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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 6, 1995 between
DUNDEE MILLS, INCORPORATED., a Georgia corporation ("Dundee"), DUNDEE
ACQUISITION CORP., a Georgia corporation ("Subcorp"), and SPRINGS INDUSTRIES,
INC. ("Springs"), a South Carolina corporation (the "Agreement").
BACKGROUND STATEMENT
Springs and Dundee desire to effect a business combination of Dundee
and SubCorp pursuant to which Dundee will merge with and into Subcorp, and the
holders of shares of Dundee Common Stock, $25.00 par value ("Dundee Shares"),
will receive shares of Springs Class A Common Stock, par value $.25 per share
("Springs Shares"), in exchange for Dundee Shares, as provided in this
Agreement (the "Merger"), subject to the limited right to make an election to
receive cash. The Merger is intended to be a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended.
The respective Boards of Directors of Springs, Subcorp and Dundee each has
approved this Agreement and the Merger. The Board of Directors of Dundee has
directed that this Agreement be submitted to the shareholders of Dundee for
their approval.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE 1
THE BUSINESS COMBINATION
1.1 THE MERGER. At the Effective Time (as defined in Section 1.3
hereof), Dundee shall be merged with and into Subcorp in accordance with the
provisions of this Agreement and the Georgia Business Corporation Code, (the
GBCC"), and the separate existence of Dundee shall thereupon cease, and
Subcorp, as the surviving corporation in the Merger (hereinafter sometimes
referred to as the "Surviving Corporation"), shall continue its corporate
existence under the laws of the State of Georgia as a wholly-owned subsidiary
of Springs. The Merger shall have the effects provided under the applicable
laws of the State of Georgia including, but not limited to, Section 14-2-1106
of the GBCC.
1.2 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at
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the offices of Sutherland, Asbill & Brennan, 999 Peachtree Street, N.E.,
Atlanta, Georgia 30309-3996, as soon as possible after all conditions set forth
in Article 5 have been satisfied or waived in writing but in no event later
than the third business day after all such conditions shall have been satisfied
or waived (the "Closing Date.")
1.3 EFFECTIVE TIME OF THE MERGER. If all the conditions set forth in
Article 5 shall have been fulfilled or waived in accordance with this Agreement
and provided that this Agreement has not been terminated pursuant to Article 6,
on the Closing Date the parties shall cause the certificate of merger attached
hereto as Exhibit A (the "Certificate of Merger") to be executed, delivered and
filed with the Secretary of State of Georgia in accordance with the provisions
of the GBCC. The Merger shall become effective at the time of such filing
unless a different effective time is specified in the Certificate of Merger
pursuant to the GBCC (the "Effective Time").
1.4 ARTICLES OF INCORPORATION; BYLAWS. The Articles of Incorporation
and Bylaws of Subcorp as in effect immediately prior to the Effective Time
shall be the Articles of Incorporation and Bylaws of the Surviving Corporation,
until duly amended in accordance with applicable law (subject to Section 4.14
hereof), except that the name of the Surviving Corporation shall be changed to
Dundee Mills, Incorporated.
1.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At the
Effective Time the persons who are directors and officers of Subcorp at the
Effective Time will become the directors and officers of the Surviving
Corporation until such time as they may be replaced in accordance with the
Bylaws of the Surviving Corporation.
ARTICLE 2
CONVERSION AND EXCHANGE OF SHARES; ADDITIONAL ACTION
2.1 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof:
(a) DUNDEE SHARES. Subject to Section 2.2, each issued and
outstanding Dundee Share (excluding any Dundee Shares held by Springs
or its Subsidiaries), shall automatically be cancelled and
extinguished and shall thereafter be converted into only the right to
receive the consideration for the Merger as set forth in Sections 2.2,
2.3 and 2.4 (the "Merger Consideration").
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(b) TREASURY SHARES. Each Dundee Share held in the treasury of
Dundee shall be automatically cancelled and extinguished, and no
payment shall be made in respect thereof.
(c) SUBCORP COMMON STOCK. Each issued and outstanding share of
Subcorp common stock at the Effective Time shall thereafter represent
one validly issued, fully paid and nonassessable share of common stock
of the Surviving Corporation.
2.2 MERGER CONSIDERATION. The Merger Consideration to be paid for
each Dundee Share shall be equal to Two Thousand Five Hundred Twenty Five
dollars ($2,525.00). The Merger Consideration shall be paid in Springs Shares
as provided in this Section 2.2 and, to the extent applicable, cash pursuant to
Section 2.3 and Section 2.4.
(a) PAYMENT OF MERGER CONSIDERATION. The Merger Consideration to
be paid in Springs Shares shall be determined as follows:
(i) Subject to the limitations set forth in this Section
2.2, each Dundee Share shall be converted into the right to
receive a number of Springs Shares equal to the result of dividing
the Merger Consideration by the Reported Market Price (as
hereinafter defined) of Springs Shares; provided, however, that in
lieu of conversion of Dundee Shares into Springs Shares, holders
of Dundee Shares may elect in accordance with and subject to the
conditions of Section 2.3 (a "Cash Election") to receive payment
of the Merger Consideration in cash.
(ii) The maximum number of Dundee Shares that shall be
converted into the right to receive cash shall be 23,363 Dundee
Shares, less the total number of Dundee Shares as to which the
holders have exercised appraisal rights with respect to the Merger
pursuant to the GBCC ("Dissenting Shares"), which maximum number
of Dundee Shares as to which Cash Elections may be made is
hereinafter referred to as the "Maximum Number of Cash Election
Shares."
(iii) The maximum number of Springs Shares that shall be
issued as Merger Consideration shall be three million Springs
Shares. If the number of Dundee Shares as to which a Cash
Election has not been validly made or as to which a Cash Election
has been validly made but has been withdrawn by the holder or
eliminated or rejected by the Exchange Agent (as hereinafter
defined) would be converted into the right to receive more than
three million Springs Shares, the Exchange Agent shall treat a
number of Dundee Shares as to which Cash Elections have
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not been made (pro rata as nearly as practicable as to each holder
of ten (10) or more such Dundee Shares) as having been subject to
Cash Elections as necessary to reduce the number of Springs Shares
issuable as Merger Consideration to three million Springs Shares.
2.3 LIMITED CASH ELECTION.
(a) Any holder of record of Dundee Shares shall have the right to
make a Cash Election with respect to all or any portion of his Dundee
Shares by surrendering and depositing with Wachovia Bank of North
Carolina, N.A. (the "Exchange Agent") at its office in Winston-Salem,
North Carolina, no later than the close of business on the Expiration
Date (as hereinafter defined) the certificate or certificates
representing such Dundee Shares, properly endorsed for transfer or
with duly executed stock powers attached, accompanied by a duly
executed and properly completed letter of transmittal with respect to
such Cash Election to be provided by Springs. The form of letter of
transmittal with respect to Cash Elections shall be mailed to the
holders of record of Dundee Shares as of the record date for the
meeting of holders of Dundee Shares called to vote on this Agreement
no later than five (5) business days after the date on which the Proxy
Statement (as herein defined) is first mailed to holders of Dundee
Shares. The Exchange Agent shall make available the form of letter of
transmittal with respect to Cash Elections to all persons who become
holders of record of Dundee Shares during the period between such
record date and the Expiration Date. Record holders of Dundee Shares
on deposit with the Exchange Agent pursuant to a Cash Election and not
withdrawn as provided hereby (the "Deposited Shares") shall remain
stockholders of record with respect to such shares until immediately
prior to the Effective Time. For purposes of this Agreement,
"Expiration Date" means the last business day prior to the date on
which the Dundee Stockholders vote upon the approval of the Merger, or
such later date determined by Springs by notice thereof to the
Exchange Agent.
(b) If the number of Deposited Shares exceeds the Maximum Number
of Cash Election Shares, the Exchange Agent shall eliminate from the
Deposited Shares (pro rata as nearly as practicable as to each holder
of ten (10) or more Deposited Shares) the number of Deposited Shares
necessary to reduce the number of Deposited Shares to the Maximum
Number of Cash Election Shares (or the most practicable number thereof
immediately below such number), and such Dundee Shares eliminated from
the Deposited Shares shall be converted into the right to receive the
Merger Consideration in Springs Shares as provided in Section 2.2.
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(c) Each holder of Dundee Shares who has made a valid Cash
Election shall have the right at any time prior to the close of
business on the Expiration Date to withdraw the shares deposited by
such stockholder and thereby revoke the Cash Election by giving
written notice of withdrawal to the Exchange Agent prior to the close
of business on the Expiration Date.
(d) The Exchange Agent shall in its sole discretion determine
whether or not Cash Elections have been properly or timely made or
revoked. Neither Springs, Dundee nor the Exchange Agent shall be
under any duty to give notification that any Cash Election has not
been properly or timely made or revoked. If the Exchange Agent
determines that any Cash Election was not properly or timely made or
revoked, the shares subject to this Cash Election shall be treated by
the Exchange Agent as Dundee Shares which were not subject to any Cash
Election, and at the Effective Time such shares shall be converted
into the right to receive Springs Shares pursuant to Section 2.2. The
Exchange Agent may, after consultation with Springs, make such
equitable changes in the procedures set forth herein as are necessary
or desirable to effect fully any Cash Election.
(e) Anything to the contrary notwithstanding in this Section 2.3,
if this Agreement is terminated pursuant to Article 6, any certificate
or certificates representing Dundee Shares that have been deposited
with the Exchange Agent in connection with a Cash Election shall be
promptly returned by the Exchange Agent to the record holder of any
such certificate.
2.4 NO FRACTIONAL SHARES. No scrip or fractional Springs Shares shall
be issued in the Merger upon conversion of Dundee Shares as provided in Section
2.1. Each holder of Dundee Shares who would otherwise have been entitled to
receive a fraction of a Springs Share upon conversion of his Dundee Shares
shall be entitled to receive a cash payment with respect to such fractional
share in an amount equal to the product of the Reported Market Price as defined
below of Springs Shares multiplied by such fractional share. Springs will make
available to the Exchange Agent the funds necessary for the purpose of paying
cash for fractional shares.
2.5 REPORTED MARKET PRICE. As used in this Agreement, the Reported
Market Price for Springs Shares shall be the arithmetic average of the closing
prices for Springs Shares on the New York Stock Exchange ("NYSE") for the ten
(10) trading days immediately preceding the date which is three (3) calendar
days prior to the Closing Date; provided, however, that
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(a) If such average is greater than $38.50, the Reported Market
Price shall be $38.50; and
(b) If such average is less than $33.50, the Reported Market Price
shall be $33.50.
2.6 STOCK TRANSFER BOOKS. From and after the Effective Time, no
transfer of Dundee Shares outstanding prior to the Effective Time shall be
registered on the stock transfer books of the Surviving Corporation. If, after
the Effective Time, certificates for Dundee Shares are presented to the
Surviving Corporation for transfer, such certificates shall be cancelled and
exchanged for the consideration described in Sections 2.2 and 2.4.
2.7 SURRENDER AND EXCHANGE OF CERTIFICATES REPRESENTING DUNDEE SHARES.
(a) EXCHANGE AGENT. Prior to the mailing of the Proxy Statement
to the holders of record of Dundee Shares, Springs shall appoint
Wachovia Bank of North Carolina, N.A. as Exchange Agent pursuant to an
exchange agent agreement reasonably acceptable to Dundee (the
"Exchange Agent Agreement"). At the Effective Time, Springs shall,
pursuant to irrevocable instructions, direct the Exchange Agent to
issue the number of Springs Shares and pay the amounts of cash
provided for in Sections 2.2, 2.3 and 2.4 to which the holders of
Dundee Shares are entitled pursuant to Sections 2.2, 2.3 and 2.4.
(b) SURRENDER OF CERTIFICATES. Promptly after the Effective Time,
Springs shall cause the Exchange Agent to mail and otherwise make
available to each record holder as of the Effective Time of an
outstanding certificate or certificates which immediately prior to the
Effective Time represented Dundee Shares (the "Certificates") and who
has not already properly made (and not withdrawn or revoked) a Cash
Election with respect to the Dundee Shares represented by such
Certificates, a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates
to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates for payment therefor and conversion
thereof. Upon surrender to the Exchange Agent of the Certificates,
together with such letter of transmittal, or the letter of transmittal
delivered pursuant to Section 2.3 with respect to Deposited Shares, in
each case duly executed, the holder of such Certificates shall be
entitled to receive in exchange therefor (i) the Merger Consideration
as set forth in Section 2.2 and (ii) as to any fractional share, a
check representing the cash consideration to which such holder shall
have become entitled pursuant to Section 2.4, and the Certificates so
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surrendered shall forthwith be cancelled. If any portion of the
Merger Consideration to be received upon exchange of a Certificate
(whether a certificate representing Springs Shares or a check
representing cash) is to be issued or paid to a person other than the
person in whose name the Certificate surrendered and exchanged
therefor is registered, it shall be a condition of such issuance and
payment that the Certificate so surrendered shall be properly endorsed
or otherwise is in proper form for transfer and that the person
requesting such exchange shall pay in advance in cash any transfer or
other taxes required by reason of the issuance of a certificate
representing Springs Shares or a check representing cash to such other
person, or establish to the satisfaction of the Exchange Agent that
such tax has been paid or that no such tax is applicable. From the
Effective Time until surrender in accordance with the provisions of
this Section 2.7, each Certificate (other than Certificates
representing treasury shares) shall represent for all purposes only
the right to receive the Merger Consideration. All payments in
respect of Dundee Shares that are made in accordance with the terms
hereof shall be deemed to have been made in full satisfaction of all
rights pertaining to such securities.
(c) LOST CERTIFICATES. In the case of any lost, misplaced, stolen
or destroyed Certificate, the holder thereof may be required, as a
condition precedent to delivery to such holder of the Merger
Consideration, to deliver to Springs an indemnity agreement and bond
in such reasonable sum as Springs may direct as indemnity against any
claim that may be made against the Exchange Agent, Springs or the
Surviving Corporation with respect to the Certificate alleged to have
been lost, misplaced, stolen or destroyed.
(d) NO INTEREST. No interest shall be paid or accrued at any time
on any portion of the Merger Consideration regardless of the cause for
delay in payment of the Merger Consideration.
(e) DIVIDENDS ON SPRINGS SHARES. No holder of a Certificate shall
be entitled to receive any dividend or other distribution from Springs
declared with a record date after the Effective Time until surrender
of such holder's Certificate pursuant to this Section 2.7. Upon such
surrender, there shall be paid to the holder the amount of any
dividends or other distributions (without interest) that theretofore
became payable by Springs, but were not paid by reason of the
foregoing with respect to the number of whole Springs Shares
represented by the certificate or certificates issued upon such
surrender. From and after the Effective Time, Springs shall be
entitled, however, to treat any such Certificate that has not yet been
surrendered for exchange as evidencing the ownership of the aggregate
Merger Consideration
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into which the Dundee Shares represented by such Certificate shall
have been converted, notwithstanding any failure to surrender such
Certificate.
2.8 ADJUSTMENTS BECAUSE OF CHANGES IN SPRINGS SHARES. If, between the
date of this Agreement and the Effective Time, the outstanding Springs Shares
shall be changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
distributed as of a date prior to the Effective Time, or declared with a record
date prior to the Effective Time and a distribution date after the Effective
Time, the Reported Market Price shall be appropriately adjusted.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES BY DUNDEE. All references in
Articles 3 and 4 of this Agreement to Dundee, other than in Sections 3.1(a),
(b) and (c), 4.2 and 4.14, shall be deemed to refer to Dundee and all its
Subsidiaries as hereinafter defined, and all references to the assets,
liabilities, business, financial condition, results of operations or prospects
of Dundee shall be deemed to refer to Dundee and its Subsidiaries, taken as a
whole. Dundee represents and warrants to and agrees with Springs and Subcorp
as of the date of this Agreement and as of the Closing as follows:
(a) ORGANIZATION AND QUALIFICATION. Dundee is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia, has the corporate power and authority to own all of
its properties and assets and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good
standing in the jurisdictions shown on Schedule 3.1(a), which are all
of the jurisdictions in which Dundee owns any real property or has any
place of business or where such qualification is required. The copies
of Dundee's Articles of Incorporation and Bylaws, as amended to date,
which have been delivered to Springs, are complete and correct, and
such instruments, as so amended, are in full force and effect at the
date hereof.
(b) CAPITALIZATION. The authorized capital stock of Dundee
consists of 200,000 Dundee Shares. Except as set forth on Schedule
3.1(b), all of the issued and outstanding Dundee Shares are duly
authorized, validly issued, fully paid and nonassessable, and not
issued in violation of any preemptive rights. As of the date hereof:
(i) 46,728 Dundee Shares are
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issued and outstanding and (ii) no Dundee Shares are reserved for
issuance pursuant to any stock incentive plans. Except as set forth
in this Section 3.1(b), there are no shares of capital stock of Dundee
outstanding, and there are no subscriptions, options, convertible
securities, calls, rights, warrants or other agreements, claims or
commitments of any nature whatsoever obligating Dundee to issue,
transfer, deliver or sell or cause to be issued, transferred,
delivered or sold, additional shares of the capital stock or other
securities of Dundee or obligating Dundee to grant, extend or enter
into any such agreement or commitment.
(c) AUTHORITY. Dundee has the corporate power and authority to
execute and deliver this Agreement and, subject to the receipt of the
approval of the Merger by the affirmative vote of the holders of a
majority of the outstanding Dundee Shares, to consummate the
transactions contemplated on the part of Dundee hereby. The execution
and delivery by Dundee of this Agreement and the consummation by
Dundee of the transactions contemplated on its part hereby have been
duly authorized by its Board of Directors. Except for the approval of
the Merger by a majority of the holders of Dundee Shares, no other
corporate action on the part of Dundee is necessary to authorize the
execution and delivery of this Agreement by Dundee or the consummation
by Dundee of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Dundee and is a valid, binding and
enforceable agreement of Dundee.
(d) NON-CONTRAVENTION. Except as set forth on Schedule 3.1(d),
the execution and delivery of this Agreement by Dundee do not and,
subject to the adoption of this Agreement by the holders of a majority
of the outstanding Dundee Shares and the expiration of all applicable
waiting periods after the filings required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") referred to in
paragraph (e) below, the consummation by Dundee of the transactions
contemplated hereby does not and will not (i) violate or conflict with
any provision of the Articles or Certificate of Incorporation or
Bylaws of Dundee, or (ii) violate or conflict with, or result (with
the giving of notice or the lapse of time or both) in a violation of
or constitute a default under any provision of, or result in the
acceleration or termination of or entitle any party to accelerate or
terminate (whether after the giving of notice or lapse of time or
both), any obligation or benefit under, or result in the creation or
imposition of any lien, charge, pledge, security interest or other
encumbrance upon any of the material assets or properties of Dundee
pursuant to any provision of, any "Material Contract" (as hereinafter
defined), "Intellectual Property Agreement" (as hereinafter defined),
law, ordinance, regulation, order, arbitration award, judgment or
decree to which Dundee is a party or by
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which Dundee or its assets or properties is bound and do not and will
not violate or conflict with any other material restriction of any
kind or character to which Dundee is subject or by which any of its
assets or properties may be bound, and the same does not and will not
constitute an event permitting termination of any Material Contract or
Intellectual Property Agreement to which Dundee is a party. No such
violation, conflict, default, acceleration, termination, entitlement,
creation or imposition of a lien, charge, pledge, security interest or
other encumbrance or event, regardless of whether it is described in
Schedule 3.1(d), shall cause any substantial damage, additional cost
or expense (including any payments or expenses incurred to obtain
consents or waivers) to Dundee, Springs or the Surviving Corporation.
Except for the agreements, statutes and other arrangements noted on
Schedule 3.1(d), to the knowledge of Dundee, Dundee has no reasonable
basis to believe that it will not be able to obtain (without
additional payment or expense) all consents and waivers necessary to
avoid any such violation, acceleration, entitlement to accelerate,
creation or imposition of a lien, charge, pledge, security interest or
other encumbrance, conflict or event.
(e) CONSENTS. Except as set forth in Schedule 3.1(e) and except
for the filing of the Registration Statement (as hereinafter defined)
with the Securities and Exchange Commission (the "SEC") and, to the
extent required, any required filings with or approvals by any state
securities commissions, filings with the Federal Trade Commission (the
"FTC") and the Department of Justice ("Justice") under the HSR Act and
the filing of the Certificate of Merger with the Secretary of State of
Georgia, no consent, authorization, clearance, order or approval of,
or filing or registration with, any executive, judicial or other
public authority, agency, department, bureau, division, unit or court
or other public person or entity (any of which is hereinafter referred
to as a "Governmental Entity") or any other third party is required
for or in connection with the execution and delivery of this Agreement
by Dundee and the consummation by Dundee of the transactions
contemplated hereby.
(f) SUBSIDIARIES. Schedule 3.1(f) sets forth each Subsidiary (as
hereafter defined) of Dundee. Dundee owns, directly or indirectly,
all the outstanding capital stock of each of its Subsidiaries, free
and clear of all liens, charges, pledges, security interests or other
encumbrances, and all such capital stock is duly authorized, validly
issued and outstanding, fully paid and nonassessable, and except as
set forth in Schedule 3.1(f), neither Dundee nor any Subsidiary has
made any material investment in, or material advance of cash or other
extension of credit to, any person, corporation or other entity other
than its Subsidiaries. None
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of such Subsidiaries has any commitment to issue or sell any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person (other than Dundee) any right
to acquire from such Subsidiary, any shares of its capital stock, and
no such securities or obligations are outstanding. Each Subsidiary is
a corporation duly organized and validly existing in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to own all of its properties and assets
and to carry on its business as it is now being conducted. Each
Subsidiary is duly qualified to do business and is in good standing in
the jurisdictions shown on Schedule 3.1(f), which are all
jurisdictions in which each such Subsidiary owns any real property,
has any place of business, or where such qualification is required.
As used in this Agreement, the term "Subsidiary" means, with respect
to any person, corporation or other entity, any corporation or other
organization, whether incorporated or unincorporated, of which at
least a majority of the securities or interests having by the terms
thereof voting power to elect a majority of the board of directors or
others performing similar functions with respect to such corporation
or other organization is at that time directly or indirectly owned or
controlled by such person, corporation or other entity, or by any one
or more of its Subsidiaries, or by such person, corporation or other
entity, and one or more of its Subsidiaries.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit B are true
and complete copies of the balance sheets of Dundee as of August 31,
1994, 1993 and 1992 and the related statements of income,
stockholders' equity and cash flows for the years then ended,
including the notes thereto, certified by Ernst & Young, LLC
("Dundee's Auditors") (the "Dundee Audited Financial Statements").
The Dundee Audited Financial Statements and the unaudited balance
sheets of Dundee as of December 31, 1994 and December 31, 1993 and the
related statements of income and cash flows for the four-month periods
then ended attached hereto as Exhibit C (together with the Dundee
Audited Financial Statements, the "Dundee Financial Statements") (i)
have been prepared from, and are in accordance with, the books and
records of Dundee; (ii) present fairly in all material respects the
financial position and results of operations and cash flows of Dundee
as of the dates and for the periods indicated, in each case in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except
as stated herein or therein), and (iii) include all adjustments
(consisting only of normal recurring accruals) that are necessary for
the fair presentation of the financial position of Dundee and the
results of its operations and cash flows except as otherwise stated in
the Dundee Financial Statements. The unaudited December 31, 1994 and
December 31, 1993
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financial statements are subject to year-end closing adjustments and
do not contain footnote disclosures required by GAAP.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 3.1(h), since August 31, 1994, there has not been: (i) any
material adverse change in the assets, liabilities, business,
financial condition, results of operations or, other than as a result
of a change in general conditions in the textile industry or in the
United States economy, prospects of Dundee; (ii) any damage,
destruction, loss or casualty to property or assets of Dundee, whether
or not covered by insurance, which property or assets are material to
the operations or business of Dundee; (iii) any strike, work stoppage
or slow down or other labor trouble involving Dundee; (iv) any
declaration, setting aside or payment of any dividend or distribution
(whether in cash, capital stock or property) with respect to the
capital stock of Dundee; (v) any redemption or other acquisition by
Dundee of any of the capital stock of Dundee; (vi) any split,
combination, reclassification or other similar change in the
outstanding Dundee Shares; (vii) any transaction outside the ordinary
course of business; or (viii) any agreement to do any of the
foregoing. Except as set forth on Schedule 3.1(h), since August 31,
1994, there has not been any issuance by Dundee of any shares, or
options, calls or commitments relating to shares of its capital stock,
or any securities or obligations convertible into or exchangeable for,
or giving any person any right to acquire from it, any shares of its
capital stock.
(i) GOVERNMENTAL AUTHORIZATION AND COMPLIANCE WITH LAWS. Dundee
is in substantial compliance in all respects with all laws, orders,
regulations, policies and guidelines of all Governmental Entities
applicable to Dundee or any of its businesses or properties and
assets. Dundee has all permits, certificates, licenses, approvals and
other authorizations required in connection with the operation of its
businesses. No notice has been issued and to Dundee's knowledge no
investigation or review is pending or is contemplated or threatened
against Dundee by any Governmental Entity (i) with respect to any
alleged violation by Dundee of any law, order, regulation, policy or
guideline of any Governmental Entity, or (ii) with respect to any
alleged failure to have all permits, certificates, licenses, approvals
and other authorizations required in connection with the operation of
the businesses of Dundee. Dundee is not in violation of any judgment,
decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality, arbitrator or other
person.
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(j) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 3.1(j) or in the balance sheet as of December 31, 1994
included in the Dundee Financial Statements, Dundee (i) did not have,
as of December 31, 1994, any debts, liabilities or obligations,
whether accrued, absolute, contingent or otherwise and whether due or
to become due (including without limitation any uninsured liabilities
resulting from failure to comply with any law applicable to the
conduct of its business) (ii) has not incurred since December 31,
1994, any such debts, liabilities or obligations (other than debts,
liabilities or obligations incurred in the ordinary and usual course
of business after December 31, 1994), and (iii) has not, since
December 31, 1994, conducted its business otherwise than in the
ordinary and usual course.
(k) TAX MATTERS. Except as set forth in Schedule 3.1(k), Dundee
has properly completed and timely filed in correct form all federal,
state, local, provincial, foreign and other tax returns and reports of
every nature (collectively, "Tax Returns") required to be filed by
Dundee, no extensions of time in which to file any such Tax Returns
are in effect, and all such Tax Returns are true and correct. All
taxes arising under the Internal Revenue Code of 1986, as amended (the
"Code"), or any law, rule, regulation or order promulgated thereunder,
or arising under any federal, state, local or foreign law, rule,
regulation or order including, without limitation any income, profits,
employment, sales, use, occupation, excise, real property, personal
property or ad valorem taxes or any license or franchise fee or tax
(collectively, "Taxes"), currently due and payable by Dundee have been
paid or provided for in the Dundee Financial Statements and are not
delinquent. All Taxes incurred but not yet due have been fully
accrued on the books of Dundee through August 31, 1994 and adequate
reserves have been established therefor. The charges, accruals and
reserves which have been provided in the Dundee Financial Statements
in respect of Taxes for all fiscal periods prior to and ending at
August 31, 1994, are sufficient for the payment of all unpaid taxes,
whether or not disputed, that are accrued or applicable for the period
ended August 31, 1994 and for all years and periods ended prior
thereto. There are no pending claims asserted for Taxes against
Dundee or outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of Dundee for any
period. Dundee has not filed a consent to the application of Section
341(f) of the Code. Dundee has made all estimated income tax deposits
and all other required tax payments or deposits and has complied for
all prior periods in all material respects with the tax withholding
provisions of all applicable federal, state, local and other laws.
14
(l) TITLE TO PROPERTIES. Except as set forth on Schedule 3.1(l),
Dundee has good and marketable title to all properties and assets
reflected in the balance sheet dated December 31, 1994, included in
the Dundee Financial Statements (or acquired after that date) and has
valid leasehold interests in all properties and assets not reflected
on such balance sheet but used by Dundee in its businesses, free and
clear of any title defects, liens, charges, pledges, security
interests, adverse claims, or other encumbrances, except (i) mortgages
and liens securing debt reflected as liabilities on such balance
sheet, (ii) liens for current taxes and assessments not in default,
(iii) mechanics', carriers', workmen's, repairman's, statutory or
common law liens either not delinquent or being contested in good
faith and (iv) liens, mortgages, encumbrances, covenants,
rights-of-way, building or use restrictions, easements, exceptions,
variances, reservations and other matters or limitations of any kind,
if any, which do not have an adverse effect on Dundee's use of the
property affected. No person other than Dundee is entitled to
possession or use of any of the properties of Dundee, whether owned or
leased by Dundee. The real property, buildings, structures and
improvements owned or leased by Dundee conform in all substantial
respects to all applicable laws, ordinances and regulations, including
zoning regulations, none of which would upon consummation of the
Merger adversely interfere with the use of such properties, buildings,
structures or improvements for the purposes for which they are now
utilized. The properties and assets owned or leased by Dundee are
adequate in all material respects for the conduct of its businesses as
presently conducted.
(m) MATERIAL CONTRACTS. Schedule 3.1(m) contains a correct and
complete list of the following (hereinafter referred to as the
"Material Contracts"):
(i) all bonds, interest rate swap agreements, debentures,
loan agreements, notes, mortgages, deeds to secure debt, deeds of
trust, indentures or guaranties to which Dundee is a party or by
which it or its properties or assets are bound;
(ii) all leases (whether capital or operating) under which
Dundee is the lessee or lessor of real or personal property;
(iii) all employment agreements of Dundee; and
(iv) all existing contracts and commitments (other than
those described in subparagraphs (i), (ii) or (iii) and any
"Employee Plans" (as defined in Section 3.1(t)) to which Dundee is
a party or by which any of its properties or assets may be bound
involving an annual
15
commitment or annual payment by any party thereto of more than
$100,000 individually, or which have a fixed term extending more
than 12 months from the date hereof and which involve an annual
commitment or annual payment by any party thereto of more than
$50,000 individually.
True and complete copies of all Material Contracts, including all
amendments thereto, have been made available to Springs. Except as
set forth on Schedule 3.1(m): (i) all Material Contracts are in full
force and effect and constitute the valid and binding obligations of
the respective parties thereto; (ii) there has not been and there
currently is no default under any Material Contract by any party
thereto; (iii) no event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other
event) would constitute a default thereunder by Dundee or (to the
knowledge of Dundee) any other party entitling any party to terminate
a Material Contract; and (iv) the continuation, validity and
effectiveness of all such Material Contracts under the current terms
thereof and the current rights and obligations of Dundee thereunder
will in no way be affected, altered or impaired by the consummation of
the Merger. Except as disclosed in Schedule 3.1(m), there are no
contracts or options to sell or lease any properties or assets of
Dundee other than in the ordinary course of business.
(n) LEGAL PROCEEDINGS. Except as set forth on Schedule 3.1(n),
(i) there is no claim, action, suit, proceeding or investigation
pending or, to the knowledge of Dundee, contemplated or threatened
against Dundee or any of its properties or assets (or any of its
officers or directors in connection with the business of Dundee)
before any arbitrator or Governmental Entity, domestic or foreign,
which in the event of a final adverse determination, considered
individually or in the aggregate with all such other claims, actions,
suits or proceedings, would adversely affect the assets, liabilities,
financial condition, results of operations, business or prospects of
Dundee, or which seeks treble damages, seeks damages in connection
with any of the transactions contemplated by this Agreement or to
prohibit, restrict or delay consummation of the Merger or any of the
conditions to consummation of the Merger or to limit in any material
manner the right of Springs to control the Surviving Corporation or
any aspect of the businesses of Dundee after the Effective Time, nor
is there any judgment, decree, injunction, ruling or order of any
Governmental Entity, arbitrator or any other person outstanding
against Dundee having any such effect; and (ii) Dundee is not a party
to or bound by any judgment, decree, injunction, ruling or order of
any Governmental Entity, arbitrator or any other person against Dundee
which, when considered individually or in the aggregate with all such
other judgments, decrees, injunctions,
16
rulings or orders, adversely affects the assets, liabilities,
financial condition, results of operations, businesses or prospects of
Dundee.
(o) LABOR RELATIONS. Dundee is in compliance in all substantial
respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and
hours, and, to the knowledge of Dundee, is not engaged in any unfair
labor or unlawful employment practice. Except as set forth on
Schedule 3.1(o), to the knowledge of Dundee, there is no unlawful
employment practice discrimination charge pending before the Equal
Employment Opportunity Commission ("EEOC") or any EEOC recognized
state "referral agency." To the knowledge of Dundee, there is no
unfair labor practice charge or complaint against Dundee pending
before the National Labor Relations Board ("NLRB"). There is no labor
strike, dispute, slowdown or stoppage actually pending or, to the best
knowledge of Dundee, threatened against or involving or affecting
Dundee, and no NLRB representation question exists respecting any of
their respective employees. No grievance or arbitration proceeding is
pending and no written claim therefor exists. There is no collective
bargaining agreement that is binding on Dundee. Except for any
Material Contract disclosed pursuant to Section 3.1(m), Dundee is not
a party to or bound by any agreement, arrangement or understanding
with any employee or consultant that cannot be terminated on notice of
ninety (90) or fewer days without liability to Dundee or that entitles
the employees or consultant to receive any salary continuation or
severance payment or retain any specified position with Dundee.
(p) INSIDER INTERESTS. Except as disclosed in the Dundee
Financial Statements or on Schedule 3.1(p) no shareholder, affiliate,
officer or director of Dundee (i) has any agreement with Dundee or any
interest in any property, real or personal, tangible or intangible,
including without limitation trade names or trademarks used in or
pertaining to the businesses of Dundee, except for the normal rights
as a shareholder or (ii) has any claim or cause of action against
Dundee except for accrued compensation and benefits, expenses and
similar obligations incurred in the ordinary course of business
(including reimbursement of medical expenses pursuant to Employee
Plans) with respect to employees of Dundee.
(q) INTELLECTUAL PROPERTY. Schedule 3.1(q) lists all patents,
trademarks, service marks, trade names, copyrights or applications for
the foregoing, and all computer programs, firmware and documentation
relating thereto, and all other intellectual properties other than
trade secrets (which have been separately disclosed to Springs)
(including such trade secrets, the "Intellectual Property") which are
owned or are
17
used and are necessary for the conduct of the businesses of Dundee,
and all royalty, transfer or similar fees relating thereto. Dundee
owns or has the right to use pursuant to an Intellectual Property
Agreement (as hereinafter defined) all such Intellectual Property.
Schedule 3.1(q) lists all licenses or other agreements (other than
licenses of generally available software programs for personal
computers) pursuant to which Dundee has any right to use or enjoy any
Intellectual Property that is owned by others or pursuant to which
Dundee is under a duty of confidentiality with respect to any
Intellectual Property owned by others (the "Intellectual Property
Agreements"). As to any Intellectual Property owned by Dundee, such
Intellectual Property is owned free and clear of all claims of others,
including employees, former employees or independent contractors of
Dundee, and Dundee has received no notice that the use of such
Intellectual Property in any business of Dundee violates or infringes
upon the claimed rights of others. As to the Intellectual Property
Agreements, (i) all such agreements are in full force and effect, (ii)
neither Dundee nor, to the knowledge of Dundee, any other party
thereto, is in default under any such agreement, (iii) Dundee is not
and will not become obligated to make any additional royalty or
similar payments under any such agreements as a result of the
transactions contemplated by this Agreement, and (iv) the exercise by
Dundee of its rights under any such agreements does not infringe upon
the claimed rights of others. Dundee has not received any notice that
any of the products or services of Dundee, nor any products held for
future sale or license by Dundee, infringes upon the claimed rights of
others. Except as set forth in Schedule 3.1(q), Dundee has not
granted to any person any license or other right to use in any manner
any of the Intellectual Property owned by Dundee has not granted any
sublicense or right to use any Intellectual Property licensed to
Dundee under the Intellectual Property Agreements; and Dundee has not
granted any software licenses or sublicenses that would authorize any
person to use any software licensed or sublicensed thereunder for any
purpose other than uses solely internal to such person.
(r) INSURANCE. Schedule 3.1(r) summarizes the amount and scope of
all insurance policies or contracts providing coverage to Dundee. In
the opinion of the management of Dundee, all such policies or
contracts of insurance are in scope and in an amount usual and
customary for businesses engaged in by Dundee and are sufficient for
compliance with all requirements of law and of all agreements to which
Dundee is a party. All insurance policies pursuant to which any such
insurance is provided are in full force and effect and no notice of
cancellation or termination of any such insurance policies has been
given to Dundee by the carrier of any such
18
policy. Through the date hereof, all premiums required to be paid in
connection therewith have been paid in full.
(s) PROXY STATEMENT; REGISTRATION STATEMENT. The information with
respect to Dundee and its officers and directors that shall have been
supplied by Dundee or its authorized representatives in writing for
use in the definitive proxy statement that will be distributed to
Shareholders of Dundee in connection with the meeting of such
Shareholders (the "Dundee Shareholders Meeting") to approve the
adoption of this Agreement (the "Proxy Statement") and that will form
a part of the registration statement of Springs under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the
Springs Shares to be issued in the Merger (the "Registration
Statement"), or in the Registration Statement, will not, on the date
or dates the Proxy Statement is first mailed to shareholders of
Dundee, or in the case of the Registration Statement at the time it
becomes effective, and at the Effective Time, as such Proxy Statement
or Registration Statement is then amended or supplemented, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier filing
with the SEC of such Registration Statement or amendment thereto or
any earlier communication in the preparation of which Dundee
participated (including the Proxy Statement) to shareholders of Dundee
with respect to the Merger.
(t) EMPLOYEE AND FRINGE BENEFIT PLANS.
(i) SCHEDULE OF PLANS. Schedule 3.1(t) to this Agreement
lists each of the following that Dundee or any Dundee Subsidiary
either maintains, is required to contribute to or otherwise
participates in (or at any time during the preceding seven years
maintained, contributed to or otherwise participated in or as to
which Dundee or any of its Subsidiaries has any unsatisfied
material liability or obligation, whether accrued, contingent or
otherwise:
(A) any employee pension benefit plan
("Pension/Profit-Sharing Plan") (as such term is defined in
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including any pension, profit-sharing,
retirement, thrift or stock bonus plan;
(B) any "multi-employer plan" ("Multi-Employer
Plan") (as such term is defined in ERISA);
19
(C) any employee welfare benefit plan ("Welfare
Plan") (as such term is defined in ERISA); or
(D) any other commission, bonus or deferred
compensation, stock option, restricted stock, fringe benefit
or retirement plan, program, policy, understanding or
arrangement of any kind whatsoever, whether formal or
informal, not included in the foregoing and providing for
benefits for, or the welfare of, any or all of the current or
former employees or agents of Dundee or any Dundee Subsidiary
or their beneficiaries or dependents or with respect to which
Dundee or a Dundee Subsidiary has any material liability,
including any group health, life insurance, retiree medical,
bonus, incentive or severance arrangement;
(all of the foregoing in items (i), (ii), (iii) and (iv) being
referred to as "Employee Plans"). "ERISA Affiliate" means each
trade or business (whether or not incorporated) which together
with Dundee is treated as a single employer pursuant to Code
Section 414(b), (c), (m) or (o). Dundee has delivered to Springs
(and Schedule 3.1(t) lists each item delivered) copies of the
following: (A) each written Employee Plan, as amended (including
either the original plan or the most recent restatement and all
subsequent amendments); where applicable, (B) the most recent
Internal Revenue Service ("IRS") determination letter issued with
respect to each Pension/Profit-Sharing Plan; (C) the latest
actuarial valuation (if any) for each Pension/Profit-Sharing Plan;
(D) the three most recent annual reports on the Form 5500 series
for each Employee Plan; (E) each trust agreement, insurance
contract or document setting forth any other funding arrangement,
if any, with respect to each Employee Plan; (F) the most recent
ERISA summary plan description or other summary of plan provisions
distributed to participants or beneficiaries for each Employee
Plan; (G) each opinion or ruling from the IRS, the Department of
Labor or the Pension Benefit Guaranty Corporation ("PBGC")
concerning any Employee Plan; and (H) each Registration Statement,
amendment thereto and prospectus relating thereto filed with the
SEC or furnished to participants in connection with any Employee
Plan.
(ii) QUALIFICATION. Except as set forth in Schedule
3.1(t) each Pension/Profit-Sharing Plan: (i) has received a
favorable determination letter from the IRS to the effect that it
is qualified under Code Sections 401(a) and 501, both as to the
original plan and all
20
restatements or material amendments; (ii) has never been subject
to any assertion by any governmental agency that it is not so
qualified; and (iii) has been operated so that it has always been
so qualified.
(iii) ACCRUALS; FUNDING.
(A) PENSION/PROFIT-SHARING PLANS. Schedule
3.1(t) fully and accurately discloses, as of the end of each
Plan's most recently ended fiscal year (or, each Plan's second
most recently ended fiscal year if the required information is
not yet available for such Plan's most recently ended fiscal
year) (such year end, as applicable, being referred to as the
"Applicable Plan Year-End"), the total assets, and where
applicable the actuarially computed present value of the
accrued benefits or other liabilities or obligations, and the
actuarially computed present value of the vested benefits or
other liabilities or obligations, for each
Pension/Profit-Sharing Plan subject to ERISA Title IV
(including those for retired, terminated or other former
employees and agents) based on the actuarial assumptions set
forth in the plan valuations included as part of Schedule
3.1(t), unless otherwise indicated on such Schedule. None of
the Pension/Profit-Sharing Plans subject to ERISA Title IV has
incurred any "accumulated funding deficiency" (as such term is
defined in ERISA), there is no employer liability with respect
to any of such Plans as determined in accordance with ERISA
Section 4062, and the actuarially computed present value of
the benefits of each such Plan, accrued to the Applicable Plan
Year-End, does not exceed the value of the assets of such
Employee Plan. Schedule 3.1(t) further sets forth as of the
Applicable Plan Year End the actuarially computed present
value of the accrued benefit liabilities of each such
Pension/Profit-Sharing Plan subject to Title IV of ERISA,
determined on the basis of the assumptions prescribed by the
PBGC pursuant to ERISA Section 4044 for use in valuing accrued
benefit liabilities upon a plan termination, and the value of
such benefit liabilities does not exceed the value of the
assets of any such Plan. There have been no material changes
in the financial condition of any of the
Pension/Profit-Sharing Plans since the Applicable Plan
Year-End.
(B) OTHER PLANS. Schedule 3.1(t) fully and
accurately discloses any funding liability under each Employee
Plan not subject to ERISA Title IV, whether insured or
otherwise, specifically setting
21
forth any liabilities under any retiree medical, dental or
life insurance arrangement and specifically designating any
insured plan which provides for retroactive premium or other
adjustments. The levels of insurance reserves and accrued
liabilities with regard to each such Employee Plan are
reasonable and are sufficient to provide for all incurred but
unreported claims and any retroactive premium adjustments.
(C) CONTRIBUTIONS. Except as fully and
accurately disclosed in Schedule 3.1(t): (I) Dundee and each
Dundee Subsidiary have in all material respects made full and
timely payment of all amounts required to be contributed under
the terms of each Employee Plan and applicable law, or
required to be paid as expenses under such Employee Plan,
including PBGC premiums and amounts required to be contributed
under Code Section 412; and (II) no excise taxes or liens are
assessable against Dundee as a result of any nondeductible or
other contributions made or not made to an Employee Plan or
any other plan of an ERISA Affiliate.
(iv) REPORTING AND DISCLOSURE. Except as fully and
accurately disclosed in Schedule 3.1(t), summary plan descriptions
and all other returns, reports, registration statements,
prospectuses, documents, statements and communications which are
required to have been filed, published or disseminated under ERISA
or other federal law and the rules and regulations promulgated by
the Department of Labor under ERISA and the Treasury Department or
by the SEC with respect to the Employee Plans have been so filed,
published or disseminated.
(v) PROHIBITED TRANSACTIONS; TERMINATIONS; OTHER
REPORTABLE EVENTS. Except as set forth in Schedule 3.1(t):
(A) neither Dundee nor any Dundee Subsidiary, any
Employee Plan, any trust or arrangement created under any of
them, nor any trustee, fiduciary, custodian, administrator or
any person or entity holding or controlling assets of any of
the Employee Plans has engaged in any "prohibited transaction"
(as such term is defined in ERISA or the Code) which could
subject Dundee or a Dundee Subsidiary to any material tax,
penalty or other cost or liability of any kind;
(B) no termination has occurred with respect to
any Employee Plan subject to ERISA since 1991;
22
(C) no "reportable event" (as such term is
defined in ERISA) (other than a reportable event for which the
statutory notice requirements have been waived by regulation)
has occurred with respect to any Employee Plan subject to
Title IV of ERISA; and
(D) no Internal Revenue Service or Department of
Labor investigation with respect to any Employee Plan is
currently underway or to Dundee's knowlege has been
threatened.
(vi) CLAIMS FOR BENEFITS. Other than claims for benefits
arising in the ordinary course of the administration and operation
of the Employee Plans no claims, investigations or arbitrations
are pending or to Dundee's knowledge threatened against any
Employee Plan or against Dundee, any Dundee Subsidiary, any trust
or arrangement created under or as part of any Employee Plan, any
trustee, fiduciary, custodian, administrator or other person or
entity holding or controlling assets of any Employee Plan, and to
Dundee's knowledge no basis to anticipate any such claim or claims
exists.
(vii) OTHER. Except as fully and completely disclosed in
Schedule 3.1(t), Dundee and each Dundee Subsidiary have fully
complied with all of their obligations under each of the Employee
Plans and with all provisions of ERISA and any and all other law
applicable to the Employee Plans. No written notice has been
received by Dundee of any claim by any participant in the Employee
Plans of any violations of such laws, and to the best knowledge of
Dundee, no such claims are pending or threatened.
(viii) CREATION OF OBLIGATIONS BY REASON OF MERGER. Except
as set forth in Schedule 3.1(t), the execution of or performance
of the transactions contemplated by this Agreement will not
constitute an event under any Employee Plan that will or may
result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect
to any employee, including any obligation to make a payment that
would be nondeductible under Code Section 280G or any other Code
provision.
(ix) NO MULTI-EMPLOYER PLANS. Except as set forth in
Schedule 3.1(t), none of the Employee Plans are Multi-Employer
Plans, and neither Dundee nor to Dundee's knowledge any ERISA
Affiliate has any liability, joint or otherwise, for any
withdrawal liability (potential,
23
contingent or otherwise) under ERISA Title IV for a complete or
partial withdrawal from any Multi-Employer Plan.
(u) MAJOR CUSTOMERS. Schedule 3.1(u) sets forth (i) the names of
the twenty largest customers of Dundee in each of its four principal
product lines (i.e., retail and institutional towels, baby products
and health care products) based on revenues during the year ended
August 31, 1994; and (ii) the name of each customer of Dundee (a)
described in clause (i), or (b) which during the year ended August 31,
1994, or during the four months ended December 31, 1994, generated
revenue or annualized revenue, respectively, of $300,000 or more, and
in either case as to which Dundee has received notice or otherwise has
a reasonable basis to believe that such customer will terminate or
materially reduce its purchases from Dundee on or before December 31,
1995.
(v) ENVIRONMENTAL. Except as set forth in Schedule 3.1(v):
(i) no generation, storage, presence, contamination,
transport, emission, discharge or "release" (as such term is defined
in 42 U.S.C. Section 9601(22)) of any Hazardous Substance (as defined
below) exists or is occurring (or has existed or occurred) from, under
or upon, any property owned, leased, used or controlled at any time by
Dundee or any predecessor of Dundee;
(ii) there is no past or present action, activity, event,
omission, condition or circumstance (A) that could be reasonably
expected to require Dundee to incur costs of removal, remedial,
response or corrective action (and the terms "removal," "remediation"
and "response" action include the types of activities covered by
CERCLA (as defined below) pursuant to any Environmental Laws (as
defined below) with respect to any Hazardous Substances or Waste (each
as defined below) or (B) that could be reasonably expected to give
rise to any common law or statutory liability (including punitive or
exemplary damages and whether assessed with respect to personal injury
or property damage, negligence, nuisance, trespass, damage to natural
resources or the environment or otherwise) on the part of Dundee;
(iii) Dundee (A) has obtained, maintained and complied with
all permits, registrations, licenses, approvals and other
authorizations (collectively, "Permits") that are required for the
operation of its businesses or the ownership or operation of any of
its properties, and (B), has maintained all records and has made all
filings required by applicable Environmental Laws for Dundee's
operations at past or present operating levels, including all records,
filings and Permits
24
with respect to treatment, storage, presence, contamination,
generation, transport, emission, discharge or release into the
environment of any substance (including solids, liquids and gases) and
the proper disposal of such materials (including solid waste materials
and petroleum or any fractions or by-products of it);
(iv) without limiting or being limited by the foregoing,
Dundee is (and has been) otherwise in compliance with all
Environmental Laws in respect of any of the properties owned, leased,
used or controlled at any time by Dundee of any of the products,
business operations or other activities of Dundee, and no facts or
circumstances exist that could be reasonably expected to interfere
with Dundee's compliance with Environmental Laws; and
(v) Dundee has not received since December 31, 1991 any
notice of any action, activity, event, pending or threatened
investigation, condition or circumstance covered by any of clauses
(i), (ii), (iii) or (iv) above or otherwise alleging any liability or
potential liability under any Environmental Law, including CERCLA and
OSHA (as defined below).
Schedule 3.1(v) to this Agreement lists: (A) all Permits, regulatory
plans and compliance schedules of Dundee pertaining to its businesses,
together with their expiration and renewal dates (a copy of which
have been delivered by Dundee to Springs) and all environmental audit
reports or site investigations with respect to any facilities or
properties currently or formerly used by Dundee in its businesses; (B)
all Waste dumps and disposal, treatment and storage sites used by
Dundee in connection with its businesses or located on real property
owned, used or leased by Dundee at any time, and the names of the
entities that have been engaged in the handling, transportation and
disposal of waste materials for Dundee; (C) the material safety data
sheets ("MSDS") for each "hazardous chemical" (as such term is defined
under OSHA) produced by (or in products produced by) or used by
Dundee; (D) all "underground storage tanks" (as defined under RCRA)
and the Substances stored in them presently or formerly located on any
real properties currently or formerly owned, leased or operated by
Dundee; (E) all asbestos on property owned, leased or used by Dundee
and (F) Emergency and Hazardous Chemical Inventory Forms for each
"toxic chemical" which Dundee has notice that it is required to
furnish pursuant to the Emergency Planning and Community Right to Know
Act of 1986. "Environmental Laws" means and includes: (i) all
applicable federal, state, or local laws relating to protection,
preservation, or restoration of the environment, prevention or
minimization of pollution, control and tracking of Hazardous
Substances and Wastes, protection of public or employee health
25
and safety, or similar matters, or the generation, use, collection,
treatment, storage, transportation, recovery, removal, discharge or
disposal of Hazardous Substances (as defined below) and any record
keeping, notification and reporting requirements of them, including
the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"),
the Clean Air Act, the Federal Water Pollution Control Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right to
Know Act of 1986, the Occupational Safety and Health Act of 1970
("OSHA") and all comparable state and local laws, as amended from time
to time, and (ii) any common law (including common law that may impose
strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence
of or exposure to any Hazardous Substance or Waste. "Hazardous
Substance" means and includes: [s] any substance currently or which,
to the knowledge of Dundee, may in the future be listed, defined,
designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law
(including any substances defined as "hazardous substances" under
CERCLA), whether by type or by quality, including any material
containing any such substance as a component, petroleum and any
products or fractions thereof; and [t] any toxic or hazardous wastes,
materials, pollutants or substances regulated under any other
applicable law, including any so-called "Super Fund" or "Super Lien"
legislation, now existing or hereafter enacted, relating to
environmental, pollution or similar matters. "Waste" means and
includes any garbage, refuse or waste, whether or not involving
Hazardous Substances.
(w) CONTINUITY OF STOCK OWNERSHIP.
(i) To the best of the knowledge of the executive officers of
Dundee, there is no plan or intention by the holders of Dundee
Shares to sell, exchange, or otherwise dispose of a number of
Springs Shares received in the Merger that would reduce the
ownership of Springs Shares by the holders of Dundee Shares to a
number of Springs Shares having a value, as of the date of the
Merger, of less than 50 percent of the value of all the formerly
outstanding Dundee Shares as of the same date. For purposes of
this representation, Dundee Shares Exchanged for cash pursuant to
Section 2.3, surrendered by dissenters or exchanged for cash in
lieu of fractional Springs Shares will be treated as outstanding
on the date of the Merger. Moreover, Dundee Shares and Springs
Shares held by holders of Dundee Shares and otherwise sold,
redeemed, or disposed of prior or subsequent to the Merger will be
considered in making this representation;
26
(ii) SubCorp will acquire at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair
market value of the gross assets held by Dundee immediately prior
to the transaction. For purposes of this representation, amounts
paid by Dundee to dissenters, Dundee assets used to pay its Merger
expenses, and all redemptions and distributions (except for
regular, normal dividends) made by Dundee immediately preceding
the Merger, will be included as assets of Dundee held immediately
prior to the Merger; and
(iii) the liabilities of Dundee to be assumed by Subcorp and
the liabilities to which the assets of Dundee are subject were
incurred by Dundee in the ordinary course of business.
(x) FAIRNESS OPINION. The Board of Directors of Dundee has
received an opinion from The Robinson-Humphrey Company, Inc. as of the
date of this Agreement to the effect that the consideration to be
received by the holders of the Dundee Shares pursuant to the Merger is
fair to such holders from a financial point of view.
(y) BROKERS, FINDERS AND INVESTMENT BANKERS. None of Dundee or
any of its officers, directors or employees have employed any broker,
finder or investment banker or incurred any liability for any
investment banking fees, financial advisory fees, brokerage fees or
finders' fees in connection with the transactions contemplated by this
Agreement, except that Dundee has arrangements with The
Robinson-Humphrey Company, Inc., the complete terms of which have been
disclosed to Springs.
3.2 REPRESENTATIONS AND WARRANTIES BY SPRINGS. Springs represents and
warrants to, and agrees with, Dundee as of the date hereof and as of the
Closing as follows and, as to matters regarding Subcorp, Subcorp represents and
warrants to, and agrees with, Dundee as of the date hereof and as of the
Closing as follows:
(a) ORGANIZATION AND QUALIFICATION, ETC. Springs is a corporation
duly organized, validly existing and in good standing under the laws
of the State of South Carolina, has the corporate power and authority
to own all its properties and assets and to carry on its business as
it is now being conducted. SubCorp is a corporation duly organized
under the laws of the State of Georgia and has the corporate power and
authority to own all its properties and assets and to carry on its
business as it is now being conducted. The copies of Springs's
Articles of Incorporation and Bylaws and Subcorp's Articles of
Incorporation and Bylaws, in each case, as amended
27
to date, which have been delivered to Dundee, are complete and
correct, and such instruments, as so amended, are in full force and
effect at the date hereof.
(b) CAPITALIZATION. The authorized capital stock of Springs
consists of 40,000,000 Springs Shares, 20,000,000 shares of Class B
Common Stock (the "Springs Class B Shares") and 1,000,000 shares of
$1.00 par value preferred stock (the "Springs Preferred Shares"). As
of December 31, 1994, 9,764,558 Springs Shares were validly issued and
outstanding, fully paid and non-assessable, and 119,585 Springs Shares
were held in the treasury of Springs. As of December 31, 1994,
7,830,375 Springs Class B Common Shares were validly issued and
outstanding, fully paid and non-assessable, and no Springs Class B
Common Shares were held in the treasury of Springs. No Springs
Preferred Shares are issued or outstanding or held in the treasury of
Springs. The authorized capital stock of Subcorp consists of 10,000
shares of common stock of no par value, of which 1,000 shares are
validly issued and outstanding, fully paid and non-assessable.
Springs owns all of the outstanding shares of Subcorp, and no shares
of Subcorp are held in its treasury.
(c) AUTHORITY. Each of Springs and Subcorp has the corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated on the part of Springs and
SubCorp hereby. The execution and delivery by each of Springs and
Subcorp of this Agreement and the consummation by each of Springs and
Subcorp of the transactions contemplated on its part hereby have been
duly authorized by its Board of Directors (or a duly authorized
committee thereof) and by Springs as the sole shareholder of Subcorp.
No other corporate action on the part of Springs or Subcorp is
necessary to authorize the execution and delivery of this Agreement by
Springs or Subcorp or the consummation by Springs or Subcorp of the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by Springs and Subcorp and is a valid, binding
and enforceable agreement of Springs and Subcorp.
(d) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Springs and Subcorp do not and, subject to the expiration
of the applicable waiting periods after the filings required by the
HSR Act referred to in paragraph (e) below, the consummation by
Springs and Subcorp of the transactions contemplated hereby do not and
will not (i) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Springs or Subcorp or (ii) violate or
conflict with, or result (with the giving of notice or the lapse of
time or both) in a violation of or constitute a default under, any
provision of, or result in the acceleration or termination of or
entitle any party to accelerate or
28
terminate (whether after the giving of notice or lapse of time or
both) any obligation or benefit under, or result in the creation or
imposition of any lien, charge, pledge, security interest or other
encumbrance upon any of the assets or property of Springs or Subcorp
pursuant to any provision of, any contract, agreement, commitment,
undertaking, arrangement or understanding to which Springs or any of
its Subsidiaries is a party or bound or to which any of their assets
or properties are subject that is (A) described in Item 14(a)(3) of
Springs Annual Report (as hereinafter defined) in response to Items
601(b)(4) and 601(b)(10) of Regulation S-K, (B) described in Item 6(a)
of Part II of the Springs Quarterly Reports (as hereinafter defined)
in response to Items 601(b)(4) and 601(b)(10) of Regulation S-K or (C)
required to be disclosed in Item 21(a) of the Registration Statement
in response to Items 601(b)(4) and 601(b)(10) of Regulation S-K (a
"Springs Material Contract"), or any law, ordinance, regulation,
order, arbitration award, judgment or decree to which Springs or
Subcorp is a party or by which either of them or their respective
assets or properties is bound, and the same does not and will not
constitute an event permitting termination of any Springs Material
Contract, if such violation, conflict, default, acceleration,
termination, entitlement, creation or imposition of a lien, charge,
pledge, security interest or other encumbrance or event would, when
taken together with all other such violations, conflicts, defaults,
accelerations, terminations, entitlements to accelerate, creations and
impositions of liens, charges, pledges, security interests and other
encumbrances and events, affect adversely the assets, liabilities,
financial condition, results of operations, business or prospects of
Springs and its Subsidiaries taken as a whole.
(e) CONSENTS. Except for the filing of the Registration Statement
with the SEC and state securities commissions, filings with the FTC
and Justice as required by the HSR Act, the filing of the Certificate
of Merger with the Secretary of State of Georgia, no consent,
authorization, order or approval, or filing or registration with, any
Governmental Entity is required for or in connection with the
execution and delivery of this Agreement by Springs or Subcorp and the
consummation by Springs and Subcorp of the transactions contemplated
hereby, if the failure to make such filing or registration or to
obtain such consent, authorization, order or approval would have an
adverse effect on the consummation of the Merger.
(f) PERIODIC REPORTS. The information in the Springs's Annual
Report on Form 10-K for the year ended January 1, 1994, including the
proxy statement incorporated by reference therein (the "Springs Annual
Report"), and its Quarterly Reports on Form 10-Q for the first three
quarters of 1994 (the
29
"Springs Quarterly Reports") (i) were prepared in all material
respects in accordance with the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the Rules and
Regulations thereunder, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(g) FINANCIAL STATEMENTS. Springs has previously furnished Dundee
with a true and complete copy of the consolidated balance sheets of
Springs and its Subsidiaries as of January 1, 1994, January 2, 1993
and December 28, 1991 and the related consolidated statements of
operations, retained earnings and cash flows for the years then ended,
including the notes thereto, certified by Deloitte & Touche,
independent certified public accountants (the "Springs Audited
Financial Statements"). The Springs Audited Financial Statements and
the financial statements included in the Springs Quarterly Reports
(together with the Springs Audited Financial Statements, the "Springs
Financial Statements") have been prepared from, and are in accordance
with, the books and records of Springs and its Subsidiaries and
present fairly in all material respects the consolidated financial
position and consolidated results of operations of Springs and
Springs's Subsidiaries as of the dates and for the periods indicated,
in each case in conformity with generally accepted accounting
principles, consistently applied, except as otherwise stated in such
financial statements (including the notes thereto) and the audit
reports thereon.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 1, 1994,
there has not been any material adverse change in the business,
financial condition or results of operations of Springs and its
Subsidiaries, taken as a whole.
(i) PROXY STATEMENT; REGISTRATION STATEMENT. The information with
respect to Springs, its officers and directors and its Subsidiaries
(including SubCorp) that shall have been supplied by Springs or its
authorized representatives in writing for use in the Proxy Statement
or as contained in the Registration Statement, will not, on the date
or dates the Proxy Statement is first mailed to shareholders of
Dundee, or in the case of the Registration Statement at the time it
becomes effective, and at the Effective Time, as such Proxy Statement
or Registration Statement is then amended or supplemented, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading or necessary to correct statements in any earlier filing
with the SEC of such
30
Registration Statement or amendment thereto or any earlier
communication in the preparation of which Springs participated
(including the Proxy Statement) to shareholders of Dundee or Springs
with respect to the Merger.
(j) ABSENCE OF UNDISCLOSED LIABILITIES AND AGREEMENTS. Except as
set forth on the balance sheet as of October 1, 1994 included in the
Springs Quarterly Reports, neither Springs nor any of its Subsidiaries
had, as of October 1, 1994 debts, liabilities or obligations, whether
accrued, absolute, contingent or otherwise and whether due or to
become due (including without limitation any uninsured liabilities
resulting from failure to comply with any law applicable to the
conduct of its business) required by generally accepted accounting
principles to be set forth on such balance sheet or disclosed in the
notes thereto.
(k) ACTIVITIES OF SUBCORP. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions
contemplated hereby, Subcorp has neither incurred any obligations or
liabilities nor engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with
any person.
(l) BROKERS, FINDERS AND INVESTMENT BANKERS. None of Springs, any
of its Subsidiaries or any of their respective officers, directors or
employees have employed any broker, finder or investment banker or
incurred any liability for any investment banking fees, financial
advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated by this Agreement, except that Springs has
arrangements with Goldman, Sachs & Co. and McGrath & Company, the
complete terms of which have been disclosed to Dundee.
(m) GOVERNMENTAL AUTHORIZATION AND COMPLIANCE WITH LAWS. Springs
is in substantial compliance in all respects with all laws, orders,
regulations, policies and guidelines of all Governmental Entities
applicable to Springs or any of its businesses or properties and
assets. Springs has all material permits, certificates, licenses,
approvals and other authorizations required in connection with the
operation of its businesses. No notice has been issued and to
Springs' knowledge no investigation or review is pending or threatened
against Springs by any Governmental Entity (i) with respect to any
alleged violation by Springs of any law, order, regulation, policy or
guidelines of any Governmental entity, or (ii) with respect to any
alleged failure to have all permits, certificates, licenses, approvals
and other authorizations required in connection with the operation of
the business of Springs, except for violations or failures
31
that, individually or in the aggregate, would not materially and
adversely affect the assets, liabilities, financial condition, results
of operations or business of Springs and its Subsidiaries, taken as a
whole. Springs is not in violation of any judgment, decree,
injunction, ruling or order of any court, governmental department,
commission, agency or instrumentality, arbitrator or other person.
(n) LEGAL PROCEEDINGS. There is no claim, action, suit,
proceeding or investigation pending or, to the knowledge of Springs,
contemplated or threatened against Springs or any of its properties or
assets (or any of its officers or directors in connection with the
business of Springs) before any arbitrator or Governmental Entity,
domestic or foreign, which in the event of a final adverse
determination, considered individually or in the aggregate with all
such other claims, actions, suits or proceedings, would materially and
adversely affect the assets, liabilities, financial condition, results
of operations or business of Springs and its Subsidiaries, taken as a
whole, nor it there any judgment, decree, injunction, ruling or order
of any Governmental Entity, arbitrator or any other person outstanding
against Springs having such effect; and (ii) Springs is not a party to
or bound by any judgment, decree, injunction, ruling or order of any
Governmental Entity, arbitrator or any other person against Springs
which, when considered individually or in the aggregate with all such
other judgments, decrees, injunctions, rulings or orders, adversely
affects the assets, liabilities, financial condition, results of
operations or business of Springs and its Subsidiaries, taken as a
whole.
ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. During the period from the date hereof to
the Effective Time (except as required by law, as set forth on Schedule 4.1 and
for the transactions contemplated by this Agreement):
(a) OPERATION BY DUNDEE IN THE ORDINARY COURSE OF BUSINESS.
Dundee shall conduct its operations according to its ordinary and
usual course of business in substantially the same manner as
heretofore conducted and use its best efforts to preserve intact its
business organization, keep available the services of its officers and
employees, and maintain satisfactory relationships with licensors,
suppliers, distributors, customers and others having business
relationships with it. Dundee shall prepare and file all federal,
state, local and foreign returns for Taxes and other tax reports,
filings and amendments thereto required to be
32
filed by it, and allow Springs, at its request, to review all such
returns, reports, filings and amendments at Dundee's offices prior to
the filing thereof, which review shall not interfere with the timely
filing of such returns.
(b) FORBEARANCES BY DUNDEE. Dundee shall not, without the prior
written consent of Springs, which consent shall not be unreasonably
withheld (and shall be deemed given if no written response shall have
been made within five (5) days after receipt by Springs of a written
request therefor by Dundee):
(i) incur any debt, liability or obligation, direct or
indirect, whether accrued, absolute, contingent or otherwise,
other than current liabilities incurred in the ordinary and usual
course of business, or pay any debt, liability or obligation of
any kind other than such current liabilities and current
maturities of existing long-term debt (including interest when
due) in each case only in accordance with the terms of the
document creating and evidencing such debt, or fail to pay any
debt when due or take or fail to take any action, which taking or
failing to take would permit any debt to be accelerated;
(ii) assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, firm or
corporation, or make any loans or advances to any individual, firm
or corporation;
(iii) declare, set aside or pay any dividend (whether in
cash, capital stock or property) with respect to its capital stock
or declare or make any distribution on, redeem, or purchase or
otherwise acquire any Dundee Shares, or split, combine or
otherwise similarly change the outstanding Dundee Shares, or
authorize the creation or issuance of or issue or sell any shares
of its capital stock or any securities or obligations convertible
into or exchangeable for, or giving any person any right to
acquire from it, any shares of its capital stock, or agree to take
any such action;
(iv) mortgage, pledge or otherwise encumber any property or
asset, except in the ordinary and usual course of business;
(v) sell, lease, transfer or dispose of any of its properties
or assets, waive or release any rights or cancel, compromise,
release or assign any indebtedness owed to it or any claims held
by it, except in the ordinary and usual course of business but in
no event shall any such sale or disposition exceed $100,000;
33
(vi) acquire any subsidiary or make any investment of a
capital nature either by purchase of stock or securities,
contributions to capital, property transfers or otherwise, or by
the purchase of any property or assets of any other individual,
firm or corporation, except in the ordinary and usual course of
business but in no event greater than $100,000;
(vii) fail to perform in all material respects its
obligations under Material Contracts (except those being contested
in good faith) or enter into, assume or amend any contract or
commitment that (A) extends for more than six months after the
date of this Agreement and calls for the payment or receipt of
more than $50,000 by Dundee, or (B) would be a Material Contract
other than, in the case of this clause (B), contracts for the sale
of products entered into in the ordinary and usual course of
business;
(viii) except as set forth on Schedule 4.1(b)(viii) and
except for regularly scheduled increases for non-officer employees
made prior to the Effective Time in accordance, both as to timing
and amount, with normal prior practice, increase in any manner the
compensation or fringe benefits of any of its officers or
employees or pay or agree to pay any bonus or severance pay or
pension or retirement allowance not required by any existing plan
or agreement to any of its officers or employees, or commit itself
to or enter into any employment agreement or any incentive
compensation, deferred compensation, profit sharing, stock option,
stock purchase, savings, consulting, retirement, pension or other
"fringe benefit" plan or arrangement with or for the benefit of
any officer, employee or other person;
(ix) permit any insurance policy naming it as a beneficiary
or a loss payable payee to be cancelled or terminated or any of
the coverage thereunder to lapse, unless Dundee makes reasonable
efforts to obtain simultaneously with such termination or
cancellation replacement policies providing substantially the same
coverage on commercially reasonable terms and, if so available,
such replacement policies shall be maintained in full force and
effect;
(x) amend its Articles of Incorporation or Bylaws;
(xi) enter into any union, collective bargaining or
similar agreement;
34
(xii) make sales of goods other than in accordance with its
customary practices regarding price and credit or make any
shipment of goods other than in accordance with its customary
practices regarding delivery dates requested by customers; or
(xiii) enter into an agreement or commitment to do any of the
things described in clauses (i) through (xii).
In connection with the continued operation of the businesses of Dundee between
the date of this Agreement and the Effective Time, Dundee shall confer in good
faith on a regular and frequent basis with one or more representatives of
Springs designated in writing to receive reports on operational matters and the
general status of ongoing operations, and Springs shall be entitled to have its
representatives present in the offices, plants and other facilities of Dundee
to monitor its business activities and its compliance with the provisions of
this Agreement. Dundee acknowledges that Springs does not and will not waive
any rights it may have under this Agreement as a result of such consultations
including the requirement that Dundee obtain the written consent of Springs to
certain actions as required by this Section 4.1(b), nor shall Springs be
responsible for any decisions made by Dundee's officers and directors with
respect to matters which are the subject of such consultation.
(c) ACTIONS BY SPRINGS. Springs shall not, without the prior
written consent of Dundee, which consent shall not be unreasonably
withheld (and shall be deemed given if no written response shall have
been made within five (5) days after receipt by Dundee of a written
request therefor by Springs):
(i) declare, set aside or pay any dividend (whether in
cash, capital stock or property) with respect to its capital stock or
declare or make any distribution on any of its capital stock, except
for regular quarterly dividends at a rate not exceeding 125% of the
last such dividend; or
(ii) amend its Articles of Incorporation or Bylaws in any
manner that adversely affects the rights of holders of Springs Shares.
4.2 MEETING OF DUNDEE SHAREHOLDERS.
(a) APPROVAL OF MERGER. Dundee covenants and agrees that its
Board of Directors shall (i) cause the Dundee Shareholders Meeting to
be duly called and held in accordance with Dundee's Articles of
Incorporation, its Bylaws and applicable law as soon as reasonably
practicable to consider and vote upon this Agreement; (ii) recommend
approval of this Agreement to the holders of the Dundee Shares; and
(iii) use its best efforts to cause such meeting to take place and to
35
obtain the approval by the holders of the Dundee Shares of the Merger
and other transactions contemplated by this Agreement in accordance
with its Articles of Incorporation, Bylaws and the GBCC.
(b) OTHER MATTERS. At the Dundee Shareholders Meeting the holders
of the Dundee Shares will be asked to approve or ratify the following
matters:
(i) all issuances or sales by Dundee of Dundee Shares since
July 1, 1989; and
(ii) the waiver of preemptive rights by holders of Dundee
Shares with respect to all issuances or sales of Dundee Shares by
Dundee since February 1, 1990.
4.3 BEST EFFORTS; FURTHER ASSURANCES; COOPERATION. Subject to the
other provisions in this Agreement, the parties hereto shall each use their
best efforts to perform their respective obligations herein and to take, or
cause to be taken or do, or cause to be done, all things necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the Merger and the other transactions contemplated by this Agreement to
be carried out promptly in accordance with the terms hereof and shall cooperate
fully with each other and their respective officers, directors, employees,
agents, counsel, accountants and other designees in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, including without limitation:
(a) REGULATORY ACTION. Subject to the terms and conditions of
Section 4.12, Dundee and Springs shall promptly make their respective
filings and submissions and shall take, or cause to be taken, all
action and do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to (i) comply with the
provisions of the HSR Act and (ii) obtain any other required approval
of any other Governmental Entity with jurisdiction over the
transactions contemplated by this Agreement.
(b) CERTAIN LEGAL PROCEEDINGS. Subject to the terms and
conditions of Section 4.12, in the event any claim, action, suit,
investigation or other proceeding by any Governmental Entity or other
person is commenced which questions the validity or legality of the
Merger or any of the other transactions contemplated hereby or seeks
damages in connection therewith, the parties agree to cooperate and
use their best efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order
is issued in any such action, suit or other proceeding, to use their
best efforts to have such injunction
36
or other order lifted, and to cooperate reasonably regarding any other
impediment to the consummation of the transactions contemplated by
this Agreement.
(c) NOTICE. Each party shall give prior written notice to the
others of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or
warranty of Dundee, Springs or SubCorp, as the case may be, contained
in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time or that will or
may result in the failure to satisfy any of the conditions specified
in Article 5 and (ii) any failure of Dundee, Springs or SubCorp, as
the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
4.4 INVESTIGATION. Dundee agrees to permit Springs and its authorized
representatives to have or cause them to be permitted to have, after the date
hereof and until the Effective Time, full access to the premises, books and
records of Dundee at reasonable hours, and, subject to Dundee's consent which
shall not be unreasonably withheld, to enter upon any and all of the properties
of Dundee for purposes of testing of the soil, water, groundwater, tanks,
containers, effluent, equipment, building components, raw materials, finished
products and wastes, or conducting such other tests and studies as Springs or
its consultants in their reasonable opinion deem appropriate or necessary, and
the officers of Dundee will furnish Springs with such financial and operating
data and other information with respect to Dundee's business and properties as
Springs shall from time to time reasonably request. Dundee will instruct its
auditing firm to permit Springs and its representatives, including its auditing
firm, to review the work papers of Dundee's Auditors relating to their
examination of the Dundee Audited Financial Statements. No investigation by
Springs heretofore or hereafter made shall affect the representations and
warranties of Dundee, and each such representation and warranty shall survive
any such investigation, subject to Section 7.5. Springs covenants and agrees
to hold all information received by it in connection herewith in accordance
with the Confidentiality Agreement dated January 6, 1995 between Springs and
Dundee (the "Confidentiality Agreement").
4.5 EXPENSES. Except as otherwise provided in this Agreement, if the
Merger is not consummated, all costs and expenses (including any brokerage
commissions or any finder's or investment banker's fees and including
attorney's and accountants' fees) incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except that Springs and Dundee shall share equally the costs of
printing the Proxy Statement and Registration Statement
37
and filing such documents with the SEC and any state securities
commission.
4.6 NO SOLICITATION OF TRANSACTIONS. From the date hereof until the
Effective Time or until this Agreement is terminated or abandoned as provided
in Article 6, Dundee shall not, directly or indirectly, through any officer,
director, agent, shareholder or otherwise, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate knowingly, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Competing Transaction (as such term is defined below in this
Section 4.6), or enter into or maintain or continue discussions or negotiate
with any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction or
authorize or permit any of the officers, directors or employees of such party
or any of its subsidiaries or any investment banker, financial advisor,
attorney, accountant or other representative retained by such party or any of
such party's subsidiaries to take any such action, and Dundee shall notify
Springs thereof orally (within one business day) and in writing (as promptly as
practicable) of all of the relevant details relating to all inquiries and
proposals which it or any of its Subsidiaries or any such officer, director,
employee, investment banker, financial advisor, attorney, accountant or other
representative may receive relating to any of such matters and if such inquiry
or proposal is in writing, Dundee shall deliver to Springs a copy of such
inquiry or proposal; provided, however, that nothing contained in this Section
4.6 or elsewhere in this Agreement shall prohibit the Board of Directors of
Dundee, as the case may be, from: (i) furnishing information to, or entering
into discussions or negotiations with, any person or entity that makes an
unsolicited written, bona fide proposal, which is not subject to any material
contingencies that the Board of Directors of Dundee determines in good faith
are not reasonably capable of being satisfied (and nothing contained in this
Section 4.6 or elsewhere in this Agreement shall prohibit Dundee from holding
discussions necessary to make this determination), to acquire Dundee pursuant
to a merger, consolidation, share exchange, business combination, tender or
exchange offer or other similar transaction if, and only to the extent that,
(A) the Board of Directors of Dundee, after consultation with and based upon
the advice of independent legal counsel (who may be Dundee's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for the Board of Directors of Dundee to comply with its fiduciary
duties to shareholders under applicable law and (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, Dundee (I) provides reasonable notice to Springs to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person or entity and (II) receives from such person or entity an
executed confidentiality agreement in
38
reasonably customary form on terms not more favorable to such person or entity
than the terms contained in the Confidentiality Agreement; (ii) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer; or (iii) failing to make or withdrawing or modifying its
recommendation referred to in Section 4.2 following the occurrence of a
Competing Transaction if the Board of Directors of Dundee, after consultation
with and based upon the advice of independent legal counsel (who may be
Dundee's regularly engaged independent legal counsel), determines in good faith
that such action is necessary for the Board of Directors of Dundee to comply
with its fiduciary duties to shareholders under applicable law. For purposes
of this Agreement, "Competing Transaction" shall mean any of the following
involving Dundee: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets of
Dundee, taken as a whole, in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 15% or more of the outstanding
shares of capital stock of Dundee or the filing of a registration statement
under the Securities Act in connection therewith; (iv) any person having
acquired beneficial ownership or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) having been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15% or
more of the then outstanding shares of capital stock of Dundee; or (v) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing. Nothing in this Section
4.6 shall (i) permit Dundee to terminate this Agreement, (ii) permit Dundee to
enter into any agreement with respect to a Competing Transaction during the
term of this Agreement or (iii) affect any other obligation of Dundee under
this Agreement.
4.7 REGISTRATION STATEMENT AND PROXY STATEMENT. Springs shall, and
Dundee shall cooperate in taking steps to, (i) prepare and file with the SEC as
soon as is practicable the Registration Statement, which shall contain a
preliminary draft of the Proxy Statement, and (ii) use best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable. Promptly after the Registration Statement has been declared
effective by the SEC, Dundee shall mail the Proxy Statement to the holders of
Dundee Shares, and Dundee shall use its best efforts to solicit proxies in
favor of the adoption and approval of this Agreement and the Merger. Springs
shall also take any action required to be taken under state blue sky or
securities laws in connection with the Merger. The Registration Statement and
the Proxy Statement shall conform as to form in all material respects with all
applicable requirements of the federal securities laws and Georgia law.
39
4.8 NYSE LISTINGS. Springs shall cause the Springs Shares to be
issued in connection with the Merger to be authorized for listing on the New
York Stock Exchange, upon official notice of issuance, prior to the Effective
Time.
4.9 AFFILIATES OF DUNDEE. Dundee will provide Springs with such
information as Springs may reasonably request to determine the identity of
those persons (as defined in Rule 145(e)) who may be deemed "affiliates" of
Dundee under Rule 145 promulgated by the SEC under the Securities Act, and
shall identify those persons whom Dundee believes may be deemed affiliates
thereunder at the time the Merger is submitted to a vote of Dundee's
shareholders. Dundee shall use its best efforts to cause each person who is so
identified as an "affiliate" to deliver to Springs prior to the Closing a
written agreement (an "Affiliate Agreement") providing that such person will
not sell, pledge, transfer or otherwise dispose of the Springs Shares to be
received by such person in the Merger except in compliance with the applicable
provisions of the Securities Act and the rules and regulations thereunder.
Springs shall not be required to maintain the effectiveness of the Registration
Statement under the Securities Act for the purposes of resales of Springs
Shares by "affiliates" or to deliver any certificates evidencing Springs Shares
to any "affiliate" from whom an Affiliate Agreement has not been received
unless any such certificate contains a legend stating in substance that Springs
may refuse to transfer such Springs Shares in the absence of an effective
Registration Statement as to such transfer, or unless Springs receives an
opinion of counsel satisfactory to Springs that registration with respect to
such transfer is not required. Such Affiliate Agreements shall provide that
such "affiliates" agree that during the period of time following the
consummation of the Merger when the Springs Shares of "affiliates" may be sold
without registration only in compliance with Rule 145 there may be placed upon
the certificates representing Springs Shares received by them pursuant to the
Merger, or any substitutions therefor, a legend stating in substance that
Springs may refuse to transfer such shares in violation of the Affiliate
Agreement or in the absence of an effective Registration Statement as to such
transfer, or an opinion of counsel satisfactory to Springs that such
registration is not required.
4.10 RULE 145. Springs covenants for a period of three years
following the Effective Time of the Merger that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act, and
the rules and regulations adopted by the SEC thereunder (or, if Springs is not
required to file such reports, it will, upon the request of any holder of
Springs Shares issued in connection
40
with the Merger, make publicly available other information so long as it is
necessary to permit sales under Rule 145 under the Securities Act but only if
Springs otherwise makes such information publicly available), that it will take
such further action as any holder of Springs Shares issued in connection with
the Merger may reasonably request, all to the extent required from time to time
to enable such shareholders to sell Springs Shares within the limitation of the
exemptions provided by (i) Rule 145 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC.
4.11 PUBLIC ANNOUNCEMENTS. The timing and content of all
announcements regarding any aspect of this Agreement or the Merger to the
financial community, government agencies, employees or the general public shall
be mutually agreed upon in advance unless Springs or Dundee is advised by
counsel that any such announcement or other disclosure not mutually agreed upon
in advance is required to be made by law or applicable NYSE rules and then only
after making a reasonable attempt to comply with provisions of this Section
4.11.
4.12 ANTITRUST CHALLENGES. In the event a suit is instituted
challenging the Merger as violative of the antitrust laws, each of Springs and
Dundee will use its best efforts to defend against such suit. Springs and
Dundee will use their best efforts to take such action as may be required by
any federal or state court of the United States, in any suit brought by a
private party or Governmental Entity challenging the Merger as violative of the
antitrust laws, in order to avoid the entry of, or to effect the dissolution
of, any injunction, temporary restraining order or other order which has the
effect of preventing the consummation of the Merger; provided, however, that
Springs shall not be required to agree to any divestiture by Springs or Dundee
or any of Springs' Subsidiaries of any shares of capital stock or of any
business, properties or assets of Springs or Dundee or any of Springs'
Subsidiaries, or the imposition of any material limitation on the ability of
Springs to conduct such business or to own or exercise control of such stock,
business, properties or assets.
4.13 EMPLOYEE MATTERS.
(a) EMPLOYEE BENEFITS AND AGREEMENTS. Springs shall provide the
employees of Dundee as of the Effective Time with employee benefit
plans that are in the aggregate not materially less favorable to such
employees than the Employee Plans provided by Dundee and shall give
each Dundee employee credit for employment with Dundee for purposes of
eligibility to participate in, vesting and payment of benefits under
such plans; provided, however, that, except as otherwise specifically
provided in subsection (b), nothing in this Agreement shall be deemed
to require Springs to cause to be continued any employee's employment,
responsibilities or officer title for any definite period.
(b) EMPLOYMENT. Springs will cause the Surviving Corporation to
agree to employ each of the Dundee employees
41
listed on Schedule 4.13(b) for the number of months following the
Closing set forth beside his name on Schedule 4.13(b) (the "Initial
Term") for compensation at the annual rate set forth beside the
employee's name on Schedule 4.13(b); provided, however, that either
Springs or any such employee shall be entitled to terminate the
employment of such employee effective at upon the completion of his
Initial Term, after not less than two weeks notice to the other party,
and upon such termination the terminated employee shall receive a one
time payment equal to the amount set forth beside his name on Schedule
4.13(b). No such employee shall be required by Springs to relocate
during his Initial Term without such employee's consent. Such
employment shall be in such executive capacity and with such title as
Springs shall determine. In addition, Springs shall offer to employ
Lowell Belk until December 31, 1997 at total annual compensation of at
least $118,000, provided that he agrees to relocate his office to
Lancaster, S.C. at the request of Springs.
(c) Springs agrees that upon any termination or suspension of
further benefits accruals under Dundee's qualified pension plans, any
funds held in trust for the pension plans will be credited to the
accounts of pension plan participants of those plans in those or other
qualified employee benefit plans as Springs may determine subject to
any applicable ERISA requirements.
(d) Springs agrees to guarantee Dundee's obligations under the
Dundee Mills Supplemental Executive Retirement Plan following the
Closing.
4.14 INDEMNIFICATION.
(a) ARTICLES OF INCORPORATION; BYLAWS. At the Effective Time, the
Articles of Incorporation and Bylaws of Dundee will contain provisions
relating to limitation of liability and indemnification which shall be
continued in the Articles of Incorporation and Bylaws of the Surviving
Corporation. Springs agrees that these provisions of the Articles of
Incorporation and Bylaws of the Surviving Corporation will be deemed
to have been duly adopted by Dundee and will be complied with by the
Surviving Corporation. From and after the Effective Time, Springs
will not take any action, nor permit any action to be taken, which
would change or amend the provisions of the Articles of Incorporation
or Bylaws of the Surviving Corporation in effect at the Effective Time
relating to limitation of liability or indemnification, prior to the
expiration of all statutes of limitation applicable to events
occurring on or prior to the Effective Time, in any manner that would
adversely affect the rights thereunder of individuals who at or prior
to the Effective Time were entitled to the benefits of such
provisions.
42
(b) REORGANIZATION, ETC. In the event the Surviving Corporation
or any of its successors or assigns (i) reorganizes or consolidates
with or merges into or enters into another business combination
transaction with any other person or entity and is not the resulting,
continuing or surviving corporation or entity of such consolidation,
merger or transaction or (ii) liquidates, dissolves or transfers all
or substantially all of its properties and assets to any person or
entity, then, and in each such case, proper provision will be made so
that the successors and assigns of the Surviving Corporation assume
the obligations set forth in this Section 4.14.
4.15 ACCOUNTANTS' LETTERS. Each of Dundee and Springs agrees to
use its best efforts to obtain and deliver to the other letters of Springs
Auditors and Dundee's Auditors, dated the date of the Proxy
Statement/Prospectus included within the Registration Statement, the effective
date of the Registration Statement and the Closing Date (or such other dates
reasonably acceptable to the parties) with respect to certain financial
statements and other financial information included in the Registration
Statement, which letters shall be in form reasonably satisfactory to the
addressee.
4.16 FINANCIAL STATEMENTS OF DUNDEE. Dundee shall cause to be
prepared and delivered to Springs as soon as practicable after they have been
prepared (but in no event later than February 15, 1994) unaudited balance
sheets of Dundee as of December 31, 1994 and December 31, 1993 and the related
unaudited statements of income, stockholders equity and cash flows, including
the notes thereto. Such financial statements shall be in conformity with GAAP
in all respects and shall otherwise meet the requirements for Dundee Financial
Statements in Section 3.1(g), and shall be prepared in such manner and include
such information necessary in order to satisfy Springs' disclosure requirements
under the United States securities laws as determined by Springs in its
reasonable judgment.
4.17 SPRINGS ACTIONS. Following the Effective Time, Springs shall
not take any action that would disqualify, or fail to take any action necessary
to preserve, the Merger as a reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended.
ARTICLE 5
CONDITIONS TO THE MERGER
5.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions:
43
(a) DUNDEE SHAREHOLDER APPROVAL. This Agreement and the Merger
shall have been approved at the Dundee Shareholders Meeting duly
called and held in accordance with Dundee's Articles of Incorporation
and Bylaws and the GBCC, by the holders of a majority of the Dundee
Shares outstanding and entitled to vote thereon.
(b) HSR ACT. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
(c) TAX EFFECT OF MERGER. Dundee and Springs shall each have
received a written opinion of Sutherland, Asbill & Brennan, in form
reasonably satisfactory to Dundee and Springs (the "Tax Opinion"), to
the effect that to the extent the Merger Consideration is comprised of
Springs Shares, the Merger shall be treated as a tax-free
reorganization under the applicable provisions of the Code. In
connection with the Tax Opinion, Sutherland, Asbill & Brennan shall be
entitled to make factual assumptions as are customary in similar tax
opinions, and such factual assumptions shall be confirmed by
certificates executed by responsible officers of Dundee and Springs.
Sutherland, Asbill & Brennan may also rely on all representations,
warranties, covenants and agreements of the parties contained in this
Agreement or any Schedule hereto.
(d) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose, or under the proxy rules of the SEC
pursuant to the Exchange Act and with respect to the transactions
contemplated hereby, shall be pending before or threatened by the SEC.
(e) NYSE LISTING. The Springs Shares to be issued in the Merger
shall have been authorized for listing on the NYSE upon official
notice of issuance.
5.2 CONDITIONS TO OBLIGATIONS OF SPRINGS AND SUBCORP. Consummation of
the Merger is subject to the fulfillment to the reasonable satisfaction of
Springs, prior to or at the Closing, of each of the following conditions:
(a) CONSENTS, AUTHORIZATIONS, ETC. All consents, authorizations
and approvals required under the items listed on Schedule 3.1(e) shall
have been obtained or made.
(b) INJUNCTION, ETC. The consummation of the Merger will not
violate the provisions of any injunction, order, judgment, decree, law
or regulation applicable or effective with respect to Springs, SubCorp
or their respective officers and directors. No suit or proceeding
shall have been instituted by any person, or, to the knowledge of
Springs,
44
shall have been threatened by any Governmental Entity, which seeks
(i) to prohibit, restrict or delay consummation of the Merger or to
limit in any material respect the right of Springs to control any
material aspect of the business of Springs and its Subsidiaries or
Dundee and its Subsidiaries after the Effective Time, or (ii) to
subject Springs or Dundee or their respective directors or officers to
material liability on the ground that it or they have breached any law
or regulation or otherwise acted improperly in relation to the
transactions contemplated by this Agreement; provided, however, that
in the case of (ii) above, Springs shall have made a good faith
determination that a substantial basis exists which would support a
finding of such liability against the officers and directors of
Dundee or Springs.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Dundee contained in this Agreement shall have been true
and correct in all respects at the date hereof and shall also be true
and correct in all respects at and as of the Effective Time, except
for changes contemplated in this Agreement, with the same force and
effect as if made at and as of the Effective Time, except in either
case as such representations and warranties by their terms relate only
to periods of time prior to the Effective Time, or except where the
failure of any representation and warranty to be true and correct
would not have a material adverse effect on the assets, liabilities,
financial condition, results of operations, business or prospects of
Dundee; and Dundee shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with by it at or prior to the Effective
Time.
(d) AFFILIATE AGREEMENTS. There shall have been delivered to
Springs Affiliate Agreements as described in Section 4.9.
(e) CERTIFICATE. Dundee shall have delivered to Springs a
certificate, dated as of the Effective Time, of the Chief Executive
Officer and the Chief Financial Officer of Dundee to the effect that
(i) they are familiar with the provisions of this Agreement and (ii)
to the best of their knowledge the conditions specified in paragraph
(c) of this Section 5.2 have been satisfied. Such certificate shall
also specify the number of issued and outstanding shares of Dundee
Common Stock and shall certify that to the best of their knowledge
there has been no violation by Dundee of Sections 4.1 or 4.6 hereof.
(f) OPINION AND CONFIRMATION OF DUNDEE'S COUNSEL.
(i) Springs and Subcorp shall have received an opinion or
opinions, dated as of the Effective Time, of
45
King & Spalding in form and substance and with such exceptions and
limitations as shall be reasonably satisfactory to Springs,
substantially to the effect that:
(A) Dundee is a corporation incorporated, validly
existing and in good standing under the laws of the State of
Georgia, and has the corporate power and authority to own its
properties and assets and to conduct its business as it is
described in the Registration Statement.
(B) The authorized capital stock of Dundee
consists of 200,000 Dundee Shares. As of the date of such
opinion, there are 46,728 Dundee Shares issued and
outstanding. Dundee owns all of the outstanding shares of
capital stock of its Subsidiaries.
(C) Dundee has the corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated on the part of Dundee. The
Agreement has been duly adopted by the Board of Directors of
Dundee and duly approved by its shareholders, duly executed
and delivered by Dundee, and is a valid and binding agreement
of Dundee enforceable in accordance with its terms, subject
to: (i) bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting creditors' rights generally; and
(ii) general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at
law, provided that no opinion is expressed with respect to the
enforceability of Sections 4.6, 6.2 or 6.4.
(D) Neither the execution nor delivery by Dundee
of this Agreement nor the performance of its obligations
hereunder will (with the passage of time or the giving of
notice or both): (i) constitute a violation of, constitute a
default or require any payment under, permit a termination of,
or result in the creation or imposition of any security
interest, lien or other encumbrance or adverse claim against,
or upon any of the property of, Dundee or any of its
Subsidiaries under (I) any term or provision of the Articles
of Incorporation or Bylaws of Dundee, (II) any contract,
agreement, commitment, undertaking, arrangement, or
understanding (including without limitation those imposing any
rights of first refusal or transfer restrictions) to which
Dundee or any of its Subsidiaries is a party or bound or to
46
which any of its properties is subject, that is listed on
Schedule 3.1(n) or that is known to such counsel, (III) any
permit, judgment, decree or order of any Governmental Entity
that is listed on Schedule 3.1(e) or that is known to such
counsel or (IV) any applicable law which in the experience of
such counsel is normally applicable to transactions of the
type contemplated by this Agreement; or (ii) create or cause
the acceleration of the maturity of, any indebtedness,
obligation, or liability of Dundee that is listed on Schedule
3.1(n) or that is known to such counsel.
(E) Except for the filing of the Certificate of
Merger with the Secretary of State of Georgia, each consent,
authorization, order and approval of, and filing and
registration with, any Governmental Entity required to be made
or obtained by Dundee for the execution and delivery of this
Agreement and the other documents and agreements contemplated
hereby and the consummation of the transactions contemplated
by this Agreement have been made or obtained.
(F) The Proxy Statement sent by Dundee to its
shareholders for purposes of the Dundee Shareholders Meeting
held pursuant to Section 5.2 of this Agreement complied as to
form in all material respects with the requirements of Georgia
law.
(G) The Shareholders of Dundee have duly approved
or ratified the matters described in Section 4.2(b)(i) and
(ii) and a disinterested committee of the Board of Directors
of Dundee has duly authorized and approved the payments to
officers of Dundee as set forth on Schedule 4.1(b)(viii)
pursuant to Section 14-2-862 of the Georgia Business
Corporation Code.
(H) The Directors of Dundee have taken action with
respect to the Dundee Mills Supplemental Executive Retirement
Plan that has the effect of preventing a Change in Control (as
defined in Section 1.5 of such plan) from being considered to
have occurred by reason of the Merger.
(I) Upon the filing of the Certificate of Merger
with the Secretary of State of Georgia in accordance with
Section 1.3 of the Agreement, the Merger shall become
effective in accordance with the GBCC;
47
(J) Each of Dundee's Subsidiaries listed on
Schedule 3.1(f) is a corporation incorporated, validly
existing under the laws of its jurisdiction of incorporation
and has the corporate power and authority to own all of its
properties and assets and to carry on its business as it is
described in the Proxy Statement.
(ii) Springs and Subcorp shall have received confirmation,
dated as of the Effective Time, from King & Spalding,
substantially to the effect that:
(A) Such counsel has participated in the
preparation and review of the Registration Statement and the
Proxy Statement. From time to time such counsel has had
discussions with officers, directors and employees of Dundee
and the independent accountants who examined certain
consolidated financial statements of Dundee and its
Subsidiaries and, based thereon, no facts have come to such
counsel's attention which lead such counsel to believe that
the Registration Statement or the Proxy Statement (except for
the financial statements, schedules and other financial and
statistical information included therein, as to which such
counsel need express no opinion) or any amendment or
supplement thereto, at the time they were mailed to the
shareholders of Dundee and at the time of the Dundee
Shareholders Meeting, contained any untrue statement of a
material fact regarding Dundee and its Subsidiaries or omitted
to state a material fact regarding Dundee and its Subsidiaries
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading. Such counsel has not,
however, independently verified, is not passing upon, and does
not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration
Statement and the Proxy Statement;
(B) To the knowledge of such counsel there is no
litigation or other proceeding against Dundee or any its
Subsidiaries, or its properties and assets, pending or overtly
threatened by a written communication to Dundee, that would be
required to be disclosed pursuant to the requirements of Item
103 of Regulation S-K if Dundee were subject thereto.
Such opinion may be limited to the laws of the State of Georgia
and the federal laws of the United States of
48
America and, except as set forth in Section 6.2(f)(i)(E), may
exclude the applicability and effect of any antitrust and unfair
competition laws. In rendering such opinions such counsel may
rely upon opinions of other counsel and may rely upon certificates
of public officials and officers of Dundee as to factual matters
and shall be under no obligation to make any independent
investigation as to factual matters.
(g) LETTERS FROM ACCOUNTANTS. Springs shall have received the
letters of Ernst & Young contemplated by Section 4.15.
(h) CERTAIN ANTITRUST MATTERS. No proceeding shall be pending or
threatened with respect to the transactions hereunder and no order,
decree or judgement shall have been entered or issued, which, in any
such case, would require any divestiture by Springs or Dundee or any
of Springs' or Dundee's Subsidiaries of any shares of capital stock or
of any business, properties or assets of Springs or Dundee or any of
Dundee's or Springs' Subsidiaries, or the imposition of any material
limitation on the ability of Springs to conduct its business or to own
or exercise control of such stock, business, properties or assets.
(i) SERP DETERMINATION. The Board of Directors of Dundee shall
have determined that, for purposes of the Dundee Mills Supplemental
Executive Retirement Plan, no Change in Control (as defined in Section
1.5 of such plan) will be considered to have occurred by reason of the
Merger.
(j) APPRAISAL RIGHTS. Appraisal rights under the GBCC shall have
been perfected by holders of not more than eight (8) percent of the
outstanding Dundee Shares.
(k) ADDITIONAL CERTIFICATES, ETC. Dundee shall have furnished to
Springs such additional certificates, opinions and other documents as
Springs may have reasonably requested as to any of the conditions set
forth in Sections 5.1 and 5.2.
(l) CERTAIN SHAREHOLDER ACTION. The shareholders of Dundee shall
have duly approved or ratified the matters described in Section
4.2(b).
(m) FILING DEFICIENCIES. Dundee shall have cured all deficiences
with respect to the filing of required forms or documents and
satisfied all related obligations (including late fees or penalties)
with respect to the HSR Act and all Dundee pension plans, all at no
material expense to Dundee.
(n) SHAREHOLDER LOANS. All of the loans made by Dundee to Dundee
Shareholders set forth on Schedule 5.2(n) shall have
49
been repaid in full with interest in accordance with their terms.
(o) IDB FINANCINGS. Dundee and its counsel shall have taken all
action necessary to preserve the tax exempt status of the Industrial
Revene Bonds set forth on Schedule 3.1(e).
5.3 CONDITIONS TO OBLIGATIONS OF DUNDEE. Consummation of the Merger
is subject to the fulfillment to the reasonable satisfaction of Dundee, prior
to or at the Effective Time, of each of the following conditions:
(a) CONSENTS, AUTHORIZATIONS, ETC. All consents, authorizations,
orders and approvals of, and filings and registrations with, any
Governmental Entity, (other than the filing of the Certificate of
Merger with the Secretary of State of Georgia) which are required for
or in connection with the execution and delivery of this Agreement by
Springs and SubCorp and the consummation by Springs and SubCorp of the
transactions contemplated hereby shall have been obtained or made.
(b) INJUNCTION, ETC. The consummation of the Merger will not
violate the provisions of any injunction, order, judgment, decree, law
or regulation applicable or effective with respect to Dundee or its
officers or directors.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Springs and Subcorp contained in this Agreement shall
have been true and correct in all respects at the date hereof and
shall also be true and correct in all respects at and as of the
Effective Time, except for changes contemplated in this Agreement,
with the same force and effect as if made at and as of the Effective
Time or except as such representations and warranties by their terms
relate only to periods of time prior to the Effective Time or except
where the failure of any representation or warranty to be correct
would not have a material adverse effect on the ability of Springs to
consummate the Merger or would not have a material adverse effect on
the consolidated assets, liabilities, financial condition, results of
operation, business or prospects of Springs and its subsidiaries,
taken as a whole; and Springs shall have performed or complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the
Effective Time.
(d) SPRINGS SHARES. The Springs Shares issued to the shareholders
of Dundee pursuant to the Merger shall, upon consummation of the
Merger, be validly authorized and issued, fully paid and
nonassessable.
50
(e) CERTIFICATE. Springs shall have delivered to Dundee a
certificate, dated as of the Effective Time, of the Chief Executive
Officer or a senior executive officer of Springs to the effect that
(i) he is familiar with the provisions of this Agreement and (ii) to
the best of his knowledge the conditions specified in paragraph (c) of
this Section 5.3 have been satisfied.
(f) OPINION AND CONFIRMATION OF SPRINGS'S AND SUBCORP'S COUNSEL.
(i) Dundee shall have received an opinion, dated as of
the Effective Time, of Sutherland, Asbill & Brennan, counsel to
Springs and Subcorp, in form and substance and with such
exceptions and limitations as shall be reasonably satisfactory to
Dundee, substantially to the effect that:
(A) Springs is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of South Carolina and has the corporate power and
authority to own its properties and assets and to conduct its
business as it is described in the Registration Statement.
(B) SubCorp is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Georgia and has corporate power and authority to own
its properties and assets and to carry on its business as it
is described in the Registration Statement.
(C) The authorized capital stock of Springs
consists of 40,000,000 Springs Shares, 20,000,000 shares of
Class B Common Stock and 1,000,000 shares of Springs Preferred
Stock. As of the date of such opinion there are _____________
Springs Shares, ____ shares of Springs Class B shares and
_____ shares of Preferred Stock issued and outstanding. The
issued and outstanding Springs Shares are duly authorized,
validly issued, fully paid and non-assessable.
(D) Each of Springs and Subcorp has the corporate
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated on the part of
Springs and SubCorp. Each of Springs and Subcorp has taken
all necessary corporate action to authorize the execution and
delivery of this Agreement and the consummation by it of the
transactions contemplated hereby. The Agreement has been duly
adopted by the respective Boards of Directors of Springs and
SubCorp, executed
51
and delivered by each of Springs and Subcorp and is a valid
and binding agreement of Springs and SubCorp and enforceable
in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium, or other similar laws
affecting creditors' rights generally; and (ii) general
principles of equity, regardless of whether enforceability is
considered in a proceeding in equity or at law, provided that
no opinion is expressed with respect to the enforceability of
Sections 4.6, 6.2 or 6.4.
(E) Except for the filing of the Certificate of
Merger with the Secretary of State of Georgia, each consent,
authorization, order and approval of, and filing and
registration with, any Governmental Entity required to be made
or obtained by each of Springs and Subcorp for the execution
and delivery of this Agreement and the other documents and
agreements contemplated hereby and the consummation of the
transactions contemplated by this Agreement have been made or
obtained.
(F) The Springs Shares issued to the shareholders
of Dundee shall, upon consummation of the Merger, be validly
authorized and issued, fully paid and nonassessable.
(G) Neither the execution nor delivery of this
Agreement by each of Springs and Subcorp and the performance
by Springs and Subcorp of their respective obligations
hereunder will constitute a violation of (i) any term or
provision of the respective Articles of Incorporation or
Bylaws of Springs or SubCorp, (ii) any permit, judgment,
decree or order of any Governmental Entity known to such
counsel or (iii) any applicable law which in such counsel's
experience is normally applicable to transactions of the type
contemplated by the this Agreement.
(H) The Registration Statement with respect to
the distribution of Springs Shares to the shareholders of
Dundee pursuant to this Agreement complied as to form in all
material respects with the requirements of the federal
securities laws.
(I) Upon the filing of the Certificate of Merger
with the Secretary of State of Georgia in accordance with
Section 1.3 of this Agreement, the Merger shall become
effective in accordance with the GBCC.
52
(ii) Dundee shall have received confirmation, dated as of the
Effective Time, from Sutherland, Asbill & Brennan, substantially
to the effect that:
(A) Such counsel has participated in the
preparation and review of the Registration Statement and the
Proxy Statement. From time to time such counsel has had
discussions with officers, directors and employees of Springs
and the independent accountants who examined certain financial
statements of Springs and its Subsidiaries and, based thereon,
no facts have come to such counsel's attention which leads
such counsel to believe that the Registration Statement or
Proxy Statement (except for the financial statements,
schedules and other financial and statistical information
included therein, as to which such counsel need express no
opinion) or any amendment or supplement thereto contained, at
the time they were mailed to the holders of Dundee Shares and
at the time of the Dundee Shareholders Meeting, any untrue
statement of a material fact regarding Springs or omitted to
state a material fact regarding Springs required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. Such counsel has not, however, independently
verified, and is not passing upon, and does not assume any
responsibility for the accuracy, completeness or fairness of
the statements contained the Registration Statement and the
Proxy Statement.
(B) The Registration Statement has become
effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement has
been issued and insofar, as such counsel knows, no proceeding
for that purpose has been instituted or is pending or
contemplated.
Such opinion may be limited to the laws of the State of Georgia,
the corporation law of the State of South Carolina and the federal
laws of the United States of America and, except as set forth in
Section 5.3(f)(i)(E), may exclude the applicability and effect of
any antitrust and unfair competition laws. In rendering such
opinions such counsel may rely upon opinions of C. Powers Dorsett,
General Counsel of Springs, and other counsel and may rely upon
certificates of public officials and officers of Springs, SubCorp
or any of Springs's other Subsidiaries as to factual matters and
shall be under no
53
obligation to make any independent investigation as to factual
matters.
(g) LETTERS FROM ACCOUNTANTS. Dundee shall have received the
letters of Deloitte & Touche contemplated by Section 4.15.
(h) TAX ADVICE. Dundee shall not have been advised by King &
Spalding that in its opinion the Merger shall not be treated as a
tax-free reorganization under the applicable provisions of the Code to
the extent the Merger Consideration consists of Springs Shares.
(i) INVESTMENT BANKER'S OPINION. The Robinson-Humphrey Company,
Inc. shall have delivered to Dundee its written opinion, dated
approximately the date of mailing of the Proxy Statement, that the
consideration to be received by the holders of the Dundee Shares
pursuant to the Merger is fair to such holders from a financial point
of view and shall have consented to the inclusion of a copy of such
opinion in the Proxy Statement.
(j) ADDITIONAL CERTIFICATES, ETC. Springs shall have furnished to
Dundee such additional certificates, opinions and other documents as
Dundee may have reasonably requested as to any of the conditions set
forth in Sections 5.1 and 5.3.
ARTICLE 6
TERMINATION AND ABANDONMENT
6.1 TERMINATION AND ABANDONMENT. This Agreement and the Merger may be
terminated and abandoned at any time prior to the Effective Time:
(a) By mutual action of the Board of Directors of Springs and
Dundee, whether before or after any action by shareholders.
(b) By Springs:
(i) if any event shall have occurred as a result of which
any condition set forth in Section 5.2 is no longer capable of
being satisfied; or
(ii) if there has been a breach by Dundee of any
representation or warranty contained in this Agreement which would
have or would be reasonably likely to have a material adverse
effect on the assets, liabilities, financial condition, results of
operations, business or prospects of Dundee and its Subsidiaries
taken as a
54
whole, or there has been a material breach of any of the covenants
or agreements set forth in this Agreement on the part of Dundee,
which breach is not curable, or, if curable, is not cured within
30 days after written notice of such breach is given by Springs to
Dundee.
(c) By Springs in the event that:
(i) Dundee (or its Board of Directors) shall have authorized,
recommended, proposed or publicly announced its intention to enter
into a Competing Transaction which has not been consented to in
writing by Springs;
(ii) The Board of Directors of Dundee shall have withdrawn or
materially modified its authorization, approval or recommendation
to the holders of Dundee Shares with respect to the Merger or this
Agreement in a manner adverse to Springs or shall have failed to
make such favorable recommendation; or
(iii) Any person, entity or "group" (as that term is used in
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) (other than Springs or any of its
affiliates) shall have (A) commenced or publicly proposed to
commence a tender offer or exchange offer for at least 15 percent
of the then total outstanding Dundee Shares, (B) acquired more
than 15 percent of the then total outstanding Dundee Shares or (C)
solicited and received proxies or consents sufficient to permit it
to elect directors nominated by it to a majority of the members of
Dundee's Board of Directors or to block approval of the Merger and
the transactions contemplated by this Agreement by the holders of
Dundee Shares.
(d) By Dundee:
(i) if any event shall have occurred as a result of which any
condition set forth in Section 5.3 is no longer capable of being
satisfied.
(ii) if there has been a breach by Springs or SubCorp of any
representation or warranty contained in this Agreement which would
have or would be reasonably likely to have a material adverse
effect on the ability of Springs or SubCorp to consummate the
Merger, or there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of
Springs or SubCorp, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is
given by Dundee to Springs.
55
(e) By Springs or Dundee if there shall have occurred (i) any
general suspension of, or limitation on, trading in securities
generally on the NYSE continuing for a period of 15 days, or (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States continuing for a period of 15
days.
(f) By either Springs or Dundee if (i) any event shall have
occurred as a result of which any condition set forth in Section 5.1
is no longer capable of being satisfied or (ii) the Merger shall not
have been consummated by July 31, 1995; provided, however, that the
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner which proximately
contributed to the failure of any such condition to be satisfied or
the failure to consummate the Merger.
6.2 SPECIFIC PERFORMANCE. The parties acknowledge that the rights
of each party to consummate the transactions contemplated hereby are
special, unique, and of extraordinary character, and that, in the event that
either violates or fails and refuses to perform any covenant made by it herein,
the other party or parties will be without adequate remedy at law. Each party
agrees, therefore, that, in the event that it violates or fails and refuses to
perform any covenant made by it herein, the other party or parties so long as
it or they are not in breach hereof, may, in addition to any remedies at law,
institute and prosecute an action in a court of competent jurisdiction to
enforce specific performance of such covenant or seek any other equitable
relief.
6.3 RIGHTS AND OBLIGATIONS UPON TERMINATION. If this Agreement is
terminated and abandoned as provided herein, each party will redeliver all
documents, work papers, and other materials of any party relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same, except to the extent
previously delivered to third parties in connection with the transactions
contemplated hereby, and all information received by any party hereto with
respect to the business of any other party shall not at any time be used for
the advantage of, or disclosed to third parties by, such party to the detriment
of the party furnishing such information; provided, however that this Section
6.3 shall not apply to any documents, work papers, material, or information
which is a matter of public knowledge or which heretofore has been or hereafter
is published in any publication for public distribution or filed as public
information with any governmental agency.
6.4 CERTAIN FEES AND EXPENSES. Dundee acknowledges that Springs has
spent, and will be required to spend, substantial time and effort in examining
the business, properties, affairs, financial condition and prospects of Dundee
and its Subsidiaries, and has incurred, and will continue to incur, substantial
fees and
56
expenses in connection with such examination, the preparation of this Agreement
and the accomplishment of the transactions contemplated hereunder, and will be
unable to evaluate and, possibly, make investments in or acquire other entities
due to the limited number of personnel available for such purpose and the
constraints of time. Therefore, to induce Springs to enter this Agreement:
(a) EXPENSES. In the event that Springs terminates this Agreement
pursuant to Section 6.1 (b) by reason of the failure to meet the
condition of Section 5.2(c) due to Dundee's knowing and intentional
misrepresentation or knowing and intentional breach of warranty or
breach of any covenant or agreement, then Dundee shall pay Springs on
demand, in same day funds, the Expenses. For purposes of this Section
6.4, "Expenses" shall include all reasonable out-of-pocket expenses
and fees (including, without limitation, fees and expenses payable to
all investment banking firms and their respective agents and counsel,
and all fees of counsel, accountants, experts and consultants to
Springs) actually incurred by Springs or on its behalf in connection
with the Merger and all transactions contemplated by this Agreement;
and
(b) FEE. If this Agreement is terminated pursuant to:
(i) Section 6.1(b) by reason of the failure to meet the
condition of Section 5.2(c) due to Dundee's knowing and
intentional misrepresentation or knowing and intentional breach of
warranty or breach of any covenant or agreement and (A) Dundee
shall have had contacts about or entered into negotiations
relating to a Competing Transaction during the period from the
date of this Agreement through the date of termination of this
Agreement; and (B) within one year after the date of such
termination a Competing Transaction shall have been consummated
involving a person with whom Dundee has had such negotiations or
contacts;
(ii) Section 6.1(f) because this Agreement does not receive
the requisite vote of the holders of Dundee Shares and at the time
of such vote, there existed a Competing Transaction; or
(iii) Section 6.1(c)(i) or (ii).
then Dundee shall pay to Springs in addition to the Expenses a Fee in
the amount of three million dollars ($3,000,000) (the "Fee"), not as a
penalty but as full and complete liquidated damages; provided,
however, that no amount shall be paid pursuant to this Section 6.4(b)
if Springs shall be in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement. The
Fee
57
shall be payable to Springs notwithstanding that any action taken by
the Board of Directors of Dundee which may give rise to the obligation
to pay the Fee may have been taken in accordance with the fiduciary
duties of the Board of Directors.
(c) PAYMENT. Any payment required pursuant to this Section 6.4
shall be made as promptly as practicable, but in no event later than
five business days after termination of this Agreement and shall be
made by wire transfer of immediately available funds to an account
designated by the Springs; provided, however, that any payment
required pursuant to subsection (b)(i) of this Section 6.4 shall be
made as promptly as practicable, but in no event later than five
business days after the occurrence of the Competing Transaction. In
the event that Springs is entitled to the Expenses or the Fee, Dundee
shall also pay to Springs interest at the rate of 8 1/2% per year on
any amounts that are not paid when due, plus all costs and expenses in
connection with or arising out of the enforcement of the obligation of
Dundee to pay the Expenses, the Fee or such interest.
(d) EFFECT OF PAYMENT. Except as provided in Section 6.5, upon
payment of the Expenses and, if applicable, the Fee, this Agreement
shall terminate with no further liability of Dundee or Springs at law
or equity resulting therefrom.
6.5 EFFECT OF TERMINATION. In the event of a termination and
abandonment of this Agreement pursuant to Section 6.1 above, this Agreement
shall forthwith become void and have no further effect, without any liability
on the part of any party hereto or its respective officers, directors or
stockholders, other than the provisions of Section 4.4, 4.5, 4.11, 6.3, 6.4 and
this Section 6.5. Notwithstanding the foregoing, nothing contained in this
Section 6.5 shall relieve any party from liability for any breach of this
Agreement, and any such termination shall be without prejudice to the rights of
any party hereto arising out of the willful breach by any other party of any
covenant or agreement contained in this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1 WAIVER OF CERTAIN CONDITIONS. Any party may, at its option,
waive in writing any or all of the conditions herein contained to which its
obligations hereunder are subject, except that the conditions contained in
Section 5.1, Section 5.2(a) (with respect to consents and authorizations,
orders and approvals of, and filings and registrations with, any Governmental
Entity) and
58
- -(b) (first sentence) and Section 5.3(a) and -(b) may not be so waived.
7.2 NOTICES. All notices and other communications under this
Agreement shall be in writing and may be given by any of the following methods:
(i) personal delivery; (ii) facsimile transmission; (iii) registered or
certified mail, postage prepaid, return receipt requested; or (iv) overnight
delivery service requiring acknowledgment of receipt. Notices shall be sent to
the appropriate party at its address or facsimile number given below (or at
such other address or facsimile number for such party as shall be specified by
notice given hereunder):
If to Springs and any SubCorp, to:
Springs Industries, Inc.
205 North White Street
P. O. Box 70
Fort Mill, S.C. 29715
Fax No. 803-547-3766
Attention: Walter Y. Elisha
Chairman of the Board
and Chief Executive Officer
and
C. Powers Dorsett
Vice President/General Counsel
and Secretary
with a copy to:
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309-3996
Fax No. (404) 853-8806
Attention: George L. Cohen
If Dundee, to:
Dundee Mills, Incorporated
P. O. Box E
Griffin, Georgia 30224-0199
Fax No: (404) 412-5656
Attention: John T. Newton
Chairman
59
with a copy to:
King & Spalding
42nd Floor
191 Peachtree Street, N.E.
Fax No: (404) 572-5146
Attention: Edward J. Hawie
All such notices and communications shall be deemed received upon (i) actual
receipt thereof by the addressee, (ii) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt, or (iii) in the
case of a facsimile transmission, upon transmission thereof by the sender and
telephonic confirmation of receipt. In the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice to
the addressee at the address provided for above. However, such mailing shall
in no way alter the time at which the facsimile notice is deemed received.
7.3 TABLE OF CONTENTS; HEADINGS. The Table of Contents, cross
reference pages and headings contained herein are for convenience of reference
only, do not constitute a part of this Agreement, and shall not be deemed to
limit or affect any of the provisions hereof.
7.4 VARIATION AND AMENDMENT. Before or after the approval of this
Agreement by the holders of Dundee Shares, this Agreement may be varied or
amended at any time without action by the holders of Dundee Shares by action of
the respective Boards of Directors of Dundee, Springs and Subcorp; provided,
however, that any variance or amendment made after approval of the Merger by
the holders of Dundee Shares that (i) reduces the Merger Consideration or
changes the form of the Merger Consideration or (ii) changes any of the terms
and conditions of this Agreement if such change would adversely affect the
holders of Dundee Shares shall be subject to the further approval of the
holders of Dundee Shares. Any variation, modification or amendment to this
Agreement must be made in writing and executed by each of the parties hereto.
7.5 NO SURVIVAL OF REPRESENTATIONS OR WARRANTIES. None of the
representations or warranties made in Article 3 of this Agreement shall survive
the Effective Time.
7.6 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration in accordance with
the then-prevailing Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration shall be held in Atlanta, Georgia before a panel
of three (3) arbitrators, one selected by Springs and SubCorp, one selected by
Dundee and the third selected by mutual agreement of the first two arbitrators.
Each arbitrator shall be independent
60
and impartial. Judgment upon any award rendered by the arbitrators may be
entered into any court of competent jurisdiction. The determination of which
party (or combination of them) bears the costs and expenses incurred, including
reasonable attorneys fees, in connection with any such arbitration proceeding
shall be determined by the arbitrators.
7.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law of public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party hereto. Upon any such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are consummated to the
extent possible.
7.8 WAIVER. The failure of any party hereto at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition, or the breach of
any term, provision, warranty, representation, agreement or covenant contained
in this Agreement or the other agreements contemplated hereby, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach or a waiver
of any other condition or of the breach of any other term, provision, warranty,
representation, agreement or covenant herein or therein contained.
7.9 NO THIRD PARTY BENEFICIARIES; ASSIGNMENT. This Agreement shall
inure to the benefit of the parties and their respective successors and
permitted assignees. Except as set forth in Sections 4.10, 4.13, 4.14 and
4.17, nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity, including, without
limitation, employees not a party to this Agreement. Except for assignments to
wholly-owned subsidiaries (direct or indirect) of Springs, in which event
Springs shall remain liable for the performance of this Agreement, no transfer
or assignment (including by operation of law) of this Agreement or of any
rights or obligations under this Agreement may be made by any party without the
prior written consent of the other parties and any attempted transfer or
assignment without that required consent shall be void. No transfer or
assignment by a party of its rights under this Agreement shall relieve it of
any of its obligations to the other parties under this Agreement.
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7.10 TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the
essence of each and every provision of this Agreement. Whenever the last day
for the exercise of any right or the discharge of any duty under this Agreement
shall fall upon Saturday, Sunday or a public or legal holiday, the party having
such right or duty shall have until 5:00 p.m. Atlanta, Georgia time on the next
succeeding regular business day to exercise such right or to discharge such
duty.
7.11 COUNTERPARTS. This Agreement may be executed by each party upon
a separate copy, and in such case one counterpart of this Agreement shall
consist of enough of such copies to reflect the signatures of all of the
parties. This Agreement may be executed in two or more counterparts, each of
which shall be an original, and each of which shall constitute one and the same
agreement. Any party may deliver an executed copy of this Agreement and of any
documents contemplated hereby by facsimile transmission to another party and
such delivery shall have the same force and effect as any other delivery of a
manually signed copy of this Agreement or of such other documents.
7.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without giving
effect to the conflicts of law principles thereof.
7.13 ENTIRE AGREEMENT. This Agreement (with its Schedules) together
with the Confidentiality Agreement, contain, and is intended as, a complete
statement of all the terms of the arrangements among the parties with respect
to the matters provided for, supersedes any previous agreements and
understandings between the parties with respect to those matters and cannot be
changed or terminated orally.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, and their corporate seals affixed, as of the date first above
written.
DUNDEE MILLS, INCORPORATED
[Corporate Seal]
By: /s/John T. Newton
-------------------------------
Attest:
/s/Douglas R. Tingle
- ------------------------------
, Secretary
SPRINGS INDUSTRIES, INC.
[Corporate Seal]
By: /s/Walter Y. Elisha
-------------------------------
Attest:
/s/C. Powers Dorsett
- ------------------------------
, Secretary
DUNDEE ACQUISITION CORP.
[Corporate Seal]
By: /s/Thomas P. O'Connor
-------------------------------
Attest:
/s/C. Powers Dorsett
- ------------------------------
, Secretary
63
DESCRIPTION OF EXHIBITS
AND SCHEDULES TO AGREEMENT
AND PLAN OF MERGER
LIST OF EXHIBIT
EXHIBIT DESCRIPTION
- ------- -----------
A Certificate of Merger with Respect to the Merger of
Dundee Mills, Incorporated with and into Dundee Acquisition
Corp.
B Audited Financial Statements of Dundee Mills, Incorporated
as of August 31, 1993 and August 31, 1994
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
- -------- -----------
3.1(a) Jurisdictions in which Qualified to do Business and in
Good Standing
3.1(b) Capitalization
3.1(d) Non-Contravention
3.1(e) Consents
3.1(f) Subsidiaries
3.1(h) Certain Changes or Events Since August 31, 1994
3.1(j) Liabilities Not Disclosed on Balance Sheet of December 31, 1994
3.1(k) Tax Matters
3.1(l) Title to Properties
3.1(m) Material Contracts
3.1(n) Legal Proceedings
3.1(o) Labor Relations
3.1(p) Insider Interests
3.1(q) Intellectual Property
3.1(r) Insurance
3.1(t) Employee and Fringe Benefit Plans
3.1(u) Major Customers
3.1(v) Environmental
4.1 Forbearance by Dundee
4.1(b)(viii) Additional Compensation to Certain Individuals
4.13(b) Employment Matters
5.2(n) Shareholder Loans
Springs agrees to furnish a copy of any omitted Exhibit or Schedule to the
Commission upon request.