<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
------------------------
TENDER OFFER STATEMENT
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
------------------------
ALBA-WALDENSIAN, INC.
(Name of Subject Company)
AWS ACQUISITION CORP.
a wholly-owned subsidiary of
TEFRON U.S. HOLDINGS CORP.
a wholly-owned subsidiary of
TEFRON LTD.
(Bidders)
------------------------
Common Stock, par value $2.50 per share
(Title of Class of Securities)
012041109
(CUSIP Number of Class of Securities)
------------------------
ARIE WOLFSON, PRESIDENT
AWS ACQUISITION CORP.
C/O TEFRON LTD.
28 CHIDA STREET
BNEI-BRAK, 51371, ISRAEL
011-972-3-579-8701
(Names, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Bidders)
------------------------
COPIES OF COMMUNICATIONS TO:
MORTON A. PIERCE, ESQ.
DOUGLAS L. GETTER, ESQ.
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NY 10019
(212) 259-8000
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee*
$61,675,263 $12,335
* Estimated for purposes of calculated the amount of the filing fee only. The
amount assumes the purchase of 3,333,798 shares of common stock, $2.50 par
value (the "Shares"), at a price per Share of $18.50 in cash. Such number of
Shares represents all the Shares outstanding as of November 5, 1999 and
assumes the exercise of all existing vested options, warrants, and other
rights to acquire Shares from the Company.
---------------------------
/ / Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration no.: Not Applicable Date Filed: Not Applicable
</TABLE>
(Exhibit Index is located on Page 7)
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<PAGE>
CUSIP No. 012041 10 9 SCHEDULE 14D-1
<TABLE>
<S> <C>
1. NAME OF REPORTING PERSONS
AWS Acquisition Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
BK, AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f)
/ /
N/A
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,663,565*
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES
/ /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
49.9%*
10. TYPE OF REPORTING PERSON
CO
</TABLE>
- ------------------------
* On November 8, 1999, Tefron U.S. Holdings, Corp., a Delaware corporation
("Parent") and a wholly-owned subsidiary of Tefron Ltd., a corporation
organized under the laws of Israel, and AWS Acquisition Corp., a Delaware
corporation, a wholly-owned subsidiary of Parent ("Purchaser"), entered into a
Support Agreement (the "Support Agreement") with certain stockholders, of
Alba-Waldensian, Inc. (the "Company") (collectively, the "Support
Stockholders"), pursuant to which the Support Stockholders have agreed, among
other things, to validly tender (and not to withdraw) pursuant to and in
accordance with the terms of the Offer all of the shares beneficially owned by
them (the "Support Shares"). The Support Agreement was entered into in
connection with the Merger Agreement, dated November 8, 1999, among Purchaser,
Parent, and the Company (the "Merger Agreement"). Additionally, each Support
Stockholder has granted Parent and Purchaser an irrevocable proxy to vote the
Shares beneficially owned by such Support Stockholder in connection with the
transactions contemplated by the Merger Agreement. If such proxy is exercised
prior to the expiration or waiver of all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 as amended, such proxy
will only be exercisable by Parent or Purchaser to the extent that Parent and
Purchaser would be entitled to vote up to 49.9% of the outstanding shares. The
Support Stockholders beneficially own approximately 1,801,766 shares,
representing approximately 54% in the aggregate of the Company's outstanding
shares (assuming the exercise of all such Support Stockholders' options
subject to the Support Agreement). The Support Agreement is described more
fully in Section 10 of the Offer to Purchase, dated November 12, 1999.
2
<PAGE>
CUSIP No. 012041 10 9 SCHEDULE 14D-1
<TABLE>
<S> <C>
1. NAME OF REPORTING PERSONS
Tefron U.S. Holdings, Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
BK, AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f)
/ /
N/A
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSONS
1,663,565*
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES
/ /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
49.9%*
10. TYPE OF REPORTING PERSON*:
CO
</TABLE>
- ------------------------
* The footnote on page 2 is incorporated by reference herein.
3
<PAGE>
CUSIP No. 012041 10 9 SCHEDULE 14D-1
<TABLE>
<S> <C>
1. NAME OF REPORTING PERSONS
Tefron Ltd.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f)
/ /
N/A
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,663,565*
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES
/ /
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
49.9%*
10. TYPE OF REPORTING PERSON
CO
</TABLE>
* The footnote on page 2 is incorporated by reference herein.
4
<PAGE>
I. TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 and Schedule 13D is filed by
AWS Acquisition Corp., a Delaware corporation ("Purchaser"), and a wholly-owned
subsidiary of Tefron U.S. Holdings, Corp., a Delaware corporation ("Parent"),
and a wholly-owned subsidiary of Tefron Ltd., a corporation organized under the
laws of the State of Israel ("Tefron"), relating to the offer by Purchaser to
purchase all outstanding shares of common stock, par value $2.50 per share (the
"Shares"), of Alba-Waldensian, Inc., a Delaware corporation (the "Company"), at
a purchase price of $18.50 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated November 12, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, and any amendments or supplements thereto (which, as
amended or supplemented from time to time, collectively constitute the "Offer").
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by Parent and Purchaser of
beneficial ownership of certain of the selling stockholders' Shares. The item
numbers and responses thereto below are in accordance with the requirements of
Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Alba-Waldensian, Inc., a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is P.O. Box 100, 201 St. Germain Avenue, SW, Valdese, North Carolina
28690.
(b) The information set forth on the cover page and under "Introduction"
Section 1--"Terms of the Offer" and Section 10--"Background of the Offer;
Contacts with the Company" in the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 6--"Price Range of the Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This Statement is filed by Purchaser, Parent and Tefron. The
information set forth on the cover page, under "Introduction," in
Section 9--"Certain Information Concerning Tefron, Parent and the Purchaser" and
in Schedule I--"Directors and Executive Officers of Tefron, Parent and the
Purchaser" of the Offer to Purchase is incorporated herein by reference.
(e) and (f) During the last five years, none of Tefron, Parent or
Purchaser, or, to the best of Tefron's, Parent's and Purchaser's knowledge, any
person listed in Schedule I to the Offer to Purchase has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth under "Introduction" and in Section
11--"Purpose of the Offer; the Merger Agreement; the Support Agreement; the
Consulting Agreements; Appraisal Rights; Plans for the Company" of the Offer to
Purchase is incorporated herein by reference.
(b) The information set forth under "Introduction" and in Sections
10--"Background of the Offer; Contacts with the Company" and 11--"Purpose of the
Offer; the Merger Agreement; the Support Agreement; the Consulting Agreement;
Appraisal Rights; Plans for the Company" of the Offer to Purchase is
incorporated herein by reference.
5
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
(a)-(b) The information set forth in Section 12--"Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "Introduction" and in
Section 11--"Purpose of the Offer; the Merger Agreement; the Support Agreement;
the Consulting Agreements; Appraisal Rights; Plans for the Company" of the Offer
to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7--"Possible Effects of the
Offer on the Market for the Shares; Amex Listing; Exchange Act Registration;
Margin Regulations" of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction" and in Section
11--"Purpose of the Offer; the Merger Agreement; the Support Agreement; the
Consulting Agreements; Appraisal Rights; Plans for the Company" of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Introduction" and in Sections 10
"Background of the Offer; Contracts with the Company" and 11--"Purpose of the
Offer; the Merger Agreement; the Support Agreement; the Consulting Agreements;
Appraisal Rights; Plans for the Company" of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Introduction" and in Section 16--"Certain
Fees and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "Introduction" and in Section
11--"Purpose of the Offer; the Merger Agreement; the Support Agreement; the
Consulting Agreements; Appraisal Rights; Plans for the Company" of the Offer to
Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 15--"Certain Legal Matters;
Required Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in Section 7--"Possible Effects of the Offer
on the Market for the Shares; AMEX Listing; Exchange Act Registration; Margin
Regulations" of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
6
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
----------- ---------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase dated November 12, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients For Use by Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Form W-9.
(a)(7) Form of Summary of Advertisement dated November 12, 1999.
(a)(8) Joint Press Release dated November 8, 1999.
(b)(1) Commitment Letter of Bank Hapoalim B.M. to Tefron Ltd., dated November 1, 1999.
(c)(1) Agreement and Plan of Merger, dated November 8, 1999, among Parent, Purchaser and the Company.
(c)(2) Support Agreement among Parent, Purchaser and Clyde Wm. Engle, Nathan H Dardick and GSC,
Enterprises, Inc., dated November 8, 1999.
(c)(3) Integration Consulting/Noncompetition Agreement, dated November 8, 1999, between Parent and Clyde
Wm. Engle.
(c)(4) Integration Consulting/Noncompetition Agreement, dated November 8, 1999, between Parent and Nathan
H Dardick.
(c)(5) Letter Agreement between LaSalle Bank National Association and Parent, regarding the GSC
Enterprises Inc. Pledge dated November 8, 1999.
(c)(6) Letter Agreement between LaSalle Bank National Association and Parent, regarding the Clyde Wm.
Engle Pledge dated November 8, 1999.
(c)(7) Confidentiality Agreement, dated August 25, 1999, between Tefron and the Company.
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of each of the undersigned's knowledge
and belief, each of the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: November 12, 1999
AWS ACQUISITION CORP.
By: /s/ ARIE WOLFSON
-----------------------------
Name:Arie Wolfson
Title:President
By: /s/ MICHA KORMAN
-----------------------------
Name: Micha Korman
Title: Vice President
TEFRON U.S. HOLDINGS CORP.
By: /s/ ARIE WOLFSON
-----------------------------
Name: Arie Wolfson
Title: President
By: /s/ MICHA KORMAN
-----------------------------
Name: Micha Korman
Title: Vice President
TEFRON LTD.
By: /s/ ARIE WOLFSON
-----------------------------
Name: Arie Wolfson
Title: President
By: /s/ MICHA KORMAN
-----------------------------
Name: Micha Korman
Title: Chief Financial Officer
8
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
ALBA-WALDENSIAN, INC.
at
$18.50 NET PER SHARE
by
AWS ACQUISITION CORP.
a wholly-owned subsidiary
of
TEFRON U.S. HOLDINGS CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
TEFRON LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER
AND THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN), ARE FAIR TO, AND IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE
OFFER, THE MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR WAIVER OF
CERTAIN CONDITIONS, INCLUDING (1) THERE BEING VALIDLY TENDERED AND NOT
PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES WHICH CONSTITUTE A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (2) THE
EXPIRATION OR TERMINATION OF ALL WAITING PERIODS UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED.
THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET
FORTH HEREIN. SEE INTRODUCTION AND SECTIONS 1, 11
AND 14.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) either should (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, and mail or deliver it together with the
certificate(s) representing tendered Shares and any other required documents to
the Depositary (as defined herein) or tender such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect such transaction. A stockholder whose Shares are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis, may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent, the
Dealer Manager or from brokers, dealers, commercial banks, trust companies and
other nominees.
The Dealer Manager for the Offer is:
CREDIT FIRST
SUISSE BOSTON
November 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION.............................................................................................. 1
1. Terms of the Offer.................................................................................. 2
2. Acceptance for Payment and Payment.................................................................. 4
3. Procedures for Tendering Shares..................................................................... 5
4. Withdrawal Rights................................................................................... 7
5. Certain Tax Consequences............................................................................ 8
6. Price Range of the Shares; Dividends................................................................ 8
7. Possible Effects of the Offer on the Market for the Shares; AMEX Listing; Exchange Act Registration;
Margin Regulations.................................................................................. 9
8. Certain Information Concerning the Company.......................................................... 10
9. Certain Information Concerning Tefron, Parent and the Purchaser..................................... 13
10. Background of the Offer; Contacts with the Company.................................................. 14
11. Purpose of the Offer; the Merger Agreement; the Support Agreement; the Consulting Agreements;
Appraisal Rights; Plans for the Company............................................................. 15
12. Source and Amount of Funds.......................................................................... 29
13. Dividends and Distributions......................................................................... 29
14. Certain Conditions of the Offer..................................................................... 30
15. Certain Legal Matters; Required Regulatory Approvals................................................ 31
16. Certain Fees and Expenses........................................................................... 33
17. Miscellaneous....................................................................................... 34
SCHEDULE I--Directors and Executive Officers of Tefron, Parent and the Purchaser.......................... I-1
</TABLE>
i
<PAGE>
To: All Holders of Shares of Common Stock of
Alba-Waldensian, Inc.:
INTRODUCTION
AWS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Tefron U.S. Holdings Corp., a Delaware corporation
("Parent") which is a wholly-owned subsidiary of Tefron Ltd. ("Tefron"), a
company organized under the laws of the State of Israel, hereby offers to
purchase all outstanding shares of common stock, par value $2.50 per share (the
"Shares"), of Alba-Waldensian, Inc., a Delaware corporation (the "Company") at a
purchase price of $18.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").
Tendering stockholders who have shares registered in their name and who
Tender directly to the Depositary will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. Stockholders who hold their shares through a broker or
bank are urged to consult with them as to whether they charge service fees. The
Purchaser will pay all charges and expenses of First Union National Bank, as
Depositary (the "Depositary"), and D.F. King & Co., Inc., as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER, THE
MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
William Blair & Company, L.L.C. ("William Blair"), financial advisor to the
Company, has delivered to the Board of Directors of the Company (the "Board of
Directors") a written opinion dated November 8, 1999 to the effect that, as of
such date and based upon and subject to certain matters stated in such opinion,
the $18.50 per Share cash consideration to be received by the holders of Shares
(other than the Company or any subsidiary of the Company and Parent or the
Purchaser), pursuant to the Offer and the Merger is fair, from a financial point
of view, to such holders. A copy of the written opinion from William Blair is
included with the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), that is being mailed to stockholders concurrently
herewith, and stockholders are urged to read such opinion carefully and in its
entirety for a description of the assumptions made, matters considered and
limitations of the review undertaken by William Blair.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS, INCLUDING (1) THERE BEING VALIDLY TENDERED AND NOT
PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER
OF SHARES WHICH CONSTITUTE A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION") AND (2) THE
EXPIRATION OR TERMINATION OF ALL WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"). THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH HEREIN AND WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS
EXTENDED. SEE SECTIONS 1, 11 AND 14.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 8, 1999 (the "Merger Agreement"), by and among the Company, the
Purchaser and Parent pursuant to which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company continuing as
the surviving corporation (the "Surviving Corporation"). At the effective time
of the Merger (the "Effective Time"), each Share outstanding immediately prior
to the Effective Time (other than Shares held by the Company or by any
subsidiary of the Company, Parent or the Purchaser, which Shares will be
canceled with no payment being made with respect thereto, and other than Shares,
if any, held by stockholders who have properly perfected their appraisal rights
under the Delaware General
<PAGE>
Corporation Law (the "DGCL"), if available ("Dissenting Shares")), will, by
virtue of the Merger and without any action by the holder thereof, be converted
into the right to receive $18.50 in cash (the "Merger Consideration"), payable
to the holder thereof, without interest thereon, upon the surrender of the
certificate formerly representing such Share. The Merger Agreement is more fully
described in Section 11 below. Certain U.S. federal income tax consequences of
the sale of Shares pursuant to the Offer or the Merger are described in
Section 5 below.
If the Minimum Condition and the other conditions of the Offer, as set
forth in Section 14 (the "Offer Conditions") are satisfied and the Offer is
consummated, the Purchaser will own a sufficient number of Shares to ensure that
the Merger will be approved. Under the DGCL, if, after consummation of the
Offer, the Purchaser owns at least 90% of the Shares then outstanding, the
Purchaser will be able to cause the Merger to occur without a vote of the
Company's stockholders. If, however, after consummation of the Offer, the
Purchaser owns less than 90% of the then outstanding Shares, a vote of the
Company's stockholders will be required under the DGCL to approve the Merger,
and a significantly longer period of time will be required to effect the Merger.
See Section 11.
Concurrently with the execution of the Merger Agreement, Parent also
entered into a support agreement with two directors of the Company and an
affiliate of one of the directors (the "Support Agreement"). Pursuant to the
Support Agreement, such persons have agreed, among other things, to tender, in
accordance with the terms of the Offer, all of the Shares owned (beneficially or
of record) by them and to vote all of the Shares owned by them in favor of the
Merger and against certain other extraordinary transactions. According to
information provided by such persons, in the aggregate, approximately 1,801,766
Shares are subject to the Support Agreement, representing approximately 54% of
the outstanding Shares on a fully diluted basis. See Section 11.
The Company has informed the Purchaser that, as of November 5, 1999, there
were 3,246,045 Shares issued and outstanding and 187,753 Shares issuable upon
the exercise of outstanding stock options ("Options") (of which 87,753 Options
are currently vested) granted under the Company's stock option or other equity
based plans (the "Company Option Plans"). Based on the foregoing, and assuming
no additional Shares (or warrants, options or rights exercisable for, or
securities convertible into, Shares) have been issued (other than Shares issued
pursuant to such options and rights referred to above), if the Purchaser were to
acquire the Shares required to be tendered pursuant to the Support Agreement,
the Minimum Condition would be satisfied.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the Offer Conditions (including, if the Offer
is extended or amended, the terms and conditions of any such extension or
amendment) and the Merger Agreement, the Purchaser will accept for payment and
pay for all Shares validly tendered and not properly withdrawn on or prior to
the Expiration Date in accordance with the procedures set forth in Section 4, as
soon as practicable after such Expiration Date. The Offer will remain open until
12:00 midnight, New York City time, on Monday, December 13, 1999 (the
"Expiration Date"), unless and until the Purchaser extends the period of time
for which the Offer is open, in which event the term "Expiration Date" will mean
the time and date at which the Offer, as so extended by the Purchaser, will
expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the HSR Act. See Section 14. Purchaser may, without the consent of
the Company, (i) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "Commission") or the staff thereof applicable to the Offer as a result of
an increase in the Offer Price (as defined herein) by the Purchaser in light of
a bona fide competing offer from a third party for some or all of the Shares and
(ii) extend the Offer, if at the Expiration Date, any of the Offer Conditions
shall not have been satisfied or waived. See Section 11. During any extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer and subject to the right of a tendering stockholder to
2
<PAGE>
withdraw such stockholder's Shares. Under no circumstances will interest be paid
on the purchase price for tendered Shares, whether or not the Offer is extended.
Subject to the applicable regulations of the Commission, the Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to (i) in addition to its termination rights relating to fulfillment of
the Minimum Condition and expiration or termination of HSR Act, terminate the
Offer if at any time prior to the time of payment for Shares pursuant to the
Offer any of the other conditions referred to in Section 14 have not been
satisfied; (ii) waive any condition (except that Purchaser shall not waive the
Minimum Condition); or (iii) except as set forth in the Merger Agreement and
discussed below, otherwise amend the Offer in any respect, in each case, by
giving oral or written notice of such termination, waiver or amendment to the
Depositary. In the Merger Agreement, the Purchaser has agreed that without the
prior written consent of the Company it will not, (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend or add to
the Offer Conditions, (iv) except as referred to in the preceding paragraph,
extend the Offer, (v) change the form of consideration payable in the Offer or
(vi) amend any other term of the Offer in any manner adverse to the holders of
the Shares. See Section 11.
Any such extension, termination or amendment will be followed as promptly
as practicable by public announcement thereof. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14e-1 under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. The rights reserved by
the Purchaser in the preceding paragraph are in addition to the Purchaser's
rights pursuant to Section 14.
If the Purchaser makes a material change in the terms of the Offer, or if
it waives a material condition to the Offer, the Purchaser will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which the Offer must remain open following material changes in the terms
of the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to stockholders, and, if material changes are
made with respect to information that approaches the significance of price and
the percentage of securities sought, a minimum of ten business days may be
required to allow for adequate dissemination and investor response. With respect
to a change in price, a minimum ten business day period from the date of such
change is generally required under applicable Commission rules and regulations
to allow for adequate dissemination to stockholders. THE PURCHASER HAS AGREED
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE MERGER AGREEMENT IT SHALL BE DEEMED
TO HAVE WAIVED SATISFACTION OF THE CONDITIONS TO THE OFFER SET FORTH IN
PARAGRAPHS (B), (E), (F), AND (H) OF SECTION 14 FOLLOWING THE INITIAL EXTENSION
PERIOD (AS DEFINED HEREIN). SEE SECTION 11.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a Federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other related materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder lists or, if
3
<PAGE>
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the Offer Conditions (including, if the Offer
is extended or amended, the terms and conditions of the Offer as so extended or
amended), promptly after the Expiration Date the Purchaser will purchase, by
accepting for payment, and will pay for, all Shares validly tendered and not
properly withdrawn (in accordance with Section 4) prior to the Expiration Date.
In addition, subject to applicable rules of the Commission, the Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of, or payment for, Shares in order to comply with applicable law,
including the HSR Act. See Sections 1 and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
representing such Shares ("Share Certificates") or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in Section 3; (ii) the appropriate Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined below) in
connection with a book-entry transfer; and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. In all cases, upon the terms and subject to the Offer Conditions,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to validly tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY THE PURCHASER.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the
consideration offered or to return Shares deposited by, or on behalf of
stockholders, promptly after the termination or withdrawal of the Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder subject to Instruction
6 of the Letter of Transmittal (or, in the case of Shares delivered by book-
entry transfer into the Depositary's account at DTC pursuant to the procedures
set forth in Section 3, such Shares will be credited to an account maintained
within DTC), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
4
<PAGE>
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either
(i) Share Certificates representing tendered Shares must be received by the
Depositary or tendered pursuant to the procedure for book-entry transfer set
forth below, and Book-Entry Confirmation must be received by the Depositary, in
each case on or prior to the Expiration Date or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternate, conditional or
contingent tenders will be accepted.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at DTC for purposes of the Offer. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of Shares by causing
DTC to transfer such Shares into the Depositary's account at DTC in accordance
with its procedures for such transfer. However, although delivery of Shares may
be effected through book-entry transfer into the Depositary's account at DTC,
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other required documents must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. See Instruction 1 of the Letter
of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or the procedures for book-entry transfer
cannot be completed on a timely basis, such Shares or Rights may nevertheless be
tendered if all of the following guaranteed delivery procedures are duly
complied with:
5
<PAGE>
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
American Stock Exchange, Inc. ("AMEX") trading days on which banks and DTC
are open for business, after the date of execution of such Notice of
Guaranteed Delivery. An AMEX "trading day" is any day on which the AMEX is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery and a representation that the stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or, of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time, and will depend upon when Share Certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at DTC.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's agents, attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares and other securities or rights issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase. All such
powers of attorney and proxies shall be considered irrevocable and coupled with
an interest in the tendered Shares. Such appointment will be effective upon the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Upon such acceptance for payment, all other powers of
attorney and proxies given by such stockholder with respect to such Shares and
such other securities or rights prior to such payment will be revoked, without
further action, and no subsequent powers of attorney and proxies may be given by
such stockholder (and, if given, will not be deemed effective). The designees of
the Purchaser will, with respect to the Shares and such other securities and
rights for which such appointment is effective, be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's stockholders, or
any adjournment or postponement thereof, or by consent in lieu of any such
meeting or otherwise. In order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, the Purchaser or its
designee must be able to exercise full voting rights with respect to such Shares
and other securities, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it to be not in proper form or for which the acceptance of or payment may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any of the conditions of the Offer and the Merger
Agreement to the extent permitted by applicable law and the Merger Agreement or
any
6
<PAGE>
defect or irregularity in any tender of Shares of any particular stockholder,
whether or not similar defects or irregularities are waived in the case of other
stockholders.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
Purchaser that (i) such stockholder has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 under the Exchange Act and (ii) the
tender of such Shares complies with Rule 14e-4. It is a violation of Rule 14e-4
for a person, directly or indirectly, to tender Shares for such person's own
account unless, at the time of tender, the person so tendering (a) has a net
long position equal to or greater than the amount of (A) Shares tendered or
(B) other securities immediately convertible into or exchangeable or exercisable
for the Shares tendered, and such person will acquire such Shares for tender by
conversion, exchange or exercise and (b) will cause such Shares to be delivered
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.
The Purchaser's interpretation of the terms and conditions of the Offer
will be final and binding. No tender of Shares will be deemed to have been
validly made until all defects and irregularities with respect to such tender
have been cured or waived by the Purchaser. None of Parent, the Purchaser or any
of their respective affiliates or assigns, the Depositary, the Information Agent
or any other person or entity, will be under any duty to give any notification
of any defects or irregularities in tenders or incur any liability for failure
to give any such notification.
The Purchaser's acceptance for payment of Shares tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time, on or prior to the Expiration Date.
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept
for payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this
Section 4.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers shown on
the particular certificates evidencing the Shares to be withdrawn, and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawn Shares, in that case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph. Withdrawals of Shares may not be rescinded. Any
Shares properly withdrawn will be deemed not validly tendered for purposes of
the Offer, but may be tendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding.
7
<PAGE>
None of Parent, the Purchaser or any of their respective affiliates or assigns,
the Depositary, the Information Agent or any other person or entity will be
under any duty to give any notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local, foreign and other tax laws.
For U.S. federal income tax purposes, each selling stockholder generally will
recognize gain or loss equal to the difference between the amount of cash
received and such stockholder's tax basis for the sold Shares. Such gain or loss
will be capital gain or loss (assuming the Shares are held as a capital asset)
and any such capital gain or loss will be long-term capital gain or loss if the
stockholder held the Shares for more than one year.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of employee stock options or otherwise as compensation, individuals who
are not citizens or residents of the United States and foreign corporations, and
entities that are otherwise subject to special tax treatment under the Internal
Revenue Code of 1986, as amended (the "Code") (such as dealers in securities,
traders in securities who elect to apply a mark-to-market method of accounting,
financial institutions, persons who hold Shares as part of a hedge, straddle or
conversion transaction, insurance companies, tax-exempt entities and regulated
investment companies). This discussion does not address all aspects of U.S.
federal income taxation that may be relevant to a particular stockholder in
light of such stockholder's personal investment circumstances nor does it
address any aspect of foreign, state, local or estate and gift taxation that may
be applicable to a stockholder.
In addition, under the backup federal income tax withholding laws
applicable to certain stockholders (other than certain exempt stockholders,
including, among others, all corporations and certain foreign individuals), the
Depositary may be required to withhold 31% of the amount of any payments made to
such stockholders pursuant to the Offer or the Merger. To prevent backup federal
income tax withholding, each such stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 9 of the Letter of Transmittal.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND
MERGER, INCLUDING UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded on the AMEX under the symbol "AWS." The following
table sets forth, for the periods indicated, the reported closing high and low
sale prices for the Shares on the AMEX since the first quarter of 1997 and the
cash dividends declared on the Company's common stock during each quarter
presented.
8
<PAGE>
ALBA-WALDENSIAN, INC.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
CALENDAR YEAR 1997
First Quarter................................................................. $ 3 1/8 $ 2 1/2 --
Second Quarter................................................................ $ 2 5/8 $ 2 7/16 --
Third Quarter................................................................. $ 2 5/8 $ 2 7/16 --
Fourth Quarter................................................................ $ 2 7/8 $ 2 5/16 --
<CAPTION>
HIGH LOW DIVIDENDS
---- --- -------
<S> <C> <C> <C>
CALENDAR YEAR 1998
First Quarter................................................................. $ 2 9/16 $ 2 1/4 --
Second Quarter................................................................ $ 5 5/16 $ 2 9/16 --
Third Quarter................................................................. $ 6 7/8 $ 4 5/8 $0.0375
Fourth Quarter................................................................ $21 11/16 $ 5 1/2 --
<CAPTION>
HIGH LOW DIVIDENDS
---- --- -------
<S> <C> <C> <C>
CALENDAR YEAR 1999
First Quarter................................................................. $19 1/2 $11 7/16 $0.056
Second Quarter................................................................ $20 5/8 $11 5/8 --
Third Quarter................................................................. $20 $ 8 1/2 $0.075
Fourth Quarter (through November 10, 1999).................................... $18 1/4 $ 8 5/8 --
</TABLE>
- ------------------
Prices and dividends are adjusted to reflect a three-for-two stock split
effected on November 16, 1998 and a four-for-three stock split effected on
June 4, 1999.
On November 1, 1999, the last full day of trading prior to the Company's
public announcement that the Company was in discussions with a third party
concerning the possible sale of the Company, the reported closing price per
Share on the AMEX was $11 1/4, and on November 5, 1999, the last full day of
trading prior to the Company's public announcement of the Offer and the Merger,
the reported closing price per Share on the AMEX was $16 1/8.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; AMEX LISTING;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise be traded publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise be traded publicly will have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future market prices to be greater or less than the Offer
price therefor.
AMEX Listing. The purchase of Shares pursuant to the Offer will reduce the
number of holders of Shares and the number of Shares that might otherwise be
traded publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued listing on the AMEX.
According to published guidelines, the AMEX will give consideration to delisting
the Shares if, among other things (i) the number of publicly-held Shares falls
below 200,000 shares; or (ii) the market value of the number of publicly-held
Shares falls below $1,000,000; or (iii) the number of stockholders is less than
300; or (iv) stockholders' equity falls below $2,000,000 if the Company has had
losses in 2 of the then most recent 3 years or below $4,000,000 if the Company
has had losses in 3 of the then most recent 4 years.
In the event the Shares are no longer eligible for listing on the AMEX,
quotations might still be available from other sources. The extent of the public
market for the Shares and the availability of such
9
<PAGE>
quotations would, however, depend upon the number of holders of such shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act as described below and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by the Company to the
Commission if the Shares are not listed on a "national securities exchange" and
there are fewer than 300 record holders of Shares. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its stockholders and the Commission
and would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirements of furnishing a
proxy statement in connection with stockholders' meetings pursuant to
Section 14(a) or 14(c) and the related requirement of an annual report, no
longer applicable to the Company. If the Shares are no longer registered under
the Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions would no longer be applicable to the
Company. Furthermore, the ability of "affiliates" of the Company and persons
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended,
may be impaired or, with respect to certain persons, eliminated. If registration
of the Shares under the Exchange Act were terminated, the Shares would no longer
be eligible for stock exchange listing or Nasdaq reporting. The Purchaser
believes that the purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act, and it would
be the intention of the Purchaser to cause the Company to make an application
for termination of registration of the Shares as soon as possible after
successful completion of the Offer if the Shares are then eligible for such
termination.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which have the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ("Purpose Loans"). Depending upon
factors such as the number of record holders of the Shares and the number and
market value of publicly held Shares, following the purchase of Shares pursuant
to the Offer, the Shares might no longer constitute "margin securities" for
purposes of the Federal Reserve Board's margin regulations and, therefore, could
no longer be used as collateral for Purpose Loans made by brokers. In addition,
if registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive offices
located at 201 St. Germain Avenue, S.W., P.O. Box 100, Valdese, North Carolina
28690, and its telephone number is (828) 879-6500. The following description of
the Company's business has been taken from, and is qualified in its entirety by
reference to, the Form 10-K filed by the Company for the year ended
December 31, 1998 (the "Form 10-K").
The Company manufactures a variety of knitted apparel and health care
products at two plants in Valdese, North Carolina and one plant in Rockwood,
Tennessee and markets the products through two divisions, the Consumer Products
Division and the Health Products Division.
Consumer Products Division
Products manufactured and sold by this Division include women's apparel and
women's hosiery products. Women's apparel includes both intimate apparel
(brassieres, briefs and bodywear, as well as specially designed briefs for
maternity wear) and combination internally/externally worn products (bodysuits,
bandeaus, tube tops, and dresses). Women's hosiery products include sheer
stockings, pantyhose, tights and trouser socks, primarily for large-size women
and the maternity market.
10
<PAGE>
The Company has developed a process that makes it possible to knit bras,
briefs, tank tops, bodysuits and many other products on seamless knitting
equipment. This design technology, which is patented for the knit bra and
various knit-in features for all seamless products, has allowed the Company to
significantly broaden its product offerings. The seamless knit bra was
introduced in 1994 and the tank tops and bodysuits were introduced in 1995.
During 1988, the Company introduced several new products utilizing the seamless
technology, including bandeaus, tube tops, dresses and activewear.
The Company uses state of the art computer-controlled circular-knitting
technology. Such equipment produces apparel that management believes is better
fitting and therefore more comfortable than traditional cut and sew products.
Health Products Division
Products manufactured and sold by this Division are designed to assist in
healthcare. They include anti-embolism stockings and compression therapy
systems, an intermittent pneumatic compression device, both of which are
designed to improve circulation and reduce the incidence of deep vein
thrombosis; sterile wound dressings such as pre-saturated gauze, petrolatum and
xeroform gauze, non-adhering dressings and gauze strips and
XX-Span(Registered) dressing retainers, an extensible net tubing designed to
hold dressings in place without the use of adhesive tape. All dressing products
are used in wound care therapy.
In addition, this Division manufactures a knitted stockinette in a variety
of sizes, which is used under fracture casts or is sterile packaged for use as a
supplemental drape in surgical procedures, as well as heel and elbow pads which
are XX-Span(Registered) sleeves with an inner soft foam pad used to reduce
pressure and the incidence of decubitus ulcers.
Other products include slip-resistant patient treads, which are knitted
soft patient footwear with slip resistant soles to help prevent patient falls
while keeping feet warm even while in bed; knitted arm sleeves, which provide
protection to the skin of patients with poor circulation; oversize socks for
diabetic patients; baby caps to retain body temperature; and knitted cuffs for
use on surgical gowns.
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the Form 10-K
and from the Form 10-Q filed by the Company for the six months ended July 4,
1999. More comprehensive financial and other information is included in such
report (including management's discussion and analysis of financial condition
and results of operations) and in other reports and documents filed by the
Company with the Commission. The financial information set forth below is
qualified in its entirety by reference to such reports and documents filed with
the Commission and the financial statements and related notes contained therein.
These reports and other documents may be examined and copies thereof may be
obtained in the manner set forth below.
11
<PAGE>
ALBA-WALDENSIAN, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
IX MONTHS
THREE MONTHS ENDED YEARS ENDED DECEMBER,
ENDED JULY 4, JULY 4, -----------------------------
1999 1999 1998 1997 1996
------------ ----------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
------------ -----------
<S> <C> <C> <C> <C> <C>
Net Sales....................................... $ 19,321 $40,446 $75,242 $59,912 $65,815
Cost of sales................................... 13,996 29,013 53,087 47,690 50,624
-------- ------- ------- ------- -------
Gross margin.................................... 5,325 11,433 22,155 12,222 15,191
Selling, general and administrative expenses.... 3,548 6,853 12,966 11,809 13,392
Operating income................................ 1,777 4,580 9,189 413 1,799
Interest Expense................................ (343) (631) (865) (1,020) (1,286)
Interest Income................................. 56 79 21
Other expenses.................................. (23) (46) (115) (63) (30)
Total Other Expenses............................ (366) (677) (924) (1,004) (1,295)
Income before Income Taxes...................... 1,411 3,903 8,265 (591) 504
Provision for Income Taxes...................... 422 1,369 3,282 (214) 184
-------- ------- ------- ------- -------
Net income per common share $ 989 $ 2,534 4,983 (377) 320
-------- ------- ------- ------- -------
--Basic(1).................................... $ .32 $ .81 $ 1.49 $ (0.10) $ 0.08
--Diluted(1).................................. $ .30 $ .76 $ 1.43 $ (0.10) $ 0.08
Weighted average number of shares of common
stock outstanding
--Basic....................................... 3,138 3,139
--Diluted..................................... 3,334 3,343
</TABLE>
- ------------------
(1) Adjusted to reflect the effect of the 3 for 2 stock split effected
November 16, 1998 and 4 for 3 Stock Split effected June 4, 1999.
<TABLE>
<CAPTION>
JULY 4, DECEMBER 31,
1999 1998
------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets........................................................................ $28,291 $ 21,571
Net property and equipment............................................................ 21,409 17,882
Other assets.......................................................................... 6,999 7,326
Total assets.......................................................................... 56,699 46,779
Current liabilities................................................................... 7,598 6,683
Long-term debt........................................................................ 15,507 8,383
Deferred compensation................................................................. 210 200
Deferred income tax liability......................................................... 1,864 1,864
Total liabilities..................................................................... 25,179 17,130
Stockholders' equity.................................................................. 31,520 29,649
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including their
remuneration and the stock options granted to them), the principal holders of
the Company's securities, any material interests of such persons in transactions
with the Company and certain other matters is required to be disclosed in proxy
statements and annual reports distributed to
12
<PAGE>
the Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Chicago, Illinois 60606, and 7 World Trade Center,
New York, New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may be obtained electronically by visiting the Commission's
website on the Internet, at http://www.sec.gov. The Shares are traded on the
AMEX, and reports, proxy statements and other information concerning the Company
should also be available for inspection at The American Stock Exchange, 86
Trinity Place, New York, New York 10006.
Although none of Parent, the Purchaser or Tefron has any knowledge that any
such information is untrue, none of Parent, the Purchaser or Tefron takes any
responsibility for the accuracy or completeness of information contained in this
Offer to Purchase with respect to the Company or any of its subsidiaries or
affiliates or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING TEFRON, PARENT AND THE PURCHASER.
Tefron is a corporation organized under the laws of the State of Israel
whose principal executive offices are located at 28 Chida Street, Bnei-Brak,
51371 Israel.
The Parent's principal executive offices are located c/o Tefron at 28 Chida
Street, Bnei-Brak, 51371 Israel. The Parent is a newly formed Delaware
corporation and a wholly owned subsidiary of Tefron. The Parent has not
conducted any business other than in connection with the Offer and the Merger.
The Purchaser's principal executive offices are located c/o Tefron at 28
Chida Street, Bnei-Brak, 51371 Israel. The Purchaser is a newly formed Delaware
corporation and a wholly-owned subsidiary of Parent. The Purchaser has not
conducted any business other than in connection with the Offer and the Merger.
Tefron is a foreign issuer subject to certain information and reporting
requirements of the Exchange Act and in accordance therewith is required to file
periodic reports and other information with the Commission relating to its
business, financial condition and other matters. Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 500 West
Madison Street, Chicago, Illinois 60606, and 7 World Trade Center, New York, New
York 10048. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Tefron's
ordinary shares are traded on the New York Stock Exchange (the "NYSE"), and
reports and other information concerning the Company should also be available
for inspection at The New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of Tefron, Parent and the Purchaser are set forth in Schedule
I.
Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto: (i) none of Parent, the Purchaser or Tefron or, to the knowledge of
Parent, the Purchaser or Tefron, any of the persons listed in Schedule I hereto
or any associate or majority-owned subsidiary of Parent, the Purchaser or Tefron
or any of the persons so listed, beneficially owns or has a right to acquire any
Shares or any other equity securities of the Company; (ii) none of Parent, the
Purchaser or Tefron or, to the knowledge of Parent, the Purchaser or Tefron, any
of the persons or entities referred to in clause (i) above or any of their
executive officers, directors or subsidiaries has effected any transaction in
the Shares or any other equity securities of the Company during the past
60 days; (iii) none of Parent, the Purchaser or Tefron or, to the knowledge of
Parent, the Purchaser or Tefron, any of the persons listed in Schedule I hereto,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company (including, but not limited
to, any contract, arrangement, understanding or
13
<PAGE>
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations); (iv) in the past five years, there have been no transactions
which would require reporting under the rules and regulations of the Commission
between Tefron, Parent or the Purchaser or any of their respective subsidiaries
or, to the knowledge of Tefron, Parent or the Purchaser, any of the persons
listed in Schedule I hereto, on the one hand, and the Company or any of its
executive officers, directors or affiliates, on the other hand; and (v) in the
past five years, there have been no contacts, negotiations or transactions
between Parent or the Purchaser or any of their respective subsidiaries or, to
the knowledge of Parent or the Purchaser, any of the persons listed in Schedule
I hereto, on the one hand, and the Company or any of its subsidiaries or
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
Certain of Tefron's strategic objectives have included increasing its
production capacity to meet demand and establishing a U.S. design and
manufacturing presence.
In August 1999, in furtherence of these objectives, Tefron contacted the
Company concerning pursuit of a possible business combination with or
acquisition of the Company. After further discussions, on August 25, 1999,
representatives of the Company and Tefron met in Chicago at which time Tefron
and the Company entered into a confidentiality agreement regarding a potential
business combination with or acquisition of the Company. At such meeting, the
Company also provided information regarding the Company to Tefron for purposes
of Tefron's consideration of such business transaction.
Representatives of Tefron met with representatives of the Company in New
York on August 30, 1999 and discussed a possible acquisition transaction.
Thereafter, Tefron indicated that it was considering making an offer to acquire
the Company for $16 per Share in some combination of cash and shares of Tefron
stock for all of the outstanding Shares of the Company. Tefron indicated that
the offer would not be subject to a financing condition and would be made on a
friendly basis only. The management of the Company subsequently responded to
Tefron that the Company would not be interested in pursuing discussions unless
Tefron was prepared to pay a price which was higher than its current proposal.
Such exploratory discussions did not advance beyond this phase.
On October 24, 1999, after the expiration of the Company's exclusivity
period with another potential acquiror, Arie Wolfson, the Chairman and President
of Tefron, contacted Nathan H Dardick, the chairman of the special committee of
the Company's Board of Directors (the "Special Committee"), and expressed
continuing interest in pursuing a transaction with the Company. Tefron's
financial advisor, Credit Suisse First Boston Corporation ("CSFB"), also
contacted the Company on October 25 and the Company sent to CSFB documents to
permit Tefron to commence its due diligence investigation of the Company.
On October 27, 1999, representatives of Tefron visited the Company's
headquarters and plant in Valdese, North Carolina. Following a meeting of the
Board of Directors of the Company, certain members of the Board of Directors of
the Company later met with representatives of Tefron and continued discussion of
a possible acquisition transaction.
Discussions between Mr. Dardick, on behalf of the Special Committee, and
representatives of Tefron continued through the remainder of the week. Tefron
indicated that it would be willing to offer $18.50 per Share in cash in a
two-step tender offer and merger transaction, subject to satisfactory completion
of its due diligence review of the Company and satisfactory resolution of
certain outstanding business issues. Mr. Wolfson also informed the Company that
Tefron and its representatives were prepared to commence confidential,
confirmatory financial, legal and accounting due diligence of the Company.
Following October 27, 1999 through November 7, 1999, the Purchaser, Parent
and Tefron and their financial and legal advisors and accountants conducted a
financial, legal and accounting due diligence review of the Company. Discussions
continued during the week of November 1, 1999, during which
14
<PAGE>
Tefron's accountants and consultants visited the Company's facilities. On
November 1, Tefron's legal advisors delivered drafts of the Merger Agreement,
Support Agreement and Integration Consulting/Noncompetition Agreements to the
Company, its counsel and counsel to the Special Committee. Negotiations
concerning those documents continued through the week.
On November 2, 1999, in response to an unusually high volume of trading in
the Common Stock, the Company issued a press release announcing that it is
currently engaged in discussions with an interested party concerning the
possible sale transaction.
Tefron and its advisors substantially completed their due diligence of the
Company by the weekend of November 7, 1999. Negotiations continued on Saturday,
November 6, and Sunday, November 7, 1999, by which time the parties had reached
substantial agreement on the documents and the terms of the Offer and the Merger
and related matters. Substantially final drafts of the Merger Agreement, the
Support Agreement and the Integration Consulting/Noncompetition Agreements were
delivered to the members of the Company's Board of Directors on Saturday,
November 6, and Tefron's Board of Directors on Sunday, November 7, in Israel.
On Sunday evening, November 7, the Board of Directors of the Company
unanimously approved the Offer, the Merger, the Merger Agreement and the
transaction contemplated thereby and resolved to recommend that the Company's
Stockholders accept the Offer and tender their Shares pursuant to the Offer.
On Monday morning, November 8, after discussion with their financial
advisors, accountants and legal counsel the Board of Directors of Tetron
unanimously approved the Offer, the Merger, the Merger Agreement and the
transaction contemplated thereby.
The Merger Agreement, the Support Agreement and the Integration
Consulting/Noncompetition Agreements were executed and delivered after the close
of the NYSE on Monday, November 8, 1999, and Tefron and the Company issued a
joint press release announcing the Merger and the Offer.
11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE SUPPORT AGREEMENT; THE
CONSULTING AGREEMENTS; APPRAISAL RIGHTS; PLANS FOR THE COMPANY.
Purpose
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. The purpose of the Merger is to acquire all of the capital stock of the
Company not purchased pursuant to the Offer or otherwise.
The following is a summary of certain provisions of the Merger Agreement,
the Support Agreement and the Consulting Agreements (as such terms are defined
below). This summary is qualified in its entirety by reference to the Merger
Agreement, the Support Agreement and the Consulting Agreements which are
incorporated by reference and copies or forms of which have been filed with the
Commission as exhibits to the Schedule 14D-1 to which this Offer to Purchase is
an exhibit (the "Schedule 14D-1"). The Merger Agreement and the Support
Agreement may be examined and copies may be obtained at the places set forth in
Section 8. Defined terms used herein and not defined herein shall have the
respective meanings assigned to those terms in the Merger Agreement.
The Merger Agreement
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of the Offer Conditions, the Purchaser will purchase all Shares validly tendered
pursuant to the Offer. The Merger Agreement provides that Purchaser may modify
the terms of the Offer, except that without the consent of the Company Purchaser
shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the
Offer Price, (iii) amend or add to the Offer Conditions, (iv) except as provided
below, extend the Offer, (v) change the form of consideration payable in the
Offer or (vi) amend any other term of the Offer in any manner adverse to the
holders of the Shares. In addition, the Merger Agreement also provides the
Purchaser
15
<PAGE>
shall not increase or decrease a dealer's soliciting fee, of which there is
none. Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer for any period required by any rule, regulation,
interpretation or position of Commission applicable to the Offer as a result of
an increase in the Offer Price by Purchaser in light of a bona fide competing
offer from a third party for some or all of the Shares and (ii) (A) extend the
Offer for a period, in the aggregate, of not more than five business days if, at
the initial scheduled expiration date of the Offer, the Shares validly tendered
and not withdrawn pursuant to the Offer are less, than 90% of the outstanding
Shares and (B) following the period contemplated by clause (ii) (A) (the
"Initial Extension Period"), if any of the Offer Conditions have not been waived
or satisfied, extend the Offer on one or more occasions for periods not to
exceed five business days until January 31, 2000; provided, that, (x) if at the
expiration date of the Offer, as so extended, the Offer Conditions have been
satisfied or waived (including the deemed waivers described in clauses (y) and
(z) below), Purchaser shall not continue to extend the Offer (unless required by
clause (i), above), (y) following the Initial Extension Period, Purchaser shall
be deemed to have waived satisfaction of the Offer Conditions set forth in
paragraphs (b), (e), (f) and (h) set forth in Section 14 hereof with respect to
matters existing on or before the last day of the Initial Extension Period and
(z) in the event Purchaser extends the Offer after the Initial Extension Period
following written notice from the Company of an event which has had, or is
reasonably likely to have a material adverse effect on the financial condition,
business, assets or results of operations of the Company taken as a whole or on
the Company's ability to perform its obligations under the Merger Agreement or
which would prevent or delay the consummation of the transactions contemplated
by the Merger Agreement, Purchaser shall be deemed to have waived satisfaction
of the condition set forth in paragraph (c) set forth in Section 14 with
respect, and only with respect, to the event for which it has received such
written notice; provided further, that all time periods set forth above in this
sentence shall be tolled, at the election of Purchaser, during the pendency of
the No Takedown Period (as defined under the heading "No Solicitation" below).
Directors. The Merger Agreement provides that, promptly upon the acceptance
of payment of Shares by Purchaser pursuant to the Offer, Purchaser shall be
entitled to designate such number of directors on the Board of Directors of
(i) the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, a majority of such directors and the Company
shall, at such time, cause Purchasers designees to be so elected by its existing
Board of Directors and (ii) each subsidiary of the Company and each committee of
the Board of Directors and each such subsidiary as will give Purchaser a
majority of such directors or committee, and the Company shall, at such time,
cause Purchaser's designees to be so elected. In the event that Purchasers
designees are elected to the Board of Directors, until the Effective Time such
Board of Directors shall have at least two directors who are directors on the
date of the Merger Agreement and who are not officers of the Company (the
Independent Directors); and provided that, in such event, if the number of
Independent Directors shall be reduced below two for any reason whatsoever, the
remaining Independent Director shall designate a person to fill such vacancy who
shall be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be officers or affiliates of the
Company, or officers or affiliates of Parent or any of its subsidiaries, and
such persons shall be deemed to be Independent Directors for purposes of the
Merger Agreement. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders an information statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the
"Information Statement"), and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Purchaser shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Purchasers designees). In connection with
the foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Board of Directors and each subsidiarys board of
directors (and each committee thereof) and/or obtain the resignation of such
number of its current directors as is necessary to enable Purchasers designees
to be elected or appointed to, and to constitute a majority of the Companys and
each subsidiarys board of directors (and each committee thereof) as provided
above. Following the election or appointment of Purchaser's designees and prior
to
16
<PAGE>
the Effective Time, the affirmative vote of a majority of the Independent
Directors then in office shall be required by the Company to (i) amend or
terminate the Merger Agreement by the Company, (ii) exercise or waive any of the
Company's rights or remedies under the Merger Agreement or (iii) extend the time
for performance of Parent's and Purchaser's respective obligations under the
Merger Agreement.
The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the Surviving Corporation.
The Merger Agreement provides that as promptly as practicable (but in no
event more than two business days) after the satisfaction or waiver of the
conditions to the Merger (other than conditions which by their nature are to be
satisfied at the closing, but subject to such conditions) the parties to the
Merger Agreement shall (a) file a certificate of merger or, if applicable, a
certificate of ownership and merger (the Certificate of Merger) in such form as
is required by and executed in accordance with the relevant provisions of the
DGCL and (b) make all other filings or recordings required under the DGCL. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State or at such subsequent time as Parent
and the Company shall agree and as shall be specified in the Certificate of
Merger the Effective Time.
Charter, Bylaws, Directors and Officers. The Merger Agreement provides
that, the Certificate of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and applicable law. The by-laws of the
Purchaser in effect at the time of the Effective Time shall be the by-laws of
the Surviving Corporation until amended, subject to the provisions of the Merger
Agreement which provide that all rights to indemnification now existing in favor
of directors and officers of the Company and its subsidiaries as provided in
their respective articles of incorporation or by-laws shall survive the Merger
and continue in full force and effect in accordance with their terms. Subject to
applicable law, the directors of the Purchaser immediately prior to the
Effective Time, will be the initial directors of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation. Such officers and directors will
hold office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
Conversion of Securities. The Merger Agreement provides that, by virtue of
the Merger and without any action on the part of the holders thereof, as of the
Effective Time, each issued and outstanding Share (other than (i) any Shares
owned by the Company or any subsidiary of the Company and each Share that is
owned by Parent or Purchaser, which Shares, by virtue of the Merger and without
any action on the part of the holder thereof, will be canceled and retired and
will cease to exist with no payment being made in exchange therefor and
(ii) Dissenting Shares (as defined below)) will be canceled and retired and will
be converted into the right to receive in cash, without interest, the Merger
Consideration. As of the Effective Time, all such Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration.
Company Stock Options. The Merger Agreement provides that, prior to the
date that Purchaser shall accept for payment, and pay for, all Shares validly
tendered pursuant to the Offer (such date, the "Takedown Date"), the Company
shall use commercially reasonable efforts to cause as of (i) the Effective Time
or, (ii) if the Purchaser and Parent so elect, as of the Take-down Date
provided, that in the case of clause (ii) Purchaser will take such actions as
may be reasonably necessary to allow the Company to cause the following actions,
(i) each Option for which the exercise price is less than the Offer Price,
whether or not then vested or exercisable, to be canceled in consideration for a
payment by the Company to each holder thereof of an amount equal to the product
of (A) the excess of the Offer Price over the exercise price of each such Option
and (B) the number of Shares subject to the Option immediately prior to its
cancellation and (ii) each Option for which the exercise price is equal to or
greater than the Offer Price, whether or not then vested or exercisable, to be
cancelled in consideration
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for a payment by the Company to each holder thereof in an amount equal to the
product of (A) $0.50 and (B) the number of Shares subject to the Option. All
such payments to be made shall be net of required withholding taxes. The Merger
Agreement obligates the Company to use commercially reasonable efforts to cause
or, if Purchaser and Parent so elect, Purchaser will take such actions as may be
reasonably necessary to allow the Company to cause, as of the Takedown Date,
(i) all Company Option Plans to terminate as of the Effective Time, (ii) no
holder of an Option to have any rights thereunder other than to receive the cash
payment contemplated above and (iii) no person to have any right to acquire any
security of the Company, the Surviving Corporation (or any parent subsidiary
thereof) as a result of any agreement or obligation of the Company or any
subsidiary. Prior to the Takedown Date, the Company shall use commercially
reasonable efforts to obtain all necessary consents (in a form acceptable to
Parent) from holders of Options and take all other lawful action as is necessary
to give effect to the requirements set forth under this heading "Company Stock
Options". Pursuant to the Merger Agreement, the Company has further agreed to
cause the Board of Directors to adopt any resolutions necessary to effectuate
the foregoing.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser with respect to, among other matters, its organization and
qualification, capitalization, subsidiaries, authority, consents and approvals,
no violations, financial statements, public filings, absence of certain changes
or events, undisclosed liabilities, information to be included in the 14D-1 and
the documents included therein, together with any supplements or amendments
thereto, the Schedule 14D-9, the Information Statement or the Proxy Statement,
employee benefit plans, employment practices, labor matters, material contracts,
litigation, insurance, compliance with laws, product warranties and liabilities,
relationships, tax matters, environmental matters, title to and condition of
properties, intellectual property, opinion of financial advisor, brokers and
finders, year 2000 compliance, related party transactions, state takeover
statutes, charter provisions, accuracy of information supplied and copies of
documents. Pursuant to the Merger Agreement, Parent and the Purchaser have made
customary representations and warranties to the Company with respect to, among
other matters, their organization, qualifications, authority, consents and
approvals, no violations, information to be included in the 14-D-1, Schedule
14D-9, Information Statement or Proxy Statement, interim operations of
Purchaser, brokers and finders and no knowledge of certain matters.
Covenants. The Merger Agreement obligates the Company and its subsidiaries,
from the date of the Merger Agreement until such time as Parent's designees
constitute a majority of the members of the Board of Directors, to conduct their
business only in the ordinary course and use all reasonable efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with the Company and its subsidiaries. The Merger Agreement also
contains specific restrictive covenants as to certain activities of the Company
prior to the time as Parent's designees constitute a majority of the members of
the Board of Directors, which provide that the Company, without the written
consent of Purchaser, will not, and will cause its subsidiaries not to, take
certain actions including, among other things and subject to certain exceptions,
make dividends, make changes in capital stock, issue securities, make amendments
to its certificate of incorporation or by-laws, make material acquisitions,
effect consolidations or dispositions, incur indebtedness, change tax
accounting, make capital expenditures, discharge liabilities, change material
contracts, change benefits plans, change Company Option Plans (other than their
termination as discussed above under the heading "Company Stock Options"),
change insurance, change accounting methods or take certain other actions.
No Solicitation. The Merger Agreement requires the Company to, and to cause
its officers, directors, employees, representatives and agents to, immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to any inquiry, proposal, offer or expression of interest by any third
party relating a merger, consolidation or other business combination involving
all or substantially all of the Company's consolidated assets or 100% of the
outstanding voting power of the Company's securities that is not subject to any
financing condition (the foregoing, a
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"Takeover Proposal"). The Merger Agreement further provides that the Company
will not, and will cause its officers, directors, employees, representatives and
agents not to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
or reasonably likely to facilitate or encourage, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal, provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors determines in good faith, after consultation with outside counsel and
William Blair, that it is necessary to do so in order to comply with its
fiduciary duties to the Companys stockholders under applicable law, the Company
may, in response to a Takeover Proposal that was not solicited subsequent to the
date hereof, and subject to compliance with the requirements set forth under
this heading "No Solicitation," furnish information with respect to the Company
to any person pursuant to a confidentiality agreement in a form approved by
Parent (such approval not to be unreasonably withheld) and (y) participate in
discussions or negotiations regarding such Takeover Proposal. The Merger
Agreement provides that any material modification of a Takeover Proposal shall
constitute a new Takeover Proposal. The Merger Agreement requires the Company to
immediately advise Parent orally and in writing of any request for information
or of any Takeover Proposal, the material terms and conditions of such request
or Takeover Proposal and the identity of the person making such request or
Takeover Proposal. Pursuant to the Merger Agreement, the Company is obligated to
immediately inform Parent of any material change in the details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
The Merger Agreement provides that, unless it has complied with the
procedures set forth under this heading "No Solicitation," neither the Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, the approval or recommendation by such Board of Directors or
such committee of the Offer, the Merger or this Agreement, (ii) approve or
recommend or take no position with respect to, or propose to approve or
recommend or take no position with respect to, any Takeover Proposal or
(iii) cause the Company to enter into any agreement related to any Takeover
Proposal (other than a confidentiality agreement in compliance with the
procedures set forth in the preceding paragraph). Notwithstanding the foregoing,
in the event that prior to the acceptance for payment of Shares pursuant to the
Offer the Board of Directors determines in good faith, after consultation with
outside counsel and the William Blair, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors may, in response to a Superior Proposal (as defined
below) that was not solicited subsequent to the date hereof, (x) withdraw or
modify its approval or recommendation of the Offer, the Merger or this Agreement
or (y) subject to the requirement that it pay Parent the amounts due Parent, as
described under the heading "Expenses" below, in accordance with the terms of
the Merger Agreement, terminate the Merger Agreement, but in each such case,
only at a time that is after the fifth business day following Parent's receipt
of written notice (such five-day period, the "Notice Period") advising Parent
that the Board of Directors has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and only if the Company is in compliance
with the requirements set forth under this heading "No Solicitation." Parent and
Purchaser agree that Purchaser shall not accept for payment, or pay for any
Shares tendered pursuant to the Offer until 5 p.m. (New York City time) on the
business day immediately following the end of the Notice Period (the "No
Takedown Period"); provided, that either of Parent or Purchaser, in its sole
discretion, may elect to shorten or waive the Notice Period and immediately
terminate this Agreement at any time after commencement of the Notice Period in
which case the amounts due Parent, as described under the heading "Expenses"
below, shall be immediately due and payable. For purposes of this Agreement, a
Superior Proposal means any bona fide Takeover Proposal made by a third party on
terms which the Board of Directors determines in its good faith judgment (based
on the advice of the William Blair or other financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger and which is reasonably capable of being consummated in
a timely fashion. Nothing contained in the Merger Agreement will prohibit the
Company from taking and disclosing to its stockholders a position
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contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Companys stockholders if, in the good faith judgment of
the Board of Directors, after consultation with outside counsel, failure so to
disclose would be inconsistent with applicable law, provided, however, none of
the Company, the Board of Directors or any committee thereof shall, except as
specifically permitted as set forth under this "No Solicitation" heading,
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer, the Merger or this Agreement or approve or recommend, or propose
to approve or recommend, a Takeover Proposal.
Stockholder Approval; Preparation of Proxy Statement. The Company has
agreed pursuant to the Merger Agreement that, if the adoption of the Merger
Agreement by holders of a majority of the outstanding Shares (the "Company
Stockholder Approval") is required by law, the Company shall, as promptly as
practicable following the expiration of the Offer, duly call, give notice of,
convene and hold a meeting of its stockholders (the Stockholders Meeting) for
the purpose of obtaining the Company Stockholder Approval. Pursuant to the
Merger Agreement, the Company shall, through the Board of Directors, recommend
to its stockholders that the Company Stockholder Approval be given.
Notwithstanding the foregoing, if Purchaser or any other subsidiary of Parent
shall acquire at least 90% of the outstanding Shares, the parties shall, at the
option and request of Parent, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after the expiration of
the Offer without a Stockholders Meeting in accordance with the short form
merger provisions of the DGCL. If the Company Stockholder Approval is required
by law, the Company shall, as soon as practicable following the expiration of
the Offer, prepare and file a preliminary proxy statement ("Proxy Statement")
with the Commission and shall use all reasonable efforts to respond to any
comments of the Commission or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable.
Access to Information. The Merger Agreement provides that the Company will,
and will cause each of its subsidiaries to, give Parent and its officers,
employees, accountants, counsel, agents and other representatives reasonable
access to all of the properties, personnel, books and records of the Company and
its subsidiaries, and will furnish promptly all information concerning the
business, properties and personnel of the Company and its subsidiaries
(including environmental review and testing) as Parent may reasonably request,
subject to applicable confidentiality requirements. Pursuant to the Merger
Agreement, the Company may withhold information that would be unlawful to
disclose to a competitor, or the disclosure of which the Company reasonably
believes may result in a competitive disadvantage to the Company, if it provides
Parent in writing with a description in reasonable detail of the nature of the
information withheld and the reason for withholding it.
Disclosure Supplements. The Merger Agreement requires that, from time to
time prior to the Effective Time, the Company shall supplement or amend the
disclosure schedule delivered by the Company to Parent prior to the execution of
the Merger Agreement (the "Company Disclosure Schedule") with respect to any
matter arising after or any information obtained after the execution of the
Merger Agreement which, if existing, occurring or known at or prior to the date
of the Merger Agreement, would have been required to be set forth or described
in the Company Disclosure Schedule or which is necessary to complete or correct
any information in such schedule or in any representation and warranty of the
Company in the Merger Agreement which has been rendered inaccurate thereby. The
Merger Agreement also requires the Company to promptly inform Parent of any
claim by a third party that a contract has been breached, is in default, may not
be renewed or that a consent would be required as a result of the transactions
contemplated by the Merger Agreement. No such supplement, amendment or
information will be considered for purposes of determining the satisfaction of
the conditions to the consummation of the transactions contemplated by the
Merger Agreement.
Reasonable Efforts. Pursuant to the Merger Agreement, each of the Company,
Parent and Purchaser has agreed to use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement as promptly as
practicable including, but not limited to, (i) the preparation and filing of all
forms, registrations and notices required to be filed to consummate the
transactions contemplated by the Merger Agreement
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and the taking of such commercially reasonable actions as are necessary to
obtain any requisite approvals, consents, orders, exemptions or waivers by any
third party or any governmental body, court, agency, official or regulatory or
other authority (collectively, "Governmental Entity"), including filings
pursuant to the HSR Act and (ii) using all reasonable efforts to cause the
satisfaction of all conditions to effect the Merger. Each party to the Merger
Agreement has agreed to promptly consult with the others with respect to,
provide any necessary information with respect to and provide the others (or
their respective counsel) copies of, all filings made by such party with any
Governmental Entity or any other information supplied by such party to a
Governmental Entity in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement.
Pursuant to the Merger Agreement, each party thereto has agreed to promptly
inform the others of any communication from any Governmental Entity regarding
any of the transactions contemplated by the Merger Agreement. If any of the
Company, Parent or Purchaser or an affiliate thereof receives a request for
additional information or documentary material from any such Governmental Entity
with respect to the transactions contemplated by the Merger Agreement, then such
party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Nothing in the Merger
Agreement requires any of the Company, Parent or Purchaser, to waive any
substantial rights or agree to any substantial limitation on its (or the
Surviving Corporation's) operations or to dispose of any assets.
Pursuant to the Merger Agreement, Parent has covenanted that it will cause
Purchaser to comply with its obligations under the Merger Agreement.
Indemnification; Insurance. Pursuant to the Merger Agreement, Parent and
Purchaser have agreed that all rights to indemnification for acts or omissions
occurring prior to the Effective Time now existing in favor of the current or
former directors or officers of the Company and its subsidiaries as provided in
their respective articles of incorporation or by-laws (or similar organizational
documents), shall survive the Merger and shall continue in full force and effect
in accordance with their terms. The Merger Agreement provides that, for five
years from the Effective Time, Parent will maintain in effect the Companys
current directors and officers liability insurance and fiduciary liability
insurance covering those persons who are currently covered by the Companys
directors and officers liability insurance policy and fiduciary liability
insurance (or, in lieu of maintaining such insurance, cause coverage to be
provided under any policy maintained for the benefit of Parent or any of its
subsidiaries or otherwise obtained by Parent, so long as the terms thereof are
no less advantageous to the intended beneficiaries thereof than those of the
Companys policy), provided, however, that in no event shall Parent be required
to expend in excess of 150% of the annual premiums currently paid by the Company
for such insurance, and, provided further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
Certain Litigation. Pursuant to the Merger Agreement the Company has agreed
that it will not settle any litigation commenced after the date of the Merger
Agreement against the Company or any of its directors by any stockholder of the
Company relating to the Offer, the Merger, the Merger Agreement or the Support
Agreement, without the prior written consent of Parent, with such consent not to
be unreasonably withheld. In addition, subject to its obligations described
under the heading "No Solicitation" above, the Company will not voluntarily
cooperate with any third party that may hereafter seek to restrain or prohibit
or otherwise oppose the Offer or the Merger and will cooperate with Parent and
Purchaser to resist any such effort to restrain or prohibit or otherwise oppose
the Offer or the Merger
State Takeover Laws. The Merger Agreement provides that, if any state
anti-takeover law or state law that purports to limit or restrict business
combination or the ability to acquire voting shares become applicable to the
transactions contemplated by the Offer or the Merger Agreement, the Company and
Parent and their respective boards of directors shall grant such approvals and
take such actions as are necessary so that the transactions contemplated by the
Merger Agreement may be consummated as
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promptly as practicable on the terms contemplated by the Merger Agreement and
otherwise act to eliminate or minimize the effect of such law on the
transactions contemplated by the Merger Agreement
Tefron Undertaking. Pursuant to the Merger Agreement, Tefron undertakes and
agrees to (i) provide or cause to be provided sufficient funds to Parent and
Purchaser so that Parent and Purchaser can meet their payment obligations with
respect to the Offer and the Merger and (ii) otherwise take such action as may
be required to cause Parent and Purchaser to meet their other obligations with
respect to (A) the Offer and the Merger, (B) taking reasonable efforts to
consummate and make effective the transactions contemplated by the Merger
Agreement as promptly as practicable, and (C) paying their own expenses with
respect to the transactions contemplated by the Merger Agreement. Tefron agrees
that the Company may seek remedies directly from Tefron with respect to this
undertaking without first exhausting its remedies against Purchaser or Parent.
HSR Filing. Pursuant to the Merger Agreement, each of the Company and the
Parent has undertaken to promptly file, and to cause its direct and indirect
shareholders (to the extent required by the HSR Act) to file, with the Federal
Trade Commission ("FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") a notification and report form
and related material required to be filed under the HSR Act, which will, at the
time of filing, comply in all material respects with the requirements of the HSR
Act. Additionally, pursuant to the Merger Agreement, each of the Company and the
Parent has undertaken to make all reasonable effort to ensure that, at the time
of such filing, all information relating to the Company, or the Parent, as
applicable, and its respective subsidiaries as set forth in the notification and
report form filed by it will be true and correct in all material respects.
Conditions to Consummation of the Merger. Pursuant to the Merger Agreement,
the respective obligations of each party to the Merger Agreement to consummate
the Merger are subject to the satisfaction of each of the following conditions:
(i) if required by applicable law, the Company Stockholder Approval shall have
been obtained; (ii) no statute, law, ordinance, rule or regulation of any
Governmental Entity (a "Law") or any judgment, order, writ, preliminary or
permanent injunction or decree issued by any court of competent jurisdiction (an
"Order") or other Governmental Entity or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, provided, however,
that each party to the Merger Agreement shall have used reasonable efforts to
prevent the entry of any such Order and to appeal as promptly as possible any
Order that may have been entered and (iii) Purchaser shall have previously
accepted for payment and paid for Shares pursuant to the Offer. Additionally,
the obligations of Parent and Purchaser to consummate the Merger are subject to
the satisfaction of the condition that Parent and Purchaser shall have been
provided with a certified statement of the Company, pursuant to
Section 1.1445-2(c)(3) of the treasury regulations, that the Company is not, and
has not been within the last five years, a "United States real property holding
corporation" as defined in Section 897(c)(2) of the Internal Revenue Code of
1986 (the "Code").
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the terms of this
Agreement by the stockholders of the Company:
(a) by mutual written consent of the Parent and the Company;
(b) by either the Parent or the Company if (i) (x) the Offer shall
have expired without the acceptance for payment of Shares thereunder or
(y) Purchaser shall not have accepted for payment any Shares pursuant to
the Offer prior to January 31, 2000; provided, however, that such right to
terminate the Merger Agreement pursuant to this clause (b)(i) is not
available to any party whose failure to perform any of its obligations
under the Merger Agreement resulted in the failure of any such condition or
if the failure of such condition results from facts or circumstances that
constitute a breach of representation or warranty under the Merger
Agreement by such party; or (ii) if any Governmental Entity shall have
issued an Order or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger and such Order or
other action shall have become final and nonappealable;
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(c) by Parent prior to the purchase of Shares pursuant to the Offer if
the Company shall have breached or failed to perform in any material
respect any representation, warranty, covenant or other agreement contained
in the Merger Agreement that (i) would give rise to the failure of a
condition to the Offer set forth in paragraphs (e) or (f) of Section 14,
and (ii) cannot be or has not been cured within five business days after
the giving of written notice to the Company;
(d) by Parent or Purchaser if either Parent or Purchaser is entitled
to terminate the Offer as a result of the occurrence of any event set forth
in paragraph (d) of Section 14;
(e) by the Company; provided, that it has complied with the provisions
set forth under the heading "No Solicitation" above, including the notice
provisions therein contained, and that it has paid Parent the amounts due
Parent as described under the heading "Expenses" below, in accordance with
the terms of the Merger Agreement;
(f) by the Company prior to the purchase of Shares pursuant to the
Offer if Parent or Purchaser shall have breached or failed to perform in
any material respect any of their respective representations, warranties,
covenants or other agreements contained in the Merger Agreement, which
breach or failure to perform is incapable of being cured or has not been
cured within five business days after the giving of written notice to
Parent or Purchaser, as applicable, except, in any case, such breaches and
failures which are not reasonably likely to materially and adversely affect
Parent's or Purchaser's ability to consummate the Offer or the Merger; or
(g) by the Parent or Purchaser if either Parent or Purchaser is
entitled to terminate the Offer as a result of the occurrence of any event
set forth in paragraph (h) of Section 14.
Effect of Termination. In the event of the termination of the Merger
Agreement, subject to the provisions relating to the payment of certain fees and
expenses described under the heading "Expenses" below, the Merger Agreement will
become void and there shall be no liability or obligation on the part of Parent,
Purchaser or the Company or their respective officers or directors; provided,
that no party would be relieved from liability for any willful breach of the
Merger Agreement.
Amendment. The Merger Agreement may be amended by the parties thereto, by
duly authorized action taken, at any time before or after obtaining the Company
Stockholder Approval, but, after the purchase of Shares pursuant to the Offer,
no amendment shall be made which decreases the Merger Consideration and, after
the Company Stockholder Approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval. The Merger Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties thereto.
Extension; Waiver. At any time prior to the Effective Time, the parties to
the Merger Agreement may, to the extent legally allowed and subject to the
provisions set forth under the heading "Amendment" above, (i) extend the time
for the performance of any of the obligations or other acts of any other party
thereto, (ii) waive any inaccuracies in the representations and warranties
contained therein of any other party thereto or in any document delivered
pursuant to the Merger Agreement or (iii) waive compliance with any of the
agreements contained in the Merger Agreement.
Expenses. Except as provided below, each party to the Merger Agreement will
bear its own expenses in connection with the transactions contemplated by the
Merger Agreement. If the Merger Agreement is terminated pursuant to
(i) paragraph (c) under the heading "Termination" above and either (x) such
termination is the result of an intentional breach or failure to perform by the
Company or (y) the Company enters into a definitive agreement with respect to a
Superior Transaction within 12 months of the date of such termination,
(ii) paragraph (d) or (e) under the heading "Termination" above or (iii) if the
Company has knowledge of any liability, loss, damage, penalty, fine, obligation,
lien, cost or expense of any nature whatsoever to the Company with respect to
any environmental matter or violation of Environmental Law or any litigation or
litigations relating thereto (which are not otherwise disclosed in relevant
section of the Company Disclosure Schedule), which individually or in the
aggregate exceed $500,000 (an "Environmental Violation"), paragraph (g) under
the heading "Termination" above, then the Company shall pay to Parent, as
liquidated damages, (A) a fee of
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$3,000,000 plus (B) an amount equal to Parent's Costs (as defined below) by wire
transfer of immediately available funds. If this Agreement is terminated
pursuant to paragraph (c) under the heading "Termination" above and such
termination did not result from an intentional breach or failure to perform by
the Company, the Company shall pay to Parent, as liquidated damages (in the
manner set forth in this paragraph), an amount equal to Parent's Costs. If this
Agreement is terminated pursuant to paragraph (g) under the heading
"Termination" above and the Company does not have knowledge of an Environmental
Violation, the Company shall pay to Parent, as liquidated damages (in the manner
set forth in this paragraph), an amount equal to Parent's Costs incurred from
and after the date of the Merger Agreement. Such fee and /or costs shall be paid
prior to termination in the case of paragraph (e) under the heading
"Termination" above and within one business day of termination otherwise;
provided, that, in the case of a Superior Transaction contemplated by clause
(i)(y) above, the fee shall be paid at the time of the execution of the
definitive agreement contemplated thereby. For purposes hereof, a "Superior
Transaction" shall mean a merger, consolidation, reorganization,
recapitalization, asset or share purchase or other acquisition or sale
transaction made at any time (i) involving a per Share purchase price or
consideration in excess of $18.50 per Share and (ii) involving (A) 50% or more
of the assets of the Company or the outstanding Shares or (B) a change of
control of the Company. If the Company fails to pay the amount due as described
under this heading "Expenses" when it is required to be paid, and, in order to
obtain such payment, Parent commences a suit which results in a judgment against
the Company for the fee set forth under this heading "Expenses," the Company
shall pay to Parent its costs and expenses (including attorneys' fees) in
connection with such suit, including any costs of collection, together with
interest on the amount of the fee at the rate of 12% per annum from the date
such fee was required to be paid. "Parent's Costs" is defined as Parent's and
Purchaser's reasonable and documented out-of-pocket costs, fees and expenses of
their counsel, accountants, financial advisors and other experts and advisors as
well as fees and expenses incident to negotiation, preparation and execution of
this Agreement and related documentation and shareholders' meetings and consents
up to an aggregate amount of $1,800,000.
Publicity. The Merger Agreement provides that except as otherwise required
by law, court process or the rules of any applicable securities exchange or as
contemplated or provided elsewhere therein, no party to the Merger Agreement
will issue any press release or otherwise make any public statement with respect
to the transactions contemplated by the Merger Agreement without prior
consultation with the other parties to the Merger Agreement.
(a) The Support Agreement
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into a Support Agreement with two directors of the Company,
Engle and Dardick (the "Director Stockholders") and GSC Enterprises, Inc., an
affiliate of Engle (GSC and, together with the Director Stockholders, the
"Support Stockholders"). According to the information provided by them, as of
November 8, 1999, Engle, Dardick and GSC beneficially owned directly or
indirectly 977,000, 687,066 and 127,700 Shares, respectively. 18,000 of the
Shares owned by Dardick (the "Dardick Owned Shares") will be donated to charity
and, upon such donation will not be subject to the Support Agreement. In
addition, each of the Director Stockholders have an option to acquire an
additional 5,000 Shares (the Director Options), representing in the aggregate
approximately 54% of the Shares outstanding on a fully- diluted basis as of such
date. The Shares owned by Engle (the "Engle Owned Shares") and the Shares owned
by GSC (the "GSC Owned Shares") were subject to one or more stock pledge or
similar agreements (the "Pledge Agreements"), between Engle and LaSalle National
Bank (the "Bank") and GSC and the Bank, as applicable, pursuant to which some or
all of the Engle Owned Shares and the GSC Owned Shares were held in the name of
a nominee for the Bank. On the date the Support Agreement was entered into the
Bank delivered to Parent and Purchaser letter agreements (the "Bank Letters")
pursuant to which the Bank agreed to cause the Engle Owned Shares and the GSC
Owned Shares to be tendered in the Offer pursuant to Section 1.1 of the Support
Agreement.
Pursuant to the Support Agreement each of the Support Stockholders agreed
to validly tender (or cause the record owner of such Shares to validly tender)
and not withdraw, pursuant to the Offer (i) all of
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their Shares owned on the date of the Support Agreement, as soon as practicable
after commencement of the Offer but in no event later than ten business days
after the date of commencement of the Offer, and (ii) all Shares acquired prior
to termination of the Tender Offer, upon the date of acquisition thereof by such
stockholder, or promptly thereafter, but, in any event prior to the expiration
date of the Offer, (the "Tender Shares") and not withdraw their Tender Shares,
except following termination of the Offer pursuant to its terms, or the
termination of this Agreement. Engle and GSC agreed to instruct the Bank in a
timely manner to tender all Shares held in nominee's name by the Bank, or
otherwise pursuant to the Pledge Agreements, in accordance with the Support
Agreement so that each of Engle and GSC will meet such obligation under the
Support Agreement. Each Support Stockholder also agreed that, for so long as the
Support Agreement is in effect, at any meeting of the stockholders of the
Company, however called, such stockholder would vote his or its Tender Shares in
favor of the Merger, vote his or its Tender Shares against any action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement, and vote his or its Tender Shares against any action or agreement
that would impede, interfere with, delay, postpone or attempt to discourage the
Merger or the Offer including (i) any extraordinary transaction involving the
Company or any of its subsidiaries, (ii) a sale or transfer of a material amount
of assets of the Company or any of its subsidiaries or a reorganization,
recapitalization or liquidation of the Company or any of its subsidiaries,
(iii) any change in the management or Board of Directors, except as otherwise
agreed to in writing by Purchaser, (iv) any material change in the present
capitalization or dividend policy of the Company, or (v) any other material
change in the Company's corporate structure or business. Pursuant to the Support
Agreement, each stockholder revoked any proxy previously granted by him or it
with respect to the Tender Shares; provided, that, if such meeting of the
stockholders is held prior to the expiration or waiver of all waiting periods
under the HSR Act (such expiration or waiver, the "HSR Termination") such
Support Stockholder shall vote only that pro rata portion of his or its Tender
Shares such that the total number of Tender Shares voted pursuant to the Support
Agreement in favor of the Merger, combined with the total number of Shares held
by Parent and Purchaser at the time of such meeting, equals 49.9% (forty-nine
and nine-tenths percent) of the total Shares. The pro rata portion of Tender
Shares to be voted shall be calculated such that each Support Stockholder votes
an equal percentage of his or its Tender Shares. Notwithstanding the foregoing,
it is understood that the Engle Owned Shares and the GSC Owned Shares and
Engle's and the GSC's obligations under Section 1.2 of the Support Agreement are
subject to the Pledge Agreements. Pursuant to the Support Agreement, each of
Engle and GSC have agreed to instruct the Bank and to use all reasonable efforts
to cause the Bank to vote the Engle Owned Shares and the GSC Owned Shares as
described above.
Each of the Support Stockholders also granted representatives of Parent
and/or Purchaser an irrevocable proxy and attorney-in-fact to vote his or its
Tender Shares in favor of the Merger and other transactions contemplated by the
Merger Agreement, against any Takeover Proposal and otherwise as contemplated by
the preceding paragraph; provided, that, if such proxy is exercised prior to HSR
Termination, such proxy will be exercisable only with respect to that pro rata
portion of each Support Stockholders Tender Shares such that the total number of
Tender Shares subject to proxy, combined with the total number of Shares held by
Parent and Purchaser at the time of such exercise, equals 49.9% (forty-nine and
nine-tenths percent) of the total Shares. The pro rata portion of Tender Shares
subject to proxy will be calculated so that each Support Stockholder granted a
proxy with respect to an equal percentage of his or its Tender Shares. The
foregoing proxy terminates upon the termination of the Support Agreement. The
grant of irrevocable proxy described above applies to the Engle Owned Shares and
the GSC Owned Shares only to the extent permitted (or not permitted and
acceptable to the Bank) by the Pledge Agreements.
In addition each of the Support Stockholders who is a party to the Support
Agreement has agreed not to (i) except to the Purchaser, transfer (which term
includes, without limitation, any sale, gift, pledge or other disposition) or
consent to any transfer of, any or all of his Director Options or his or its
Tender Shares, or any interest therein (ii) except with Parent, enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of his Director Options or his or its Tender Shares, or
any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with
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respect to his Director Options or his or its Tender Shares, (iv) deposit any
Director Options or Tender Shares into a voting trust or enter into a voting
agreement or arrangement with respect to his or its Tender Shares or (v) take
any other action that would in any way restrict, limit or interfere with the
performance of his or its obligations under the Support Agreement, or the
transactions contemplated by the Support Agreement or by the Merger Agreement or
which would make any representation or warranty of such stockholder under the
Support Agreement untrue or incorrect.
Each Support Stockholder further agrees that he or it will not, and will
not permit or authorize any of his or its affiliates, representatives or agents
to, directly or indirectly, encourage, solicit, explore, participate in or
initiate discussions or negotiations with, or provide or disclose any
information to, any corporation, partnership, person or other entity or group
(other than Parent, the Purchaser, any of their affiliates or representatives)
concerning any Takeover Proposal or enter into any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Merger or any other transactions contemplated by the Merger Agreement. Each
Support Stockholder has also agreed to immediately cease any existing
activities, discussions or negotiations with any parties with respect to any
Takeover Proposal and to immediately advise Parent in writing of the receipt,
directly or indirectly, of any inquiries, discussions, negotiations or proposals
relating to a Takeover Proposal, identify the offeror and furnish to Parent a
copy of any such proposal or inquiry, if it is in writing, or a written summary
of any oral proposal or inquiry relating to a Takeover Proposal and to promptly
advise Parent in writing of any development relating to such proposal, including
the results of any discussions or negotiations with respect thereto. Where
applicable, the Support Agreement provides, however, that any action taken by
any stockholder in his capacity as an officer or director of the Company, as
applicable, or the Company or any member of the Board of Directors (including,
if applicable, any representative of such stockholder acting in such capacity)
in accordance with the proviso set forth in the second sentence of
Section 6.2(a) of the Merger Agreement will be deemed not to violate the
provisions described in this paragraph.
Pursuant to the Support Agreement, each Support Stockholder has also agreed
to waive any appraisal rights or rights to dissent from, the Merger that it may
have.
The Support Agreement also provided that any incremental value each Support
Stockholder has in the equity of the Company (including any Shares and Director
Options beneficially owned by such stockholder) resulting from or attributable
to a Superior Transaction (other than with Parent or the Purchaser) that is
entered into or consummated prior to or within one month of the termination of
the Merger Agreement in accordance with its terms that exceeds $18.50 per Share
(or the equivalent spread value of any Option) (an "Excess Amount") shall belong
to Parent who is entitled to receive such amount within two business days of
receipt by such Support Stockholder.
The agreements and proxy contained in the Support Agreement will terminate
on the earlier of the payment for the Shares pursuant to the Offer and date of
termination of the Merger Agreement in accordance with its terms.
The foregoing is a summary of the material provisions of the Support
Agreement, a copy of which is included as an exhibit to the Schedule 14D-1 of
which this Offer to Purchase forms a part. This summary is qualified in its
entirety by reference to the Support Agreement which is incorporated herein by
reference.
(b) Integration Consulting/Non-competition Agreements
Concurrently with the execution of the Merger Agreement, the Parent entered
into an integration consulting/noncompetition agreement (each, a "Consulting
Agreement" and collectively, the "Consulting Agreements") with each of Engle and
Dardick (each, a "Consultant") which are substantially similar in their terms.
Each Consulting Agreement has a period commencing from the Takedown Date to the
Effective Time (the "Consulting Period"). Each Consultant is a principal
stockholder and director of the Company and acknowledged and agreed that, from
and after the Takedown Date, his status at all times shall be that of an
independent contractor, and that he may not, at any time, act as a
representative for or on behalf of the Parent or the Company for any purpose or
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transaction, and may not bind or otherwise obligate the Parent or the Company in
any manner whatsoever without obtaining the prior written approval of the Parent
therefor. Each Consultant has agreed to render such advisory and consulting
services during the Consulting Period with respect to the integration of the
business of the Company with the business of Parent and its affiliates (such
businesses, collectively, the "Businesses") as Parent may reasonably request
from time to time (including, but not limited to, consulting with and advising
the officers of Parent and the Company with respect to the integration of the
Businesses) and at a mutually agreed upon time and place.
The Consulting Agreements provide that each Consultant may engage for
compensation in any business, employment, occupation or other activity (either
as an employee or on his own behalf); provided, that, in consideration of the
Offer, the transactions contemplated by the Merger Agreement, the Noncompetition
Payment (as defined herein) and the provisions of the Consulting Agreement, each
Consultant has agreed that, for a minimum of thirty months from the Takedown
Date (the "Noncompetition Period") such Consultant will not (i) in any
geographic area where the Parent or its controlling shareholder or the Company
conducts business during the Noncompetition Period, engage in or participate in,
directly or indirectly (whether as an officer, director, employee, partner,
consultant, holder of an equity or debt investment, lender or in any other
manner or capacity), or lend his name (or any part or variant thereof) to, any
business which is, or as a result of such Consultant's engagement or
participation would be involved in the industry in which the Parent or the
Company operates, (ii) deal, directly or indirectly, in a competitive manner
with any customers doing business with the Parent or the Company during the
Noncompetition Period (except in connection with the performance of his services
hereunder), or (iii) solicit or employ any officer or employee of the Parent or
its controlling shareholder or the Company to become an officer, director,
employee or agent of the Consultant, his affiliates or anyone else; provided,
that, for the Consulting Agreement with Engle only, Consultant may continue to
employ an officer of the Company in the same capacity on the same part-time
basis as he is currently employed and may employ him on a full-time or other
basis if his employment is terminated by or with the consent of the Company.
Each Consultant has agreed that, at no time shall such Consultant engage in or
participate in, directly or indirectly, any business conducted under any name
that shall be the same as or similar to the name of the Parent or the Company or
any trade name used by them. Notwithstanding the foregoing, the Consulting
Agreements provide that ownership by each Consultant, in the aggregate, of less
than 5% of the outstanding shares of capital stock of any corporation with one
or more classes of its capital stock listed on a national securities exchange or
actively traded in the over-the-counter market that would otherwise be
prohibited by clause (i) above is not deemed to constitute a violation of such
provision.
Pursuant to the Consulting Agreements, during the Consulting Period, each
Consultant is obligated to disclose to the Parent all ideas, inventions and
business plans developed by such Consultant during such period which relate
directly or indirectly to the Businesses, including, without limitation, any
process, operation, product or improvement which may be patentable or
copyrightable. Each Consultant agreed that such is the property of the Parent
and that such Consultant will at the Parent's request and cost do whatever is
necessary to secure the rights thereto by patent, copyright or otherwise to the
Parent. Each Consultant will be prohibited from making use of or implementing
any such ideas, inventions or business plans in connection with his employment
with a business that is considered a competitor under the Consulting Agreements.
Pursuant to the Consulting Agreements, during the Consulting Period and at
all times thereafter, each Consultant agreed that he will not divulge to anyone
(other than the Parent or the Company or any persons employed or designated by
the Parent or the Company) any knowledge or information of any type whatsoever
whether of a confidential nature or otherwise relating to the business of the
Parent or the Company or any of their respective subsidiaries or affiliates,
including, without limitation, all types of trade secrets (unless readily
ascertainable from public or published information or trade sources) and
customer and supplier information (the foregoing, collectively, the
"Confidential Information"). Each Consultant further agreed not to disclose,
publish or make use of any Confidential Information without the prior written
consent of the Parent. If the Consulting Agreements are terminated, all books,
memoranda, plans, records and written data of every kind relating to the
business and affairs of the
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Company or the Confidential Information which are then in either Consultant's
possession shall be promptly delivered to the Company by such Consultant or his
personal representative.
The Consulting Agreements provide a fee of $200,000 and $100,000 for Engle
and Dardick, respectively, (the "Consulting Fee") for services requested by the
Parent as described above, to be paid by the Parent to the Consultant in two
equal installments of $100,000 and $50,000 respectively. The first installment
is to be paid on the Takedown Date and the second installment to be paid upon
the Effective Time. Each Consultant will be reimbursed by the Parent for all
reasonable travel, food, lodging or similar expenses incurred in connection with
such Consultant's duties under the Consulting Agreements which are pre-approved
by Parent. In consideration of each Consultant's agreement to enter into the
covenant not-to-compete as described above, Engle and Dardick, respectively,
shall be paid $100,000 and $50,000 (the "Noncompetition Payment"), which
payments shall be made to each Consultant on March 31, 2001.
The foregoing is a summary of the material provisions of the Consulting
Agreements, a copy of which is included as an exhibit to the Schedule 14D-1 of
which this Offer to Purchase forms a part. This summary is qualified in its
entirety by reference to the Consulting Agreements which is incorporated herein
by reference.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, however, stockholders of the Company who
have not tendered their Shares will have certain rights under the DGCL to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Stockholders who perfect such rights by complying with
the procedures set forth in Section 262 of the DGCL ("Section 262") will have
the fair value of their Shares (exclusive of any element of value arising from
the accomplishment or expectation of the Merger) determined by the Delaware
Court of Chancery and will be entitled to receive a cash payment equal to such
fair value from the Surviving Corporation. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, the
court is required to take into account all relevant factors. Accordingly, such
determination could be based upon considerations other than, or in addition to,
the market value of the Shares, including, among other things, asset values and
earning capacity. In Weinberger v. UOP, Inc., the Delaware Supreme court stated
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. The Weinberger court also noted that
under Section 262, fair value is to be determined "exclusive of any element of
value arising from the accomplishment of exception of the merger." In Cede & Co.
v. Technicolor, Inc., however, the Delaware Supreme Court stated that, in the
context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be included in the appraisal process. As
a consequence, the fair value determined in any appraisal proceeding could be
more or less than the consideration to be paid in the Offer and the Merger.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than the price paid in the Merger. In this regard, stockholders should
be aware that opinions of investment banking firms as to the fairness from a
financial point of view (including the opinion of William Blair described
herein) are not necessarily opinions as to "fair value" under Section 262.
THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Plans for the Company. In connection with the Offer, Parent and the
Purchaser have reviewed, and will continue to review various possible business
strategies that they might consider in the event that the Purchaser acquires
control of the Company, whether pursuant to this Offer, the Merger or otherwise.
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Such strategies could include, among other things, changes in the Company's
business, corporate structure, capitalization or management.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions.
The Company does not believe Rule 13e-3 is applicable to the Offer, but the rule
may, under certain circumstances, be applicable to the Merger. However,
Rule 13e-3 would be inapplicable to the Merger if (i) the Shares are
deregistered under the Exchange Act prior to the Merger or other business
combination or (ii) the Merger or other business combination is consummated
within one year after the purchase of the Shares pursuant to the Offer and the
amount paid per Share in the Merger or other business combination is at least
equal to the amount paid per Share in the Offer. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to the consummation of the transaction.
12. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required to consummate the Offer and the Merger (including fees
and expenses related thereto) and to refinance certain indebtedness of the
Company is estimated to be approximately $85 million.
Tefron, Parent and the Purchaser plan to obtain sufficient funds from loans
to be provided by a new senior credit facility to be provided by Bank Hapoalim
B.M. (the "Bank") pursuant to a commitment letter between Tefron and the Bank,
dated November 1, 1999, which commitment letter will be appropriately modified
to reflect the definitive structure of the financing. It is expected that such
facility will provide Tefron, Parent and the Purchaser with seven year term
loans in the aggregate amount of $85 million. Such borrowings will bear interest
at rates to be agreed to between Tefron and the Bank, currently anticipated to
be approximately 150 basis points above the London Interbank Offered Rate. It is
expected that funds from the facility will be loaned in part to Purchaser and in
part to Tefron and will be sufficient to consummate the Offer and the proposed
Merger (including fees and expenses related thereto).
The funds necessary to purchase the Shares pursuant to the Offer and upon
conversion of the Shares in the proposed Merger (and to pay fees and expenses
related thereto) not borrowed directly from the Bank by Purchaser, will be
furnished to Purchaser, directly or indirectly, by Tefron and/or Parent as
capital contributions and/or loans.
13. DIVIDENDS AND DISTRIBUTIONS.
According to the Company's Form 10-K for the period ended December 31,
1998, the Company paid a dividend of $0.05 per Share on August 24, 1998 and
according to the Company's Form 10-Q for the period ending July 4, 1999, the
Company paid a dividend of $0.075 per Share on February 22, 1999 and a dividend
of $0.075 per Share on August 24, 1999. (The foregoing dividend amounts do not
reflect subsequent stock splits.)
The Merger Agreement provides that until Parent's designees constitute a
majority of the members of the Board of Directors, the Company will not, and
will not permit any of its subsidiaries to declare or pay any dividends on or
make other distributions in respect of any of its capital stock (except for
dividends by a wholly owned subsidiary of the Company to its parent),
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) repurchase, redeem or
otherwise acquire, or modify or amend, any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
except as otherwise described in Section 11.
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14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other term of the Offer, the Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchasers obligation to pay for or return tendered Shares after
the termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless prior to the Expiration Date (i) the Minimum
Condition shall have been met and (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated. The Purchaser is not required to accept for payment or to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
prior to the Expiration Date, any of the following conditions exists (other than
as a result of any action or inaction of Parent or any of its subsidiaries that
constitutes a breach of the Merger Agreement):
(a) there shall be threatened, instituted or pending by any
Governmental Entity any suit, action or proceeding (i) challenging the
acquisition by Parent or Purchaser of any Shares under the Offer, seeking
to restrain or prohibit the making or consummation of the Offer or the
Merger or seeking to obtain from the Company, Parent or Purchaser any
damages that are material in relation to the Company and its subsidiaries
taken as a whole, (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of a material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, or to compel the Company and its subsidiaries, taken as a
whole or Parent to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and its subsidiaries, taken as
a whole, in each case as a result of the Offer or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose
material limitations on the ability of Parent or Purchaser to acquire or
hold, or exercise full rights of ownership of, any Shares to be accepted
for payment pursuant to the Offer including, without limitation, the right
to vote such Shares on all matters properly presented to the stockholders
of the Company, (iv) seeking to prohibit Parent or any of its subsidiaries
from effectively controlling in any material respect any material portion
of the business or operations of the Company or its subsidiaries or (v)
which otherwise is reasonably likely to have a Material Adverse Effect on
the Company;
(b) there shall be any Law or Order enacted, entered, first enforced,
promulgated or first deemed applicable to the Offer or the Merger, by any
Governmental Entity, other than the routine application to the Offer or the
Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall exist any Material Adverse Effect with respect to the
Company other than as disclosed in the Merger Agreement or the Company
Disclosure Schedule;
(d) (i) the Board of Directors or any committee thereof shall have
(x) withdrawn or modified in a manner adverse to Parent or Purchaser its
approval or recommendation of the Offer or the Merger or its adoption of
the Merger Agreement, (y) approved or recommended or taken a neutral
position with respect to any Takeover Proposal, or (z) failed to reaffirm
its recommendation of the Offer or the Merger or its adoption of the Merger
Agreement within five business days of being requested by Parent to do so
or (ii) the Board of Directors or any committee thereof shall have resolved
to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement shall not be true and correct in any material
respect in each case at the date of the Merger Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform or comply, in all
material respects, with any agreement, obligation or covenant to be
performed or complied with by it under the Merger
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Agreement, which failure to perform or comply has not been cured within
five business days after the giving of written notice to the Company;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) the Purchaser and Parent shall have reasonably determined that
there is any Environmental Violation; or
(i) Parent or Purchaser shall not have been provided with a certified
statement of the Company, pursuant to Section 1.1445-2(c)(3) of the
treasury regulations, that the Company is not, and has not been within the
last five years, a United States real property holding corporation as
defined in Section 897(c)(2) of the Code.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their
reasonable discretion. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. THE PURCHASER HAS AGREED THAT UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE MERGER AGREEMENT IT SHALL BE DEEMED TO
HAVE WAIVED SATISFACTION OF THE CONDITIONS SET FORTH IN PARAGRAPHS (B), (E),
(F), AND (H) ABOVE FOLLOWING THE INITIAL EXTENSION PERIOD. SEE SECTION 11.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.
General. Except as set forth in this Offer to Purchase, based on its review
of publicly available filings by the Company with the Commission, neither Parent
nor the Purchaser is aware of any licenses or regulatory permits that appear to
be material to the business of the Company and its subsidiaries, taken as a
whole, and that might be adversely affected by the Purchaser's acquisition of
Shares (and the indirect acquisition of the stock of the Company's subsidiaries)
as contemplated herein, or any filings, approvals or other actions by or with
any domestic, foreign or supranational governmental authority or administrative
or regulatory agency that would be required for the acquisition or ownership of
the Shares by the Purchaser pursuant to the Offer as contemplated herein. Should
any such approval or other action be required, it is presently contemplated that
such approval or action would be sought except as described below under "State
Takeover Laws." Should any such approval or other action be required, there can
be no assurance that any such approval or action would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's or its subsidiaries' businesses, or that certain parts of the
Company's, Parent's, the Purchaser's or any of their respective subsidiaries'
businesses might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or action
or in the event that such approvals were not obtained or such actions were not
taken. The Purchaser's obligation to purchase and pay for Shares is subject to
certain conditions, including conditions with respect to litigation and
governmental actions. See Introduction and Section 14.
State Takeover Laws. A number of states (including Delaware where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, stockholders, principal executive offices or principal places of
business therein. To the extent that certain provisions of certain of these
state takeover statutes purport to apply to the Offer or the Merger, the
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of
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corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX Acquisition Corp.
v. Telex Corp., a Federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they apply to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
Federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
Section 203 of the DGCL prevents certain "business combinations" with an
"interested stockholder" (generally, any person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) for a period of
three years following the time such person became an interested stockholder,
unless, among other things, prior to the time the interested stockholder became
such, the board of directors of the corporation approved either the business
combination (and ratified by 66 2/3% of the voting stock not owned by the
interested party) or the transaction in which the interested stockholder became
such. The Board of Directors of the Company has unanimously approved the Offer,
the Merger and the Merger Agreement and the transactions contemplated thereby
for the purposes of Section 203 of DGCL.
The North Carolina Tender Offer Disclosure Act (the "TODA") purports to
apply to tender offers for equity securities of a company that has its principal
place of business and substantial assets in North Carolina. The TODA requires
Purchaser to file a statement with the North Carolina Secretary of State
relating to the Offer and contains prohibitions against deceptive practices in
connection with making a tender offer. In Eure v. Grand Metropolitan Limited,
the North Carolina Superior Court held that the TODA's 30-day waiting period
prior to the commencement of a tender offer is unenforceable and preempted by
the Exchange Act. Consequently, Purchaser has filed concurrently with the
Commission and the North Carolina Secretary of State a Tender Offer Statement on
Schedule 14D-1, together with all exhibits thereto, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, and Section 78B-4 of
the TODA.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer or the Merger although,
pursuant to the Merger Agreement, the Company has represented that the Board of
Directors has taken appropriate action to render Section 203 of the DGCL
inapplicable to the Offer, the Merger and the transactions contemplated by the
Merger Agreement. The Purchaser reserves the right to challenge the validity or
applicability of any state law allegedly applicable to the Offer or the Merger,
and nothing in this Offer to Purchase nor any action taken in connection
herewith is intended as a waiver of that right. In the event that it is asserted
that one or more takeover statutes apply to the Offer or the Merger, and it is
not determined by an appropriate court that such statute or statutes do not
apply or are invalid as applied to the Offer or the Merger, as applicable, the
Purchaser may be required to file certain documents with, or receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or purchase Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for purchase, or pay for, any Shares tendered. See
Section 14.
Article 13 of the Company's Charter. Article 13 of the certificate of
incorporation of the Company (the "Company's Charter") provides that the
affirmative vote of at least 80% of the issued and outstanding voting stock of
the Company shall be required to authorize, adopt or approve: (i) any plan of
merger or consolidation with or into any entity, or affiliate thereof, which
owns of record, beneficially, directly or indirectly, or which has the right to
acquire more than 5% of the issued and outstanding stock of the Company having
the right to vote (a "Substantial Stockholder"); (ii) any sale, lease, exchange,
transfer or other disposition of all or substantially all of the assets or
business of the Company to a Substantial Stockholder; (iii) any issuance or
delivery of stock or other securities of the Company in exchange for any
properties or assets or other consideration of a Substantial Stockholder; and
(iv) the dissolution of the Company (unless the Board of Directors unanimously
approves such transaction).
32
<PAGE>
However, the foregoing provisions shall not apply to any transaction if either
(i) a majority of the entire board of directors has approved, by resolution, a
memorandum with respect to such transaction prior to the time such Substantial
Stockholder became a holder of more than 5% of the issued and outstanding voting
stock of the Company or (ii) the entire board of directors of the Company has
approved the transaction. The foregoing provisions may not be amended, repealed
or annulled without the affirmative vote of at least 80% of the issued and
outstanding voting stock of the Company. The Board of Directors of the Company
has unanimously approved the Offer, the Merger and the Merger Agreement and the
transactions contemplated thereby for the purposes of Article 13 of the
Company's Charter.
Antitrust. The Offer and the acquisition of Shares pursuant to the Merger
Agreement are subject to the HSR Act, which provides that certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission ("FTC") and certain waiting period
requirements have been satisfied.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer and the Merger may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by Parent.
Accordingly, the waiting period with respect to the Offer will expire at
11:59 p.m., New York City time, on the 15th calendar day following the date of
filing, unless the Antitrust Division and the FTC terminate the waiting period
or Parent receives a request for additional information or documentary material
prior thereto. If, within such 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period requirements
imposed by the HSR Act with respect to the Offer have been satisfied. See
Section 14.
No separate HSR Act waiting period requirements with respect to the Merger
Agreement will apply, so long as the 15-day waiting period expires or is
terminated. Thus, all Shares may be acquired pursuant to the Offer upon the
expiration or termination of the 15-day waiting period or the tenth calendar day
after the date of substantial compliance with a request for additional
information.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger Agreement. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries, or
the Company or its subsidiaries. Private parties and state attorneys general may
also bring legal action under the antitrust laws under certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, the Purchaser believes that the
acquisition of Shares pursuant to the Offer and the Merger should not violate
the applicable antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer and the Merger on antitrust grounds will not be made, or,
if such challenge is made, what the result will be. See Section 14.
16. CERTAIN FEES AND EXPENSES.
D.F. King & Co., Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information
33
<PAGE>
Agent reasonable and customary compensation for all such services in addition to
reimbursing the Information Agent for reasonable out-of-pocket expenses in
connection therewith.
First Union National Bank has been retained as the Depositary. The
Purchaser will pay the Depositary reasonable and customary compensation for its
services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent or the
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
Parent and the Purchaser have filed with the Commission a Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. Such Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies may
be obtained from the office of the Commission in the same manner as described in
Section 8 with respect to information concerning the Company, except that copies
will not be available at the regional offices of the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer shall under any circumstances create any implication that there has
been no change in the affairs of Tefron, Parent, the Purchaser, the Company or
any of their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.
AWS ACQUISITION CORP.
November 12, 1999
34
<PAGE>
SCHEDULE-1
DIRECTORS AND EXECUTIVE OFFICERS OF TEFRON, PARENT AND PURCHASER
A. DIRECTORS AND EXECUTIVE OFFICERS OF TEFRON
The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the Tefron
are set forth below. Unless otherwise indicated, the business address of each
such director and each such executive officer is care of Tefron Ltd. 28 Chida
Street, Bnei-Brak 51371. Unless otherwise indicated, all directors and executive
officers listed below are citizens of Israel.
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ------------------------------------------------------------------------
<S> <C> <C>
Sigi Rabinowicz.................. 50 CEO of Tefron. Mr. Rabinowicz joined Tefron in 1977 and has served as
CEO since 1990. Mr. Rabinowicz has also served as a Director of
Macpell Industries Ltd. ("Macpell") since April 21, 1998.
Mr. Rabinowicz has over 25 years of experience in the textile industry
in Israel and abroad. Prior to joining the Company, Mr. Rabinowicz was
general manager of Kortes Hosiery Mills in Australia, which was
subsequently acquired by Sara Lee Corporation.
Arie Wolfson..................... 37 Chairman and President of Tefron. Joined Tefron in 1987 and has served
as Chairman of the Board of Directors since 1997 and President since
1993, prior to which time Mr. Wolfson served as Chief Financial
Officer from 1988 to 1990 and Assistant to the CEO from 1990 to 1993.
Mr. Wolfson has also served as CEO of Macpell since May 17, 1998, as
well as Chairman of the Board of Macpell since April 21, 1998.
Zvi Meiri........................ 53 Mr. Meiri joined Tefron in 1998 as General Manager, and was appointed as
a Director of Tefron on December 1, 1998. Prior to joining Tefron,
Mr. Meiri served as the General Manager of the paper and board
division of American Israeli Paper Mills, Ltd.
Yoseph Ron....................... 52 General Manager. Mr. Ron joined Tefron as General Manager in 1999, prior
to which time Mr. Ron held the positions first as Managing Director of
Operations of Delta, Inc. and then as Division Manager of Delta, Inc.
from 1982 to 1999. Mr. Ron has also served as Managing Director of
Begd'or.
Micha Korman..................... 44 Chief Financial Officer of Tefron. Mr. Korman joined Tefron in 1991 as
Chief Financial Officer. Prior to joining Tefron, Mr. Korman held
various financial and management positions with companies in the
beverage, paper and electronics industries.
Tchiya R. Fortus................. 40 Company Secretary and Legal Counsel. Ms. Fortus joined Tefron as Company
Secretary and Legal Counsel in 1998. Prior to joining Tefron, Ms.
Fortus served as lawyer in DIC from 1989 to 1997, and earlier served
as Legal Counsel and Company Secretary with companies in the
construction and medical imaging industries.
Zvi Regev........................ 52 Chief Operating Officer. Mr. Regev joined Tefron in 1997 as Chief
Operating Officer. From 1989 to 1997, Mr. Regev served as General
Manager-Underwear Division for Gibor Sabrina Ltd. Mr. Regev has over
25 years of experience in the textile industry.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ------------------------------------------------------------------------
<S> <C> <C>
Itzhak Gan....................... 52 General Manager of Operations. Mr. Gan joined Tefron in 1994 and has
served as General Manager of Operations since 1996, prior to which
time he served as Production Manager. Prior to joining Tefron,
Mr. Gan served as a plant manager for Rabintex Ltd. (Rabintex) from
1992 to 1993. Prior thereto, Mr. Gan held managerial positions with
Gibor Sabrina Ltd., Rabintex and Macpell in Israel and with Rabintex
in the United States. Mr. Gan has over 15 years of experience in the
textile industry.
<S> <C> <C>
Zviki Gafni...................... 49 General Manager New-Net. Mr. Gafni joined Tefron in 1993 and has served
as General Manager of New-Net since 1996, prior to which time he
served as Operations Manager. Mr. Gafni served as the Quality
Assurance Manager for Macpell from 1991 to 1992 and as Quality
Assurance Manager for Delta Galil Industries (Socks) from 1989 to
1991. Mr. Gafni has over 1 years experience in the textile industry.
Talya Hanan...................... 38 General Manager Hi-Tex. Ms. Hanan joined Tefron in 1989 and has served
as the General Manager of Hi-Tex since 1997, prior to which time she
served in various operational positions in Tefron including
Manager-Quality Assurance, Manager-Research and Development,
Manager-Pre-production and New York Sales Correspondent.
Hanoch Zlotnick.................. 44 Controller. Mr. Zlotnick joined Tefron in 1985 and has served as
Controller since 1992. Prior to joining Tefron, Mr. Zlotnick served
as the Controller for the Rimini Restaurant chain from 1988 to 1992
and as chief bookkeeper for Tefron from 1985 to 1988. Mr. Zlotnick is
a Certified Public Accountant.
Meyer Azoulay.................... 38 Manager-Research and Development. Mr. Azoulay joined Tefron in 1991.
Prior to joining Tefron, Mr. Azoulay served as a Lieutenant Colonel in
the Israeli Army responsible for technology and logistics.
Zvika Maoz....................... 41 Manager-Logistics. Mr. Maoz has served as the Manager-Logistics since
1994. From 1992 to 1994, Mr. Maoz served as the Manager-Cutting
operations. Prior to joining Tefron, Mr. Maoz served as Operations
Manager for Macpell from 1989 to 1990.
Eliezer Peleg.................... 61 Director. Mr. Peleg has been a Director of Tefron since 1993. Mr. Peleg
served as the Chairman of the board of directors of Macpell from
October 1993 to April 20, 1998, and has served as Director of Macpell
since 1986. From November 1993 to July 1994, Mr. Peleg was the Chief
Executive Officer of Macpell.
Nachum Peleg..................... 55 Director. Mr. Peleg has been a Director of Tefron since 1993. Mr. Peleg
served as the CEO of Macpell from 1996 to May 16, 1998. Mr. Peleg
served as the Chairman of the board of directors and Managing Director
of Macpell from 1986 to 1993 and as Directors of Macpell from 1993 to
1996.
Lenny Recanti.................... 45 Director. Mr. Recanti has been a Director of Tefron since 1988.
Mr. Recanti currently serves as a Senior Manger and a Director of DIC,
the Chairman of the board of directors of Ilanot Discount Ltd., the
Chairman of the board of directors of Delek- The Israel Fuel Company
and a member of the board
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AND ADDRESS AGE PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ------------------------------------------------------------------------
of directors of IDB Holdings Ltd. and of other companies in the IDB
Group.
Frank J. Klein................... 56 Director. Mr. Klein joined Tefron as a Director on June 21, 1998.
Mr. Klein was appointed President of PEC on January 1, 1995. Prior to
such appointment, he served as Executive Vice President of Israel
Discount Bank of New York beginning in 1985. Mr. Klein served as
Executive Vice President of PEC from November 1977 to November 1991
and as Treasurer of PEC from May 1980 to November 1991. Mr. Klein is a
Director of PEC, as well as of a number of companies associated with
it, including Tambour Ltd. where he serves as Chairman of the Board,
Scitex, Elron Electronics Industries Ltd., Level 8 Systems, Inc.
Property and Building Corporation Ltd. and Super-Sol.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the
Purchaser are set forth below. Unless otherwise indicated, the business address
of each such director and each such executive officer is care of Tefron Ltd. 28
Chida Street, Bnei-Brak 51371. Unless otherwise indicated, all directors and
executive officers listed below are citizens of Israel.
DIRECTOR
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND ADDRESS AND 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Arie Wolfson.............................. Director and President. See Part A.
EXECUTIVE OFFICERS
Arie Wolfson.............................. Director and President. See Part A.
Micha Korman.............................. Vice President. See Part A.
Nachum Peleg.............................. Vice President. See Part A.
</TABLE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the
Purchaser are set forth below. Unless otherwise indicated, the business address
of each such director and each such executive officer is care of Tefron Ltd. 28
Chida Street, Bnei-Brak 51371. Unless otherwise indicated, all directors and
executive officers listed below are citizens of Israel.
DIRECTOR
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND ADDRESS AND 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Arie Wolfson.............................. Director and President. See Part A.
EXECUTIVE OFFICERS
Arie Wolfson.............................. Director and President. See Part A.
Micha Korman.............................. Vice President. See Part A.
Nachum Peleg.............................. Vice President. See Part A.
</TABLE>
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
The Depositary For The Offer Is:
FIRST UNION NATIONAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight:
First Union National Bank First Union National Bank First Union National Bank
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
1525 West W.T. Harris Boulevard, 3C3 1525 West W.T. Harris Boulevard, 3C3 1525 West W.T. Harris Boulevard, 3C3
Charlotte, North Carolina 28288-1153 Charlotte, North Carolina 28288-1105 Charlotte, North Carolina 28288-1105
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: To Confirm Receipt of
(for eligible institutions only) Notice of Guaranteed Delivery:
(704) 590-7628 (704) 590-7408
Confirm Facsimile Transmission:
By Telephone Only
(704) 590-7408
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at the Purchaser's expense. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent For The Offer Is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 659-6590
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010
Call Toll Free: (800) 881-8320
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
of
ALBA-WALDENSIAN, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 12, 1999
by
AWS ACQUISITION CORP.
a wholly-owned subsidiary of
TEFRON U.S. HOLDINGS CORP.
a wholly-owned subsidiary of
TEFRON LTD.
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
FIRST UNION NATIONAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Union National Bank First Union National Bank First Union National Bank
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
1525 West W.T. Harris Boulevard, 3C3 1525 West W.T. Harris Boulevard, 3C3 1525 West W.T. Harris Boulevard, 3C3
Charlotte, North Carolina 28288-1153 Charlotte, North Carolina 28288-1105 Charlotte, North Carolina 28262-1105
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only) Notice of Guaranteed Delivery
(704) 590-7628 (704) 590-7408
To Confirm Facsimile Transmission Only
(704) 590-7408
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined in the Offer to Purchase dated November 12,
1999 (the "Offer to Purchase")) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of
Shares are to be made by book-entry transfer to the depositary and transfer
agent, First Union National Bank ("Depositary") at the Depository Trust Company
("DTC"), pursuant to the book-entry procedures set forth in Section 3 of the
Offer to Purchase. Stockholders who tender Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders."
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase) or who cannot complete
the procedures for book-entry transfer, if applicable, on a timely basis, must
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S)
(PLEASE FILL IN EXACTLY AS CERTIFICATE(S) AND SHARE(S) TENDERED
NAME(S) APPEAR(S) (ATTACH ADDITIONAL SIGNED LIST, IF
ON SHARE CERTIFICATE(S) TENDERED) NECESSARY)
- -----------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED NUMBER
CERTIFICATE BY SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------
<S> <C> <C> <C>
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
TOTAL SHARES
------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares represented
by Share Certificates delivered to the Depositary are being tendered. See
Instruction 4.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE FOLLOWING
(ONLY PARTICIPANTS IN DTC MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
----------------------------------------------
Account Number Transaction Code Number
--------------------- ---------------
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s)
--------------------------------------------
Window Ticket Number (if any)
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-------------------------
Name of Institution which Guaranteed Delivery
------------------------------
/ / CHECK HERE IF CERTIFICATES FOR SHARES TO BE TRANSFERRED HAVE BEEN LOST,
DESTROYED, MUTILATED OR STOLEN. SEE INSTRUCTION 10.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to AWS Acquisition Corp. (the "Purchaser"),
a Delaware corporation, and a wholly-owned subsidiary of Tefron U.S. Holdings
Corp., a Delaware corporation (the "Parent") and a wholly-owned subsidiary of
Tefron Ltd., a corporation organized under the laws of the State of Israel
("Tefron"), the above described shares of Common Stock, par value $2.50 per
share (the "Shares"), of Alba-Waldensian, Inc., a Delaware corporation (the
"Company"), pursuant to the Purchaser's offer to purchase all outstanding Shares
at a price of $18.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended or supplemented from time to time, together with
the Offer to Purchase constitute the "Offer"). The undersigned understands that
the Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its direct or indirect subsidiaries or
affiliates the right to purchase all or any portion of the Shares tendered
pursuant to the Offer. As used herein, the term "Purchaser" shall, if
applicable, include any such subsidiary and affiliate.
Subject to, and effective upon, acceptance for payment of the Shares
tendered hereby in accordance with the terms and subject to the conditions of
the Offer (including if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns, and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all of the Shares that are being tendered hereby and any
and all dividends on the Shares, including, without limitation, the issuance of
additional Shares pursuant to a stock dividend or stock split, the issuance of
other securities, the issuance of rights for the purchase of any securities, or
any cash dividends that are declared or paid by the Company on or after the date
of the Offer to Purchase and are payable or distributable to stockholders of
record on a date prior to the transfer into the name of the Purchaser or its
nominees or transferees on the Company's stock transfer records of the Shares
purchased pursuant to the Offer (collectively, "Distributions"), and irrevocably
constitutes and appoints the Depositary the true and lawful agent,
attorney-in-fact and proxy of the undersigned to the full extent of the
undersigned's rights with respect to such Shares (and Distributions) with full
power of substitution (such power of attorney and proxy being deemed to be
irrevocable and coupled with an interest), to (a) deliver Share Certificates
(and Distributions), or transfer ownership of such Shares on the account books
maintained by DTC, together in either such case with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchaser upon receipt
by the Depositary, as the undersigned's agent, of the purchase price, (b)
present such Shares (and Distributions) for transfer on the books of the Company
and (c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and Distributions), all in accordance with the terms
and subject to the conditions of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints designees of the Purchaser, and each of them, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution, to the full
extent of the undersigned's rights with respect to the Shares, to vote in such
manner as each such attorney and proxy or his or her substitute shall, in his or
her sole discretion, deem proper, and otherwise act (including pursuant to
written consent) with respect to all of the Shares tendered hereby which have
been accepted for payment by the Purchaser prior to the time of such vote or
action (and Distributions) which the undersigned is entitled to vote at any
meeting of stockholders of the Company (whether annual or special and whether or
not an adjourned meeting), or by written consent in lieu of such meeting, or
otherwise. This power of attorney and proxy is coupled with an interest in the
Company and in the Shares and is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment of such Shares by the
Purchaser in accordance with the terms of the Offer. Such acceptance for payment
shall revoke, without further action, any other power of attorney or proxy
granted by the undersigned at any time with respect to such Shares (and
Distributions) and no subsequent powers of attorney or proxies will be given
(and if given will be deemed not to be effective) with respect thereto by the
undersigned. The undersigned understands that the Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered,
3
<PAGE>
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser is able to exercise full voting rights with respect to such Shares and
Distributions, including voting at any meeting of stockholders.
By executing this Letter of Transmittal, the undersigned represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby and all Distributions, that the
undersigned own(s) the Shares tendered hereby within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that such tender of Shares complies with Rule 14e-4 under the Exchange
Act and that when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable and unencumbered title thereto and to
all Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
reasonably deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Distributions. In addition, the undersigned shall promptly remit
and transfer to the Depositary for the account of the Purchaser any and all
other Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of such Distributions and may withhold the entire purchase
price or deduct from the purchase price of Shares tendered hereby the amount or
value thereof, as determined by the Purchaser in its sole discretion.
No authority herein conferred or herein agreed to be conferred shall be
affected by, and all such authority shall survive, the death or incapacity of
the undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, legal representatives, successors and
assigns of the undersigned. Tenders of Shares pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment pursuant to the Offer, may also be withdrawn at any time after
January 11, 2000. See Section 4 of the Offer to Purchase.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions" please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and accompanying
documents as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Book-Entry
Stockholders may request that any Shares not accepted for payment be returned by
crediting such account maintained at DTC as such Book-Entry Stockholder may
designate by making an appropriate entry under "Special Payment Instructions."
The undersigned recognizes that the Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
such Shares tendered hereby.
4
<PAGE>
<TABLE>
<CAPTION>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
<S> <C>
To be completed ONLY if Share Certificates not To be completed ONLY if Share Certificates not
tendered or not purchased and/or the check for the tendered or not purchased and/or the check for the
purchase price of Shares purchased are to be issued in purchase price of Shares purchased are to be sent to
the name of someone other than the undersigned, or if someone other than the undersigned, or to the
Shares tendered by book-entry transfer which are not undersigned at an address other than that shown on the
purchased are to be returned by credit to an account inside front cover.
maintained at DTC other than that designated on the
inside front cover.
Issue: / / Check / / Certificate(s) to: Mail / / Check / / Certificate(s) to:
Name Name
----------------------------------------------- ------------------------------------------------
(PRINT) (PRINT)
Address Address
----------------------------------------------- ------------------------------------------------
- ---------------------------------------------------- -----------------------------------------------------
(ZIP CODE) (ZIP CODE)
- ---------------------------------------------------- -----------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
/ / Credit unpurchased Shares tendered by book-entry
transfer to account at DTC set forth below:
- ----------------------------------------------------
(ACCOUNT NUMBER)
</TABLE>
5
<PAGE>
IMPORTANT
STOCKHOLDER: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
----------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
X
----------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: 1999
------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary information.
See Instruction 5.)
Name(s):
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
---------------------------------------------------------
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
--------------------------------------------------------
Tax Identification or
Social Security No.:
--------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
----------------------------------------------------------
Name (Please print):
-----------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Tel. No.:
--------------------------------------------------------
Dated: , 1999
--------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES.
No signature guarantee on this Letter of Transmittal is required (i) if
this Letter of Transmittal is signed by the registered holder(s) (which term,
for purposes of this document, shall include any participant in DTC whose name
appears on a security position listing as the owner of Shares) of the Shares
tendered herewith, unless such holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" above or (ii) if such Shares are tendered for the account of a
firm that is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES.
This Letter of Transmittal is to be used either if Share Certificates are
to be forwarded herewith or, unless an Agent's Message is utilized, if tenders
are to be made pursuant to the procedures for tender by book-entry transfer set
forth in Section 3 of the Offer to Purchase. Share Certificates, or timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Shares into the Depositary's account at DTC, as well as this Letter of
Transmittal (or a facsimile hereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in the Offer to Purchase).
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedures
for delivery by book-entry transfer on a timely basis may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedure: (i) such tender must be made by or through
an Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Purchaser,
must be received by the Depositary on or prior to the Expiration Date; and (iii)
the Share Certificates (or a Book-Entry Confirmation) representing all tendered
Shares, in proper form for transfer together with a properly completed and duly
executed Letter of Transmittal (or a facsimile hereof), with any required
signature guarantees (or, in the case of a book-entry delivery, an Agent's
Message) and any other documents required by this Letter of Transmittal, must be
received by the Depositary within three AMEX trading days after the date of
execution of such Notice of Guaranteed Delivery. An "AMEX trading day" is any
day on which American Stock Exchange is open for business. If Share Certificates
are forwarded separately to the Depositary, a properly completed and duly
executed Letter of Transmittal (or facsimile hereof) must accompany each such
delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal or facsimile hereof, waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE.
If the space provided herein under "Description of Shares Tendered" is
inadequate, the certificate numbers and/or the number of Shares and any other
required information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
7
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF SHARES WHO TENDER BY BOOK-ENTRY
TRANSFER).
If fewer than all the Shares evidenced by any Share Certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new Share
Certificate(s) for the remainder of the Shares that were evidenced by your old
Share Certificate(s) will be sent to you, unless otherwise provided in the
appropriate box marked "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the Share Certificate(s) without alteration,
enlargement or any other change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several Share
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal or any Share Certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to or Share
Certificates not tendered or purchased are to be issued in the name of a person
other than the registered owner(s). Signatures on such Share Certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner(s) appear(s) on the Share
Certificates. Signatures on such Share Certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES.
Except as set forth in this Instruction 6, the Purchaser will pay or cause
to be paid any stock transfer taxes with respect to the transfer and sale of
purchased Shares to it or its order pursuant to the Offer. If, however, payment
of the purchase price of any Shares purchased is to be made to, or
certificate(s) for Shares not tendered or not purchased are to be issued in the
name of any person(s) other than the registered holder(s), or if tendered Share
Certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such person(s)) payable on
account of the transfer to such person will be deducted from the purchase price
received by such person(s) pursuant to this Offer (i.e., such purchase price
will be reduced) unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES LISTED IN THIS
LETTER OF TRANSMITTAL.
8
<PAGE>
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS.
If a check is to be issued in the name of, and/or certificates for
unpurchased Shares are to be returned to, a person other than the
person(s) signing this Letter of Transmittal or if a check is to be sent and/or
such Share Certificates are to be returned to someone other than the
person(s) signing this Letter of Transmittal or to an address other than that
shown on the inside front cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. Book-Entry Stockholders may request that Shares
not purchased be credited to such account maintained at DTC as such Book-Entry
Stockholder may designate hereon. If no such instructions are given, such Shares
not purchased will be returned by crediting the account at DTC designated above.
See Instruction 1.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses set forth below.
Requests for additional copies of the Offer to Purchase, this Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or to brokers, dealers, commercial banks or trust companies.
9. UNITED STATES BACKUP WITHHOLDING; SUBSTITUTE FORM W-9.
Under U.S. federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on Substitute Form
W-9 below, or alternatively, to establish another basis for an exemption from
backup withholding. If the Depositary is not provided with the correct TIN, the
Internal Revenue Service may subject the stockholder or other payee to a $50
penalty, and payments that are made to such stockholder or other payee with
respect to Shares purchased pursuant to the Offer may be subject to 31% backup
withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt holders should indicate their exempt status on Substitute
Form W-9. In order for a foreign individual to qualify as an exempt recipient,
such holder must submit to the Depositary a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for more
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather, the U.S. federal income tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
To prevent backup withholding on payments that are made to a stockholder or
other payee with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN (or the TIN of any other payee) by completing a Substitute Form W-9
certifying, under penalties of perjury, (i) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (ii) that
(a) such stockholder is exempt from backup withholding, (b) such stockholder has
not been notified by the Internal Revenue Service that such stockholder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (c) the Internal Revenue Service has notified such stockholder that
such stockholder is no longer subject to backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder (or other payee) has not been issued a TIN but has applied
for a TIN or intends to apply for a TIN in the near future. If the box in Part 3
is checked, the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN of the record
holder of the Shares. If the Shares are registered in more than one name or are
not registered in the name of the actual owner, consult the enclosed
9
<PAGE>
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
10. LOST, DESTROYED, MUTILATED, OR STOLEN CERTIFICATES.
If any Share Certificate(s) have been lost, destroyed, mutilated, or
stolen, the stockholder should promptly notify the Company's transfer agent
First Union National Bank at (800) 829-8432. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, mutilated, or destroyed
certificates have been followed.
11. WAIVER OF CONDITIONS.
The conditions to the Offer may be waived by Purchaser (subject to certain
limitations in the Merger Agreement (as defined in the Offer to Purchase)), in
whole or in part at any time and from time to time in Purchaser's sole
discretion.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR
TO THE EXPIRATION DATE.
10
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: AWS ACQUISITION CORP.
START HERE
<TABLE>
<S> <C> <C>
PART I -- Please provide your name, address
SUBSITUTE (below) and TIN (in Part 3) and certify by Social Security Number
signing and dating below OR
FORM W-9 Name: _________________________________
Address: _________________________________ Employer ID Number
___________________________________________
DEPARTMENT OF THE TREASURY Awaiting TIN ________________
INTERNAL REVENUE SERVICE
PART II -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me and have checked the box in Part 3) and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding because: (a) I am exempt from backup
TAXPAYER IDENTIFICATION withholding, (b) I have not been notified by the Internal Revenue Service (the
NUMBER ("TIN") "IRS") that I am subject to backup withholding as a result of a failure to report
AND CERTIFICATION all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) of Part 2 above if you have
been notified by the IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to backup withholding, do not
cross out item (2).
1999
- -------------------------------------------------- --------------------------------------------------
Signature Date
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS. YOU MUST COMPLETE
THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE
FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld.
------------------------------------------------- -------------------------
Signature Date
11
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, the Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers listed below. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 659-6590
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
November 12, 1999
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
TENDER OF SHARES OF COMMON STOCK
of
ALBA-WALDENSIAN, INC.
to
AWS ACQUISITION CORP.
a wholly-owned subsidiary of
TEFRON U.S. HOLDINGS CORP.
a wholly-owned subsidiary of
TEFRON LTD.
-----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
-----------------------------------------------------------------------
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates (the "Share
Certificates") representing shares of Common Stock, par value $2.50 per share
(the "Shares"), of Alba-Waldensian, Inc., a Delaware corporation (the
"Company"), are not immediately available, if time will not permit all required
documents to reach First Union National Bank (the "Depositary") on or prior to
the Expiration Date (as defined in the Offer to Purchase), or if the procedures
for delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mail to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
First Union National Bank First Union National Bank First Union National Bank
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
1525 West W.T. Harris 1525 West W.T. Harris 1525 West W.T. Harris
Boulevard, 3C3 Boulevard, 3C3 Boulevard, 3C3
Charlotte, North Carolina Charlotte, North Carolina Charlotte, North Carolina
28288-1153 28288-1105 28262-1105
To Confirm Facsimile By Facsimile Transmission To Confirm Receipt of
Transmission Only (For Eligible Institutions Only) Notice of Guaranteed Delivery:
(704)-590-7408 (704)-590-7628 (704)-590-7408
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of guaranteed delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to AWS Acquisition Corp., a Delaware
corporation (the "Purchaser"), a wholly-owned subsidiary of Tefron U.S. Holdings
Corp., a Delaware corporation, (the "Parent"), and a wholly-owned subsidiary of
Tefron Ltd., a corporation organized under the laws of the State of Israel
("Tefron"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated November 12, 1999 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Signature(s) Address(es):
----------------------------------------- ----------------------------------------------
- ----------------------------------------------------- ----------------------------------------------------------
ZIP CODE
Name(s) of Record Holders
---------------------------
Area Code and Tel. No(s)
- ----------------------------------------------------- ----------------------------------
Please Type or Print
- -----------------------------------------------------
Number of Shares / / Check box if shares will be tendered by book-entry
------------------------------------ transfer.
Certificate No(s). (if Available)
- -----------------------------------------------------
- -----------------------------------------------------
Dated: , 1999 Account Number
------------------------------------- ------------------------------------------
<CAPTION>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union, savings association or other entity which is a
member in good standing of the Securities Transfer Agents Medallion Program, hereby guarantees to deliver to the
Depositary at one of its addresses set forth above either the certificates representing all tendered Shares, in proper
form for transfer, a Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in
the case of book-entry delivery of Shares, an Agent's Message (as defined in the Offer to Purchase), and any other
documents required by the Letter of Transmittal within three AMEX trading days on which banks and DTC are open for
business after the date of execution of this Notice of Guaranteed Delivery. An "AMEX trading day" is any day on which the
American Stock Exchange, Inc. is open for business.
<S> <C>
- ----------------------------------------------------- ----------------------------------------------------------
Name of Firm Authorized Signature
Name
- ----------------------------------------------------- -----------------------------------------------------
Address (Please type or print)
Title
- ----------------------------------------------------- -----------------------------------------------------
Zip Code
Area Code & Tel. No. Date , 1999
-------------------------------- --------------------------------------------
</TABLE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
CREDIT | FIRST CREDIT SUISSE FIRST BOSTON CORPORATION
SUISSE | BOSTON Eleven Madison Avenue
New York, New York 10010 Telephone 212 325 2000
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
ALBA-WALDENSIAN, INC.
at
$18.50 NET PER SHARE
by
AWS ACQUISITION CORP.
a wholly-owned subsidiary
of
TEFRON U.S. HOLDINGS CORP.
a wholly-owned subsidiary
of
TEFRON LTD.
------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
------------------------------------------------------------------------
November 12, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by AWS Acquisition Corp., a Delaware corporation (the
"Purchaser"), and a wholly-owned subsidiary of Tefron U.S. Holdings Corp., a
Delaware corporation ("Parent"), and a wholly-owned subsidiary of Tefron Ltd., a
corporation organized under the laws of the State of Israel ("Tefron"), to act
as Dealer Manager in connection with the Purchaser's offer to purchase all
outstanding shares of Common Stock, par value $2.50 per share (the "Shares"), of
Alba-Waldensian, Inc., a Delaware corporation (the "Company"), at a purchase
price of $18.50 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 12, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer") enclosed herewith. The Offer is being made in connection
with the Agreement and Plan of Merger, dated as of November 8, 1999, by and
among Purchaser, Parent and the Company.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS, INCLUDING (1) THERE BEING VALIDLY TENDERED AND NOT
PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO
PURCHASE) THAT NUMBER OF SHARES WHICH CONSTITUTE A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM
CONDITION") AND (2) THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
<PAGE>
CONDITIONS SET FORTH IN THE OFFER TO PURCHASE AND WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS
EXTENDED. SEE SECTIONS 1, 11 AND 14 OF THE OFFER TO PURCHASE.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated November 12, 1999.
2. The Letter of Transmittal for your use to tender Shares and for
the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if certificates for Shares ("Share Certificates") and all other
required documents are not immediately available or cannot be delivered to
First Union National Bank (the "Depositary") by the Expiration Date or if
the procedure for book-entry transfer cannot be completed by the Expiration
Date.
5. A letter to stockholders from the Secretary of the Company
accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, DECEMBER 13, 1999,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The Offer price is $18.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer.
2. The board of directors of the Company has unanimously determined
that the Offer and the Merger (as defined in the Offer to Purchase) are
fair to, and in the best interests of, the Company's stockholders, has
approved the Merger Agreement (as defined in the Offer to Purchase) and the
transactions contemplated thereby, including the Offer and the Merger, and
recommends that the Company's stockholders accept the Offer and tender
their Shares pursuant to the Offer.
3. The Offer is conditioned upon, among other things, those matters
set forth above.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, December 13, 1999, unless the Offer is extended.
5. The Offer is being made for all of the outstanding Shares.
6. Tendering stockholders who hold Shares in their names will not be
obligated to pay brokerage fees or commissions to the Dealer Manager, the
Depositary or the Information Agent or, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares by the Purchaser pursuant to the Offer. However, backup federal
income tax withholding at a rate of 31% may be required, unless an
exemption applies or unless the required taxpayer identification
information is provided. See Instruction 9 of the Letter of Transmittal.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) Share Certificates (or a
timely Book-Entry Confirmation (as defined in Section 3 to the Offer to
Purchase) with respect to), (b) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry transfer, and (c) any other documents required
by the Letter of Transmittal. Accordingly, payment to all tendering
stockholders may not be
<PAGE>
made at the same time depending upon when Share Certificates or Book-Entry
Confirmation with respect to Shares are actually received by the
Depositary.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares, and any other required
documents should be sent to the Depositary and either Share Certificates
representing the tendered Shares should be delivered to the Depositary, or
Shares should be tendered by book-entry transfer into the Depositary's account
maintained at The Depository Trust Company, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Information Agent and the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however,
upon request, reimburse you for customary clerical and mailing expenses incurred
by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any stock transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the undersigned at the address and telephone numbers set forth on the back cover
of the Offer to Purchase. Requests for additional copies of the enclosed
materials may be directed to the Information Agent, D.F. King & Co., Inc., at
its address and telephone numbers set forth on the back cover of the Offer to
Purchase.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF TEFRON LTD., PARENT, THE PURCHASER, THE
COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
Offer to Purchase For Cash
All Outstanding Shares of Common Stock
of
ALBA-WALDENSIAN, INC.
at
$18.50 NET PER SHARE
by
AWS ACQUISITION CORP.
a wholly-owned subsidiary
of
TEFRON U.S. HOLDINGS CORP.
a wholly-owned subsidiary
of
TEFRON LTD.
-----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
-----------------------------------------------------------------------
November 12, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated
November 12, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer") relating to the offer by AWS Acquisition Corp., a
Delaware corporation (the "Purchaser"), and a wholly-owned subsidiary of Tefron
U.S. Holdings Corp., a Delaware corporation (the "Parent"), and a wholly-owned
subsidiary of Tefron Ltd., a corporation organized under the laws of the State
of Israel ("Tefron"), to purchase all outstanding shares of Common Stock, par
value $2.50 per share (the "Shares"), of Alba-Waldensian, Inc., a Delaware
corporation (the "Company"), at a purchase price of $18.50 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal enclosed herewith. The Offer is being made in connection with the
Agreement and Plan of Merger, dated as of November 8, 1999, by and among
Purchaser, Parent, and the Company. Holders of Shares whose certificates for
such Shares (the "Share Certificates") are not immediately available, or who
cannot deliver their Share Certificates and all other required documents to the
Depositary on or prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF
RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT
BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The Offer price is $18.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth
in the Offer.
<PAGE>
2. The board of directors of the Company has unanimously determined
that the Offer and the Merger (as defined in the Offer to Purchase) are
fair to, and in the best interests of, the Company's stockholders, has
approved the Merger Agreement (as defined in the Offer to Purchase) and
the transactions contemplated thereby, including the Offer and the Merger,
and recommends that the Company's stockholders accept the Offer and tender
their Shares pursuant to the Offer.
3. The Offer is conditioned upon, among other things, the
satisfaction or waiver of certain conditions, including (1) there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the offer to purchase) that number of Shares which
constitute a majority of the Shares outstanding on a fully diluted basis
on the date of purchase and (2) the expiration or termination of all
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). The Offer is also subject to certain
other conditions set forth in the offer to purchase and will expire at
12:00 midnight, New York City Time, on Monday, December 13, 1999, unless
extended. See Sections 1, 11 and 14 of the Offer to Purchase.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, December 13, 1999, unless the Offer is
extended.
5. The Offer is being made for all of the outstanding Shares.
6. Tendering stockholders who hold Shares in their names will not be
obligated to pay brokerage fees or commissions to the Dealer Manager, the
Depositary or the Information Agent or, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares by the Purchaser pursuant to the Offer. However, backup federal
income tax withholding at a rate of 31% may be required, unless an
exemption applies or unless the required taxpayer identification
information is provided. See Instruction 10 of the Letter of Transmittal.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be
made only after timely receipt by First Union National Bank, the
Depositary of (a) Share Certificates (or a timely Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to),
(b) the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment to all tendering stockholders may not be
made at the same time depending upon when Share Certificates or Book-Entry
Confirmation with respect to Shares are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. Your instructions should be forwarded to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any such jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ALBA-WALDENSIAN, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase, dated November 12, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (which as amended or supplemented from time to time,
together with the Offer to Purchase constitute the "Offer") in connection with
the offer by AWS Acquisition Corp., a Delaware corporation (the "Purchaser"),
and a wholly-owned subsidiary of Tefron U.S. Holdings Corp., a Delaware
corporation and a wholly-owned subsidiary of Tefron Ltd., a corporation
organized under the laws of the State of Israel, to purchase all outstanding
shares of Common Stock, par value $2.50 per share (the "Shares"), of
Alba-Waldensian, Inc., a Delaware corporation, at a purchase price of $18.50 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares Tendered:* ______________________________________________
Certificate Nos. (if available): _________________________________________
/ / Check box if shares will be tendered by book-entry transfer to The
Depository Trust Company.
Account Number: __________________________________________________________
Dated: ___________________________________________________________________
SIGN HERE
Signature(s): ____________________________________________________________
Please type or print address(es): ________________________________________
Area Code and Telephone Number: __________________________________________
Taxpayer Identification or Social Security Number(s): ____________________
* Unless otherwise indicated, it will be assumed that you instruct us to tender
all Shares held by us for your account.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------
FOR THIS TYPE OF GIVE THE SOCIAL
ACCOUNT: SECURITY NUMBER OF:
- --------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF--
- -------------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, The owner(4)
or pension trust Legal entity (Do not
furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- -------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individual), or Form SS-4, Application for Employer Identification Number (for
business and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended ("the Code"), or an individual retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or any
agency, or instrumentality thereof.
o An international organization or any agency, or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a) of the Code.
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
o An entity registered at all times under the Investment Company Act of 1940.
o A foreign central bank issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding including the following:
o Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments of mortgage interest to you.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE SUBSTITUTE FORM W-9 TO AVOID POSSIBLE
ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM, AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6019 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer (as defined below) is made solely by the Offer to
Purchase, dated November 12, 1999, and the related Letter of Transmittal, and
any amendments or supplements thereto, and is being made to all holders of
Shares. The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Purchaser (as defined below) may in its discretion
take such actions as it may deem necessary to make the Offer in any jurisdiction
and extend the Offer to holders of Shares in such jurisdiction. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by Credit Suisse First Boston Corporation ("Credit Suisse
First Boston" or the "Dealer Manager") or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
Alba-Waldensian, Inc.
at
$18.50 Net Per Share
by
AWS Acquisition Corp.
a wholly-owned subsidiary
of
Tefron U.S. Holdings Corp.
a wholly-owned subsidiary
of
Tefron, Ltd.
AWS Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Tefron U.S. Holdings Corp., a Delaware corporation
("Parent") and itself a wholly-owned subsidiary of Tefron, Ltd., a company
organized under the laws of the State of Israel ("Tefron"), is offering to
purchase all of the outstanding common shares, par value $2.50 (the "Shares"),
of Alba-Waldensian, Inc. (the "Company") at $18.50 per Share, net to the seller
in cash, without interest thereon, on the terms and subject to the conditions
set forth in the Offer to Purchase dated November 12, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together, as either
may be amended or supplemented from time to time, constitute the "Offer").
Tendering stockholders who have Shares registered in their name and who tender
directly will not be charged brokerage fees or commissions or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer. Stockholders holding Shares through their broker
or bank are urged to consult them as to whether they charge any service fees.
Following the Offer, the Purchaser intends to effect the Merger as described
below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of certain conditions, including (1) there being validly tendered and not
properly withdrawn prior to the Expiration Date that number of Shares which
constitute a majority of the Shares outstanding on a fully diluted basis on the
date of purchase (the "Minimum Condition") and (2) the expiration or termination
of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended. The Offer is also subject to certain other conditions set
forth in the Offer to Purchase. See the Introduction and Sections 1, 11 and 14
of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 8, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides that, among other things,
Purchaser will make the Offer and, as promptly as practicable (but in no event
more than two business days) after the satisfaction or waiver of certain
conditions set forth in the Merger Agreement and in accordance with relevant
provisions of the Delaware General Corporation Law ("DGCL"), Purchaser will
merge with and into the Company (the "Merger"). On consummation of the Merger,
the separate existence of Purchaser shall thereupon cease and the Company will
continue as the surviving corporation and will be a wholly-owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each Share
outstanding immediately prior to the Effective Time (other than Shares owned by
the Company or by any subsidiary of the Company and Shares that are owned by
Parent or Purchaser and other than Shares held by stockholders who have properly
perfected their appraisal rights under the DGCL, if available) will be
converted into the right to receive $18.50 in cash, without interest thereon
(and less any required withholding taxes). The Merger Agreement is more fully
described in Section 11 of the Offer to Purchase.
Certain stockholders of the Company have entered into a Support Agreement
with Purchaser and Parent, pursuant to which such stockholders have agreed,
among other things, to tender pursuant to the Offer, and not withdraw (except in
limited circumstances) all of their Shares, which together represent
approximately 54% of all of the Shares outstanding on a fully diluted basis.
Consequently, if all such stockholders' Shares are so tendered, the Minimum
Condition will be satisfied.
The Board of Directors of the Company has unanimously determined that the
Offer, the Merger and the Merger Agreement are fair to, and in the best
interests of, the Company and its stockholders, has approved the Offer and the
Merger Agreement and recommends that the Company's stockholders accept the Offer
and tender their Shares pursuant to the Offer.
Purchaser may, and may be required to, subject to the terms of the Merger
Agreement, extend the Offer. Any such extension will be followed as promptly as
practicable by public announcement thereof, no later than 9:00 a.m. New York
City time, on the next business day after the previously scheduled Expiration
Date.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, Purchaser may, subject to
certain terms of the Merger Agreement, (a) terminate the Offer and not accept
for payment or pay for any such Shares any time prior to the time for payment of
Shares pursuant to the Offer or (b) waive all unsatisfied conditions (other than
the Minimum Condition) and accept for payment and pay for all Shares validly
tendered and not properly withdrawn prior to the Expiration Date or (c) extend
the Offer and, subject to the right of the stockholders to withdraw Shares until
the Expiration Date as set forth below, retain the Shares that have been
tendered during the period for which the Offer is extended.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of its acceptance of such
Shares for payment pursuant to the Offer. In all cases, on the terms and subject
to the conditions of the Offer, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to validly
tendering stockholders. Payment for shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depository of (i)
certificates representing such Shares (or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company), (ii) the appropriate Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Monday, December 13, 1999, unless and until Purchaser extends the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions set forth in the Merger Agreement, including, if required,
the approval of the Merger by the requisite vote of the stockholders of the
Company. The stockholder vote necessary to approve the Merger is the affirmative
vote of the holders of a majority of the outstanding Shares. If the Minimum
Condition is satisfied and Purchaser purchases Shares pursuant to the Offer,
Purchaser will be able to effect the Merger without the affirmative vote of any
other stockholder. If Purchaser acquires at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, the parties shall, at the option and request
of Parent, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Stockholders Meeting (as defined in the Merger Agreement) in
accordance with the short form merger provisions of the DGCL.
Under no circumstances will interest be paid on the purchase price to be
paid for the Shares pursuant to the Offer, regardless of any extension of the
Offer or any delay in making such payment. No interest will be paid on the
consideration to be paid in the Merger to stockholders who fail to tender their
Shares pursuant to the Offer, regardless of any delay in effecting the Merger or
making such payment.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, the Purchaser may, under
certain circumstances, (i) in addition to its termination rights relating to the
fulfillment of the Minimum Condition, terminate the Offer if, at any time prior
to the time of payment for Shares pursuant to the Offer, any of the other
conditions set forth in the Merger Agreement have not been satisfied, (ii) waive
any condition (except that Purchaser shall not waive the Minimum Condition), or
(iii) except as set forth in the Merger Agreement, and discussed below,
otherwise amend the Offer in any respect, in each case, by giving oral or
written notice of such termination, waiver or amendment to the Depositary. In
the Merger Agreement, the Purchaser has agreed that without the prior written
consent of the Company, it will not, (i) reduce the number of Shares subject to
the Offer, (ii) reduce the Offer Price, (iii) amend or add to the conditions to
the Offer, (iv) except as otherwise provided in the Offer to Purchase, extend
the Offer, (v) change the form of consideration payable in the Offer or (vi)
amend any other term of the Offer in any manner adverse to the holders of the
Shares. Any extension, delay, waiver, amendment or termination of the Offer will
be followed as promptly as practicable by a public announcement thereof. In the
case of an extension, Rule 14e-l(d) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires that an announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the rights of a tendering stockholder to withdraw such stockholder's
Shares.
Shares tendered pursuant to the Offer may be withdrawn at any time, on or
prior to the Expiration Date. If, for any reason whatsoever, acceptance for
payment of any Shares tendered pursuant to the Offer is delayed, or the
Purchaser is unable to accept for payment or pay for Shares tendered pursuant to
the Offer, then, without prejudice to the Purchaser's rights, the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares and such
Shares may not be withdrawn except to the extent that the tendering stockholder
is entitled to and duly exercises withdrawal rights pursuant to Section 4 of the
Offer to Purchase. For a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth in the Offer to Purchase and must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holders of the Shares, if
different from the person who tendered the Shares. If certificates evidencing
the Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution (as defined in the Offer to Purchase) must be submitted
prior to the release of such Shares (except in the case of Shares tendered by an
Eligible Institution). In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered holder
(if different from that of the tendering stockholder) and the serial numbers
shown on the particular certificate evidencing the Shares to be withdrawn or, in
the case of Shares tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all parties.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Exchange Act is contained
in the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with a list of the Company's
stockholders and security position listings for the purpose of disseminating the
Offer to holders of Shares. The Offer to Purchase, the related Letter of
Transmittal and other related materials are being mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Any questions or requests for assistance or for additional copies of the
Offer to Purchase, the related Letter of Transmittal and other related tender
offer materials may be directed to the Information Agent or the Dealer Manager
at their respective addresses and telephone numbers set forth below, and copies
will be furnished promptly at Purchaser's expense. None of Tefron, Parent or
Purchaser will pay any fees or commissions to any broker or dealer or any other
person (other than the Dealer Manager, the Depositary and the Information Agent)
in connection with the solicitation of tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Bankers and Brokers call collect: (212) 269-5550
All Others Call Toll Free: (800) 659-6590
The Dealer Manager for the Offer is:
CREDIT SUISSE|FIRST BOSTON
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 881-8320
November 12, 1999
Proof From DOREMUS & COMPANY
200 Varick Street, New York, NY 212 366-3000
11/11/99 Proof 3
FBF-TEN-P-43107 Primar 6309
<PAGE>
[LETTERHEAD OF TEFRON LTD]
[LOGO]
FOR IMMEDIATE RELEASE
TEFRON LTD. TO ACQUIRE ALBA-WALDENSIAN, INC.
BNEI-BRAK, Israel and Valdese, North Carolina -- November 8, 1999, -- Tefron
Ltd. (NYSE: TFR) and Alba-Waldensian, Inc. (Amex: AWS) today announced that they
have signed a definitive agreement under which Tefron will acquire
Alba-Waldensian for $18.50 per share in cash. Tefron will pay approximately $62
million for the Alba-Waldensian common shares. Including assumed debt, the
transaction has a total value of approximately $83 million.
The transaction which joins together Tefron, one of the world's leading
producers of seamless intimate apparel, and Alba, a leading US manufacturer of
seamless apparel and a manufacturer of specialty knitted medical products,
significantly reinforces Tefron's position as a leader in the market for
seamless intimate apparel.
Under the terms of the agreement, which was unanimously approved by the boards
of directors of both companies, Tefron will make a tender offer for 100% of the
outstanding shares of Alba-Waldensian. Tefron has entered into lock-up
agreements with Alba-Waldensian's two largest shareholders pursuant to which,
among other things, they have agreed to tender a majority of the outstanding
shares of Alba-Waldensian into the tender offer. The tender offer is conditioned
on the valid tender of a majority of Alba-Waldensian's outstanding shares,
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act, and other customary closing conditions. Tefron and
Alba-Waldensian plan to complete the transaction before year-end 1999.
Alba-Waldensian offers a number of key strategic assets which Tefron believes
will contribute to making the combined entity even more effective in the market.
They include:
o Significant production capacity: Alba-Waldensian has 200 Santoni
knitting machines in a facility which can accommodate further growth to
meet the growing demand that Tefron is experiencing.
o United States presence: Alba-Waldensian has its design center in North
Carolina and a sales office in New York. This will facilitate and
improve collaboration between Tefron and its U.S. customers who work
together on innovative, new product development.
o Direct store distribution capability: Alba-Waldensian offers its
customers the ability to have products delivered directly to their
stores. It also offers its customers Electronic Data Interchange (EDI)
services, providing quick response automatic inventory replenishment.
This opens the door to new customers who demand EDI capability.
- more -
<PAGE>
- 2 -
o Attractive customer base: Alba-Waldensian's blue chip customer base
which includes some of the largest customers for intimate apparel, such
as J.C. Penney, Sears, Lane Bryant, Target and Express, will complement
Tefron's roster of premier clients.
o Incremental revenues: Alba-Waldensian had revenues in 1998 of $75
million, of which more than half were attributable to the rapidly
growing intimate apparel division.
Commenting on the acquisition, Sigi Rabinowicz, Chief Executive Officer of
Tefron said, "The acquisition of Alba-Waldensian is an exciting strategic step
for Tefron. Although we are already one of the world's leading producers of
seamless intimate apparel, the combined company will have even greater critical
mass and a global presence. It will create a company with a combined annualized
revenue run rate of almost a quarter of a billion dollars, a list of top
customers and a worldwide manufacturing presence. This is a strong platform upon
which to base our future growth.
"The demand for intimate apparel continues to increase at a rapid rate and the
combined company will be particularly well positioned to take advantage of this
trend. Combining Alba-Waldensian's strengths with Tefron's technology and
product innovation will make us even more responsive to the marketplace.
"Finally, Tefron has always believed that people are the Company's most
important asset. With this acquisition, we are adding a strong management team
in the US. This is truly a win-win situation."
Alba-Waldensian Chairman Clyde Wm. Engle added, "We are delighted to join
Tefron. Its strong international reputation and position, combined with our
presence in the United States, will make the combined company an even more
powerful factor in the market place. We have long respected Tefron's
technological prowess and look forward to working together to provide customers
with the most innovative and successful products."
The acquisition of Alba-Waldensian will be accounted for using the purchase
method of accounting and is expected to be accretive to Tefron's earnings per
share before goodwill amortization and initially may be modestly dilutive after
goodwill amortization. The acquisition is expected to be accretive to earnings,
even after goodwill amortization, by the end of 2000.
Tefron's corporate headquarters will remain in Bnei Brak, Israel.
Alba-Waldensian's office in Valdese, North Carolina will become Tefron's US
headquarters. The combined company will employ more than 3,000 people.
Credit Suisse First Boston acted as the strategic and financial advisor to
Tefron. William Blair advised Alba-Waldensian.
Tefron will hold a conference call to discuss the transaction tomorrow, Tuesday,
November 9, 1999 at 10:00 AM EST. The dial-in number is 719 457-2653. Please
dial in a few minutes before 10:00 AM EST.
- more -
<PAGE>
- 3 -
Tefron will announce its 3rd quarter and nine months 1999 results on Thursday,
November 11, 1999. On that day, the Company will hold a conference call to
discuss the results.
Tefron manufactures boutique-quality everyday seamless intimate apparel sold
throughout the world by such name-brand marketers as Victoria's Secret, Gap,
Banana Republic, DIM, Cacharel, Schiesser, and B.H.S., as well as two other well
known American designer labels. The Company's product line includes knitted
briefs, tank tops, loungewear, nightwear, bras, T-shirts and bodysuits,
primarily for women.
Alba-Waldensian manufactures and markets seamless intimate apparel and women's
hosiery on a private-label basis for major retailers and on a contract basis for
major brands. The company's medical specialty products group manufactures its
products in Tennessee and markets them throughout the Americas and Europe. The
company employs approximately 830 people in Valdese and Rockwood, Tenn.
This press release contains certain forward-looking statements with respect to
the Company's business, financial condition and results of operations. These
forward looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward-looking statements, including, but not limited to, fluctuations in
product demand, economic conditions as well as certain other risks detailed from
time to time in the Company's filings with the Securities and Exchange
Commission. The Company undertakes no obligation to publicly release any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
# # #
Contact:
Mr. Sigi Rabinowicz, CEO
Tefron Limited
Telephone: 972-3-579-8701
Fax: 972-3-579-8715
Ms. Jennifer Leavitt
Taylor Rafferty Associates
Telephone: 212-889-4350
Fax: 212-683-2614
Email: [email protected]
<PAGE>
Head Office--Corporate Banking Division
41-45 Rothschild Boulevard
Tel-Aviv 65784, ISRAEL
Tel: 972-3-5675579
Fax: 972-3-5672995
November 1, 1999
To: Tefron Ltd.
Dear Sirs,
Re: Credits to Tefron Ltd.
Whereas Tefron Ltd. (hereinafter: "Tefron") has notified Bank Hapoalim
B.M. (hereinafter: the "Bank") of its intention to purchase 100%
of the share capital of Alba Waldensian, Inc. (hereinafter:
"Alba"); and
Whereas Tefron has requested the Bank to grant it a loan for the purpose
of financing the purchase of the said share capital of Alba
(hereinafter: the "Purchased Shares");
Therefore the Bank is willing to accede to Tefron's request and make a loan
available to it upon the following terms and conditions
(hereinafter: the "Loan").
1. The Loan
Amount:
US$65,000,000 (sixty five million US Dollars).
Period:
Up to 7 years.
Interest, fees and other commercial conditions:
To be agreed between Tefron and the Bank.
2. Conditions Precedent
The granting of the Loan or any part thereof shall be subject, inter alia,
to the fulfilment of the following conditions to the Bank's full satisfaction:
2.1 The conclusion and execution in due course and as shall be
determined by our Bank, of all documentation in connection with the
financing, the collaterals and such other terms and obligations as herein
stipulated or as may be additionally required by our Bank.
2.2 There being no legal or other impediment whatsoever to the
granting of the Loan by the Bank to Tefron, including without limitation
restrictions imposed by The Bank of Israel and/or any governmental or other
authority as to the financing being made available to Tefron.
3. Collateral
As security for the full repayment of the Loan, the Bank shall be furnished
with the following collateral:
3.1 A first ranking floating and fixed pledge and charge, unlimited in
amount, in favor of the Bank, over the Purchased Shares, which shares shall
be deposited as instructed by the Bank.
3.2 Tefron's undertaking to maintain certain financial covenants, as
agreed with the Bank, so long as there are any outstanding amounts on
account of the Loan.
4. General
<PAGE>
4.1 The foregoing is intended to provide only an outline of the
indicative terms of the possibilities for financing, rather than a complete
statement of all terms conditions and documents which would be required.
4.2 Kindly note that we are willing to provide Alba with a loan in the
amount of up to US$20,000,000 (twenty million US Dollars) to be secured by
Tefron's guarantee, in terms and conditions to be agreed and concluded
between the bank and Alba in due time, subject only to the approval of
Tefron's acquisition of Alba by the Board of Directors of Tefron (it being
understood that such approval will not be granted unless Tefron's Board of
Directors shall have first received a "fairness opinion" with respect to
the Alba acquisition from its independent financial advisor, (Credit Suisse
First Boston).
If and when relevant we would be pleased to furnish you with a letter
of intent, detailing indicative terms as to said additional financing.
4.3 This Letter is issued solely to you, is not assignable and does
not confer any rights on any party whatsoever, nor does it establish any
privity between our Bank and any third party.
It will be our pleasure to cooperate with you on this transaction and we
await to receive further details in order to proceed in this matter. Kindly let
us know until December 31st, 1999 if you are interested in proceeding in this
matter, as this letter shall be no longer valid after said date.
Yours faithfully,
BANK HAPOALIM B.M.
Head Office
- ------------------------------ ---------------------------------
A. Latir D. Ajanati
2
<PAGE>
Execution Copy
================================================================================
AGREEMENT AND PLAN OF MERGER
among
TEFRON U.S. HOLDINGS CORP.,
AWS ACQUISITION CORP.
and
ALBA-WALDENSIAN, INC.
Dated as of November 8, 1999
================================================================================
<PAGE>
Table Of Contents
<TABLE>
<S> <C>
ARTICLE I THE OFFER......................................................................................1
Section 1.1. The Offer...............................................................................1
Section 1.2. Company Actions.........................................................................3
Section 1.3. Directors...............................................................................4
ARTICLE II THE MERGER....................................................................................5
Section 2.1. The Merger..............................................................................5
Section 2.2. Effective Time..........................................................................6
Section 2.3. Certificate of Incorporation and By-laws................................................6
Section 2.4. Directors and Officers..................................................................6
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES.............................................................................................6
Section 3.1. Effect on Capital Stock.................................................................6
Section 3.2. Exchange of Certificates................................................................7
Section 3.3. Company Stock Options...................................................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................10
Section 4.1. Organization...........................................................................10
Section 4.2. Capitalization.........................................................................10
Section 4.3. Authority..............................................................................11
Section 4.4. Consents and Approvals; No Violations..................................................11
Section 4.5. SEC Reports and Financial Statements...................................................12
Section 4.6. Absence of Certain Changes or Events...................................................12
Section 4.7. No Undisclosed Liabilities.............................................................13
Section 4.8. Information Supplied...................................................................13
Section 4.9. Company Plans; Employees and Employment Practices......................................13
Section 4.10. Labor Matters..........................................................................15
Section 4.11. Contracts..............................................................................15
Section 4.12. Litigation; Insurance..................................................................16
Section 4.13. Compliance with Applicable Law.........................................................16
Section 4.14. Product Warranties and Liabilities; Relationships......................................17
Section 4.15. Tax Matters............................................................................17
Section 4.16. Environmental..........................................................................19
Section 4.17. Title to and Condition of Properties...................................................21
Section 4.18. Proprietary Rights.....................................................................21
Section 4.19. Opinion of Financial Advisor...........................................................22
Section 4.20. Brokers and Finders....................................................................22
Section 4.21. Year 2000..............................................................................22
Section 4.22. Copies of Documents....................................................................23
Section 4.23. Related Party Transactions.............................................................23
Section 4.24. State Takeover Statutes; Charter.......................................................23
Section 4.25. Accuracy of Information................................................................23
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........................................24
Section 5.1. Organization...........................................................................24
Section 5.2. Authority..............................................................................24
Section 5.3. Consents and Approvals; No Violations..................................................24
Section 5.4. Information Supplied...................................................................25
Section 5.5. Interim Operations of Purchaser........................................................25
Section 5.6. Brokers and Finders....................................................................25
Section 5.7. No Knowledge of Certain Matters........................................................25
ARTICLE VI COVENANTS....................................................................................25
Section 6.1. Covenants of the Company...............................................................25
Section 6.2. No Solicitation........................................................................28
Section 6.3. Stockholder Approval; Preparation of Proxy Statement...................................29
Section 6.4. Access to Information..................................................................30
Section 6.5. Disclosure Supplements.................................................................30
Section 6.6. Reasonable Efforts.....................................................................31
Section 6.7. Indemnification; Insurance.............................................................31
Section 6.8. Certain Litigation.....................................................................32
Section 6.9. Takeover Statute.......................................................................32
Section 6.10. Tefron Undertaking.....................................................................32
Section 6.11. HSR Filing by the Company..............................................................33
Section 6.12. HSR Filing by the Parent...............................................................33
ARTICLE VII CONDITIONS..................................................................................33
Section 7.1. Conditions to Each Party's Obligation To Effect the Merger.............................33
Section 7.2. Conditions to Parent's and Purchaser's Obligation to Effect the Merger.................33
ARTICLE VIII TERMINATION AND AMENDMENT..................................................................34
Section 8.1. Termination............................................................................34
Section 8.2. Effect of Termination..................................................................35
Section 8.3. Amendment..............................................................................35
Section 8.4. Extension; Waiver......................................................................35
Section 8.5. Expenses...............................................................................35
ARTICLE IX MISCELLANEOUS................................................................................36
Section 9.1. Nonsurvival of Representations and Warranties..........................................36
Section 9.2. Notices................................................................................36
Section 9.3. Interpretation.........................................................................37
Section 9.4. Counterparts...........................................................................38
Section 9.5. Entire Agreement; No Third Party Beneficiaries.........................................38
Section 9.6. Governing Law..........................................................................38
Section 9.7. Publicity..............................................................................39
Section 9.8. Assignment.............................................................................39
Section 9.9. Enforcement............................................................................39
Section 9.10. Severability...........................................................................39
</TABLE>
iii
<PAGE>
Exhibits
Conditions to the Offer Exhibit A
iv
<PAGE>
Schedules
Schedule 4.2(b) Outstanding Options
Schedule 4.2(c) Subsidiaries and Stock Ownership
Schedule 4.4(b) Consents and Approvals
Schedule 4.5 Company SEC Document
Schedule 4.6 Certain Changes and Events
Schedule 4.9(a) Employment Agreements and Plans
Schedule 4.9(c) Unfunded Pension Plans
Schedule 4.9(h) Acceleration of Benefits
Schedule 4.11 Material Contracts
Schedule 4.12 Litigation
Schedule 4.13 Compliance with Applicable Laws
Schedule 4.14 Product Warranties, Relationships
Schedule 4.15(b) Tax Audit
Schedule 4.15(e) Tax Agreements
Schedule 4.16(a) Environmental
Schedule 4.17 Liens on Title
Schedule 4.18 Proprietary Rights
Schedule 4.23 Related Party Transactions
Schedule 4.24 State Takeover Statues
Schedule 6.1 Negative Covenant Exceptions
v
<PAGE>
Defined Term.........................................................Page Number
Antitrust Division............................................................33
Certificate of Merger..........................................................6
Certificates...................................................................7
Charter........................................................................1
Closing........................................................................6
Closing Date...................................................................6
Code..........................................................................14
Company........................................................................1
Company Disclosure Schedule...................................................11
Company Filed SEC Documents...................................................12
Company Financial Advisor.....................................................22
Company Notification and Report Form..........................................33
Company Option Plans...........................................................9
Company Permits...............................................................16
Company Personnel.............................................................13
Company Plans.................................................................13
Company Rights................................................................22
Company SEC Documents.........................................................12
Company Stockholder Approval..................................................11
contract......................................................................12
DGCL...........................................................................1
Dissenting Shares..............................................................7
Dissenting Stockholder.........................................................7
Effective Time.................................................................6
Environmental Law.............................................................20
Environmental Permit..........................................................21
Environmental Violation........................................................2
ERISA.........................................................................13
Exchange Act...................................................................3
Exchange Agent.................................................................7
Expiration Date................................................................1
FTC...........................................................................33
GAAP..........................................................................12
Governmental Entities.........................................................11
Hazardous Substance...........................................................21
HSR Act.......................................................................11
Indemnified Parties...........................................................31
Independent Directors..........................................................5
Information Statement.........................................................13
Initial Extension Period.......................................................2
Law...........................................................................12
Liens.........................................................................11
Litigation....................................................................16
Loss..........................................................................19
Material Adverse Change.......................................................10
Material Adverse Effect.......................................................10
Material Contract.............................................................15
Merger.........................................................................1
Merger Consideration...........................................................6
Minimum Condition..............................................................1
No Takedown Period............................................................29
Notice Period.................................................................28
Offer..........................................................................1
Offer Conditions...............................................................2
vi
<PAGE>
Offer Documents................................................................3
Offer Price....................................................................1
Options.......................................................................10
Order.........................................................................12
Parent.........................................................................1
Parent Notification and Report Form...........................................33
Parent's Costs................................................................36
PBGC..........................................................................14
Proprietary Rights............................................................22
Proxy Statement...............................................................30
Purchaser......................................................................1
Release.......................................................................21
Schedule 14D-1.................................................................2
Schedule 14D-9.................................................................3
SEC............................................................................2
Shares.........................................................................1
Stockholders Meeting..........................................................29
subsidiary....................................................................38
Superior Proposal.............................................................29
Superior Transaction..........................................................36
Support Agreement..............................................................1
Surviving Corporation..........................................................5
Takedown Date..................................................................2
Takeover Proposal.............................................................28
taxes.........................................................................18
Tefron.........................................................................1
Year 2000 Problem.............................................................23
vii
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AGREEMENT AND PLAN OF MERGER dated as of November 8, 1999, among Tefron
U.S. Holdings Corp. ("Parent"), a Delaware corporation and wholly-owned
subsidiary of Tefron, Ltd., a corporation organized under the laws of Israel
("Tefron"), AWS Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Alba-Waldensian, Inc., a Delaware
corporation (the "Company").
WHEREAS, Parent proposes to cause Purchaser to make a tender offer (as
it may be amended from time to time as permitted under this Agreement, the
"Offer") to purchase all the outstanding shares of Common Stock, par value $2.50
per share (the "Shares"), of the Company at a purchase price (the "Offer Price")
of $18.50 per Share, net to each seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in this Agreement; and the
Board of Directors of the Company has adopted resolutions approving the Offer
and recommending that holders of Shares accept the Offer;
WHEREAS, the merger of Purchaser with and into the Company (the
"Merger") upon the terms and subject to the conditions set forth in this
Agreement has been authorized by all necessary corporate action on behalf of
Parent and Purchaser and has been adopted by the Board of Directors of the
Company; and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent and Purchaser to enter into this Agreement, Parent,
Purchaser and certain stockholders of the Company are entering into a Support
Agreement (the "Support Agreement") pursuant to which such stockholders have,
among other things, agreed to sell all such stockholders' Shares to Purchaser at
the price per Share paid in the Offer, upon the terms and subject to the
conditions set forth in the Support Agreement; and the Support Agreement has
been approved by the Board of Directors of the Company; and
WHEREAS, the Board of Directors of the Company has taken such actions
as are necessary to render the provisions of Section 203 of the Delaware General
Corporation Law ("DGCL") and Article 13 of the Certificate of Incorporation of
the Company (the "Charter") inapplicable to the transactions contemplated hereby
and by the Support Agreement.
NOW, THEREFORE, Parent, Purchaser and the Company hereby agree as
follows:
ARTICLE I
THE OFFER
Section 1.1. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Purchaser shall commence the Offer, with the initial scheduled
expiration date of the Offer (subject to the extensions permitted by this
Agreement) being the 20th business day after
<PAGE>
commencement. The obligation of Purchaser to, and of Parent to cause Purchaser
to, commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in
part by Purchaser in its sole discretion, except that Purchaser shall not waive
the Minimum Condition (as defined in Exhibit A) without the consent of the
Company) and to the terms and conditions of this Agreement. Purchaser expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company, Purchaser shall not (i) reduce the number of Shares
subject to the Offer, (ii) reduce the Offer Price, (iii) increase or reduce the
dealer's soliciting fee, (iv) amend or add to the Offer Conditions, (v) except
as provided in the last sentence of this paragraph, extend the Offer, (vi)
change the form of consideration payable in the Offer or (vii) amend any other
term of the Offer in any manner adverse to the holders of the Shares. Subject to
the terms and conditions of the Offer and this Agreement, Purchaser shall accept
for payment, and pay for, all Shares validly tendered pursuant to the Offer that
Purchaser becomes obligated to accept for payment, and pay for, pursuant to the
Offer as promptly as practicable after the expiration of the Offer (such date,
the "Takedown Date"). Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (i) extend the Offer for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer as a result
of an increase in the Offer Price by Purchaser in light of a bona fide competing
offer from a third party for some or all of the Shares and (ii) (A) extend the
Offer for a period, in the aggregate, of not more than five business days if, at
the initial scheduled expiration date of the Offer, the Shares validly tendered
and not withdrawn pursuant to the Offer are less than 90% of the outstanding
Shares and (B) following the period contemplated by clause (ii) (A) (the
"Initial Extension Period") if any of the Offer Conditions have not been waived
or satisfied, extend the Offer on one or more occasions for periods not to
exceed five business days until January 31, 2000; provided that, (x) if at the
expiration date of the Offer, as so extended, the Offer Conditions have been
satisfied or waived (including the deemed waivers described in clauses (y) and
(z) below), Purchaser shall not continue to extend the Offer (unless required by
clause (i), above), (y) following the Initial Extension Period, Purchaser shall
be deemed to have waived satisfaction of the conditions set forth in paragraphs
(b), (e), (f) and (h) of Exhibit A hereto with respect to matters existing on or
before the last day of the Initial Extension Period and (z) in the event
Purchaser extends the Offer after the Initial Extension Period following written
notice from the Company of an event constituting a Material Adverse Change,
Purchaser shall be deemed to have waived satisfaction of the conditions set
forth in paragraph (c) of Exhibit A hereto with respect, and only with respect,
to the event for which it has received such written notice; provided further,
that all time periods set forth above in this sentence shall be tolled, at the
election of Purchaser, during the pendency of the No Takedown Period (as defined
in Section 6.2(b) below).
(a) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal (such Schedule 14D-1 and the
documents included therein pursuant to which
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<PAGE>
the Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). Parent and Purchaser agree that the Offer Documents shall
comply in all material respects with the Securities Exchange Act of 1934 (the
"Exchange Act"), and the rules and regulations promulgated thereunder and the
Offer Documents, on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no covenant is made by Parent or
Purchaser with respect to information supplied by the Company or any of its
stockholders specifically for inclusion or incorporation by reference in the
Offer Documents. Each of Parent, Purchaser and the Company agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the stockholders of the Company. Parent and
Purchaser agree to provide the Company and its counsel any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
(b) Parent shall provide or cause to be provided to Purchaser on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
that Purchaser becomes obligated to accept for payment, and pay for, pursuant to
the Offer.
Section 1.2. Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, duly and unanimously adopted resolutions (i)
approving this Agreement, (ii) approving the Offer and the Merger (and effecting
the other actions referred to in Section 4.24), (iii) determining that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company and its stockholders, (iv) recommending that the Company's stockholders
accept the Offer, tender their shares pursuant to the Offer and approve this
Agreement (if required) and (v) approving the acquisition of Shares by Purchaser
pursuant to the Offer, the Support Agreement and the other transactions
contemplated by this Agreement and the Support Agreement. The Company has been
advised by each of its directors and executive officers that each such person
intends to tender all Shares owned by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, and the documents included
therein, together with any supplements or amendments thereto, the "Schedule
14D-9") containing the recommendation described in paragraph (a) and shall mail
the Schedule 14D-9 to the stockholders of the Company. The Company agrees that
the Schedule 14D-9
3
<PAGE>
shall comply in all material respects with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no covenant is made by the Company with
respect to information supplied by Parent or Purchaser specifically for
inclusion in the Schedule 14D-9. Each of the Company, Parent and Purchaser
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given reasonable opportunity to review and comment upon the Schedule 14D-9 prior
to its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Purchaser promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Purchaser such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Purchaser and their agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will, upon request, deliver, and will use
their reasonable efforts to cause their agents to deliver, to the Company all
copies and any extracts or summaries from such information then in their
possession or control.
Section 1.3. Directors. (a) Promptly upon the acceptance for payment of
Shares by Purchaser pursuant to the Offer, Purchaser shall be entitled to
designate such number of directors on the Board of Directors of (i) the Company
as will give Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, a majority of such directors, and the Company shall, at such time, cause
Purchaser's designees to be so elected by its existing Board of Directors and
(ii) each subsidiary of the Company and each committee of the Board of Directors
of the Company and each such subsidiary as will give Purchaser a majority of
such directors or committee, and the Company shall, at such
4
<PAGE>
time, cause Purchaser's designees to be so elected. In the event that
Purchaser's designees are elected to the Board of Directors of the Company,
until the Effective Time such Board of Directors shall have at least two
directors who are directors on the date of this Agreement and who are not
officers of the Company (the "Independent Directors"); and provided that, in
such event, if the number of Independent Directors shall be reduced below two
for any reason whatsoever, the remaining Independent Director shall designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate two persons to fill such vacancies who shall not
be officers or affiliates of the Company, or officers or affiliates of Parent or
any of its subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement.
(b) Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company agrees to make such mailing with the mailing of the Schedule 14D-9
(provided that Purchaser shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to Purchaser's designees). In connection with the foregoing, the Company
will promptly, at the option of Parent, either increase the size of the
Company's and each subsidiary's Board of Directors (and each committee thereof)
and/or obtain the resignation of such number of its current directors as is
necessary to enable Purchaser's designees to be elected or appointed to, and to
constitute a majority of the Company's and each subsidiary's Board of Directors
(and each committee thereof) as provided above.
(c) Subject to the foregoing provisions of this Agreement, following
the election or appointment of Purchaser's designees pursuant to this Section
1.3 and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors then in office shall be required by the Company to (i)
amend or terminate this Agreement by the Company, (ii) exercise or waive any of
the Company's rights or remedies under this Agreement or (iii) extend the time
for performance of Parent's and Purchaser's respective obligations under this
Agreement.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions
set forth herein and in accordance with the DGCL, at the Effective Time
Purchaser shall be merged with and into the Company, the separate existence of
Purchaser shall thereupon cease and the Company shall continue as the surviving
corporation (hereinafter sometimes referred to as the "Surviving Corporation")
and a wholly owned subsidiary of Parent. The Merger shall have the effects set
forth in the DGCL.
5
<PAGE>
Section 2.2. Effective Time. As promptly as practicable (but in no
event more than two business days) after the satisfaction or waiver of the
conditions to the Merger (other than conditions which by their nature are to be
satisfied at the closing, but subject to such conditions) the parties shall (a)
file a certificate of merger or, if applicable, a certificate of ownership and
merger (the "Certificate of Merger") in such form as is required by and executed
in accordance with the relevant provisions of the DGCL and (b) make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State or at such subsequent time as Parent and the Company shall
agree and as shall be specified in the Certificate of Merger (the date and time
the Merger becomes effective being the "Effective Time"). Prior to such filing,
a closing (the "Closing") shall be held at the offices of Dewey Ballantine LLP,
New York, New York. The date of the Closing is sometimes referred to as the
"Closing Date."
Section 2.3. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of Purchaser as in effect immediately prior to the
Effective Time shall be the initial certificate of incorporation of the
Surviving Corporation, provided that Article I shall read in its entirety, "The
name of the Corporation is "Alba-Waldensian, Inc.."
(b) The by-laws of Purchaser as in effect immediately prior to
the Effective Time, shall be the initial by-laws of the Surviving Corporation.
Section 2.4. Directors and Officers. (a) The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation.
(b) The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder thereof:
(a) Conversion of Shares. Subject to Section 3.1(d), each
issued and outstanding Share (other than Shares to be canceled in accordance
with Section 3.1(b) hereof) shall be converted into the right to receive in
cash, without interest, the price per share paid in the Offer (the "Merger
Consideration"). As of the Effective Time, all such Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share that is owned by the Company or any subsidiary of the Company and
each Share that is
6
<PAGE>
owned by Parent or Purchaser shall be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Capital Stock of Purchaser. Each issued and outstanding
share of common stock of Purchaser shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any Shares held by a person (a "Dissenting
Stockholder") who does not vote to approve the Merger and complies with all the
provisions of the DGCL concerning the right of holders of Shares to dissent from
the Merger and require payment of fair value (as defined in the DGCL) for their
Shares ("Dissenting Shares") shall not be converted as described in Section
3.1(a), but shall be converted into the right to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant to the DGCL.
If, after the Effective Time, such Dissenting Stockholder withdraws his demand
or fails to perfect or otherwise loses his rights as a Dissenting Stockholder to
payment of fair value, in any case pursuant to the DGCL, his Shares shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of any
demands for fair value for Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the prior written
consent of Parent, make any payment with respect to, or settle, offer to settle
or otherwise negotiate, any such demands.
Section 3.2. Exchange of Certificates. (a) Exchange Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company to act as
Exchange Agent in the Merger which shall be reasonably satisfactory to the
Company (the "Exchange Agent"), and, from time to time on, prior to or after the
Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Exchange Agent cash in amounts and at the times
necessary for the prompt payment of the Merger Consideration upon surrender of
certificates that immediately prior to the Effective Time represented
outstanding Shares ("Certificates").
(b) Exchange Procedure. Promptly after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent, together
with a duly executed letter of transmittal and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share theretofore represented by such Certificate, and the Certificate so
surrendered shall forthwith be canceled.
(c) No Further Ownership Rights in Shares. All Merger
Consideration
7
<PAGE>
delivered upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates.
Until surrendered as contemplated by this Section 3.2, each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1. No interest will be paid or will accrue on the cash payable upon
the surrender of any Certificate.
(d) Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article III.
(e) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Exchange Agent, the posting by such person of a bond or other
surety in such amount as the Exchange Agent may reasonable direct as indemnity
against any claim that may be made with respect to such Certificate and subject
to such other reasonable conditions as the Exchange Agent may impose, the
Exchange Agent shall deliver in exchange for such Certificate the Merger
Consideration into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 3.1.
(f) Transferred Certificates. If any payment under this
Article III is to be made to a person other than the person in whose name the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate
surrendered or such person shall establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
(g) Investment. The Exchange Agent shall invest any funds held
by it for purposes of this Section 3.2 as directed by Parent, on a daily basis.
Any interest and other income or loss resulting from such investments shall be
paid to or, in the case of any loss, paid by, Parent.
(h) Withholding Tax. The right of any stockholder to receive
the Merger Consideration shall be subject to and reduced by the amount of any
required tax withholding obligation.
(i) No Liability. None of Parent, Purchaser, the Company or
the Exchange Agent shall be liable to any person in respect of any cash
delivered to a public
8
<PAGE>
official pursuant to any applicable abandoned property, escheat or similar law.
Any portion of the cash that has been made available to the Exchange Agent
pursuant to this Section 3.2 that remains unclaimed by the holder of any
Certificate six months after the Effective Time, shall be returned to Parent and
any such holder who has not exchanged such holder's Certificate prior to such
time shall thereafter look only to the Surviving Corporation for any claim for
Merger Consideration hereunder.
Section 3.3. Company Stock Options. (a) Section 4.2(b) of the Company
Disclosure Schedule (as defined herein) sets forth the numbers of shares and
exercise prices of all outstanding employee and director stock options
("Options") to purchase the Shares, including those granted under the Company's
1993 Long Term Performance Plan, 1992 Nonqualified Stock Option Plan for
Non-employee Directors, 1997 Nonqualified Stock Option Plan for Directors and
all other stock option or other equity based plans (collectively, the "Company
Option Plans").
(b) Prior to the Takedown Date, the Company shall use
commercially reasonable efforts to cause, as of the Effective Time or, if the
provisions of paragraph (d) below shall be applicable, the Takedown Date, (i)
each Option for which the exercise price is less than the Offer Price, whether
or not then vested or exercisable, to be cancelled in consideration for a
payment by the Company to each holder thereof of an amount equal to the product
of (A) the excess of the Offer Price over the exercise price of each such Option
and (B) the number of Shares subject to the Option immediately prior to its
cancellation and (ii) each Option for which the exercise price is equal to or
greater than the Offer Price, whether or not then vested or exercisable, to be
cancelled in consideration for a payment by the Company to each holder thereof
in an amount equal to the product of (A) $.50 and (B) the number of Shares
subject to the Option. All payments to be made hereunder shall be net of
required withholding taxes.
(c) The Company shall use commercially reasonable efforts to
cause (i) all Company Option Plans to terminate as of the Effective Time or, if
the provisions of paragraph (d) below shall be applicable, the Takedown Date,
(ii) no holder of an Option to have any rights thereunder other than to receive
the cash payment contemplated by this Section and (iii) no person to have any
right to acquire any security of the Company, the Surviving Corporation (or any
parent subsidiary thereof) as a result of any agreement or obligation of the
Company or any subsidiary. Prior to the Takedown Date, the Company shall use
commercially reasonable efforts to obtain all necessary consents (in a form
acceptable to Parent) from holders of Options and take all other lawful action
as is necessary to give effect to the provisions of this Section. The Company
further agrees to cause the Board of Directors of the Company to adopt any
resolutions necessary to effectuate the foregoing.
(d) If Purchaser and Parent so elect, Purchaser will take such
action as may be reasonably necessary to allow the Company to take all actions
contemplated by paragraphs (b) and (c) above promptly following the Takedown
Date rather than at the Effective Date as contemplated by such paragraphs.
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<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as follows:
Section 4.1. Organization. Each of the Company and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate
power and authority to own, lease or operate its properties and to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect on the
Company. For purposes of this Agreement, a "Material Adverse Effect" means, with
respect to any person, a fact, event or effect which has had, or is reasonably
likely to have, together with all similar or related facts, events and effects,
a material adverse effect on the financial condition, business, assets or
results of operations of such person and its subsidiaries taken as a whole or on
the ability of such person to perform its obligations hereunder or which would
prevent or delay the consummation of the transactions contemplated hereby. For
purposes of this Agreement, a "Material Adverse Change" means, with respect to
any person, any change which has had, or is reasonably likely to have, a
material adverse effect on the financial condition, business, assets or results
of operations of such person and its subsidiaries taken as a whole or on the
ability of such person to perform its obligations hereunder or which would
prevent or delay the consummation of the transactions contemplated hereby. The
Company has made available to Parent complete and correct copies of its Charter
and by-laws and the certificate of incorporation and by-laws (or similar
organizational documents) of each of its subsidiaries.
Section 4.2. Capitalization. (a) The authorized capital stock of the
Company consists of 5,000,000 Shares and no shares of preferred stock. At the
close of business on November 5, 1999, (i) 3,246,045 Shares were issued and
outstanding, (ii) 526,955 Shares were held in treasury, and (iii) 187,753 Shares
were issuable upon the exercise of Options to purchase Shares under the Company
Option Plans. All outstanding shares of capital stock of Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth above, and for changes since such date resulting from the exercise of
outstanding employee or director stock options ("Options") outstanding on such
date in accordance with their terms, there are outstanding (x) no shares of
capital stock or other voting securities of the Company, (y) no securities of
the Company convertible into or exchangeable for shares of capital stock or
other securities of the Company, and (z) no options or other rights to acquire
from the Company, and no obligation of the Company to issue, any capital stock
or other securities. There are no outstanding obligations of the Company or any
subsidiary to repurchase, redeem or
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<PAGE>
otherwise acquire any securities of the Company or to vote or to dispose of any
shares of the capital stock of any of the Company's subsidiaries.
(b) Section 4.2(b) of the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), which Company Disclosure Schedule throughout this
Agreement identifies the Section (or, if applicable, subsection to which such
exception relates), lists each outstanding Option, the holder thereof, the
number of Shares issuable thereunder and the exercise price thereof.
(c) Section 4.2(c) of the Company Disclosure Schedule lists
each subsidiary of the Company. All the outstanding shares of capital stock of
each such subsidiary are owned by the Company, by another wholly owned
subsidiary of the Company or by the Company and another wholly owned subsidiary
of the Company, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature (collectively,
"Liens"), and are duly authorized, validly issued, fully paid and nonassessable.
Except as set forth in Section 4.2(c) of the Company Disclosure Schedule and
except for the capital stock of its subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
entity.
Section 4.3. Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation by the Company of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate such transactions, other than, with respect to the Merger, the
adoption of this Agreement by the holders of a majority of the outstanding
Shares (the "Company Stockholder Approval"). This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
Section 4.4. Consents and Approvals; No Violations. (a) The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated by this Agreement do not and
will not require any filing or registration with, notification to, or
authorization, permit, consent or approval of, or other action by or in respect
of, any governmental body, court, agency, official or regulatory or other
authority (collectively, "Governmental Entities") other than (i) the filing of
the Certificate of Merger as contemplated by Article II hereof, (ii) compliance
with any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (iii) compliance with any
applicable requirements of the Exchange Act.
(b) Except as set forth in Section 4.4(b) of the Company
Disclosure Schedule, the execution, delivery and performance by the Company of
this Agreement
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and the consummation by the Company of the transactions contemplated by this
Agreement do not and will not (i) conflict with or result in any breach of any
provision of the Charter or by-laws of the Company or any similar organizational
documents of any of its subsidiaries, (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
under, or give rise to any right of termination, amendment, cancellation,
acceleration or loss of benefits under, or result in the creation of any Lien
upon any of the properties or assets of the Company or any of its subsidiaries
under, or require consent pursuant to, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, permit,
concession, franchise, contract, agreement or other instrument or obligation (a
"contract") to which the Company or any of its subsidiaries is a party or by
which any of its properties or assets may be bound or (iii) violate any
judgment, order, writ, preliminary or permanent injunction or decree (an
"Order") or any statute, law, ordinance, rule or regulation of any Governmental
Entity (a "Law") applicable to the Company, any of its subsidiaries or any of
their properties or assets, except in the case of clauses (ii) or (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect
on the Company.
Section 4.5. SEC Reports and Financial Statements. (a) Except as set
forth in Section 4.5 of the Company Disclosure Schedule, the Company has filed
with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1997 (collectively, the "Company SEC
Documents"). The Company SEC Documents as from time to time amended,
supplemented or superceded by subsequent Company SEC Documents which were filed
prior to the date hereof (a) do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (b) comply in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, and the applicable rules and regulations of the SEC thereunder.
No subsidiary of the Company is required to make any filings with the SEC.
(b) The financial statements of the Company included in the
Company SEC Documents comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments not material in amount) the consolidated financial position of the
Company and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
Section 4.6. Absence of Certain Changes or Events. Except as set forth
in Section 4.6 of the Company Disclosure Schedule or as disclosed in the Company
SEC Documents filed and publicly available prior to the date of this Agreement
(the "Company Filed SEC Documents"), since January 1, 1999, (i) the Company and
its subsidiaries have conducted their respective business only in the ordinary
course, (ii) there has not occurred any Material Adverse Change with respect to
the Company and
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(iii) neither the Company nor any subsidiary has taken any action contemplated
by Section 6.1.
Section 4.7. No Undisclosed Liabilities. Except as and to the extent
set forth in the Company Filed SEC Documents, neither the Company nor any of its
subsidiaries has any liabilities of any nature, whether or not accrued,
contingent or otherwise, that would have a Material Adverse Effect on the
Company.
Section 4.8. Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be filed
by the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the Exchange Act (the "Information Statement") or (iv) the Proxy
Statement, will, in the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer Documents, the Schedule
14D-9 and the Information Statement are filed with the SEC or first published,
sent or given to the Company's stockholders, or, in the case of the Proxy
Statement, at the time the Proxy Statement is first mailed to the Company's
stockholders or at the time of the Stockholders Meeting (as defined in Section
7.1), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Purchaser for inclusion or incorporation by reference therein.
Section 4.9. Company Plans; Employees and Employment Practices. (a)
Section 4.9(a) of the Company Disclosure Schedule lists each plan, agreement,
arrangement or commitment which is an employment or consulting agreement,
executive or incentive compensation plan, bonus plan, deferred compensation
agreement, employee pension, profit sharing, savings or retirement plan,
employee stock option or stock purchase plan, group life, health, or accident
insurance or other employee benefit plan, agreement, arrangement or commitment,
including, without limitation, any commitment arising under the laws of any
jurisdiction, severance, holiday, vacation, Christmas or other bonus plans
(including, but not limited to, "employee benefit plans", as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), maintained by the Company or any of its subsidiaries for any of
their present or former employees, consultants, independent contractors,
officers or directors ("Company Personnel") or with respect to which the Company
or any of its subsidiaries has liability, makes or has an obligation to make
contributions ("Company Plans").
(b) The Company has provided Parent with or made available to
Parent (i) true and correct copies of all Company Plans or in the case of an
unwritten plan, a written description thereof, (ii) true and correct copies of
any annual, financial or
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actuarial reports and Internal Revenue Service determination letters relating to
such Company Plans and (iii) true and correct copies of all summary plan
descriptions (whether or not required to be furnished under ERISA) and employee
communications relating to such Company Plans and distributed to Company
Personnel, in each case under this subsection (b), existing or in effect during
or within the past five years.
(c) Except as set forth on Section 4.9(c) of the Company
Disclosure Schedule, there are no Company Personnel who are entitled to (i) any
pension benefit that is unfunded or (ii) any pension or other benefit to be paid
after termination of employment other than required by Section 601 of ERISA or
pursuant to plans intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and listed on Section 4.9(a) of
the Company Disclosure Schedule, and no other benefits whatsoever are payable to
any Company Personnel after termination of employment (including retiree medical
and death benefits).
(d) Each Company Plan that is an employee welfare benefit plan
under Section 3(l) of ERISA is either (i) funded through an insurance company
contract and is not a "welfare benefit fund" within the meaning of Section 419
of the Code or (ii) is unfunded. All contributions or payments owed with respect
to any periods prior to the Closing under any Company Plan have been made or
accrued. Each Company Plan by its terms and operation is in material compliance
with all applicable laws (including, but not limited to, ERISA, the Code and the
Age Discrimination in Employment Act of 1967, as amended). There are no actions,
suits or claims pending or threatened (other than routine noncontested claims
for benefits) or, to the Company's knowledge, no set of circumstances exist
which may reasonably give rise to such a claim against any Company Plan or
administrator or fiduciary of any such Company Plan. As to each Company Plan for
which an annual report is required to be filed under ERISA or the Code, all such
filings, including schedules, have been made on a timely basis and with respect
to the most recent report regarding each such Company Plan liabilities do not
exceed assets, and no material adverse change has occurred with respect to the
financial matters covered thereby. To the knowledge of the Company, the Company
Plans are not the subject of any investigation, audit or action by the Internal
Revenue Service, the Department of Labor or the Pension Benefit Guaranty
Corporation ("PBGC").
(e) Neither the Company nor any entity required to be
aggregated with the Company pursuant to Sections 414(b), (c), (m) or (o) of the
Code (i) contributes to, maintains or has any liability with respect to a plan
subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA,
or (ii) contributes to, or has ever contributed to, a "multiemployer plan" as
defined in Section 3(37) of ERISA.
(f) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service stating that such plan is so qualified and, to the
Company's knowledge, nothing has occurred since the date of such letter to cause
the letter to be no longer valid or effective.
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(g) Neither the Company, any of its subsidiaries nor any other
person, including any fiduciary, has engaged in any "prohibited transaction" (as
defined in Section 4975 of the Code or Section 406 of ERISA), which could
subject any of the Company Plans (or their trusts), the Company, any of its
subsidiaries, or any person who the Company or any of its subsidiaries has an
obligation to indemnify, to any tax or penalty imposed under Section 4975 of the
Code or Section 502 of ERISA.
(h) Except as set forth in Section 4.9(h) of the Company
Disclosure Schedule, the events contemplated by this Agreement (either alone or
together with any other event) will not (i) entitle any Company Personnel to
severance pay, unemployment compensation, or other similar payments under any
Company Plan or law, (ii) accelerate the time of payment or vesting or increase
the amount of benefits due under any Company Plan or compensation to any Company
Personnel, (iii) result in any payments under any Company Plan or law becoming
due to any Company Personnel, or (iv) terminate or modify or give a third party
a right to terminate or modify the provisions or terms of any Company Plan.
Section 4.10. Labor Matters. Neither the Company nor any of its
subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. To the knowledge of the Company, there are no organizational
efforts with respect to the formation of a collective bargaining unit currently
being made or threatened involving employees of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries, nor their
respective representatives or employees, has committed any unfair labor
practices in connection with the operation of the respective businesses of the
Company or any of its subsidiaries, and there is no pending or, to the knowledge
of the Company, threatened charge, complaint, decision, order, notice-posting
requirement, settlement agreement or injunctive action or order against the
Company or any of its subsidiaries by the National Labor Relations Board or any
similar governmental or adjudicatory agency or court. The Company and its
subsidiaries have in the past been and are in compliance in all respects with
all applicable collective bargaining agreements and laws respecting employment,
employment practices, employee classification, labor relations, safety and
health, wages, hours and terms and conditions of employment except for any
failure to so comply that would not have a Material Adverse Effect on the
Company. Neither the Company nor any of its subsidiaries has experienced within
the past 12 months a "plant closing" or "mass layoff" within the meaning of the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss.ss. 2101 et seq.
Section 4.11. Contracts. Except as set forth in Section 4.11 of the
Company Disclosure Schedule or as disclosed in the Company Filed SEC Documents,
there are no contracts that are material to the financial condition, business,
assets or results of operations of the Company or any of its subsidiaries (each
a "Material Contract"). Neither the Company nor any of its subsidiaries, or to
the best knowledge of the Company, any other party, is in violation or breach of
or in default (nor does there exist any condition which upon the passage of time
or the giving of notice would result in a violation or breach of, or constitute
a default under, or give rise to any right of
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termination, amendment, cancellation, acceleration or loss of benefits, or
result in the creation of any Lien upon any of the properties or assets of the
Company or any of its subsidiaries) under any contract to which it is a party or
by which it or any of its properties or assets is bound, except for violations,
breaches or defaults that would not have a Material Adverse Effect on the
Company. No other party to any such Material Contract has, to the best knowledge
of the Company, alleged that the Company or any subsidiary is in violation or
breach of or in default under any such Material Contract or has notified the
Company or any subsidiary of an intention to modify any material terms of or not
to renew any such Material Contract, where such events would have a Material
Adverse Effect on the Company. Section 4.11 of the Company Disclosure Schedule
sets forth all Material Contracts which require any consent, waiver or approval
for such contracts to remain in effect without material modification after the
Effective Time. Following the Effective Time and assuming all consents, waivers
and approvals disclosed in Section 4.11 of the Company Disclosure Schedule are
obtained, the Company and each of its subsidiaries will be permitted to exercise
all of their respective rights under each Material Contract then in effect
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which the Company or its subsidiaries would
otherwise be required to pay had the transactions contemplated by this Agreement
not occurred. To the knowledge of the Company, there are no facts, circumstances
or conditions which would reasonably be expected to result in the loss of any
customer that would have a Material Adverse Effect on the Company.
Section 4.12. Litigation; Insurance. Except as set forth in Section
4.12 of the Company Disclosure Schedule or as disclosed in the Company Filed SEC
Documents, there is no suit, claim, action, proceeding or investigation
(collectively, "Litigation") pending before any Governmental Entity or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries. Except as disclosed in the Company Filed SEC Documents, neither
the Company nor any of its subsidiaries is subject to any outstanding Order that
would have a Material Adverse Effect on the Company. The Company maintains fire
and casualty, general liability, product liability, business interruption and
professional liability insurance policies with reputable insurance carriers as
are adequate to cover all normal activities incident or relating to the business
of the Company and its subsidiaries and their respective properties and assets.
Section 4.13. Compliance with Applicable Law. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
Company Permits that would not have a Material Adverse Effect on the Company.
The Company and its subsidiaries are in material compliance with the terms of
the Company Permits. The businesses of the Company and its subsidiaries have not
been, and are not being, conducted in violation of any Law, except for
violations that would not have a Material Adverse Effect on the Company. Except
as set forth in Section 4.13. of the Company Disclosure Schedule no
investigation or review by any Governmental Entity with respect to the Company
or any of its subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
any such investigation or
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review, other than, in each case, where the outcome would not have a Material
Adverse Effect on the Company.
Section 4.14. Product Warranties and Liabilities; Relationships. Except
as listed in Section 4.14 of the Company Disclosure Schedule, (a) the Company
has no forms of warranties or guarantees of its products and services that are
in effect or proposed to be used by it, (b) the relationships of the Company
with its customers, distributors and suppliers are good and (c) no product
produced by the Company or any of subsidiaries or produced for the Company or
any of its subsidiaries by a third party and bearing a Company trademark or
other Proprietary Right (as defined) of the Company has been recalled
voluntarily or involuntarily since January 1, 1995, no such recall is being
considered by the Company, and, to the knowledge of the Company, no such recall
is being considered by or has been requested or ordered by any Governmental
Authority.
Section 4.15. Tax Matters.
(a) The Company and each of its subsidiaries has timely filed
all federal, state and local, domestic and foreign, income and franchise tax
returns and reports and all other material tax returns and reports required to
be filed by it, except for any failure to so file any tax returns and reports
which would not have a Material Adverse Effect on the Company. All such returns
and reports are complete and correct in all material respects. The Company and
each of its subsidiaries has timely paid (or the Company has paid on its
subsidiaries' behalf) all taxes due with respect to the taxable periods covered
by such returns and reports and all other material taxes (as defined below),
except for any failure to so pay any taxes which would not have a Material
Adverse Effect on the Company, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an adequate reserve for all
taxes payable by the Company and its subsidiaries for all taxable periods and
portions thereof through the date of such financial statements.
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, no federal, state or local, domestic or foreign, income or
franchise tax return or report or any other material tax return or report of the
Company or any of its subsidiaries is under audit or examination by any taxing
authority, and no written or unwritten notice of such an audit or examination
has been received by the Company. Each material deficiency resulting from any
audit or examination relating to taxes by any taxing authority has been timely
paid. No material issues relating to taxes were raised by the relevant taxing
authority during any presently pending audit or examination, and no material
issues relating to taxes were raised by the relevant taxing authority in any
completed audit or examination that can reasonably be expected to recur in a
later taxable period. Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, since 1993, no federal, state or local, domestic or foreign
tax return or report of the Company or any of its subsidiaries has been under
audit or examination by the Internal Revenue Service or other relevant taxing
authority resulting in the incurrence of a material tax liability. The relevant
statute of limitations is closed with respect to the U.S. federal tax returns of
the Company and its subsidiaries for all years through 1993.
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(c) There is no agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been executed or
filed with any taxing authority.
(d) No material liens for taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(e) Except as set forth in Section 4.15(e) of the Company
Disclosure Schedule neither the Company nor any of its subsidiaries is a party
to or bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority) or otherwise is liable for the taxes of any other person
under Treasury Regulation Section 1.1502-6, as a successor or transferee, by
contract or otherwise.
(f) Neither the Company nor any of its subsidiaries will be
required to include in a taxable period ending after the Effective Time taxable
income attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481 of the Code
or comparable provisions of state or local tax law, domestic or foreign, or for
any other reason.
(g) The disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount paid or payable
by the Company or any of its subsidiaries under any Company Plan or other
compensation arrangement currently in effect.
(h) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any Company Plan or other compensation arrangement currently in
effect would not be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code).
(i) The Company has complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of taxes (including, without limitation, withholding of taxes pursuant to
Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any
foreign federal laws or any state or local laws, domestic and foreign) and has,
within the time and the manner prescribed by law, withheld from and paid over to
the proper governmental authorities all amounts required to be so withheld and
paid over under applicable laws.
(j) As used in this Agreement, "taxes" shall include all
federal, state and
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local, domestic and foreign, income, franchise, property, sales, excise,
employment, payroll, social security, value-added, ad valorem, transfer,
withholding and other taxes, including taxes based on or measured by gross
receipts, profits, sales, use or occupation, tariffs, levies, impositions,
assessments or governmental charges of any nature whatsoever, including any
interest, penalties or additions with respect thereto.
Section 4.16. Environmental.
(a) Except as disclosed in Section 4.16(a) of the Company
Disclosure Schedule:
(i) the Company and its subsidiaries comply, and at
all times have complied in all respects, with all applicable Environmental Laws,
except for any such lack of compliance which would not have a Material Adverse
Effect on the Company;
(ii) the Company and its subsidiaries have obtained
and are in compliance with all Environmental Permits necessary for the operation
of the properties currently owned, leased, operated or controlled by the Company
and its subsidiaries and the conduct of the business of the Company and its
subsidiaries, except for any failure to so comply which would not have a
Material Adverse Effect on the Company; there are no proceedings against the
Company pending or, to the knowledge of the Company or any of its subsidiaries,
threatened which would jeopardize the validity of any such Environmental
Permits;
(iii) there are no facts, conditions or circumstances
that form the basis for the Company or any of its subsidiaries to be subject to
any liability, loss, damage, penalty, fine, obligation, lien, cost or expense of
any nature whatsoever ("Loss") pursuant to any Environmental Law in connection
with the presence, Release or threatened Release by the Company of any Hazardous
Substance at any property (including soils, groundwater, surface water,
buildings and other structures, and equipment) currently or formerly owned,
leased, operated or controlled by the Company or its subsidiaries or any other
property for which the Company bears liability under Environmental Laws
(including, without limitation, any location at which any Hazardous Substances
generated, stored, treated or disposed by or on behalf of the Company or any of
its subsidiaries have come to be located), except for any facts, conditions or
circumstances which would not result in a Material Adverse Effect on the
Company;
(iv) neither the Company nor any of its subsidiaries
has received any written notice, demand, letter, claim or request for
information alleging that the Company or any of its subsidiaries is or may be in
violation of or liable under any Environmental Law and the Company has no
knowledge of the foregoing;
(v) neither the Company nor any of its subsidiaries
is subject to any written Orders, decrees, injunctions, consent agreements or
other similar arrangements with any Governmental Authority or is subject to any
indemnity or contribution agreement with any person relating to liability under
any Environmental
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Law or relating to Hazardous Substances and the Company has no knowledge of the
foregoing;
(vi) there is no material proceeding pending or, to
the knowledge of the Company and its subsidiaries, threatened, before any
Governmental Authority by or against the Company or its subsidiaries arising
under or relating to any Environmental Law;
(vii) there are no facts, conditions or circumstances
that would result in a Material Adverse Effect on the Company pursuant to any
Environmental Law in connection any predecessor of the Company or any of its
subsidiaries;
(viii) there are (a) no Environmental Laws,
including, without limitation, to the knowledge of the Company any Environmental
Laws compliance with which is not required until after the date hereof, or any
orders, decrees, injunctions, consent agreements or other similar arrangements
with any Governmental Authority, or any indemnity or contribution agreements
with any person, and (b) to the knowledge of the Company, no proposals to amend,
supplement or supplant any existing Environmental Laws or to create any new
Environmental Laws or amend, supplement or supplant any orders, decrees,
injunctions, consent agreements or other similar arrangements with any
Governmental Authority or any indemnity or contribution agreements with any
person, compliance with which could (in the case of clause (a) or (b) above) be
reasonably expected to require that the Company or any of its subsidiaries
install or modify any facilities, structures or equipment or make any other
material capital improvements or incur operating costs in excess of current
operating costs in order to operate any property owned, leased, operated or
controlled by the Company or any of its subsidiaries in substantially the same
manner such property is currently operated or operate the business of the
Company and its subsidiaries in substantially the same manner in which it is
currently conducted if the effects thereof would have a Material Adverse Effect
on the Company.
(b) Except for transfers of permits issued pursuant to
Environmental Laws and notifications required pursuant to Environmental Laws,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not impose any obligation on the Company,
any of its subsidiaries, Parent or Purchaser to take any action pursuant to any
Environmental Law (including, without limitation, any so-called environmental
property transfer act), any order, decree, injunction, consent agreement or
other similar arrangement with any Governmental Authority, or any indemnity or
contribution agreement with any person.
(c) As used herein, the term "Environmental Law" means any
international, national, Native American, provincial, regional, federal, state,
municipal or local law, ordinance, rule, order, statute, decree, judgment,
injunction, directive, Environmental Permit, code, regulation, common or
decisional law (including, without limitation, principles of tort, negligence,
trespass, nuisance, strict liability, contribution and indemnification) or other
requirement of any Governmental Authority, relating to:
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(A) the protection, investigation or restoration of the environment (including,
without limitation, natural resources) or the health or safety of humans or
other living organisms; (B) the manufacture, introduction into commerce, export,
import, handling, use, presence, disposal, release or threatened release of any
Hazardous Substance; or (C) noise, odor, wetlands, pollution, or contamination;
or (D) any injury or threat of injury to persons or property arising out of or
relating to Hazardous Substances.
(d) As used herein, the term "Environmental Permit" means any
permit, consent, license, or other approval or authorization of or by any
Governmental Authority required under any Environmental Law.
(e) As used herein, the term "Hazardous Substance" means any
element, compound, substance or material of any nature whatsoever (including,
without limitation, any product) that is listed, classified or regulated
pursuant to any Environmental Law or the subject of regulatory action by any
Governmental Authority pursuant to any Environmental Law, including, without
limitation, any petroleum product, by-product or additive, asbestos-containing
material, polychlorinated biphenyl, radioactive materials, volatile organic
compound, or hazardous air pollutant.
(f) As used herein, the term "Release" means any release,
spill, emission, leaking, pumping, pouring, injecting, deposit, disposal,
discharge, dispersal, escape, leaching or migrating into the indoor or outdoor
environment, including, without limitation, air, soil, groundwater and surface
water.
Section 4.17. Title to and Condition of Properties. Except as set forth
in Section 4.17 to the Company Disclosure Schedule, the Company and its
subsidiaries have good, valid and marketable title to, or a valid leasehold
interest in, all of its properties and assets (real, personal and mixed,
tangible and intangible), including, without limitation, all the properties and
assets reflected in the consolidated balance sheet of the Company at December
31, 1998 included in the Company Filed SEC Documents (except for properties and
assets disposed of in the ordinary course of business and consistent with past
practices since such date). Such properties or assets (a) are in good operating
condition and repair free, in the case of real property, of material structural
or engineering defects and (b) are not subject to any liability, obligation,
claim, lien, mortgage, pledge, security interest, conditional sale agreement,
charge or encumbrance of any kind (whether absolute, accrued, contingent or
otherwise) which would have a Material Adverse Effect on the Company.
Section 4.18. Proprietary Rights. (a) Except as set forth on Section
4.18 of the Company Disclosure Schedule: (i) the Company is the sole owner, free
and clear of any lien or encumbrance, of, or has a valid license, without the
payment of any royalty except with respect to off-the-shelf software and
otherwise on commercially reasonable terms, to, all U.S. and foreign patents,
registered designs, mask works, copyrights, computer software and databases,
trademarks, service marks and trade names, whether or not registered, and other
trade secrets, research and development, formulae, know-how, proprietary and
intellectual property rights and information, including all grants,
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registrations and applications relating thereto (collectively, the "Proprietary
Rights") necessary or advisable for the conduct of its and its subsidiaries'
business as now conducted or as contemplated to be conducted, except for such
Proprietary Rights the absence of which would not have a Material Adverse Effect
on the Company (such Proprietary Rights owned by or licensed to the Company,
subject to such exception, collectively, the "Company Rights"); (ii) the Company
has taken, and will continue to take, all actions which are necessary or
advisable in order to protect the Company Rights, and to acquire Proprietary
Rights, consistent with prudent commercial practices in the Company's industry;
(iii) the Company's rights in the Company Rights are valid and enforceable; (iv)
the Company has received no demand, claim, notice or inquiry from any person in
respect of the Company Rights which challenges, threatens to challenge or
inquires as to whether there is any basis to challenge, the validity of, or the
rights of the Company in, any such Company Rights, and the Company knows of no
basis for any such challenge; (v) the Company is not in violation or
infringement of, and has not violated or infringed, any Proprietary Rights of
any other person, except for any such violation or infringement which would not
have a Material Adverse Effect on the Company; (vi) to the knowledge of the
Company, no person is infringing any Company Rights; and (vii) except on an
arm's-length basis for value and other commercially reasonable terms, the
Company has not granted any license with respect to any Company Rights to any
person.
(b) Section 4.18 of the Company Disclosure Schedule contains a
complete and accurate list of the Company Rights and all license and other
agreements relating thereto.
Section 4.19. Opinion of Financial Advisor. The Company has received
the opinion of William Blair and Company, L.L.C. (the "Company Financial
Advisor"), dated the date of this Agreement, to the effect that, as of the date
of this Agreement, the consideration to be received in the Offer and the Merger
by the Company's stockholders is fair to the Company's stockholders other than
Tefron, Nathan H Dardick and Clyde Wm. Engle from a financial point of view, and
a complete and correct signed copy of such opinion has been, or promptly upon
receipt thereof will be, delivered to Parent.
Section 4.20. Brokers and Finders. No broker, investment banker,
financial advisor or other person, other than the Company Financial Advisor, the
fees and expenses of which will be paid by the Company (as reflected in an
agreement between such firm and the Company, a copy of which has been delivered
to Parent), is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
Section 4.21. Year 2000. The Company has reviewed its operations and
that of its subsidiaries and has made inquiries of any third parties with which
the Company or any of its subsidiaries has a material relationship, including,
without limitation, vendors or suppliers of software which is material to the
Company's business, to evaluate the extent to which the business or operations
of the Company and any of its subsidiaries will be
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affected by the Year 2000 Problem (as defined below). As a result of such review
and such inquiries, the Company has concluded and hereby represents and warrants
that the Year 2000 Problem will not have a Material Adverse Effect on the
Company. As used herein with respect to the Company, its subsidiaries or such
third parties, the "Year 2000 Problem" means any material failure of computer
hardware or software to function as effectively with dates or time periods
occurring after December 31, 1999 as with dates or time periods occurring prior
to January 1, 2000, whether used in the receipt, transmission, processing,
manipulation, storage retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind and all
expenditures in connection therewith, including, without limitation,
prophylactic measures.
Section 4.22. Copies of Documents. The Company and its subsidiaries
have provided Purchaser, Parent or their respective representatives with true,
accurate and complete copies of all documents listed or described in the Company
Disclosure Schedule
Section 4.23. Related Party Transactions. Except as set forth in
Section 4.23 of the Company Disclosure Schedule and excluding transactions
between the Company and its subsidiaries, no director, officer, partner,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or its subsidiaries or any "associate" of such
director or officer of the Company and its subsidiaries (a) has been involved in
any material business arrangement or relationship with the Company within the
past thirty-six months, (b) owns any material asset, tangible or intangible,
which is used in the business of the Company or (c) is or was engaged in
competition with the Company; other than ownership as a passive investment of
securities of an entity if such securities are publicly traded and do not
constitute more than 5% of the outstanding equity securities of such entity.
Section 4.24. State Takeover Statutes; Charter. The Board of Directors
of the Company has adopted this Agreement and approved the Offer, the Support
Agreement, the acquisition of Shares by Purchaser pursuant to the Offer and the
Support Agreement and the other transactions contemplated by this Agreement and
the Support Agreement and such adoptions and approvals are sufficient to render
inapplicable to the Offer, the Merger, this Agreement, the Support Agreement,
the acquisition of Shares by Purchaser pursuant to the Offer and the Support
Agreement and the other transactions contemplated by this Agreement and the
Support Agreement the provisions of (a) Section 203 of the DGCL and (b) Article
13 of the Charter. Except as set forth in Section 4.24 of the Company Disclosure
Schedule, no other state takeover statute or similar Law or provision of the
Charter or the Company's by-laws applies to the Offer, the Merger, this
Agreement, the Support Agreement, the acquisition of Shares by Purchaser
pursuant to the Offer and the Support Agreement or any of the transactions
contemplated by this Agreement or the Support Agreement. The Company will take
all reasonable actions to prevent the application of any of the foregoing.
Section 4.25. Accuracy of Information. The representations made by the
Company herein or in the Company Disclosure Schedule, taken as a whole, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in
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order to make the statements made or information contained therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to the
Company as follows:
Section 5.1. Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not be reasonably expected to prevent or materially delay
the consummation of the Offer or the Merger.
Section 5.2. Authority. Each of Parent and Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Purchaser and no other corporate proceedings on the
part of Parent and Purchaser are necessary to authorize this Agreement or to
consummate such transactions. No vote of Parent stockholders is required to
approve this Agreement or the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Parent and Purchaser, as the case may
be, and constitutes a valid and binding obligation of each of Parent and
Purchaser enforceable against them in accordance with its terms.
Section 5.3. Consents and Approvals; No Violations. (a) The execution,
delivery and performance by Parent and Purchaser of this Agreement and the
consummation by Parent and Purchaser of the transactions contemplated by this
Agreement do not and will not require any filing or registration with,
notification to, or authorization, permit, consent or approval of, or other
action by or in respect of, any Governmental Entities other than (i) the filing
of the Certificate of Merger as contemplated by Article I hereof, (ii)
compliance with any applicable requirements of the HSR Act, and (iii) compliance
with any applicable requirements of the Exchange Act.
(b) The execution, delivery and performance by Parent and
Purchaser of this Agreement and the consummation by Parent and Purchaser of the
transactions contemplated by this Agreement do not and will not (i) conflict
with or result in any breach of any provision of the organizational documents of
the Parent or Purchaser, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default under, or give
rise to any right of termination, amendment, cancellation, acceleration or loss
of benefits under, or result in the creation of any Lien upon any of the
properties or assets of Parent or Purchaser or any of their subsidiaries under,
any of the terms, conditions or provisions of contract to which Parent or
Purchaser or any of their
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subsidiaries is a party or by which any of its properties or assets may be bound
or (iii) violate any Order or Law applicable to Parent or Purchaser, any of
their subsidiaries or any of their properties or assets, except in the case of
clauses (ii) or (iii) for violations, breaches or defaults that would not
reasonably be expected to prevent or materially delay the consummation of the
Offer or the Merger.
Section 5.4. Information Supplied. None of the information supplied or
to be supplied by Parent or Purchaser specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement or (iv) the Proxy Statement will, in the case of
the Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Offer Documents will comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or
Purchaser with respect to statements made or incorporated by reference therein
based on information supplied by the Company specifically for inclusion or
incorporation by reference therein.
Section 5.5. Interim Operations of Purchaser. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby.
Section 5.6. Brokers and Finders. No broker, investment banker,
financial advisor or other person, other than Credit Suisse First Boston, the
fees and expenses of which will be paid by the Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent.
Section 5.7. No Knowledge of Certain Matters. Neither Purchaser nor
Parent has actual knowledge of any (i) Environmental Violation (as defined on
Exhibit A hereto) at any of the properties of the Company as of the date hereof
or (ii) any material breach by the Company of any of its representations or
warranties set forth herein (other than as set forth in the Company Disclosure
Schedule).
ARTICLE VI
COVENANTS
Section 6.1. Covenants of the Company. Until such time as Parent's
designees shall constitute a majority of the members of the Board of Directors
of the Company, except as provided in the Company Disclosure Schedule, the
Company shall, and shall cause its subsidiaries to, conduct their business in
the ordinary course and use all
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reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with the Company and its
subsidiaries. Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, as provided in Section 6.1 of the Company
Disclosure Schedule or as agreed in writing by Parent, from the date hereof
until such time as Parent's designees shall constitute a majority of the members
of the Board of Directors of the Company, the Company shall not, and shall cause
its subsidiaries not to:
(a) Dividends; Changes in Stock. (i) Declare or pay any
dividends on or make other distributions in respect of any of its capital stock
(except for dividends by a wholly owned subsidiary of the Company to its
parent), (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire, or modify or amend, any shares of capital stock of
the Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
except as otherwise required by Section 3.3 of this Agreement.
(b) Issuance of Securities. Issue, deliver, sell, pledge or
encumber, or authorize, propose or agree to the issuance, delivery, sale, pledge
or encumbrance of, any shares of its capital stock or any other security (or any
right to acquire such capital stock or other security) other than the issuance
of Shares upon the exercise of Company Stock Options outstanding on the date of
this Agreement and in accordance with the terms of such Company Stock Options.
(c) Governing Documents. Amend or propose to amend its Charter
or by-laws (or similar organizational documents).
(d) Acquisitions. Acquire or agree to acquire any material
assets (including securities) or merge or consolidate with any person or engage
in any similar transaction.
(e) Dispositions. Sell, lease, license, encumber or otherwise
dispose of any of its assets or any interest therein, other than in the ordinary
course.
(f) Indebtedness. (i) Incur or suffer to exist any
indebtedness for borrowed money or guarantee any such indebtedness, guarantee
any debt of others, enter into any "keep-well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
working capital borrowings incurred in the ordinary course of business, or (ii)
make any loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any wholly owned subsidiary of the
Company.
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(g) Tax Matters. Make, revoke or change any tax election,
change any method of accounting or reporting for tax purposes or settle or
compromise any tax liability of the Company or any of its subsidiaries.
(h) Capital Expenditures. Make or agree to make any capital
expenditures out of the ordinary course of business.
(i) Discharge of Liabilities. Pay, discharge, settle or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business or in accordance
with their terms, of claims, liabilities or obligations recognized or disclosed
in the most recent financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred since the date of such
financial statements in the ordinary course of business.
(j) Material Contracts. (i) Modify, amend or terminate any
material contract, (ii) waive, release or assign any material rights or claims,
(iii) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement or (iv) except in the ordinary
course of business, enter into any material contracts or transactions.
(k) Benefits Changes. (i) Increase the compensation or
benefits of any director, officer, employee or consultant, (ii) adopt any new
employee benefit plan or any amendment to an existing Benefit Plan that
increases the cost thereof, (iii) enter into any employment, consulting or
severance agreement with any director, officer, employee or consultant or (iv)
accelerate the payment of compensation or benefits to any director, officer,
employee or consultant.
(l) Company Option Plans. Take any action that would prevent
or is inconsistent with the provision of Section 3.3, grant any options or other
awards pursuant to any Company Option Plans, or make any amendments in respect
of options, awards or Company Option Plans except as to further the purposes of
this Section and Section 3.3.
(m) Insurance. Permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except in the
ordinary course of business consistent with past practice.
(n) Accounting. Except as may be required as a result of a
change in law or in GAAP, make any change in its methods of accounting.
(o) General. Authorize any of, or announce an intention,
commit or agree to take any of, the foregoing actions or any action which would
result in a breach of any representation or warranty of the Company contained in
this Agreement as of the date when made or as of any future date or would result
in any of the Offer Conditions not being satisfied.
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Section 6.2. No Solicitation. (a) The Company shall, and shall cause
its officers, directors, employees, representatives and agents to, immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined). The Company shall not,
and shall cause its officers, directors, employees, representatives and agents
not to, directly or indirectly, (i) solicit, initiate or encourage (including by
way of furnishing information), or take any other action designed or reasonably
likely to facilitate or encourage, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding any
Takeover Proposal, provided, however, that if, at any time prior to the
acceptance for payment of Shares pursuant to the Offer, the Board of Directors
of the Company determines in good faith, after consultation with outside counsel
and the Company Financial Advisor, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Company may, in response to a Takeover Proposal that was not solicited
subsequent to the date hereof, and subject to compliance with this Section 6.2,
(x) furnish information with respect to the Company to any person pursuant to a
confidentiality agreement in a form approved by Parent (such approval not to be
unreasonably withheld) and (y) participate in discussions or negotiations
regarding such Takeover Proposal. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal, offer or expression of interest by any
third party relating a merger, consolidation or other business combination
involving all or substantially all of the Company's consolidated assets or 100%
of the outstanding voting power of the Company's securities that is not subject
to any financing condition. Any material modification of a Takeover Proposal
shall constitute a new Takeover Proposal.
(b) Except as set forth in this Section 6.2, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, the approval or recommendation by such
Board of Directors or such committee of the Offer, the Merger or this Agreement,
(ii) approve or recommend or take no position with respect to, or propose to
approve or recommend or take no position with respect to, any Takeover Proposal
or (iii) cause the Company to enter into any agreement related to any Takeover
Proposal (other than a confidentiality agreement contemplated by paragraph (a)
above). Notwithstanding the foregoing, in the event that prior to the acceptance
for payment of Shares pursuant to the Offer the Board of Directors of the
Company determines in good faith, after consultation with outside counsel and
the Company Financial Advisor, that it is necessary to do so in order to comply
with its fiduciary duties to the Company's stockholders under applicable law,
the Board of Directors of the Company may, in response to a Superior Proposal
(as defined below) that was not solicited subsequent to the date hereof, (x)
withdraw or modify its approval or recommendation of the Offer, the Merger or
this Agreement or (y) subject to the provisions of Section 8.1(e) hereof,
terminate this Agreement, but in each such case, only at a time that is after
the fifth business day following Parent's receipt of written notice (such
five-day period, the "Notice Period") advising Parent that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and only if the Company is in compliance
with this Section 6.2. Parent and
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Purchaser agree that Purchaser shall not accept for payment, or pay for any
Shares tendered pursuant to the Offer until 5 P.M. (New York City time) on the
business day immediately following the end of the Notice Period (the "No
Takedown Period"); provided, that either of Parent or Purchaser, in its sole
discretion, may elect to shorten or waive the Notice Period and immediately
terminate this Agreement and the Offer at any time after commencement of the
Notice Period in which case the amounts due Parent under Section 8.5(b) below
shall be immediately due and payable. For purposes of this Agreement, a
"Superior Proposal" means any bona fide Takeover Proposal made by a third party
on terms which the Board of Directors of the Company determines in its good
faith judgment (based on the advice of the Company Financial Advisor or other
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the Offer and the Merger and which is reasonably
capable of being consummated in a timely fashion.
(c) The Company shall immediately advise Parent orally and in
writing of any request for information or of any Takeover Proposal, the material
terms and conditions of such request or Takeover Proposal and the identity of
the person making such request or Takeover Proposal. The Company will
immediately inform Parent of any material change in the details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Section 6.2 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable law, provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as specifically permitted by Section 6.2(b), withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Offer, the Merger or this Agreement or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
Section 6.3. Stockholder Approval; Preparation of Proxy Statement. (a)
If the Company Stockholder Approval is required by law, the Company shall, as
promptly as practicable following the expiration of the Offer, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of obtaining the Company Stockholder Approval. The
Company shall, through its Board of Directors, recommend to its stockholders
that the Company Stockholder Approval be given. Notwithstanding the foregoing,
if Purchaser or any other subsidiary of Parent shall acquire at least 90% of the
outstanding Shares, the parties shall, at the option and request of Parent, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a Stockholders
Meeting in accordance with the short form merger provisions of the DGCL. Without
limiting the generality of the foregoing, except as specifically permitted by
Section 6.2(b) the Company agrees that its obligations pursuant to the first
sentence of this Section 6.3(a) shall not be affected by (i) the commencement,
public proposal, public disclosure
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or communication to the Company of any Takeover Proposal or (ii) the withdrawal
or modification by the Board of Directors of the Company of its approval or
recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law,
the Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary proxy statement ("Proxy Statement") with the SEC
and shall use all reasonable efforts to respond to any comments of the SEC or
its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. The Company shall give Parent an opportunity to comment
on any correspondence with the SEC or its staff or any proposed material to be
included in the Proxy Statement prior to transmission to the SEC or its staff
and shall not transmit any such material to which Parent reasonably objects. If
at any time prior to the Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its stockholders such an amendment or
supplement. The Company shall not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
(c) Parent agrees to cause all Shares owned by Parent or any
subsidiary of Parent to be voted in favor of the Company Stockholder Approval.
Section 6.4. Access to Information. The Company shall, and shall cause
each of its subsidiaries to, afford to Parent and its officers, employees,
accountants, counsel, agents and other representatives reasonable access to all
of the properties, personnel, books and records of the Company and its
subsidiaries, and shall furnish promptly all information concerning the
business, properties and personnel of Company and its subsidiaries as Parent may
reasonably request (including, without limitation, allowing Parent and its
consultants to complete such environmental review and testing as it shall deem
to be reasonably necessary). All such information shall be kept confidential in
accordance with the terms of the Confidentiality Agreement, dated as of August
25, 1999, between Parent and the Company. It is understood by the parties hereto
that the Company may withhold information that would be unlawful to disclose to
a competitor, or the disclosure of which the Company reasonably believes may
result in a competitive disadvantage to the Company, if it provides Parent in
writing with a description in reasonable detail of the nature of the information
withheld and the reason for withholding it.
Section 6.5. Disclosure Supplements. From time to time prior to the
Effective Time, the Company shall supplement or amend the Company Disclosure
Schedule with respect to any matter hereafter arising or any information
obtained after the date hereof of which, if existing, occurring or known at or
prior to the date of this Agreement, would
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have been required to be set forth or described in the Company Disclosure
Schedule or which is necessary to complete or correct any information in such
schedule or in any representation and warranty of the Company which has been
rendered inaccurate thereby. The Company shall promptly inform Parent of any
claim by a third party that a contract has been breached, is in default, may not
be renewed or that a consent would be required as a result of the transactions
contemplated by this Agreement. For purposes of determining the satisfaction of
the conditions to the consummation of the transactions contemplated hereby, no
such supplement, amendment or information shall be considered.
Section 6.6. Reasonable Efforts. (a) Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to, (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such commercially reasonable
actions as are necessary to obtain any requisite approvals, consents, orders,
exemptions or waivers by any third party or Governmental Entity, including
filings pursuant to the HSR Act and (ii) using all reasonable efforts to cause
the satisfaction of all conditions to Closing. Each party shall promptly consult
with the others with respect to, provide any necessary information with respect
to and provide the others (or their respective counsel) copies of, all filings
made by such party with any Governmental Entity or any other information
supplied by such party to a Governmental Entity in connection with this
Agreement and the transactions contemplated by this Agreement.
(b) Each party hereto shall promptly inform the others of any
communication from any Governmental Entity regarding any of the transactions
contemplated by this Agreement. If any party or affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Entity with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request. Nothing herein
shall require any party to waive any substantial rights or agree to any
substantial limitation on its (or the Surviving Corporation's) operations or to
dispose of any assets.
(c) Parent shall cause Purchaser to comply with its
obligations under this Agreement.
Section 6.7. Indemnification; Insurance. (a) Parent and Purchaser agree
that all rights to indemnification for acts or omissions occurring prior to the
Effective Time now existing in favor of the current or former directors or
officers (the "Indemnified Parties") of the Company and its subsidiaries as
provided in their respective articles of incorporation or by-laws (or similar
organizational documents), shall survive the Merger and shall continue in full
force and effect in accordance with their terms.
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(b) For five years from the Effective Time, Parent shall
maintain in effect the Company's current directors' and officers' liability
insurance and fiduciary liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy and fiduciary liability insurance (copies of which has been heretofore
delivered to Parent) (or, in lieu of maintaining such insurance, cause coverage
to be provided under any policy maintained for the benefit of Parent or any of
its subsidiaries or otherwise obtained by Parent, so long as the terms thereof
are no less advantageous to the intended beneficiaries thereof than those of the
Company's policy), provided, however, that in no event shall Parent be required
to expend in excess of 150% of the annual premiums currently paid by the Company
for such insurance, which annual premiums the Company represents are $48,200,
and, provided further, that if the annual premiums of such insurance coverage
exceed such amount, Parent shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
(c) This Section 6.7 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Indemnified Parties,
and shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
(d) Each of Parent and Purchaser agrees, that they will take
no action, the primary purpose of which is intended to avoid liability pursuant
to this Section 6.7.
Section 6.8. Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any stockholder of the Company relating to the Offer, the
Merger, this Agreement or the Support Agreement, without the prior written
consent of Parent, with such consent not to be unreasonably withheld. In
addition, subject to its rights under Section 6.2(b) hereof, the Company shall
not voluntarily cooperate with any third party that may hereafter seek to
restrain or prohibit or otherwise oppose the Offer or the Merger and shall
cooperate with Parent and Purchaser to resist any such effort to restrain or
prohibit or otherwise oppose the Offer or the Merger.
Section 6.9. Takeover Statute. If any state anti-takeover law or state
law that purports to limit or restrict business combination or the ability to
acquire voting shares become applicable to the transactions contemplated by the
Offer or this Agreement, the Company and Parent and their respective Boards of
Directors shall grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effect of such law on the transactions contemplated hereby.
Section 6.10. Tefron Undertaking. Tefron hereby undertakes and agrees
to (i) provide or cause to be provided sufficient funds to Parent and Purchaser
so that Parent and Purchaser can meet their payment obligations under Articles I
and II hereof and (ii) otherwise take such action as may be required to cause
Parent and Purchaser to meet their other obligations under Articles I, II, III,
Section 6.6 and Section 8.5(a) hereof. Tefron
32
<PAGE>
agrees that the Company may seek remedies directly from Tefron with respect to
this undertaking without first exhausting its remedies against Purchaser or
Parent.
Section 6.11. HSR Filing by the Company. The Company will promptly
file, and will cause its direct and indirect shareholders (to the extent
required by the HSR Act) to file, with the Federal Trade Commission ("FTC") and
the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") a Notification and Report Form (collectively, the "Company
Notification and Report Form") and related material required to be filed under
the HSR Act, which will, at the time of filing, comply in all material respects
with the requirements of the HSR Act. The Company will make all reasonable
effort to ensure that, at the time of such filing, all information relating to
the Company and its subsidiaries as set forth in the Company Notification and
Report Form will be true and correct in all material respects.
Section 6.12. HSR Filing by the Parent. The Parent will promptly file,
and will cause its direct or indirect shareholders (to the extent required by
the HSR Act) to file, with the FTC and the Antitrust Division a Notification and
Report Form (collectively, the "Parent Notification and Report Form") and
related material required to be filed under the HSR Act, which will, at the time
of filing, comply in all material respects with the requirements of the HSR Act.
Parent will make all reasonable effort to ensure that at the time of such
filing, all information relating to the Parent as set forth in the Parent
Notification and Report Form was true and correct in all material respects.
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction of the following conditions:
(a) Company Stockholder Approval. If required by applicable
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No Law or Order issued by
any court of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, provided, however, that each of the parties shall have used reasonable
efforts to prevent the entry of any such Order and to appeal as promptly as
possible any Order that may be entered.
(c) Purchase of Shares. Purchaser shall have previously
accepted for payment and paid for Shares pursuant to the Offer.
Section 7.2. Conditions to Parent's and Purchaser's Obligation to
Effect the Merger. The obligation of each of Parent and Purchaser to effect the
Merger shall be subject to the satisfaction of the following condition:
33
<PAGE>
(a) FIRPTA Certificate. Parent and Purchaser shall have been
provided with a certified statement of the Company, pursuant to Section
1.1445-2(c)(3) of the Treasury Regulations, that the Company is not, and has not
been within the last five years, a "United States real property holding
corporation" as defined in Section 897(c)(2) of the Code
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) the Offer shall have expired without the
acceptance for payment of Shares thereunder or (y) Purchaser shall not have
accepted for payment any Shares pursuant to the Offer prior to January 31, 2000,
provided, however, that the right to terminate this Agreement pursuant to this
(b)(i) shall not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of any such condition or
if the failure of such condition results from facts or circumstances that
constitute a breach of representation or warranty under this Agreement by such
party; or
(ii) if any Governmental Entity shall have issued an
Order or taken any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and such Order or other action shall have become final
and nonappealable;
(c) by Parent prior to the purchase of Shares pursuant to the
Offer if the Company shall have breached or failed to perform in any material
respect any representation, warranty, covenant or other agreement contained in
this Agreement that (i) would give rise to the failure of a condition set forth
in paragraph (e) or (f) of Exhibit A and (ii) cannot be or has not been cured
within five business days after the giving of written notice to the Company;
(d) by Parent or Purchaser if either Parent or Purchaser is
entitled to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) of Exhibit A to this Agreement;
(e) by the Company in accordance with Section 6.2(b), provided
that it has complied with all provisions thereof, including the notice
provisions therein, and that it has paid Parent the Termination Fee in
accordance with the terms of this Agreement;
34
<PAGE>
(f) by the Company prior to the purchase of Shares pursuant to
the Offer if Parent or Purchaser shall have breached or failed to perform in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach or failure to
perform is incapable of being cured or has not been cured within five business
days after the giving of written notice to Parent or Purchaser, as applicable,
except, in any case, such breaches and failures which are not reasonably likely
to materially and adversely affect Parent's or Purchaser's ability to consummate
the Offer or the Merger; or
(g) by the Parent or Purchaser if either Parent or Purchaser
is entitled to terminate the Offer as a result of the occurrence of any event
set forth in paragraph (h) of Exhibit A to this Agreement.
Section 8.2. Effect of Termination. Subject to Section 8.5 below, in
the event of a termination of this Agreement by either the Company or Parent as
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Parent, Purchaser or the
Company or their respective officers or directors, provided, however, that
nothing herein shall relieve any party for liability for any willful breach
hereof.
Section 8.3. Amendment. This Agreement may be amended by the parties
hereto, by duly authorized action taken, at any time before or after obtaining
the Company Stockholder Approval, but, after the purchase of Shares pursuant to
the Offer, no amendment shall be made which decreases the Merger Consideration
and, after the Company Stockholder Approval, no amendment shall be made which by
law requires further approval by such stockholders without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 8.4. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, subject to Section
8.3, (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
Section 8.5. Expenses. (a) Except as otherwise provided in this Section
8.5, each party shall bear its own expenses in connection with the transactions
contemplated by this Agreement.
(b) If this Agreement is terminated pursuant to (i) Section
8.1(c), and either (x) such termination is the result of an intentional breach
or failure to perform by
35
<PAGE>
the Company or (y) the Company enters into a definitive agreement with respect
to a Superior Transaction within 12 months of the date of such termination, (ii)
Section 8.1(d) or (e) or (iii) if the Company has knowledge of an Environmental
Violation, Section 8.1(g), then the Company shall pay to Parent, as liquidated
damages, (A) a fee of $3,000,000 plus (B) an amount equal to Parent's Costs (as
defined below) by wire transfer of immediately available funds. If this
Agreement is terminated pursuant to Section 8.1(c) and such termination did not
result from an intentional breach or failure to perform by the Company, the
Company shall pay to Parent, as liquidated damages (in the manner set forth in
this paragraph), an amount equal to Parent's Costs. If this Agreement is
terminated pursuant to Section 8.1(g) and the Company does not have knowledge of
an Environmental Violation, the Company shall pay to Parent, as liquidated
damages (in the manner set forth in this paragraph), an amount equal to Parent's
Costs incurred from and after the date hereof. Such fee and /or costs shall be
paid prior to termination in the case of Section 8.1(e) and within one business
day of termination otherwise; provided that, in the case of a Superior
Transaction contemplated by clause (i)(y) above, the fee shall be paid at the
time of the execution of the definitive agreement contemplated thereby . For
purposes hereof, a "Superior Transaction" shall mean a merger, consolidation,
reorganization, recapitalization, asset or share purchase or other acquisition
or sale transaction made at any time (i) involving a per Share purchase price or
consideration in excess of $18.50 per Share and (ii) involving (A) 50% or more
of the assets of the Company or the outstanding Shares or (B) a change of
control of the Company. The Company acknowledges that the agreements contained
in this Section 8.5(b) are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, Parent would not enter into
this Agreement. Accordingly, if the Company fails to pay the amount due pursuant
to this Section 8.5(b) when it is required to be paid, and, in order to obtain
such payment, Parent commences a suit which results in a judgment against the
Company for the fee set forth in this Section 8.5(b), the Company shall pay to
Parent its costs and expenses (including attorneys' fees) in connection with
such suit, including any costs of collection, together with interest on the
amount of the fee at the rate of 12% per annum from the date such fee was
required to be paid. "Parent's Costs" shall mean Parent's and Purchaser's
reasonable and documented out-of-pocket costs, fees and expenses of their
counsel, accountants, financial advisors and other experts and advisors as well
as fees and expenses incident to negotiation, preparation and execution of this
Agreement and related documentation and shareholders' meetings and consents up
to an aggregate amount of $1,800,000.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
Section 9.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt by the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
36
<PAGE>
(a) if to Parent or Purchaser, to
c/o Tefron Ltd.
28 Chida Street
Bnei-Brak 51371
Israel
Attention: Arie Wolfson,
Chief Executive Officer
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
and
(b) if to the Company, to
Alba-Waldensian, Inc.
P.O. Box 100
Valdese, NC 28690
Attention: Glenn J. Kennedy
Chief Financial Officer
with a copy to:
Kennedy Covington Lobdell & Hickman
100 North Tryon Street, Suite 4200
Charlotte, NC 28202-4006
Attention: J. Norfleet Pruden, III
Telefax: (704) 331-7598
Section 9.3. Interpretation.
(a) When a reference is made in this Agreement to an Article
or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
37
<PAGE>
(c) This Agreement is the result of the joint efforts of
Parent, Purchaser and the Company, and each provision hereof has been subject to
the mutual consultation, negotiation and agreement of the parties and there
shall be no construction against any party based on any presumption of that
party's involvement in the drafting thereof.
(d) The words "include", "includes" or "including" shall be
deemed to be followed by the words "without limitation."
(e) A "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person.
(f) The term "ordinary course of business" (or similar terms)
shall be deemed to be followed by the words "consistent with past practice."
(g) The term "knowledge" or "actual knowledge" with respect to
any person that is not a natural person shall mean the knowledge of the senior
officers of that person.
Section 9.4. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 9.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.7, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 9.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any New York state
or federal court sitting in the City of New York. Each of the parties hereto
(including Tefron) irrevocably submits to the exclusive jurisdiction of the
United States District Court for the Southern District of New York, for the
purpose of any action or proceeding arising out of or relating to this Agreement
and each of the parties hereto irrevocably agrees that all claims in respect to
such action or proceeding may be heard and determined exclusively in any New
York state or federal court sitting in the City of New York. Each of the parties
hereto (including Tefron) irrevocably consents to the service of any summons and
complaint and any other process in any other action or proceeding relating to
the Offer or Merger, on
38
<PAGE>
behalf of itself or its property, by the personal delivery of copies of such
process to such party. Nothing in this Section 9.6 shall affect the right of any
party hereto to serve legal process in any other manner permitted by law.
Section 9.7. Publicity. Except as otherwise required by law, court
process or the rules of any applicable securities exchange or as contemplated or
provided elsewhere herein, no party hereto shall issue any press release or
otherwise make any public statement with respect to the transactions
contemplated by this Agreement without prior consultation with the other parties
hereto. The parties hereto agree that a mutually acceptable joint press release
shall be made promptly upon execution of this Agreement and, unless otherwise
agreed by the parties, in no event shall such press release be made later than
the date hereof.
Section 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any affiliate of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 9.9. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, in addition to any other remedy to
which they are entitled at law or in equity.
Section 9.10. Severability. This Agreement shall be deemed severable;
the invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of the balance of this Agreement
or of any other term hereof, which shall remain in full force and effect. If of
any of the provisions hereof are determined to be invalid or unenforceable, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible.
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
TEFRON U.S. HOLDINGS CORP.
By:
-------------------------------
Name:
Title:
AWS ACQUISITION CORP.
By:
-------------------------------
Name:
Title:
ALBA-WALDENSIAN, INC.
By:
-------------------------------
Name:
Title:
For purposes of agreeing to be legally bound by the provisions of
Sections 6.10 and 9.6 hereof, the undersigned hereby executes and delivers this
Agreement as of the date first written above:
TEFRON , LTD.
By:
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless prior to the expiration date for the Offer (the "Expiration
Date") (i) there shall have been validly tendered and not properly withdrawn
prior to the Expiration Date a majority of the outstanding Shares (determined on
a fully diluted basis) (the "Minimum Condition") and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Furthermore, notwithstanding any other
term of the Offer or this Agreement, Purchaser shall not be required to accept
for payment or, subject as aforesaid, to pay for any Shares not theretofore
accepted for payment or paid for, and may terminate the Offer if, at any time on
or after the date of this Agreement and prior to the Expiration Date, any of the
following conditions exists (other than as a result of any action or inaction of
Parent or any of its subsidiaries that constitutes a breach of this Agreement):
(a) there shall be threatened, instituted or pending by any
Governmental Entity any suit, action or proceeding (i) challenging the
acquisition by Parent or Purchaser of any Shares under the Offer, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger or
seeking to obtain from the Company, Parent or Purchaser any damages that are
material in relation to the Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or materially limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material portion of
the business or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or to compel the Company and its
subsidiaries, taken as a whole or Parent to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and its
subsidiaries, taken as a whole, in each case as a result of the Offer or any of
the other transactions contemplated by this Agreement, (iii) seeking to impose
material limitations on the ability of Parent or Purchaser to acquire or hold,
or exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company,
(iv) seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company or its subsidiaries or (v) which otherwise is
reasonably likely to have a Material Adverse Effect on the Company;
<PAGE>
(b) there shall be any Law or Order enacted, entered, first
enforced, promulgated or first deemed applicable to the Offer or the Merger, by
any Governmental Entity, other than the routine application to the Offer or the
Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall exist any Material Adverse Effect with respect
to the Company other than as disclosed in this Agreement or the Company
Disclosure Schedule;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have (x) withdrawn or modified in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer or the Merger or its
adoption of this Agreement, (y) approved or recommended or taken a neutral
position with respect to any Takeover Proposal, (z) failed to reaffirm its
recommendation of the Offer or the Merger or its adoption of this Agreement
within five business days of being requested by Parent to do so or (ii) the
Board of Directors of the Company or any committee thereof shall have resolved
to take any of the foregoing actions;
(e) any of the representations and warranties of the Company
set forth in this Agreement shall not be true and correct in any material
respect in each case at the date of the Agreement and at the scheduled or
extended expiration of the Offer;
(f) the Company shall have failed to perform or comply, in all
material respects, with any agreement, obligation or covenant to be performed or
complied with by it under the Agreement, which failure to perform or comply has
not been cured within five business days after the giving of written notice to
the Company;
(g) the Agreement shall have been terminated in accordance
with its terms;
(h) the Purchaser and Parent shall have reasonably determined
that there are Losses (as defined in Section 4.16(a) (iii) of the Agreement) to
the Company with respect to any environmental matter or violation of
Environmental Law or any litigation or litigations relating thereto (which are
not otherwise disclosed in Schedule 4.16(a) of the Company Disclosure Schedule),
which individually or in the aggregate exceed $500,000 (an "Environmental
Violation"); or
(i) Parent or Purchaser shall not have been provided with a
certified statement of the Company, pursuant to Section 1.1445-2(c)(3) of the
Treasury Regulations, that the Company is not, and has not been within the last
five years, a "United States real property holding corporation" as defined in
Section 897(c)(2) of the Code.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and
A-2
<PAGE>
may, subject to the terms of this Agreement, be waived by Parent and Purchaser
in whole or in part at any time and from time to time in their reasonable
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement to which this Exhibit A is a part.
A-3
<PAGE>
Execution Copy
================================================================================
SUPPORT AGREEMENT
among
TEFRON U.S. HOLDINGS CORP.
and AWS ACQUISITION CORP.
and
CLYDE WM. ENGLE,
NATHAN H DARDICK
and GSC ENTERPRISES, INC.
Dated as of November 8, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Agreement to Tender and to Vote........................................................2
1.1 Tender.............................................................................2
1.2 Voting.............................................................................3
1.3 Grant of Irrevocable Proxy; Appointment of Proxy...................................3
1.4 No Inconsistent Arrangements.......................................................4
1.5 No Solicitation....................................................................4
1.6 Reasonable Best Efforts............................................................5
1.7 Waiver of Appraisal Rights.........................................................5
1.8 Payment for Tender Shares in Excess of the Offer Price.............................5
Section 2. Expiration.............................................................................6
Section 3. Representation and Warranties..........................................................6
Section 4. Additional Shares......................................................................7
Section 5. Exhibit A..............................................................................7
Section 6. Further Assurances.....................................................................7
Section 7. Miscellaneous..........................................................................7
7.1 Non-Survival.......................................................................7
7.2 Entire Agreement; Assignment.......................................................7
7.3 Amendments.........................................................................7
7.4 Notices............................................................................8
7.5 Governing Law; Jurisdiction........................................................9
7.6 Specific Performance...............................................................9
7.7 Counterparts.......................................................................9
7.8 Descriptive Headings...............................................................9
7.9 Severability.......................................................................9
</TABLE>
<PAGE>
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (this "Agreement"), dated as of November 8,
1999, by and among Tefron U.S. Holdings Corp., a Delaware corporation
("Parent"), AWS Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), Clyde Wm. Engle, an individual residing in
the state of Illinois ("Engle"), GSC Enterprises, Inc. ("GSC"), a Delaware
corporation controlled by Engle and Nathan H. Dardick, an individual residing in
the state of Illinois ("Dardick") and (each of Engle, GSC and Dardick, a
"Seller" and, collectively, "Sellers").
WHEREAS, concurrently herewith, Parent, Purchaser, and Alba-Waldensian,
Inc., a Delaware corporation (the "Company"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
the Purchaser agrees to make a tender offer (the "Offer") for all outstanding
Shares of the Company, at $18.50 per Share (the "Offer Price") net to the seller
in cash, to be followed by a merger (the "Merger") of the Purchaser or a
wholly-owned subsidiary thereof with and into the Company. Capitalized terms
used but not defined herein shall have the meanings set forth in the Merger
Agreement;
WHEREAS, as of the date hereof, Engle is the Chairman of the Board of
Directors of the Company and beneficially owns directly or indirectly 977,000
Shares (the "Engle Owned Shares") and options to acquire 5,000 Shares (the
"Engle Options");
WHEREAS, as of the date hereof, GSC beneficially owns directly or
indirectly 127,700 Shares (the "GSC Owned Shares");
WHEREAS, as of the date hereof, Dardick is a director of the Company
and beneficially owns directly 687,066 Shares, 18,000 Shares of which will be
donated to charity the ("Charity Shares") and, upon such donation, will not be
subject to this Agreement, such Shares, less the Charity Shares, (the "Dardick
Owned Shares") and together with the Engle Owned Shares and the GSC Owned
Shares, the "Owned Shares" and options to acquire 5,000 Shares (the "Dardick
Options" and, together with the Engle Options, the "Options");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement and make the Offer, Parent and the Purchaser have required that
Sellers agree, and each Seller hereby agrees, (i) to tender pursuant to the
Offer the Owned Shares held by him, together with any Shares acquired by him
after the date hereof and prior to the termination of the Offer (such Shares,
the "After-Acquired Shares"), whether upon the exercise of Options, conversion
of convertible securities or otherwise (all of the foregoing, collectively, the
"Tender Shares") on the terms and subject to the conditions provided for in this
Agreement and (ii) to enter into the other agreements set forth herein; and
WHEREAS, the Engle Owned Shares and the GSC Owned Shares are subject to
one or more stock pledge or similar agreements (the "Pledge Agreements"),
between
<PAGE>
Engle and LaSalle National Bank (the "Bank") and GSC and the Bank, as
applicable, pursuant to which some or all of the Engle Owned Shares and the GSC
Owned Shares are held in the name of one or more nominees for the Bank;
WHEREAS, on the date hereof the Bank has delivered to Parent and
Purchaser (i) a letter agreement pursuant to which the Bank has agreed to cause
the Engle Owned Shares to be tendered in the Offer as contemplated by Section
1.1 of the Agreement (the "Engle Letter") and (ii) a letter agreement pursuant
to which the Bank has agreed to cause the GSC Owned Shares to be tendered in the
Offer as contemplated by Section 1.1 of the Agreement (the "GSC Letter" and
together with the Engle Letter, the "Bank Letters"); and
WHEREAS, the Board of Directors of the Company has taken such actions
as are necessary to render the provisions of Section 203 of the Delaware General
Corporation Law and Article 13 of the Certificate of Incorporation of the
Company inapplicable to the transactions contemplated hereby and by the Merger
Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
Section 1. Agreement to Tender and to Vote.
1.1 Tender. (a) Each Seller hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), pursuant to and in
accordance with the terms of the Offer, as soon as practicable after
commencement of the Offer but in no event later than ten business days after the
date of commencement of the Offer (the "Tender Deadline")(and with respect to
the After-Acquired Shares, upon the date of acquisition thereof by Seller, or
promptly thereafter, but, in any event the tender of such After-Acquired Shares
shall take place prior to the expiration date of the Offer), all of such
Seller's Tender Shares by physical delivery of the certificates therefor and to
not withdraw such Tender Shares, except following termination of the Offer
pursuant to its terms or the termination of this Agreement. Each Seller hereby
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Tender Shares is subject to the terms and conditions
of the Offer. Each Seller hereby permits Parent and the Purchaser to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the Securities and Exchange Commission) its identity
and ownership of the Tender Shares and the nature of its commitments,
arrangements and understandings under this Agreement.
(b) Engle and GSC agree to instruct the Bank in a timely manner to
tender all Shares held in nominee's name by the Bank or otherwise pursuant to
the Pledge Agreements in accordance with paragraph (a) above so that Engle and
GSC shall meet each of their obligations under paragraph (a) above on or before
the Tender Deadline.
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1.2 Voting. (a) Each Seller hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of the Company,
however called, such Seller shall (a) vote all of such Seller's Tender Shares in
favor of the Merger; (b) vote the Tender Shares against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement; and (c)
vote the Tender Shares against any action or agreement (other than the Merger
Agreement or the transactions contemplated thereby) that would impede, interfere
with, delay, postpone or attempt to discourage the Merger or the Offer,
including, but not limited to: (i) any extraordinary corporate transaction, such
as a merger, consolidation or other business combination involving the Company
or any of its subsidiaries; (ii) a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries or a reorganization,
recapitalization or liquidation of the Company and its subsidiaries; (iii) any
change in the management or board of directors of the Company, except as
otherwise agreed to in writing by the Purchaser; (iv) any material change in the
present capitalization or dividend policy of the Company; or (v) any other
material change in the Company's corporate structure or business. Seller hereby
revokes any proxy previously granted by such Seller with respect to the Tender
Shares; provided, that, if such meeting of the stockholders is held prior to the
expiration or waiver of all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") (such expiration
or waiver, "HSR Termination") such Seller shall vote only that pro rata portion
of his Tender Shares such that the total number of Tender Shares voted pursuant
to this Agreement in favor of the Merger, combined with the total number of
Shares held by Parent and Purchaser at the time of such meeting, shall equal
49.9% (forty-nine and nine-tenths percent) of the total Shares. The pro rata
portion of Tender Shares to be voted shall be calculated such that each Seller
votes an equal percentage of such Seller's Owned Shares.
(b) Notwithstanding the foregoing, it is understood that the Engle
Owned Shares, the GSC Owned Shares and Engle's and GSC's obligations under this
Section 1.2 are subject to the Pledge Agreement. Engle and GSC agree that each
shall instruct the Bank and shall use all reasonable efforts to cause the Bank
to vote the Engle Owned Shares and the GSC Owned Shares as provided in this
Section 1.2.
1.3 Grant of Irrevocable Proxy; Appointment of Proxy.
(i) Each Seller hereby irrevocably grants to, and appoints,
Arie Wolfson, and Nachum Peleg, or any of them, in their respective
capacities as officers of the Purchaser or Parent, and any individual
who shall hereafter succeed to any such office of the Purchaser or
Parent, and each of them individually, such Seller's proxy and
attorney-in-fact (with full power of substitution), for and in the
name, place and stead of such Seller, to vote such Seller's Tender
Shares in favor of the Merger and other transactions contemplated by
the Merger Agreement, against any Takeover Proposal and otherwise as
contemplated by Section 1.2; provided, that, if such proxy is exercised
prior to HSR Termination, such proxy will be exercisable only with
respect to that pro rata portion of each Seller's Tender Shares such
that the total number of Tender Shares subject to proxy, combined with
the total number of Shares held by Parent and Purchaser at the
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time of such exercise, shall equal 49.9% (forty-nine and nine-tenths
percent) of the total Shares. The pro rata portion of Tender Shares
subject to proxy shall be calculated such that each Seller grants a
proxy with respect to an equal percentage of such Seller's Owned
Shares. The foregoing proxy shall terminate upon the termination of
this Agreement.
(ii) Each Seller represents that any proxies heretofore given
in respect of the Tender Shares are not irrevocable, and that any such
proxies are hereby revoked.
(iii) Each Seller understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon such Seller's
execution and delivery of this Agreement. Each Seller hereby affirms
that the irrevocable proxy set forth in this Section 1.3 is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of
such Seller under this Agreement consistent, in the case of Engle and
Dardick, with such Seller's duties as a director of the Company and in
accordance with the terms of the Merger Agreement. Each Seller hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked. Each Seller hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of Section
212(e) of the Delaware General Corporation Law.
(iv) This Section 1.3 shall apply to the Engle Owned Shares
and the GSC Owned Shares only to the extent permitted (or not
prohibited and acceptable to the Bank) by the Pledge Agreements.
1.4 No Inconsistent Arrangements. Each Seller hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
such Seller shall not (i) except to the Purchaser, transfer (which term shall
include, without limitation, any sale, gift, pledge or other disposition), or
consent to any transfer of, any or all of the Options or Tender Shares or any
interest therein, (ii) except with Parent, enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all of
the Options or Tender Shares or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to the Options or
Tender Shares, (iv) deposit any Options or Tender Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Tender Shares
or (v) take any other action that would in any way restrict, limit or interfere
with the performance of its obligations hereunder or the transactions
contemplated hereby or by the Merger Agreement or which would make any
representation or warranty of such Seller hereunder untrue or incorrect.
1.5 No Solicitation. Each Seller hereby agrees that it shall not, and
shall not permit or authorize any of its affiliates, representatives or agents
to, directly or indirectly, encourage, solicit, explore, participate in or
initiate discussions or negotiations with, or provide or disclose any
information to, any corporation, partnership, person or other entity or group
(other than Parent, the Purchaser or any of their affiliates or
4
<PAGE>
representatives) concerning any Takeover Proposal or enter into any agreement,
arrangement or understanding requiring the Company to abandon, terminate or fail
to consummate the Merger or any other transactions contemplated by the Merger
Agreement. Each Seller will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Takeover Proposal. From and after the execution of this Agreement, each
Seller shall immediately advise Parent in writing of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations or proposals relating to
a Takeover Proposal, identify the offeror and furnish to Parent a copy of any
such proposal or inquiry, if it is in writing, or a written summary of any oral
proposal or inquiry relating to a Takeover Proposal. Each Seller shall promptly
advise Parent in writing of any development relating to such proposal, including
the results of any discussions or negotiations with respect thereto. Any action
taken by either Engle or Dardick in his capacity as director of the Company, or
the Company, or any member of the Board of Directors of the Company including,
if applicable, any representative of either Engle or Dardick acting in such
capacity, in accordance with the proviso to the second sentence of Section
6.2(a) of the Merger Agreement shall be deemed not to violate this Section 1.5.
1.6 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each Seller hereby agrees to use all reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Sellers shall promptly consult with Parent and provide
any necessary information and material with respect to all filings made by such
Seller with any Governmental Entity in connection with this Agreement and the
Merger Agreement and the transactions contemplated hereby and thereby.
1.7 Waiver of Appraisal Rights. Each Seller hereby waives any rights of
appraisal or rights to dissent from the Merger that it may have.
1.8 Payment for Tender Shares in Excess of the Offer Price. Each Seller
hereby agrees that any incremental value such Seller has in the equity of the
Company (including any Shares and Options beneficially owned by Seller)
resulting from or attributable to a Superior Transaction (other than with Parent
or the Purchaser) that is entered into or consummated prior to or within one
month of the termination of the Merger Agreement in accordance with its terms
that exceeds $18.50 per Share (or the equivalent spread value of any Option) (an
"Excess Amount") shall belong to Parent. Each Seller accordingly agrees to hold
in trust for the benefit of Parent, and to remit to Parent within two days of
any receipt thereof (or, if earlier, entitlement to receive), any Excess Amount
or Amounts that such Seller shall receive or be entitled to receive from any
person. Each Seller acknowledges that this provision is a material inducement to
Parent and Purchaser to enter into this Agreement, and is intended to ensure
that such Seller would not have a personal incentive to favor a competing
transaction over the transactions contemplated by the Merger Agreement.
Accordingly, each Seller hereby agrees to reimburse Parent and Purchaser for any
fees and expenses (including reasonable
5
<PAGE>
attorneys' fees) incurred by Parent and Purchaser in connection with any
successful litigation, dispute or other attempt to recover Excess Amounts.
Section 2. Expiration.
This Agreement and the Sellers' obligation to tender provided herein
shall terminate on the earlier of the payment for the Shares pursuant to the
Offer and the date of termination of the Merger Agreement.
Section 3. Representation and Warranties.
Each Seller hereby, severally and not jointly, represents and warrants
to Parent as follows:
(a) Title. Except as set forth on Exhibit A hereto, such Seller has
good and valid title to such Seller's Owned Shares, free and clear of any lien,
pledge, charge, encumbrance or claim of whatever nature. Upon the purchase of
the Tender Shares by the Purchaser, each Seller will deliver good and valid
title to the Tender Shares owned by such Seller, free and clear of any lien,
charge, encumbrance or claim of whatever nature.
(b) Ownership of Shares. On the date hereof, such Seller's Owned Shares
are owned of record or beneficially by such Seller. On the date hereof, such
Owned Shares (and with respect to Dardick, such Shares together with the Charity
Shares) constitute all of the Shares owned of record or beneficially by such
Seller. Except as set forth on Exhibit A hereto, such Seller has sole voting
power and sole power of disposition with respect to all of such Seller's Owned
Shares, with no restrictions, subject to applicable federal securities laws, on
Seller's rights of disposition pertaining thereto.
(c) Power; Binding Agreement. Such Seller has the legal capacity, power
and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Seller will not violate any other agreement to which such Seller is a party,
including, without limitation, any voting agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered by
such Seller and constitutes a valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms.
(d) No Conflicts. Other than in connection with or in compliance with
the provisions of the Exchange Act and the HSR Act, no authorization, consent or
approval of, or filing with, any court or any public body or authority is
necessary for the consummation by such Seller of the transactions contemplated
by this Agreement. Except as set forth on Exhibit A hereto, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not constitute a breach, violation or
default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, encumbrance, pledge, charge or
claim upon any of the properties or assets of such Seller under, any note, bond,
mortgage, indenture, deed of
6
<PAGE>
trust, license, lease, agreement or other instrument to which such Seller is a
party or by which its properties or assets are bound.
(e) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Seller.
Section 4. Additional Shares.
Each Seller hereby agrees, while this Agreement is in effect, to
promptly notify Parent of the number of any new Shares acquired by such Seller,
if any, after the date hereof and that such shares shall be subject to the terms
of this Agreement.
Section 5. Exhibit A.
The provisions of Exhibit A are incorporated herein by reference and
shall be deemed to be an integral part of this Agreement with regard to Engle
and GSC only.
Section 6. Further Assurances.
From time to time, at the Parent's request and without further
consideration, Sellers shall execute and deliver such additional documents and
take all such further action as may be reasonably necessary or desirable to
consummate and make effective the transactions contemplated by Section 1 of this
Agreement.
Section 7. Miscellaneous.
7.1 Non-Survival. The representations and warranties made herein shall
terminate upon the expiration of this Agreement, other than Sellers'
representations and warranties in Sections 3(a) and (b) which shall survive the
sale of the Tender Shares and the termination of this Agreement following such
sale.
7.2 Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise, provided that Parent may
assign its rights and obligations hereunder to any affiliate of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
7.3 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto. All references herein to the Merger Agreement
and the terms and conditions defined therein shall refer to the Merger Agreement
entered into contemporaneously herewith, and shall not extend to any amendments
thereof unless otherwise agreed to in writing by the parties hereto.
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7.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by hand
delivery, telegram, telex or telecopy or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
If to Engle: Clyde Wm. Engle
830 North Greenbay Road
Lake Forest, IL 60045
Telecopy: (847) 234-4350
If to GSC: GSC Enterprises, Inc.
4433 West Touhy Avenue, Suite 310
Lincolnwood, IL 60712
Attention: Clyde Wm. Engle
Telecopy: (847) 568-9392
If to Dardick: Nathan H Dardick
2331 Orrington Avenue
Evanston, IL 60201
Telecopy: (847) 328-9577
and
Nathan H Dardick
P.O. Box 731
Captiva, FL 33924
Telecopy: (941) 395-4392
If to Parent: c/o Tefron Ltd.
28 Chida Street
Bnei-Brak 51371
Israel
Attention: Arie Wolfson
Chief Executive Officer
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with a copy to: Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
Telecopy: (212) 259-6333
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.5 Governing Law; Jurisdiction. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any Illinois state
or federal court sitting in the City of Chicago for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Illinois state or
federal court sitting in the City of Chicago. Each of the parties hereto
irrevocably consents to the service of any summons and complaint and any other
process in any other action or proceeding relating to the this Agreement, on
behalf of itself or its property, by the personal delivery of copies of such
process to such party. Nothing in this Section 7.5 shall affect the right of any
party hereto to serve legal process in any other manner permitted by law.
7.6 Specific Performance. Each Seller recognizes and acknowledges that
a breach by him of any covenants or agreements contained in this Agreement will
cause Parent to sustain damages for which it would not have an adequate remedy
at law, and therefore each Seller agrees that in the event of any such breach
Parent shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
7.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same Agreement.
7.8 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.9 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such
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invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
10
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IN WITNESS WHEREOF, Parent and Sellers have caused this Agreement to be
duly executed as of the day and year first above written.
------------------------------------
CLYDE WM. ENGLE
------------------------------------
NATHAN H DARDICK
------------------------------------
GSC Enterprises, Inc.
By:
--------------------------------
Name:
Title:
TEFRON U.S. HOLDINGS CORP.
By:
--------------------------------
Name:
Title:
AWS ACQUISITION CORP.
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit A
Engle's Owned Shares and the GSC's Owned Shares are subject to the Pledge
Agreements. Pursuant to the Bank Letters, Engle and GSC will each be able to
fully meet his or its obligations to Purchaser and Parent under Section 1.1
hereof.
<PAGE>
Execution Copy
INTEGRATION CONSULTING/NONCOMPETITION AGREEMENT
THIS INTEGRATION CONSULTING/NONCOMPETITION AGREEMENT
("Consulting Agreement") is made and entered into on November 8, 1999 between
Tefron U.S. Holdings Corp., Delaware corporation (the "Parent"), and Clyde Wm.
Engle, an individual who resides in the State of Illinois (the "Consultant").
Terms not otherwise defined herein shall have the meanings assigned to them in
the Merger Agreement (as defined below).
WHEREAS, the Consultant is a principal stockholder and
director of Alba-Waldensian, Inc., a Delaware corporation (the "Company");
WHEREAS, concurrently herewith the Parent and AWS Acquisition
Corp., a Delaware corporation and the Parent's wholly-owned subsidiary
("Purchaser"), and the Company are entering into an Agreement and Plan of Merger
of even date herewith (the "Merger Agreement") pursuant to which the Purchaser
agrees to make a tender offer (the "Offer") for all outstanding Shares of the
Company, to be followed by a merger (the "Merger") of the Purchaser or a
wholly-owned subsidiary thereof with and into the Company;
WHEREAS, the Parent desires to avail itself of the
Consultant's experience and expertise on the terms and conditions hereinafter
set forth; and
WHEREAS, the Consultant is willing to render consulting
services to the Parent to assist in the integration of the business of the
Company with the business of Parent and its affiliates (such businesses,
collectively, the "Businesses") on the terms and conditions hereinafter set
forth and to refrain from certain activities in competition with the Businesses;
NOW, THEREFORE, in consideration of the premises, the mutual
promises of the parties, and other good and valuable consideration, it is hereby
agreed as follows:
1. Consulting Period. The Parent shall retain the Consultant, and the
Consultant shall serve the Parent, in an advisory and consulting capacity for
the period commencing on the Takedown Date (the "Initial Date") and ending on
the effective date of the Merger (such period being hereinafter referred to as
the "Consulting Period").
2. Consulting Services. The Consultant agrees to render such advisory
and consulting services during the Consulting Period with respect to the
integration of the Businesses as the Parent may reasonably request from time to
time. The Parent and the Consultant shall mutually agree upon the time and place
where the services shall be performed. During the Consulting Period, the
Consultant will from time to time, at the request of the Parent, consult with
and advise the officers of the Parent and the Company with respect to the
integration of the Businesses.
Nothing in this Consulting Agreement shall preclude the Consultant from
engaging for compensation in any business, employment, occupation or other
activity (either as an employee or on his own behalf) not prohibited by the
provisions of Section 6 hereof.
<PAGE>
3. Compensation for Consulting Services and Noncompetition Agreement.
For the Consultant's services to the Parent during the Consulting Period, and
the Consultant's observance of his agreements set forth in this agreement, the
Parent shall pay the Consultant a fee of $200,000 (the "Consulting Fee") for
services requested by the Parent as described herein. Consultant shall be paid
the Consulting Fee in two equal installments of $100,000. The first installment
shall be paid on the date on which Purchaser pays for Shares tendered pursuant
to the Offer and the second installment shall be paid upon the effective date of
the Merger. The Consultant will be reimbursed by the Parent for all reasonable
travel, food, lodging or similar expenses incurred in connection with his duties
hereunder which are approved by Parent in advance of the incurrence of such
expenses. In consideration of the Consultant's agreement to enter into the
covenant not to compete set forth in paragraph 6 below, Consultant shall be paid
$100,000 (the "Noncompetition Payment") which payment shall be made to the
Consultant on March 31, 2001.
4. Disability During Consulting Period. In the event the Consultant
shall, in the opinion of competent medical authority, become disabled prior to
the expiration of the Consulting Period and as a result of such disability shall
be substantially unable to perform the services required of him hereunder, the
Consultant shall thereupon be relieved of any further obligation to perform such
services and the Parent shall pay to the Consultant a pro rata portion of the
Consulting Fee through the date of disability.
5. Death of Consultant. The Consulting Agreement shall terminate upon
the death of the Consultant. In the event of the Consultant's death, the Parent
shall pay to the Consultant's legal representative a pro rata portion of the
Consulting Fee through the date of death.
6. Restrictive Covenants. In consideration of the Offer, the
transactions contemplated by the Merger Agreement, the Noncompetition Payment
and the other provisions hereof:
(a) Covenant Not to Compete. The Consultant hereby agrees
that, for a minimum of thirty months from the Initial Date (the "Noncompetition
Period"), the Consultant shall not (i) in any geographic area where the Parent
or its controlling shareholder or the Company conducts business during the
Noncompetition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity), or lend
his name (or any part or variant thereof) to, any business which is, or as a
result of the Consultant's engagement or participation would be involved in the
industry in which the Parent or the Company operates, (ii) deal, directly or
indirectly, in a competitive manner with any customers doing business with the
Parent or the Company during the Noncompetition Period (except in connection
with the performance of his services hereunder), or (iii) solicit or employ any
officer or employee of the Parent or its controlling shareholder or the Company
to become an officer, director, employee or agent of the Consultant, his
affiliates or anyone else; provided, that, Consultant may continue to employ
Glenn J. Kennedy in the same capacity on the same part-time basis as he is
currently employed and may employ him on a full-time or other basis if his
employment with the Company is terminated by or with the consent of the Company.
At no time shall the Consultant engage in or participate in, directly or
indirectly, any business conducted under any name that shall be the same as or
similar to the name of the Parent or the Company or any trade name used by them.
Notwithstanding the foregoing, it is expressly understood and agreed that
ownership by the Consultant, in the aggregate, of less than 5% of the
outstanding shares of capital stock of any
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corporation with one or more classes of its capital stock listed on a national
securities exchange or actively traded in the over-the-counter market that would
otherwise be prohibited by clause (i) above shall not be deemed to constitute a
violation of such provision.
(b) Intellectual Property. During the Consulting Period,
Consultant will disclose to the Parent all ideas, inventions and business plans
developed by Consultant during such period which relate directly or indirectly
to the Businesses, including, without limitation, any process, operation,
product or improvement which may be patentable or copyrightable. Consultant
agrees that such will be the property of the Parent and that Consultant will at
the Parent's request and cost do whatever is necessary to secure the rights
thereto by patent, copyright or otherwise to the Parent. The Consultant shall be
prohibited from making use of or implementing any such ideas, inventions or
business plans in connection with his employment with a business that is
considered a competitor under Section 6(a)(i) hereof.
(c) Confidentiality. During the Consulting Period and at all
times thereafter, Consultant agrees that he will not divulge to anyone (other
than the Parent or the Company or any persons employed or designated by the
Parent or the Company) any knowledge or information of any type whatsoever
whether of a confidential nature or otherwise relating to the business of the
Parent or the Company or any of their respective subsidiaries or affiliates,
including, without limitation, all types of trade secrets (unless readily
ascertainable from public or published information or trade sources) and
customer and supplier information (the foregoing, collectively, the
"Confidential Information"). Consultant further agrees not to disclose, publish
or make use of any Confidential Information without the prior written consent of
the Parent. Upon termination of this Agreement, the Consultant or his personal
representative shall promptly deliver to the Company all books, memoranda,
plans, records and written data of every kind relating to the business and
affairs of the Company or the Confidential Information which are then in the
Consultant's possession. In the event that the Consultant is requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoenas, civil investigative demand or other
similar process) to disclose any of the Confidential Information, Consultant
shall provide the Parent with prompt written notice of any such request or
requirement so that the Parent may seek a protective order or other appropriate
remedy an/or waive compliance with the provisions of this Section 6(c). If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the Company, the Consultant is, in the opinion of counsel, legally compelled to
disclose Confidential Information, the Consultant may, without liability
hereunder, disclose only that portion of the Confidential Information which such
counsel advises the Consultant is legally required to be disclosed.
(d) Business Goodwill. During the Consulting Period and at all
times thereafter, Consultant will make only positive comments about the Parent
and the Company and their respective affiliates, directors, officers, employees
and agents, and shall make no comments or take any other actions, direct or
indirect, that will reflect adversely on any of the foregoing or adversely
affect their business reputation or good will.
(e) Remedy for Breach. The Parent shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of this Section 6
and the Consultant hereby consents that such restraining order or injunction may
be granted without the necessity of the Parent's posting any bond.
-3-
<PAGE>
7. Miscellaneous. (a) Independent Contractor Status. Consultant
acknowledges and agrees that, from and after the Initial Date, his status at all
times shall be that of an independent contractor, and that he may not, at any
time, act as a representative for or on behalf of the Parent or the Company for
any purpose or transaction, and may not bind or otherwise obligate the Parent or
the Company in any manner whatsoever without obtaining the prior written
approval of the Parent therefor. The parties hereby acknowledge and agree that
all Consulting Fees paid during the Consulting Period shall represent fees for
his consulting services as an independent contractor, and shall therefor be paid
without any deductions or withholdings taken therefrom for taxes or any other
purpose. The Consultant further acknowledges that the Parent makes no warranties
as to any tax consequences regarding payment of such Consulting Fees, and
specifically agrees that the determination of any tax liability or other
consequences of the payment set forth above is his sole and complete
responsibility and that he will pay all federal, state and local taxes, if any,
assessed on such payments, but will not be responsible for any taxes or
penalties imposed by any taxing authority against the Parent or the Company for
its failure to properly report the Consultant's earnings under this Agreement.
(b) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person or by courier, telegraphed, telexed or by
facsimile transmission (with a printed confirmation) or mailed by certified or
registered mail, postage prepaid, addressed as follows:
If to the Consultant: If to the Parent:
Clyde Wm. Engle c/o Tefron Ltd.
830 North Greenbay Road 28 Chida Street
Lake Forest, IL 60045 Bnei-Brak 51371
Telecopy: (847) 234-4350 Israel
Attention: Arie Wolfson,
Chief Executive Officer
Any party may, by written notice to the others, change the address to
which notices to such party are to be delivered or mailed, provided, that any
such change of address shall only be effective upon receipt.
(c) General. No party hereto may assign his or its rights or delegate
his or its duties hereunder without the prior written consent of the other
party. To the extent any provision of this Consulting Agreement shall be invalid
or unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Consulting Agreement shall be unaffected and shall
continue in full force and effect. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business activities
covered by, any provision of this Consulting Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may be
validly and enforceably covered. This Consulting Agreement (i) contains the
entire agreement between the parties with respect to the subject matter hereof
(other than the Purchase Agreement), and supersedes all previous negotiations,
commitments and writings, (ii) may be amended, modified, altered or terminated,
and any of its provisions waived, only in a writing
-4-
<PAGE>
signed on behalf of the parties hereto, (iii) shall be governed by and construed
and enforced in accordance with the laws of the State of New York without regard
to the applicable conflicts of laws and (iv) shall terminate with no further
obligation of either party hereto to the other upon the termination of the
transactions contemplated by the Merger Agreement pursuant to the terms thereof.
All actions and proceedings arising out of or relating to this Agreement shall
be heard and determined in any Illinois state or federal court sitting in the
City of Chicago for the purpose of any action or proceeding arising out of or
relating to this Agreement and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined exclusively in any Illinois state or federal court sitting in the
City of Chicago. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state of Illinois, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Illinois or federal
court sitting in the City of Chicago. Each of the parties hereto agrees to
reimburse the other for any reasonable costs and expenses, including reasonable
legal fees incurred by such party in connection with the collection of any
amounts payable by the other party hereunder which are not paid in a timely
manner.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Consulting Agreement
as of the day and year first above written.
TEFRON U.S. HOLDINGS CORP.:
By:
-------------------------------
Name:
Title:
----------------------------------
Cylde Wm. Engle
<PAGE>
Execution Copy
INTEGRATION CONSULTING/NONCOMPETITION AGREEMENT
THIS INTEGRATION CONSULTING/NONCOMPETITION AGREEMENT ("Consulting
Agreement") is made and entered into on November 8, 1999 between Tefron U.S.
Holdings Corp., Delaware corporation (the "Parent"), and Nathan H Dardick, an
individual who resides in the State of Illinois (the "Consultant"). Terms not
otherwise defined herein shall have the meanings assigned to them in the Merger
Agreement (as defined below).
WHEREAS, the Consultant is a principal stockholder and director of
Alba-Waldensian, Inc., a Delaware corporation (the "Company");
WHEREAS, concurrently herewith the Parent and AWS Acquisition Corp., a
Delaware corporation and the Parent's wholly-owned subsidiary ("Purchaser"), and
the Company are entering into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement") pursuant to which the Purchaser agrees to make
a tender offer (the "Offer") for all outstanding Shares of the Company, to be
followed by a merger (the "Merger") of the Purchaser or a wholly-owned
subsidiary thereof with and into the Company;
WHEREAS, the Parent desires to avail itself of the Consultant's
experience and expertise on the terms and conditions hereinafter set forth; and
WHEREAS, the Consultant is willing to render consulting services to the
Parent to assist in the integration of the business of the Company with the
business of Parent and its affiliates (such businesses, collectively, the
"Businesses") on the terms and conditions hereinafter set forth and to refrain
from certain activities in competition with the Businesses;
NOW, THEREFORE, in consideration of the premises, the mutual promises
of the parties, and other good and valuable consideration, it is hereby agreed
as follows:
1. Consulting Period. The Parent shall retain the Consultant, and the
Consultant shall serve the Parent, in an advisory and consulting capacity for
the period commencing on the Takedown Date (the "Initial Date") and ending on
the effective date of the Merger (such period being hereinafter referred to as
the "Consulting Period").
2. Consulting Services. The Consultant agrees to render such advisory
and consulting services during the Consulting Period with respect to the
integration of the Businesses as the Parent may reasonably request from time to
time. The Parent and the Consultant shall mutually agree upon the time and place
where the services shall be performed. During the Consulting Period, the
Consultant will from time to time, at the request of the Parent, consult with
and advise the officers of the Parent and the Company with respect to the
integration of the Businesses.
Nothing in this Consulting Agreement shall preclude the Consultant from
engaging for compensation in any business, employment, occupation or other
activity (either as an employee or on his own behalf) not prohibited by the
provisions of Section 6 hereof.
<PAGE>
3. Compensation for Consulting Services and Noncompetition Agreement.
For the Consultant's services to the Parent during the Consulting Period, and
the Consultant's observance of his agreements set forth in this agreement, the
Parent shall pay the Consultant a fee of $100,000 (the "Consulting Fee") for
services requested by the Parent as described herein. Consultant shall be paid
the Consulting Fee in two equal installments of $50,000. The first installment
shall be paid on the date on which Purchaser pays for Shares tendered pursuant
to the Offer and the second installment shall be paid upon the effective date of
the Merger. The Consultant will be reimbursed by the Parent for all reasonable
travel, food, lodging or similar expenses incurred in connection with his duties
hereunder which are approved by Parent in advance of the incurrence of such
expenses. In consideration of the Consultant's agreement to enter into the
covenant not to compete set forth in paragraph 6 below, Consultant shall be paid
$50,000 (the "Noncompetition Payment") which payment shall be made to the
Consultant on March 31, 2001.
4. Disability During Consulting Period. In the event the Consultant
shall, in the opinion of competent medical authority, become disabled prior to
the expiration of the Consulting Period and as a result of such disability shall
be substantially unable to perform the services required of him hereunder, the
Consultant shall thereupon be relieved of any further obligation to perform such
services and the Parent shall pay to the Consultant a pro rata portion of the
Consulting Fee through the date of disability.
5. Death of Consultant. The Consulting Agreement shall terminate upon
the death of the Consultant. In the event of the Consultant's death, the Parent
shall pay to the Consultant's legal representative a pro rata portion of the
Consulting Fee through the date of death.
6. Restrictive Covenants. In consideration of the Offer, the
transactions contemplated by the Merger Agreement, the Noncompetition Payment
and the other provisions hereof:
(a) Covenant Not to Compete. The Consultant hereby agrees
that, for a minimum of thirty months from the Initial Date (the "Noncompetition
Period"), the Consultant shall not (i) in any geographic area where the Parent
or its controlling shareholder or the Company conducts business during the
Noncompetition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity), or lend
his name (or any part or variant thereof) to, any business which is, or as a
result of the Consultant's engagement or participation would be involved in the
industry in which the Parent or the Company operates, (ii) deal, directly or
indirectly, in a competitive manner with any customers doing business with the
Parent or the Company during the Noncompetition Period (except in connection
with the performance of his services hereunder), or (iii) solicit or employ any
officer or employee of the Parent or its controlling shareholder or the Company
to become an officer, director, employee or agent of the Consultant, his
affiliates or anyone else. At no time shall the Consultant engage in or
participate in, directly or indirectly, any business conducted under any name
that shall be the same as or similar to the name of the Parent or the Company or
any trade name used by them. Notwithstanding the foregoing, it is expressly
understood and agreed that ownership by the Consultant, in the aggregate, of
less than 5% of the outstanding shares of capital stock of any corporation with
one or more classes of its capital stock listed on a national securities
exchange or actively traded in the over-the-counter market that would otherwise
be prohibited by clause (i) above shall not be deemed to constitute a violation
of such provision.
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<PAGE>
(b) Intellectual Property. During the Consulting Period,
Consultant will disclose to the Parent all ideas, inventions and business plans
developed by Consultant during such period which relate directly or indirectly
to the Businesses, including, without limitation, any process, operation,
product or improvement which may be patentable or copyrightable. Consultant
agrees that such will be the property of the Parent and that Consultant will at
the Parent's request and cost do whatever is necessary to secure the rights
thereto by patent, copyright or otherwise to the Parent. The Consultant shall be
prohibited from making use of or implementing any such ideas, inventions or
business plans in connection with his employment with a business that is
considered a competitor under Section 6(a)(i) hereof.
(c) Confidentiality. During the Consulting Period and at all
times thereafter, Consultant agrees that he will not divulge to anyone (other
than the Parent or the Company or any persons employed or designated by the
Parent or the Company) any knowledge or information of any type whatsoever
whether of a confidential nature or otherwise relating to the business of the
Parent or the Company or any of their respective subsidiaries or affiliates,
including, without limitation, all types of trade secrets (unless readily
ascertainable from public or published information or trade sources) and
customer and supplier information (the foregoing, collectively, the
"Confidential Information"). Consultant further agrees not to disclose, publish
or make use of any Confidential Information without the prior written consent of
the Parent. Upon termination of this Agreement, the Consultant or his personal
representative shall promptly deliver to the Company all books, memoranda,
plans, records and written data of every kind relating to the business and
affairs of the Company or the Confidential Information which are then in the
Consultant's possession. In the event that the Consultant is requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoenas, civil investigative demand or other
similar process) to disclose any of the Confidential Information, Consultant
shall provide the Parent with prompt written notice of any such request or
requirement so that the Parent may seek a protective order or other appropriate
remedy an/or waive compliance with the provisions of this Section 6(c). If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the Company, the Consultant is, in the opinion of counsel, legally compelled to
disclose Confidential Information, the Consultant may, without liability
hereunder, disclose only that portion of the Confidential Information which such
counsel advises the Consultant is legally required to be disclosed.
(d) Business Goodwill. During the Consulting Period and at all
times thereafter, Consultant will make only positive comments about the Parent
and the Company and their respective affiliates, directors, officers, employees
and agents, and shall make no comments or take any other actions, direct or
indirect, that will reflect adversely on any of the foregoing or adversely
affect their business reputation or good will.
(e) Remedy for Breach. The Parent shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of this Section 6
and the Consultant hereby consents that such restraining order or injunction may
be granted without the necessity of the Parent's posting any bond.
7. Miscellaneous. (a) Independent Contractor Status. Consultant
acknowledges and agrees that, from and after the Initial Date, his status at all
times shall be that of an independent contractor, and that he may not, at any
time, act as a representative for or on behalf
3
<PAGE>
of the Parent or the Company for any purpose or transaction, and may not bind or
otherwise obligate the Parent or the Company in any manner whatsoever without
obtaining the prior written approval of the Parent therefor. The parties hereby
acknowledge and agree that all Consulting Fees paid during the Consulting Period
shall represent fees for his consulting services as an independent contractor,
and shall therefor be paid without any deductions or withholdings taken
therefrom for taxes or any other purpose. The Consultant further acknowledges
that the Parent makes no warranties as to any tax consequences regarding payment
of such Consulting Fees, and specifically agrees that the determination of any
tax liability or other consequences of the payment set forth above is his sole
and complete responsibility and that he will pay all federal, state and local
taxes, if any, assessed on such payments, but will not be responsible for any
taxes or penalties imposed by any taxing authority against the Parent or the
Company for its failure to properly report the Consultant's earnings under this
Agreement.
(b) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person or by courier, telegraphed, telexed or by
facsimile transmission (with a printed confirmation) or mailed by certified or
registered mail, postage prepaid, addressed as follows:
If to the Consultant: If to the Parent:
Nathan H Dardick c/o Tefron Ltd.
2331 Orrington Avenue 28 Chida Street
Evanston, IL 60201 Bnei-Brak 51371
Israel
and: Attention: Arie Wolfson,
Chief Executive Officer
Nathan H Dardick
P.O. Box 731
Captiva, FL 33924
Any party may, by written notice to the others, change the address to
which notices to such party are to be delivered or mailed, provided, that any
such change of address shall only be effective upon receipt.
(c) General. No party hereto may assign his or its rights or delegate
his or its duties hereunder without the prior written consent of the other
party. To the extent any provision of this Consulting Agreement shall be invalid
or unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Consulting Agreement shall be unaffected and shall
continue in full force and effect. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business activities
covered by, any provision of this Consulting Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may be
validly and enforceably covered. This Consulting Agreement (i) contains the
entire agreement between the parties with respect to the subject matter hereof
(other than the Purchase Agreement), and supersedes all previous negotiations,
commitments and writings, (ii) may be amended, modified, altered or terminated,
and any of its provisions waived, only in a writing
4
<PAGE>
signed on behalf of the parties hereto, (iii) shall be governed by and construed
and enforced in accordance with the laws of the State of New York without regard
to the applicable conflicts of laws and (iv) shall terminate with no further
obligation of either party hereto to the other upon the termination of the
transactions contemplated by the Merger Agreement pursuant to the terms thereof.
All actions and proceedings arising out of or relating to this Agreement shall
be heard and determined in any Illinois state or federal court sitting in the
City of Chicago for the purpose of any action or proceeding arising out of or
relating to this Agreement and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined exclusively in any Illinois state or federal court sitting in the
City of Chicago. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state of Illinois, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Illinois or federal
court sitting in the City of Chicago. Each of the parties hereto agrees to
reimburse the other for any reasonable costs and expenses, including reasonable
legal fees incurred by such party in connection with the collection of any
amounts payable by the other party hereunder which are not paid in a timely
manner.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Consulting Agreement
as of the day and year first above written.
TEFRON U.S. HOLDINGS CORP.:
By:
--------------------------------
Name:
Title:
------------------------------------
NATHAN H DARDICK
<PAGE>
November 8, 1999
Tefron U.S. Holdings, Inc.
AWS Acquisition Corp.
c/o Tefron Ltd.
28 Chida Street
Bnei-Brak, 51371
Israel
Attention: Arie Wolfson
Dear Mr. Wolfson:
I understand that AWS Acquisition Corp. ("Buyer") intends to make a tender offer
for all of the shares of common stock of Alba-Waldensian, Inc. ("Alba") and Mr.
Clyde Engle has agreed with you to tender to Buyer all of the shares of Alba
common stock owned by GSC Enterprises, Inc. ("GSC"). Pursuant to an agreement
between GSC and us, GSC has pledged substantially all of his shares to us (the
"Pledged Shares"). There are approximately 115,000 Pledged Shares and certain of
such shares are currently held in the name of one or more of our nominees.
We hereby agree with you that upon instruction from GSC we will cause the
Pledged Shares to be tendered in the tender offer referred to above, we will not
withdraw the Pledged Shares except as instructed by GSC and we will allow the
Pledged Shares to be purchased and sold in the tender offer so long as all
proceeds thereof are delivered directly to the undersigned.
Very truly yours,
LASALLE BANK NATIONAL ASSOCIATION
By:
-------------------------------------------
Jeffrey J. Bowden, First Vice President
<PAGE>
November 8, 1999
Tefron U.S. Holdings, Inc.
AWS Acquisition Corp.
c/o Tefron Ltd.
28 Chida Street
Bnei-Brak, 51371
Israel
Attention: Arie Wolfson
Dear Mr. Wolfson:
I understand that AWS Acquisition Corp. ("Buyer") intends to make a tender offer
for all of the shares of common stock of Alba-Waldensian, Inc. ("Alba") and Mr.
Clyde Engle has agreed with you to tender to Buyer all of the shares of Alba
common stock owned by him. Pursuant to an agreement between Mr. Engle and us,
Mr. Engle has pledged substantially all of his shares to us (the "Pledged
Shares"). There are approximately 943,700 Pledged Shares and certain of such
shares are currently held in the name of one or more of our nominees and Mr.
Engle's name.
We hereby agree with you that upon instruction from Mr. Engle we will cause the
Pledged Shares to be tendered in the tender offer referred to above, we will not
withdraw the Pledged Shares except as instructed by Mr. Engle and we will allow
the Pledged Shares to be purchased and sold in the tender offer so long as all
proceeds thereof are delivered directly to the undersigned.
Very truly yours,
LASALLE BANK NATIONAL ASSOCIATION
By:
-------------------------------------------
Jeffrey J. Bowden, First Vice President
<PAGE>
CONFIDENTIALITY AGREEMENT
AGREEMENT between Alba-Waldensian, Inc. ("Alba") and Tefron Ltd., its directors,
officers, employees and affiliates (collectively, the "Company") entered into as
of August 25, 1999.
WHEREAS, the Company has requested Alba to furnish the Company with confidential
or proprietary information relating to Alba (the "Confidential Information") for
the sole purpose of determining the Company's interest in entering into a joint
venture, business combination or other transaction with Alba or with its
shareholders.
WHEREAS, the Company agrees to review, examine, inspect and use the Confidential
Information only for the purposes described above, and only in accordance with
the terms of this AGREEMENT.
NOW, THEREFORE, in consideration of the premises, the parties hereby agree:
1. The Confidential Information, including, but not limited to, any
information or materials not available under the Securities Exchange
Act of 1934, as amended, of Alba, has been prepared from information
furnished by Alba and from other sources deemed reliable; however, Alba
makes no representation or warranty, expressed or implied, as to the
accuracy or completeness of the information contained therein and shall
not be liable in any manner for the loss or injury resulting from
reliance thereon.
2. The Company agrees to hold the Confidential Information, including the
identity of Alba, and the fact that information has been provided
(collectively known as "Information") in trust and confidence. The
obligation of the Company hereunder to hold the Information
confidential does not apply to: (a) information which is published or
otherwise becomes available to the general public through no act or
failure on the part of the company; (b) information which is
proprietary to the Company at the time of disclosure; or (c)
information which is subsequently acquired by the Company from a third
party who has a bona fide right to make such information available
without restriction. The Company agrees that the information shall be
used only for the purposes stated above and shall not be used for any
other purpose or disclosed to any third party except as expressly
provided herein. Notwithstanding the foregoing, in the event that the
Company is required by law or legal process to disclose any of the
Information, the Company will (i) provide Alba with prompt notice of
such requirement prior to the disclosure, and (ii) give Alba all
available information, assistance and authority to enable Alba to take
the measures that Alba, in its sole discretion, may deem appropriate or
necessary to protect the Information from disclosure.
3. Alba and the Company acknowledge that they are aware of the
restrictions imposed by securities laws and regulations on a person
possessing certain
<PAGE>
material non-public information. The Company also acknowledges that the
possibility of a transaction with Alba and the Company is material
non-public information. The Company also acknowledges that the
possibility of a transaction with Alba and the Company is material
non-public information.
4. The Company agrees to share the Confidential Information only with a
limited number of the company's employees, on a need-to-know basis
only.
5. The Company agrees to reimburse, indemnify and hold harmless Alba and
its officers, directors, employees, representatives and agents from any
damage, loss and expense incurred by them as a result of any use by
Company of the information contrary to the terms of the AGREEMENT.
6. Upon demand by Alba, all Confidential Information, including copies,
notes or memoranda, prepared by the Company in connection with its
investigation of Alba, shall be destroyed or returned to Alba at Alba's
expense, unless otherwise authorized in writing by Alba's Chairman.
7. The Information shall not be disclosed to any agent, consultant or
third party, other than the Company's legal and financial advisors,
unless they agree to be bound by the terms of this AGREEMENT and have
been previously approved by Alba's Chairman in writing.
8. Without the written consent of Alba's Chairman, the Company, its
officers, directors, employees, representatives and agents, shall not
for a period of one year from the date hereof directly or indirectly
solicit for employment any person who is employed by Alba or any of its
affiliates. Without the prior consent of Alba's Chairman, the Company
agrees that they will not contact any employee, director or agent of
Alba directly, but will instead conduct all correspondence through
Alba's Chairman.
9. This AGREEMENT and its validity, construction, effect and performance
shall be governed by the laws of the State of North Carolina, United
States of America, without giving effect to the principles of conflict
of laws thereof. Each party hereto consents to personal jurisdiction in
such State and voluntarily submits to the jurisdiction of the courts of
such State in any action or proceeding with respect to this AGREEMENT,
including the federal district courts located in such State. The
Company agrees that it may be served with process at the address of its
corporate headquarters. A facsimile transmission of this document
(including a facsimile of the signatures) is legally binding.
10. The Company agrees that money damages would not be a sufficient remedy
for any breach of this AGREEMENT by the Company, and that in addition
to all other remedies for a breach of this AGREEMENT, Alba shall be
entitled to specific performance and injunctive or other equitable
relief without posting any
2
<PAGE>
bond, as well as being entitled to collect all legal fees incurred to
enforce this AGREEMENT.
IN WITNESS WHEREOF, the undersigned have executed this Confidentiality
Agreement as of the date first set forth above.
ALBA-WALDENSIAN, INC. TEFRON LTD
By: /s/ Clyde W. Engle By: /s/ Sigi Rabinowicz
------------------------ ------------------------
Its: Chairman Its: Chief Financial Officer
------------------------ ------------------------
Date: 8/25/99 Date: 8/25/99
------------------------ ------------------------
3
<PAGE>
Execution Copy
INTEGRATION CONSULTING/NONCOMPETITION AGREEMENT
THIS INTEGRATION CONSULTING/NONCOMPETITION AGREEMENT ("Consulting
Agreement") is made and entered into on November 8, 1999 between Tefron U.S.
Holdings Corp., Delaware corporation (the "Parent"), and Clyde Wm. Engle, an
individual who resides in the State of Illinois (the "Consultant"). Terms not
otherwise defined herein shall have the meanings assigned to them in the Merger
Agreement (as defined below).
WHEREAS, the Consultant is a principal stockholder and director of
Alba-Waldensian, Inc., a Delaware corporation (the "Company");
WHEREAS, concurrently herewith the Parent and AWS Acquisition Corp., a
Delaware corporation and the Parent's wholly-owned subsidiary ("Purchaser"), and
the Company are entering into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement") pursuant to which the Purchaser agrees to make
a tender offer (the "Offer") for all outstanding Shares of the Company, to be
followed by a merger (the "Merger") of the Purchaser or a wholly-owned
subsidiary thereof with and into the Company;
WHEREAS, the Parent desires to avail itself of the Consultant's
experience and expertise on the terms and conditions hereinafter set forth; and
WHEREAS, the Consultant is willing to render consulting services to the
Parent to assist in the integration of the business of the Company with the
business of Parent and its affiliates (such businesses, collectively, the
"Businesses") on the terms and conditions hereinafter set forth and to refrain
from certain activities in competition with the Businesses;
NOW, THEREFORE, in consideration of the premises, the mutual promises
of the parties, and other good and valuable consideration, it is hereby agreed
as follows:
1. Consulting Period. The Parent shall retain the Consultant, and the
Consultant shall serve the Parent, in an advisory and consulting capacity for
the period commencing on the Takedown Date (the "Initial Date") and ending on
the effective date of the Merger (such period being hereinafter referred to as
the "Consulting Period").
2. Consulting Services. The Consultant agrees to render such advisory
and consulting services during the Consulting Period with respect to the
integration of the Businesses as the Parent may reasonably request from time to
time. The Parent and the Consultant shall mutually agree upon the time and place
where the services shall be performed. During the Consulting Period, the
Consultant will from time to time, at the request of the Parent, consult with
and advise the officers of the Parent and the Company with respect to the
integration of the Businesses.
Nothing in this Consulting Agreement shall preclude the Consultant from
engaging for compensation in any business, employment, occupation or other
activity (either as an employee or on his own behalf) not prohibited by the
provisions of Section 6 hereof.
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3. Compensation for Consulting Services and Noncompetition Agreement.
For the Consultant's services to the Parent during the Consulting Period, and
the Consultant's observance of his agreements set forth in this agreement, the
Parent shall pay the Consultant a fee of $200,000 (the "Consulting Fee") for
services requested by the Parent as described herein. Consultant shall be paid
the Consulting Fee in two equal installments of $100,000. The first installment
shall be paid on the date on which Purchaser pays for Shares tendered pursuant
to the Offer and the second installment shall be paid upon the effective date of
the Merger. The Consultant will be reimbursed by the Parent for all reasonable
travel, food, lodging or similar expenses incurred in connection with his duties
hereunder which are approved by Parent in advance of the incurrence of such
expenses. In consideration of the Consultant's agreement to enter into the
covenant not to compete set forth in paragraph 6 below, Consultant shall be paid
$100,000 (the "Noncompetition Payment") which payment shall be made to the
Consultant on March 31, 2001.
4. Disability During Consulting Period. In the event the Consultant
shall, in the opinion of competent medical authority, become disabled prior to
the expiration of the Consulting Period and as a result of such disability shall
be substantially unable to perform the services required of him hereunder, the
Consultant shall thereupon be relieved of any further obligation to perform such
services and the Parent shall pay to the Consultant a pro rata portion of the
Consulting Fee through the date of disability.
5. Death of Consultant. The Consulting Agreement shall terminate upon
the death of the Consultant. In the event of the Consultant's death, the Parent
shall pay to the Consultant's legal representative a pro rata portion of the
Consulting Fee through the date of death.
6. Restrictive Covenants. In consideration of the Offer, the
transactions contemplated by the Merger Agreement, the Noncompetition Payment
and the other provisions hereof:
(a) Covenant Not to Compete. The Consultant hereby agrees
that, for a minimum of thirty months from the Initial Date (the "Noncompetition
Period"), the Consultant shall not (i) in any geographic area where the Parent
or its controlling shareholder or the Company conducts business during the
Noncompetition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity), or lend
his name (or any part or variant thereof) to, any business which is, or as a
result of the Consultant's engagement or participation would be involved in the
industry in which the Parent or the Company operates, (ii) deal, directly or
indirectly, in a competitive manner with any customers doing business with the
Parent or the Company during the Noncompetition Period (except in connection
with the performance of his services hereunder), or (iii) solicit or employ any
officer or employee of the Parent or its controlling shareholder or the Company
to become an officer, director, employee or agent of the Consultant, his
affiliates or anyone else; provided, that, Consultant may continue to employ
Glenn J. Kennedy in the same capacity on the same part-time basis as he is
currently employed and may employ him on a full-time or other basis if his
employment with the Company is terminated by or with the consent of the Company.
At no time shall the Consultant engage in or participate in, directly or
indirectly, any business conducted under any name that shall be the same as or
similar to the name of the Parent or the Company or any trade name used by them.
Notwithstanding the foregoing, it is expressly understood and agreed that
ownership by the Consultant, in the aggregate, of less than 5% of the
outstanding shares of capital stock of any
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corporation with one or more classes of its capital stock listed on a national
securities exchange or actively traded in the over-the-counter market that would
otherwise be prohibited by clause (i) above shall not be deemed to constitute a
violation of such provision.
(b) Intellectual Property. During the Consulting Period,
Consultant will disclose to the Parent all ideas, inventions and business plans
developed by Consultant during such period which relate directly or indirectly
to the Businesses, including, without limitation, any process, operation,
product or improvement which may be patentable or copyrightable. Consultant
agrees that such will be the property of the Parent and that Consultant will at
the Parent's request and cost do whatever is necessary to secure the rights
thereto by patent, copyright or otherwise to the Parent. The Consultant shall be
prohibited from making use of or implementing any such ideas, inventions or
business plans in connection with his employment with a business that is
considered a competitor under Section 6(a)(i) hereof.
(c) Confidentiality. During the Consulting Period and at all
times thereafter, Consultant agrees that he will not divulge to anyone (other
than the Parent or the Company or any persons employed or designated by the
Parent or the Company) any knowledge or information of any type whatsoever
whether of a confidential nature or otherwise relating to the business of the
Parent or the Company or any of their respective subsidiaries or affiliates,
including, without limitation, all types of trade secrets (unless readily
ascertainable from public or published information or trade sources) and
customer and supplier information (the foregoing, collectively, the
"Confidential Information"). Consultant further agrees not to disclose, publish
or make use of any Confidential Information without the prior written consent of
the Parent. Upon termination of this Agreement, the Consultant or his personal
representative shall promptly deliver to the Company all books, memoranda,
plans, records and written data of every kind relating to the business and
affairs of the Company or the Confidential Information which are then in the
Consultant's possession. In the event that the Consultant is requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoenas, civil investigative demand or other
similar process) to disclose any of the Confidential Information, Consultant
shall provide the Parent with prompt written notice of any such request or
requirement so that the Parent may seek a protective order or other appropriate
remedy an/or waive compliance with the provisions of this Section 6(c). If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the Company, the Consultant is, in the opinion of counsel, legally compelled to
disclose Confidential Information, the Consultant may, without liability
hereunder, disclose only that portion of the Confidential Information which such
counsel advises the Consultant is legally required to be disclosed.
(d) Business Goodwill. During the Consulting Period and at all
times thereafter, Consultant will make only positive comments about the Parent
and the Company and their respective affiliates, directors, officers, employees
and agents, and shall make no comments or take any other actions, direct or
indirect, that will reflect adversely on any of the foregoing or adversely
affect their business reputation or good will.
(e) Remedy for Breach. The Parent shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of this Section 6
and the Consultant hereby consents that such restraining order or injunction may
be granted without the necessity of the Parent's posting any bond.
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7. Miscellaneous. (a) Independent Contractor Status. Consultant
acknowledges and agrees that, from and after the Initial Date, his status at all
times shall be that of an independent contractor, and that he may not, at any
time, act as a representative for or on behalf of the Parent or the Company for
any purpose or transaction, and may not bind or otherwise obligate the Parent or
the Company in any manner whatsoever without obtaining the prior written
approval of the Parent therefor. The parties hereby acknowledge and agree that
all Consulting Fees paid during the Consulting Period shall represent fees for
his consulting services as an independent contractor, and shall therefor be paid
without any deductions or withholdings taken therefrom for taxes or any other
purpose. The Consultant further acknowledges that the Parent makes no warranties
as to any tax consequences regarding payment of such Consulting Fees, and
specifically agrees that the determination of any tax liability or other
consequences of the payment set forth above is his sole and complete
responsibility and that he will pay all federal, state and local taxes, if any,
assessed on such payments, but will not be responsible for any taxes or
penalties imposed by any taxing authority against the Parent or the Company for
its failure to properly report the Consultant's earnings under this Agreement.
(b) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person or by courier, telegraphed, telexed or by facsimile
transmission (with a printed confirmation) or mailed by certified or registered
mail, postage prepaid, addressed as follows:
If to the Consultant: If to the Parent:
Clyde Wm. Engle c/o Tefron Ltd.
830 North Greenbay Road 28 Chida Street
Lake Forest, IL 60045 Bnei-Brak 51371
Telecopy: (847) 234-4350 Israel
Attention: Arie Wolfson,
Chief Executive Officer
Any party may, by written notice to the others, change the address to
which notices to such party are to be delivered or mailed, provided, that any
such change of address shall only be effective upon receipt.
(c) General. No party hereto may assign his or its rights or delegate
his or its duties hereunder without the prior written consent of the other
party. To the extent any provision of this Consulting Agreement shall be invalid
or unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Consulting Agreement shall be unaffected and shall
continue in full force and effect. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business activities
covered by, any provision of this Consulting Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may be
validly and enforceably covered. This Consulting Agreement (i) contains the
entire agreement between the parties with respect to the subject matter hereof
(other than the Purchase Agreement), and supersedes all previous negotiations,
commitments and writings, (ii) may be amended, modified, altered or terminated,
and any of its provisions waived, only in a writing
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signed on behalf of the parties hereto, (iii) shall be governed by and construed
and enforced in accordance with the laws of the State of New York without regard
to the applicable conflicts of laws and (iv) shall terminate with no further
obligation of either party hereto to the other upon the termination of the
transactions contemplated by the Merger Agreement pursuant to the terms thereof.
All actions and proceedings arising out of or relating to this Agreement shall
be heard and determined in any Illinois state or federal court sitting in the
City of Chicago for the purpose of any action or proceeding arising out of or
relating to this Agreement and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined exclusively in any Illinois state or federal court sitting in the
City of Chicago. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state of Illinois, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Illinois or federal
court sitting in the City of Chicago. Each of the parties hereto agrees to
reimburse the other for any reasonable costs and expenses, including reasonable
legal fees incurred by such party in connection with the collection of any
amounts payable by the other party hereunder which are not paid in a timely
manner.
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IN WITNESS WHEREOF, the parties have executed this Consulting Agreement
as of the day and year first above written.
TEFRON U.S. HOLDINGS CORP.:
By:
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Name:
Title:
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Cylde Wm. Engle
