Sheets consisted of, and all
inventories thereafter acquired and all inventories existing on the Closing
Date or reflected in the Closing Balance Sheet will consist of, items of
quality and quantity usable or salable in the ordinary and regular course of
Company's business, each class thereof was priced at the lower of cost or
market on the first-in, first-out basis and, as to the classes of items
inventoried and methods of counting and pricing, such inventories were
determined in a manner consistent with prior years; and the quantity of each
item of inventory on hand at the Determination Date and at the Closing Date
will not exceed fifty percent (50%) of the quantity thereof sold or used during
the 1992-1993 fiscal year; except to the extent, if any, disclosed in Exhibit
3.10 hereto.
(b) Since September 30, 1993, there have been no
material changes in the inventories reflected in the September 30, 1993 Balance
Sheet and there will be no changes in any such inventories prior to the
Closing, except those changes resulting from purchases and manufacturing in the
ordinary and regular course of business and sale of merchandise inventory in
the ordinary and regular course of business.
Section 3.11 Accounts Receivable. The accounts receivable
included in the September 30, 1993 Balance Sheet are and will be bona fide,
valid and enforceable receivables of Company, resulting from sales in the
ordinary course of business. The accounts receivable included on the books of
account of Company at the Determination Date and reflected in the Closing
Balance Sheet will be bona fide, valid and enforceable receivables of Company,
resulting from sales in the ordinary course of business. The collection period
of such receivables will be within normal trade terms or as defined by
contract. Neither Company nor any Shareholder warrants the collectibility of
the accounts receivable.
Section 3.12 Lines of Credit. Company maintains no lines of
credit with financial institutions other than those described in Exhibit 3.12
hereto. True, correct and complete copies of all loan and other agreements
relating to such lines of credit have been provided to Russell. Company is
not, and will not be on the Determination Date or on the Closing Date, in
default under any such loan or other agreements described in Exhibit 3.12
hereto, and there do not, and on neither the Determination Date nor the Closing
Date will there exist any grounds for declaring, whether immediately or upon
the giving of notice or the passage of time, or both, any such default.
III-8
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Section 3.13 Trademarks, Patents, Etc.
(a) A true and complete schedule setting forth all
federal and foreign (i) patents, (ii) trademarks, service marks, trade name or
brand name registrations and copyright registrations, and (iii) all pending
applications and applications to be filed, if any, therefor, owned or
controlled by Company or that are used by Company in connection with its
business, together with a summary description and full information in respect
of the filing, registration or issuance thereof, and expiration dates, is
contained in Exhibit 3.13 hereto. No licenses, sublicenses, covenants or
agreements have been granted or entered into by Company in respect of any of
such patents, trademarks, service marks, trade names, brand names, copyrights,
applications and licenses described in Exhibit 3.13 hereto or under any
patents, trademarks, service marks, trade names, brand names, copyrights, or
applications for patents, trademarks, service marks or copyrights of others,
except as set forth in Exhibit 3.13 hereto. Company owns the entire right,
title and interest in and to any and all patents, trademarks, service marks,
trade names, brand names, copyrights, applications or licenses utilized in its
business and each such item is in full force and effect, free and clear of all
liens and encumbrances of every nature, and no such item is currently being
challenged in any way or is involved in any pending or threatened interference
proceeding.
(b) There are no patents, trademarks, service marks,
trade names, brand names, copyrights, licenses, applications, inventions,
proprietary processes and know-how, formulae and trade secrets without which
Company's business could not be conducted as presently conducted, except as
described in Exhibit 3.13 hereto. The operations of Company, the manufacture,
use and sale by Company of its products, the use by Company of its machinery,
equipment and processes, the use of the products of Company by its respective
customers for the purpose for which sold, and the use of the patents,
trademarks, service marks, trade names, brand names, copyrights, applications,
licenses, inventions, proprietary processes and know-how, formulae and trade
secrets and advertising, technical or other literature of Company has not, and
pending the Closing will not, involve infringement, nor has Company been
advised of any claim of infringement of any proprietary right, patent,
trademark, service mark, trade name or copyright of others.
(c) No licenses, sublicenses, covenants or agreements
have been granted or entered into by Company in respect of any invention,
proprietary processes and know-how, formula or trade secret. Company owns the
entire right, title and interest in and to the inventions, proprietary
processes and know-how, formulae and trade secrets utilized in its business,
free and clear of all liens and encumbrances of every nature, except as
described in Exhibit 3.13 hereto.
(d) No officer, director, employee or shareholder of
Company, nor any affiliate of such persons or any members of any such persons'
families, owns directly or indirectly, in whole or in part, any invention,
patent, proprietary right, trademark, service mark, trade name, brand name or
copyright or application or license therefor (i) which Company is presently
using in its business or (ii) without which Company could not conduct its
business as presently conducted by it.
Section 3.14 Title to Property; Condition of Property.
(a) Company has, and at the Closing will have (except,
as to inventory only, as the same may have been sold or otherwise disposed of
after the date hereof in the ordinary course of its business), good and
marketable title in fee simple (or the equivalent) to all of its assets
constituting real property (or leasehold interests therein), and good and
marketable title (or the equivalent) to all of its assets constituting personal
property, tangible or intangible, free and clear of any mortgage, pledge, lien,
encumbrance, charge or title retention or other security arrangement, or other
adverse right or interest therein, or limitation thereon, except the following
(hereinafter referred to as "PERMITTED ENCUMBRANCES"):
(i) liens imposed by law that are incurred in the
ordinary and regular course of business for indebtedness not yet due
to carriers, warehousemen, laborers or materialmen;
(ii) liens in respect of pledges or deposits under
workmen's compensation laws or similar legislation;
III-9
21
(iii) liens for property taxes, assessments, or
governmental charges not yet subject to penalties for nonpayment;
(iv) other liens, charges and encumbrances
incidental to the conduct of the business or the ownership of the
properties subject thereto and not material in the aggregate; and
(v) liens and other arrangements described in
Exhibit 3.14 hereto.
(b) All of the buildings and structures located on such
real property are in adequate operating condition and repair. Company has
adequate rights of ingress and egress to all of its assets constituting real
property for the operation of its business in the ordinary course. With
respect to the assets of Company constituting real property (or leasehold
interests therein), all buildings and structures located thereon, all
appurtenances thereto, and all equipment used therein (hereinafter collectively
referred to in this Section 3.14 as the "PROPERTY"),
(i) no defect or condition of the Property or
interest of any third party exists which impairs the current
or planned use of the Property by Company;
(ii) the Property, as currently used by Company,
and as reasonably planned to be used in the conduct of any
part of Company's business subsequent to the Closing, is not
in violation of any existing applicable statute, ordinance,
order, requirement, law, rule or regulation (including,
without limitation, building, occupational safety, zoning or
environmental laws) affecting the Property;
(iii) no notice of violation of any applicable
statute, law, ordinance, rule, regulation, order or
requirement, or of any covenant, condition, restriction or
easement affecting the Property or with respect to the use or
occupancy of the Property, has been given to Company (or, to
its knowledge or the knowledge of any Shareholder, any of its
lessors) by any governmental authority having jurisdiction
over the Property or by any other person entitled to enforce
the same;
(iv) there is not (A) any intended public
improvement which may involve any charge being levied or
assessed or which may result in the creation of any lien upon
the Property, (B) any intended or proposed ordinance, order,
requirement, law or regulation (including, but not limited to,
zoning changes) which may adversely affect the current or
proposed use of the Property, or (C) any suit, action, claim
or legal, administrative, arbitration or other proceeding
(including, without limitation, any proceedings for
condemnation) or governmental investigation pending,
threatened or contemplated against or affecting the Property
or the use of any part thereof;
(v) there are no encroachments onto the Property
of any improvements of any adjoining property that interfere
with the conduct of any part of Company's business as
presently or proposed to be conducted, and no improvement on
the Property necessary to the operation of Company's business
as presently or proposed to be conducted encroaches on any
adjoining property; and
(vi) Company is currently complying with all
covenants, conditions, restrictions, easements and similar
matters affecting the Property;
except as otherwise set forth in Exhibit 3.14 hereto.
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Section 3.15 Other Assets. Company has no assets other than
those set forth in the September 30, 1993 Balance Sheet or acquired in the
ordinary course of business since September 30, 1993 except for any such assets
which may have been written off the books through depreciation, none of which
assets shall be disposed of by Company prior to the Closing, and all of which
assets are the property of Company.
Section 3.16 Litigation. Except as described in Exhibit 3.16,
there is no suit, proceeding or investigation pending or threatened against or
affecting Company or its properties or business in any court or before or by
any governmental department, commission, board or other instrumentality or
before any arbitrator, domestic or foreign, nor is there any valid basis for
any such suit, proceeding or investigation, which would have a material adverse
effect on Company or its business, and Company is not in default with respect
to any judgment, order, decree, or award by which it is bound of any court or
any such department, commission, board or other instrumentality or arbitrator.
There is no suit, proceeding or investigation pending or threatened against
Company or any Shareholder which would question this Agreement, any term or
provision hereof or the transactions contemplated hereby. Company is not, in
any way, and will not be at the time of Closing, subject to, or restricted in
any way in the conduct of its business by, any judgment, order, writ, decree or
injunction of, or obtained by, any government, court, department, commission,
board, agency, authority or other instrumentality or arbitrator, to which it is
a party.
Section 3.17 Employees; Payroll Taxes, Etc. (a) There is no
pending or threatened dispute between or involving Company on the one hand, and
any employee or group of employees of Company, or any union representing or
claiming to represent any employees or former employees of Company on the other
hand. There have never been any strikes or work stoppages in effect or
threatened against Company which had or would have a material adverse effect on
Company, nor have any strikes or work stoppages which would have such effect
been enjoined by any order, writ, injunction or decree or any court or
governmental agency or instrumentality, domestic or foreign. Except as
otherwise disclosed in Exhibits 3.4(a)(iv) and 3.4(a)(v) or Exhibit 3.17, (i)
Company has no employment contracts, commission or bonus arrangements with any
of its employees, officers, directors, or with any Shareholder; (ii) Company
has no outstanding loans to its employees, officers or directors, or to any
Shareholder; (iii) Company has not received any citation or notice that it has
violated any occupational safety laws, standards or regulations; and (iv)
Company has no severance or termination pay liabilities or other fringe benefit
obligations to its employees, officers or directors or to any Shareholder.
(b) Except as set forth in Exhibit 3.17 hereto,
(i) proper and accurate amounts have been and
will be withheld by Company from its employees for all periods through
the Closing Date in compliance with the tax withholding provisions of
applicable Federal, foreign, state and local laws; and
(ii) proper and accurate Federal, foreign, state
and local Returns have been and will be filed by Company for all
periods through the Closing Date for which Returns were or are due
with respect to employee income tax withholding, social security,
payroll, occupational and unemployment and similar taxes, and the
amounts shown thereon to be due and payable have been or will be paid
in full.
(c) Except as disclosed in Exhibit 3.17 hereto, no
person or party (including, but not limited to, any governmental agency) has
any claim or basis for any action or proceeding against Company arising out of
any statute, ordinance or regulation relating to wages, commissions, collective
bargaining, discrimination in employment or employment practices or
occupational safety and health standards (including, but not limited to, the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, as
amended, the Occupational Safety and Health Act, the Age Discrimination in
Employment Act of 1967 or the Americans With Disabilities Act of 1990). None
of such claims shall result in any liability to or obligation of Company, or
lien or encumbrance against any assets of Company.
Section 3.18 Bank Accounts. Company and Shareholders have
delivered to Russell a list of all bank accounts maintained by Company, which
list is attached as Exhibit 3.18, including the name of the bank or other
institution at which each such account is maintained, the names of persons
authorized to draw on such account and
III-11
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the account number, and new signature cards for completion and delivery to said
banks and other institutions after the Closing.
Section 3.19 No Breach. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not, except as described in Exhibit 3.19 hereto or as otherwise
disclosed in this Agreement,
(i) violate, conflict with or result in a breach of or
default under any of the terms, provisions or conditions of the
Certificate of Incorporation, bylaws or other instrument respecting
the governance of Company or any statute, law, regulation or court or
administrative order or process, or any agreement or instrument to
which either Company or any Shareholder is a party or by which any of
either Company's or any Shareholder's properties or assets is bound;
(ii) result in the creation of any lien, charge or
encumbrance upon any of Company's properties or assets under any of
the foregoing other than any granted by Russell or to which Russell
may be subject;
(iii) terminate, delay or give any party thereto the right
to terminate, delay, amend, abandon, or refuse to perform any
provision of any agreement or instrument to which Company is a party;
(iv) accelerate or give any party thereto the right to
accelerate or modify the time within which, or the terms under which,
Company is to perform any such agreement or instrument; or
(v) require the consent of any other person or entity.
Section 3.20 No Finders. No finder or any agent, broker or other
person acting pursuant to authority of any Shareholder or Company is entitled
to any commission or finder's fee in connection with the transactions
contemplated by this Agreement; and Shareholders agree to hold Russell and
Company harmless from any loss, damage or expense resulting from any claims by
any person claiming any commission or finder's fee pursuant to authorization
from Shareholders or Company, or one or more thereof, in connection with the
transactions contemplated by this Agreement.
Section 3.21 Subsequent Events. Since the date of the September
30, 1993 Balance Sheet there has not been, and after the date hereof through
the Closing Date there will not be (except as described in Exhibit 3.21 or as
otherwise contemplated or permitted by this Agreement):
(i) any material adverse change in the financial
condition, assets, liabilities (absolute, accrued, contingent or
otherwise), business, business organization or personnel of Company or
in its relationships with employees, dealers, distributors, suppliers,
customers, landlords or others, other than changes occurring in the
ordinary and regular course of business, none of which changes, if
any, has been or will be materially adverse, and neither Company nor
any Shareholder has knowledge of any information on the basis of which
a knowledgeable business person would conclude that any such material
adverse change may be reasonably expected to occur in the reasonably
foreseeable future;
(ii) any disposition by Company of any of its capital
stock or of any option or right or privilege to acquire any of its
capital stock, or any acquisition or retirement by Company of any of
its capital stock or any dividend or other distribution on or with
respect to its capital stock;
(iii) any sale, mortgage, pledge or other disposition of
any asset owned by Company on the date of the September 30, 1993
Balance Sheet or acquired since said date, other than sales of
merchandise in the ordinary and regular course of business and other
than the dispositions described in Exhibit 3.4(a)(iii);
III-12
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(iv) any expenditure or commitment by Company for the
acquisition of assets of any kind, other than merchandise inventories
and miscellaneous supplies acquired in the ordinary and regular course
of business and other than the purchases described in Exhibit
3.4(a)(iii) and any other exhibit attached hereto;
(v) any damage, destruction or loss (whether or not
insured) materially and adversely affecting the property, business or
prospects of Company;
(vi) any increase in the compensation or commission
payable or to become payable by Company to any officer, employee,
independent contractor, distributor or manufacturer's representative,
including any Shareholder, or any agreement therefor;
(vii) any loans or advances by or to Company other than
renewals or extensions of existing indebtedness and uses of lines of
credit, if any, for inventory purchases;
(viii) any cancellation or payment by Company of any
indebtedness owing to it or any cancellation or settlement by Company
of any claims against others, except in the ordinary and regular
course of business;
(ix) any amendment, modification, cancellation or
expiration without renewal of any of the license agreements to which
Company is a party described in Exhibit 3.13 hereof;
(x) any payment, discharge or satisfaction of any claim,
liability or obligation (absolute, accrued, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities
and obligations reflected or reserved against in the September 30,
1993 Balance Sheet or incurred in the ordinary course of business and
consistent with past practices since the date of the September 30,
1993 Balance Sheet;
(xi) any change in any method of accounting or accounting
practice or policy;
(xii) any write-down in the value of, or write-off of, any
asset or the establishment of any reserve; or
(xiii) any agreement, whether in writing or otherwise, to
take any action described in this Section 3.21.
Section 3.22 No Losses. Since September 30, 1993, Company has
not sustained any loss on account of fire, flood, accident or other calamity of
such character as to interfere materially with the continued operation of any
part of its business, regardless of whether or not such loss was insured
against, other than as set forth in Exhibit 3.22 hereto.
Section 3.23 No Undue Influence. Neither Shareholders nor
Company has, directly or indirectly, made any payments to or entered into any
transactions with any person as an inducement to such person (or to induce such
person to influence another person) to take action deemed to be to the
advantage of Company in such person's official position with a governmental
authority, or in such person's position with any other business entity, nor has
any Shareholder or Company directly or indirectly made any other payment to any
person or entity that was contrary to any law or regulation of any such
governmental authority.
Section 3.24 No Increase in Costs. Neither Shareholders nor
Company has any knowledge of any circumstances unique to Company that leads
them or it to believe that the consummation of the transactions contemplated by
this Agreement will cause the costs or expenses incurred by Company to increase
significantly over those currently paid by Company with respect to any part of
its business. The parties understand and agree that by making this
representation and warranty Shareholders and Company have not made any
representation or warranty regarding the ability of Russell to operate the
business of Company.
III-13
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Section 3.25 Sales Orders. Each of the sales orders referred to
in Section 3.4(a)(iii) of this Agreement, including those listed in Exhibit
3.4(a)(iii) hereto, was taken in the ordinary course of Company's business.
Section 3.26 Suppliers and Customers. No supplier to or customer
of Company has communicated to Shareholders or Company in any manner his or its
intention to cease to do business with or trade with Company as a result of the
consummation of the transactions contemplated by this Agreement.
Section 3.27 Environmental Matters. Except as disclosed on
Exhibit 3.27 (i) Company has not violated, and as currently being conducted
does not violate, any applicable law, ordinance, rule, prohibition or
regulation relating to air, water or noise pollution, or the production,
storage, labeling or disposition of solid, infectious or radioactive wastes or
hazardous or toxic substances, or the health, safety or environmental
conditions on, beneath, or about any of the properties used, owned, or leased
by Company, or relating to the business of Company (such laws, ordinances,
rules, prohibitions or regulations being hereinafter referred to as
"ENVIRONMENTAL LAWS"); (ii) Company has timely filed all required reports,
obtained all required approvals and permits relating to its business, and
generated and maintained all required data, documentation and records under any
applicable Environmental Laws; (iii) neither Company nor, to the knowledge of
Company or any Shareholder, any other person has placed, stored, buried,
spilled or released, used, generated, manufactured, refined, processed,
treated, dumped or disposed of, or transported to or from, any materials
produced by, or resulting from, any business, operations, or processes,
including any "Hazardous Wastes," "Hazardous Substances," "Hazardous
Materials," "Pollutants," "Toxic Substances," "Solid Wastes," or "Infectious
Wastes," "Radioactive Wastes" or "Contaminants" (as such terms are defined in
any Environmental Law and collectively hereinafter referred to as "HAZARDOUS
MATERIALS") on, beneath, or about any of the properties used, owned, or leased
by Company, except for inventories of such chemicals to be used, and wastes
generated therefrom, in the ordinary course of business of Company (which
inventories and wastes, if any, were and are stored and disposed of in
accordance with applicable laws and regulations and in a manner such that there
was no release, nor any possibility of any release, of any such chemicals into
the environment which could cause the incurrence of clean-up or other response
costs under Environmental Laws); (iv) to the best knowledge of Company and each
Shareholder, there has not been any release in the vicinity of any property of
Company which, through soil or ground water migration, has come to be located
on the property of Company; (v) there are no Hazardous Materials presently
stored or located on, in or about any portion of Company's property, except for
those identified and the exact location of which is described on Exhibit 3.27,
all of which are stored and located on Company's property in full compliance
with applicable laws; and (vi) Company has not received any notice from any
governmental agency or private or public entity advising it that it is or may
be responsible, or potentially responsible, for response costs with respect to
a release, a threatened release or clean up of materials produced by, or
resulting from, its business, operations, or processes, including but not
limited to Hazardous Materials. Exhibit 3.27 lists all locations upon which
Company and its predecessors have disposed or have caused to be disposed
Hazardous Materials created in or resulting from its business prior to the
Closing. Company has not received notice of, and neither Company nor any
Shareholder is aware of any condition or event relating to Company's business
or property which by the passage of time would result in the violation of any
Environmental Law or would require remedial action by Company, except as
described in Exhibit 3.27 hereto.
Section 3.28 Subsidiaries. Company does not, directly or
indirectly, now own, possess, control or have, and has never, directly or
indirectly, owned, possessed, controlled or had, any direct or indirect
ownership or equitable interest in, or participation with, any corporation,
partnership, trust, joint venture or other business association, except as
described in Exhibit 3.28 to this Agreement.
Section 3.29 Material Facts. Neither this Agreement, nor any
statement, certificate, exhibit, or other instrument or list or information
furnished by Shareholders pursuant to this Agreement, contains, or will
contain, any untrue statement of a material fact or omits, or will omit, to
state any material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances in which they were made, not
misleading.
Section 3.30 Reliance. All documents, records and other
information attached as exhibits hereto have been prepared by or at the request
of Shareholders and furnished to Russell or Russell's representatives by
Shareholders, and fairly, accurately and completely present (in a manner
consistent with prior periods) the matters purported to be presented therein.
Shareholders acknowledge that such documents were furnished at the request
III-14
26
of Russell or Russell's representatives and that such documents, records and
other information have been relied upon by Russell or Russell's representatives
as an inducement to the execution and delivery of this Agreement.
Section 3.31 Correctness on Determination Date and Closing Date.
The representations and warranties of Company and Shareholders contained in
this Article III will be true and correct on the Determination Date and on the
Closing Date.
[Article III ends here. The next
page of this Agreement is IV-1.]
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder hereby represents and warrants to Russell and
Subsidiary as follows:
(a) Each Shareholder and Reece is the owner of, and has
good title to, the number of shares of Company Common Stock set forth next to
such person's name in Exhibit 2.2 to this Agreement and, in the event that the
Merger is consummated, such person is entitled to that percentage of Russell
Common Stock equal to the percentage of Company Common Stock owned by such
person, as set forth in Exhibit 2.2.
(b) Shareholder is acquiring the shares of Russell
Common Stock for investment and for his or her own account and not with a view
to any distribution thereof in violation of the Securities Act of 1933 (the
"1933 ACT") or any applicable state securities law, and such shares of Russell
Common Stock will not be sold, transferred or hypothecated by Shareholder
unless an exemption from registration is available under the 1933 Act and
applicable state securities law or unless such shares of common stock are
registered or qualified thereunder.
(c) Shareholder acknowledges that he or she has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of an investment in the shares of
Russell Common Stock and has received copies of the 1993 First Quarter Report
of Russell, the 1993 Mid-Year Report of Russell, the 1993 Third Quarter Report
of Russell, the 1993 Fourth Quarter Report of Russell, the annual report of
Russell on Form 10-K for the year ended January 2, 1993 and the press release
of Russell dated October 27, 1993 regarding a stock repurchase program
implemented by Russell, and that, by virtue of the foregoing and the process of
negotiating this Agreement and the transactions contemplated herein,
Shareholder has had access to such information relating to Russell as would be
disclosed in a registration statement for the common stock of Russell under the
1933 Act.
[Article IV ends here. The next
page of this Agreement is V-1.]
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RUSSELL AND SUBSIDIARY
Each of Russell and Subsidiary warrants and represents to and
covenants with Shareholders and their respective assigns, heirs and personal
and legal representatives (which warranties, representations and covenants
together with the other warranties, representations and covenants of Russell
and Subsidiary set forth in this Agreement or contained in any exhibit hereto,
or in any certificate or other document required to be delivered to
Shareholders by Russell pursuant to this Agreement, shall, except as otherwise
expressly provided herein, survive the Merger) as follows:
Section 5.1 Corporate Status. Each of Russell and Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Alabama of the United States of America and has all
necessary corporate power and attributes to enter into this Agreement and the
transactions contemplated hereby.
Section 5.2 Approvals; No Conflict. At the time of Closing,
each of Russell and Subsidiary will have taken all requisite corporate action
to approve this Agreement and the transactions contemplated by this Agreement,
and there shall have at the time of Closing been delivered to Shareholders
certified copies of the resolutions duly adopted in connection therewith.
Except as otherwise stated in Exhibit 5.2 hereto, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not violate, conflict with or result in a breach of or default
under any of the terms, provisions or conditions of the restated articles of
incorporation or bylaws of Russell or Subsidiary or any statute, regulation or
any court or administrative order or process, or any agreement or instrument to
which Russell or Subsidiary is a party or by which either of them, or their
respective properties or assets is bound and which violation, conflict, breach
or default would materially and adversely affect the ability of Russell or
Subsidiary to fulfill their respective obligations under this Agreement.
Section 5.3 No Finders. No finder or any agent, broker or other
person acting pursuant to the authority of Russell or Subsidiary is entitled to
any commission or finder's fee in connection with the transactions contemplated
by this Agreement; and Russell and Subsidiary agree to hold Shareholders
harmless from any loss, damage or expense resulting from any claims by any
person claiming any commission or broker's or finder's fee pursuant to
authorization from Russell or Subsidiary in connection with the transactions
contemplated by this Agreement.
Section 5.4 Material Facts. No representation or warranty by
Russell or Subsidiary in this Agreement, and no statement, certificate or
exhibit furnished by Russell or Subsidiary to Shareholders pursuant hereto,
contains, or will contain, any untrue statement of a material fact or omits, or
will omit, to state any material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they were
made, not misleading.
Section 5.5 No Consents Required. Russell and Subsidiary have,
or at the time of Closing will have, obtained all required consents, if any, of
third persons necessary to consummate the transactions contemplated hereby or
to make this Agreement and all other documents executed in connection herewith
binding upon Russell and Subsidiary.
Section 5.6 Reliance. All documents, records and other
information, if any, attached as exhibits hereto by Russell or Subsidiary and
the following documents, records and other information which have been
furnished by Russell or Russell's representatives to Shareholders: copies of
the 1993 First Quarter Report of Russell, the 1993 Mid-Year Report of Russell,
the 1993 Third Quarter Report of Russell, the 1993 Fourth Quarter Report of
Russell and the annual report of Russell on Form 10-K for the year ended
January 2, 1993, fairly, accurately and completely present (in a manner
consistent with prior periods) the matter purported to be presented therein.
Russell acknowledges that such documents were furnished at the request of
Shareholders and Company or their representatives, and that such documents,
records and other information have been relied upon by
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Shareholders and Company or their representatives as an inducement to the
execution and delivery of this Agreement.
[Article V ends here. The next
page of this Agreement is VI-1.]
V-2
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ARTICLE VI
COVENANTS OF COMPANY AND SHAREHOLDERS
Section 6.1 Conduct of Business. From and after the execution
of this Agreement, Company and Shareholders agree that Company shall not,
without the prior written consent of Russell, engage in any activities or
transactions which shall be outside the ordinary and regular course of its
business as conducted on the date hereof, other than activities contemplated
hereby. Without limiting the generality of the foregoing, between the date
hereof and the Closing, unless the prior written consent of Russell is first
obtained, to which Russell may attach any conditions Russell, in its sole
discretion, desires to impose, Company will not
(a) amend its Certificate of Incorporation, Bylaws or
any other instruments respecting the governance of Company;
(b) make any change in its authorized capital stock;
(c) issue any stock options, warrants, or other rights
calling for the issue, sale or delivery of any shares of its capital
stock or other equity securities or any securities or other
instruments convertible or exchangeable, with or without any
additional consideration, into any such shares of its capital stock or
other equity securities;
(d) pay any stock dividend or make any reclassification
in respect of its outstanding shares of capital stock;
(e) issue, sell or deliver any shares of its capital
stock, or securities convertible into or exchangeable, with or without
additional consideration, for such shares of capital stock;
(f) purchase or otherwise acquire for any consideration
any outstanding shares of its capital stock;
(g) declare, pay or set apart in respect of its capital
stock any dividends or other distributions or payments;
(h) incur any debt for borrowed money except short-term
bank borrowings in the ordinary and regular course of business;
(i) grant or agree to grant any increases in
compensation to any director, officer, employee, consultant or agent,
including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment or make any promotions of
any officers or employees, other than as required pursuant to the
terms of collective bargaining or union agreements of Company in
effect on the date of this Agreement;
(j) organize any subsidiary corporations, acquire any
capital stock or other equity securities of any other corporation or
acquire any equity ownership interest in any business;
(k) pay, discharge or satisfy any liability or
obligation (whether absolute, accrued, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities or obligations shown or reflected on the
September 30, 1993 Balance Sheet or incurred in the ordinary course of
business since September 30, 1993;
(l) permit or allow any of its assets (real or personal,
tangible or intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind,
except for purchase money liens and materialmen's liens incurred in
the ordinary course of business in connection with the purchase of
property; provided however, that such liens attach only to the
property purchased, none of such liens exceeds in amount the unpaid
balance of the
VI-1
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purchase price of such property and all such liens of Company taken
together shall not exceed $25,000 in the aggregate;
(m) cancel or waive any claim or rights of substantial
value or sell, transfer, distribute or otherwise dispose of any assets
or properties in excess of a value, singularly or in the aggregate, of
$25,000, other than inventory sold in the ordinary course of business;
(n) dispose of or permit to lapse any rights to the use
of any patent, trademark, service mark, trade name, brand name,
copyright or license material to it, or dispose of or (except in the
ordinary course of business) disclose to any person any material trade
secret, formula, process or know-how not heretofore a matter of public
knowledge, the disclosure of which would have a material adverse
effect on Company;
(o) make any capital expenditure or commitment for
additions to property, plant or equipment, except with respect to
expenditures or additions in the normal course of business not to
exceed $25,000 in the aggregate;
(p) pay any amount to, or sell any assets to, or enter
into any agreement or arrangement with, any of its officers, directors
or any Shareholder or any affiliate or associate of any thereof or any
member of any such person's family, except for compensation to
officers at rates not exceeding the level of compensation in effect on
September 30, 1993 and reimbursement of expenses incurred by employees
in connection with their employment; or
(q) agree, whether in writing or not, to do any of the
foregoing.
The parties understand and agree that between the date of
execution of this Agreement and the Closing Date, Shareholders shall continue
to operate the business of Company in the ordinary course, subject to the
limitations described in this Agreement. In addition, between the date hereof
and the Closing, Shareholders shall cause Company to maintain its good standing
in all places set forth in Exhibit 3.1(a) hereto.
Section 6.2 Consents. Shareholders shall, with the assistance
of Russell, which assistance shall not be unreasonably withheld, obtain, or
cause Company to obtain, all consents from parties to loans, contracts, leases
and other agreements of any of Shareholders or Company which are required for
the due and punctual consummation of the transactions contemplated by this
Agreement.
Section 6.3 Right of Inspection. Shareholders will cause
Company to give to Russell and its representatives, from and after the date of
execution of this Agreement and during normal working hours, full access to all
of the properties, books of account, contracts, consultants' studies and
reports, appraisals and valuation studies and reports, documents and records of
Company, and Shareholders will give to Russell and its representatives any and
all such information or documents in their possession. Shareholders will
furnish to Russell and its representatives all additional financial statements
of, and all information with respect to, the business and affairs of Company
that Russell may reasonably request. Shareholders shall cause Company to
permit Russell, at Russell's election and expense, to audit the books and
records of Company prior to the Closing Date. No such examination, inspection
or audit by Russell or its representatives shall in any way affect, diminish or
terminate any of the representations, warranties or covenants of Company or
Shareholders herein expressed.
Section 6.4 Defaults. Shareholders shall give prompt notice to
Russell of (i) any notice of, or other communication relating to, a default or
an event, which with notice or lapse of time or both, would become a default,
received by Company subsequent to the date of this Agreement under any
indenture or loan agreement or under any other agreements which are material
alone or in the aggregate to which Company is a party or by which it is bound
or to which it or any of its properties is subject, (ii) any notice or other
communication from any party to any such instrument alleging that the consent
of such party is or may be required in connection with the transactions
contemplated by this Agreement and (iii) any matter which would be in violation
of any of the representations or warranties of Company or Shareholders.
VI-2
32
Section 6.5 Business Intact. Shareholders will cause Company to
use its best efforts, through the Closing, and Shareholders will cooperate
after the Closing with Company, to preserve intact the business organization of
Company, to keep available to Russell, Subsidiary and the Surviving Corporation
the services of the present employees of Company and to preserve the
relationship of Company with distributors, suppliers, customers, landlords and
others having business relationships with Company, all to the end that the
going business of Company will be unimpaired at and through the time of Closing
and thereafter. Shareholders will promptly notify Russell in writing of any
adverse change in the business of Company, including, without limitation, any
changes in employees, distributors, suppliers or customers.
Section 6.6 Payment of Obligations to Company. Prior to the
Closing, any amounts owing to Company by any Shareholder, or any officer or
director of Company, or any affiliate of any Shareholder or any member of any
Shareholder's family or any firm or corporation in which any such person is
interested, shall be paid in full.
Section 6.7 Operation of Company. Between the date hereof and
the Closing, no Shareholder will deliberately take any action that would cause
any representation or warranty of Company or Shareholders contained herein to
be untrue or incorrect in any material respect.
Section 6.8 Notification. Between the date hereof and the
Closing, Shareholders shall give prompt notice to Russell of any fact,
occurrence or matter which would cause any of the representations, warranties
or covenants of Company or Shareholders set forth herein to be untrue or
incorrect in any material respect.
Section 6.9 No Public Announcement. Prior to the Closing Date,
no Shareholder will make any press release or public announcement with respect
to the transactions contemplated by this Agreement without the consent of
Russell.
[Article VI ends here. The next
page of this Agreement is VII-1.]
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ARTICLE VII
POST-CLOSING COVENANTS OF SHAREHOLDERS
Shareholders covenant and agree as follows:
Section 7.1 Confidentiality. Shareholders agree that, after the
Closing Date, each Shareholder will treat as confidential and will not use or
disclose to others, or permit any affiliate of any Shareholder or any member of
any Shareholder's family to use or disclose to others, any documents, reports
or other information concerning Company or the business theretofore conducted
by Company, or concerning Russell or Subsidiary, or the business, operations or
affairs thereof, except in connection with the enforcement of Shareholders'
rights or the rights of Russell or Subsidiary under this Agreement or as
otherwise required by law or legal process.
Section 7.2 No Public Announcement. After the Closing Date, no
Shareholder will make any press release or public announcement with respect to
the transactions contemplated by this Agreement without at least twenty-four
(24) hours' advance notice thereof to Russell.
[Article VII ends here. The next
page of this Agreement is VIII-1.]
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ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnity by Shareholders. Shareholders agree to
indemnify Russell, Subsidiary and the Surviving Corporation against and save
each of them harmless from all liabilities and damages to Russell, Subsidiary
and the Surviving Corporation arising out of (i) events in the operation of
Company occurring prior to the Effective Time or (ii) the breach of any
representation, warranty, covenant or agreement of Company or Shareholders in
this Agreement or contained in any statement, certificate, exhibit, document or
other instrument delivered to Russell, Subsidiary or the Surviving Corporation
under this Agreement, as well as all reasonable fees and expenses, including,
without limitation, attorneys' fees, incurred by Russell, Subsidiary or the
Surviving Corporation in investigating or defending any of them against the
assertion of any claim with respect to such liability. In respect of any
payment due by Shareholders under the indemnity contained herein, Russell,
Subsidiary or the Surviving Corporation, as the case may be, shall, if it is
satisfied that the same has been or will be subject to taxation other than
taxation which would have been payable in any event if the breach of warranty
had not occurred, be entitled to demand from Shareholders such amount as will
insure that the net receipt, after such taxation to Russell, Subsidiary or the
Surviving Corporation in respect of such payment, is the same as it would have
been were the payment not subject to taxation. Russell, Subsidiary and the
Surviving Corporation agree that, within 20 days after any of them is given
notice of the assertion of any claim as to liability with respect to which
indemnity may be sought by Russell, Subsidiary or the Surviving Corporation
hereunder, Russell, Subsidiary or the Surviving Corporation will notify
Shareholders in writing of such asserted liability. If, within 10 days after
the receipt of such notice, Shareholders notify Russell, Subsidiary and the
Surviving Corporation in writing of Shareholders' election to have the asserted
liability defended by Shareholders, Shareholders thereafter shall be entitled
to direct, through counsel of Shareholders' own choosing, reasonably acceptable
to Russell, Subsidiary and the Surviving Corporation, the defense against such
asserted liability at Shareholders' own expense. In case Shareholders so elect
to direct such defense, Russell, Subsidiary and the Surviving Corporation may
participate in such defense, but in such case the fees and expenses incurred
therein by Russell, Subsidiary and the Surviving Corporation shall be borne by
Russell, Subsidiary and the Surviving Corporation unless such participation by
Russell, Subsidiary and the Surviving Corporation has been requested in writing
by Shareholders. In case Shareholders do not elect as aforesaid to direct such
defense, Russell, Subsidiary and the Surviving Corporation may then, in their
sole discretion, elect to defend such matter, in which event the fees and
expenses of Russell, Subsidiary and the Surviving Corporation shall be borne by
Shareholders, jointly and severally. In the event Shareholders elect to direct
such defense as herein set out, Russell, Subsidiary and the Surviving
Corporation shall not pay, or cause or permit to be paid, any part of any claim
or demand arising from such asserted liability until Shareholders consent in
writing to such payment or until Shareholders choose in writing to withdraw
from the defense of such asserted liability or until a final judgment from
which no appeal has been taken by or on behalf of Shareholders is entered
against Russell, Subsidiary or the Surviving Corporation for such liability.
Then, and in any such event, Shareholders shall become obligated to pay such
liability to the extent such liability is within the terms and conditions
hereof. If Shareholders do not elect to defend, as Shareholders are herein
authorized to do, Russell, Subsidiary or the Surviving Corporation, as the case
may be, shall be entitled to charge such asserted liability, to the extent such
liability is within the terms and conditions hereof, to Shareholders at such
time or at such time as Russell, Subsidiary or the Surviving Corporation, as
the case may be, reaches the decision to make no further defense in connection
with such asserted liability on its own behalf as hereinabove authorized.
Notwithstanding anything to the contrary contained in this
Agreement, the indemnity agreement of Shareholders contained in the preceding
paragraph of this Section 8.1 shall be limited as follows:
(a) Shareholders shall have no obligation to indemnify
Russell, Subsidiary and the Surviving Corporation against liabilities,
damages and expenses incurred by Russell, Subsidiary or the Surviving
Corporation in investigating, defending or satisfying any claim with
respect to such liability unless or until the aggregate of all such
liabilities, damages and expenses (excluding attorney's fees) suffered
or incurred by Russell, Subsidiary or the Surviving Corporation
exceeds $25,000, in which event Russell, Subsidiary and the Surviving
Corporation shall be entitled to indemnification for the amount of all
liabilities, damages and expenses (including reasonable attorney's
fees) suffered or incurred in excess of $25,000.
VIII-1
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(b) With respect to claims by Russell, Subsidiary and
the Surviving Corporation for indemnification from Shareholders with
respect to accounts receivable, if the total amount of the
uncollectible accounts receivable exceeds the reserve for doubtful
accounts established by Company as of the Determination Date,
Russell's right to recover with respect to uncollectible accounts
receivable will be reduced by the amount of any accounts receivable
written off by Company in the ordinary and regular course of business
and charged against the reserve for doubtful accounts prior to the
Closing Date and thereafter collected prior to the assertion of the
claim by Russell for indemnification.
Section 8.2 Indemnity by Russell. Russell agrees to indemnify
Shareholders and save Shareholders harmless from all liabilities, damages,
costs and expenses (including reasonable attorney's fees) arising out of the
guarantees or endorsements by Shareholders of obligations of Company incurred
by Company in the ordinary course of its business prior to the Closing Date,
which said obligations are unpaid or otherwise unsatisfied and are described in
Exhibit 8.2 to this Agreement.
[Article VIII ends here. The next
page of this Agreement is IX-1.]
VIII-2
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ARTICLE IX
EXPENSES
Section 9.1 Expenses of Shareholders and Company. All expenses
incurred by or on behalf of Company or any Shareholder in connection with the
negotiation, execution and performance of this Agreement, including the fees
and expenses of counsel and auditors or accountants for Company or any
Shareholder shall be paid by Company or Shareholders, as appropriate, whether
or not the transactions contemplated in this Agreement are consummated.
Section 9.2 Expenses of Russell. All expenses incurred by or on
behalf of Russell or Subsidiary in connection with the negotiation, execution
and performance of this Agreement, including the fees and expenses of counsel
and auditors for Russell or Subsidiary, shall be paid by Russell or Subsidiary,
whether or not the transactions contemplated in this Agreement are consummated.
[Article IX ends here. The next
page of this Agreement is X-1.]
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ARTICLE X
THE CLOSING
Section 10.1 Time and Place of Closing. The closing under this
Agreement (the "CLOSING") will take place at the offices of Bradley, Arant,
Rose & White, at 9:00 a.m., local time, on April 1, 1994, or at such other
date, or at such different time or place, as the parties may agree upon (the
"CLOSING DATE").
Section 10.2 Conditions of Obligations of Russell and Subsidiary.
The obligations of Russell and Subsidiary shall be subject to the fulfillment
at or prior to the Closing of each of the following conditions:
(a) Correctness of Representations and Warranties of
Company and Shareholders. All representations and warranties of Company and
Shareholders contained in this Agreement or otherwise made in writing pursuant
to this Agreement shall be true and correct at and as of the Closing with the
same force and effect as though made at and as of the Closing, except for
changes contemplated or permitted by this Agreement.
(b) Obligations and Conditions. Company and
Shareholders shall have performed and complied with all of the obligations and
conditions required by this Agreement to be performed or complied with by
Company and Shareholders at or prior to the time of Closing.
(c) Certificate Respecting Fulfillment of Conditions.
Shareholders will deliver to Russell and Subsidiary a certificate dated the
date of the Closing, as to the fulfillment of the matters described in
paragraphs (a) and (b) of this Section 10.2.
(d) No Proceedings. No proceeding or formal
investigation shall have been commenced by any governmental or regulatory
agency or by any other person or entity with respect to any of the transactions
contemplated by this Agreement.
(e) Expiration of Applicable Waiting Periods. Any
waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR ACT") and any rules or orders of the Federal
Trade Commission (the "FTC") or under any other applicable law, statute, order
or ruling of any government or agency or instrumentality thereof, shall have
expired or been terminated.
(f) Satisfaction of Russell and its Counsel. All
proceedings to be taken in connection with the consummation of the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Russell and its counsel, and
Russell and its counsel shall have received copies of such documents as its
counsel may reasonably request in connection with said transactions.
(g) Opinion of Counsel for Company. Russell shall have
received an opinion from Scruggs, Jordan & Dodd, P.A., counsel for Company,
dated the Closing Date, in form and substance satisfactory to counsel for
Russell (which approval shall not be unreasonably withheld), to the effect
that:
(i) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Alabama
and has full corporate power to own its properties and conduct its
business as now being conducted; and Company is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which
its ownership of property or the nature of the conduct of its business
requires such qualification, including, without limitation, the
jurisdictions listed in Exhibit 3.1(a);
(ii) the par value and number of authorized shares,
unissued shares, treasury shares and outstanding shares of Company are
as set forth in Section 3.1(b) of this Agreement; and all of said
outstanding shares are legally and validly authorized and issued and
are fully paid and non-assessable;
X-1
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(iii) Company has good and marketable title to all assets
represented as being owned by it, and Company owns all such assets
free and clear of any mortgage, lien, encumbrance, claim, charge,
title retention or other security arrangement, except Permitted
Encumbrances as defined in this Agreement;
(iv) said counsel does not know, and has no reason to
believe, that any suit, proceeding or investigation is pending or
threatened against Company or any Shareholder or Reece, insofar as any
such suit, proceeding or investigation relates to Company, or the
transactions contemplated hereby, including specifically the
representation and warranty contained in Section 3.16 of this
Agreement, other than as disclosed in certain Exhibits to this
Agreement specifically referred to in said opinion; and
(v) the execution and performance of this Agreement, the
Escrow Agreement and each other agreement executed and delivered in
connection herewith will not result in a breach of or constitute a
default under any charter or bylaw provision of Company or, to the
best of the knowledge of said counsel (after diligent investigation),
any agreement or other document to which Company is a party or by
which Company or any of its property is bound or any decree, order,
rule or award of any court or other governmental authority or
arbitrators which is binding on Company or any property of Company or,
to the best of the knowledge of said counsel (after diligent
investigation), any agreement or other document to or by which any
Shareholder or Reece is a party or any decree, order, rule or award of
any court or other governmental authority or arbitrators which is
binding on any Shareholder or Reece insofar as any such agreement,
document, decree, order, rule, or award relates to Company or the
transactions contemplated hereby.
Such opinion shall also cover such related matters as Russell
may reasonably require.
(h) Opinion of Counsel for Shareholders. Russell and
Subsidiary shall have received an opinion from counsel for Shareholders, who
may also be counsel for Company, dated the Closing Date, in form and substance
satisfactory to counsel for Russell and Subsidiary (which approval shall not be
unreasonably withheld), to the effect that:
(i) On the date of the execution of this Agreement,
Shareholders and Reece were, and on the Closing Date Shareholders and
Reece are, the only beneficial and record owners of the capital stock
of Company;
(ii) On the date of the execution of this Agreement and
on the Closing Date, the shares of capital stock of Company owned by
Shareholders and Reece are free and clear of all liens, encumbrances,
options, proxies, equities and claims;
(iii) This Agreement and the Escrow Agreement have been
duly and legally executed and delivered by each Shareholder; and is
the valid and binding agreement of each Shareholder, enforceable
against such Shareholder in accordance with its respective terms;
(iv) To the best of the knowledge of said counsel (after
diligent investigation), the execution and performance of this
Agreement and the Escrow Agreement and any other agreements to which
they are a party contemplated hereby will not result in a breach of or
constitute a default under any agreement or other document to or by
which any Shareholder is a party or is bound or any decree, order or
rule of any court or other governmental authority which is binding on
any Shareholder; and
(v) Such counsel does not know, and does not have reason
to believe, that any suit, proceeding or investigation by any persons,
which questions or could affect this Agreement, or the transactions
contemplated hereby, is pending or threatened.
X-2
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Such opinion shall also cover such related matters as Russell
may reasonably require.
(i) Preservation of Business. The going business of
Company and its business organization and personnel shall have been preserved
intact and shall not have been impaired.
(j) Non-impairment of Relations. The relations of
Company with suppliers, customers, landlords and others shall have been
preserved intact and not impaired.
(k) Russell's Knowledge of Material Variance. Russell
shall not have learned of any fact or condition with respect to the business,
properties, assets or earnings of Company which is materially at variance with
one or more of the warranties or representations of Company or Shareholders set
forth in this Agreement or which in Russell's sole opinion materially and
adversely affects or may affect such business, properties, assets or earnings
or the ownership, or value or continuance thereof.
(l) Resignations of Officers and Directors of Company.
Shareholders shall have procured the resignations of the officers and directors
of Company indicated in Exhibit 10.2(l) without any claim for loss of office.
(m) Confidential Matters. Shareholders shall have
delivered to Russell all documents and other materials and all copies thereof
owned or used by Shareholders reasonably believed by Shareholders to be both
confidential and reasonably appropriate for the operation of Company.
(n) Escrow Agreement. Shareholders, Russell and Escrow
Agent shall have executed and delivered the Escrow Agreement.
(o) Satisfaction with Respect to Licenses. Russell
shall receive such assurances as it deems reasonable from the licensors under
the licensing agreements held by Company that such licensing arrangements will
not be terminated as a result of the consummation of the transactions
contemplated by this Agreement.
(p) Environmental Audit. Russell shall have received a
report with respect to an environmental audit, the cost of which audit shall be
borne by Russell, of the premises owned or leased by Company, the contents of
which report shall be satisfactory to Russell.
(q) Lease. Company shall have entered into a lease with
respect to the premises in which certain of its existing operations known as
"Plant No. 2" are conducted, the terms of which lease shall be satisfactory to
Russell.
(r) Dissent. No shareholder of Company shall dissent
from the Merger.
(s) Termination of Certain Agreements. Company,
Shareholders and certain employees and former employees of Company shall have
executed agreements, which agreements shall contain, among other things, a
general release of Company from any liability and shall be effective at the
Effective Time, terminating the following agreements and understandings: (i)
Executive Employment Contract, dated as of December 30, 1992, between Company
and Robert H. Yoe, III; (ii) Shareholders Agreement, dated December 30, 1992,
among Company, John K. Tcherneshoff, Robert H. Yoe, III and Susan T. McCurdy;
and (iii) all agreements or understandings between Company and any employee or
former employee, including, Robert H. Yoe, III, Robby Davis, Dennis Traylor, or
David R. Austin, regarding compensation (including employee bonuses) or any
other matters relating to employment.
(t) Non-Competition Agreement. Russell and Subsidiary
shall have executed a Non-Competition Agreement with Robert H. Yoe, III, in
form and substance satisfactory to Russell.
Section 10.3 Conditions of Obligations of Company and
Shareholders. The obligations of Company and Shareholders hereunder shall be
subject to the fulfillment at or prior to the time of Closing of each of the
following conditions:
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(a) Satisfaction of Company, Shareholders and their
Respective Counsel. All proceedings to be taken in connection with the
consummation of the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Company, Shareholders and their respective counsel, and Company,
Shareholders and their respective counsel shall have received copies of such
documents as counsel may reasonably request in connection with said
transactions.
(b) Representations and Warranties of Russell and
Subsidiary. All representations and warranties of Russell and Subsidiary
contained in this Agreement shall be true and correct at and as of the time of
Closing, with the same force and effect as though made at and as of the time of
Closing, except for changes contemplated or permitted by this Agreement.
(c) Obligations and Conditions. Russell and Subsidiary
shall have performed and complied with all of the obligations and conditions
required by this Agreement to be performed or complied with by them at or prior
to the time of Closing.
(d) Certificate Respecting Fulfillment of Conditions.
Russell and Subsidiary will deliver to Shareholders a certificate dated the
Closing Date, executed on the behalf of each by their respective President or
by any Vice President, however denominated, as to the fulfillment of the
conditions set forth in paragraphs (a) and (b) of this Section 10.3.
(e) Opinion of Counsel for Russell and Subsidiary.
Shareholders shall have received an opinion from Bradley, Arant, Rose & White,
counsel for Russell and Subsidiary, dated the Closing Date, in form and
substance satisfactory to counsel for Shareholders (which approval shall not be
unreasonably withheld), to the effect that:
(i) Each of Russell and Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Alabama;
(ii) this Agreement has been duly and legally authorized
by all necessary corporate action on the part of each of Russell and
Subsidiary, has been duly and legally executed and delivered by
Russell and Subsidiary, and is the valid and binding agreement of
Russell and Subsidiary enforceable in accordance with its terms; and
(iii) the execution and performance of this Agreement will
not result in a breach of or constitute a default under any charter or
bylaw provision which is binding on Russell or Subsidiary or, to the
best of the knowledge of said counsel (after diligent investigation),
any agreement or other document to or by which Russell or Subsidiary
is a party or is bound or any decree, order or rule of any court or
other governmental authority which is binding on Russell or
Subsidiary.
(f) No Proceedings. No proceeding or formal
investigation shall have been commenced by any governmental or regulatory
agency or by any other person or entity with respect to any of the transactions
contemplated in this Agreement.
(g) Expiration of Applicable Waiting Periods. Any
waiting period applicable to the Merger under the HSR Act and any rules or
orders of the FTC or under any other applicable law, statute, order or ruling
of any government or agency or instrumentality thereof, shall have expired or
been terminated.
(h) Escrow Agreement. Russell, Shareholders and the
Escrow Agent shall have executed and delivered the Escrow Agreement.
(i) Value of Russell Common Stock. The value of the
Russell Common Stock to be issued in the Merger, valued at the average closing
sales price per share of common stock of Russell as reported on the New York
Stock Exchange for the ten (10) trading days immediately preceding the Closing
Date, equals or exceeds $10,000,000.
X-4
41
Section 10.4 Additional Conditions of the Closing. The
obligations of Russell and Subsidiary under this Agreement shall be subject to
the condition that (i) Shareholders, Reece, their respective affiliates and
members of their respective families and firms and corporations in which any
one or more thereof have an interest shall pay all indebtedness owing to
Company and (ii) Company shall be released from any liability, contingent or
otherwise, if any, with respect to any indebtedness of any Shareholder or
Reece.
[Article X ends here. The next
page of this Agreement is XI-1.]
X-5
42
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Warranties of the Parties Shall Survive the Closing.
All representations, warranties, covenants and agreements herein contained of
all parties shall survive the Closing and the deliveries hereunder, regardless
of any investigation made by or on behalf of any such party, and shall continue
for a period of three (3) years from the Closing Date, at which time all
representations, warranties, covenants and agreements (except those with
respect to tax matters) shall expire and become null and void, unless prior to
such date, written notice of a claim for inaccuracy or breach of such
representations, warranties, covenants and agreements shall be delivered to
Shareholders pursuant to Section 11.4. All representations, warranties,
covenants and agreements with respect to tax matters shall expire on the date
when the entity charged with collecting such tax, by virtue of the applicable
statute of limitations, is unable to assess a tax against Company for
operations or income for all periods prior to and through the Closing Date.
Section 11.2 Termination of Agreement. This Agreement may be
terminated under any of the following circumstances by notice given on or
before the Closing Date:
(a) Russell and Subsidiary shall have the right to
terminate if, during the period from the date hereof to the Closing Date,
Russell shall learn of any fact or condition which is materially at variance
with one or more of the warranties or representations of Company or
Shareholders set forth in this Agreement, or if Company or Shareholders shall
fail in any material respect to perform the covenants set forth in this
Agreement.
(b) Company and Shareholders shall have the right to
terminate if, during the period from the date hereof to the Closing Date,
Company or Shareholders shall learn of any fact or condition which is
materially at variance with one or more of the warranties or representations of
Russell or Subsidiary set forth in this Agreement.
(c) Each party may, at its election, waive any of its
rights to terminate this Agreement under the provisions of this Section 11.2,
and shall be deemed to have waived such rights upon completion of the Closing
under this Agreement.
(d) Each party shall have the right to terminate this
Agreement if the Closing shall not have occurred by May 1, 1994.
(e) In the event of a termination of this Agreement as
provided in this Section 11.2, this Agreement shall forthwith become void and
there shall be no liability on the part of any party hereunder, except as set
forth in Article IX. Nothing contained in this Section 11.2 shall relieve any
party from liability for any breach of this Agreement.
Section 11.3 Press Releases, Announcements. Between the date
hereof and the Closing, no party shall make any press release or public
announcement in respect of the transactions contemplated by this Agreement,
except to the extent, if any, required by law (and in no event will any such
press release or public announcement be made by either party without at least
twenty-four hours advance notice thereof to the other parties); provided,
however, that Russell and Company may, without liability to any other party,
make a joint announcement at any time following execution of this Agreement.
Section 11.4 Notices. Any notice to a party hereto pursuant to
this Agreement shall be given in writing either by delivery in person or by
certified or registered mail, addressed as follows:
XI-1
43
If to Shareholders, then to:
John K. Tcherneshoff
621 Gulf Shores Drive
Destin, Florida 32545
Robert H. Yoe, III
1000 Laurel Lane
Fort Payne, Alabama 35967
Susan T. McCurdy
Route 7, Box 755
Fort Payne, Alabama 35967
with copies to:
William D. Scruggs, Jr.
Scruggs, Jordan & Dodd, P.A.
P. O. Box 1109
Ft. Payne, AL 35967
If to Russell then to:
Russell Corporation
Lee Street
Alexander City, Alabama 35010
Attention: Steve R. Forehand
with copies to:
Bradley, Arant, Rose & White
1400 Park Place Tower
2001 Park Place
Birmingham, Alabama 35203
Attention: William L. Hinds, Jr., Esq.
Any notice hereunder shall be deemed delivered upon the second
business day after the day such notice is placed in the mails so addressed (or
to such other address as any party hereto shall advise the other in writing),
with postage prepaid.
Section 11.5 Registration Statement. As soon as practicable
after the Closing Date (but in no event later than one hundred eighty (180)
days), Russell shall prepare and file with the Securities and Exchange
Commission a registration statement on Form S-3, and all amendments and
supplements thereto, with respect to the Russell Common Stock issued pursuant
to this Agreement (the "REGISTRATION STATEMENT"), and Russell shall use its
best efforts to cause the Registration Statement to become effective. In
addition, Russell shall use its best efforts to obtain, prior to the sale of
any such shares following the effective date of the Registration Statement,
such "blue sky" permits and approvals as may be required to carry out the
transactions contemplated by this Agreement and the Merger. Shareholders agree
that from time to time and upon the request of Russell, they will execute
investment letters or other similar documents confirming the representations
and warranties made by Shareholders in this Agreement.
XI-2
44
Section 11.6 Table of Contents; Captions. The table of contents
and the captions and other headings contained in this Agreement as to the
contents of particular articles, sections, paragraphs or other subdivisions
contained herein are inserted for convenience of reference only and are in no
way to be construed as part of this Agreement or as limitations on the scope of
the particular articles, sections, paragraphs or other subdivisions to which
they refer and shall not affect the interpretation or meaning of this
Agreement.
Section 11.7 Incorporation of Appendices and Exhibits. Except as
otherwise expressly stated, each reference in this Agreement to an "EXHIBIT"
refers to an exhibit to this Agreement. This Agreement shall be deemed to have
incorporated by reference all of the Exhibits referred to herein to the same
extent as if such Exhibits were fully set forth herein. Each reference herein
to "this Agreement" or "the Agreement" shall be construed to include each
Exhibit. An item disclosed in an Exhibit to this Agreement is only deemed
disclosed in connection with the specific representation to which it is
explicitly referenced.
Section 11.8 Entire Agreement; Amendment; Modification;
Extension; Waiver. This Agreement and the Exhibits represent the entire
understanding and agreement between the parties with respect to the subject
matter hereof and shall supersede any prior agreements and understanding
between the parties with respect to that subject matter. This Agreement may
not be amended, supplemented or modified orally, but only by a written
instrument signed by the party against which enforcement of any such amendment
supplement or modification is sought. At any time prior to or subsequent to
the Closing, the parties hereto may, by mutual written agreement and in no
other manner, (a) extend the time for the performance of any of the obligations
or other acts of the parties hereto, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant hereto, or (c) waive compliance with any of the covenants or
agreements contained in this Agreement. A waiver by any party of any
inaccuracy in the representations and warranties contained in this Agreement or
in any document delivered pursuant hereto or the compliance with any of the
covenants or agreements contained in this Agreement shall not be deemed to
waive any inaccuracy in any representation, warranty or document or compliance
with any other covenant or agreement.
Section 11.9 Severability. In the event any provision or portion
of this Agreement is deemed to be invalid or unenforceable, in whole or in
part, for any reason, the remainder thereof shall not be invalidated or
rendered unenforceable or otherwise adversely affected.
Section 11.10 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
parties hereto, and their respective estates, successors, legal or personal
representatives, heirs, distributees, designees and assigns, but no assignment
shall relieve any party of the obligations hereunder. This Agreement cannot be
assigned by any party without the prior written consent of the other parties
hereto.
Section 11.11 Governing Law. This Agreement shall be controlled,
construed and enforced in accordance with the substantive laws of the state of
Alabama without regard to the application of the laws of Alabama regarding
conflict of laws.
Section 11.12 Preparation of Agreement. Each of the parties
acknowledges that each party to this Agreement has been represented by counsel
in connection with preparation and negotiation of this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of law or
legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted the Agreement shall have no
application and any such right is expressly waived.
Section 11.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 11.14 Claims. Each Shareholder understands, acknowledges
and agrees that there is no requirement that Russell or the Surviving
Corporation bring a claim against every Shareholder committing a breach of this
Agreement in order to recover damages for that breach and that, in the event of
a breach by more than one Shareholder of a representation, warranty, covenant
or agreement contained in this Agreement, either Russell, the Surviving
Corporation or both may bring a claim for such breach against any one or more
of the breaching
XI-3
45
Shareholders without joining all of the breaching Shareholders in such claim;
provided, however, that the liability of any Shareholder for any such breach
shall be only for such Shareholder's pro rata share of such liability based on
the percentage of such Shareholder's ownership of Company Common Stock shown in
Exhibit 2.2.
Section 11.15 Assumption of Liability. Subject to the obligations
of Shareholders to indemnify Subsidiary and the Surviving Corporation pursuant
to the terms of this Agreement, Subsidiary and the Surviving Corporation agree
to assume and be responsible for all liabilities arising out of events in the
operation of Company occurring after the Effective Time.
[Article XI ends here. The next
page of this Agreement is the
first page of the signature pages.]
XI-4
46
IN WITNESS WHEREOF, the parties have executed this document as of the
date first above written.
RUSSELL CORPORATION
By /s/ JAMES D. NABORS
--------------------------------
Its Executive Vice President
and Chief Financial Officer
ATTEST:
By /s/ STEVE R. FOREHAND
-------------------------------------
Its Secretary
TUBECO, INC.
By /s/ JAMES D. NABORS
--------------------------------
Its President
ATTEST:
By /s/ STEVE R. FOREHAND
-------------------------------------
Its Secretary
DESOTO MILLS, INC.
By /s/ ROBERT H. YOE, III
--------------------------------
Its President
ATTEST:
By /s/ SUSAN T. HAWKINS
-------------------------------------
Its Secretary
47
/s/ JOHN K. TCHERNESHOFF
--------------------------------
JOHN K. TCHERNESHOFF
WITNESS:
/s/ WILLIAM D. SCRUGGS
- ----------------------------------------
/s/ ROBERT H. YOE, III
--------------------------------
ROBERT H. YOE, III
WITNESS:
/s/ WILLIAM D. SCRUGGS
- ----------------------------------------
/s/ SUSAN T. HAWKINS
--------------------------------
SUSAN T. McCURDY
WITNESS:
/s/ E. ALLEN DODD, JR.
- ----------------------------------------
48
GLOSSARY
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .X-1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .X-1
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-6
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
Dependents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-6
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-2
Employee benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . .III-3
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .III-3
Excess Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Exhibit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . III-14
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
Interim Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . .III-2
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .III-5
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . .III-9
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-10
Reece . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
Russell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
September 30, 1993 Balance Sheet . . . . . . . . . . . . . . . . . . . . .III-2
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-2
49
LIST OF EXHIBITS
A Articles of Merger
2.2 Shareholders
2.4 Escrow Agreement
3.1(a) Domicile, Powers and Qualifications under the laws of the
State of Alabama
3.1(d) Authorization by Company or Shareholder
3.3 Liabilities or obligations by Company
3.4(a)(i) Real Property description of interests of Company
3.4(a)(ii) Personal Property description of leases and other
agreements affecting rights of Company
3.4(a)(iii) Purchase Orders for Non-Capital Assets by Company
3.4(a)(iv) Employee Benefit Plans of Company
3.4(a)(v) Employment contracts or agreement by Company
3.4(a)(vi) Purchase Orders for Capital Assets of Company
3.4(a)(vii) Collective Bargaining Agreements of Company
3.4(a)(viii) Business Relationships with Shareholders by Company
3.4(a)(ix) Independent Contractors of Company
3.4(a)(x) Service Agreements binding on Company
3.5(k) COBRA
3.6(a) Insurance policies of Company
3.6(b) List of all claims made by Company since September 30, 1993
3.7 Taxes
3.7(c) Audits
3.8 Conflicts of Interest
3.9 Fixed Assets of Company
3.10 Inventory Listings of Company
3.12 Lines of Credit of Company
3.13 Patents, Etc.
50
3.14 Title of Property; Condition of Property by Company
3.16 Litigation Affecting Company
3.17 Employees; Payroll Taxes, Etc.
3.18 Bank Accounts of Company
3.19 No Breach by Company
3.21 Subsequent Events of Company
3.22 No Losses of Company
3.27 Environmental Matters of Company
3.28 Subsidiaries of Company
5.2 Approvals; No Conflict by Russell and Subsidiary
8.2 Indemnity by Russell
10.2(l) Resignations of Officers and Directors of Company
51
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1 (the "Amendment"), dated as of March 30, 1994,
to that certain Agreement and Plan of Merger dated as of February 25, 1994 (the
"Merger Agreement"), by and among Russell Corporation, an Alabama corporation,
Tubeco, Inc., an Alabama corporation, DeSoto Mills, Inc., an Alabama
corporation, and John K. Tcherneshoff, Robert H. Yoe, III and Susan T. McCurdy,
also known as Susan T. Hawkins.
NOW, THEREFORE, in consideration of the premises and mutual
covenants, representations, warranties and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Amendment to Section 1.4. The Merger Agreement is hereby
amended by deleting Section 1.4 therein and inserting in its place and stead
the following:
"Section 1.4 Articles of Incorporation. The Articles
of Incorporation of Company, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation."
2. Amendment to Section 1.5. The Merger Agreement is hereby
amended by deleting Section 1.5 therein and inserting in its place and stead
the following:
"Section 1.5 Bylaws. The bylaws of Company, as in
effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation."
3. Amendment to Section 2.2. The Merger Agreement is hereby
amended by deleting the first sentence of Section 2.2 therein and inserting in
its place and stead the following:
"Company has authorized capital stock consisting of 7,100
shares of common stock, par value $1.00 per share, of which 5,554
shares are issued and outstanding and 1,546 shares are held as
treasury stock (hereinafter referred as "COMPANY COMMON STOCK")."
4. Amendment to Section 2.3(a). The Merger Agreement is
hereby amended by deleting the phrase, "Five Thousand Five Hundred Fifty-Six
(5,556)," which appears in the eighth line of Section 2.3(a) and inserting in
its place and stead the following: "Five Thousand Five Hundred Fifty-Four
(5,554)".
5. Amendment to Section 3.1(b). The Merger Agreement is
hereby amended by deleting the first sentence of Section 3.1(b)(i) and
inserting in its place and stead the following:
"The authorized capital stock of Company consists of 7,100
shares of common stock, par value $1.00 per share, 5,554 shares of
which have been duly and validly issued and are outstanding, and are
fully paid and non-assessable, and 1,546 of which are held as
treasury stock by Company."
1
52
6. Amendment to Exhibit 2.2. The Merger Agreement is hereby
amended by deleting Exhibit 2.2 therein and inserting in its place and stead
the following:
"EXHIBIT 2.2
Shareholder Number of Shares Percentage
- ------------------------- -------------------------- -----------------------
John K. Tcherneshoff 3,609 64.98%
Robert H. Yoe, III 1,389 25.01%
Susan T. McCurdy 555 9.99%
Sandy Reece 1 .02%
------ -------
5,554 100.00%"
2
53
IN WITNESS WHEREOF, the parties have executed this document as of the
date first above written.
RUSSELL CORPORATION
By /s/ JAMES D. NABORS
-------------------------------------
Its Executive Vice President
and Chief Financial Officer
ATTEST:
By /s/ STEVE R. FOREHAND
-----------------------------------
Its Secretary
TUBECO, INC.
By /s/ JAMES D. NABORS
-------------------------------------
Its President
ATTEST:
By /s/ STEVE R. FOREHAND
-----------------------------------
Its Secretary
DESOTO MILLS, INC.
By /s/ ROBERT H. YOE, III
-------------------------------------
Its President
ATTEST:
By /s/ SUSAN T. HAWKINS
-----------------------------------
Its Secretary
3
54
/s/ JOHN K. TCHERNESHOFF
-------------------------------------
JOHN K. TCHERNESHOFF
WITNESS:
/s/ E. ALLEN DODD, JR.
- --------------------------------------
/s/ ROBERT H. YOE, III
------------------------------------
ROBERT H. YOE, III
WITNESS:
/s/ E. ALLEN DODD, JR.
- --------------------------------------
/s/ SUSAN T. HAWKINS
-------------------------------------
SUSAN T. HAWKINS
WITNESS:
/s/ E. ALLEN DODD, JR.
- --------------------------------------
4