<PAGE>
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
_______________
SAVANNAH FOODS & INDUSTRIES,INC.
(Name of Subject Company)
_______________
IHK MERGER SUB CORPORATION
IMPERIAL HOLLY CORPORATION
(Bidders)
_______________
COMMON STOCK, PAR VALUE $0.25 PER SHARE
(Title of Class of Securities)
_______________
452835 10 1
(CUSIP Number of Class of Securities)
_______________
WILLIAM F. SCHWER, ESQ.
IMPERIAL HOLLY CORPORATION
ONE IMPERIAL SQUARE, SUITE 200
8016 HIGHWAY 90-A
SUGAR LAND, TEXAS 77478
(281) - 491 - 9181
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidders)
with a copy to:
ROBERT V. JEWELL, ESQ.
ANDREWS & KURTH L.L.P.
TEXAS COMMERCE TOWER
600 TRAVIS, SUITE 4200
HOUSTON, TEXAS 77002-3090
(713) 220-4200
_______________
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation:$291,556,179* Amount of Filing Fee:$58,312
- --------------------------------------------------------------------------------
* For purposes of calculating fee only. The amount assumes the purchase of
14,397,836 Shares (as defined herein) at $20.25 per Share in cash. The
amount of the filing fee, calculated in accordance with Rule 0-11(d) of the
Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of
the aggregate of the cash offered for such number of Shares.
[ ] Check box if any part of the fee is offset 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.
Amount Previously Paid: Not applicable Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
<PAGE>
CUSIP No. 452835 10 1 14D-1 Page 2 of 8 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IHK Merger Sub Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCES OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
0
- --------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
2
<PAGE>
CUSIP No. 452835 10 1 14D-1 Page 3 of 8 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Imperial Holly Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCES OF FUNDS
BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
830,678.1 shares of common stock
- --------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
2.9%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
3
<PAGE>
This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
relates to the offer by IHK Merger Sub Corporation, a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Imperial Holly Corporation, a
Texas corporation ("Parent"), to purchase 14,397,836 outstanding shares (or such
other amount of shares representing 50.1% of the outstanding common stock, par
value $0.25 per share (the "Shares"), on a fully diluted basis on the date of
purchase) of Savannah Foods & Industries, Inc., a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated September 18, 1997 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together constitute the "Offer"), which are
annexed to and filed with this Statement as Exhibits (a)(1) and (a)(2),
respectively.
ITEM 1--Security and Subject Company
(a) The name of the subject company is Savannah Foods & Industries, Inc., a
Delaware corporation. The principal executive offices of the Company are located
at 2 East Bryan Street, Savannah, Georgia 31401.
(b) The class of equity securities to which this Schedule 14D-1 relates is
the common stock, par value $0.25 per share, of the Company. The information set
forth in "Introduction" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2--IDENTITY AND BACKGROUND
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser and
Parent. The information set forth in Section 8 ("Certain Information Concerning
the Purchaser and Imperial Holly") and in Schedule I ("Certain Information
Concerning the Purchaser and Monterey") of the Offer to Purchase is incorporated
herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor Parent
or, to the best of their knowledge, any of the persons listed in Schedule I
("Directors and Executive Officers of the Purchaser and Imperial Holly") to the
Offer to Purchase (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was 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 further 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)-(b) The information set forth in "Introduction," Section 8 ("Certain
Information Concerning the Purchaser and Imperial Holly"), Section 10
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") and Section 11 ("Purpose of the Offer; the Merger; the Merger
Agreement; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
ITEM 4--SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
4
<PAGE>
ITEM 5--PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in "Introduction," Section 10
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company"), Section 11 ("Purpose of the Offer; the Merger; the Merger Agreement;
Plans for the Company") and Section 13 ("Dividends and Distributions") of the
Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 12 ("Effect of the Offer on
the Market for Shares; NYSE Listing; Registration Under the Exchange Act") 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 in "Introduction," Section 8 ("Certain
Information Concerning the Purchaser and Imperial Holly"), Section 10
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") and Section 11 ("Purpose of the Offer; the Merger; the Merger
Agreement; 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 in "Introduction," Section 8 ("Certain
Information Concerning the Purchaser and Monterey"), Section 10 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 11 ("Purpose of the Offer; the Merger; the Merger Agreement; 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 in "Introduction" and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9--FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and Imperial Holly") is incorporated herein by reference.
ITEM 10--ADDITIONAL INFORMATION
(a) The information set forth in "Introduction," Section 8 ("Certain
Information Concerning the Purchaser and Monterey"), Section 10 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 11 ("Purpose of the Offer; the Merger; the Merger Agreement; Plans for
the Company") of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 11 ("Purpose of the Offer; the
Merger; the Merger Agreement; Plans for the Company") and 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 12 ("Effect of the Offer on the
Market for Shares; Nasdaq Listing; Registration Under the Exchange Act") of the
Offer to Purchase is incorporated herein by reference.
(e) The information set forth in Section 15 ("Certain Legal Matters;
Required Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
5
<PAGE>
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, is incorporated herein by reference in its entirety.
ITEM 11--MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated September 18, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Lehman Brothers, Inc. to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees,
dated September 18, 1997.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) IRS Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Summary Advertisement, dated September 18, 1997.
(c)(1) Agreement and Plan of Merger, dated as of September 12, 1997, among
Imperial Holly Corporation, IHK Merger Sub Corporation and Savannah
Foods & Industries, Inc.
(c)(2) Stockholders Agreement, dated September 12, 1997, between Imperial
Holly Corporation, IHK Merger Sub Corporation and each of the
executive officers and directors of Savannah Foods & Industries,
Inc. listed therein.
(c)(3) Form of Agreement and Irrevocable Proxy between Savannah Foods &
Industries, Inc. and certain stockholders of Imperial Holly
Corporation.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
6
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: September 18, 1997
IHK MERGER SUB CORPORATION
By: /s/ James C. Kempner
------------------------------------
James C. Kempner
Chief Executive Officer and Chief
Financial Officer
IMPERIAL HOLLY CORPORATION
By: /s/ James C. Kempner
-----------------------------------
James C. Kempner
President, Chief Executive Officer
and Chief Financial Officer
7
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit Name
- ------- ------------
(a)(1) Offer to Purchase, dated September 18, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Lehman Brothers, Inc. to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees, dated September 18, 1997.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) IRS Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement, dated September 18, 1997.
(c)(1) Agreement and Plan of Merger, dated September 12, 1997 among Imperial
Holly Corporation, IHK Merger Sub Corporation and Savannah Foods &
Industries, Inc.
(c)(2) Stockholders Agreement, dated September 12,1997, between Imperial
Holly Corporation, IHK Merger Sub Corporation and each of the
executive officers and directors of Savannah Foods & Industries, Inc.
listed therein.
(c)(3) Form of Agreement and Irrevocable Proxy between Savannah Foods &
Industries, Inc. and certain stockholders of Imperial Holly
Corporation.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
8
<PAGE>
EXHIBIT 99(a)(1)
Offer to Purchase for Cash
14,397,836 Shares of Common Stock
of
SAVANNAH FOODS & INDUSTRIES, INC.
at
$20.25 Net Per Share
by
IHK MERGER SUB CORPORATION
a wholly owned subsidiary
of
IMPERIAL HOLLY CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 16, 1997, UNLESS THE OFFER
IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AT THE OFFER PRICE AND
THE MERGER, AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BY THE EXPIRATION DATE AT LEAST 14,397,836 SHARES
OR SUCH OTHER NUMBER OF SHARES REPRESENTING 50.1% OF THE COMPANY'S OUTSTANDING
COMMON STOCK ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE, (II) THE
EXPIRATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER
AND (III) IMPERIAL HOLLY HAVING OBTAINED FINANCING SUFFICIENT TO ENABLE IT (OR
TO CAUSE PURCHASER) TO PURCHASE THE SHARES TENDERED PURSUANT TO THE OFFER AND
TO CONSUMMATE THE MERGER. THE OFFER ALSO IS SUBJECT TO CERTAIN OTHER
CONDITIONS WHICH ARE SET FORTH IN SECTION 14 OF THIS OFFER TO PURCHASE.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (a) complete and sign the enclosed Letter of Transmittal
(or a facsimile copy thereof) in accordance with the instructions in the
Letter of Transmittal, have his signature thereon guaranteed if required by
Instruction 1 of the Letter of Transmittal and mail or deliver it, together
with the certificate(s) representing tendered Shares, and any other required
documents, to the Paying Agent or tender such Shares pursuant to the procedure
for book-entry transfer set forth in Section 3 or (b) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. 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.
Any stockholder who desires to tender such stockholder's 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 or from brokers, dealers, commercial banks and trust
companies.
---------------
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
---------------
September 18, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
Section 1. Terms of the Offer, Proration and Expiration Date............ 3
Section 2. Acceptance for Payment and Payment........................... 5
Section 3. Procedures for Tendering Shares.............................. 6
Section 4. Withdrawal Rights............................................ 8
Section 5. Certain Tax Consequences..................................... 9
Section 6. Price Range of Shares; Dividends............................. 10
Section 7. Certain Information Concerning the Company................... 10
Certain Information Concerning the Purchaser and Imperial
Section 8. Holly....................................................... 12
Section 9. Source and Amount of Funds................................... 13
Background of the Offer, Past Contacts, Transactions or
Section 10. Negotiations with the Company............................... 15
Purpose of the Offer; the Merger; Merger Agreement; Plans for
Section 11. the Company................................................. 16
Section 12. Effect of the Offer on the Market for Shares................. 27
Section 13. Dividends and Distributions.................................. 27
Section 14. Conditions to the Offer...................................... 27
Section 15. Certain Legal Matters; Required Regulatory Approvals......... 29
Section 16. Fees and Expenses............................................ 31
Section 17. Miscellaneous................................................ 31
</TABLE>
<TABLE>
<S> <C>
SCHEDULE I--DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND IMPERIAL
HOLLY...................................................................... S-1
</TABLE>
(i)
<PAGE>
To Holders of Common Stock of
Savannah Foods & Industries, Inc.
INTRODUCTION
IHK Merger Sub Corporation, a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Imperial Holly Corporation, a Texas corporation
("Imperial Holly"), hereby offers to purchase 14,397,836 shares of common
stock, par value $0.25 per share (the "Shares"), of Savannah Foods &
Industries, Inc., a Delaware corporation (the "Company"), or such other number
of Shares representing 50.1% of the Company's outstanding common stock on a
Fully Diluted Basis (as defined below) on the date of purchase, at a price of
$20.25 per Share (such price, or any such higher price as may be paid in the
Offer (as defined below), being referred to herein as the "Offer Price"), 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 together constitute the "Offer"). "Fully Diluted Basis"
means the number of Shares (i) issued and outstanding as of the close of
business on the date of purchase and (ii) issuable pursuant to the exercise of
rights to purchase Shares or upon conversion or exchange of other securities,
other than options to purchase shares issued under the Company's 1996 Equity
Incentive Plan.
Tendering stockholders will not be obligated to pay brokerage commissions
or, except as set forth in Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Purchaser pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 that is included in the Letter of Transmittal
may be subject to a required backup federal income tax withholding of 31% of
the gross proceeds payable to such stockholder or other payee pursuant to the
Offer. See Section 3. The Purchaser will pay all charges and expenses of
Lehman Brothers Inc. ("Lehman Brothers"), which is acting as Dealer Manager
for the Offer (in such capacity, the "Dealer Manager"), D. F. King & Co.,
Inc., which is acting as the Information Agent (the "Information Agent"), and
Wachovia Bank, N.A., which is acting as the Paying Agent (the "Paying Agent"),
incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AT THE OFFER PRICE AND
THE MERGER, AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BY THE EXPIRATION DATE AT LEAST 14,397,836 SHARES,
OR SUCH OTHER NUMBER OF SHARES REPRESENTING 50.1% OF THE COMPANY'S OUTSTANDING
COMMON STOCK ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "TARGET
SHARE CONDITION" AND SUCH NUMBER OF SHARES BEING REFERRED TO HEREIN AS THE
"TARGET NUMBER OF SHARES") , (II) THE EXPIRATION OF ANY APPLICABLE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT") AND THE REGULATIONS THEREUNDER (THE "HSR CONDITION")
AND (III) IMPERIAL HOLLY HAVING OBTAINED FINANCING SUFFICIENT TO ENABLE IT (OR
TO CAUSE THE PURCHASER) TO PURCHASE THE SHARES TENDERED PURSUANT TO THE OFFER
AND TO CONSUMMATE THE MERGER (THE "FINANCING CONDITION"). THE OFFER ALSO IS
SUBJECT TO CERTAIN OTHER CONDITIONS WHICH ARE SET FORTH IN SECTION 14.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION ("DLJ"), THE COMPANY'S
FINANCIAL ADVISOR, HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE COMPANY ITS
WRITTEN OPINION, DATED SEPTEMBER 11, 1997, THAT THE OFFER PRICE AND THE MERGER
CONSIDERATION (AS DEFINED BELOW) TO BE RECEIVED BY THE STOCKHOLDERS PURSUANT
1
<PAGE>
TO THE OFFER AND THE MERGER, TAKEN AS A WHOLE, ARE FAIR FROM A FINANCIAL POINT
OF VIEW, TO SUCH STOCKHOLDERS. A COPY OF THE WRITTEN OPINION OF DLJ, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND CERTAIN LIMITATIONS ON
THE SCOPE OF REVIEW UNDERTAKEN BY DLJ, IS CONTAINED IN THE COMPANY'S
SOLICITATION/ RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-
9") FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN
CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING FURNISHED TO THE
STOCKHOLDERS CONCURRENTLY WITH THIS OFFER TO PURCHASE.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 12, 1997 (the "Merger Agreement"), among Imperial Holly, the
Purchaser and the Company, pursuant to which, as promptly as practicable
following the later of the Expiration Date and the satisfaction or waiver of
certain conditions, the Purchaser will be merged with and into the Company
(the "Merger"), with the Company surviving as a wholly owned subsidiary of
Imperial Holly (the "Surviving Corporation"). At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior thereto (other than Shares held by Imperial Holly, the Purchaser or any
of their subsidiaries, or held in the treasury of the Company, all of which
will be canceled and cease to exist without consideration being payable
therefor (the "Excluded Shares"), and Shares held by stockholders who perfect
their appraisal rights under Delaware law (the "Dissenting Shares")) will be
converted into the right to receive, subject to the proration procedures
described below (i) cash in the amount equal to the Offer Price, without
interest thereon (the "Cash Consideration"), or (ii) Stock Consideration (as
defined below, and together with the Cash Consideration, the "Merger
Consideration").
The number of Shares to be converted into the right to receive the Cash
Consideration in the Merger shall be equal to (x) 70% of the number of Shares
issued and outstanding immediately prior to the Effective Time less (y) the
sum of the Excluded Shares (which include Shares purchased in the Offer) and
the Dissenting Shares (the "Cash Election Number"). Subsequent to the
consummation of the Offer, each stockholder of the Company holding Shares not
tendered in the Offer (other than Excluded Shares) or not accepted for payment
in the Offer because of proration will be entitled to make an election to
receive the Cash Consideration. If the number of Shares electing to receive
the Cash Consideration exceeds the Cash Election Number, such Shares will be
converted into the right to receive the Cash Consideration on a pro rata
basis, with the remainder converted into the right to receive the Stock
Consideration. If the number of Shares electing to receive the Cash
Consideration is less than the Cash Election Number, such Shares will be
converted into the right to receive the Cash Consideration while those Shares
not so electing will be converted into the right to receive the Stock
Consideration on a pro rata basis, with the remainder receiving the Cash
Consideration. "Stock Consideration," with respect to each Share converted
into the right to receive such Stock Consideration, shall mean (x) if the
Closing Price (as defined below) of the shares of common stock, without par
value, of Imperial Holly ("Imperial Shares") is $13.25 or lower, a number of
Imperial Shares equal to the quotient of the Offer Price divided by $13.25,
(y) if the Closing Price of the Imperial Shares is $17.25 or greater, a number
of Imperial Shares equal to the quotient of the Offer Price divided by $17.25,
or (z) if the Closing Price of the Shares is greater than $13.25 but less than
$17.25, a number of Imperial Shares equal to the quotient of the Offering
Price divided by the Closing Price. The Stock Consideration also includes
certain rights to purchase shares of preferred stock of Imperial Holly. See
Section 11 for a description of such rights. "Closing Price" means the volume
weighted average of the trading prices of the Imperial Shares, rounded to
three decimal places, as reported by Bloomberg Financial Markets, for each of
the first 15 consecutive days upon which both the New York Stock Exchange and
the American Stock Exchange are open for trading in the period commencing 20
of such trading days prior to the date of the closing of the Merger. See
Section 11 for a description of the Merger Agreement.
The Purchaser, Imperial Holly and each of the Directors and executive
officers of the Company have entered into a stockholders agreement, dated
September 12, 1997 (the "Stockholders Agreement"), whereby each of
2
<PAGE>
such stockholders has agreed to tender all Shares owned by such stockholder
into the Offer and not withdraw any of such Shares so tendered.
According to the Company, as of September 1, 1997, there were (i) 28,738,196
Shares issued and outstanding, all of which were validly issued, fully paid
and nonassessable, (ii) 2,568,604 Shares were held in the treasury of the
Company, and (iii) 1,250,000 Shares were reserved for future issuance pursuant
to the Company's 1996 Equity Incentive Plan, of which 179,844 Shares were
reserved for issuance upon exercise of existing options. See Section 11 for a
description of the effect of the Merger on such existing options. As of the
date hereof, 1,000,000 shares of Company preferred stock are reserved for
issuance pursuant to a Rights Agreement, dated as of March 31, 1989, between
the Company and and Wachovia Bank, N.A., as successor rights agent to Citizens
and Southern Trust Company (Georgia), N.A. (the "Company Rights Agreement"),
none of which are currently issued and outstanding. The Company has amended
the Company Rights Agreement so as to provide that no purchase rights under
such agreement will become exercisable as a result of the authorization,
execution or delivery of the Merger Agreement or the consummation of the Offer
or the Merger.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH STOCKHOLDERS SHOULD READ CAREFULLY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
The statements regarding future market prices and operating results and
other statements that are not historical facts contained herein are forward-
looking statements. The words "expect", "project", "estimate", "believe",
"anticipate", "plan", "intend", "could", "may", "predict" and similar
expressions are also intended to identify forward-looking statements. Such
statements involve risks, uncertainties and assumptions, including, without
limitation, market factors, the effect of weather and economic conditions,
farm and trade policy, the available supply of sugar, available quantity and
quality of sugar beets and other factors detailed elsewhere in this Offer to
Purchase and other Company filings with the Commission. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual outcomes may vary materially from those indicated.
Section 1. Terms of the Offer, Proration and Expiration Date.
Upon 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), if more than the Target Number of Shares is validly tendered and
not withdrawn in accordance with Section 4 of this Offer to Purchase prior to
the Expiration Date, Purchaser will accept for payment and pay for the Target
Number of Shares, on a pro rata basis (with appropriate adjustments to avoid
purchases of fractional Shares) based upon the number of Shares properly
tendered and not withdrawn by each stockholder at or prior to the Expiration
Date. In the event that proration of tendered Shares is required, because of
the difficulty of determining the precise number of Shares properly tendered
and not withdrawn (due in part to the guaranteed delivery procedure described
in Section 3), the Purchaser does not expect to be able to announce the final
results of such proration or pay for any Shares until at least five New York
Stock Exchange, Inc. ("NYSE") trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Stockholders may obtain
such preliminary information from the Information Agent and may be able to
obtain such information from their brokers. The term "Expiration Date" means
12:00 midnight, New York City time, on Thursday, October 16, 1997, unless and
until Purchaser, in its sole discretion (but subject to the terms and
conditions of the Merger Agreement), shall have extended the period during
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 Purchaser,
shall expire.
The Offer is conditioned upon, among other things, the satisfaction of each
of the Target Share Condition, the HSR Condition and the Financing Condition.
The Offer is also subject to certain other conditions set forth in Section 14
below. If any condition to the Purchaser's obligation to purchase Shares under
the Offer is not satisfied prior to the Expiration Date, the Purchaser
reserves the right (subject to the terms of the Merger Agreement and the
applicable rules and regulations of the Commission) to (i) decline to purchase
any of the
3
<PAGE>
Shares tendered and terminate the Offer, (ii) waive such unsatisfied
condition, and purchase the Target Number of Shares validly tendered and not
withdrawn, (iii) extend the Offer and, subject to the right of stockholders to
withdraw Shares as provided in Section 4 of this Offer to Purchase, retain the
Shares which have been tendered during the period or periods for which the
Offer is extended or (iv) amend the Offer. The Merger Agreement provides that
the Purchaser reserves the right to increase the price per Share payable in
the Offer or to otherwise amend the Offer; provided, however, the Purchaser
will not, without the prior written consent of the Company, (i) decrease or
change the form of consideration payable in the Offer, (ii) decrease the
Target Number of Shares, (iii) impose conditions to the Offer in addition to
those set forth in the Merger Agreement, (iv) change the conditions of the
Offer (except that the Purchaser may waive any of the conditions of the Offer
other than the Target Share Condition) or (v) make any other change in the
terms or conditions of the Offer which is adverse to holders of Shares.
If the conditions described in Section 14 are not satisfied, to the extent
permitted by the Merger Agreement, the Purchaser may extend the period of time
during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Paying Agent. The rights reserved by the Purchaser in this
paragraph are in addition to the Purchaser's rights to amend or terminate the
Offer described in Section 14. There can be no assurance, however, that the
Purchaser will exercise its rights to extend the Offer. Any extension,
amendment or termination will be followed as promptly as practicable by public
announcement thereof, the announcement in the case of an extension to 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
announcement requirements of Rule 14d-4(c) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Without limiting the obligation of
the Purchaser under such Rule or the manner in which the Purchaser may choose
to make any public announcement, the Purchaser currently intends to make
announcements by issuing a release to the Dow Jones News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then without prejudice to the Purchaser's rights under the Offer,
the Paying Agent may retain tendered Shares on behalf of the Purchaser, and
such Shares may not be withdrawn except to the extent tendering stockholders
are entitled to withdrawal rights as described in Section 4 of this Offer to
Purchase. However, the ability of the Purchaser to delay the payment for
Shares which the Purchaser has accepted for payment is limited by Rule 14e-
l(c) under the Exchange Act, that requires that a bidder pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend
the Offer 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 or information concerning
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
relative materiality of the change in terms or information. With respect to a
change in price or a change in percentage of securities sought (other than an
increase in the number of Shares being sought that does not exceed 2% of the
number of Shares outstanding), a minimum period of 10 business days is
required to allow for adequate dissemination to stockholders and investor
response. If, prior to the Expiration Date, the Purchaser should decide to
increase the price per Share being offered in the Offer, such increase will be
applicable to all stockholders whose Shares are accepted for payment pursuant
to the Offer. As used in this Offer to Purchase, "business day" has the
meaning set forth in Rule l4d-1 under the Exchange Act.
The Company has provided to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees,
4
<PAGE>
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
Section 2. Acceptance for Payment and Payment.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will purchase, by accepting for payment, and will
pay for, the Target Number of Shares that have been validly tendered prior to
the Expiration Date (and not properly withdrawn in accordance with Section 4
hereof) promptly after the Expiration Date. Any determination concerning the
satisfaction of such terms and conditions shall be within the sole discretion
of the Purchaser. See Section 14. The Purchaser expressly reserves the right
to delay acceptance for payment of, or, subject to Rule 14e-1(c) under the
Exchange Act, payment for, Shares in order to comply, in whole or in part,
with any applicable law, including the HSR Act. See Sections 14 and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Paying Agent of (i) certificates for
such Shares or timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Shares into the Paying Agent's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), 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 a Book-Entry
Transfer Facility to, and received by, the Paying Agent and forming a part of
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that 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.
Pursuant to the HSR Act, on September 17, 1997, Imperial Holly filed a
Premerger Notification and Report Form in connection with the purchase of
Shares pursuant to the Offer with the Federal Trade Commission (the "FTC") and
the Antitrust Division of the Department of Justice (the "Antitrust
Division"). Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares pursuant to the Offer may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by
Imperial Holly. Accordingly, the waiting period under the HSR Act applicable
to the purchase of Shares pursuant to the Offer will expire at 11:59 p.m., New
York City time, on October 2, 1997, unless such waiting period is earlier
terminated by the FTC and the Antitrust Division or extended by a request from
the FTC or the Antitrust Division for additional information or documentary
material prior to the expiration of the waiting period or by the withdrawal
and resubmission of the Premerger Notification and Report Form by Imperial
Holly. Pursuant to the HSR Act, Imperial Holly has requested early termination
of the waiting period applicable to the Offer. There can be no assurance,
however, that the 15-day HSR Act waiting period will be terminated early or
not extended. See Section 15. In any event, pursuant to Rule 14e-1(a) under
the Exchange Act, the Expiration Date may not occur prior to October 16, 1997.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares, if, as and when the Purchaser
gives oral or written notice to the Paying Agent of the Purchaser's acceptance
of such Shares for payment pursuant to the Offer. In all cases, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price with the Paying Agent, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering stockholders. Under no circumstances will
interest on the purchase price of the Shares be paid by the Purchaser. Upon
the deposit of funds with the Paying Agent for the purpose of making payments
to tendering stockholders, the Purchaser's obligation to make such payments
shall be satisfied and tendering
5
<PAGE>
stockholders must thereafter look solely to the Paying Agent for payment of
amounts owed to them by reason of the acceptance for payment of Shares
pursuant to the Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates submitted represent more Shares than are tendered,
certificates for such Shares not purchased or tendered will be returned,
without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer into the Paying Agent's account at a Book-
Entry Transfer Facility pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained at such Book-Entry
Transfer Facility), promptly after the expiration, termination or withdrawal
of the Offer.
Section 3. Procedures for Tendering Shares.
For Shares to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal or facsimile thereof, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other requirements, must be received by
the Paying Agent at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date. In addition, either (i) the
certificates for Shares must be received by the Paying Agent along with the
Letter of Transmittal or Shares must be tendered pursuant to the procedures
for book-entry transfer described below and a Book-Entry Confirmation must be
received by the Paying Agent, in each case prior to the Expiration Date, or
(ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below. The Paying Agent will establish an account with
respect to the Shares at each Book-Entry Transfer Facility for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a Book-
Entry Transfer Facility to transfer such Shares into the Paying Agent's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, 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 Paying
Agent at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date or the tendering stockholder must comply
with the guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS
TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE PAYING AGENT.
No signature guarantee on this Letter of Transmittal is required (a) if this
Letter of Transmittal is signed by the registered holder of the Shares
tendered herewith, unless such holder has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" or (b) if such Shares are tendered for the account of a bank or
trust company in the United States or by a firm that is a member of the
National Association of Securities Dealers, Inc. (the "NASD") or of a
registered national securities exchange which is a member of a recognized
member of a Medallion Signature Guarantee Program (an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If the 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 or
certificates for Shares not accepted for payment or not tendered are to be
returned to a person other than the registered holder, then the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. See Instructions 1 and 5 of the
Letter of Transmittal.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL (OR A MANUALLY
SIGNED FACSIMILE THEREOF) AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH A BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. 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.
6
<PAGE>
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or time
will not permit all required documents to reach the Paying Agent on or prior
to the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all
the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Paying Agent as provided below, on or prior to the
Expiration Date as provided below; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a Letter of
Transmittal or facsimile thereof, properly completed and duly executed,
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 Paying Agent within three NYSE
trading days after the date of execution of such Notice of Guaranteed
Delivery. Stockholders may not extend the foregoing time period for
delivery of Shares to the Paying Agent by providing a second Notice of
Guaranteed Delivery with respect to such Shares. A "trading day" is any day
on which the NYSE is open for business.
The Notice of Guaranteed Delivery may be sent by hand delivery, telegram,
facsimile transmission or mail to the Paying Agent and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by
the Paying Agent of certificates for the Shares or a timely Book-Entry
Confirmation of the delivery of such Shares, and a Letter of Transmittal (or
manually signed facsimile thereof), properly completed and duly executed, 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 certificates for the
Shares or Book-Entry Confirmations of the delivery of such Shares are received
into the Paying Agent's account at a Book-Entry Transfer Facility.
UNDER THE FEDERAL INCOME TAX LAWS APPLICABLE TO CERTAIN STOCKHOLDERS (OTHER
THAN CERTAIN EXEMPT STOCKHOLDERS, INCLUDING, AMONG OTHERS, ALL CORPORATIONS
AND CERTAIN FOREIGN INDIVIDUALS), THE PAYING AGENT MAY BE REQUIRED TO WITHHOLD
31% OF THE AMOUNT OF ANY PAYMENTS MADE TO SUCH STOCKHOLDERS PURSUANT TO THE
OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO
PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED PURSUANT TO THE OFFER, A
TENDERING STOCKHOLDER MUST PROVIDE THE PAYING AGENT 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
TO THE LETTER OF TRANSMITTAL.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tendered Shares pursuant to any of
the procedures described above will be determined in the sole discretion of
the Purchaser, whose determination shall be final and binding. The Purchaser
reserves the absolute right to reject any or all tenders of any Shares
determined by it not to be in proper form if the acceptance for payment of, or
payment for, such Shares may, in the opinion of the Purchaser's counsel, be
unlawful. The Purchaser also reserves the absolute right, in its sole
discretion, subject to the Merger Agreement, to waive any of the conditions of
the Offer or any defect or irregularity in any tender with respect to Shares
of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the Instructions thereto) will be final and binding.
Neither the Purchaser, Imperial Holly, the Company, the Paying Agent, the
Information Agent, the Dealer Manager nor any other person or entity will be
under any duty to give notification of any defects or irregularities in
tenders or will incur any liability for failure to give any such notification.
7
<PAGE>
By executing a Letter of Transmittal or by causing the transmission of an
Agent's Message as set forth above, a tendering stockholder irrevocably
appoints designees of the Purchaser as the stockholder's attorneys-in-fact and
proxies, in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of the stockholder's rights with
respect to the Shares tendered by the stockholder and accepted for payment by
the Purchaser (and any and all other Shares or other securities issued or
issuable in respect of such Shares on or after the date of the Merger
Agreement). All such powers of attorney and proxies shall be considered to be
coupled with an interest in the tendered Shares. This appointment will be
effective when, and only to the extent that, the Purchaser accepts Shares for
payment. Upon acceptance for payment, all prior powers of attorney and proxies
given by the stockholder with respect to the Shares or other securities will,
without further action, be revoked, and no subsequent powers of attorney or
proxies may be given nor any subsequent written consent executed by such
stockholder (and, if given or executed, will not be deemed to be effective)
with respect thereto. The designees of the Purchaser will, with respect to the
Shares and other securities, be empowered to exercise all voting and other
rights of such stockholder as they in their sole discretion may deem proper at
any annual, special or adjourned meeting of the Company's stockholders, by
written consent or otherwise. The Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able
to exercise full voting and other rights of a record and beneficial holder,
including rights in respect of acting by written consent, with respect to such
Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment for Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
Section 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 prior to the Expiration Date and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after November 17, 1997.
For a withdrawal to be effective, a written, telegraphic, or facsimile
transmission notice of withdrawal must be timely received by the Paying Agent
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 the name
of the registered holder, if different from that of the person who tendered
such Shares. If certificates for Shares have been delivered or otherwise
identified to the Paying Agent, then, prior to the release of such
certificates, the serial numbers of the particular certificates evidencing the
Shares to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution, except in the case of Shares tendered
for the account of an Eligible Institution, must also be furnished to the
Paying Agent as described above. If Shares have been tendered pursuant to the
procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
appropriate 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 THE PURCHASER, IN ITS SOLE
DISCRETION, WHOSE DETERMINATION WILL BE FINAL AND BINDING. NEITHER THE
PURCHASER, IMPERIAL HOLLY, THE COMPANY, THE DEALER MANAGER, THE PAYING AGENT,
THE INFORMATION AGENT NOR ANY OTHER PERSON OR ENTITY WILL BE UNDER ANY DUTY TO
GIVE NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL
OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY NOTIFICATION.
Any Shares properly withdrawn will be deemed to be not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by
following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
8
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Section 5. Certain Tax Consequences.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to
cash or Imperial Shares in the Merger. The discussion is for general
information only and does not purport to consider all aspects of federal
income taxation that might be relevant to beneficial owners of Shares. The
discussion is based on current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing, proposed and temporary regulations
promulgated thereunder and administrative and judicial interpretations
thereof, all of which are subject to change. The discussion applies only to
beneficial owners of Shares in whose hands Shares are capital assets within
the meaning of Section 1221 of the Code, and may not apply to Shares received
pursuant to the exercise of employee stock options or otherwise as
compensation, or to certain types of beneficial owners of Shares (such as
insurance companies, tax-exempt organizations, financial institutions and
broker-dealers) who may be subject to special rules. This discussion does not
discuss the federal income tax consequences to a beneficial owner of Shares
who, for United States federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate
or trust, nor does it consider the effect of any foreign, state or local tax
laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF SHARES
SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL OWNER AND THE
PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or cash or Imperial
Shares pursuant to the Merger will be a taxable transaction for federal income
tax purposes. In general, for federal income tax purposes, a beneficial owner
of Shares will recognize gain or loss equal to the difference between the
beneficial owner's adjusted tax basis in the Shares sold pursuant to the Offer
or converted to cash and Imperial Shares in the Merger and the amount of cash
and the value of the Imperial Shares, determined as of the Effective Time,
received therefor. Gain or loss must be determined separately for each block
of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted to cash and Imperial Shares in the
Merger. Such gain or loss will be capital gain or loss and will be (a) long-
term capital gain or loss if the beneficial owner held the Shares for more
than 18 months or (b) mid-term capital gain or loss if the beneficial owner
held the Shares more than 12 months but not more than 18 months as of the date
of sale (in the case of the Offer) or the Effective Time (in the case of the
Merger). Long-term capital gain of individuals currently is taxed at a maximum
rate of 20%. Mid-term capital gain of individuals is currently taxed at a
maximum rate of 28%.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct taxpayer identification
number to the payor, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable withholding rules. A
beneficial owner who does not provide a correct taxpayer identification number
may be subject to penalties imposed by the Internal Revenue Service. Any
amount paid as backup withholding does not constitute an additional tax and
will be creditable against the beneficial owner's federal income tax
liability. Each beneficial owner of Shares should consult with his or her own
tax advisor as to his or her qualification for exemption from backup
withholding and the procedure for obtaining such exemption. Those tendering
their Shares in the Offer may prevent backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Section 3
hereof. Similarly, those who convert their Shares into cash and Imperial
Shares in the Merger may prevent backup withholding by completing a Substitute
Form W-9 and submitting it to the Paying Agent.
Imperial Holly and the Purchaser will be entitled to deduct and withhold
from the consideration otherwise payable pursuant to the Merger Agreement to
any holder of Shares such amounts as Imperial Holly and the Purchaser is
required to deduct and withhold with respect to the making of such payment. To
the extent that amounts are so withheld by Imperial Holly or the Purchaser,
such withheld amounts shall be treated for all purposes as having been paid to
the holder of the Shares in respect of which such deduction and withholding
was made by Imperial Holly and the Purchaser.
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Section 6. Price Range of Shares; Dividends.
The Shares are listed and traded on the NYSE under the symbol "SFI". The
following table sets forth, for the calendar quarters indicated, the high and
low closing sales price per Share on the NYSE and the dividends paid. All
prices set forth below are as reported in published financial sources:
<TABLE>
<CAPTION>
CALENDAR QUARTER HIGH LOW DIVIDEND
---------------- ---- ---- --------
<S> <C> <C> <C>
1995
First Quarter................................... $14 3/8 $10 1/2 $0.135
Second Quarter.................................. 11 3/4 9 1/8 0.025
Third Quarter................................... 13 5/8 10 1/2 0.025
Fourth Quarter.................................. 13 7/8 11 3/8 0.025
1996
First Quarter................................... $12 7/8 $10 5/8 $0.025
Second Quarter.................................. 13 1/2 10 3/4 0.025
Third Quarter................................... 14 11 3/8 0.025
Fourth Quarter.................................. 16 5/8 13 1/4 0.025
1997
First Quarter................................... $15 1/4 $12 7/8 $0.025
Second Quarter.................................. 17 3/4 12 1/2 0.0375
Third Quarter (through September 17, 1997)...... 19 13 1/16 0.0375
</TABLE>
On August 25, 1997, the last full trading day prior to the announcement of
Imperial Holly's initial offer to acquire the Company, the reported closing
sales price per Share on the NYSE was 14 15/16. On September 11, 1997, the
last full trading day prior to the announcement of the Merger Agreement, the
reported closing sales price per Share on the NYSE was 18 1/16. On September
17, 1997, the last full trading day prior to the commencement of the Offer,
the reported closing sales price per Share on the NYSE was 18 7/8.
Stockholders are urged to obtain a current market quotation for the Shares.
Section 7. Certain Information Concerning the Company.
General. According to the Company's Annual Report on Form 10-K for the
fiscal year ended September 29, 1996 (the "Company 10-K"), the Company was
incorporated in Delaware on February 19, 1969, as the successor to the
Savannah Sugar Refining Corporation, which was originally incorporated in New
York in 1916. Its principal executive offices are located at 2 East Bryan
Street, Savannah, Georgia 31401. The Company and its wholly owned subsidiaries
are principally engaged in the production, marketing and distribution of food
products, primarily refined sugar.
Selected Consolidated Financial Data. The following selected consolidated
financial data relating to the Company have been taken or derived from the
audited financial statements contained in the Company 10-K and the unaudited
financial statements contained in the Company's Quarterly Reports on Form 10-Q
for the quarterly periods ended December 29, 1996, March 30, 1997 and June 29,
1997 (collectively, the "Company Form 10-Qs"). More comprehensive financial
information (including the notes to the Company's financial statements) is
included in such Company 10-K, the Company Form 10-Qs and other documents
filed by the Company with the Commission, and the financial data set forth
below are qualified in their entirety by reference to such reports and other
documents, including the financial statements (and notes thereto) contained
therein. Such reports and other documents may be examined and copies may be
obtained from the offices of the Commission in the manner set forth below.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA FOR SAVANNAH FOODS & INDUSTRIES, INC.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED(1) NINE MONTHS ENDED
-------------------------------------- ------------------------
(UNAUDITED)
OCTOBER 2, OCTOBER 1, SEPTEMBER 29, JUNE 30, JUNE 29,
1994 1995 1996 1996 1997
----------- ----------- ------------- ----------- -----------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales............... $ 1,074,367 $ 1,098,544 $ 1,146,332 $ 842,675 $ 883,156
EBITDA.................. 48,404 35,715 49,793 40,692 70,212
Income from operations.. 19,432 7,401 21,799 19,618 52,443
Income (loss) before in-
come taxes and extraor-
dinary item............ 8,606 (6,078) 9,681 9,883 47,391
Extraordinary item, net
of tax................. -- -- (971) (698) (376)
Net income (loss)....... 5,743 (3,493) 5,972 5,528 29,003
Per share:
Income (loss) before
extraordinary item... $ 0.22 $ ( 0.13) $ 0.27 $ 0.24 $ 1.12
Extraordinary item.... -- -- (0.04) (0.03) (0.01)
Net income (loss)..... 0.22 $ (0.13) 0.23 0.21 1.11
Dividends............. 0.54 $ 0.32 $ 0.10 0.0750 0.0875
Weighted average shares
outstanding............ 26,238,196 26,238,196 26,238,196 26,238,196 26,238,196
BALANCE SHEET DATA
Current assets.......... $ 197,802 $ 180,552 $ 229,931
Total assets............ 476,507 398,261 435,092
Current liabilities..... 114,740 85,946 134,144
Long-term debt.......... 106,864 59,754 26,230
Stockholders' equity.... 169,649 173,727 200,933
</TABLE>
- --------
(1) The Company's fiscal year ends on the Sunday closest to September 30th.
The Company is subject to the information and filing requirements of the
Exchange Act and is required to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
described in proxy statements distributed to the Company's stockholders and
filed with the Commission. These reports, proxy statements and other
information are available for inspection and copying at the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of these materials may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a World Wide Web Site on the Internet at
http://www.sec.gov that contains reports, proxy statements and other
information filed electronically by the Company with the Commission.
Other than as set forth below, the information concerning the Company
contained in this section has been taken from or based upon publicly available
documents on file with the Commission and other publicly available
information. Although neither the Purchaser nor Imperial Holly has any
knowledge that would indicate that statements contained herein based upon such
documents are untrue, neither the Purchaser nor Imperial Holly takes any
responsibility for the accuracy or completeness of the information contained
in such documents or for any failure by the Company to disclose events that
may have occurred and may affect the significance or accuracy of any such
information but which are unknown to either the Purchaser or Imperial Holly.
11
<PAGE>
Section 8. Certain Information Concerning the Purchaser and Imperial Holly.
The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Imperial Holly which to date has not conducted any
business other than that incident to its formation, the execution and delivery
of the Merger Agreement and the commencement of the Offer. Accordingly, no
meaningful financial information with respect to the Purchaser is available.
The principal executive offices of Imperial Holly and the Purchaser are
located at One Imperial Square, Suite 200, 8016 Highway 90-A, Sugar Land,
Texas 77478. Imperial Holly, which is a Texas corporation, and its
subsidiaries are producers and marketers of refined sugar, producing both cane
and beet sugar.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Imperial Holly are set forth in
Schedule I hereto.
Selected Consolidated Financial Data. The following selected consolidated
financial data relating to Imperial Holly have been taken or derived from the
audited financial statements contained in the Annual Report on Form 10-K for
the fiscal year ended March 31, 1997 of Imperial Holly (the "Imperial Holly
10-K") and the unaudited financial statements contained in the Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1996 (the
"Imperial Holly 10-Q"). More comprehensive financial information (including
the notes to Imperial Holly's financial statements) is included in such
Imperial Holly 10-K, Imperial Holly 10-Q and other documents filed by Imperial
Holly with the SEC, and the financial data set forth below are qualified in
their entirety by reference to such reports and other documents, including the
financial statements (and notes thereto) contained therein. Such reports and
other documents may be examined and copies may be obtained from the offices of
the SEC in the manner set forth in Section 7.
SELECTED CONSOLIDATED FINANCIAL DATA FOR IMPERIAL HOLLY CORPORATION
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, QUARTER ENDED JUNE 30,
---------------------------------- -----------------------
(UNAUDITED)
1995 1996 1997 1996 1997
---------- ---------- ---------- ----------- -----------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales............... $ 586,925 $ 616,450 $ 752,595 $ 179,905 $ 197,758
EBITDA.................. 11,338 10,250 43,196 12,610 18,954
Operating income (loss). (2,091) (2,431) 28,423 8,971 14,171
Income (loss) before
income taxes and
extraordinary item... (8,649) (5,076) 17,688 6,618 11,574
Extraordinary item.... -- 604 -- -- --
Net income (loss)..... (5,365) (2,614) 11,518 4,149 7,294
Per share:
Income (loss) before
extraordinary item... (0.52) (0.31) 0.92 0.40 0.51
Extraordinary item.... -- 0.06 -- -- --
Net income (loss)..... (0.52) (0.25) 0.92 0.40 0.51
Weighted average shares
outstanding............ 10,266,229 10,300,487 12,576,489 10,315,289 14,220,388
BALANCE SHEET DATA
Current assets.......... $ 183,350 $ 285,147 $ 315,204
Total assets............ 325,319 449,933 481,184
Current liabilities..... 101,804 151,241 177,430
Long-term debt.......... 89,800 90,619 81,495
Shareholders' equity.... 111,043 176,956 189,936
</TABLE>
12
<PAGE>
Ownership of Shares, Transactions with Respect to Shares and Other Matters
Imperial Holly currently owns 448 Shares. James C. Kempner, the President
and Chief Executive Officer of Imperial Holly, owns 3,000 Shares. Roger W.
Hill, a managing director of Imperial Holly, owns 100 Shares. P.C. Carrothers,
the Senior Vice President--Operations of Imperial Holly, owns 2,200 Shares.
Mr. Carrothers sold 800 Shares on July 25, 1997 at a price of $14 per Share.
He initially acquired such Shares in May of 1996 at a price of $10 5/8. Mr.
Carrothers effected such trades through his broker. Certain individuals and
entities affiliated with Harris L. Kempner, Jr., a director of Imperial Holly,
sold an aggregate amount of 5,602 Shares for an aggregate price of $15.375 per
Share on July 21, 1997. Such Shares were acquired on May 20, 1996 and July 16,
1996, in each case for an aggregate price of $11.33 per Share. All of such
trades were effected through a broker.
Imperial Holly and its wholly owned subsidiary, Holly Sugar Corporation
("Holly Sugar") entered into several routine sales contracts to sell refined
sugar to the Company for the one-year period ended September 30, 1997. For
such period, Imperial Holly entered into two sales contracts to deliver
refined sugar to the Company for an aggregate consideration of approximately
$2,219,000. For such period, Holly Sugar entered into three sales contracts to
deliver refined sugar to the Company for aggregate consideration of
approximately $6,401,000. In addition, in July 1996, Holly Sugar entered into
a packaging contract with Dixie Crystals Foodservices, Inc., a wholly owned
subsidiary of the Company ("Dixie"), to deliver refined sugar to Dixie's
facility in Visalia, California to be packaged and returned to Holly Sugar.
The aggregate value of such contract to Imperial Holly for its fiscal year
ended March 31, 1997 was approximately $950,000.
Except as provided in the Merger Agreement, and as otherwise described in
this Offer to Purchase, neither Imperial Holly nor the Purchaser, nor to the
best knowledge of Imperial Holly and the Purchaser, any of the persons listed
on 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 relationship concerning the transfer or the voting of any
securities of the Company, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
Imperial Holly nor the Purchaser nor, to the best knowledge of Imperial Holly
and the Purchaser, any of the persons listed on Schedule I hereto, has had,
since October 4, 1993, any business relationships or transactions with the
Company or any of its executive officers, directors, or affiliates that would
require reporting under the rules of the SEC applicable to this Offer to
Purchase. Except as set forth in this Offer to Purchase, since October 4,
1993, there have been no contacts, negotiations or transactions between the
Purchaser, Imperial Holly or any of its subsidiaries or, to the best knowledge
of Imperial Holly and the Purchaser, any of the persons listed on Schedule I
hereto, and the Company or its affiliates, concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets. Except
as set forth in this Offer to Purchase, neither Imperial Holly nor the
Purchaser, nor, to the best knowledge of Imperial Holly and the Purchaser, any
of the persons listed on Schedule I hereto, beneficially owns any Shares or
has effected any transactions in the Shares in the past 60 days.
Section 9. Source and Amount of Funds.
The total amount of funds required by the Purchaser to purchase 50.1% of the
outstanding Shares is estimated not to exceed $295 million. The total cash
compensation payable to holders of Shares in connection with the consummation
of the Offer and the Merger is estimated not to exceed $408 million. The funds
necessary to purchase Shares pursuant to the Offer and to pay related fees and
expenses will be furnished to the Purchaser (i) by Imperial Holly as a capital
contribution and (ii) through the financings described below.
Imperial Holly has received a commitment letter (the "Commitment Letter"),
dated September 10, 1997, as amended September 18, 1997, from Lehman
Commercial Paper Inc., an affiliate of Lehman Brothers ("LCPI"), to provide
senior credit facilities in the aggregate amount of $505 million (the "Tender
Facilities"). Such funds will be used to finance the Offer, to repay
approximately $136 million of indebtedness of Imperial Holly and certain
related expenses and to provide for Imperial Holly's working capital needs
pending the closing
13
<PAGE>
of the Merger. The Tender Facilities will be comprised of a term loan facility
in the amount of $295 million and a revolving credit facility in the amount of
$210 million. The Tender Facilities will be guaranteed by each of Imperial
Holly's direct and indirect subsidiaries (other than the Company and its
subsidiaries), and will be secured by substantially all the assets of Imperial
Holly and each of the guarantors. The term loan under the Tender Facilities
will be available for one drawing on the date (in no event later than November
30, 1997) on which Purchaser accepts for payment the Target Number of Shares
(the "Tender Date"). The term loan will be repayable on the earlier of (i) the
date of the closing of the Merger and (ii) the date which is the earlier of
January 31, 1998 and 90 days after the Tender Date (the "Maturity Date"). The
revolving credit facility will be available on a revolving basis during the
period commencing on or before the Tender Date and ending on the Maturity Date
and will mature on the Maturity Date. The Tender Facilities will bear interest,
at Imperial Holly's election, at either (i) the higher of (A) the prime rate of
the administrative agent selected in the syndication process, (B) the secondary
market rate for certificates of deposit plus 1%, or (C) the federal funds
effective rate plus 0.50% (the "Base Rate") plus a margin of 1.50% or (ii) the
rate for eurodollar deposits in the interbank eurodollar market (the
"Eurodollar Rate") plus a margin of 2.50%.
The Commitment Letter also provides for LCPI to arrange senior credit
facilities (the "Merger Facilities"), which are comprised of either (i) senior
credit facilities of up to $455 million (the "Alternative A Merger
Facilities"), comprised of term loan facilities aggregating not more than $255
million (the "Alternative A Term Loans") and a $200 million revolving credit
facility (the "Alternative A Revolver"), which will be implemented in
conjunction with the issuance of $250 million in proceeds of unsecured senior
subordinated notes to be issued by Imperial Holly (the "Subordinated Notes") or
(ii) in the event the Subordinated Notes are not issued and sold on the date of
the Merger, senior credit facilities of up to $705 million (the "Alternative B
Merger Facilities"), comprised of term loan facilities aggregating not more
than $505 million (the "Alternative B Term Loans") and a $200 million revolving
credit facility (the "Alternative B Revolver"). The proceeds of the Merger
Facilities will provide the financing necessary to repay amounts owing under
the Tender Facilities, to provide a portion of the Cash Consideration payable
upon consummation of the Merger and certain related expenses, and to provide
financing for future working capital and other general corporate purposes. The
Merger Facilities will be guaranteed by each of Imperial Holly's direct and
indirect subsidiaries, and will be secured by substantially all tangible and
intangible assets of Imperial Holly and each of the guarantors.
The Alternative A Term Loans will be available for one drawing on the date of
the closing of the Merger, and will consist of two tranches. The two tranches,
in the aggregate principal amounts of $150 million and $105 million,
respectively, will fully amortize over a period of six and eight years,
respectively. The Alternative A Revolver will be available on a revolving basis
during the period commencing on the date of the closing of the Merger and
ending on the date that is five years after the date of the closing of the
Merger. The Alternative A Revolver and the Alternative A Term Loans will bear
interest, at Imperial Holly's election, at either the Base Rate plus a margin
ranging from 0.25% to 1.00% or the Eurodollar Rate plus a margin ranging from
1.25% to 2.00%.
The Alternative B Term Loans will be available for one drawing on the date of
the closing of the Merger, and will consist of four tranches. The four
tranches, in the aggregate principal amounts of $150 million, $127.5 million,
$127.5 million and $100 million, respectively, will fully amortize over periods
of five, six, seven and eight years, respectively. The Alternative B Revolver
will be available on a revolving basis during the period commencing on the date
of the closing of the Merger and ending on the date that is five years after
the date of the closing of the Merger. The Alternative B Revolver and the
Alternative B Term Loans will bear interest, at Imperial Holly's election, at
either the Base Rate plus a margin ranging from 0.75% to 2.50% or the
Eurodollar Rate plus a margin ranging from 1.75% to 3.50%.
Although LCPI anticipates that it may syndicate all or a portion of the
Tender Facilities and the Merger Facilities to other lenders, the commitment
letter provides that LCPI will, subject to customary conditions, underwrite the
entire amount of the Tender Facilities and the Alternative A Merger Facilities
or the Alternative B Merger Facilities.
14
<PAGE>
Section 10. Background of the Offer, Past Contacts, Transactions or
Negotiations with the Company.
On July 15, 1997, the Company announced that it had entered into an
Agreement and Plan of Merger (the "Flo-Sun Merger Agreement"), dated as of
July 14, 1997, among XSF Holdings, Inc., a Delaware corporation ("Newco"), DXE
Merger Corp., a Delaware corporation and a wholly owned subsidiary of Newco,
the Company and Flo-Sun Incorporated, a Florida corporation ("Flo-Sun"),
pursuant to which the Company would be merged into DXE Merger Corp. and each
outstanding Share would be converted into one share of Class A Common Stock of
Newco, (the "Flo-Sun Merger"). Shortly after the announcement of the Flo-Sun
Merger Agreement, Imperial Holly's management contacted Lehman Brothers to
seek assistance in determining the feasibility of a potential offer to acquire
the Company.
The Imperial Holly Board of Directors (the "Imperial Holly Board") met on
July 25, 1997 and considered a presentation by Lehman Brothers and Imperial
Holly management of structuring and financing alternatives for the acquisition
of the Company by Imperial Holly. The Imperial Holly Board authorized
management and Lehman Brothers to continue to refine their financial and
strategic analyses and to pursue financing alternatives for such a
transaction.
On August 8, 1997, the Imperial Holly Board met to consider and discuss a
presentation by Imperial Holly management and Lehman Brothers of their
analysis of a proposal for the acquisition of the Company by Imperial Holly
for a combination of cash and Imperial Shares. The Imperial Holly Board, after
consulting with its outside counsel, management and Lehman Brothers,
authorized management to continue to work with Lehman Brothers and Imperial
Holly's legal advisors to formulate a proposal for the acquisition of the
Company and the financing required for such a transaction.
The Imperial Holly Board met on August 22, 1997 and discussed with
management, Lehman Brothers and Imperial Holly's outside counsel a proposal to
acquire the Company in a cash and stock merger for $18.75 per Share,
consisting of 70% cash and 30% Imperial Shares. The Imperial Holly Board
authorized management to deliver a letter setting forth the terms of such a
proposal to the Company.
On August 25, 1997, James C. Kempner, the President and Chief Executive
Officer of Imperial Holly, delivered a letter containing the terms of such an
offer to William F. Sprague, III, the President and Chief Executive Officer of
the Company. On August 26, 1997, the Company Board met and evaluated Imperial
Holly's offer. After consulting with its financial and legal advisors, the
Company Board instructed management of the Company to enter into discussions
with Imperial Holly regarding Imperial Holly's proposed offer to acquire the
Company.
On August 26, 1997, Imperial Holly signed a customary confidentiality
agreement with the Company relating to the information to be provided by the
Company (which agreement, among other things, prohibited Imperial Holly from
making an unsolicited acquisition proposal for the Company, or engaging in
certain other activities relating to control of the Company, for a two year
period).
On August 27, 1997, Imperial Holly delivered a draft merger agreement to the
Company and its financial and legal advisors, and Imperial Holly and the
Company both began to conduct due diligence.
On August 28, 1997, Mr. Kempner and other members of Imperial Holly's
management and its financial and legal advisors met in Savannah with Messrs.
Cartledge and Sprague and other members of the Company's management, and the
Company's financial and legal advisors to discuss Imperial Holly's offer. The
Company and Imperial Holly discussed a proposed structure for the acquisition
of the Company, pursuant to which Imperial Holly would make a cash tender
offer for 50.1% of the Shares followed by a merger at a price of $18.75 per
Share, with 70% of the consideration being in cash and 30% in Imperial Shares.
On August 30, 1997, Messrs. Kempner, Cartledge and Sprague, and other members
of Imperial Holly's and the Company's management, DLJ and Lehman Brothers and
the Company's and Imperial Holly's outside counsel met by telephone conference
to discuss the terms of a proposed merger agreement and to resolve certain
issues regarding the terms of Imperial Holly's proposed offer.
15
<PAGE>
On September 4, 1997, the Imperial Holly Board met and reviewed in detail
with Imperial Holly's management, Lehman Brothers and Imperial Holly's outside
counsel the terms of the proposed transaction. Lehman Brothers delivered its
opinion to the Imperial Holly Board that the consideration to be paid by
Imperial Holly in the proposed transaction was fair from a financial point of
view. The Imperial Holly Board unanimously approved an offer for the Shares at
$18.75 per Share, consisting of 70% cash and 30% Imperial Shares. The Imperial
Holly Board also directed Lehman to communicate the offer, including the copy
of the proposed merger agreement signed by Imperial Holly, to DLJ, conditioned
upon the Company's terminating its agreement with Flo-Sun.
Also on September 4, 1997, the Company's Board met and reviewed Imperial
Holly's offer with DLJ and the Company's outside counsel. DLJ rendered its
opinion to the Company that the consideration to be paid in the proposed
transaction by Imperial Holly to the Company's stockholders was fair to the
Company's stockholders from a financial point of view, and the Company's Board
approved the termination of the Flo-Sun agreement and, subject to such
termination, the acceptance of the Imperial Holly offer and the execution of
the proposed merger agreement tendered by Imperial Holly.
On September 4, 1997, Flo-Sun contacted the Company to propose a revised
offer, which the Company Board agreed to consider. DLJ notified Imperial Holly
that Flo-Sun had revised its offer. From September 5, 1997 through September
9, 1997, Imperial Holly's management, Lehman Brothers and Imperial Holly's
outside counsel discussed certain revisions to the terms of Imperial Holly's
offer to the Company and negotiated with the Company's management, DLJ and the
Company's outside counsel concerning the terms of such a revised offer.
The Imperial Holly Board met on September 10, 1997 and reviewed the terms of
a revised offer at $20.25 per Share, consisting of 70% cash and 30% Imperial
Shares, with Imperial Holly's management, Lehman Brothers and Imperial Holly's
outside counsel. Lehman Brothers rendered its revised opinion to the Imperial
Holly Board that such a transaction was fair from a financial point of view to
Imperial Holly, and the Imperial Holly Board unanimously approved such an
offer and directed Lehman Brothers to communicate the revised offer to DLJ.
On September 11, 1997, the Company Board met and reviewed the terms of the
revised Flo-Sun offer and the revised Imperial Holly offer with DLJ and a
second financial advisor, The Robinson-Humphrey Company ("Robinson-Humphrey"),
and the Company's outside counsel. After full discussion of the final Imperial
Holly offer and the revised Flo-Sun offer, and after considering the advice of
DLJ, Robinson-Humphrey and the Company's outside counsel, and the oral opinion
of DLJ that, based upon and subject to the assumptions, limitations and
qualifications set forth therein, as of the date of such opinion, the
consideration to be received by the Company's stockholders pursuant to the
Offer and the Merger was fair to such stockholders from a financial point of
view, the Company Board unanimously approved the Offer, the Merger, the Merger
Agreement and the transactions contemplated thereby, and the termination of
the Flo-Sun Merger Agreement. On September 12, 1997, the Flo-Sun Merger
Agreement was terminated and the Company executed the Merger Agreement.
Section 11. Purpose of the Offer; the Merger; Merger Agreement; Plans for the
Company.
The purpose of the Offer, the Merger and the Merger Agreement is for
Imperial Holly to acquire control of, and the entire equity interest in, the
Company. The Offer and the Merger Agreement are intended to increase the
likelihood that the Merger will be effected as promptly as practicable.
The Merger Agreement. The following summary of the Merger Agreement, a copy
of which is filed as an exhibit to the Schedule 14D-1, is qualified by
reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment or pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Target Share
Condition, the HSR Condition and the Financing Condition and certain other
conditions that are set forth in Section 14. If any condition to the
Purchaser's obligation to purchase Shares under the Offer is not satisfied
prior to the Expiration Date, the Purchaser reserves the right (subject to the
terms of the Merger Agreement and the applicable rules and regulations of the
Commission) to (i) decline to purchase any of the Shares tendered and
16
<PAGE>
terminate the Offer, (ii) waive such unsatisfied condition, and purchase the
Target Number of Shares validly tendered and not withdrawn, (iii) extend the
Offer and, subject to the right of stockholders to withdraw Shares as provided
in Section 4 of this Offer to Purchase, retain the Shares which have been
tendered during the period or periods for which the Offer is extended or (iv)
amend the Offer. The Merger Agreement provides that the Purchaser reserves the
right to increase the price per Share payable in the Offer or to otherwise
amend the Offer; provided, however, the Purchaser will not, without the prior
written consent of the Company, (i) decrease or change the form of
consideration payable in the Offer, (ii) decrease the Target Number of Shares,
(iii) impose conditions to the Offer in addition to those set forth in the
Merger Agreement, (iv) change the conditions of the Offer (except that the
Purchaser may waive any of the conditions of the Offer other than the Minimum
Condition) or (v) make any other change in the terms or conditions of the
Offer which is adverse to holders of Shares.
Recommendation. The Board of Directors of the Company, based in part upon
the opinion of DLJ that the proposed consideration to be received by holders
of Shares pursuant to the Merger Agreement is fair from a financial point of
view to the holders of Shares, unanimously determined that the Offer and the
Merger are fair to and in the best interests of the stockholders of the
Company, approved the Offer and the Merger and recommended acceptance of the
Offer and approval and adoption of the Merger Agreement by the stockholders of
the Company and approved the amendment to the Company Rights Plan so as to
provide that no purchase rights under such agreement will become exercisable
as a result of the approval, execution or delivery of the Merger Agreement or
the consummation of the transactions contemplated thereby (including the Offer
or the Merger).
Board Representation. The Merger Agreement provides that, upon the
Purchaser's acquisition of a majority of the outstanding Shares pursuant to
the Offer, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
shall give the Purchaser representation on the Board of Directors equal to the
product of the total number of directors on the Board of Directors multiplied
by the percentage that the aggregate number of Shares beneficially owned by
the Purchaser at such time bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause the Purchaser's designees to be elected as directors of the
Company, including increasing the size of the Board of Directors or securing
the resignations of incumbent directors or both. At the request and expense of
the Purchaser, the Company shall take all action necessary to effect any such
election, including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
Notwithstanding the foregoing, at all times prior to the Effective Time of
the Merger, the Board of Directors of the Company shall include at least two
directors who held office as of the date of the Merger Agreement (any such
director remaining in office being a "Continuing Director"). Following the
election or appointment of Purchaser's designees and prior to the Effective
Time, such designees shall abstain from acting upon, and the approval of a
majority of the Continuing Directors shall be required to authorize and shall
be sufficient to authorize, any resolution with respect to any termination of
the Merger Agreement by the Company, any amendment of the Merger Agreement
requiring action by the Board of Directors of the Company, any extension of
time for the performance of any of the obligations or other acts of Imperial
Holly or the Purchaser under the Merger Agreement, any waiver of compliance
with any of the agreements or conditions under the Merger Agreement for the
benefit of the Company and any action to seek to enforce any obligation of
Imperial Holly or the Purchaser under this Agreement.
The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company, whereupon the separate
corporate existence of the Purchaser will cease and the Company will be the
surviving corporation in the Merger. The Merger Agreement further provides
that (i) subject to certain requirements in the Merger Agreement, the
Certificate of Incorporation and the By-Laws of the Purchaser as in effect at
the Effective Time shall be the Certificate of Incorporation and the By-Laws
of the surviving corporation, (ii) the directors of the Purchaser immediately
prior to the Effective Time shall be the initial directors of the surviving
corporation, and (iii) the officers of the Company immediately prior to the
Effective Time shall be the initial officers of the surviving corporation.
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Consideration to be Paid in the Merger. The Merger Agreement provides that
each Share issued and outstanding immediately prior to the Effective Time
(other than Excluded Shares and Dissenting Shares) will be converted into the
right to receive (i) Cash Consideration or (ii) Stock Consideration. The
number of Shares to be converted into the right to receive the Cash
Consideration in the Merger shall be the Cash Election Number. Subsequent to
the consummation of the Offer, each stockholder of the Company holding Shares
not tendered in the Offer (other than Excluded Shares) will be entitled to
make an election to receive the Cash Consideration. If the number of Shares
electing to receive the Cash Consideration exceeds the Cash Election Number,
then pursuant to the Merger Agreement (i) each Share other than Cash Election
Shares will be converted into the Stock Consideration and (ii) each
stockholder making an election to receive the Cash Consideration (a "Cash
Election") will be entitled to receive the Offer Price for that number of Cash
Election Shares as is equal to the product of (x) the number of Cash Election
Shares of such stockholder and (y) a fraction, the numerator of which is the
Cash Election Number and the denominator of which is the total number of Cash
Election Shares and (iii) each other Cash Election Share held by such
stockholder will be converted into the Stock Consideration. If the number of
Shares electing to receive the Cash Consideration is less than the Cash
Election Number, then (i) each Cash Election Share will be converted into the
right to receive the Offer Price, (ii) in addition to such Cash Election
Shares, each stockholder (including stockholders who made Cash Elections with
respect to some but not all of their Shares) will be required to accept the
Offer Price for that number of Shares as is equal to the product of (x) the
excess of the Cash Election Number over the number of Cash Election Shares and
(y) a fraction, the numerator of which is the number of Shares (other than
Cash Election Shares) held by such stockholder and the denominator of which is
the aggregate number of outstanding Shares other than Cash Election Shares and
(iii) each other Share held by such stockholder will be converted into the
Stock Consideration. The Stock Consideration also includes with each Imperial
Share the right to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock, without par value, of Imperial Holly pursuant
to a rights agreement, dated as of September 14, 1989, as amended, between
Imperial Holly and the Bank of New York, as rights agent. See "Introduction."
Company Options. Each unexpired and unexercised option to purchase Shares
issued pursuant to the Company's 1996 Equity Incentive Plan, or otherwise
granted by the Company (in each case, an "Option"), shall, at the Effective
Time and at the election of the holder of such Options either (i) be assumed
by Imperial Holly and constitute an option to acquire, on the same terms and
conditions as were applicable under such assumed Option, a number of Imperial
Shares equal to the product of (A) the Stock Consideration and (B) the number
of Shares subject to such Option, at a price per share equal to the amount
obtained by dividing the exercise price of such Option by the Stock
Consideration or (ii) be canceled by the Company, and each holder of an Option
so canceled shall be entitled to receive an amount in cash equal to the
difference between the Offer Price and the exercise price of such Option. Each
holder of an Option shall make such election by notifying the Company and
Imperial Holly by 5:00 p.m. New York City time on the Election Date (as
defined below). At the Effective Time, Imperial Holly shall deliver to holders
of Options who make the election set forth in clause (i) of the preceding
sentence, appropriate option agreements representing the right to acquire
Imperial Shares on the same terms and conditions as contained in the
outstanding Options. Imperial Holly shall adopt and comply with the terms of
the 1996 Equity Incentive Plan as it applies to Options assumed as set forth
above including, without limitation, provisions regarding the accelerated
vesting of Options which shall occur by virtue of consummation of the Merger,
to the extent required by the terms of such Options or such Plan. The date of
grant of each option to acquire Imperial Shares shall be deemed to be the date
on which the corresponding Option was granted.
Stockholders' Meetings. In the Merger Agreement, each of the Company and
Imperial Holly agreed to take all action necessary in accordance with
applicable law to duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following the consummation
of the Offer for the purpose of (in the case of the Company) the approving and
adopting of the Merger Agreement and the Merger or (in the case of Imperial
Holly) the issuance of the Stock Consideration to stockholders of the Company
in the Merger (the "Company Stockholders Meeting" and the "Imperial
Stockholders Meeting," respectively). Subject to their fiduciary duties under
applicable law, the respective Board of Directors of the Company and Imperial
Holly will recommend that their respective stockholders approve such actions.
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Exchange of Certificates. The Merger Agreement provides that as of or
promptly after the Effective Time, Imperial Holly shall deposit the aggregate
Merger Consideration with the Bank of New York (the "Exchange Agent") for the
benefit of the holders of Shares. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented Shares shall, upon surrender to the Exchange Agent of such
certificate or certificates and acceptance thereof by the Exchange Agent, be
entitled to a certificate or certificates representing the number of full
Imperial Shares received as Stock Consideration and the Cash Consideration, if
any, into which the number of Shares previously represented by such
certificate or certificates surrendered shall have been converted pursuant to
the Merger Agreement. The Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal
exchange practices. If any certificate for such Imperial Shares is to be
issued in, or if cash is to be remitted to, a name other than that in which
the certificate representing Shares surrendered for exchange is registered,
the certificate so surrendered shall be properly endorsed, with signature
guaranteed or otherwise in proper form for transfer. The person requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for such Imperial Shares in a name other than that of
the registered holder of the certificate surrendered or establish that such
tax has been paid or is not applicable. Until surrendered, each certificate
representing Shares shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration upon surrender.
Each holder of Shares after the Effective Time who would otherwise have been
entitled to receive as Stock Consideration a fraction of an Imperial Share
(after taking into account all Shares delivered by such holder) shall receive,
in lieu thereof, a cash payment (without interest) equal to such fraction
multiplied by the Cash Consideration.
No dividends or other distributions with respect to Imperial Shares with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered certificate representing Shares and no cash payment in lieu of
fractional Imperial Shares shall be paid to any such holder until the
surrender of such certificate representing Shares. However, following
surrender of any such certificates, but subject to applicable laws, the holder
of a certificate representing whole Imperial Shares shall be paid, without
interest, at the time of such surrender (i) cash in lieu of fractional
Imperial Shares to which such holder is entitled and (ii) the proportionate
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such fractional or whole
Imperial Shares.
Any portion of the Merger Consideration deposited with the Exchange Agent
which remains undistributed to the holders of the certificates representing
Shares for six months after the Effective Time shall be delivered to Imperial
Holly, and any holders of Shares prior to the Effective Time who have not
theretofore complied with the exchange provisions of the Merger Agreement
shall thereafter look only to Imperial Holly and only as general creditors
thereof for payment of their claim for cash or Imperial Shares. None of the
Purchaser, the Company, Imperial Holly or the Exchange Agent shall be liable
to any person in respect of any cash or any Imperial Shares delivered to a
public office pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing Shares shall not have been
surrendered immediately prior to the date on which any Merger Consideration in
respect of such certificate would otherwise escheat to or become the property
of any government authority, any such Merger Consideration in respect of such
certificate shall, as such time and to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto. The Company shall pay
all charges and expenses of the Exchange Agent.
Elections. The Merger Agreement provides that each person who, on or prior
to the Election Date, is a record holder of Shares (other than Excluded
Shares) will be entitled, with respect to all or any portion of his Shares, to
make a Cash Election on or prior to such Election Date to receive the Cash
Consideration. The Company shall prepare and mail a form of election, which
form shall be subject to the reasonable approval of Imperial Holly and the
Purchaser (the "Form of Election"), with the joint proxy statement/prospectus
prepared in connection with the Merger (the "Proxy Statement") to the record
holders of Shares as of the record date for the Company Stockholders Meeting
to be used by each such record holder who wishes to make a Cash Election
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with respect to any or all Shares held by such holder. The Company will use
commercially reasonable efforts to make the Form of Election and the Proxy
Statement available to all persons who become holders of Shares during the
period between such record date and the Election Date. Any such holder's Cash
Election shall have been properly made only if the Exchange Agent shall have
received at its designated office, by 5:00 p.m., New York City time on the
business day (the "Election Date") next preceding the day on which the vote is
taken at the Company Stockholders' Meeting (or any adjournment thereof) a Form
of Election properly completed and signed and accompanied by certificates for
the Shares to which such Form of Election relates (or by an appropriate
guarantee of delivery of such certificates as set forth in such Form of
Election from a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, provided such certificates are in fact delivered to the
Exchange Agent within three NYSE trading days after the date of execution of
such guarantee of delivery). Failure to deliver Shares covered by such a
guarantee of delivery within the time set forth therein shall invalidate an
otherwise properly made Cash Election.
Any Form of Election may be revoked by the stockholder submitting it to the
Exchange Agent only by written notice received by the Exchange Agent (i) prior
to 5:00 p.m., New York City time, on the Election Date or (ii) after the date
of the Company Stockholders Meeting, if (and to the extent that) the Paying
Agent is legally required to permit revocations and the Effective Time shall
not yet have occurred. In addition, all Forms of Election shall automatically
be revoked if the Exchange Agent is notified in writing by Imperial Holly,
Purchaser and the Company that the Merger has been abandoned. If a Form of
Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for Shares to which such Form of Election relates
shall be promptly returned to the stockholder submitting the same to the
Exchange Agent.
The determination of the Exchange Agent shall be binding as to whether or
not Cash Elections have been properly made or revoked with respect to Shares
and when Cash Elections and revocations were received. If the Exchange Agent
determines that any Cash Election was not properly made with respect to
Shares, such Shares shall be exchanged in the Merger for Stock Consideration
subject to the proration procedures described in "Consideration to be Paid in
the Merger". The Exchange Agent shall also make all computations as to the
allocation and the proration contemplated in connection with any exchange, and
any such computation shall be conclusive and binding on the holders of Shares.
Dissenters' Rights. If the Merger is consummated, persons who hold Shares at
that time would have the right to appraisal of their Shares in accordance with
Section 262 of the DGCL. Such appraisal rights, if the statutory procedures
are complied with, would result in a judicial determination of the "fair
value" of such Dissenting Shares (excluding any element of value arising from
the accomplishment or expectation of the Merger) owned by such holders. In
addition, such dissenting stockholders may 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 Dissenting Shares. Any such
judicial determination of the fair value of the Dissenting Shares could be
based upon considerations other than or in addition to the Offer Price, the
Cash Consideration or the Stock Consideration and the market value of the
Shares, including asset values, the investment value of the Shares and any
other valuation considerations generally accepted in the investment community.
The value so determined for Dissenting Shares could be more or less than the
Offer Price, the Cash Consideration or the Stock Consideration, and payment of
such consideration would take place subsequent to payment pursuant to the
Offer. The Company shall not, without the prior written consent of Purchaser
and Imperial Holly, make any payment with respect to, or settle or offer to
settle with, any such dissenters.
In addition, several decisions by the Delaware courts have held that a
controlling stockholder of a corporation involved in a merger has a fiduciary
duty to the other stockholders which requires that the merger be fair to such
other stockholders. In determining whether a merger is fair to minority
stockholders, the Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and
whether there was fair dealing among the parties. In Weinberger v. UOP, Inc.,
the Delaware Supreme Court stated, among other things, that although the
remedy ordinarily available in a merger that is found not to be "fair" to
minority stockholders is the right to appraisal described above, such
appraisal remedy may
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not be adequate "in certain cases, particularly where fraud,
misrepresentation, self-dealing, deliberate waste of corporate assets, or
gross and palpable overreaching are involved," and that in such cases the
Delaware Chancery Court would be free to fashion any form of appropriate
relief.
If the Purchaser purchases Shares pursuant to the Offer, and the Merger or
another merger or other business combination is consummated more than one year
after the completion of the Offer, or if such a merger or other business
combination were to provide for the payment of consideration less than that
paid pursuant to the Offer, compliance by the Purchaser with Rule 13e-3 under
the Exchange Act would be required, unless the Shares were to be deregistered
under the Exchange Act prior to such transaction. See Section 12. Rule 13e-3
would require, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders
therein be filed with the SEC and disclosed to minority stockholders prior to
consummation of the transaction.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties by the Company, on the one hand, and the
Purchaser and Imperial Holly, on the other hand, relating to, among other
things, (i) due organization and qualification, including subsidiaries, (ii)
charter documents, (iii) capitalization, (iv) due authorization, execution and
delivery of the Merger Agreement and consummation of the transactions
contemplated thereby, (v) conflict with charter documents and required
consents, (vi) possession of all necessary permits, (vii) accuracy of
information contained in documents filed with the Commission and financial
statements prepared in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"), (viii) no material adverse affect since the end of
the Company's and Imperial Holly's respective last fiscal years, (ix) the
absence of material litigation, (x) matters relating to the Employee
Retirement Income Security Act, (xi) intellectual property, (xii) taxes,
(xiii) environmental matters, (xiv) products, (xv) real property and other
assets, (xvi) insurance, (xvii) opinions of the Company's and Imperial Holly's
respective financial advisors, (xviii) vote necessary for stockholder
approval, (xix) no brokers other than financial advisors of the Company and
Imperial Holly and (xx) no material misstatements or omissions in documents
filed with Commission in connection with Offer and Merger. The Company also
represented and warranted that it (a) amended the Company Rights Agreement,
(b) amended certain provisions of the Company's Employee Benefit Trust and (c)
terminated the agreement and plan of merger, dated July 14, 1997, entered into
among the Company, Flo-Sun Incorporated ("Flo-Sun") and certain affiliates of
Flo-Sun. In addition, the Purchaser and Imperial Holly represented that
Imperial Holly received a commitment letter from LCPI to provide financing to
complete the Offer and the Merger.
Employee Benefit Matters. For a one year period immediately following the
Closing Date, Imperial Holly has agreed to provide or cause the Surviving
Corporation to provide all employees of the Company who continue to be
employed by Imperial Holly or the Surviving Corporation or any of their
respective affiliates as of the Effective Time ("Continuing Employees") with
compensation and benefits on terms which are, in the aggregate, not
substantially less favorable than those provided to Continuing Employees
immediately prior to the date of the Merger Agreement.
Prior to the execution of the Merger Agreement, the Company amended each of
(i) the Company's Supplemental Executive Retirement Plan and (ii) the Deferred
Compensation Plan for Key Employees of the Company, as amended and restated as
of August 1, 1990 (collectively, the "Company Executive Deferred Compensation
Plans"), to provide that neither the execution of the Merger Agreement, nor
the consummation of the transactions comtemplated by the Merger Agreement,
shall constitute a "change of control" for purposes of such Company Executive
Deferred Compensation Plans or otherwise will result in the acceleration of
vesting or payment of any benefit, or the triggering of any ancillary or
supplemental benefit or subsidy, under such plan.
Prior to the execution of the Merger Agreement and in accordance with the
terms thereof, the Company amended its Benefit Trust Agreement (the "Benefit
Trust") in order to, among other things, (i) provide for the prepayment of the
existing note of the Benefit Trust (the "Note"), with the cash proceeds
received in the Offer and the Merger; (ii) provide for the remaining corpus of
the Benefit Trust to be reinvested in Imperial Shares to be acquired from
Imperial Holly; (iii) provide that the corpus of the Benefit Trust will not be
immediately
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distributed to participants, but rather will be held in the Benefit Trust to
pay benefits when due; (iv) provide that, from and after consummation of the
Offer, the Company will no longer be entitled to be reimbursed from the
Benefit Trust for payments or contributions made prior to such time under the
covered benefit plans; (v) provide that no actions taken in connection with
the Offer and the Merger will constitute a Potential Change in Control under
the Benefit Trust; (vi) provide that, from and after consummation of the
Offer, the Trustee can sell Imperial Shares only after giving Imperial Holly a
right of first refusal; (vii) provide that, from and after consummation of the
Offer, Imperial Shares held by the Benefit Trust will be voted in proportion
to all other outstanding Imperial Shares; and (viii) provide that, from and
after consummation of the Offer, the Trustee will tender or exchange Imperial
Shares held by the Benefit Trust as directed by the Company's Board of
Directors. The Merger Agreement stipulates that the cash received by the
Benefit Trust in the Offer and the Merger will be used to repay the Note to
the Company and to purchase additional Imperial Shares. Consummation of the
Offer will constitute a Change in Control under the Benefit Trust.
Agreements with Respect to the Conduct of Business Pending the Merger. The
Merger Agreement provides that, between the date of the Merger Agreement and
the Effective Time, the Company and Imperial Holly shall not, unless agreed to
in writing by the other party, fail to carry on their business and the
business of their subsidiaries in the usual, regular and ordinary course in
substantially the same manner as conducted beforehand, or fail to use
commercially reasonable efforts to preserve substantially intact their present
lines of business, maintain their rights and franchises and preserve their
relationships with employees, customers and suppliers.
The Merger Agreement contains covenants of both the Company and Imperial
Holly with respect to the period between the date of the Merger Agreement and
the Effective Time, including covenants that: (i) prevent amendment to
corporate governance documents, (ii) prevent issuance of securities, (iii)
prevent declaration and payment of dividends (other than regular quarterly
dividends), (iv) limit reclassification or alteration of any of its capital
stock, (v) limit acquisition or disposition of any entity or assets not in the
ordinary course of business, (vi) limit incurrence of any indebtedness, (vii)
limit entrance into, amendment or termination of any material contract, (viii)
limit authorization of any material capital expenditure, (ix) limit increases
of the compensation to its officers or employees, (x) limit entrance into or
amendment of any employment or severance agreement, (xi) prevent the
establishment or amendment of any benefit or option plans, (xii) limit changes
in accounting methods, (xiii) prevent the making of any tax election with
respect to any material tax liability and (xiv) limit payment, discharge or
satisfaction of any obligation.
In addition, the Merger Agreement contains covenants of both the Company and
Imperial Holly with respect to the period between the date of the Merger
Agreement and Effective Time, that neither party will (i) take any action that
would prevent or impede the Merger from obtaining any material consent or
approval, (ii) enter into any agreement that would limit such company's
ability to compete or (iii) take any action that would result in breach of any
representations or warranties or prevent the conditions to the Merger from
being satisfied.
Neither the Company, Imperial Holly nor any subsidiary thereof may authorize
or enter into an agreement to do anything listed above.
No Solicitation. The Merger Agreement provides that neither the Company nor
any subsidiary shall, directly or indirectly, initiate, solicit, encourage, or
otherwise facilitate any inquiries or the making of any proposal or offer
relating to a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
(other than the transactions contemplated by the Merger Agreement) (any of
such transactions being an "Acquisition Proposal") involving, or any purchase
or sale of all or any significant portion of the assets or 20% or more of the
equity securities of, the Company or any subsidiary that could reasonably be
expected to interfere with the completion of the Merger or the other
transactions contemplated by the Merger Agreement. Neither the Company or any
subsidiary of the Company will have any discussion with or provide any
confidential information or data to any person or entity relating to an
Acquisition Proposal or engage in any negotiations concerning an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement
an Acquisition Proposal or accept an Acquisition Proposal; provided, however,
that nothing contained in the Merger Agreement shall prevent the Company or
the Company's Board of Directors from (i) complying with Rule 14e-2 under the
Exchange Act with regard to an Acquisition Proposal; (ii) engaging in any
discussions or negotiations with, or providing any information to, any person
or entity in
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response to an unsolicited bona fide written Acquisition Proposal by any such
person or entity; or (iii) recommending such an unsolicited bona fide written
Acquisition Proposal to the holders of Shares if and only to the extent that,
in any such case as is referred to in clauses (ii) and (iii), (A) the
Company's Board of Directors concludes in good faith (after consultation with
its legal counsel and financial advisors) that such Acquisition Proposal is
reasonably capable of being completed, and would, if consummated, result in a
transaction more favorable to holders of Shares than the transactions
contemplated by the Merger Agreement (any such more favorable Acquisition
Proposal being hereinafter referred to as a "Superior Proposal"), (B) the
Company's Board of Directors determines in good faith after consultation with
legal counsel that such action is necessary for it to act in a manner
consistent with its fiduciary duties, (C) prior to providing any information
or data to any person or entity in connection with a Superior Proposal, the
Company's Board of Directors receives from such person or entity an executed
confidentiality agreement on terms substantially similar to those contained in
the confidentiality agreement, dated August 26, 1997, between the Company and
Imperial Holly and (D) prior to providing any information or data to or
entering into discussions or negotiations with any person or entity, the
Company's Board of Directors notifies Imperial Holly promptly of the
inquiries, proposals or offers received by, the information requested from, or
the discussions or negotiations sought to be initiated or continued with, the
Company or any subsidiary indicating the name of such person or entity and the
terms and conditions of any proposals or offers. The Company also will cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties previously conducted regarding any Acquisition
Proposal.
Indemnification of Directors. As provided in the Merger Agreement, Imperial
Holly will, and will cause the Surviving Corporation to, maintain all rights
of indemnification existing in favor of, and indemnify, each present and
former director, officer, employee and fiduciary of the Company or any
subsidiary and each person who served at the request of the Company or any
subsidiary (collectively, the "Indemnified Parties") to the fullest extent
permitted under applicable law against all losses and claims arising out of or
pertaining to any action or omission in the capacity as an officer, director,
employee or fiduciary of the Company. Imperial Holly and the Purchaser agree
that all rights to indemnification existing in favor of the Indemnified
Parties as provided in the Company's By-Laws, as in effect as of the date
hereof, with respect to matters occurring through the Effective Time, shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time.
In the event any claim, action, suit, proceeding or investigation (a
"Claim") is brought against any Indemnified Party (whether arising before or
after the Effective Time) after the Effective Time, the Indemnified Parties
have certain rights with respect to retention of counsel, payment of fees and
expenses and assistance in the vigorous defense of any Claim (provided that
neither Imperial Holly nor the Surviving Corporation shall be liable for any
settlement of any Claim effected without its written consent). Any Indemnified
Party wishing to claim indemnification must notify Imperial Holly (but the
failure to so notify Imperial Holly shall not relieve Imperial Holly from any
liability that Imperial Holly may have thereunder except to the extent such
failure materially prejudices Imperial Holly), and must deliver to Imperial
Holly the undertaking contemplated by Section 145(e) of the General Corporate
Law of the State of Delaware. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more Indemnified
Parties.
For a period of six years after the Effective Time, Imperial Holly shall
cause to be maintained in effect the current directors' and officers'
liability insurance policies maintained by the Company with respect to claims
arising from facts or events that occurred prior to the Effective Time;
provided, however, that in no event shall Imperial Holly be required to expend
more than an amount per year equal to 200% of current annual premiums paid by
the Company for such insurance.
Company Rights Plan. The Company's Board of Directors shall take all further
action necessary in order to render the preferred stock purchase rights under
the Company Rights Agreement inapplicable to the Offer, the Merger and the
other transactions contemplated by the Merger Agreement, to terminate the
Company Rights Agreement as of the Effective Time and to ensure that Imperial
Holly and Purchaser will not have any obligations in connection with the
Company Rights Agreement or such related purchase rights.
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Conditions to Each Party's Obligation to Effect the Merger. In addition to
the approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the stockholders of the
Company in accordance with the DGCL and the Company's Certificate of
Incorporation and the approval of the issuance of the Imperial Shares pursuant
to the Merger by the affirmative vote of the shareholders of Imperial Holly in
accordance with the applicable rules and regulations of the American Stock
Exchange, the obligations of the Company, Imperial Holly and the Purchaser to
consummate the Merger are subject to the following conditions: (i) any waiting
period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; (ii) the
absence of any law, rule, regulation or other order by any governmental entity
which would have the effect of restraining or making the Merger illegal or
otherwise prohibiting consummation of the Merger; (iii) the Registration
Statement on Form S-4 to be filed by Imperial Holly with the Commission after
the consummation of the Offer (the "Registration Statement") shall have been
declared effective, and the absence of a stop order suspending such
effectiveness; (iv) the Imperial Shares to be issued in the Merger and
pursuant to options assumed by Imperial Holly shall have been authorized for
listing on the American Stock Exchange, subject to official notice of
issuance; and (v) the Purchaser shall have purchased Shares pursuant to the
Offer.
Termination. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated thereby may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of the
Merger Agreement and the transactions contemplated thereby:
(a) by mutual written consent of Imperial Holly and the Company; or
(b) by Imperial Holly or the Company if the Effective Time shall not have
occurred on or before May 31, 1998; provided, however, that the right to
terminate the Merger Agreement will not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date; or
(c) by either Imperial Holly or the Company, if any court of competent
jurisdiction in the United States or other governmental entity, based
otherwise than on any antitrust law, (i) shall have issued an order,
decree, judgment, injunction, ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement and such order, decree, judgment,
injunction, ruling or other action shall have become final or nonappealable
or (ii) shall have failed to issue an order, decree, judgment, injunction,
ruling or other action or to take any other action necessary to fulfill the
conditions to the closing of the Merger and such denial of a request to
issue such order, decree, judgment, injunction, ruling or other action or
take such other action shall have become final and nonappealable; or
(d) (x) by either Imperial Holly or the Company, if the Merger Agreement
and the transactions contemplated thereby shall fail to receive the
requisite vote for approval and adoption at the Company Stockholders'
Meeting or (y) by the Company, if the issuance of the Imperial Shares as
part of the Merger shall fail to receive the requisite vote for approval at
the Imperial Shareholders Meeting; or
(e) by Imperial Holly, if prior to the payment for Shares pursuant to the
Offer (i) the Company's Board of Directors withdraws, modifies or changes
its approval or recommendation (including by amendment of the Schedule 14D-
9) of the Merger Agreement, the Offer or the Merger in a manner adverse to
Imperial Holly or the Purchaser, (ii) the Company's Board of Directors
shall, at a time when there is an Acquisition Proposal with respect to the
Company, fail to reaffirm such approval or recommendation of the Merger
Agreement, the Offer or the Merger upon the reasonable request of Imperial
Holly and Purchaser, (iii) the Company's Board of Directors shall approve
or recommend any acquisition of the Company or a material portion of its
assets or any tender offer for shares of its capital stock, in each case,
other than by the other parties to the Merger Agreement or affiliates
thereof; (iv) a tender offer or exchange offer for 20% or more of the
outstanding Shares is commenced, and the Company's Board of Directors fails
to recommend against acceptance of such tender offer or exchange offer by
its stockholders (including by taking no position with
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respect to the acceptance of such tender offer or exchange offer by its
stockholders); or (v) the Company's Board of Directors has resolved to take
any of the actions specified in clauses (i) through (iv) above;
(f) by the Company, prior to the payment for Shares pursuant to the
Offer, upon five business days' prior notice to Imperial Holly and
Purchaser (which notice shall be revocable by the Company), if, as a result
of a Superior Proposal received by the Company from a person or entity
other than a party to this Agreement or any of its affiliates, the
Company's Board of Directors determines in good faith that their fiduciary
obligations require that such Superior Proposal be accepted; provided,
however, that (i) the Company's Board of Directors shall have concluded in
good faith, on the basis of advice of counsel, that such action is
necessary for the Company's Board of Directors to act in a manner
consistent with its fiduciary duties and (ii) prior to the effective date
of any such termination, the Company shall provide Imperial Holly and
Purchaser with an opportunity to make such adjustments in the terms and
conditions of this Agreement, the Offer or the Merger as would enable the
Company to proceed with the transactions contemplated hereby; provided,
however, that it shall be a condition to the effectiveness of termination
by the Company that the Company shall have made the payment of the
Termination Fee (as defined below) to Imperial Holly;
(g) by Imperial Holly, prior to the payment for Shares pursuant to the
Offer, upon a breach of any representation, warranty, covenant or agreement
on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue;
provided, however, that, if such breach is curable by the Company and for
so long as the Company continues to exercise all reasonable efforts to cure
such breach, Imperial Holly may not terminate the Merger Agreement;
(h) by the Company, prior to the payment for Shares pursuant to the
Offer, upon breach of any representation, warranty, covenant or agreement
on the part of Imperial Holly or the Purchaser set forth in this Agreement,
or if any representation or warranty of Imperial Holly and the Purchaser
shall have become untrue, in either case except for such breaches or
failures (i) which, individually or in the aggregate, would not have an
material adverse effect upon Imperial Holly and (ii) which, individually or
in the aggregate, would not materially impair or delay the ability of the
Purchaser to consummate the Offer or the ability of Imperial Holly, the
Purchaser and the Company to effect the Merger; provided, however, that, if
such breach is curable by Imperial Holly and the Purchaser and for so long
as Imperial Holly and the Purchaser continue to exercise all reasonable
efforts to cure such breach, the Company may not terminate the Merger
Agreement; or
(i) by Imperial Holly, if the Offer is terminated or expires without the
purchase of any Shares thereunder, unless such termination or expiration
has been caused by or resulted from the failure in any material respect of
Imperial Holly or the Purchaser to perform any of its covenants and
agreements contained in the Merger Agreement or in the Offer; and
(j) by the Company, if all of the conditions to the Offer have been
satisfied except for the Financing Condition and Imperial Holly fails to
accept and pay for the Shares in the Offer solely because of the failure of
LCPI to provide the funding necessary for such purchase.
(k) by the Company, if on May 29, 1998, the Effective Time shall not have
occurred because Imperial Holly and the Purchaser have not been permitted
to consummate the Offer and the Merger by reason of any antitrust law.
Fees and Expenses. The Merger Agreement provides that except as set forth
herein, all expenses incurred in connection with the Merger Agreement shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated, except that the Company and Imperial Holly each shall pay one-
half of all expenses relating to printing, filing and mailing the Registration
Statement and the Proxy Statement and all Commission and other regulatory
filing fees incurred in connection with the Registration Statement and the
Proxy Statement.
Termination Fees. The Merger Agreement provides that (i) if Imperial Holly
terminates the Merger Agreement pursuant to paragraph (e) above or (ii) if the
Company terminates the Merger Agreement pursuant to
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paragraph (f) above or (iii) if (A) Imperial Holly or the Company terminates
the Merger Agreement pursuant to paragraph (d) due to the failure of the
Company's stockholders to approve and adopt the Merger Agreement and (B) at
the time of such failure to so approve and adopt the Merger Agreement there
exists an Acquisition Proposal with respect to the Company and, within 12
months of the termination of the Merger Agreement, the Company enters into a
definitive agreement with any third party with respect to an Acquisition
Proposal with respect to the Company, then the Company will pay to Imperial
Holly an amount equal to $8,000,000 (the "Company Termination Fee").
The Merger Agreement provides that if the Company terminates the Merger
Agreement pursuant to paragraph (j) or (k) above, then Imperial Holly will pay
to the Company an amount equal to $8,000,000 (the "Imperial Termination Fee").
The Company Termination Fee required to be paid pursuant to clause (ii)
above shall be paid prior to, and will be a pre-condition to effectiveness of
termination of the Merger Agreement and the Company Termination Fee required
to be paid pursuant to clause (iii) will be paid to Imperial Holly on the next
business day after a definitive agreement is entered into with a third party
with respect to an Acquisition Proposal with respect to the Company. Any
payment of a Company Termination Fee or an Imperial Termination Fee shall be
made not later than two business days after termination of the Merger
Agreement.
Amendment. The Merger Agreement provides that it may be amended (by an
instrument in writing signed by the parties thereto) by the parties thereto by
action by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, after approval and adoption of
the Merger Agreement and the transactions contemplated thereby by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration payable in the Merger.
Company Stockholders Agreement. As a condition and inducement to entering
the Merger Agreement, Imperial Holly and the Purchaser required that
substantially all of the directors and executive officers of the Company enter
into a stockholders agreement, dated September 12, 1997. Pursuant to the
Stockholder Agreement, each such stockholder severally agreed to tender all
Shares owned by such stockholder into the Offer prior to the expiration of the
Offer and not to withdraw any Shares so tendered so long as the per Share
price is not less than $20.25 in cash net to the seller.
Imperial Holly Proxy Agreements. As a condition and inducement to entering
the Merger Agreement, the Company required that certain stockholders of
Imperial Holly, affiliated with Imperial Holly and representing approximately
66.34% of the issued and outstanding Imperial Shares, enter into the Imperial
Holly Proxy Agreements, pursuant to which they would agree to vote all of
their Imperial Shares in favor of the Merger.
Employment Agreements. In connection with the Merger, Imperial Holly intends
to enter into a new employment agreement with Mr. Sprague providing for a 5-
year term beginning on the Merger Date. Pursuant to the employment agreement,
Mr. Sprague will continue as the President of the Company and will be
nominated to serve on Imperial Holly's Board. In addition to his base salary
which will continue at no less than $430,000, Mr. Sprague will be entitled to
participate in an annual bonus program, which provides him with a maximum
bonus opportunity equal to 75% of his base salary, to continue to receive
benefits under the Company's Supplemental Executive Retirement Plan and
retiree health benefits, to receive a stock option grant with respect to
135,000 shares of Imperial Holly common stock, and various other benefits and
perquisites. In addition, upon termination of his employment for "Good Reason"
or if he is involuntarily terminated by Imperial Holly other than for "Cause"
(as those terms are defined in the employment agreement), Mr. Sprague will be
entitled to receive a lump sum payment equal to three times the sum of his
base salary and his highest bonus amount (as defined in the employment
agreement), his stock options shall vest, and certain employee benefits will
be continued for a period of up to five years. Also, in the event these
payments would exceed the "golden" parachute payment limit of the Internal
Revenue Code, Mr. Sprague will be made "whole" on a net after-tax basis for
any parachute excise tax he incurs. Imperial Holly acknowledged, in connection
with the execution of
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the Merger Agreement, its intention to enter into employment agreements, to
become effective upon consummation of the Merger, with certain other senior
executives of the Company on terms to be determined.
Section 12. Effect of the Offer on the Market for Shares.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of
Shares, which could adversely affect the liquidity and market value of the
remaining shares held by stockholders other than the Purchaser. The Purchaser
cannot predict whether the reduction in the number of Shares and the existence
of the Merger Agreement would 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 equal to or greater or less than the Offer Price.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following
the Offer it is possible that the Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
If the Purchaser acquires a substantial number of Shares, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 under the
Securities Act may be impaired.
Section 13. Dividends and Distributions.
If, on or after September 12, 1997, the Company should, except as permitted
under the Merger Agreement, (i) split or combine the Shares, or otherwise
change the Shares or its capitalization, (ii) issue or sell any additional
securities of the Company (other than Shares issued or sold upon the exercise
(in accordance with the present terms thereof) of Options outstanding on
September 12, 1997, or (iii) acquire currently outstanding Shares or otherwise
cause a reduction in the number of outstanding Shares, then, without prejudice
to the Purchaser's rights under Sections 1 and 14 hereof, the Purchaser, in
its sole discretion (subject to the terms of the Merger Agreement), may make
such adjustments as it deems appropriate in the Offer Price and other terms of
the Offer and the Merger including, without limitation, the amount and type of
securities offered to be purchased.
If, on or after September 12, 1997, the Company should, except as permitted
under the Merger Agreement, declare or pay any dividend on the Shares or make
any distribution (including, without limitation, the issuance of additional
Shares pursuant to a stock dividend or stock split, the issuance of other
securities or the issuance of rights for the purchase of any securities) with
respect to the Shares that is payable or distributable to stockholders of
record on a date prior to the transfer to the name of the Purchaser or its
nominee or transferee on the Company's stock transfer records of the Shares
purchased pursuant to the Offer, then, without prejudice to the Purchaser's
rights under Sections 1 and 14 hereof, (i) the Offer Price payable by the
Purchaser pursuant to the Offer will be reduced by the amount of any such cash
dividend or cash distribution and (ii) any such non-cash dividend,
distribution or right to be received by the tendering stockholders will be
received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Paying Agent for the account of the Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance
and subject to applicable law, the Purchaser will be entitled to all rights
and privileges as owner of any such non-cash dividend, distribution or right
and may withhold the entire Offer Price or deduct from the Offer Price the
amount or value thereof, as determined by the Purchaser in its sole
discretion.
Section 14. Conditions to the Offer.
Notwithstanding any other provision of the Offer, the Purchaser will not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance
for payment of and payment for Shares tendered, if (i) the Target Share
Condition, the HSR
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Condition or the Financing Condition shall not have been satisfied or (ii) at
any time on or after the date of the Merger Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall have
occurred and be continuing:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, administrative interpretation, order or injunction
enacted, promulgated, entered, enforced or deemed applicable to the Offer
or the Merger (other than the application of the waiting period provisions
of the HSR Act) by any court of competent jurisdiction in the United States
or other governmental entity, which would (i) restrain, prohibit or make
illegal or otherwise prohibit (A) the acceptance for payment of, or payment
for or purchase of at least the Target Number of Shares of the Shares or
(B) the consummation of the Merger, or (ii) prohibiting Imperial Holly or
any of its affiliates to exercise full rights of ownership of the Shares,
including without limitation the right to vote any Shares purchased by them
on all matters properly presented to the stockholders of the Company,
including without limitation the adoption and approval of the Merger
Agreement and the Merger;
(b) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, (ii) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any material limitation (whether or not mandatory) on
the extension of credit by lending institutions in the United States, (iii)
the commencement of a war, material armed hostilities or any other material
international or national calamity involving the United States having a
significant adverse effect on the functioning of the financial markets in
the United States, or (iv) in the case of any of the foregoing existing at
the time of the execution of the Merger Agreement, a material acceleration
or worsening thereof;
(c) the Company shall have breached or failed to comply with any of its
obligations under the Merger Agreement (other than as a result of a breach
by Imperial Holly or the Purchaser of any of their obligations under the
Merger Agreement) and such breach or failure shall continue unremedied for
ten (10) business days after the Company has received written notice from
Imperial Holly or the Purchaser of the occurrence of such breach or
failure, except such breaches or failures (i) which, individually and in
the aggregate, would not have a material adverse effect on the Company and
(ii) which, individually and in the aggregate, would not materially impair
or delay the ability of the Purchaser to consummate the Offer or the
ability of Imperial Holly, the Purchaser and the Company to effect the
Merger;
(d) any representation or warranty of the Company contained in the Merger
Agreement shall fail to be true and correct as of such expiration or
proposed termination of the Offer except for such failures (i) which,
individually and in the aggregate, would not have a material adverse effect
on the Company and (ii) which, individually and in the aggregate, would not
materially impair or delay the ability of the Purchaser to consummate the
Offer or the ability of Imperial Holly, the Purchaser and the Company to
effect the Merger, provided that Imperial Holly shall have notified the
Company promptly upon learning of such failure;
(e) the Merger Agreement shall have been terminated pursuant to its terms
or amended pursuant to its terms to provide for such termination or
amendment of the Offer; or
(f) the Company's Board of Directors shall have (i) (including by
amendment of the Schedule 14D-9) withdrawn or modified in any manner
adverse to Imperial Holly or the Purchaser its approval or recommendation
of the Offer, the Merger or the Merger Agreement or (ii) resolved to do any
of the foregoing;
which, in the good faith reasonable judgment of Imperial Holly and the
Purchaser, makes it inadvisable to proceed with acceptance for payment or
payment for the Shares.
The Merger Agreement provides that, except as provided for therein, the
foregoing conditions are for the sole benefit of Imperial Holly and the
Purchaser and may be asserted or waived by Imperial Holly or the Purchaser, in
whole or in part, at any time or from time to time, in its discretion. The
failure of Imperial Holly
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or the Purchaser at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
Section 15. Certain Legal Matters; Required Regulatory Approvals.
Except as set forth in this Offer to Purchase, based on a review of publicly
available filings by the Company with the SEC and other publicly available
information regarding the Company, neither Imperial Holly 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 the Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein, or any 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 (or the indirect acquisition of the stock of the Company's
subsidiaries) 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, if
needed, 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, Imperial Holly'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 injunctions and governmental actions. See
the 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 Takeover Statute which, as a matter of state
securities law, made takeovers of corporations meeting certain requirements
more difficult, and 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 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. In December 1988, a
federal district court in Florida held in Grand Metropolitan PLC v.
Butterworth that the provisions of the Florida Affiliated Transactions Act and
Florida Control Share Acquisition Act were unconstitutional as applied to
corporations incorporated outside of Florida.
The Purchaser has not attempted to comply with any state takeover statutes
in connection with the Offer or the Merger. 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
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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.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of Shares by the Purchaser pursuant to the Offer are subject to
such requirements. See Section 2.
Pursuant to the HSR Act, on September 17, 1997, Imperial Holly filed a
Premerger Notification and Report Form in connection with the purchase of
Shares pursuant to the Offer with the FTC and the Antitrust Division. Under
the provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a 15-
calendar day waiting period following the filing by Imperial Holly.
Accordingly, the waiting period under the HSR Act applicable to the purchase
of Shares pursuant to the Offer will expire at 11:59 p.m., New York City time,
on October 2, 1997, unless such waiting period is earlier terminated by the
FTC and the Antitrust Division or extended by a request from the FTC or the
Antitrust Division for additional information or documentary material prior to
the expiration of the waiting period or by the withdrawal and resubmission of
the Premerger Notification and Report Form by Imperial Holly. The effect of
withdrawal and submission of such form would be to give the relevant
governmental agency an additional 15-day waiting period.
Pursuant to the HSR Act, Imperial Holly has requested early termination of
the waiting period applicable to the Offer. There can be no assurance,
however, that either the 15-day HSR Act waiting period will be terminated
early or not extended. If either the FTC or the Antitrust Division were to
request additional information or documentary material from Imperial Holly
with respect to the Offer, the waiting period with respect to the Offer would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by Imperial Holly with such request.
Thereafter, the waiting period could be extended only by court order or with
Imperial Holly's consent. If the acquisition of Shares is delayed pursuant to
a request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the Offer may, but need not, be
extended and, in any event, the purchase of and payment for Shares will be
deferred until 10 days after the request is substantially complied with, or
unless the waiting period is sooner terminated by the FTC and the Antitrust
Division. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the HSR Act and the rules promulgated
thereunder, except by court order or with the consent of Imperial Holly. Any
such extension of the waiting period will not give rise to any withdrawal
rights not otherwise provided for by applicable law. See Section 4. It is a
condition to the Offer that the waiting period applicable under the HSR Act to
the Offer expire or be terminated. See Section 14. In any event, pursuant to
Rule 14e-1(a) under the Exchange Act, the Expiration Date may not occur prior
to October 16, 1997.
If the acquisition of Shares is delayed pursuant to a request by the FTC or
the Antitrust Division for information or documentary material pursuant to the
HSR Act, the Offer may, at the discretion of the Purchaser (subject to the
terms and conditions of the Merger Agreement) be extended and, in any event
the purchase of and payment for Shares will be deferred until the applicable
waiting period expires or is terminated. Unless the Offer is extended, any
extension of the waiting period will not give rise to any additional
withdrawal rights. See Section 4.
In practice, complying with a request for information or documentary
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while such negotiations
continue.
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. At any time before or after
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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 Imperial Holly, the
Company or their 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 Imperial Holly and the Company are engaged, Imperial Holly
and the Purchaser believe that the acquisition of Shares by the Purchaser will
not violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or other acquisition of Shares by the Purchaser on
antitrust grounds will not be made or, if such a challenge is made, of the
result. See Section 14 for certain conditions to the Offer, including
conditions with respect to injunctions and certain governmental actions.
Section 16. Fees and Expenses.
Lehman Brothers is acting as Dealer Manager in connection with the Offer. In
addition, Lehman Brothers has provided certain financial advisory services to
Imperial Holly in connection with the proposed acquisition of the Company. As
compensation for such services, Imperial Holly has to date paid Lehman
Brothers a fee of $100,000, which fee was payable upon execution of the
engagement letter with Lehman Brothers, and a fee of $900,000, which was
payable upon announcement of Imperial Holly's intent to acquire the Company.
Imperial Holly has also agreed to pay Lehman Brothers a fee of 0.75% of the
aggregate consideration to be paid to holders of Shares involved in the
acquisition of the Company contingent upon the consummation of such
acquisition, against which all fees previously paid will be fully creditable.
Imperial Holly has agreed to reimburse Lehman Brothers for its out-of-pocket
expenses, including fees and expenses of its counsel, and to indemnify Lehman
Brothers (and certain affiliated persons) against certain liabilities and
expenses. Lehman Brothers may from time to time in the future render various
investment banking services to Imperial Holly and its affiliates, for which it
is expected it would be paid customary fees. In addition, LCPI, an affiliate
of Lehman Brothers, is serving as the exclusive arranger and adviser to
Imperial Holly in securing the financing necessary to fund the purchase of
Shares pursuant to the Offer and the Merger.
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 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.
In addition, Wachovia Bank, N.A. has been retained as the Paying Agent. The
Purchaser will pay the Paying Agent reasonable and customary compensation for
its services in connection with the Offer and reimburse the Paying Agent for
its reasonable out-of-pocket expenses in connection therewith.
Except as set forth above, neither Imperial Holly 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
Imperial Holly or the Purchaser for customary clerical and mailing expenses
incurred by them in forwarding offering materials to their customers.
Section 17. Miscellaneous.
The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in
compliance with applicable law, the Purchaser will make a good faith effort to
comply with any such law. If, after such good faith effort, the Purchaser
cannot comply with any such law, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares residing in
such jurisdiction. In those
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jurisdictions whose securities or blue sky 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 which are licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR IMPERIAL HOLLY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser has filed with the SEC the Schedule 14D-1 pursuant to Rule
l4d-3 under the Exchange Act, furnishing certain additional information with
respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and
any amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth in Section 7
(except that they will not be available at the regional offices of the SEC).
IHK MERGER SUB CORPORATION
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND IMPERIAL HOLLY
1. Directors and Executive Officers of the Purchaser.
The following table sets forth the name, current business address and present
principal occupation or employment and material occupations, positions, offices
or employments for the past five years of each director and executive officer
of the Purchaser. Unless otherwise indicated, the current business address of
each person is c/o One Imperial Square, Suite 200, 8016 Highway 90-A, Sugar
Land, Texas 77478, and each occupation set forth opposite an individual's name
refers to employment with the Purchaser. Each such person is a citizen of the
United States, unless otherwise indicated.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------- ----------------------------------------------------
<S> <C>
James C. Kempner........... Director; Chief Executive Officer and Chief
Financial Officer; see "Directors and Executive
Officers of Imperial Holly."
William F. Schwer.......... Director; Vice President and Secretary; see
"Directors and Executive Officers of Imperial
Holly."
Roger W. Hill.............. Director; Vice President; see "Directors and
Executive Officers of Imperial Holly."
</TABLE>
2. Directors and Executive Officers of Imperial Holly.
The following table sets forth the name, business address and present
principal occupation or employment, and material occupations, positions,
offices or employments for the past five years of each director and executive
officer of Imperial Holly. Unless otherwise indicated, the current business
address of each such person is c/o One Imperial Square, Suite 200, 8016 Highway
90-A, Sugar Land, Texas 77478, and each occupation set forth opposite an
individual's name refers to employment with Imperial Holly. Each such person is
a citizen of the United States, unless otherwise indicated.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------- ----------------------------------------------------
<S> <C>
John D. Curtin, Jr......... Director since 1993. Chairman and CEO, Aearo Company
from 1994 to present. Executive Vice President and
Director of Cabot Corporation from 1989-1994.
Director of Eastern Enterprises.
David J. Dilger............ Director since 1996. Chief Executive Officer of
Greencore Group plc from 1996 to Present. Chief
Operating Officer of Greencore Group plc from 1991-
1996. Mr. Dilger is a citizen of Ireland.
E. O. Gaylord.............. Director since 1978. President, Gaylord & Company (a
venture capital firm) since 1988. Chairman of the
Board of Directors EOTT Energy Corp. from 1993 to
present. Director of Seneca Funds Corporation,
Essex International, Kinder Morgan Energy Partners,
L.P. and Stant Corporation.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------- ----------------------------------------------------
<S> <C>
Gerald Grinstein........... Director since 1996. Chairman of the Board of Delta
Air Lines, Inc. from August, 1997 to present,
director from 1987 to present. Chairman of the
Board of Burlington Northern, Inc. from 1987 to
1995. Director of Browning Ferris Industries,
Paccar, Inc. and Suntrend Corp.
Ann O. Hamilton............ Director since 1974. Retired Senior Advisor, World
Bank, Washington, D.C. Employed with World Bank
from 1971-1995.
Roger W. Hill.............. Director since 1988. President and CEO Holly Sugar
Corp. from 1988 to present and Managing Director of
Imperial Holly Corporation from 1996 to present.
Harris L. Kempner, Jr...... Director since 1966. President of Kempner Capital
Management, Inc. from 1982 to present. Director TNP
Enterprises and American Indemnity Financial
Corporation. Advisory Director of Cullen/Frost
Bankers, Inc.
I. H. Kempner, III......... Director since 1967. Chairman of the Board of
Imperial Holly Corporation from 1971 to present.
James C. Kempner........... Director since 1988. President, Chief Executive
Officer and Chief Financial Officer of Imperial
Holly Corporation from 1993 to present. Executive
Vice President and Chief Financial Officer from
1988-1993.
H. E. Lentz................ Director since 1993. Managing Director of Lehman
Brothers Inc. from 1993 to present. Managing
Director of Wasserstein, Perella & Co., Inc. from
1987 to 1993. Director of Rowan Companies, Inc.
Robert L. K. Lynch......... Director since 1990. Chairman, President and Chief
Executive Officer of Yaga, Inc. from 1995 to
present. President of Galveston Management Co. from
1987-1994. Director of United States National Bank
and Foster Farms.
Kevin C. O'Sullivan........ Director since 1996. Chief Financial Officer of
Greencore Group plc from 1992 to present. Mr.
O'Sullivan is a citizen of Great Britain.
Fayez Sarofim.............. Director since 1991. President and Chairman of the
Board of Fayez Sarofim & Co. from 1958 to present.
Director of Allegheny-Teledyne, Argonaut Group,
Inc., EXOR Group and Unitrin, Inc.
Daniel K. Thorne........... Director since 1988. President of Star Lake Cattle
Company from 1984 to present and President Star
Lake Properties, Inc. from 1992 to present.
Peter C. Carrothers........ Officer since 1994. Senior Vice President--
Operations from 1994 to present. Pepsico Foods
International, Vice President--Logistics from 1990
to 1994.
Douglas W. Ehrenkranz...... Officer since 1995. Vice President--Sales and
Marketing 1995 to present and Managing Director
from April 1997 to present. Procter & Gamble Corp.,
Category Sales Manager from 1979 to 1993.
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------- ----------------------------------------------------
<S> <C>
John A. Richmond........... Officer since 1991. Vice President--Operations from
1995 to present and Managing Director from April
1997 to present. Holly Sugar Corp., Senior Vice
President and General Manager--Beet Sugar
Operations from 1993 to 1995. Holly Sugar Corp.,
Senior Vice President and General Manager--Eastern
Division from 1992 to 1993.
William F. Schwer.......... Officer since 1989. Managing Director from 1995 to
present. Senior Vice President and General Counsel
from 1993 to 1995. Vice President and General
Counsel 1992 to 1993.
</TABLE>
<TABLE>
<S> <C>
Roy E. Henderson............ Officer since 1981. Vice President--Administration
from 1994 to present, Vice President and Treasurer
from 1981 to 1994.
</TABLE>
<TABLE>
<S> <C>
H. P. Mechler.............. Officer since 1988. Vice President--Accounting from
April 1997 to present, Controller from 1988 to
April 1997.
Karen L. Mercer............ Officer since 1993. Vice President and Treasurer
from April 1997 to present. Treasurer from 1994 to
April 1997. Texas Commerce Bank, Vice President--
General Lending in 1993. First City Bank, various
positions 1988 to 1993.
Alan K. Lebsock............ Officer since 1997. Controller from April 1997 to
present. Holly Sugar Corp., Controller from 1990 to
April 1997.
</TABLE>
S-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 Paying Agent at one of its address set forth
below:
The Paying Agent for the Offer is:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C> <C>
IF DELIVERY IS BY MAIL: BY OVERNIGHT COURIER: BY HAND: FOR NEW YORK DROP:
Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A.
Corporate
Reorganizations Corporate Reorganizations Shareholder Services Department c/o Boston
P. O. Box 9061 70 Campanelli Drive Wachovia East Building EquiServe L.P.
Boston, MA 02205 Braintree, MA 02184 2nd Floor Corporate Reorganizations
301 North Church Street 55 Broadway
Winston-Salem, Third Floor
NC 27101 New York, NY 10006
</TABLE>
BY FACSIMILE:
(Eligible Institutions Only)
(910) 770-4832
Confirmation Number: 1-800-633-4236
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, this 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. 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 10005-4495
Call Collect: (212) 269-5550
Call Toll Free: (800) 758-5378
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
3 World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-2449
<PAGE>
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES
OF
COMMON STOCK
OF
SAVANNAH FOODS & INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 18, 1997
BY
IHK MERGER SUB CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
IMPERIAL HOLLY CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 16, 1997 (THE "EXPIRATION
DATE"), UNLESS THE OFFER IS EXTENDED.
The Paying Agent for the Offer is:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C> <C>
If Delivery is by Mail: By Overnight Courier: By Hand For New York Drop:
Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A.
Corporate
Reorganizations Corporate Reorganizations Shareholder Services Department c/o Boston
P. O. Box 9061 70 Campanelli Drive Wachovia East Building EquiServe L.P.
Boston, MA 02205 Braintree, MA 02184 2nd Floor Corporate Reorganizations
301 North Church Street 55 Broadway
Winston-Salem, Third Floor
NC 27101 New York, NY 10006
</TABLE>
By Facsimile:
(Eligible Institutions Only)
(910) 770-4832
Confirmation Number: 1-800-633-4236
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
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 if
certificates for Shares (as defined in the Offer to Purchase, dated September
18, 1997 (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 made by book-entry transfer to an account maintained by
Wachovia Bank, N.A. (the "Paying Agent") at The Depository Trust Company
("DTC") or Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry
Transfer Facility" and collectively referred to as the "Book-Entry Transfer
Facilities"), pursuant to the 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."
1
<PAGE>
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 Paying Agent on or
prior to the Expiration Date, must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase. See Instruction 2.
NOTE:SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE PAYING AGENT'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________
Check Box of Book-Entry Transfer Facility:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
Account No. _____________ Transaction Code No. _____________________
[_]CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE PAYING AGENT 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: _____________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(S) OF
REGISTERED
HOLDER(S)
(PLEASE FILL
IN, IF BLANK,
EXACTLY AS
NAME(S)
APPEAR(S) ON SHARE CERTIFICATE(S) AND
SHARE SHARE(S) TENDERED
CERTIFICATES) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- -----------------------------------------------------
TOTAL NUMBER OF
SHARES
SHARE REPRESENTED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S) CERTIFICATE(S)* TENDERED**
- -----------------------------------------------------
<S> <C> <C> <C>
</TABLE>
-------------------------------
-------------------------------
-------------------------------
-------------------------------
TOTAL SHARES_____________
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares
represented by certificates delivered to the Paying Agent are being
tendered. See Instruction 4.
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to IHK Merger Sub Corporation (the
"Purchaser"), a Delaware corporation and a wholly owned subsidiary of Imperial
Holly Corporation, a Texas corporation ("Imperial Holly"), the described
shares of Common Stock, par value $0.25 per share (the "Shares"), of Savannah
Foods & Industries, Inc., a Delaware corporation (the "Company"), at a price
of $20.25 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 September 18, 1997 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which 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 Imperial Holly or one or more of Imperial Holly's
subsidiaries or affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith 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 or any distribution (including,
without limitation, the issuance of additional Shares pursuant to a stock
dividend or stock split, the issuance of other securities or the issuance of
rights for the purchase of any securities) with respect to the Shares that is
declared or paid by the Company on or after September 12, 1997 and is 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 (a
"Distribution"), and constitutes and irrevocably appoints the Paying Agent 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 any
Distributions) with full power of substitution (such power of attorney and
proxy being deemed to be an irrevocable power coupled with an interest), to
(i) deliver Share Certificates (and any Distributions) or transfer ownership
of such Shares on the account books maintained by the Book-Entry Transfer
Facilities, 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 Paying Agent, as the undersigned's agent, of the purchase price, (ii)
present Shares (and any Distributions) for transfer on the books of the
Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of Shares (and any Distributions), all in accordance with
the terms of the Offer.
The undersigned hereby irrevocably appoints James C. Kempner and William F.
Schwer, and each of them individually, the attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to vote in such manner
as each such attorney and proxy or his substitute shall, in his 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 any Distributions) which the undersigned is entitled to vote at any
meeting of stockholders (whether annual or special and whether or not an
adjourned or postponed meeting) of the Company, or by consent in lieu of such
meeting, or otherwise. This power of attorney and proxy is coupled with an
interest in the tendered 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
the Shares (and any 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, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser or its designees will be able to exercise full
voting rights with respect to such Shares and other securities, including
voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free
3
<PAGE>
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 all additional documents deemed by the Paying Agent or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby (and any Distributions). In addition,
the undersigned shall promptly remit and transfer to the Paying Agent 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 any 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.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and 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. Except as stated in the Offer to Purchase, this tender is
irrevocable.
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 either or 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 Share Certificates to, the person or persons
so indicated. 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.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share To be completed ONLY if Share
Certificates not tendered or not Certificates not tendered or not
purchased and/or the check for purchased and/or the check for
the purchase price of Shares the purchase price of Shares
purchased are to be issued in the purchased are to be sent to
name of someone other than the someone other than the
undersigned, or if Shares undersigned, or to the
tendered by book-entry transfer undersigned at an address other
which are not purchased are than that shown on the front
returned by credit to an account cover.
maintained at a Book-Entry
Transfer Facility other than that
designated on the front cover.
Mail check and/or certificates
to:
Name _____________________________
Issue check and/or certificates (PLEASE PRINT)
to: Address __________________________
Name _____________________________ ----------------------------------
(PLEASE PRINT) ----------------------------------
Address __________________________ (INCLUDE ZIP CODE)
----------------------------------
----------------------------------
----------------------------------
(INCLUDE ZIP CODE)
----------------------------------
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 BELOW)
5
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
X ______________________________________________________________
X ______________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: __________________________________________________, 199__
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on 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:________________________________________________________
----------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________
Tax Identification or Social Security No.: _____________________
(SEE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________
Name: __________________________________________________________
Name of Firm: __________________________________________________
Address: _______________________________________________________
----------------------------------------------------------------
----------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________
Dated: _________________________________________________________
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 (a) if this Letter of Transmittal is signed by the
registered holder of the Shares tendered herewith, unless such holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" or (b) if such Shares are tendered for
the account of a bank or trust company in the United States or by a firm that
is a member of the National Association of Securities Dealers, Inc. or of a
registered national securities exchange which is a recognized member of a
Medallion Signature Guarantee 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 if Share Certificates are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Purchase) 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 Paying Agent's account at a Book-Entry
Transfer Facility, 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 connection with a book-entry transfer,
and any other documents required by this Letter of Transmittal, must be
received by the Paying Agent at one of its addresses set forth herein prior to
the Expiration Date and, if later, stockholders who cannot deliver their Share
Certificates and all other required documents to the Paying Agent prior to the
Expiration Date or who cannot complete the procedures for delivery by book-
entry transfer on a timely basis must 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: (a) such tender must be made by or
through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by the
Purchaser, must be received by the Paying Agent on or prior to the Expiration
Date; and (c) 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 manually
signed facsimile hereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message) and any other documents
required by this Letter of Transmittal, must be received by the Paying Agent
within three New York Stock Exchange trading days after the date of execution
of such Notice of Guaranteed Delivery as provided in Section 3 of the Offer to
Purchase. If Share Certificates are forwarded separately to the Paying Agent,
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 PAYING AGENT. 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. 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.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be
7
<PAGE>
tendered in the box entitled "Number of Shares Tendered." In such case, new
certificate(s) for the remainder of the Shares that were evidenced by your old
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 certificates delivered to the
Paying Agent 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 certificate(s) without alteration, enlargement or
any 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
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any 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 so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(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
certificates for Shares not tendered or purchased are to be issued in the name
of, a person other than the registered holder(s). Signatures on such Share
Certificates or stock powers must be medallion guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(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 holder(s) appear(s) on the
certificates. Signatures on such Share Certificates or stock powers must be
medallion 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 is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder, 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 or such person) payable on account
of the transfer to such person will be deducted from the purchase price 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.
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 signer of 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 signer of this Letter of Transmittal or to an address other than that
shown on the front cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent at its address or
telephone number set forth below. Requests for additional copies of the Offer
to Purchase and this Letter of Transmittal may be directed to the Information
Agent or to brokers, dealers, commercial banks or trust companies.
8
<PAGE>
9. 31% 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 Paying Agent with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Paying
Agent is not provided with the correct TIN, the Internal Revenue Service may
subject the stockholder or other payee to a $50 penalty. In addition, 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. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Paying Agent. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for more
instructions.
If backup withholding applies, the Paying Agent is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup
withholding is not an additional tax. Rather, the 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.
The stockholder is required to give the Paying Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has (have) been lost, destroyed or stolen, the stockholder
should promptly notify the Paying Agent in writing. 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 or destroyed certificates
have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF) OR AN AGENT'S MESSAGE TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION
OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE PAYING AGENT ON OR PRIOR TO THE EXPIRATION DATE.
9
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: WACHOVIA BANK, N.A.
- -------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW.
----------------------
Social Security
Number
or
----------------------
SUBSTITUTE Employer ID Number
--------------------------------------------------------
FORM W-9 PART 2--CERTIFICATION--Under penalties of perjury, I
certify that:
DEPARTMENT OF THE
TREASURY (1) The number shown on this form is my correct
INTERNAL REVENUE Taxpayer Identification Number (or I am waiting
SERVICE for a number to be issued to me) and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding because:
TAXPAYER (a) I am exempt from backup withholding, or (b)
IDENTIFICATION I have not been notified by the Internal Revenue
NUMBER ("TIN") Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
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) above if you have been notified by the IRS that
you are currently subject to backup withholding
because of under-reporting 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 such Item (2).
--------------------------------------------------------
SIGNATURE ________________________ PART 3--
DATE _____________________________
Awaiting TIN [_]
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, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
Signature __________________________ Date ____________________________ , 1997
10
<PAGE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers listed below. Additional copies of the Offer to Purchase, this 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. 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 10005-4495
Call Collect: (212) 269-5550
Call Toll Free: (800) 758-5378
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
3 World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-2449
<PAGE>
EXHIBIT 99(a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SAVANNAH FOODS & INDUSTRIES, INC.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.25 per share (the "Shares"),
of Savannah Foods & Industries, Inc., a Delaware corporation (the "Company"),
are not immediately available or time will not permit all required documents
to reach Wachovia Bank, N.A. (the "Paying Agent") on or prior to the
Expiration Date (as defined in the Offer to Purchase), or 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 Paying Agent. See Section 3 of the Offer to
Purchase.
THE PAYING AGENT FOR THE OFFER IS:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C> <C>
If Delivery is by Mail: By Overnight Courier: By Hand: For New York Drop:
Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A.
Corporate Corporate Reorganizations Shareholder Services Department c/o Boston
Reorganizations 70 Campanelli Drive Wachovia East Building EquiServe L.P.
P. O. Box 9061 Braintree, MA 02184 2nd Floor Corporate Reorganizations
Boston, MA 02205 301 North Church Street 55 Broadway
Winston-Salem, Third Floor
NC 27101 New York, NY 10006
</TABLE>
By Facsimile:
(Eligible Institutions Only)
(910) 770-4832
Confirmation Number: 1-800-633-4236
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.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to IHK Merger Sub Corporation, a Delaware
corporation (the "Purchaser"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated September 18, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which 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.
Number of Shares: _____________ Shares Name(s) of Record Holder(s): _________
Certificate No(s). (if available): --------------------------------------
- -------------------------------------- Address(es): _________________________
- --------------------------------------
--------------------------------------
If Share(s) will be tendered by book- --------------------------------------
entry transfer, check one box. Area Code and Telephone Number(s): ___
--------------------------------------
[_] The Depository Trust Company
Signature(s): ________________________
[_] Philadelphia Depository Trust --------------------------------------
Company
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOTE 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 (1) represents that the
tender of Shares effected hereby complies with Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, and (2) guarantees to deliver to
the Paying Agent, at one of its addresses set forth above, the certificates
representing all tendered Shares, in proper form for transfer, or a Book-
Entry Confirmation (as defined in 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 transfer 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 New York Stock Exchange trading days after the date of execution
of this Notice of Guaranteed Delivery.
------------------------------------- -------------------------------------
Name of Firm (Authorized Signature)
------------------------------------- -------------------------------------
Address Title
-------------------------------------
Name: _______________________________
------------------------------------- (Please type or print)
Area Code and Telephone Number Date: _______________________________
NOTE: DO NOT SEND SHARE CERTIFICATES FOR SHARES WITH THIS NOTICE OF
GUARANTEED DELIVERY. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
EXHIBIT 99(a)(4)
LEHMAN BROTHERS
3 WORLD FINANCIAL CENTER
NEW YORK, NY 10285
OFFER TO PURCHASE FOR CASH
14,397,836 SHARES OF COMMON STOCK
OF
SAVANNAH FOODS & INDUSTRIES, INC.
AT
$20.25 NET PER SHARE
BY
IHK MERGER SUB CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
IMPERIAL HOLLY CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 16, 1997 (THE "EXPIRATION
DATE"), UNLESS THE OFFER IS EXTENDED.
September 18, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by IHK Merger Sub Corporation, a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Imperial Holly Corporation,
a Texas corporation ("Imperial Holly"), to act as financial advisor and Dealer
Manager in connection with the Purchaser's offer to purchase 14,397,836 shares
of common stock, par value $0.25 per share (the "Shares"), of Savannah Foods &
Industries, Inc., a Delaware corporation (the "Company") or such other amount
of Shares representing 50.1% of the amount of Shares outstanding on a fully
diluted basis on the date of purchase, at a purchase price of $20.25 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 September
18, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which together constitute the "Offer") enclosed herewith.
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available 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.
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, (i) there being validly
tendered and not withdrawn by the Expiration Date at least 14,397,836 shares
or such other number of shares representing 50.1% of the Company's outstanding
common stock on a fully diluted basis on the date of purchase, (ii) the
expiration of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations thereunder
and (iii) Imperial Holly having obtained financing sufficient to enable it (or
to cause Purchaser) to purchase the shares tendered pursuant to the Offer and
to consummate the merger of the Purchaser with and into the Company (the
"Merger") following the consummation of the Offer. The offer also is subject
to certain other conditions which are set forth in Section 14 of the Offer to
Purchase.
<PAGE>
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated September 18, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or if such
certificates and all other required documents cannot be delivered to Wachovia
Bank, N.A. (the "Paying Agent") by the Expiration Date or if the procedure for
book-entry transfer cannot be completed by the Expiration Date.
4. A letter to stockholders of the Company from William W. Sprague III,
President and Chief Executive Officer of the Company, together with the
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company.
5. 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.
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Paying Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, OCTOBER 16, 1997, UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal or manually signed facsimile thereof and any required signature
guarantees, or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry delivery of Shares, and any other required
documents should be sent to the Paying Agent and Share Certificates
representing the tendered Shares should be delivered to the Paying Agent or
such Shares should be tendered by book-entry transfer into the Paying Agent's
account maintained at one of the Book-Entry Transfer Facilities (as described
in the Offer to Purchase), 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 of Shares may be effected by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commission or fees to any broker, dealer or
other person (other than the Dealer Manager and the Information Agent, as
described in the Offer to Purchase) 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 transfers of Shares to it, except
as otherwise provided in Instruction 6 of the Letter of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
Lehman Brothers Inc., the Dealer Manager, or D. F. King & Co., Inc., the
Information Agent, at their respective addresses 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.
Very truly yours,
LEHMAN BROTHERS INC.
3 WORLD FINANCIAL CENTER
200 VESEY STREET
NEW YORK, NEW YORK 10285
Dealer Manager
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE
COMPANY, THE PAYING AGENT 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.
3
<PAGE>
EXHIBIT 99(a)(5)
OFFER TO PURCHASE FOR CASH
14,397,836 SHARES OF COMMON STOCK
OF
SAVANNAH FOODS & INDUSTRIES, INC.
AT
$20.25 NET PER SHARE
BY
IHK MERGER SUB CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
IMPERIAL HOLLY CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 16, 1997 (THE "EXPIRATION
DATE"), UNLESS THE OFFER IS EXTENDED.
To our Clients:
Enclosed for your consideration are the Offer to Purchase, dated September
18, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer"), relating to the offer by IHK Merger
Sub Corporation, a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of Imperial Holly Corporation, a Texas corporation ("Imperial
Holly"), to purchase 14,397,836 shares of common stock, par value $0.25 per
share (the "Shares"), of Savannah Foods & Industries, Inc., a Delaware
corporation (the "Company"), or such other amount of Shares representing 50.1%
of the Shares outstanding on a fully diluted basis on the date of purchase, at
a purchase price of $20.25 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. Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver all
required documents to Wachovia Bank, N.A. (the "Paying Agent") on or prior to
the Expiration Date, 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 tender price is $20.25 per Share, net to you in cash without interest
thereon, upon the terms and subject to the conditions set forth in the Offer.
2. The Offer is being made for 14,397,836 Shares or such other amount of
Shares representing 50.1% of the Company's outstanding common stock on a fully
diluted basis on the date of purchase.
3. In the event that more than 14,397,836 Shares or such other amount of
Shares representing 50.1% of the Company's outstanding common stock on a fully
diluted basis on the date of purchase are validly tendered
<PAGE>
and not withdrawn in accordance with Section 4 of the Offer to Purchase prior
to the Expiration Date, the Purchaser will accept for payment and pay for such
Shares on a pro rata basis (with appropriate adjustments to avoid purchases of
fractional Shares).
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn by the Expiration Date at least 14,397,836
shares or such other number of shares representing 50.1% of the Company's
outstanding common stock on a fully diluted basis on the date of purchase,
(ii) the expiration of any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder and (iii) Imperial Holly having obtained financing sufficient to
enable it (or to cause Purchaser) to purchase the shares tendered pursuant to
the Offer and to consummate the merger of the Purchaser with and into the
Company (the "Merger") following the consummation of the Offer. The offer also
is subject to certain other conditions which are set forth in this Offer to
Purchase. See Section 14 of the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer.
6. The Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on Thursday, October 16, 1997, unless the Offer
is extended.
7. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Paying Agent of (a) Share Certificates
for such Shares or timely confirmation of the book-entry transfer of such
Shares into the account maintained by the Paying Agent at The Depository Trust
Company or Philadelphia Depository Trust Company (collectively, the "Book-
Entry Transfer Facilities"), pursuant to the procedures set forth in Section 3
of the Offer to Purchase, (b) the Letter of Transmittal (or a manually signed
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) all other
documents required by the Letter of Transmittal. Accordingly, payment may not
be made to all tendering stockholders at the same time depending upon when
Share Certificates or confirmations of book-entry transfer of such Shares into
the Paying Agent's account at a Book-Entry Transfer Facility are actually
received by the Paying Agent.
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 below. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified below. 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 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 is being made on
behalf of the Purchaser by Lehman Brothers Inc., the Dealer Manager for the
Offer, or one or more registered brokers or dealers that are licensed under
the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH 14,397,836 SHARES OF COMMON STOCK
OF
SAVANNAH FOODS & INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated September 18, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer") in
connection with the offer by IHK Merger Sub Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Imperial Holly
Corporation, a Texas corporation, to purchase 14,397,836 shares of common
stock, par value $0.25 per share (the "Shares"), of Savannah Foods &
Industries, Inc., a Delaware corporation, or such other amount of Shares
representing 50.1% of the amount of Shares outstanding on a fully diluted
basis on the date of purchase, at a purchase price of $20.25 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 to Be Tendered:
____________________ Shares
SIGN HERE
Signature(s):________________________________________________________________
Print Name(s):_______________________________________________________________
Print Address(es):___________________________________________________________
Area Code and Telephone Number(s):___________________________________________
Taxpayer Identification or Social Security Number(s):________________________
WACHOVIA BANK, N.A.
Inquiry Number: 1-800-633-4236
3
<PAGE>
EXHIBIT 99(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
PURPOSE OF FORM.--A person who is required to file an information return
with the IRS must obtain your correct Taxpayer Identification Number (TIN) to
report income paid to you, real estate transactions, mortgage interest you
paid, the acquisition or abandonment of secured property, cancellation of debt
or contributions you made to an IRA. Use the accompanying Substitute Form W-9
to furnish your correct TIN to the requester (the person asking you to furnish
your TIN), and, when applicable, (1) to certify that the TIN you are
furnishing is correct (or that you are waiting for a number to be issued), (2)
to certify that you are not subject to backup withholding, or (3) to claim
exemption from backup withholding if you are an exempt payee. Furnishing your
correct TIN and making the appropriate certifications will prevent certain
payments from being subject to backup withholding.
HOW TO OBTAIN A TIN.--If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Substitute Form W-9 if you do not have a TIN, write "Applied
for" in the space for the TIN in Part 1, sign and date the form, and give it
to the requester. Generally, you must obtain a TIN and furnish it to the
requester by the time of payment. If the requester does not receive your TIN
by the time of payment, backup withholding, if applicable, will begin and
continue until you furnish your TIN to the requester.
Note: Writing "Applied for" on the form means that you have already applied
for a TIN OR that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another Substitute Form W-9,
include your TIN, sign and date the form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you are
required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, non-employee compensation and certain
payments from fishing boat operations, but dot not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that your furnished an incorrect TIN, or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN when required. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
broker accounts considered inactive during 1983, and real estate
transactions.
Certain payees and payments are exempt from backup withholding and
information reporting. See Payees and Payments Exempt From Backup Withholding,
below, and Exempt Payees Under Specific Instructions, below, if you are an
exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING.--The following is a list
of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are
exempt except item (9). For broker transactions, payees listed in (1) through
(13) and a person registered under the Investment Advisers Act of 1940 who
regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation. (2) An organization exempt from tax under section 501(a),
or an IRA, or a custodial account under section 403(b)(7). (3) The United
States or any of its agencies or instrumentalities. (4) A state, the District
of Columbia, a possession of the United States or any of their political
subdivisions or instrumentalities. (5) A foreign government or any of its
political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) A foreign
central bank of issue. (8) A dealer in securities or commodities required to
register in the United States, the District of Columbia or a possession of the
United States. (9) A futures commission merchant registered with the Commodity
Futures Trading Commission. (10) A real estate investment trust. (11) An
entity registered at all times during the tax year under the Investment
Company Act of 1940. (12) A common trust fund operated by a bank under section
584(a). (13) A financial institution. (14) A middleman known in the investment
community as a nominee or listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust
exempt from tax under section 664 or described in section 4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $800 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct TIN to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044,
6045, 6049, 6050A and 6050N, and their regulations.
PENALTIES
FAILURE TO FURNISH TIN.--If you fail to furnish your correct TIN to a
requester, you will be subject to a penalty of $50 for each such failure
unless your failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, your are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may be subject you to criminal penalties
including fines and/or imprisonment.
MISUSE OF TINS.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
<PAGE>
SPECIFIC INSTRUCTIONS
NAME.--If you are an individual, you must generally provide the name shown
on your Social Security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your Social Security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name. You may
also enter your business name or "doing business as" name on the business name
line. Enter your name(s) as shown on your Social Security card and/or as it
was used to apply for your EIN on Form SS-4.
TAXPAYER IDENTIFICATION NUMBER.--You must enter your TIN in the appropriate
box. If you are a sole proprietor, you may enter your SSN or EIN. See the
chart below for further clarification of name and TIN combinations. If you do
not have a TIN, follow the instructions under How to Obtain a TIN on page 1.
EXEMPT PAYEES--If you are exempt from backup withholding, you should
complete the Substitute Form W-9 to avoid possible erroneous backup
withholding. Enter your correct TIN in Part 1, write "EXEMPT" in the block in
Part 2, and sign and date the form. If you are a nonresident alien or foreign
entity not subject to backup withholding, give the requester a completed Form
W-8, Certificate of Foreign Status.
SIGNING THE CERTIFICATION
1. INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE
1984 AND BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. You are required to
furnish your correct TIN, but you are not required to sign the certification.
2. INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983
AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester,
you must cross out item 2 in the certification before signing the form.
3. REAL ESTATE TRANSACTIONS. You must sign the certification. You may cross
out item 2 of the certification.
4. OTHER PAYMENTS. You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. "Other payments" include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills
for merchandise), medical and health care services, payments to a nonemployee
for service (including attorney and accounting fees) and payments to certain
fishing boat crew members.
5. MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY OR IRA CONTRIBUTIONS. You are required to furnish your correct TIN,
but you are not required to sign the certification.
6. TIN "APPLIED FOR." Follow the instructions under How to Obtain a TIN on
page 1, and sign and date the Substitute Form W-9.
SIGNATURE--For a joint account, only the person whose TIN is shown in Part 1
should sign.
PRIVACY ACT NOTICE--Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your TIN whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividend and certain other
payments to a payee who does not furnish a TIN to a payer. Certain penalties
may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FOR THIS TYPE OF GIVE NAME AND SSN OF:
ACCOUNT:
- --------------------------------------------------------------------------------
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4.a. The usual The grantor-
revocable savings trustee(1)
trust (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under state
law
5. Sole proprietorship The owner(3)
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
FOR THIS TYPE OF GIVE NAME AND EIN OF:
ACCOUNT:
- --------------------------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, Legal entity(4)
estate, or pension
trust
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational or
other tax-exempt
organization
10. Partnership The partnership
11. A broker or The broker or nominee
registered nominee
12. 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) Use first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business or "doing
business as" name. You may use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate or pension
trust. (Do not furnish the TIN of the personal representative or trustee
unless the legal entity hereof is not designated in the account title).
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>
EXHIBIT 99(a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is being made solely by the Offer to Purchase dated
September 18, 1997 and the related Letter of Transmittal and is being made to
all holders of Shares. The Purchaser is not aware of any state where the making
of the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with such
statute. If, after such good faith effort, the Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) holders of Shares in such state. 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 shall be deemed made on behalf of the Purchaser by
Lehman Brothers Inc., 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
14,397,836 Outstanding Shares of Common Stock
of
SAVANNAH FOODS & INDUSTRIES, INC.
at
$20.25 Net Per Share
by
IHK Merger Sub Corporation
a wholly owned subsidiary of
IMPERIAL HOLLY CORPORATION
__________________________________________________________________________
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 16, 1997, UNLESS THE
OFFER IS EXTENDED.
__________________________________________________________________________
<PAGE>
IHK Merger Sub Corporation, a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Imperial Holly Corporation, a Texas corporation
("Imperial Holly"), is offering to purchase 14,397,836 shares of Common Stock,
par value $0.25 per share (the "Shares"), of Savannah Foods & Industries, Inc.,
a Delaware corporation (the "Company") or such other amount of shares
representing 50.1% of the outstanding shares of the Company on a fully diluted
basis on the date of purchase, at a price of $20.25 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 September 18, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
Following the Offer, the Purchaser intends to effect the Merger (as defined
below).
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT (AS DEFINED
BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY, 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, (i) there being validly
tendered and not withdrawn by the Expiration Date (as defined below) at least
14,397,836 shares or such other number of Shares representing 50.1% of the
Company's outstanding common stock on a fully diluted basis on the date of
purchase, (ii) the expiration of any applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder and (iii) Imperial Holly having obtained financing sufficient to
enable it (or to cause Purchaser) to purchase the Shares tendered pursuant to
the Offer and to consummate the Merger. The Offer also is subject to certain
other conditions which are set forth in Section 14 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 12, 1997 (the "Merger Agreement"), among Imperial Holly, the
Purchaser and the Company. The Merger Agreement provides that as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver of certain conditions contained in the Merger Agreement
and in accordance with the relevant provisions of the General Corporation Law of
the State of Delaware, the Purchaser will be merged with and into the Company
(the "Merger"). The Company will continue as the surviving corporation and as a
wholly owned subsidiary of Imperial Holly following consummation of the Merger.
At the effective time of the Merger (the "Effective Time"), each Share issued
and outstanding immediately prior thereto (other than Shares held by Imperial
Holly, the Purchaser or any of their subsidiaries, or in the treasury of the
Company, all of which will be canceled (the "Excluded Shares"), and Shares held
by stockholders who perfect their appraisal rights under Delaware law (the
"Dissenting Shares")) will be converted into the right to receive, subject to
the proration procedures described below (i) cash in the amount equal to the
Offer Price, without interest thereon (the "Cash Consideration"), or (ii) Stock
Consideration (as defined below).
-2-
<PAGE>
The number of Shares to be converted into the right to receive the Cash
Consideration in the Merger shall be equal to (x) 70% of the number of Shares
issued and outstanding immediately prior to the Effective Time less (y) the sum
of the Excluded Shares and the Dissenting Shares (the "Cash Election Number").
Subsequent to the consummation of the Offer, each stockholder of the Company
holding Shares not tendered in the Offer (other than Excluded Shares) or not
accepted for payment in the Offer because of proration will be entitled make an
election to receive the Cash Consideration. If the number of Shares electing
to receive the Cash Consideration exceeds the Cash Election Number, such shares
will be converted into the right to receive the Cash Consideration on a pro rata
basis, with the remainder converted into the right to receive the Stock
Consideration. If the number of Shares electing to receive the Cash
Consideration is less than the Cash Election Number, such shares will be
converted into the right to receive the Cash Consideration while those Shares
not so electing will be converted into the right to receive the Stock
Consideration on a pro rata basis, with the remainder receiving the Cash
Consideration. "Stock Consideration," with respect to each Share converted into
the right to receive Stock Consideration, shall mean (x) if the Closing Price
(as defined below) of the shares of common stock, without par value, of Imperial
Holly ("Imperial Shares") is $13.25 or lower, a number of Imperial Shares equal
to the quotient of the Offer Price divided by $13.25, (y) if the Closing Price
of the Imperial Shares is $17.25 or greater, a number of Imperial Shares equal
to the quotient of the Offer Price divided by $17.25, or (z) if the Closing
Price of the Shares is greater than $13.25 but less than $17.25, a number of
Imperial Shares equal to the quotient of the Offering Price divided by the
Closing Price. The Stock Consideration also includes with each Imperial Share
the right to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock of Imperial Holly pursuant to a Rights Agreement,
dated as of September 14, 1989, as amended, between Imperial Holly and the Bank
of New York, as rights agent. "Closing Price" means the volume weighted average
of the trading prices of the Imperial Shares, rounded to three decimal places,
as reported by Bloomberg Financial Markets, for each of the first 15 consecutive
days upon which both the New York Stock Exchange and the American Stock Exchange
are open for trading in the period commencing 20 of such trading days prior to
the date of the closing of the Merger. In addition, as of September 12, 1997,
each of the executive officers and directors of the Company executed a
stockholder agreement with the Purchaser and Imperial Holly (the "Stockholders
Agreement") pursuant to which each has agreed to tender all Shares owned by such
stockholder into the Offer.
In the event that more than 14,397,836 Shares or such other amount of
Shares representing 50.1% of the Company's outstanding common stock on a fully
diluted basis on the date of purchase are validly tendered and not withdrawn in
accordance with Section 4 of the Offer to Purchase prior to the Expiration Date,
the Purchaser will accept for payment and pay for such Shares on a pro rata
basis (with applicable adjustments to avoid purchase of fractional Shares).
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to the Wachovia Bank,
N.A. (the "Paying Agent") of the Purchaser's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Paying Agent, which
will act
-3-
<PAGE>
as agent for tendering stockholders for the purpose of receiving payment from
the Purchaser and transmitting payment to tendering stockholders whose Shares
have theretofore been accepted for payment. Payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Paying Agent of (i) certificates for (or a book-entry transfer
with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), and (iii) all other documents required by the Letter of Transmittal.
Under no circumstances will interest be paid by the Purchaser on the purchase
price of the Shares, regardless of any extension of the Offer or any delay in
making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, October 16, 1997, unless and until the Purchaser shall have extended
the period of time during 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. Subject to the limitations set forth
in the Merger Agreement, the Purchaser reserves the right (but will not be
obligated), at any time or from time to time in its sole discretion, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to the Paying Agent and by making a public announcement
of such extension. There can be no assurance that the Purchaser will exercise
its right to extend the Offer. Any such extension will be followed by a 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. If the Purchaser
extends the Offer, then without prejudice to the rights of the Purchaser,
tendered Shares may be retained by the Paying Agent on behalf of the Purchaser
and may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights, as set forth below.
Except as otherwise provided below, tenders of Shares made pursuant to the
Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after November 17, 1997. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Paying Agent at its address as set forth on the back cover of
the 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 the name of the registered holder, if different from the name of
the person who tendered such Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Paying Agent, then,
prior to the physical release of such certificates, the tendering stockholder
must also submit the serial numbers shown on such certificates, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), except in the case of Shares
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal with respect to
such Shares must specify the name and number of the account at the applicable
Book-Entry Transfer Facility (as defined in the Offer to Purchase) to be
credited with the withdrawn Shares. Any Shares properly withdrawn will be
deemed not to have been validly tendered for purposes of the Offer, but
-4-
<PAGE>
may be retendered at any subsequent time prior to the Expiration Date by
following any of the procedures described in Section 3 of the Offer to Purchase.
All questions as to the form and validity (including time of receipt) of notice
of withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination shall be final and binding on all parties.
The Company has provided to the Purchaser its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholders 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 information required to be disclosed by Rule 14d-6(e)(1)(vii) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN INFORMATION WHICH
SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent and the Dealer Manager at the telephone numbers and locations listed
below. Copies of the Offer to Purchase, the Letter of Transmittal, the Notice
of Guaranteed Delivery and other tender offer documents may be obtained at the
Purchaser's expense from the Information Agent or from your broker, dealer,
commercial bank or trust company or other nominee. No fees or commissions will
be payable by Imperial Holly or the Purchaser to brokers, dealers or other
persons other than the Information Agent and the Dealer Manager for soliciting
tenders of Shares pursuant to the Offer.
-5-
<PAGE>
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
CALL COLLECT: (212) 269-5550
CALL TOLL FREE: (800) 758-5378
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
3 World Financial Center
200 Vesey Street
New York, New York 10285
CALL COLLECT: (212) 526-2449
September 18, 1997
-6-
<PAGE>
EXHIBIT 99(c)1
AGREEMENT AND PLAN OF MERGER
AMONG
IMPERIAL HOLLY CORPORATION,
IHK MERGER SUB CORPORATION
AND
SAVANNAH FOODS & INDUSTRIES, INC.
DATED AS OF SEPTEMBER 12, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I THE OFFER
SECTION 1.01 The Offer............................................ 2
SECTION 1.02 Company Actions...................................... 3
SECTION 1.03 Stockholder Lists.................................... 4
SECTION 1.04 Directors............................................ 4
ARTICLE II THE MERGER
SECTION 2.01 The Merger........................................... 5
SECTION 2.02 Effective Time; Closing.............................. 5
SECTION 2.03 Effects of the Merger................................ 6
SECTION 2.04 Certificate of Incorporation and By-Laws............. 6
SECTION 2.05 Directors and Officers............................... 6
SECTION 2.06 Conversion of Shares................................. 6
SECTION 2.07 Conversion of Common Stock of Merger Sub............. 8
SECTION 2.08 Stockholders' Meetings............................... 9
SECTION 2.09 Rights Under Stock Plans............................. 9
SECTION 2.10 Exchange of Certificates............................. 10
SECTION 2.11 Elections............................................ 12
SECTION 2.12 Dissenting Shares.................................... 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries......... 14
SECTION 3.02 Certificate of Incorporation and By-Laws............. 15
SECTION 3.03 Capitalization....................................... 15
SECTION 3.04 Authority Relative to this Agreement................. 16
SECTION 3.05 No Conflict; Required Filings and Consents........... 17
SECTION 3.06 Permits; Compliance.................................. 17
SECTION 3.07 SEC Filings; Financial Statements.................... 18
SECTION 3.08 Absence of Certain Changes or Events................. 19
SECTION 3.09 Absence of Litigation................................ 20
SECTION 3.10 Employee Benefit Plans; Labor Matters................ 20
SECTION 3.11 Intellectual Property................................ 23
SECTION 3.12 Taxes................................................ 24
SECTION 3.13 Environmental Matters................................ 24
SECTION 3.14 Products............................................. 25
SECTION 3.15 Properties and Assets; Real Property
and Leases......................................... 25
SECTION 3.16 Insurance............................................ 26
SECTION 3.17 Opinion of Financial Advisor......................... 27
SECTION 3.18 Vote Required........................................ 27
SECTION 3.19 Brokers.............................................. 27
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SECTION 3.20 Company Rights Agreement............................. 28
SECTION 3.21 Information Supplied................................. 28
SECTION 3.22 Termination of Existing Merger Agreement............. 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF IHK AND MERGER SUB
SECTION 4.01 Organization and Qualification; Subsidiaries......... 29
SECTION 4.02 Certificate of Incorporation and By-Laws............. 30
SECTION 4.03 Capitalization....................................... 30
SECTION 4.04 Authority Relative to this Agreement................. 31
SECTION 4.05 No Conflict; Required Filings and Consents........... 31
SECTION 4.06 Permits; Compliance.................................. 32
SECTION 4.07 SEC Filings; Financial Statements.................... 32
SECTION 4.08 Absence of Certain Changes or Events................. 33
SECTION 4.09 Absence of Litigation................................ 34
SECTION 4.10 Employee Benefit Plans; Labor Matters................ 35
SECTION 4.11 Intellectual Property................................ 37
SECTION 4.12 Taxes................................................ 38
SECTION 4.13 Environmental Matters................................ 38
SECTION 4.14 Products............................................. 39
SECTION 4.15 Properties and Assets; Real Property and Leases...... 39
SECTION 4.16 Insurance............................................ 40
SECTION 4.17 Opinion of Financial Advisor......................... 40
SECTION 4.18 Vote Required........................................ 40
SECTION 4.19 Brokers.............................................. 41
SECTION 4.20 Information Supplied................................. 41
SECTION 4.21 Financing............................................ 42
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending
the Merger......................................... 42
SECTION 5.02 Conduct of Business by IHK and the IHK Subsidiaries
Pending the Merger................................. 45
SECTION 5.03 Government Filings................................... 47
ARTICLE VI ADDITIONAL AGREEMENTS
SECTION 6.01 Stockholders' Meetings............................... 48
SECTION 6.02 Registration Statement; Proxy Statement.............. 49
SECTION 6.03 Access to Information; Confidentiality............... 51
SECTION 6.04 Approvals and Consents; Cooperation.................. 52
SECTION 6.05 No Solicitation of Transactions...................... 52
SECTION 6.06 Employee Benefits Matters............................ 53
SECTION 6.07 Directors' and Officers' Indemnification
and Insurance...................................... 53
SECTION 6.08 Obligations of IHK and Merger Sub.................... 54
SECTION 6.09 Affiliates' Letters.................................. 54
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<PAGE>
SECTION 6.10 Letters of Accountants............................... 55
SECTION 6.11 Listing Market....................................... 55
SECTION 6.12 IHK Board Representation............................. 55
SECTION 6.13 Company Rights Plan.................................. 56
SECTION 6.14 Public Announcements................................. 56
SECTION 6.15 Subsequent Financial Statements...................... 56
ARTICLE VII CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect
the Merger......................................... 57
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.......................................... 58
SECTION 8.02 Effect of Termination................................ 60
SECTION 8.03 Amendment............................................ 60
SECTION 8.04 Waiver............................................... 60
SECTION 8.05 Fees and Expenses.................................... 60
ARTICLE IX GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties
and Agreements..................................... 62
SECTION 9.02 Notices.............................................. 62
SECTION 9.03 Severability......................................... 63
SECTION 9.04 Assignment........................................... 63
SECTION 9.05 Interpretation....................................... 64
SECTION 9.06 Specific Performance................................. 64
SECTION 9.07 Governing Law........................................ 64
SECTION 9.08 Parties in Interest.................................. 64
SECTION 9.09 Counterparts......................................... 65
SECTION 9.10 Waiver of Jury Trial................................. 65
SECTION 9.11 Entire Agreement..................................... 65
SECTION 9.12 Certain Definitions.................................. 65
iv
<PAGE>
TABLE OF DEFINED TERMS
(not a part of the Agreement)
SECTION
-------
Acquisition Proposal.................................. 6.05(a)
Affiliate............................................. 9.12(a)
Agreement............................................. Preamble
AMEX.................................................. 9.12(o)
Beneficial Owner...................................... 9.12(b)
Benefit Trust......................................... 3.03
Benefit Trust Agreement............................... Annex B
Benefit Trust Shares.................................. 3.03
Blue Sky Laws......................................... 3.05(b)
Business Day.......................................... 9.12(c)
Cash Consideration.................................... 2.06(a)
Claim................................................. 6.07(b)
Closing............................................... 2.02
Closing Price......................................... 9.12(d)
Code.................................................. 2.09(a)
Company............................................... Preamble
Company Affiliate..................................... 6.09
Company Common Stock.................................. 1.01(a)
Company Disclosure Schedule........................... Article III Preamble
Company Environmental Permits......................... 3.13(b)
Company ERISA Affiliate............................... 3.01(3)
Company Executive Deferred Compensation Plans......... 3.10(h)
Company Financial Statements.......................... 3.07(b)
Company Material Adverse Effect....................... 3.01
Company Options....................................... 2.09(a)
Company Permits....................................... 3.06
Company Plans......................................... 3.10(a)
Company Preferred Stock............................... 3.03
Company Products...................................... 3.14
Company Rights........................................ 3.03
Company Rights Agreement.............................. 3.03
Company Rights Agreement Amendment.................... 3.20
Company SEC Reports................................... 3.07(a)
Company Specified Stockholders........................ 9.12(e)
Company Stock Option Plan............................. 2.09(a)
Company Stockholder Approval.......................... 2.08
Company Stockholder Meeting........................... 6.01(a)
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<PAGE>
Company Subsequent Financial Statements............... 6.15(a)
Company Subsidiary.................................... 3.01
Confidentiality Agreement............................. 6.03(b)
Continuing Director................................... 1.04(a)
Control............................................... 9.12(e)
Deed Reservations..................................... 3.15(c)
Dissenting Shares..................................... 2.12
DGCL.................................................. 1.02
DLJ................................................... 1.02
Effective Time........................................ 2.02(b)
Election Date......................................... 2.11(c)
Environmental Laws.................................... 3.13(a)
ERISA................................................. 3.10(a)
Exchange Act.......................................... 9.12(f)
Exchange Agent........................................ 2.10(a)
Exchange Fund......................................... 2.10(f)
Excluded Shares....................................... 2.06(a)
Expense Amount........................................ 8.05(b)
Expenses.............................................. 8.05(a)
Flo-Sun Agreement..................................... 3.22
Governmental Entity................................... 9.12(g)
Hazardous Substances.................................. 3.13
HSR Act............................................... 1.01(a)
IHK................................................... Preamble
IHK Disclosure Schedule............................... Article IV Preamble
IHK Environmental Permits............................. 4.13
IHK ERISA Affiliate................................... 4.10(b)
IHK Financial Statements.............................. 4.07(b)
IHK Junior Preferred Stock............................ 2.06(a)
IHK Material Adverse Effect........................... 4.01
IHK Permits........................................... 4.06
IHK Plans............................................. 4.10(a)
IHK Preferred Stock................................... 4.03
IHK Products.......................................... 4.14
IHK Purchase Rights................................... 2.06(a)
IHK Rights Agreement.................................. 2.06(a)
IHK SEC Reports....................................... 4.07(a)
IHK Shareholders' Meeting............................. 6.01(b)
IHK Specified Stockholders............................ 9.12(i)
IHK Stockholder Approval.............................. 2.08
IHK Subsequent Financial Statements................... 6.15(b)
IHK Subsidiary........................................ 4.01
Indemnified Parties................................... 6.07(a)
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Intellectual Property Rights.......................... 3.11
Knowledge or Known.................................... 9.12(h)
Law................................................... 9.12(i)
Lehman Brothers....................................... 4.17
Liens................................................. 3.15(c)
Listing Market........................................ 6.11
Merger................................................ Recitals
Merger Consideration.................................. 2.06(a)
Merger Shares......................................... 2.06(b)
Merger Sub............................................ Preamble
Multiemployer Plan.................................... 3.10(b)
Multiple Employer Plan................................ 3.10(b)
NYSE.................................................. 9.12(o)
Offer................................................. 1.01(a)
Offer Documents....................................... 1.01(b)
Offer Price........................................... 1.01(a)
Order................................................. 9.12(j)
Permitted Liens....................................... 3.15(c)
Person................................................ 9.12(k)
Proxy Statement....................................... 6.02(b)
Registration Statement................................ 3.21
Representatives....................................... 6.03(a)
Schedule 14D-1........................................ 1.01(b)
Schedule 14D-9........................................ 1.02
SEC................................................... 1.01(b)
Securities Act........................................ 9.12(l)
Special Meetings...................................... 2.08
Stock Consideration................................... 9.12(m)
Stockholder Approvals................................. 2.08
Stockholders' Meetings................................ 2.08
Subsidiary or Subsidiaries............................ 9.12(n)
Substitute Options.................................... 6.05(a)
Superior Proposal..................................... 7.05(a)
Surviving Corporation................................. 2.01
Terminating Company Breach............................ 8.01(g)
Terminating IHK Breach................................ 8.01(g)
Termination Fee....................................... 8.05(b)
Total Shares.......................................... 2.06(b)
Trading Day........................................... 9.12(o)
U.S. GAAP............................................. 3.07(b)
WARN.................................................. 3.10(f)
Waterway Works........................................ 3.15(c)
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<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September 12,
1997 among IMPERIAL HOLLY CORPORATION, a Texas corporation ("IHK"), IHK MERGER
SUB CORPORATION, a Delaware corporation ("Merger Sub"), and SAVANNAH FOODS &
INDUSTRIES, INC., a Delaware corporation (the "Company").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Board of Directors of each of IHK and the Company has
determined that it is in the best interests of their respective stockholders for
Merger Sub to acquire the Company upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving the acquisition of the Company by Merger Sub, this
Agreement and the transactions contemplated hereby, and has unanimously agreed
to recommend that the Company's stockholders approve this Agreement and the
transactions contemplated hereby and tender their shares of Company Common Stock
(as defined below) in the Offer (as defined below);
WHEREAS, if at least 50.1% of the outstanding shares of Company Common
Stock are purchased pursuant to the Offer, IHK, Merger Sub and the Company have
agreed (subject to the terms and conditions of this Agreement), after the
expiration or termination of the Offer and as soon as practicable following the
approval of the stockholders of the Company, to effect the merger of Merger Sub
with and into the Company (the "Merger") as more fully described herein; and
WHEREAS, the Company has advised IHK, Merger Sub and the IHK Specified
Stockholders (as hereinafter defined) that it will not enter into this Agreement
unless the IHK Specified Stockholders execute and deliver to the Company an
Agreement and Irrevocable Proxy in the form set forth in Annex C to this
Agreement; and
WHEREAS, IHK has advised the Company and the Company Specified Stockholders
that IHK will not enter into this Agreement unless the Company Specified
Stockholders (as hereinafter defined) execute and deliver to IHK the
Stockholders Agreement in form set forth as Annex D to this Agreement and
providing that the Company Specified Stockholders will tender their shares of
Company Common Stock into the Offer under the terms set forth therein; and
WHEREAS, IHK, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and intending to be legally bound hereby, the parties hereto agree
as follows:
<PAGE>
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.01 hereof, promptly (but in no event later than five
Business Days (as defined below) following the date hereof), Merger Sub shall
commence (within the meaning of Rule 14d-2 under the Exchange Act) an offer to
purchase (the "Offer") at least 50.1% of all shares outstanding (on a fully
diluted basis) of common stock, par value $.25 per share, of the Company
("Company Common Stock") at a price of $20.25 per share, net to the seller in
cash (such price, or any such higher price as may be paid in the Offer, being
referred to herein as the "Offer Price"). The obligation of Merger Sub to
consummate the Offer and to accept for payment and to pay for any shares of
Company Common Stock tendered pursuant thereto shall be subject only to those
conditions set forth in Annex A hereto. The Company agrees that no shares of
Company Common Stock held by the Company or any of the Company Subsidiaries (as
defined below) will be tendered pursuant to the Offer; provided, however, that
prior to the Effective Time (as defined below), shares of Company Common Stock
held by the Company may be allocated, issued, delivered or transferred pursuant
to the Company Stock Option Plan (as such term is defined in Section 2.09) in
accordance with the terms thereof or Section 2.09. Merger Sub will not, without
the prior written consent of the Company, (i) decrease or change the form of the
consideration payable in the Offer, (ii) decrease the number of shares of
Company Common Stock sought pursuant to the Offer, (iii) impose additional
conditions to the Offer, (iv) change the conditions to the Offer, except that
Merger Sub in its sole discretion may waive any of the conditions to the Offer
(but may not waive the condition that not less than 50.1% of the Company Common
Stock outstanding on a fully diluted basis shall have been validly tendered and
not withdrawn), or (v) make any other change in the terms or conditions of the
Offer which is adverse to the holders of the shares of Company Common Stock.
Merger Sub agrees that, subject to the terms and conditions of the Offer and
this Agreement, it will accept for payment and pay for all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer promptly
after expiration of the Offer; provided, however, that Merger Sub shall not be
obligated to accept for payment and pay for in the Offer, in the aggregate, more
than 50.1% of the outstanding shares of Company Common Stock. The Offer shall
initially provide that it shall expire 20 Business Days after it is commenced,
and may not be extended except as provided below. If the conditions set forth
in Annex A are not satisfied or, to the extent permitted by this Agreement,
waived by Merger Sub as of any scheduled expiration date, Merger Sub may extend
the Offer from time to time until the earlier of the consummation of the Offer
or 30 Business Days after the date hereof, and shall extend the Offer (x) to the
extent necessary to comply with the waiting period requirements (including any
extension or second request) under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act") and (y) upon the request of the Company, to a date no later than November
30, 1997 to the extent
2
<PAGE>
necessary for IHK to satisfy the condition set forth in clause (2) of Annex A.
The Company and Merger Sub shall use commercially reasonable efforts to satisfy
the conditions set forth in Annex A as soon as practicable.
(b) On the date of commencement of the Offer, IHK and Merger Sub shall file
or cause to be filed with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 (together with all amendments thereto,
the "Schedule 14D-1") with respect to the Offer, which shall contain the offer
to purchase and related letter of transmittal and other ancillary Offer
documents and instruments pursuant to which the Offer will be made (collectively
with any supplements or amendments thereto, the "Offer Documents"). Merger Sub
will disseminate the Offer Documents to holders of shares of Company Common
Stock. IHK, Merger Sub and the Company will promptly correct any information
provided by them for use in the Offer Documents that becomes false or misleading
in any material respect, and Merger Sub will take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable law. The Company and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-1
(including the Offer Documents) prior to its filing with the SEC. Merger Sub
agrees to provide the Company with any comments that may be received from the
SEC or its staff with respect to the Schedule 14D-1 (including the Offer
Documents) and any amendments thereto, promptly after receipt thereof.
SECTION 1.02 Company Actions. The Company hereby consents to the Offer
and represents and warrants that (a) its Board of Directors (at a meeting duly
called and held), has (i) determined that the Offer and the Merger are fair to
and in the best interests of the stockholders of the Company, (ii) resolved to
approve the Offer and the Merger and recommend (subject to its fiduciary duties
after taking into account advice of legal counsel) acceptance of the Offer and
approval and adoption of this Agreement by such stockholders of the Company,
(iii) taken all necessary steps to render Section 203 of the Delaware General
Corporation Law (the "DGCL") inapplicable to the Merger, (iv) resolved to elect
not to be subject, to the extent permitted by law, to any state takeover law
other than Section 203 of the DGCL that may purport to be applicable to the
Offer, the Merger or the transactions contemplated by this Agreement and (v)
approved the Company Rights Agreement Amendment (as defined below), and (b)
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), the Company's
financial advisor, has advised the Company's Board of Directors that, in their
opinion, the consideration to be paid in the Offer and the Merger to the
Company's stockholders is fair, from a financial point of view, to such
stockholders. Upon commencement of the Offer, the Company shall file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") containing the recommendations of its Board of Directors in favor of the
Offer and the Merger and shall permit the inclusion in the Offer Documents of
such recommendations, in each case subject to the fiduciary duties of the Board
of Directors of the Company. The Company, IHK and Merger Sub will promptly
correct any information provided by them for use in the Schedule 14D-9 that
becomes false or misleading in any material respect, and the Company will take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of shares of Company Common
3
<PAGE>
Stock, in each case as and to the extent required by applicable law. IHK and
its counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
IHK with any comments that may be received from the SEC or its staff with
respect to the Schedule 14D-9 and any amendments thereto, promptly after receipt
thereof.
SECTION 1.03 Stockholder Lists. In connection with the Offer, the
Company shall promptly furnish Merger Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of shares of Company Common Stock as of a recent
date and shall furnish Merger Sub with such information and assistance as Merger
Sub or its agents may reasonably request in communicating the Offer to the
record and beneficial stockholders of the Company. Subject to the requirements
of applicable law, IHK and Merger Sub will hold such listings and other
information in confidence and in accordance with the terms of the
Confidentiality Agreement (as defined below), shall use such information only in
connection with the Offer and the Merger and, if this Agreement is terminated,
shall deliver to the Company all copies of all such information (and extracts or
summaries thereof) then in their or their agents' or advisors' possession.
SECTION 1.04 Directors.
(a) Promptly upon the purchase by Merger Sub pursuant to the Offer of such
number of shares of Company Common Stock as represents at least 50.1% of the
outstanding shares of Company Common Stock and from time to time thereafter,
Merger Sub shall be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company as will give
Merger Sub representation on the Board of Directors of the Company equal to the
product of the number of directors on the Board of Directors of the Company and
the percentage that such number of shares of Company Common Stock so purchased
bears to the number of shares of Company Common Stock outstanding, and the
Company shall promptly, to the extent permitted by the Company's Certificate of
Incorporation and By-Laws and the DGCL, upon request by Merger Sub, either (at
the Company's election) increase the size of the Board of Directors of the
Company or exercise all reasonable efforts to secure the resignations of such
number of directors as is necessary to provide Merger Sub with such level of
representation and to enable Merger Sub's designees to be so elected.
Notwithstanding the foregoing, at all times prior to the Effective Time (as
hereinafter defined) of the Merger the Board of Directors of the Company shall
include at least two directors in office as of the date hereof (any such
director remaining in office being a "Continuing Director"). The Company's
obligations to appoint designees to the Board of Directors of the Company shall
be subject to Section 14(f) of the Exchange Act. At the request and expense of
Merger Sub, the Company shall take all action necessary to effect any such
election, including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. IHK
and Merger Sub will timely supply to the Company in writing and IHK and Merger
Sub will be solely responsible for any and all information with respect to
themselves and their respective officers, directors and affiliates and director
designees required by such Section and Rule.
4
<PAGE>
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section and prior to the Effective Time, such designees shall
abstain from acting upon, and the approval of a majority of the Continuing
Directors shall be required to authorize and shall be sufficient to authorize,
any resolution with respect to any termination of this Agreement by the Company,
any amendment of this Agreement requiring action by the Board of Directors of
the Company, any extension of time for the performance of any of the obligations
or other acts of IHK or Merger Sub under this Agreement, any waiver of
compliance with any of the agreements or conditions under this Agreement for the
benefit of the Company, and any action to seek to enforce any obligation of IHK
or Merger Sub under this Agreement. The Continuing Directors shall be appointed
as a Special Committee of the Board of Directors of the Company and, in addition
to having all of the powers of the Continuing Directors set out in the preceding
sentence, the Special Committee shall have the full power over all issues
relating to the relationship between the Company on the one hand and IHK and
Merger Sub on the other and the Company shall not take any action if, in the
opinion of a majority of the Special Committee, such action would frustrate or
be reasonably likely to impair or delay the ability of the parties to consummate
the Merger. In connection herewith, the Continuing Directors (as such or in
their capacity as the Special Committee) shall be authorized, on behalf of and
at the expense of the Company, to retain financial and legal advisors.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, the Merger
shall occur as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VII hereof. The Company
shall be the surviving corporation in the Merger (the "Surviving Corporation")
under the name SAVANNAH FOODS & INDUSTRIES, INC. (or such other name as the
parties shall agree) and shall continue its existence under the laws of
Delaware. The separate corporate existence of Merger Sub shall cease.
SECTION 2.02 Effective Time; Closing.
(a) The closing of the Merger (the "Closing") will take place on the day
that is two Business Days (as defined below) after satisfaction or waiver
(subject to applicable Law (as defined below)) of the conditions set forth in
Article VII (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date), unless another time or date is agreed to in writing by
the parties hereto. The Closing shall be held at the offices of Andrews & Kurth
L.L.P., 4200 Texas Commerce Tower, 600 Travis, Houston, Texas 77002, unless
another place is agreed to in writing by the parties hereto.
5
<PAGE>
(b) As soon as practicable following the Closing, the parties hereto shall
cause the Merger to be consummated by filing a Certificate of Merger with the
Secretary of State of Delaware in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL. The term "Effective Time"
means the date and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or such later time as may be agreed
in writing by each of the parties hereto and specified in the Certificate of
Merger; provided, however, that for financial accounting purposes, the Effective
Time shall be the first day of the month in which the Closing occurs.
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL and set forth herein.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation and By-Laws. The Certificate
of Incorporation and the By-Laws of Merger Sub, in each case as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation; provided, however, that
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read in its entirety as follows: "ARTICLE I. The name of the
Corporation is SAVANNAH FOODS & INDUSTRIES, INC." (or such other name as the
parties shall agree).
SECTION 2.05 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time and the officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected and qualified.
SECTION 2.06 Conversion of Shares.
(a) At the Effective Time, except as otherwise provided herein and subject
to Section 2.06(b), each share of Company Common Stock, issued and outstanding
immediately prior to the Effective Time (other than the shares of Company Common
Stock owned by IHK, Merger Sub or any of their Subsidiaries or held in the
treasury of the Company, all of which shall be canceled and cease to exist,
without consideration being payable therefore (the "Excluded Shares"), shall, by
virtue of the Merger and, except as provided in Section 2.11, without any action
on the part of the holder thereof, be converted into, exchanged for and
represent the right to receive (without interest), subject to the proration
procedures described below, either (i) the Stock Consideration (as defined
below) or (ii) cash in an amount equal to the Offer Price ("Cash Consideration"
and, together with the Stock Consideration, the "Merger Consideration"));
provided, however, that, in any event, if between the date of this Agreement and
the Effective Time the outstanding shares of IHK Common Stock or Company Common
Stock shall have been changed into a different number of shares or a
6
<PAGE>
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Cash
Consideration and the Stock Consideration shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. All shares of Company Common Stock so
converted or exchanged shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to receive, upon
the surrender of such certificate in accordance with the provisions of Section
2.11, only the applicable Merger Consideration and any cash to be paid in lieu
of fractional shares of IHK Common Stock and associated fractional rights ("IHK
Purchase Rights") to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock, without par value, of IHK ("IHK Junior Preferred
Stock") pursuant to the Rights Agreement, dated as of September 14, 1989, as
amended (the "IHK Rights Agreement"), between IHK and The Bank of New York, as
rights agent, to which such holder is entitled pursuant to Section 2.10(e)
(without interest thereon). The holders of such certificates previously
evidencing such shares of Company Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided herein or by law. IHK shall
prepare a statement setting forth the calculations required or otherwise
contemplated by this Section 2.06 in reasonable detail prior to the Closing Date
and shall furnish a copy thereof to the Company.
(b) Notwithstanding anything in this Agreement to the contrary, the number
of shares of Company Common Stock (the "Cash Election Number") to be converted
into the right to receive the Cash Consideration in the Merger shall be equal to
70% of the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time less the sum of (i) the number of
Dissenting Shares (as hereinafter defined) and (ii) the number of Excluded
Shares.
(c) In the event that the aggregate number of shares in respect of which
Cash Elections (as defined below) have been made (the "Cash Election Shares")
exceeds the Cash Election Number, each share of Company Common Stock in respect
of which a Cash Election has not been made shall be converted into the right to
receive the Stock Consideration, and each of the Cash Election Shares shall be
converted into the right to receive the Stock Consideration or the Cash
Consideration in the following manner:
(i) A proration factor (the "Proration Factor") shall be determined by
dividing the Cash Election Number by the total number of Cash Election Shares.
(ii) The number of Cash Election Shares as to which each stockholder who
made a Cash Election shall be converted into the right to receive the Cash
Consideration (on a consistent basis among stockholders who made a Cash Election
pro rata to the number of shares as to which they made such elections) shall be
equal to the product of the Proration Factor multiplied by the total number of
Cash Election Shares beneficially owned by such stockholder.
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(iii) Subject to Section 2.10(e), each Cash Election Share other than
those shares that shall receive the Cash Election Amount in accordance with
Section 2.06(c)(ii), shall be converted into the right to receive the Stock
Consideration.
(d) Subject to Section 2.10(e), if the number of Cash Election Shares is
less than the Cash Election Number, then:
(i) Each Cash Election Share shall be converted into the right to receive
the Cash Consideration; and
(ii) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time other than Cash Election Shares, the shares of
Company Common Stock to be canceled in accordance with Section 2.06(e) and
Dissenting Shares (the "Eligible Shares"), shall be converted into the right to
receive the Cash Consideration or the Stock Consideration in the following
manner:
(A) The number of Eligible Shares to be converted into the right to receive
the Cash Consideration shall be equal to the excess of the Cash Election Number
over the number of Cash Election Shares (which shall be allocated on a basis
consistent among all stockholders who beneficially own Eligible Shares pro rata
to the number of Eligible Shares beneficially owned by each such stockholder).
(B) Each other Eligible Share shall be converted into the right to receive
the Stock Consideration.
(e) At the Effective Time, each Excluded Share shall be canceled without
any conversion thereof and no payment or distribution shall be made with respect
thereto.
SECTION 2.07 Conversion of Common Stock of Merger Sub. Each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become at the Effective Time one
share of common stock of the Surviving Corporation.
SECTION 2.08 Stockholders' Meetings. Subject to applicable law, each
of IHK and the Company, acting through its respective Board of Directors, shall,
in accordance with applicable law, duly call, give notice of, convene and hold a
special meeting (the "Special Meetings" or the "Stockholders' Meetings") of its
respective stockholders as soon as practicable for the purpose (in the case of
the Company) of approving and adopting the agreement of merger (within the
meaning of Section 251 of the DGCL) set forth in this Agreement and approving
the Merger (the "Company Stockholder Approval") or (in the case of IHK) the
issuance of the shares of IHK Common Stock to the stockholders of the Company
in the Merger (the "IHK Stockholder Approval" and together with the Company
Stockholder Approval, the "Stockholder Approvals"), and, subject to the
fiduciary duties of the respective Boards of Directors under applicable law as
determined by such
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directors in good faith after consultation with and based upon the advice of
outside counsel, include in the Proxy Statement (as defined in Section 6.02) of
each of the Company and IHK for use in connection with the Special Meetings,
the recommendation of their Boards of Directors that stockholders vote in favor
of the Company Stockholder Approval or IHK Stockholder Approval, as the case may
be. The Company and IHK agree to use commercially reasonable efforts to cause
the Special Meetings to occur within 30 days after the Registration Statement
(as defined below in Section 3.21) is effective under the Securities Act. IHK
and Merger Sub agree that, at the Company Stockholders' Meeting, all of the
shares of Company Common Stock acquired pursuant to the Offer or otherwise by
IHK or Merger Sub will be voted in favor of the Company Stockholder Approval.
SECTION 2.09 Rights Under Stock Plans.
(a) Each unexpired and unexercised option to purchase shares of Company
Common Stock (the "Company Options") issued pursuant to the Company's 1996
Equity Incentive Plan (the "Company Stock Option Plan"), or otherwise granted
by the Company outside the Company Stock Option Plan, each of which issued and
outstanding Company Options are set forth in Section 3.03 of the Company
Disclosure Schedule (as defined below), shall, at the Effective Time and at the
election of the holder of such Company Options, either (i) be assumed by IHK and
shall constitute an option to acquire, on the same terms and conditions as were
applicable under such assumed Company Option, a number of shares of IHK Common
Stock equal to the product of (A) the Stock Consideration and (B) the number of
shares of Company Common Stock subject to such Company Option, at a price per
share equal to the amount obtained by dividing the exercise price of such
Company Option by the Stock Consideration (the "Substitute Options") or (ii)
each Company Option which is vested or exercisable or shall become vested or
exercisable as a result of the Offer or the Merger shall be canceled by the
Company, and each holder of a Company Option so canceled shall be entitled to
receive an amount in cash equal to the difference between the Offer Price and
the exercise price of such Company Option. Each holder of a Company Option
shall make such election by notifying the Company and IHK by 5:00 p.m. New York
City time on the Election Date (as defined below). At the Effective Time, IHK
shall deliver to holders of Company Options, who make the election set forth in
clause (i) of the preceding sentence, appropriate option agreements representing
the right to acquire shares of IHK Common Stock on the same terms and conditions
as contained in the outstanding Company Options. IHK shall adopt and comply
with the terms of the Company Stock Option Plan as it applies to Company Options
assumed as set forth above including, without limitation, provisions regarding
the accelerated vesting of Company Options which shall occur by virtue of
consummation of the Merger, to the extent required by the terms of such Company
Options or the Company Stock Option Plan. The date of grant of each Substitute
Option shall be deemed to be the date on which the corresponding Company Option
was granted. It is the intention of the parties that, subject to applicable
Law, the Substitute Options qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to the extent that the Company Options qualified as
incentive stock options prior to the Effective Time.
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(b) IHK shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of IHK Common Stock for delivery upon exercise of
Company Options assumed in accordance with this Section 2.09. Promptly after
the Effective Time, the shares of IHK Common Stock subject to Substitute Options
shall be covered by an effective registration statement on Form S-8 (or any
successor form) or another appropriate form and IHK shall use commercially
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements for so long as Substitute Options remain outstanding.
In addition, IHK shall use commercially reasonable efforts to cause the shares
of IHK Common Stock subject to Substitute Options to be listed on the Listing
Market (as defined below).
SECTION 2.10 Exchange of Certificates.
(a) Prior to the mailing of the Proxy Statement, IHK shall appoint a bank
or trust company to act as paying agent (the "Exchange Agent") for the payment
of the Merger Consideration. As of or promptly after the Effective Time, IHK
shall deposit the aggregate Merger Consideration with the Exchange Agent for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II.
(b) As soon as practicable after the Effective Time, each holder of an
outstanding certificate or certificates which prior thereto represented shares
of Company Common Stock shall, upon surrender to the Exchange Agent of such
certificate or certificates and acceptances thereof by the Exchange Agent, be
entitled to a certificate or certificates representing the number of full shares
of IHK Common Stock received as Stock Consideration and the Cash Consideration,
if any, into which the number of shares of Company Common Stock previously
represented by such certificate or certificates surrendered shall have been
converted pursuant to this Agreement. The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal exchange practices. After the Effective Time, there shall be no
further transfer on the records of the Company or its transfer agent of
certificates representing shares of Company Common Stock, and if such
certificates are presented to the Surviving Corporation for transfer, they shall
be canceled against delivery of cash and/or certificates for shares of IHK
Common Stock in accordance with this Agreement. If any certificate for such
shares of IHK Common Stock is to be issued in, or if cash is to be remitted to,
a name other than that in which the certificate for shares of Company Common
Stock surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed, with
signature guaranteed or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Surviving Corporation or its
transfer agent any transfer or other taxes required by reason of the issuance of
certificates for such shares of IHK Common Stock in a name other than that of
the registered holder of the certificate surrendered, or establish to the
satisfaction of the Surviving Corporation or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.10(b), each certificate for shares of Company Common Stock shall be
deemed at any time after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Merger Consideration as contemplated by
Section 2.06.
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(c) No dividends or other distributions with respect to shares of IHK
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered certificate for shares of Company Common Stock with
respect to the shares of IHK Common Stock represented thereby and no cash
payment in lieu of fractional shares of IHK Common Stock shall be paid to any
such holder pursuant to Section 2.10(e) until the surrender of the certificate
for shares of Company Common Stock with respect to the shares of IHK Common
Stock represented thereby in accordance with this Article II. Subject to the
effect of applicable laws, following surrender of any such certificates, these
shall be paid to the holder of the certificate representing whole shares of IHK
Common Stock issued in connection therewith, without interest (i) at the time of
such surrender the amount of any cash payable in lieu of fractional shares to
which such holder is entitled pursuant to Section 2.10(e) and the proportionate
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such shares of IHK Common Stock,
and (ii) at the appropriate payment date, the proportionate amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of IHK Common Stock.
(d) All cash paid upon the surrender for exchange of certificates
representing shares of Company Common Stock in accordance with the terms of this
Article II (including any cash paid pursuant to Section 2.10(e)) shall be deemed
to have been issued (and paid) in full satisfaction of all rights pertaining to
the shares of Company Common Stock exchanged for cash theretofore represented by
such certificates.
(e) Notwithstanding any other provisions of this Agreement, each holder of
shares of Company Common Stock after the Effective Time who would otherwise have
been entitled to receive as Stock Consideration a fraction of a share of IHK
Common Stock (after taking into account all shares of Company Common Stock
delivered by such holder) shall receive, in lieu thereof, a cash payment
(without interest) equal to such fraction multiplied by the Cash Consideration.
(f) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to this Section 2.10 (the "Exchange Fund") which remains
undistributed to the holders of the certificates representing shares of Company
Common Stock for six months after the Effective Time shall be delivered to IHK,
and any holders of shares of Company Common Stock prior to the Effective Time
who have not theretofore complied with this Article II shall thereafter look
only to IHK and only as general creditors thereof for payment of their claim for
cash or shares of IHK Common Stock, if any.
(g) None of Merger Sub, the Company, IHK or the Exchange Agent shall be
liable to any person in respect of any cash or any shares of IHK Common Stock
from the Exchange Fund delivered to a public office pursuant to any applicable
abandoned property, escheat or similar law. If any certificates representing
shares of Company Common Stock shall not have been surrendered immediately prior
to the date on which any Merger Consideration in respect of such certificate
would otherwise escheat to or become the property of any Government Authority,
any such Merger Consideration in respect of such certificate shall, as such time
and to the extent permitted by
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applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(h) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by IHK, on a daily basis, provided that such investments shall be in
obligations of the United States of America or obligations fully guaranteed as
to principal and interest by the United States of America, any of which may be
made through a repurchase agreement in commercially reasonable form with any
bank or other financial institution having capital, surplus and undivided
profits of at least $500,000,000. Any interest and other income resulting from
such investments shall be paid to IHK. To the extent that there are losses with
respect to such investments, or the Exchange Fund diminishes for other reasons
below the level required to make prompt payments of the Merger Consideration as
contemplated hereby, IHK shall promptly replace or restore the portion of the
Exchange Fund lost through investments or other events so as to ensure that the
Exchange Fund is, at all times, maintained at a level sufficient to make such
payments.
(i) The Company shall pay all charges and expenses of the Exchange Agent.
SECTION 2.11 Elections.
(a) Each person who, on or prior to the Election Date referred to in
paragraph (c) below, is a record holder of shares of Company Common Stock (other
than holders of shares to be canceled as set forth in Section 2.06(a)) will be
entitled, with respect to all or any portion of his shares, to make an
unconditional election (a "Cash Election") on or prior to such Election Date to
receive the Cash Consideration (subject to Section 2.06), on the basis
hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement, IHK shall appoint the
Exchange Agent for the payment of the Merger Consideration.
(c) The Company shall prepare and mail a form of election, which form shall
be subject to the reasonable approval of IHK and Merger Sub (the "Form of
Election"), with the Proxy Statement to the record holders of shares of Company
Common Stock as of the record date for the Company Stockholders' Meeting, which
Form of Election shall be used by each record holder of shares of Company Common
Stock who wishes to make a Cash Election, subject to the provisions of Section
2.06 hereof, for any or all shares of Company Common Stock held by such holder.
The Company will use commercially reasonable efforts to make the Form of
Election and the Proxy Statement available to all persons who become holders of
shares of Company Common Stock during the period between such record date and
the Election Date referred to below. Any such holder's Cash Election shall have
been properly made only if the Exchange Agent shall have received at its
designated office, by 5:00 p.m., New York City time on the Business Day (the
"Election Date") next preceding the day on which the vote is taken at the
Company Stockholders' Meeting (or any adjournment thereof) a Form of Election
properly completed and signed and accompanied by certificates for the shares of
Company Common Stock to which such Form of Election relates (or by an
appropriate guarantee of delivery of such certificates as set forth in such Form
of Election from
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a firm which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within three NYSE
trading days after the date of execution of such guarantee of delivery).
Failure to deliver shares covered by such a guarantee of delivery within the
time set forth therein shall invalidate an otherwise properly made Cash
Election.
(d) Any Form of Election may be revoked by the stockholder submitting it to
the Exchange Agent only by written notice received by the Exchange Agent (i)
prior to 5:00 p.m., New York City time, on the Election Date or (ii) after the
date of the Company Stockholders Meeting, if (and to the extent that) the
Exchange Agent is legally required to permit revocations and the Effective Time
shall not have occurred prior to such date. In addition, all Forms of Election
shall automatically be revoked if the Exchange Agent is notified in writing by
IHK, Merger Sub and the Company that the Merger has been abandoned. If a Form
of Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the shares of Company Common Stock to which such
Form of Election relates shall be promptly returned to the stockholder
submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be binding as to whether
or not elections to receive the Cash Consideration have been properly made or
revoked pursuant to this Section 2.11 with respect to shares of Company Common
Stock and when elections and revocations were received by it. If the Exchange
Agent determines that any Cash Election was not properly made with respect to
shares of Company Common Stock, such shares of Company Common Stock shall be
treated by the Exchange Agent as shares of Company Common Stock which were not
Cash Election Shares at the Effective Time, and such shares of Company Common
Stock shall be exchanged in the Merger for Stock Consideration pursuant to
Section 2.06. The Exchange Agent shall also make all computations as to the
allocation and the proration contemplated by Section 2.06, and any such
computation shall be conclusive and binding on the holders of shares of Company
Common Stock. The Exchange Agent may, with the mutual agreement of IHK and
Merger Sub, make such rules as are consistent with this Section 2.11 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
SECTION 2.12 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock which are held by stockholders who did not vote in favor of the Merger and
who comply with all of the relevant provisions of Section 262 of the DGCL (the
"Dissenting Shares") shall not be converted into or be exchanged for the right
to receive the Merger Consideration (but instead shall be converted into the
right to receive payment from the Surviving Corporation with respect to such
Dissenting Shares in accordance with the DGCL), unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the DGCL. If any such holder shall have failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
shares of Company Common Stock shall be entitled to receive either (i) the Stock
Consideration or (ii) the Cash Consideration in accordance with Section 2.06.
The Company shall give prompt notice to
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Merger Sub and IHK of any demands received by the Company for appraisal of
shares of Company Common Stock, and Merger Sub and IHK shall have the right to
participate in and direct all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Merger
Sub and IHK, make any payment with respect to, or settle or offer to settle, any
such demands. IHK agrees to invest in, or lend to, the Surviving Corporation
sufficient funds to permit any payment with respect to Dissenting Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), the
Company hereby represents and warrants to IHK and the Merger Sub that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Company Subsidiary") is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined below). The
Company and each Company Subsidiary are duly qualified or licensed as a foreign
corporation to do business, and are in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by the Company and the
respective Company Subsidiaries or the nature of their respective businesses
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Company Material Adverse Effect. The term "Company
Material Adverse Effect" means any adverse change, circumstance or effect that,
individually or in the aggregate with all other adverse changes, circumstances
and effects, is or is reasonably likely to be materially adverse to the
business, operations, assets, liabilities (including, without limitation,
contingent liabilities), financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole. Section 3.01 of the
Company Disclosure Schedule sets forth, as of the date of this Agreement, a true
and complete list of all of the Company Subsidiaries, together with the
jurisdiction of incorporation of each Company Subsidiary and the percentage of
each Company Subsidiary's outstanding capital stock or other equity interests
owned by the Company and the Company Subsidiaries, as the case may be, and the
name of each other holder of any such outstanding capital stock or other equity
interests and the percentage so held with respect to each such Company
Subsidiary. There are no partnerships or joint venture arrangements or other
business entities in which the Company or any Company Subsidiary owns an equity
interest that are material to the business of the Company and the Company
Subsidiaries taken as a whole.
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SECTION 3.02 Certificate of Incorporation and By-Laws. The Company has
made available to IHK complete and correct copies of its Certificate of
Incorporation and By-Laws and the certificates of incorporation and by-laws or
other comparable charter or organizational documents of the Company
Subsidiaries, in each case as amended to the date of this Agreement. The Company
is not in violation of any of the provisions of its Certificate of Incorporation
or By-Laws. Except as would not have a Company Material Adverse Effect, no
Company Subsidiary is in violation of any of the provisions of its Certificate
of Incorporation or By-Laws or other comparable charter or organizational
documents.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of 64,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock ("Company Preferred Stock"). As of September 1, 1997,
(i) 28,738,196 shares of Company Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable and 2,500,000 of which
are held by Wachovia Bank, N.A. (formerly Wachovia Bank of North Carolina N.A.),
as trustee of the trust created pursuant to the Savannah Foods & Industries,
Inc. Benefit Trust Agreement (the "Benefit Trust"; shares held by the trustee of
the Benefit Trust immediately prior to the Effective Time being referred to
herein as the "Benefit Trust Shares"); (ii) 2,568,604 shares of Company Common
Stock are held in the treasury of the Company; (iii) 1,250,000 shares of Company
Common Stock are reserved for future issuance pursuant to Company Options and
(iv) 1,000,000 shares of Company Preferred Stock are reserved for issuance
pursuant to the Rights Agreement, dated as of March 31, 1989, between the
Company and Citizens and Southern Trust Company, as Rights Agent (as amended,
the "Company Rights Agreement"). Except for Company Options heretofore granted
pursuant to the Company Stock Option Plan or pursuant to agreements or
arrangements described in Section 3.03 of the Company Disclosure Schedule and
the Preferred Stock Purchase Rights (the "Company Rights") issued pursuant to
the Company Rights Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Company Subsidiary or obligating
the Company or any Company Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any Company Subsidiary.
All shares of Company Common Stock and Company Preferred Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or Company
Preferred Stock or any capital stock of any Company Subsidiary. Each
outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by the Company or another Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. Neither
the Company nor any Company Subsidiary directly or indirectly owns, or has
agreed to purchase or otherwise acquire, 5% or more of the capital stock of any
corporation, partnership, joint venture or other business association or entity,
assuming for such purpose the conversion of all securities convertible into such
capital stock held by the Company or any Company Subsidiary and the
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exercise of all warrants, options and other rights of the Company or any Company
Subsidiary to purchase such capital stock (other than the Company Subsidiaries
set forth in Section 3.01 of the Company Disclosure Schedule). There are no
material outstanding contractual obligations of the Company or any Company
Subsidiary to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Company Subsidiary or any other
Person. There are no voting trusts or other agreements or understandings to
which the Company or any Company Subsidiary is a party with respect to the
voting of capital stock of the Company or any Company Subsidiary.
SECTION 3.04 Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding shares of Company Common Stock, and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by IHK and Merger Sub, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or principles governing the
availability of equitable remedies).
(b) The Company's Board of Directors has approved the Offer, the Merger and
this Agreement, and such approval is sufficient to render inapplicable to the
Offer, the Merger and this Agreement and the transactions contemplated by this
Agreement the provisions of Section 203 of the DGCL. To the Knowledge of the
Company, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement or any of the
transactions contemplated by this Agreement.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company will not,
(i) conflict with or violate the Certificate of Incorporation or By-laws or
equivalent organizational documents of the Company or any Company Subsidiary,
(ii) assuming that all consents, approvals, authorizations and other actions
described in Section 3.05(b) have been obtained and all filings and obligations
described in Section 3.05(b) have been made, conflict with or violate any
foreign or domestic Law applicable to the Company or any Company Subsidiary or
by which any property or asset of the Company or any Company Subsidiary is bound
or affected, or (iii) result in any breach
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of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" Laws ("Blue Sky Laws"), the NYSE,
the Listing Market and state takeover Laws, the pre-merger notification
requirements of the HSR Act, and filing and recordation of appropriate merger
documents as required by the DGCL and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement, and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.06 Permits; Compliance. Each of the Company and the Company
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
Company Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would not, individually or in the aggregate, have a Company Material
Adverse Effect, and, as of the date hereof, no suspension or cancellation of any
of the Company Permits is pending or, to the Knowledge of the Company,
threatened, except where the failure to have, or the suspension or cancellation
of, any of the Company Permits would not, individually or in the aggregate, have
a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected, (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary is bound or affected
or (iii) any Company Permits, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by it with the SEC since October 1, 1995 (collectively, the "Company SEC
Reports"). The Company SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act, or the
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Exchange Act, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Company Subsidiary is required to file any form, report or other
document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Company SEC Reports (the "Company Financial
Statements"), (i) was prepared from the books of account and other financial
records of the Company and the consolidated Company Subsidiaries, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and (iii) presented
fairly, in all material respects, the consolidated financial position of the
Company and the consolidated Company Subsidiaries as at the respective dates
thereof and the results of their operations and their cash flows for the
respective periods indicated therein except as otherwise noted therein (subject,
in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Company Material Adverse Effect and the omission of
footnotes).
(c) The books of account and other financial records of the Company and the
Company Subsidiaries from which the Company Financial Statements were prepared:
(i) reflect all items of income and expense and all assets and liabilities
required to be reflected therein in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Company, (ii) are in all material
respects complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies and (iii) have been maintained in accordance with
good business and accounting practices.
(d) Except for liabilities and obligations reflected on the September 29,
1996 consolidated balance sheet of the Company (including the notes thereto),
liabilities and obligations disclosed in the Company SEC Reports filed prior to
the date of this Agreement and other liabilities and obligations incurred in the
ordinary course of business consistent with past practice since September 29,
1996, neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which, individually or in the aggregate, are or are reasonably likely to be
material to the Company and the Company Subsidiaries taken as a whole.
(e) The Company has heretofore furnished to IHK complete and correct copies
of (i) all agreements, documents and other instruments not yet filed by the
Company with the SEC but that are currently in effect and that the Company
expects to file with the SEC after the date of this Agreement and (ii) all
amendments and modifications that have not been filed by the Company with the
SEC to all agreements, documents and other instruments that previously have been
filed by the Company with the SEC and are currently in effect.
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SECTION 3.08 Absence of Certain Changes or Events. Since September
29, 1996, except as contemplated by this Agreement or as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, the Company and
the Company Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (a) any Company Material Adverse Effect, (b) any change by the
Company in its accounting methods, principles or practices, except as may be
required by U.S. GAAP, (c) any damage, destruction or loss (whether or not
covered by insurance) with respect to properties or assets of the Company or any
Company Subsidiary that, individually or in the aggregate, would result in a
Company Material Adverse Effect, (d) any declaration, setting aside or payment
of any dividend or distribution in respect of shares of Company Common Stock or
any redemption, purchase or other acquisition of any of its securities other
than the previously declared regular quarterly dividend of $0.0375 per share of
Company Common Stock, (e) any revaluation by the Company and the Company
Subsidiaries of any asset (including, without limitation, any writing down of
the value of inventory or writing off of notes or accounts receivable), other
than in the ordinary course of business consistent with past practice, (f) any
entry by the Company or any Company Subsidiary into any commitment or
transaction material to the Company and the Company Subsidiaries taken as a
whole, except in the ordinary course of business consistent with past practice,
(g) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
the Company or any Company Subsidiary, except in the ordinary course of business
consistent with past practice, (h) any acquisition or disposition by the Company
or any Company Subsidiary of any material asset, except in the ordinary course
of business consistent with past practice, (i) any incurrence, assumption or
guarantee of any indebtedness or obligation relating to any lending or borrowing
except current liabilities and commitments incurred in the ordinary course of
business consistent with past practice, or (j) any amendment, modification or
termination of any existing, or entering into any new, material contract, or any
material plan, lease, license, permit or franchise, except in the ordinary
course of business consistent with past practice.
SECTION 3.09 Absence of Litigation.
(a) Except as set forth in Section 3.09 of the Company Disclosure Schedule,
there is no litigation, suit, claim, action, proceeding or investigation pending
or, to the Knowledge of the Company, threatened against or affecting the Company
or any Company Subsidiary, or any property or asset of the Company or any
Company Subsidiary, before any court, arbitrator or Governmental Entity, which
(i) individually or in the aggregate has had or is reasonably likely to have a
Company Material Adverse Effect or (ii) seeks to delay or prevent the
consummation of the Offer or the Merger.
(b) Neither the Company nor any Company Subsidiary nor any property or
asset of the Company or any Company Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the Knowledge of the Company,
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continuing investigation by, any Governmental Entity, or any Order,
determination or award of any Governmental Entity or arbitrator having or
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 3.10 Employee Benefit Plans; Labor Matters.
(a) Section 3.10(a) of the Company Disclosure Schedule contains a true and
complete list of (i) all "employee benefit plans" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements to which the Company or any Company Subsidiary is a party, by which
the Company or any Company Subsidiary is bound, with respect to which the
Company or any Company Subsidiary has any obligation or which are maintained,
contributed to or sponsored by the Company or any Company Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Company Subsidiary and (ii) each employee benefit plan for which the Company
or any Company Subsidiary could incur liability under Section 4069 of ERISA, in
the event such plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Company or any Company Subsidiary remains secondarily
liable under Section 4204 of ERISA (collectively, the "Company Plans"). Each
Company Plan is in writing and the Company has previously made available to IHK
a true and complete copy of each Company Plan and a true and complete copy of
(1) each trust or other funding arrangement, (2) each summary plan description
and summary of material modifications, (3) the most recently filed Internal
Revenue Service ("IRS") Form 5500, (4) the most recently received IRS
determination letter for each such Company Plan, and (5) the most recently
prepared actuarial report and financial statement in connection with each such
Company Plan. Neither the Company nor any Company Subsidiary has any express or
implied commitment (I) to create, to incur liability with respect to, or to
cause to exist any other employee benefit plan, program or arrangement, (II) to
enter into any contract or agreement to provide compensation or benefits to any
individual or (III) to modify, change or terminate any Company Plan (other than
with respect to a modification, change or termination required by ERISA or the
Code).
(b) None of the Company Plans is a multiemployer plan, within the meaning
of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a single
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company or any Company Subsidiary could incur liability under Section
4063 or 4064 of ERISA (a "Multiple Employer Plan"). With respect to each Company
Plan, neither the Company nor any Company Subsidiary nor any trade or business,
whether or not incorporated (a "Company ERISA Affiliate") that together with the
Company or any Company Subsidiary would be deemed a "single employer" within the
meaning of Section 4001(b) of ERISA has made or suffered a "complete withdrawal"
or a "partial withdrawal" as such terms are respectively defined in Sections
4203 and 4205 of ERISA (or any liability resulting therefrom has been satisfied
in full). None of the Company Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any Person, (ii)
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obligates the Company or any Company Subsidiary to pay separation, severance,
termination or other benefits as a result of the Merger or (iii) obligates the
Company or any Company Subsidiary to make any payment or provide any benefit
that would be subject to a tax under Section 4999 of the Code. None of the
Company Plans provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary.
(c) Each Company Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS
that such Company Plan is so qualified and each trust established in connection
with any Company Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that such trust is so exempt. To the Company's Knowledge, no fact
or event has occurred since the date of any such determination letter from the
IRS that would adversely affect the qualified status of any such Company Plan or
the exempt status of any such trust. Each trust maintained or contributed to by
the Company or any Company Subsidiary which is intended to be qualified as a
voluntary employees' beneficiary association exempt from federal income taxation
under Sections 501(a) and 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and, to
the Company's Knowledge, no fact or event has occurred since the date of such
determination by the IRS that would adversely affect such qualified or exempt
status.
(d) To the Company's Knowledge, there has been no non-exempt prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Company Plan. Neither the Company nor any Company
Subsidiary is currently liable or has previously incurred any liability for any
tax or penalty (other than any tax or penalty that would not have a Company
Material Adverse Effect) arising under Section 4971, 4972, 4979, 4980 or 4980B
of the Code or Section 502(c) of ERISA, and to the Company's Knowledge, no fact
or event exists which would give rise to any such liability. Neither the
Company nor any Company Subsidiary has incurred any liability (other than any
liability that would not have a Company Material Adverse Effect) under, arising
out of or by operation of Title IV of ERISA that has not been satisfied in full
(other than liability for premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee pension
benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any
Multiemployer Plan or Multiple Employer Plan, and, to the Company's Knowledge,
no fact or event exists which would give rise to any such liability. No
complete or partial termination has occurred within the five years preceding the
date hereof with respect to any Company Plan. No reportable event (within the
meaning of Section 4043 of ERISA) for which the 30-day notice requirement to the
Pension Benefit Guaranty Corporation has not been waived has occurred or is
expected to occur with respect to any Company Plan subject to Title IV of ERISA.
No asset of the Company or any Company Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code; neither the
Company nor any Company Subsidiary has been required to post any security under
Section 307 of ERISA or Section 401(a)(29) of the
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Code; and no fact or event exists which would give rise to any such lien or
requirement to post any such security.
(e) Each Company Plan is now and has been operated in all respects in
accordance with the requirements of all applicable Laws, including, without
limitation, ERISA and the Code, except where any failure to so operate would not
have a Company Material Adverse Effect. No Company Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived. The Company's September 29,
1996 balance sheet reflects an accrual of all amounts of employer contributions
and premiums accrued but unpaid with respect to the Company Plans. With respect
to each Company Plan subject to Title IV of ERISA, the accumulated benefit
obligations of such Company Plan are set forth in the footnotes to the Company's
September 29, 1996 balance sheet.
(f) The Company and the Company Subsidiaries have not incurred any
liability under, and have complied in all respects with, the Worker Adjustment
and Retraining Notification Act and the regulations promulgated thereunder
("WARN") and do not reasonably expect to incur any such liability as a result of
actions taken or not taken prior to the Effective Time. Section 3.10(f) of the
Company Disclosure Schedule lists all notices given by the Company and the
Company Subsidiaries in connection with WARN.
(g) (i) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
Persons employed by the Company or any Company Subsidiary, nor, to the Knowledge
of the Company, are there any activities or proceedings of any labor union to
organize any such employees; (ii) except as would not have a Company Material
Adverse Effect, neither the Company nor any Company Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Company
Subsidiary under any such agreement or contract; (iii) there are no unfair labor
practice complaints pending against the Company or any Company Subsidiary before
the National Labor Relations Board or any current union representation questions
involving employees of the Company or any Company Subsidiary; and (iv) there is
no strike, slowdown, work stoppage or lockout, or, to the Knowledge of the
Company, threat thereof, by or with respect to any employees of the Company or
any Company Subsidiary. The consent of the labor unions which are parties to the
collective bargaining agreements listed in Section 3.10(g) of the Company
Disclosure Schedule is not required to consummate the Merger.
(h) The Board of Directors of the Company has, prior to its execution of
this Agreement, amended each of (i) the Company's Supplemental Executive
Retirement Plan, (ii) the Deferred Compensation Plan for Key Employees of
Michigan Sugar Company, (iii) the Deferred Compensation Plan for Key Employees
of the Company, as amended and restated as of August 12, 1983, and (iv) the
Deferred Compensation Plan for Key Employees of the Company, as amended and
restated as of August 1, 1990 (collectively, the "Company Executive Deferred
Compensation Plans"), to provide that neither the execution of this Agreement,
nor the consummation of the transactions contemplated by this Agreement, shall
constitute a "change in control" for purposes of
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such Company Executive Deferred Compensation Plans or otherwise will result in
the acceleration of vesting or payment of any benefit, or the triggering of any
ancillary or supplemental benefit or subsidy, under such plan. The Company has
the authority and power to amend the Company Executive Deferred Compensation
Plans as described in this Section 3.10(h) without limitation or restriction
with respect to any current participants or beneficiaries, and none of such
participants or beneficiaries shall have a valid claim in law or equity that
such amendment was not effective against them, or otherwise that they are
entitled to rights or benefits that would have accrued to them under such plans
had they not been so amended.
SECTION 3.11 Intellectual Property. "Intellectual Property Rights"
means trademarks, trademark rights, trade names, trade name rights, patents,
patent rights, industrial models, inventions, copyrights, service marks, trade
secrets, applications for trademarks and for service marks, know-how and other
proprietary rights and information. The Company and the Company Subsidiaries
own, or possess adequate licenses or other valid rights to use, all Intellectual
Property Rights used or held for use in connection with the business of the
Company and the Company Subsidiaries as currently conducted. The conduct of the
business of the Company and the Company Subsidiaries as currently conducted does
not and will not conflict in any way with any Intellectual Property Rights of
any third party that, individually or in the aggregate, would have a Company
Material Adverse Effect. To the Knowledge of the Company, there are no
infringements of an Intellectual Property Right owned by or licensed by or to
the Company or any Company Subsidiary that, individually or in the aggregate,
would have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary has licensed or otherwise permitted the use by any third
party of any Intellectual Property Rights on terms or in a manner which,
individually or in the aggregate, would have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary is in breach of any agreements
pursuant to which the Company or any Company Subsidiary has a license to use
Intellectual Property Rights, which breach has had or is reasonably likely to
have a Company Material Adverse Effect, and the Merger will not constitute such
a breach or otherwise reduce or impair, in any material respect, the rights of
the Company or any Company Subsidiary under such license agreements. No claims
are pending or, to the Knowledge of the Company, threatened by any Person with
respect to the ownership, validity or enforceability of any Intellectual
Property Rights owned by or licensed to or by the Company or any Company
Subsidiary or challenging or questioning the right of the Company or any Company
Subsidiary to use any Intellectual Property Rights, except claims that would
not, if determined adversely to the Company or any Company Subsidiary,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.12 Taxes. The Company and each of the Company Subsidiaries
have (a) filed all federal, state, local and foreign tax returns required to be
filed by them prior to the date of this Agreement (taking into account
extensions), (b) paid or accrued all taxes shown to be due on such returns and
have paid all applicable ad valorem and value added taxes as are due, and (c)
paid or accrued all taxes for which a notice of assessment or collection has
been received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of any failure to file such returns or to pay
or accrue such taxes which would not individually or in the aggregate,
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have a Company Material Adverse Effect. The Company has open years for federal
income tax returns and state income and franchise tax returns only as set forth
in the Section 3.12 of the Company Disclosure Schedule. The Company and each
Company Subsidiary have withheld or collected and paid over to the appropriate
Governmental Entity (or are properly holding for such payment) all taxes
required by Law to be withheld or collected. Neither the Company nor any
Company Subsidiary has made an election under Section 341(f) of the Code.
Except as set forth in Section 3.12 of the Company Disclosure Schedule, no
requests for waivers of the time to assess any taxes against the Company or any
Company Subsidiary have been granted or are pending, except for requests with
respect to such taxes that have been adequately reserved for in the most recent
financial statements contained in the Company SEC Reports, or, to the extent not
adequately reserved, the assessment of which would not, in the aggregate, have a
Company Material Adverse Effect. Except as set forth in Section 3.12 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary has
made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. As used in
this Agreement the term "taxes" includes all federal, state, local and foreign
income, franchise, property, sales, use, excise and other taxes, including
without limitation obligations for withholding taxes from payments due or made
to any other person and any interest, penalties or additions to tax.
SECTION 3.13 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) those substances
defined in or regulated under the following federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Clean Air Act; (B) petroleum and petroleum products including crude
oil and any fractions thereof; (C) natural gas, synthetic gas and any mixtures
thereof; (D) radon; (E) any other pollutant or contaminant; and (F) any
substance with respect to which a federal, state or local agency requires
environmental investigation, monitoring, reporting or remediation; and (ii)
"Environmental Laws" means any Law relating to (A) releases or threatened
releases of Hazardous Substances or materials containing Hazardous Substances;
(B) the manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (C)
otherwise relating to pollution of the environment or the protection of human
health and safety and natural resources.
(b) Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect: (i) neither the Company nor any Company Subsidiary has
violated or is in violation of any Environmental Law; (ii) none of the
properties owned or leased by the Company or any
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Company Subsidiary (including, without limitation, soils and surface and ground
waters) are contaminated with any Hazardous Substance; (iii) neither the Company
nor any Company Subsidiary is actually or potentially or, to the Knowledge of
the Company, allegedly liable for any off-site contamination; (iv) neither the
Company nor any Company Subsidiary is actually or potentially or, to the
Knowledge of the Company, allegedly liable under any Environmental Law
(including, without limitation, pending or threatened liens); (v) each of the
Company and each Company Subsidiary has all permits, licenses and other
authorizations required under any Environmental Law ("Company Environmental
Permits"); and (vi) each of the Company and each Company Subsidiary has always
been and is in compliance with its Company Environmental Permits.
SECTION 3.14 Products. Except as would not have a Company Material
Adverse Effect, (a) there have been no written notices, citations or decisions
by any Governmental Entity that any product produced, manufactured, marketed or
distributed by the Company or any Company Subsidiary (the "Company Products") is
defective or fails to meet any applicable standards promulgated by such
Governmental Entity, (b) the Company and the Company Subsidiaries have complied
with all Laws applicable to design, manufacture, labeling, testing and
inspection of Company Products, and (c) there have been no recalls ordered or,
to the knowledge of the Company, threatened by any Governmental Entity with
respect to any of the Company Products. Neither the Company nor any Company
Subsidiary has entered into any agreement or arrangement that limits or
otherwise restricts the Company or any Company Subsidiary or any successor
thereto, or that would limit IHK or any subsidiary thereof or any successor
thereto, from engaging or competing in any line of business or in any geographic
area.
SECTION 3.15 Properties and Assets; Real Property and Leases.
(a) The Company and the Company Subsidiaries have sufficient title to all
their respective properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(b) Set forth in Section 3.15(b) of the Company's Disclosure Schedule is a
true, correct and complete list (including a general description of the uses for
such real property) of all real property owned or leased by the Company and each
of the Company Subsidiaries.
(c) Except as would not have a Company Material Adverse Effect, each parcel
of real property owned or leased by the Company or any Company Subsidiary (i) is
owned or leased free and clear of all mortgages, pledges, liens, security
interests, conditional and installment sale agreements, encumbrances, charges or
other claims of third parties of any kind (collectively, "Liens"), other than
(A) Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Company Subsidiary consistent with past
practices and (D) all matters of record, Liens and other imperfections of title
and encumbrances (including, without limitation, (l) reservations
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specified in instruments of conveyance such as deeds and indentures, reserving
in favor of the grantor under such instrument ("Deed Reservations"), the right
to make or construct canals, cuts, sluice-ways, dikes and other works ("Waterway
Works") for the drainage or reclamation of any lands, (2) Deed Reservations for
the exclusive possession of a portion of the land on either side of such
Waterway Works, (3) Deed Reservations reserving an interest in mineral rights,
including without limitation, petroleum, petroleum products, phosphate minerals,
oil and gas, (4) any covenant or restriction pursuant to any deed or recorded
plat affecting the Property and (5) any other Deed Reservation) which,
individually or in the aggregate, would not adversely affect the use of the
property for its intended purpose (Liens described in clauses (A) through (D)
being referred to herein as "Permitted Liens"), and (ii) is neither subject to
any governmental decree or order to be sold nor is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the Knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(d) All leases of real property leased for the use or benefit of the
Company or any Company Subsidiary to which the Company or any Company Subsidiary
is a party or by which the Company or any Company Subsidiary is bound, and all
amendments and modifications thereto are in full force and effect and have not
been modified or amended, and there exists no default under any such lease by
the Company or any Company Subsidiary or any other party thereto, nor any event
which with notice or lapse of time or both would constitute a default thereunder
by the Company or any Company Subsidiary or any other party thereto, except as,
individually or in the aggregate, would not have a Company Material Adverse
Effect.
SECTION 3.16 Insurance. The Company and the Company Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms,
with such deductibles, and covering such risks, including fire and other risks
insured against by extended coverage, as is customarily carried by reasonably
prudent Persons conducting businesses or owning assets similar to those of the
Company and the Company Subsidiaries, and each has maintained in full force and
effect liability insurance against claims for personal injury or death or
property damage occurring in connection with the activities of the Company and
the Company Subsidiaries or any properties owned, occupied or controlled by the
Company or any Company Subsidiary in such amount as is customarily carried by
reasonably prudent Persons conducting businesses or owning assets similar to
those of the Company and the Company Subsidiaries. The Company and each of the
Company Subsidiaries may terminate each of its insurance policies or binders at
or after the Closing and will incur no penalties or other costs in doing so that
would, individually or in the aggregate, have a Company Material Adverse Effect.
None of such policies or binders was obtained through the use of false or
misleading information or the failure to provide the insurer with all
information requested in order to evaluate the liabilities and risks. There is
no material default with respect to any provision contained in any such policy
or binder, nor has the Company or any of the Company Subsidiaries failed to give
any material notice or present any material claim under any such policy or
binders in due and timely fashion. There are no billed but unpaid premiums past
due under any such policy or binder, the failure of which to be paid would
result in the cancellation of such policy or binder. Except as
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otherwise set forth in the Company SEC Reports or in Section 3.16 of the Company
Disclosure Schedule, (a) there are no outstanding claims in excess of normal
retentions that are not covered under any such policies or binders and, to the
Knowledge of the Company, there has not occurred any event that might
reasonably form the basis of any claim in excess of normal retentions that is
not covered against or relating to the Company or any of the Company
Subsidiaries that is not covered by any of such policies or binders; (b) no
notice of cancellation or non-renewal of any such policies or binders has been
received; and (c), except as set forth in Section 3.16 of the Company Disclosure
Schedule, there are no performance bonds outstanding with respect to the Company
or any of the Company Subsidiaries.
SECTION 3.17 Opinion of Financial Advisor. The Company has received a
fairness opinion of DLJ on the date of this Agreement and the Company will
promptly, upon the execution of this Agreement, deliver a copy of such opinion
to IHK.
SECTION 3.18 Vote Required. The only vote of the holders of any class
or series of capital stock of the Company necessary to approve this Agreement
and the transactions contemplated hereby is the affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock.
SECTION 3.19 Brokers. Except as set forth in Section 3.19 of the
Company's Disclosure Schedule, other than DLJ and The Robinson-Humphrey Company,
Inc. ("Robinson-Humphrey"), no broker, finder or investment banker is entitled
to a brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has heretofore made available to IHK a complete and correct copy of all
agreements between the Company and either DLJ or Robinson-Humphrey pursuant to
which such firms would be entitled to any payment relating to the Transactions.
SECTION 3.20 Company Rights Agreement. The Company Rights Agreement
has been amended (the "Company Rights Agreement Amendment") so as to provide
that neither IHK nor Merger Sub will become an "Acquiring Person" and that no
"Stock Acquisition Date" or "Distribution Date" (as such terms are defined in
the Company Rights Agreement) will occur as a result of the approval, execution
or delivery of this Agreement or the consummation of the transactions
contemplated hereby. In addition, the Company Rights Agreement contains no
exception from the definition of "Acquiring Person" for Flo-Sun Incorporated and
its Affiliates.
SECTION 3.21 Information Supplied. The Schedule 14D-9 and any other
documents to be filed by the Company with the SEC or any other governmental or
regulatory authority in connection with the Offer and the other transactions
contemplated hereby will not, on the date of its filing or, with respect to the
Schedule 14D-9, on the date it is filed with the SEC and first published, sent
or given to stockholders, 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, except that no representation is made by the
Company with respect to information supplied in writing by or on behalf of IHK
or
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Merger Sub expressly for inclusion therein and information incorporated by
reference therein from documents filed by IHK or Merger Sub with the SEC. The
Schedule 14D-9 and any such other documents filed by the Company with the SEC
under the Exchange Act or with any other Governmental Entity under applicable
law will comply as to form in all material respects with the requirements of the
Exchange Act or other applicable law, as the case may be. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents or the Registration Statement
on Form S-4 (together with all amendments thereto, the "Registration Statement")
to be filed with the SEC by IHK in connection with the issuance of shares of IHK
Common Stock in the Merger and as contemplated by Section 2.06 will at the time
the Registration Statement becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and none of the information supplied or to be
supplied by the Company and included or incorporated by reference in the Proxy
Statement (as defined in Section 6.02), as supplemented if necessary, will, at
the date mailed to stockholders of the Company, or at the time of the Company
Stockholder 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. If at any time prior to the time of such meeting, any
event with respect to the Company or any Company Subsidiary, or with respect to
other information supplied by the Company for inclusion in the Proxy Statement
or the Registration Statement, shall occur which is required to be described in
an amendment of, or a supplement to, the Proxy Statement or the Registration
Statement, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC. The Proxy Statement, insofar as it
relates to other information supplied by the Company for inclusion therein, will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
SECTION 3.22 Termination of Existing Merger Agreement. The Company
has terminated the Agreement and Plan of Merger dated as of July 14, 1997 among
XSF Holdings, Inc., DXE Merger Corp., the Company and Flo-Sun Incorporated (the
"Flo-Sun Agreement"), in accordance with the provisions thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IHK AND
MERGER SUB
Except as set forth in the Disclosure Schedule delivered by IHK and Merger
Sub concurrently with the execution of this Agreement (the "IHK Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), IHK
and Merger Sub, jointly and severally, hereby represent and warrant to the
Company that:
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SECTION 4.01 Organization and Qualification; Subsidiaries.
(a) Each of IHK and each subsidiary of IHK (an "IHK Subsidiary") is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have an IHK Material Adverse Effect (as defined below). IHK and
each IHK Subsidiary are duly qualified or licensed as a foreign corporation to
do business, and are in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by IHK and the respective IHK
Subsidiaries or the nature of their respective businesses makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have an IHK Material Adverse Effect. The term "IHK Material
Adverse Effect" means any adverse change, circumstance or effect that,
individually or in the aggregate with all other adverse changes, circumstances
and effects, is or is reasonably likely to be materially adverse to the
business, operations, assets, liabilities (including, without limitation,
contingent liabilities), financial condition or results of operations of IHK and
the IHK Subsidiaries taken as a whole. Section 4.01 of the IHK Disclosure
Schedule sets forth, as of the date of this Agreement, a true and complete list
of all of the IHK Subsidiaries, together with the jurisdiction of incorporation
of each IHK Subsidiary and the percentage of each IHK Subsidiary's outstanding
capital stock or other equity interests owned by IHK and the IHK Subsidiaries,
as the case may be, and the name of each other holder of any such outstanding
capital stock or other equity interests and the percentage so held with respect
to each such IHK Subsidiary. Except as set forth in Schedule 4.01 of the IHK
Disclosure Schedule, there are no partnerships or joint venture arrangements or
other business entities in which IHK or any IHK Subsidiary owns an equity
interest that are material to the business of IHK and the IHK Subsidiaries taken
as a whole.
(b) Merger Sub is a corporation duly incorporated, validly existing and in
good standing under the Laws of Delaware. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries. Except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Merger Sub has
not incurred, directly or indirectly, through any Subsidiary or Affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
From the date of this Agreement until the Effective Time, all of the outstanding
capital stock of Merger Sub will be owned directly by IHK.
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SECTION 4.02 Certificate of Incorporation and By-Laws. IHK has made
available to the Company complete and correct copies of its Articles of
Incorporation and By-Laws and the certificates of incorporation and by-laws or
other comparable charter or organizational documents of the IHK Subsidiaries, in
each case as amended to the date of this Agreement. IHK is not in violation of
any of the provisions of its Articles of Incorporation or By-Laws. Except as
would not have an IHK Material Adverse Effect, no IHK Subsidiary is in violation
of any of the provisions of its Certificate of Incorporation or By-Laws or other
comparable charter or organizational documents.
SECTION 4.03 Capitalization. The authorized capital stock of IHK
consists of 50,000,000 shares of IHK Common Stock and 5,000,000 shares of
preferred stock ("IHK Preferred Stock"). As of September 1, 1997, (i)
14,282,728 shares of IHK Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable; (ii) no shares of IHK Common
Stock are held in the treasury of IHK; (iii) 773,860 shares of IHK Common Stock
are reserved for future issuance pursuant to IHK Options and (iv) 333,334 shares
of IHK Preferred Stock are reserved for issuance pursuant to the IHK Rights
Agreement. Except for IHK Options heretofore granted pursuant to the IHK
Stock Option Plan as set forth in Section 4.03 of the IHK Disclosure Schedule or
pursuant to agreements or arrangements described in Section 4.03 of the IHK
Disclosure Schedule and the IHK Purchase Rights, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of IHK or any IHK Subsidiary or
obligating IHK or any IHK Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, IHK or any IHK Subsidiary. All shares
of IHK Common Stock and IHK Preferred Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding contractual obligations of IHK or
any IHK Subsidiary to repurchase, redeem or otherwise acquire any shares of IHK
Common Stock or IHK Preferred Stock or any capital stock of any IHK Subsidiary.
Each outstanding share of capital stock of each IHK Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and except as set forth
in Section 4.03 of the IHK Disclosure Schedule each such share owned by IHK or
another IHK Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
IHK's or such other IHK Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever. Neither IHK nor any IHK Subsidiary
directly or indirectly owns, or has agreed to purchase or otherwise acquire, 5%
or more of the capital stock of any corporation, partnership, joint venture or
other business association or entity, assuming for such purpose the conversion
of all securities convertible into such capital stock held by IHK or any IHK
Subsidiary and the exercise of all warrants, options and other rights of IHK or
any IHK Subsidiary to purchase such capital stock (other than the IHK
Subsidiaries set forth in Section 4.01 of the IHK Disclosure Schedule). Except
as set forth in Section 4.03 of the IHK Disclosure Schedule, there are no
material outstanding contractual obligations of IHK or any IHK Subsidiary to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any IHK Subsidiary or any other Person. Except
for the Investor Agreement dated August 27, 1996, among IHK, Greencore Group plc
and Earlsfort Holdings B.V., there are no voting trusts or other agreements or
understandings to which IHK or any IHK Subsidiary is a party with respect to the
voting of capital stock of IHK or any IHK Subsidiary.
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SECTION 4.04 Authority Relative to this Agreement. IHK and Merger Sub
have all necessary corporate power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by IHK and Merger Sub and the consummation by IHK and Merger Sub of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part of
IHK or Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of the issuance of the Stock Consideration by the holders of a majority
of the shares of IHK Common Stock voted at the IHK Shareholders' Meeting (as
defined in Section 6.01(b)), and the filing and recordation of appropriate
merger documents as required by the DGCL). This Agreement has been duly and
validly executed and delivered by IHK and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of IHK and Merger Sub, enforceable against them in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or principles governing the availability
of equitable remedies).
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by IHK and Merger Sub will
not, (i) conflict with or violate the Articles of Incorporation or By-laws or
equivalent organizational documents of IHK, Merger Sub or any other IHK
Subsidiary, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 4.05(b) have been obtained and all filings and
obligations described in Section 4.05(b) have been made, conflict with or
violate any foreign or domestic Law applicable to IHK, Merger Sub or any other
IHK Subsidiary or by which any property or asset of IHK, Merger Sub or any other
IHK Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of IHK, Merger Sub or any other
IHK Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have an IHK Material Adverse Effect.
(b) The execution and delivery of this Agreement by IHK and Merger Sub do
not, and the performance of this Agreement by IHK and Merger Sub will not
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws, the Listing Market and
state takeover Laws, the pre-merger notification requirements of the HSR Act,
and filing and recordation of appropriate merger documents as required by the
DGCL and (ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent IHK or Merger Sub from
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performing their respective obligations under this Agreement, and would not,
individually or in the aggregate, have an IHK Material Adverse Effect.
SECTION 4.06 Permits; Compliance. Each of IHK and the IHK Subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for IHK or any IHK Subsidiary to own, lease
and operate its properties or to carry on its business as it is now being
conducted (the "IHK Permits"), except where the failure to have, or the
suspension or cancellation of, any of the IHK Permits would not, individually or
in the aggregate, have an IHK Material Adverse Effect, and, as of the date
hereof, no suspension or cancellation of any of the IHK Permits is pending or,
to the Knowledge of IHK, threatened, except where the failure to have, or the
suspension or cancellation of, any of the IHK Permits would not, individually or
in the aggregate, have an IHK Material Adverse Effect. Neither IHK nor any IHK
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to IHK or any IHK Subsidiary or by which any property or asset of IHK
or any IHK Subsidiary is bound or affected, (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which IHK or any IHK Subsidiary is a party or by
which IHK or any IHK Subsidiary or any property or asset of IHK or any IHK
Subsidiary is bound or affected or (iii) any IHK Permits, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have an IHK Material Adverse Effect.
SECTION 4.07 SEC Filings; Financial Statements.
(a) IHK has filed all forms, reports and documents required to be filed by
it with the SEC since March 31, 1995 (collectively, the "IHK SEC Reports"). The
IHK SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. No IHK Subsidiary is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the IHK SEC Reports (the "IHK Financial
Statements"), (i) was prepared from the books of account and other financial
records of IHK and the consolidated IHK Subsidiaries, (ii) was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and (iii) presented
fairly, in all material respects, the consolidated financial position of IHK and
the consolidated IHK Subsidiaries as at the respective dates thereof and the
results of their operations and their cash flows for the respective periods
indicated therein except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have an IHK
Material Adverse Effect and the omission of footnotes).
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(c) The books of account and other financial records of IHK and the IHK
Subsidiaries from which the IHK Financial Statements were prepared: (i) reflect
all items of income and expense and all assets and liabilities required to be
reflected therein in accordance with U.S. GAAP applied on a basis consistent
with the past practices of IHK, (ii) are in all material respects complete and
correct, and do not contain or reflect any material inaccuracies or
discrepancies and (iii) have been maintained in accordance with good business
and accounting practices.
(d) Except for liabilities and obligations reflected on the March 31, 1997
consolidated balance sheet of IHK (including the notes thereto), liabilities and
obligations disclosed in the IHK SEC Reports filed prior to the date of this
Agreement and other liabilities and obligations incurred in the ordinary course
of business consistent with past practice since March 31, 1997, neither IHK nor
any IHK Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, are or are reasonably likely to be material to IHK and the IHK
Subsidiaries taken as a whole.
(e) IHK has heretofore furnished to the Company complete and correct copies
of (i) all agreements, documents and other instruments not yet filed by IHK with
the SEC but that are currently in effect and that IHK expects to file with the
SEC after the date of this Agreement and (ii) all amendments and modifications
that have not been filed by IHK with the SEC to all agreements, documents and
other instruments that previously have been filed by IHK with the SEC and are
currently in effect.
SECTION 4.08 Absence of Certain Changes or Events. Since March 31,
1997, except as contemplated by this Agreement or as disclosed in the IHK SEC
Reports filed prior to the date of this Agreement, IHK and the IHK Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (a) any
IHK Material Adverse Effect, (b) any change by IHK in its accounting methods,
principles or practices, except as may be required by U.S. GAAP, (c) any damage,
destruction or loss (whether or not covered by insurance) with respect to
properties or assets of IHK or any IHK Subsidiary that, individually or in the
aggregate, would result in an IHK Material Adverse Effect, (d) any declaration,
setting aside or payment of any dividend or distribution in respect of shares of
IHK Common Stock or any redemption, purchase or other acquisition of any of its
securities other than the previously declared regular quarterly dividend of
$0.03 per share of IHK Common Stock, (e) any revaluation by IHK and the IHK
Subsidiaries of any asset (including, without limitation, any writing down of
the value of inventory or writing off of notes or accounts receivable), other
than in the ordinary course of business consistent with past practice, (f) any
entry by IHK or any IHK Subsidiary into any commitment or transaction material
to IHK and the IHK Subsidiaries taken as a whole, except in the ordinary course
of business consistent with past practice, (g) any increase in or establishment
of any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of IHK or any IHK Subsidiary, except in the ordinary course of business
consistent with past practice,
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(h) any acquisition or disposition by IHK or any IHK Subsidiary of any material
asset, except in the ordinary course of business consistent with past practice,
(i) any incurrence, assumption or guarantee of any indebtedness or obligation
relating to any lending or borrowing except current liabilities and commitments
incurred in the ordinary course of business consistent with past practice, or
(j) any amendment, modification or termination of any existing, or entering into
any new, material contract, or any material plan, lease, license, permit or
franchise, except in the ordinary course of business consistent with past
practice.
SECTION 4.09 Absence of Litigation.
(a) Except as set forth in Section 4.09 of the IHK Disclosure Schedule,
there is no litigation, suit, claim, action, proceeding or investigation pending
or, to the Knowledge of IHK, threatened against or affecting IHK or any IHK
Subsidiary, or any property or asset of IHK or any IHK Subsidiary, before any
court, arbitrator or Governmental Entity, which (i) individually or in the
aggregate has had or is reasonably likely to have an IHK Material Adverse Effect
or (ii) seeks to delay or prevent the consummation of the Merger.
(b) Neither IHK nor any IHK Subsidiary nor any property or asset of IHK or
any IHK Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
Knowledge of IHK, continuing investigation by, any Governmental Entity, or any
Order, determination or award of any Governmental Entity or arbitrator having or
reasonably likely to have, individually or in the aggregate, an IHK Material
Adverse Effect.
SECTION 4.10 Employee Benefit Plans; Labor Matters.
(a) Section 4.10(a) of the IHK Disclosure Schedule contains a true and
complete list of (i) all "employee benefit plans" (within the meaning of Section
3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements to which IHK or any IHK Subsidiary is a party, by which IHK or any
IHK Subsidiary is bound, with respect to which IHK or any IHK Subsidiary has any
obligation or which are maintained, contributed to or sponsored by IHK or any
IHK Subsidiary for the benefit of any current or former employee, officer or
director of IHK or any IHK Subsidiary and (ii) each employee benefit plan for
which IHK or any IHK Subsidiary could incur liability under Section 4069 of
ERISA, in the event such plan were terminated, or under Section 4212(c) of
ERISA, or in respect of which IHK or any IHK Subsidiary remains secondarily
liable under Section 4204 of ERISA (collectively, the "IHK Plans"). Each IHK
Plan is in writing and IHK has previously made available to the Company a true
and complete copy of each IHK Plan and a true and complete copy of (1) each
trust or other funding arrangement, (2) each summary plan description and
summary of material modifications, (3) the most recently filed IRS Form 5500,
(4) the most recently received IRS determination letter for each such IHK Plan,
and (5) the most recently prepared actuarial report and financial statement in
connection with each such IHK Plan.
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Neither IHK nor any IHK Subsidiary has any express or implied commitment (I) to
create, to incur liability with respect to, or to cause to exist any other
employee benefit plan, program or arrangement, (II) to enter into any contract
or agreement to provide compensation or benefits to any individual or (III) to
modify, change or terminate any IHK Plan (other than with respect to a
modification, change or termination required by ERISA or the Code).
(b) Each of the IHK Plans that is a Multiemployer Plan or a Multiple
Employer Plan is designated as such on Section 4.10(b) of the IHK Disclosure
Schedule and, with respect to each IHK Plan so designated, except as would not
have an IHK Material Adverse Effect: (i) neither IHK nor any IHK Subsidiary nor
any trade or business, whether or not incorporated (an "ERISA Affiliate") that
together with IHK or any IHK Subsidiary would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined in
Sections 4203 and 4205 of ERISA (or any liability resulting therefrom has been
satisfied in full), (ii) no event has occurred that presents a risk of a partial
withdrawal, (iii) neither IHK, nor any IHK Subsidiary, nor any ERISA Affiliate
has any contingent liability under Section 4204 of ERISA, and (iv) no
circumstances exist that present a risk that any such plan will go into
reorganization. With respect to Multiemployer Plans and Multiple Employer
Plans, except as would not have an IHK Material Adverse Effect, neither IHK nor
any IHK Subsidiary would incur withdrawal liability in the event of a complete
withdrawal within the meaning of Title IV of ERISA from any such Plan. None of
the IHK Plans (i) provides for the payment of separation, severance, termination
or similar-type benefits to any Person, (ii) obligates IHK or any IHK Subsidiary
to pay separation, severance, termination or other benefits as a result of the
Merger or (iii) obligates IHK or any IHK Subsidiary to make any payment or
provide any benefit that would be subject to a tax under Section 4999 of the
Code. None of the IHK Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of IHK or any IHK Subsidiary.
(c) Each IHK Plan which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS that such
IHK Plan is so qualified and each trust established in connection with any IHK
Plan which is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that such
trust is so exempt. To IHK's Knowledge, no fact or event has occurred since the
date of any such determination letter from the IRS that would adversely affect
the qualified status of any such IHK Plan or the exempt status of any such
trust. Each trust maintained or contributed to by the IHK or any IHK Subsidiary
which is intended to be qualified as a voluntary employees' beneficiary
association exempt from federal income taxation under Sections 501(a) and
501(c)(9) of the Code has received a favorable determination letter from the IRS
that it is so qualified and so exempt, and, to IHK's Knowledge, no fact or event
has occurred since the date of such determination by the IRS that would
adversely affect such qualified or exempt status.
(d) To IHK's Knowledge, there has been no non-exempt prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any IHK Plan. Neither IHK nor any IHK Subsidiary is currently liable
or has previously incurred any liability for
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any tax or penalty (other than any tax or penalty that would not have an IHK
Material Adverse Effect) arising under Section 4971, 4972, 4979, 4980 or 4980B
of the Code or Section 502(c) of ERISA, and to IHK's Knowledge, no fact or event
exists which would give rise to any such liability. Neither IHK nor any IHK
Subsidiary has incurred any liability (other than any liability that would not
have an IHK Material Adverse Effect) under, arising out of or by operation of
Title IV of ERISA that has not been satisfied in full (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee pension benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and, to IHK's Knowledge, no fact or event exists which would give
rise to any such liability. No complete or partial termination has occurred
within the five years preceding the date hereof with respect to any IHK Plan.
No reportable event (within the meaning of Section 4043 of ERISA) for which the
30-day notice requirement to the Pension Benefit Guaranty Corporation has not
been waived has occurred or is expected to occur with respect to any IHK Plan
subject to Title IV of ERISA. No asset of IHK or any IHK Subsidiary is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither IHK nor any IHK Subsidiary has been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the Code; and no
fact or event exists which would give rise to any such lien or requirement to
post any such security.
(e) Each IHK Plan is now and has been operated in all respects in
accordance with the requirements of all applicable Laws, including, without
limitation, ERISA and the Code, except where any failure to so operate would not
have an IHK Material Adverse Effect. No IHK Plan has incurred an "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived. IHK's March 31, 1997 balance sheet
reflects an accrual of all amounts of employer contributions and premiums
accrued but unpaid with respect to the IHK Plans. With respect to each IHK Plan
subject to Title IV of ERISA, the accumulated benefit obligations of such IHK
Plan are set forth in the footnotes to IHK's March 31, 1997 balance sheet.
(f) IHK and the IHK Subsidiaries have not incurred any liability under, and
have complied in all respects with, WARN and do not reasonably expect to incur
any such liability as a result of actions taken or not taken prior to the
Effective Time.
(g) (i) Except as set forth in Section 4.10(g) of the IHK Disclosure
Schedule, neither IHK nor any IHK Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to Persons
employed by IHK or any IHK Subsidiary, nor, to the Knowledge of IHK, are there
any activities or proceedings of any labor union to organize any such employees;
(ii) except as would not have an IHK Material Adverse Effect, neither IHK nor
any IHK Subsidiary has breached or otherwise failed to comply with any provision
of any such agreement or contract and there are no grievances outstanding
against IHK or any IHK Subsidiary under any such agreement or contract; (iii)
there are no unfair labor practice complaints pending against IHK or any IHK
Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of IHK or any IHK Subsidiary; and
(iv) there is no strike, slowdown, work stoppage or lockout, or, to the
Knowledge of IHK, threat thereof, by or with respect to any
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employees of IHK or any IHK Subsidiary. The consent of the labor unions which
are parties to the collective bargaining agreements listed in Section 4.10(g) of
the IHK Disclosure Schedule is not required to consummate the Merger.
SECTION 4.11 Intellectual Property. IHK and the IHK Subsidiaries own,
or possess adequate licenses or other valid rights to use, all Intellectual
Property Rights used or held for use in connection with the business of IHK and
the IHK Subsidiaries as currently conducted. The conduct of the business of IHK
and the IHK Subsidiaries as currently conducted does not and will not conflict
in any way with any Intellectual Property Rights of any third party that,
individually or in the aggregate, would have an IHK Material Adverse Effect. To
the Knowledge of IHK, there are no infringements of an Intellectual Property
Right owned by or licensed by or to IHK or any IHK Subsidiary that, individually
or in the aggregate, would have an IHK Material Adverse Effect. Neither IHK nor
any IHK Subsidiary has licensed or otherwise permitted the use by any third
party of any Intellectual Property Rights on terms or in a manner which,
individually or in the aggregate, would have an IHK Material Adverse Effect.
Neither IHK nor any IHK Subsidiary is in breach of any agreements pursuant to
which IHK or any IHK Subsidiary has a license to use Intellectual Property
Rights, which breach has had or is reasonably likely to have an IHK Material
Adverse Effect, and the Merger will not constitute such a breach or otherwise
reduce or impair, in any material respect, the rights of IHK or any IHK
Subsidiary under such license agreements. No claims are pending or, to the
Knowledge of IHK, threatened by any Person with respect to the ownership,
validity or enforceability of any Intellectual Property Rights owned by or
licensed to or by IHK or any IHK Subsidiary or challenging or questioning the
right of IHK or any IHK Subsidiary to use any Intellectual Property Rights,
except claims that would not, if determined adversely to IHK or any IHK
Subsidiary, individually or in the aggregate, have an IHK Material Adverse
Effect.
SECTION 4.12 Taxes. IHK and each of the IHK Subsidiaries have (a)
filed all federal, state, local and foreign tax returns required to be filed by
them prior to the date of this Agreement (taking into account extensions), (b)
paid or accrued all taxes shown to be due on such returns and have paid all
applicable ad valorem and value added taxes as are due, and (c) paid or accrued
all taxes for which a notice of assessment or collection has been received
(other than amounts being contested in good faith by appropriate proceedings),
except in the case of any failure to file such returns or to pay or accrue such
taxes which would not individually or in the aggregate, have an IHK Material
Adverse Effect. IHK has open years for federal income tax returns and state
income and franchise tax returns only as set forth in the Section 4.12 of the
IHK Disclosure Schedule. IHK and each IHK Subsidiary have withheld or collected
and paid over to the appropriate Governmental Entity (or are properly holding
for such payment) all taxes required by Law to be withheld or collected.
Neither IHK nor any IHK Subsidiary has made an election under Section 341(f) of
the Code. No requests for waivers of the time to assess any taxes against IHK
or any IHK Subsidiary have been granted or are pending, except for requests with
respect to such taxes that have been adequately reserved for in the most recent
financial statements contained in the IHK SEC Reports, or, to the extent not
adequately reserved, the assessment of which would not, in the aggregate, have
an IHK Material Adverse Effect. Except as set forth in Section 4.12 of the IHK
Disclosure Schedule, neither IHK nor any IHK Subsidiary has made any payments,
is obligated to make any payments,
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or is a party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Section 280G of the
Code. As used in this Agreement the term "taxes" includes all federal, state,
local and foreign income, franchise, property, sales, use, excise and other
taxes, including without limitation obligations for withholding taxes from
payments due or made to any other person and any interest, penalties or
additions to tax.
SECTION 4.13 Environmental Matters. Except as would not, individually
or in the aggregate, have an IHK Material Adverse Effect: (i) neither IHK nor
any IHK Subsidiary has violated or is in violation of any Environmental Law;
(ii) none of the properties owned or leased by IHK or any IHK Subsidiary
(including, without limitation, soils and surface and ground waters) are
contaminated with any Hazardous Substance; (iii) neither IHK nor any IHK
Subsidiary is actually or potentially or, to the Knowledge of IHK, allegedly
liable for any off-site contamination; (iv) neither IHK nor any IHK Subsidiary
is actually or potentially or, to the Knowledge of IHK, allegedly liable under
any Environmental Law (including, without limitation, pending or threatened
liens); (v) each of IHK and each IHK Subsidiary has all permits, licenses and
other authorizations required under any Environmental Law ("IHK Environmental
Permits"); and (vi) each of IHK and each IHK Subsidiary has always been and is
in compliance with its IHK Environmental Permits.
SECTION 4.14 Products. Except as would not have an IHK Material
Adverse Effect, (a) there have been no written notices, citations or decisions
by any Governmental Entity that any product produced, manufactured, marketed or
distributed by IHK or any IHK Subsidiary (the "IHK Products") is defective or
fails to meet any applicable standards promulgated by such Governmental Entity,
(b) IHK and the IHK Subsidiaries have complied with all Laws applicable to
design, manufacture, labeling, testing and inspection of IHK Products, and (c)
there have been no recalls ordered or, to the knowledge of IHK, threatened by
any Governmental Entity with respect to any of the IHK Products. Neither IHK
nor any IHK Subsidiary has entered into any agreement or arrangement that limits
or otherwise restricts IHK or any IHK Subsidiary or any successor thereto, or
that would limit IHK or any subsidiary thereof or any successor thereto, from
engaging or competing in any line of business or in any geographic area.
SECTION 4.15 Properties and Assets; Real Property and Leases.
(a) IHK and the IHK Subsidiaries have sufficient title to all their
respective properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have an IHK Material
Adverse Effect.
(b) Set forth in Section 4.15(b) of IHK's Disclosure Schedule is a true,
correct and complete list (including a general description of the uses for such
real property) of all real property owned or leased by IHK and each of the IHK
Subsidiaries.
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(c) Except as would not have an IHK Material Adverse Effect, each parcel of
real property owned or leased by IHK or any IHK Subsidiary (i) is owned or
leased free and clear of all Liens, other than (A) Liens for current taxes and
assessments not yet past due, (B) inchoate mechanics' and materialmen's Liens
for construction in progress, (C) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of IHK or such IHK
Subsidiary consistent with past practices and (D) all matters of record, Liens
and other imperfections of title and encumbrances (including, without
limitation, Deed Reservations), (2) Deed Reservations reserving an interest in
mineral rights, including without limitation, petroleum, petroleum products,
phosphate minerals, oil and gas, (3) any covenant or restriction pursuant to any
deed or recorded plat affecting the Property and (4) any other Deed Reservation)
which, individually or in the aggregate, would not adversely affect the use of
the property for its intended purpose, and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the Knowledge of IHK, has any such condemnation,
expropriation or taking been proposed.
(d) All leases of real property leased for the use or benefit of IHK or any
IHK Subsidiary to which IHK or any IHK Subsidiary is a party or by which IHK or
any IHK Subsidiary is bound, and all amendments and modifications thereto are in
full force and effect and have not been modified or amended, and there exists no
default under any such lease by IHK or any IHK Subsidiary or any other party
thereto, nor any event which with notice or lapse of time or both would
constitute a default thereunder by IHK or any IHK Subsidiary or any other party
thereto, except as, individually or in the aggregate, would not have an IHK
Material Adverse Effect.
SECTION 4.16 Insurance. IHK and the IHK Subsidiaries have obtained and
maintained in full force and effect insurance with responsible and reputable
insurance companies or associations in such amounts, on such terms, with such
deductibles, and covering such risks, including fire and other risks insured
against by extended coverage, as is customarily carried by reasonably prudent
Persons conducting businesses or owning assets similar to those of IHK and the
IHK Subsidiaries, and each has maintained in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with the activities of IHK and the IHK
Subsidiaries or any properties owned, occupied or controlled by IHK or any IHK
Subsidiary in such amount as is customarily carried by reasonably prudent
Persons conducting businesses or owning assets similar to those of IHK and the
IHK Subsidiaries. IHK and each of the IHK Subsidiaries may terminate each of
its insurance policies or binders at or after the Closing and will incur no
material penalties or other material costs in doing so. None of such policies
or binders was obtained through the use of false or misleading information or
the failure to provide the insurer with all information requested in order to
evaluate the liabilities and risks. There is no material default with respect
to any provision contained in any such policy or binder, nor has IHK or any of
the IHK Subsidiaries failed to give any material notice or present any material
claim under any such policy or binders in due and timely fashion. There are no
billed but unpaid premiums past due under any such policy or binder, the failure
of which to be paid would result in the cancellation of such policy or binder.
Except as otherwise set forth in the IHK SEC Reports or in Schedule 4.16 of
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the IHK Disclosure Schedule, (a) there are no outstanding claims in excess of
normal retentions that are not covered under any such policies or binders and,
to the Knowledge of IHK, there has not occurred any event that might reasonably
form the basis of any claim in excess of normal retentions that is not covered
against or relating to IHK or any of the IHK Subsidiaries that is not covered by
any of such policies or binders; (b) no notice of cancellation or non-renewal of
any such policies or binders has been received; and (c) there are no performance
bonds outstanding with respect to IHK or any of the IHK Subsidiaries.
SECTION 4.17 Opinion of Financial Advisor. IHK has received a
fairness opinion of Lehman Brothers Inc. ("Lehman Brothers") on the date of this
Agreement and IHK will promptly, upon the execution of this Agreement by the
Company, deliver a copy of such opinion to the Company.
SECTION 4.18 Vote Required. The only vote of the holders of any class
or series of capital stock of IHK necessary to approve the transactions
contemplated by this Agreement is the approval of the issuance of the Stock
Consideration by the affirmative vote of the holders of a majority of the shares
of IHK Common Stock voted at the IHK Shareholders' Meeting (as defined in
Section 6.01(b)).
SECTION 4.19 Brokers. Except as set forth in Section 4.19 of the IHK
Disclosure Schedule, other than Lehman Brothers, no broker, finder or investment
banker is entitled to a brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of IHK.
IHK has heretofore made available to the Company a complete and correct copy of
all agreements between IHK and Lehman Brothers pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 4.20 Information Supplied.
(a) The Offer Documents and any other documents to be filed by IHK and
Merger Sub with the SEC or any other governmental or regulatory authority in
connection with the Offer and the other transactions contemplated hereby will
not, on the date of its filing or, with respect to the Offer Documents, on the
date they are filed with the SEC and first published, sent or given to
stockholders of the Company and the date shares of Company Common Stock are
purchased pursuant to the Offer, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by IHK or Merger Sub with respect to information supplied
in writing by or on behalf of the Company expressly for inclusion therein and
information incorporated by reference therein from documents filed by the
Company or any of the Company Subsidiaries with the SEC. The Offer Documents
and any other such documents filed by IHK or Merger Sub with the SEC under the
Exchange Act or with any other governmental or regulatory authority under
applicable law will comply as to form in all material respects with the
requirements of the Exchange Act or applicable law, as the case may be.
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(b) Neither the information supplied or to be supplied in writing by or on
behalf of IHK or Merger Sub for inclusion, nor the information incorporated by
reference from documents filed by IHK or any of the IHK Subsidiaries including
Merger Sub, with the SEC, in the Schedule 14D-9, or any other documents to be
filed by IHK or Merger Sub or the Company with the SEC or any other governmental
or regulatory authority in connection with the Offer and the other transactions
contemplated hereby will on the date of its filing or, with respect to the
Schedule 14D-9, on the date it is filed with the SEC and first published, sent
or given to stockholders of the Company, contains any untrue statement of a
material fact or omit to state any material fact required to be stated therein,
in light of the circumstances under which they are made, not misleading.
(c) None of the information supplied or to be supplied by IHK for inclusion
or incorporation by reference in the Registration Statement will at the time the
Registration Statement becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and none of the information supplied or to be
supplied by IHK and included or incorporated by reference in the Proxy
Statement, as supplemented if necessary, will, at the date mailed to
shareholders of IHK, or at the time of the IHK Shareholders 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. If at any
time prior to the time of such meeting, any event with respect to IHK or any IHK
Subsidiary, or with respect to other information supplied by IHK for inclusion
in the Proxy Statement or the Registration Statement, shall occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the Registration Statement, such event shall be so described, and
such amendment or supplement shall be promptly filed with the SEC. The Proxy
Statement, insofar as it relates to other information supplied by IHK for
inclusion therein, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 4.21 Financing. In connection with the transactions
contemplated by this Agreement, Lehman Brothers Commercial Paper Inc. ("LBCPI")
has issued a commitment letter (the "Lehman Brothers Commitment") to IHK, a true
and correct copy of which has been delivered to the Company, for funds which,
together with cash available to IHK, will enable IHK (or cause Merger Sub) to
(a) pay the Offer Price pursuant to the Offer, (b) pay the Cash Consideration
pursuant to the Merger, (c) refinance such of its existing indebtedness as shall
be necessary to consummate the Offer and the Merger and the financing therefor
and provide working capital prior to the Effective Time and (d) pay related fees
and expenses. Upon consummation of the Offer, IHK will provide funds obtained
from the Lehman Brothers Commitment to Merger Sub sufficient to pay for all
amounts described above.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, except as set forth in Section 5.01 of the Company
Disclosure Schedule or as specifically contemplated by any other provision of
this Agreement, unless IHK shall otherwise agree in writing:
(a) the Company and the Company Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and shall
use commercially reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business dealings with
them to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective Time; provided, however, that no action by the
Company or any Company Subsidiary specifically permitted by any other provision
of this Section 5.01 shall be deemed a breach of this Section 5.01(a);
(b) neither the Company nor any Company Subsidiary shall amend or otherwise
change its Certificate of Incorporation or By-Laws or equivalent organizational
documents;
(c) neither the Company nor any Company Subsidiary shall issue, sell,
pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of, (i) any shares of capital stock of the
Company or any Company Subsidiary of any class or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any Company Subsidiary (except for (A)
the issuance of a maximum of 200,000 shares of Company Common Stock issuable
pursuant to Company Options outstanding on the date hereof in accordance with
the terms thereof and (B) issuances by a direct or indirect wholly owned
subsidiary of the Company of capital stock to such subsidiary's parent) or (ii)
any assets of the Company or any Company Subsidiary, except in the ordinary
course of business and in a manner consistent with past practice;
(d) neither the Company nor any Company Subsidiary shall declare, set
aside, make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock, other than (i)
any regular quarterly dividends declared and paid in accordance with past
practice and not in excess of $0.0375 per share of Company Common Stock and (ii)
dividends by a direct or indirect wholly owned subsidiary of the Company to such
subsidiary's parent;
(e) neither the Company nor any Company Subsidiary shall reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock,
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except for any such transaction by a wholly owned subsidiary of the Company
that remains a wholly owned subsidiary of the Company after the consummation of
such transaction;
(f) neither the Company nor any Company Subsidiary shall (i) acquire or
dispose of (including, without limitation, by merger, consolidation,
acquisition or disposition of stock or assets, or by liquidation or dissolution)
any interest in any corporation, partnership, other business organization or any
division thereof or any assets, other than the acquisition or disposition of
assets in the ordinary course of business consistent with past practice and any
other acquisitions for consideration which is not, in the aggregate, in excess
of $10,000,000 and any other dispositions for consideration which is not, in the
aggregate, in excess of $10,000,000; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except for (A) indebtedness incurred in the ordinary
course of business and consistent with past practice, (B) indebtedness of the
Company to a direct or indirect wholly owned Company Subsidiary or indebtedness
of a direct or indirect wholly owned Company Subsidiary to the Company or
another direct or indirect wholly owned Company Subsidiary and (C) other
indebtedness with a maturity of not more than one year incurred in the ordinary
course of business consistent with past practice; (iii) enter into, amend or
terminate any contract or agreement material to the business, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as a whole other than in the ordinary course of business, consistent with
past practice; (iv) authorize any capital expenditure, other than capital
expenditures for the Company and the Company Subsidiaries as a whole, in an
aggregate amount not exceeding the sum of (A) the amount provided in the capital
expenditure budget for the fiscal year ending September 28, 1997 previously
provided to IHK and (B) $5,000,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this subsection (f);
(g) neither the Company nor any Company Subsidiary shall (i) increase the
compensation payable or to become payable to its officers or employees, except
for increases in accordance with past practices in salaries or wages of
employees of the Company or any Company Subsidiary who are not officers of the
Company, or (ii) except pursuant to existing policies and agreements, grant any
severance or termination pay to any director, officer or other employee of the
Company or any Company Subsidiary, or (iii) enter into or amend any employment
or severance agreement with any director, officer or other employee of the
Company or any Company Subsidiary or (iv) establish, adopt, enter into, extend,
amend or terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other agreement, trust,
fund, policy or arrangement for the benefit of any director, officer or
employee;
(h) neither the Company nor any Company Subsidiary shall take any action,
other than as required by the SEC or by U.S. GAAP, with respect to accounting
policies or procedures (including, without limitation, procedures with respect
to the payment of accounts payable and collection of accounts receivable);
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(i) neither the Company nor any Company Subsidiary shall make any tax
election or settle or compromise any material federal, state, local or foreign
income tax liability;
(j) neither the Company nor any Company Subsidiary shall take any action
that would prevent or impede any party to this Agreement from obtaining any
consent or approval the receipt of which is a condition to the consummation of
the Offer or the Merger;
(k) neither the Company nor any Company Subsidiary shall enter into any
agreement or arrangement that would limit or otherwise restrict the Company or
any Company Subsidiary or any successor thereto or, after consummation of the
Merger, IHK or any subsidiary thereof or any successor thereto, from engaging or
competing in any line of business or in any geographic area;
(l) neither the Company nor any Company Subsidiary shall pay, discharge or
satisfy any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course business and consistent with past practice,
of liabilities reflected or reserved against in the September 29, 1996
consolidated balance sheet of the Company (including the notes thereto) or
subsequently incurred in the ordinary course of business and consistent with
past practice;
(m) neither the Company nor any Company Subsidiary shall take any action
that would result in (i) any of the representations or warranties of the Company
set forth in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that are not so qualified
becoming untrue in any material respect or (iii) except as otherwise permitted
by Section 6.05, any of the conditions to the Offer set forth in Annex A or the
conditions to the Merger set forth in Article VII not being satisfied; and
(n) neither the Company nor any Company Subsidiary shall authorize or enter
into an agreement to do anything prohibited by Sections 5.01(b) through (m).
SECTION 5.02 Conduct of Business by IHK and the IHK Subsidiaries
Pending the Merger. Except with respect to any action taken to incur
indebtedness to fund the Offer, the Cash Consideration and any expenses incurred
in connection therewith and to fund working capital requirements in the ordinary
course of business prior to the Effective Time, IHK covenants and agrees that,
between the date of this Agreement and the Effective Time, except as set forth
in Section 5.02 of the IHK Disclosure Schedule or as specifically contemplated
by any other provision of this Agreement, unless the Company shall otherwise
agree in writing:
(a) IHK and the IHK Subsidiaries shall carry on their respective businesses
in the usual, regular and ordinary course in all material respects, in
substantially the same manner as heretofore conducted, and shall use
commercially reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business dealings with
them to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective Time; provided, however,
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that no action by IHK or any IHK Subsidiary specifically permitted by any other
provision of this Section 5.02 shall be deemed a breach of is Section 5.02(a);
(b) Neither IHK nor any IHK Subsidiary shall amend or otherwise change its
Articles of Incorporation or By-Laws or equivalent organizational documents;
(c) Neither IHK nor any IHK Subsidiary shall issue, sell, pledge, dispose
of, grant or encumber, or authorize the issuance, sale, pledge, disposition,
grant or encumbrance of, (i) any shares of capital stock of IHK or any IHK
Subsidiary of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest),
of IHK or any IHK Subsidiary (except for (A) the issuance of a maximum of
590,870 shares of IHK Common Stock pursuant to the IHK Option Plan, (B) pursuant
to the IHK Employee Stock Purchase Plan and (C) issuances by a direct or
indirect wholly owned subsidiary of IHK of capital stock to such subsidiary's
parent or (ii) any assets of IHK or any IHK Subsidiary, except in the ordinary
course of business and in a manner consistent with past practice;
(d) Neither IHK nor any IHK Subsidiary shall declare, set aside, make or
pay any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock, other than (i) any
quarterly dividends declared and paid in accordance with past practice and not
in excess of $0.03 per share of IHK Common Stock and (ii) such dividends by a
direct or indirect wholly owned subsidiary of IHK to such subsidiary's parent;
(e) Neither IHK nor any IHK Subsidiary shall reclassify, combine, split,
subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any
of its capital stock, except for any such transaction by a direct or indirect
wholly owned subsidiary of IHK that remains a wholly-owned subsidiary of IHK
after the consummation of such transaction;
(f) Neither IHK nor any IHK Subsidiary shall (i) acquire or dispose of
(including, without limitation, by merger, consolidation, or acquisition or
disposition of stock or assets, or by liquidation or dissolution) any interest
in any corporation, partnership, other business organization or any division
thereof or any assets, other than the acquisition or disposition of assets in
the ordinary course of business consistent with past practice and any other
acquisitions for consideration which is not, in the aggregate, in excess of
$10,000,000 and any other dispositions for consideration which is not, in the
aggregate, in excess of $10,000,000; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except for (A) indebtedness incurred in the ordinary
course of business and consistent with past practice, (B) indebtedness of IHK to
a direct or indirect wholly owned IHK Subsidiary or indebtedness of IHK or a
direct or indirect wholly owned IHK Subsidiary to another direct or indirect
wholly owned IHK Subsidiary, (C) other indebtedness with a maturity of not more
than one year incurred in the ordinary course of business consistent with past
practice and (D) indebtedness to fund the Offer and the Cash Consideration and
the expenses incurred in connection therewith and
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to refinance the Company's and IHK's existing indebtedness; (iii) enter into,
amend or terminate any contract or agreement material to the business, results
of operations or financial condition of IHK and the IHK Subsidiaries taken as a
whole other than in the ordinary course of business, consistent with past
practice; (iv) authorize any capital expenditure, other than capital
expenditures for IHK and the IHK Subsidiaries as a whole, in an aggregate ate
amount not exceeding the sum of (A) the amount provided in the capital
expenditure budget for the fiscal year ending March 31, 1998 previously provided
to the Company and (B) $5,000,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this subsection (f);
(g) Neither IHK nor any IHK Subsidiary shall (i) increase the compensation
payable or to become payable to its officers or employees, except for increases
in accordance with past practices in salaries or wages of employees of IHK or
any IHK Subsidiary who are not officers of IHK, or (ii) except pursuant to
existing policies and agreements, grant any severance or termination pay to any
director, officer or other employee of IHK or any IHK Subsidiary, or (iii)
except for change of control agreements specified in Section 5.02(g) of the IHK
Disclosure Schedule enter into or amend any employment or severance agreement
with any director, officer or other employee of IHK or any IHK Subsidiary or
(iv) establish, adopt enter into, extend, amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(h) Neither IHK nor any IHK Subsidiary shall take any action, other than as
required by the SEC or U.S. GAAP, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivable);
(i) Neither IHK nor any IHK Subsidiary shall make any tax election or
settle or compromise any material federal, state, local or foreign income tax
liability;
(j) Neither IHK nor any IHK Subsidiary shall take any action that would
prevent or impede any party to this Agreement from obtaining any consent or
approval the receipt of which is a condition to the consummation of the Offer or
the Merger;
(k) Neither IHK nor any IHK Subsidiary shall enter into any agreement or
arrangement that would limit or otherwise restrict IHK or any IHK Subsidiary or
any successor thereto, after the consummation of the Merger, from engaging or
competing in any line of business or in any geographic area;
(l) Neither IHK nor any IHK Subsidiary shall pay, discharge or satisfy any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business and consistent with past
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practice, of liabilities reflected or reserved against in the March 31, 1997
consolidated balance sheet of IHK or subsequently incurred in the ordinary
course of business and consistent with past practice;
(m) Neither IHK nor any IHK Subsidiary shall take any action that would
result in (i) any of the representations or warranties of IHK and the Merger Sub
set forth in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that are not so qualified
becoming untrue in any material respect or (iii) any of the conditions to the
Offer set forth in Annex A or the conditions to the Merger set forth in Article
VII not being satisfied; and
(n) Neither IHK nor any IHK Subsidiary shall authorize or enter into an
agreement to do anything prohibited by Sections 5.02(b) through (m).
SECTION 5.03 Government Filings.
(a) The Company shall use commercially reasonable efforts to promptly file
and shall cause the Company Subsidiaries to promptly file all reports required
to be filed by any of them with any Governmental Entities between the date of
this Agreement and the Effective Time and shall (to the extent permitted by Law
or regulation or any applicable confidentiality agreement) deliver to IHK copies
of all such reports promptly after the same are filed.
(b) IHK shall use commercially reasonable efforts to promptly file and
shall cause each IHK Subsidiary to promptly file all reports required to be
filed by any of them with any Governmental Entities between the date of this
Agreement and the Effective Time and shall (to the extent permitted by Law or
regulation or any applicable confidentiality agreement) deliver to the Company
copies of all such reports promptly after the same are filed.
(c) Subject to applicable Laws, IHK shall have the right to review in
advance, and to the extent practicable to consult with the Company, with respect
to all the information relating to IHK or any IHK Subsidiary or the Merger which
appears in any Company or Company Subsidiary filings made with, or written
materials submitted to, any Governmental Entity.
(d) Subject to applicable Laws, the Company shall have the right to review
in advance, and to the extent practicable to consult with IHK, with respect to
all the information relating to the Company or any Company Subsidiary or the
Merger which appears in any IHK or IHK Subsidiary filings made with, or written
materials submitted to, any Governmental Entity.
(e) In exercising the rights provided by Sections 5.03(c) and 5.03(d), each
of the parties hereto agrees to act reasonably and as promptly as practicable.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Stockholders' Meetings.
(a) Unless otherwise required pursuant to the applicable fiduciary duties
of the Company's Board of Directors to the stockholders of the Company (as
determined in good faith by the Company's Board of Directors based upon the
advice of outside counsel), (i) the Company shall call and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") as promptly as practicable to
consider and vote upon the approval of this Agreement and the Merger, and the
Company shall use commercially reasonable efforts to hold the Company
Stockholders' Meeting as soon as practicable after the date on which shares of
Company Common Stock are purchased in the Offer and the Registration Statement
becomes effective, (ii) the Company's Board of Directors shall recommend such
approval (as well as acceptance of the Offer), and (iii) the Company shall take
all lawful action to solicit such approval, including, without limitation,
timely mailing the Proxy Statement.
(b) Unless otherwise required pursuant to the applicable fiduciary duties
of IHK's Board of Directors to the shareholders of IHK (as determined in good
faith by IHK's Board of Directors based upon the advice of outside counsel), (i)
IHK shall call and hold a meeting of its shareholders (the "IHK Shareholders'
Meeting") as promptly as practicable to consider and vote upon the approval of
the issuance of the Stock Consideration, and IHK shall use commercially
reasonable efforts to hold the IHK Shareholders' Meeting as soon as practicable
after the date on which shares of Company Common Stock are purchased in the
Offer and the Registration Statement becomes effective, (ii) the IHK's Board of
Directors shall recommend such approval, and (iii) IHK shall take all lawful
action to solicit such approval, including, without limitation, timely mailing
the Proxy Statement.
SECTION 6.02 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement (i)
IHK and the Company shall prepare and IHK shall file with the SEC the
Registration Statement in connection with the registration under the Securities
Act of the shares of IHK Common Stock to be issued to the stockholders of the
Company in the Merger, a portion of which Registration Statement shall also
serve as the joint proxy statement/prospectus (together with any amendments
thereof or supplements thereto, the "Proxy Statement") relating to the
Stockholders' Meetings. The Registration Statement shall also register the
resale of IHK Common Stock received in the Offer and the Merger by Affiliates of
the Company by such Affiliates and IHK shall maintain the effectiveness of the
Registration Statement with respect to such resales of such IHK Common Stock for
a period of one year after the Effective Time. At any time during such one year
period, upon IHK's request, any such Affiliates shall not be allowed to sell IHK
Common Stock pursuant to such Registration
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Statement for a period of 45 days if (i) IHK or any IHK Subsidiary is engaged in
confidential negotiations or other confidential business activities, disclosure
of which would be required in such registration statement (but would not be
required if such sales were not made), and IHK determines in good faith that
such disclosure would be materially detrimental to IHK and its stockholders, or
(ii) IHK determines to effect a registered underwritten public offering of IHK's
equity securities or of securities convertible to IHK's equity securities for
IHK's account and IHK takes substantial steps (including, but not limited to,
selecting the managing underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering; provided, however, that IHK may
only make such a request twice during such one year period. A deferral of such
sales shall be lifted, if, in the case of a deferral pursuant to clause (i) of
the preceding sentence, the negotiations or other activities are disclosed or
terminated, or, in the case of a deferral pursuant to clause (ii) of the
preceding sentence, the proposed registration for IHK's account is abandoned.
The Company and such Affiliates shall furnish all information concerning the
Company and such Affiliates as IHK may reasonably request in connection with
such actions and the preparation of the Registration Statement and the Proxy
Statement. IHK shall use commercially reasonable efforts, and the Company and
such Affiliates will cooperate with IHK, to cause the Registration Statement to
become effective as promptly as practicable and to keep the Registration
Statement effective as long as is necessary to consummate the Merger. Prior to
the effective date of the Registration Statement, IHK shall take all action
required under any applicable federal or state securities Laws in connection
with the issuance of shares of IHK Common Stock pursuant to the Merger. IHK
shall, as promptly as practicable, provide copies of any written comments
received from the SEC with respect to the Registration Statement to the Company
and advise the Company of any verbal comments with respect to the Registration
Statement received from the SEC. IHK and the Company shall each give the other
and its counsel the opportunity to review the Registration Statement and each
document to be incorporated by reference therein and all responses to requests
for additional information by and replies to comments of the SEC before their
being filed with, or sent to, the SEC. IHK and the Company shall each use
commercially reasonable efforts, after consultation with the other party, to
respond promptly to all such comments of and requests by the SEC. Unless
otherwise required by the applicable fiduciary duties of the respective Boards
of Directors to their respective stockholders (as determined in good faith by
each respective Board of Directors based upon the advice of its outside
counsel), as promptly as practicable after the Registration Statement shall have
become effective, the Company and IHK shall mail the Proxy Statement to their
respective stockholders.
(b) Unless otherwise required pursuant to the applicable fiduciary duties
of the respective Boards of Directors to their respective stockholders (as
determined in good faith by each respective Board of Directors based upon the
advice of its outside counsel), no amendment or supplement to the Proxy
Statement or the Registration Statement will be made by IHK or the Company
without the approval of the other party, which approval shall not be
unreasonably withheld. IHK will advise the Company, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of IHK Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or of any
request by the SEC for amendment of the Proxy Statement or the Registration
Statement.
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(c) Notwithstanding anything to the contrary in this Agreement, (i) IHK
shall have no obligation to mail the Proxy Statement to its shareholders unless
and until IHK shall have received the "comfort letter" referred to in Section
6.10(a) and (ii) the Company shall have no obligation to mail the Proxy
Statement to its stockholders unless and until the Company shall have received
the "comfort letter" referred to in Section 6.10(b).
(d) The information supplied by IHK for inclusion in the Registration
Statement and the Proxy Statement shall not, at (i) the time the Registration
Statement is declared effective, (ii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to its shareholders
and (iii) the time of the IHK Shareholders' 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 not
misleading. If at any time prior to the time of the IHK Shareholders' Meeting,
any event or circumstance relating to IHK or any IHK Subsidiary, or their
respective officers or directors, should be discovered by IHK which should be
set forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, IHK shall promptly inform the Company.
(e) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company and (iii) the time of the Company 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 not misleading. If at any time prior to the time of the
Company Stockholders' Meeting any event or circumstance relating to the Company
or any Company Subsidiary, or their respective officers or directors, should be
discovered by the Company which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, the Company shall
promptly inform IHK.
(f) All documents that IHK is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
(g) All documents that the Company is responsible for filing with the SEC
in connection with the transactions contemplated herein will comply as to form
and substance in all material aspects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
SECTION 6.03 Access to Information; Confidentiality.
(a) To the fullest extent possible, consistent with applicable Law, the
Company shall afford to IHK and its officers, employees, accountants, counsel,
financial advisors and other representatives ("Representatives") reasonable
access during normal business hours during the
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period prior to the Effective Time to all the officers, employees, agents,
properties, books, contracts, commitments and records of the Company and the
Company Subsidiaries, and will cooperate in furnishing and cause its officers,
employees and agents to furnish information regarding the Company and the
Company Subsidiaries reasonably required in connection with the indebtedness
contemplated by the Lehman Brothers Commitment and during such period, the
Company shall furnish promptly to IHK and its Representatives all information
concerning the businesses, properties and personnel of the Company and the
Company Subsidiaries as IHK may reasonably request.
(b) Until the Effective Time, IHK and the Company will be bound by, and
will hold any information received pursuant to this Agreement in confidence in
accordance with the terms of, the confidentiality agreement between the Company
and IHK dated August 26, 1997 (the "Confidentiality Agreement").
(c) To the fullest extent possible, consistent with applicable Law, IHK
shall, and shall cause the IHK Subsidiaries to, afford to the Company and its
Representatives reasonable access during normal business hours during the period
prior to the Effective Time to all the officers, employees, agents, properties,
books, contracts, commitments and records of IHK and the IHK Subsidiaries, and
during such period, IHK shall furnish promptly to the Company and its
Representatives all information concerning the businesses, properties and
personnel of IHK and the IHK Subsidiaries as the Company may reasonably request.
(d) No investigation by either the Company or IHK shall affect the
representations and warranties of the other.
SECTION 6.04 Approvals and Consents; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties (i) shall make promptly its filings, and
thereafter make any other required submissions, under the HSR Act with respect
to the Offer and the Merger and (ii) shall use all commercially reasonable
efforts to obtain as promptly as practicable (A) all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities,
including opposing any attempt by any Governmental Entity to obtain a
preliminary or permanent injunction, or to affirm on appeal any such injunction,
from the Federal Trade Commission or a federal or state court to enjoin the
consummation of the Offer and the Merger under any antitrust Law, and provided
that IHK shall consider in good faith but shall not be required to agree to any
proposal to make any material modification to the business transaction
contemplated by this Agreement in order to obtain the agreement of any
Governmental Entity to permit the Offer and Merger to be consummated, and (B)
all necessary consents, approvals or waivers from third parties and (iii) shall
execute and deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
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(b) The Company and IHK each agrees that it will consult with the other
party with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other party apprised of the status of matters relating to
completion of the transactions contemplated by this Agreement.
SECTION 6.05 No Solicitation of Transactions.
(a) The Company agrees that neither it nor any Company Subsidiary shall,
and that it shall cause its and each Company Subsidiary's Representatives not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
(including by way of furnishing information) any inquiries or the making of any
proposal, or offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets or 20% or more of the equity securities of,
the Company or any Company Subsidiary that, in any such case, could reasonably
be expected to interfere with the completion of the Merger or the other
transactions contemplated by this Agreement (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any Company Subsidiary shall, and that it shall cause
its and each Company Subsidiary's Representatives not to, directly or
indirectly, have any discussion with or provide any confidential information or
data to any Person relating to an Acquisition Proposal or engage in any
negotiations concerning an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal or accept an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company or the Company's Board of Directors from (i)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal; (ii) engaging in any discussions or negotiations with, or
providing any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by any such Person; or (iii) recommending such an
unsolicited bona fide written Acquisition Proposal to the holders of Company
Common Stock if and only to the extent that, in any such case as is referred to
in clause (ii) or (iii), (A) the Company's Board of Directors concludes in good
faith (after consultation with its legal counsel and financial advisors) that
such Acquisition Proposal is reasonably capable of being completed, taking into
account all legal, financial, regulatory and other aspects of the Acquisition
Proposal and the Person making the Acquisition Proposal, and would, if
consummated, result in a transaction more favorable to holders of Company Common
Stock than the transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal being hereinafter referred to as a "Superior
Proposal"), (B) the Company's Board of Directors determines in good faith after
consultation with legal counsel that such action is necessary for it to act in a
manner consistent with its fiduciary duties under applicable law, (C) prior to
providing any information or data to any Person in connection with a Superior
Proposal by any such Person, the Company's Board of Directors receives from such
Person an executed confidentiality agreement on terms substantially similar to
those contained in the Confidentiality Agreement and (D) prior to providing any
information or data to any Person or entering into discussions or negotiations
with any Person, the Company's Board of Directors notifies IHK promptly of such
inquiries, proposals or offers received by, any such information requested
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from, or any such discussions or negotiations sought to be initiated or
continued with, the Company, any Company Subsidiary or any of their
Representatives indicating, in connection with such notice, the name of such
Person and the terms and conditions of any proposals or offers. The Company
agrees that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. The Company agrees that it shall keep
IHK informed, on a current basis, of the status and terms of any such proposals
or offers and the status of any such discussions or negotiations.
(b) The Company agrees that it will take the necessary steps to promptly
inform each Company Subsidiary and each Representative of the Company or any
Company Subsidiary of the obligations undertaken in this Section 6.05.
SECTION 6.06 Employee Benefits Matters. Annex B hereto sets forth
certain agreements among the parties hereto with respect to employee benefits
matters and is incorporated herein by this reference.
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time, IHK shall, and shall cause the
Surviving Corporation to, indemnify and hold harmless, each present and former
director, officer, employee and fiduciary the Company and each Company
Subsidiary and each Person who served at the request of the Company or any
Company Subsidiary as a director, officer, trustee, partner, fiduciary or
employee of another corporation, partnership, joint venture, trust pension or
other employee benefit plan or enterprise (collectively, the "Indemnified
Parties"), to the fullest extent permitted under applicable Law, against all
costs and expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee or fiduciary, whether occurring
before or after the Effective Time, including, without limitation, the
transactions contemplated by this Agreement (and shall also advance, or cause to
be advanced, expenses as incurred to the fullest extent permitted under the
DGCL, provided that the Person to whom expenses are advanced provides the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL).
IHK and Merger Sub agree that all rights to indemnification existing in favor of
the Indemnified Parties as provided in the Company's By-Laws, as in effect as of
the date hereof, with respect to matters occurring through the Effective Time,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time.
(b) Without limiting the foregoing, in the event any claim, action, suit,
proceeding or investigation (a "Claim") is brought against any Indemnified Party
(whether arising before or after the Effective Time) after the Effective Time
(i) the Indemnified Parties may retain counsel satisfactory to them and
reasonably satisfactory to IHK and the Surviving Corporation, (ii) IHK and the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the
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Indemnified Parties promptly as statements therefor are received and (iii) IHK
and the Surviving Corporation will use commercially reasonable efforts to assist
in the vigorous defense of any such matter, provided that neither IHK nor the
Surviving Corporation shall be liable for any settlement of any Claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 6.07, upon learning of any such Claim, shall notify IHK (but the failure
so to notify IHK shall not relieve IHK from any liability that IHK may have
under this Section 6.07 except to the extent such failure materially prejudices
IHK), and shall deliver to IHK the undertaking contemplated by Section 145(e) of
the DGCL. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(c) For a period of six years after the Effective Time, IHK shall cause to
be maintained in effect the current directors' and officers' liability insurance
policies maintained by the Company (provided that IHK may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous) with respect to claims arising from facts or events that
occurred prior to the Effective Time; provided, however, that in no event shall
IHK be required to expend pursuant to this Section 6.07(c) more than an amount
per year equal to 200% of current annual premiums paid by the Company for such
insurance (which premiums the Company represents and warrants to be
approximately $260,000 per year in the aggregate).
SECTION 6.08 Obligations of IHK and Merger Sub. IHK shall take all
action necessary to perform, and shall cause Merger Sub to perform, its
obligations under this Agreement and to consummate the Merger on the terms and
subject to conditions set forth in this Agreement.
SECTION 6.09 Affiliates' Letters. No later than 5 days from the date
of this Agreement, the Company shall deliver to IHK a list of names and
addresses of those persons who were, in the Company's reasonable judgment, on
such date, affiliates within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act of the Company (each such
person being a "Company Affiliate"). The Company shall provide IHK with such
information and documents as IHK shall reasonably request for purposes of
reviewing such list. The Company shall use its reasonable efforts to deliver or
cause to be delivered to IHK, prior to the Effective Time, a letter
substantially in the form attached hereto as Exhibit 6.09, executed by each of
the Company Affiliates identified in the foregoing list and of any person who
shall have become a Company Affiliate subsequent to the delivery of such list.
SECTION 6.10 Letters of Accountants.
(a) The Company shall use commercially reasonable efforts to cause to be
delivered to IHK a "comfort" letter of Price Waterhouse LLP or Arthur Andersen
LLP, the Company's independent public accountants, dated and delivered the date
on which the Registration Statement shall become effective and addressed to IHK,
in the form, scope and content contemplated by Statement on Auditing Standards
No. 72, as amended issued by the American Institute of Certified
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Public Accountants, Inc. ("SAS 72"), relating to the financial statements and
other financial data with respect to the Company and its consolidated
subsidiaries included or incorporated by reference in the Proxy Statement and
such other matters as may be reasonably required by IHK, and based upon
procedures carried out to a specified date not earlier than five days prior to
the date thereof.
(b) IHK shall use commercially reasonable efforts to cause to be delivered
to the Company a "comfort letter" of Deloitte & Touche LLP, IHK's independent
public accountants, dated the date on which the Registration Statement shall
become effective, and addressed to the Company, in the form, scope and content
contemplated by SAS 72, relating to the financial statements and other financial
data with respect to IHK and the IHK Subsidiaries included in or incorporated by
reference in the Proxy Statement and such other matters as may be reasonably
required by the Company, and based upon procedures carried out to a specified
date not earlier than five days prior to the date thereof.
SECTION 6.11 Listing Market. IHK shall promptly prepare and submit to
the American Stock Exchange or such other stock exchange or market as the
parties reasonably agree (the "Listing Market") a listing application covering
the shares of IHK Common Stock to be issued in the Merger and pursuant to
Substitute Options, and shall use commercially reasonable efforts to obtain,
prior to the Effective Time, approval for the listing of such IHK Common Stock,
subject to official notice to the Listing Market of issuance, and the Company
shall cooperate with IHK with respect to such listing.
SECTION 6.12 IHK Board Representation. Prior to the Effective Time,
IHK shall cause two nominees of the Company ("Company Nominees"), subject to the
reasonable approval of IHK, to be elected as directors of IHK (and to be in
office immediately prior to the Effective Time). For a period of one or two
years after the Effective Time, depending on the class to which such Company
Nominee is initially elected, IHK shall cause each such Company Nominee to be
nominated for re-election to an additional three year term at the expiration of
his initial term in office.
SECTION 6.13 Company Rights Plan. The Company's Board of Directors
shall take all further action (in addition to that described in Section 3.20)
necessary in order to render the Company Rights inapplicable to the Offer, the
Merger and the other transactions contemplated by this Agreement, to terminate
the Company Rights Agreement as of the Effective Time and to ensure that IHK and
Merger Sub will not have any obligations in connection with the Rights Agreement
or the Company Rights (including by redeeming the Company Rights immediately
prior to the Effective Time or by amending the Company Rights Agreement).
Except as otherwise provided in this Section 6.13 and Section 3.20, the Company
shall not, prior to the Effective Time, redeem the Company Rights or amend or
terminate the Company Rights Agreement unless (a) required to do so by order of
a court of competent jurisdiction or (b) required by the applicable fiduciary
duties of the Company's Board of Directors to the stockholders of the Company
(as determined in good faith by the Company's Board or Directors based upon the
advice of outside counsel).
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SECTION 6.14 Public Announcements. Unless otherwise required by
applicable Law or stock exchange requirements, IHK and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any transaction contemplated
thereby and shall not issue any such press release or make any such public
statement prior to such consultation.
SECTION 6.15 Subsequent Financial Statements.
(a) As soon as practicable following filing, the Company shall deliver to
IHK a copy of each periodic report on Forms 10-Q or 10-K, so filed prior to the
Effective Time. The financial statements contained therein are referred to as
the "Company Subsequent Financial Statements." The Company Subsequent Financial
Statements (i) will be prepared from the books of account and other financial
records of the Company and the consolidated Company Subsidiaries, (ii) will be
prepared in accordance with U.S. GAAP applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes thereto) and
(iii) will present fairly, in all material respects, the consolidated financial
position of the Company and the consolidated Company Subsidiaries as at the
respective dates thereof and the results of their operations and cash flows for
the respective periods indicated therein except as otherwise noted therein
(subject in the case of unaudited statements, to normal and recurring year-end
adjustments which shall not be expected, individually or in the aggregate, to
have a Company Material Adverse Effect and the omission of footnotes).
(b) As soon as practicable following filing, IHK shall deliver to the
Company a copy of each periodic report on Forms 10-Q or 10-K, so filed prior to
the Effective Time. The financial statements contained therein are referred to
as the "IHK Subsequent Financial Statements." The IHK Subsequent Financial
Statements (i) will be prepared from the books of account and other financial
records of IHK and the consolidated IHK Subsidiaries, (ii) will be prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and (iii) will
present fairly, in all material respects, the consolidated financial position of
IHK and the consolidated IHK Subsidiaries as at the respective dates thereof and
the results of their operations and cash flows for the respective periods
indicated therein except as otherwise noted therein (subject in the case of
unaudited statements, to normal and recurring year-end adjustments which shall
not be expected, individually or in the aggregate, to have an IHK Material
Adverse Effect and the omission of footnotes).
ARTICLE VII
CONDITIONS TO THE MERGER
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SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger. The obligations of the Company, IHK and Merger Sub to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement and the transactions contemplated hereby shall have been
approved and adopted by the affirmative vote of the stockholders of the Company
in accordance with the DGCL and the Company's Certificate of Incorporation and
the issuance of the IHK Common Stock pursuant to the Merger shall have been
approved by the affirmative vote of the shareholders of IHK in accordance with
the applicable rules and regulations of the Listing Market;
(b) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(c) no Governmental Entity (as defined in Section 9.12(g)) or court of
competent jurisdiction located or having jurisdiction in the United States shall
have enacted, issued, promulgated, enforced or entered any Law, rule,
regulation, executive order or Order which is then in effect and has the effect
of restraining or making the Merger illegal or otherwise prohibiting
consummation of the Merger;
(d) the Registration Statement shall have been declared effective, and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect;
(e) the shares of IHK Common Stock to be issued in the Merger and pursuant
to Substitute Options shall have been authorized for listing on the Listing
Market, subject to official notice of issuance; and
(f) Merger Sub shall have purchased shares of Company Common Stock pursuant
to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement and the transactions
contemplated hereby, as follows:
(a) by mutual written consent of IHK and the Company;
(b) by either IHK or the Company, if the Effective Time shall not have
occurred on or before May 31, 1998 (the "Termination Date"); provided, however,
that the right to terminate this Agreement under this Section 8.01(b) shall not
be available to any party whose failure to fulfill any
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obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
(c) by either IHK or the Company, if any court of competent jurisdiction in
the United States or other Governmental Entity, based otherwise than on any
antitrust Law, (i) shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have become
final and nonappealable or (ii) shall have failed to issue an Order or to take
any other action necessary to fulfill the conditions to the Closing of the
Merger and such denial of a request to issue such Order or take such other
action shall have become final and nonappealable;
(d) (x) by either IHK or the Company, if this Agreement and the
transactions contemplated hereby shall fail to receive the requisite vote for
approval and adoption at the Company Stockholders' Meeting or (y) by the
Company, if the issuance of the IHK Common Stock as part of the Merger shall
fail to receive the requisite vote for approval at the IHK Shareholders'
Meeting;
(e) by IHK, if prior to the payment for shares of Company Common Stock
pursuant to the Offer (i) the Company's Board of Directors withdraws, modifies
or changes its approval or recommendation (including by amendment of the
Schedule 14D-9) of this Agreement, the Offer or the Merger in a manner adverse
to IHK or Merger Sub, (ii) the Company's Board of Directors shall, at a time
when there is an Acquisition Proposal with respect to the Company, fail to
reaffirm such approval or recommendation of this Agreement, the Offer or the
Merger upon the reasonable request of IHK and Merger Sub, (iii) the Company's
Board of Directors shall approve or recommend any acquisition of the Company or
a material portion of its assets or any tender offer for shares of its capital
stock, in each case, other than by the other parties hereto or an affiliate
thereof; (iv) a tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of the Company is commenced, and the
Company's Board of Directors fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders); or (v) the Company's Board of Directors shall resolve to
take any of the actions specified in clauses (i) through (iv) of this Section
8.01(e);
(f) by the Company, prior to the payment for shares of Company Common Stock
pursuant to the Offer, upon five Business Days' prior notice to IHK and Merger
Sub (which notice shall be revocable by the Company), if, as a result of a
Superior Proposal received by the Company from a Person other than a party to
this Agreement or any of its affiliates, the Company's Board of Directors
determines in good faith that their fiduciary obligations under applicable Law
require that such Superior Proposal be accepted; provided, however, that (i) the
Company's Board of Directors shall have concluded in good faith, after
considering applicable provisions of Law and after giving effect to all
concessions which may be offered by IHK and Merger Sub pursuant to clause (ii)
below, on the basis of advice of counsel, that such action is necessary for the
Company's Board of Directors to act in a manner consistent with its fiduciary
duties under applicable laws and (ii) prior to the effective date of any such
termination, the Company shall provide IHK and Merger Sub with
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an opportunity to make such adjustments in the terms and conditions of this
Agreement, the Offer or the Merger as would enable the Company to proceed with
the transactions contemplated hereby; provided, however, that it shall be a
condition to the effectiveness of termination by the Company pursuant to this
Section 8.01(f) that the Company shall have made the payment of the Termination
Fee (as defined below) to IHK required by Section 8.05(b);
(g) by IHK, prior to the payment for shares of Company Common Stock
pursuant to the Offer, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions to the Offer set forth in clauses (c) or (d) of
Annex A would be satisfied (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is curable by the Company and for so
long as the Company continues to exercise all reasonable efforts to cure such
Terminating Company Breach, IHK may not terminate this Agreement under this
Section 8.01(g);
(h) by the Company, prior to the payment for shares of Company Common Stock
pursuant to the Offer, upon breach of any representation, warranty, covenant or
agreement on the part of IHK or Merger Sub set forth in this Agreement, or if
any representation or warranty of IHK and Merger Sub shall have become untrue,
in either case except for such breaches or failures (i) which, individually or
in the aggregate, would not have an IHK Material Adverse Effect and (ii) which,
individually or in the aggregate, would not materially impair or delay the
ability of Merger Sub to consummate the Offer or the ability of IHK, Merger Sub
and the Company to effect the Merger ("Terminating IHK Breach"); provided,
however, that, if such Terminating IHK Breach is curable by IHK and Merger Sub
and for so long as IHK and Merger Sub continue to exercise all reasonable
efforts to cure such Terminating IHK Breach, the Company may not terminate this
Agreement under this Section 8.01(h);
(i) by IHK, if the Offer is terminated or expires without the purchase of
any shares of Company Common Stock thereunder, unless such termination or
expiration has been caused by or resulted from the failure in any material
respect of IHK or Merger Sub to perform any of its covenants and agreements
contained in this Agreement or in the Offer;
(j) by the Company, if all of the conditions to the Offer set forth in
Annex A except for clause (2) have been satisfied and IHK fails to accept and
pay for shares of Company Common Stock in the Offer solely because of the
failure of LBCPI to fund its loan commitment contained in the Lehman Brothers
Commitment; and
(k) by the Company, if on May 29, 1998, the Effective Time shall not have
occurred because IHK and Merger Sub have not been permitted to consummate the
Offer and the Merger by reason of any antitrust Law.
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SECTION 8.02 Effect of Termination. In the event of termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and, except as provided in Section 8.05, there shall be no liability under
this Agreement on the part of IHK, Merger Sub or the Company or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease, provided that nothing herein shall relieve any party from
liability for any breach of this Agreement (it being understood that IHK and
Merger Sub shall have no liability for failure to obtain financing of the Offer
and the Merger or to obtain expiration of all waiting periods under the HSR Act
or to avoid the entry or affirmation of any injunction under any antitrust Law
in respect of the Offer or the Merger, unless the Company elects to terminate
this Agreement under Section 8.01(j) or (k), respectively, and then only to the
extent provided in Section 8.05(c)).
SECTION 8.03 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that after the
approval and adoption of this Agreement and the transactions contemplated hereby
by the stockholders of the Company, no amendment may be made which would reduce
the amount or change the type of consideration into which each share of Company
Common Stock shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 8.05 Fees and Expenses.
(a) Except as set forth in this Section 8.05, all expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated, except that the Company and
IHK each shall pay one-half of all Expenses (as defined below) relating to
printing, filing and mailing the Registration Statement and the Proxy Statement
and all SEC and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement. "Expenses" as used in this
Agreement shall include all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Registration Statement and the
Proxy Statement, the solicitation of stockholder approvals and all other matters
related to the closing of the Merger.
(b) The Company and IHK agree that
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(i) if IHK shall terminate this Agreement pursuant to Section 8.01(e) or
(ii) if the Company shall terminate this Agreement pursuant to Section
8.01(f) or
(iii) if (A) IHK or the Company shall terminate this Agreement pursuant
to Section 8.01(d) due to the failure of the Company's stockholders to approve
and adopt this Agreement and (B) at the time of such failure to so approve and
adopt this Agreement there shall exist an Acquisition Proposal with respect to
the Company and, within 12 months of the termination of this Agreement, the
Company enters into a definitive agreement with any third party with respect to
an Acquisition Proposal with respect to the Company,
then the Company shall pay to IHK an amount equal to $8,000,000 (the "Company
Termination Fee").
(c) The Company and IHK agree that if the Company shall terminate this
Agreement pursuant to Section 8.01(j) or (k), then IHK shall pay to the Company
an amount equal to $8,000,000 (the "IHK Termination Fee").
(d) The Company Termination Fee required to be paid pursuant to Section
8.05(b)(ii) shall be paid prior to, and shall be a pre-condition to
effectiveness of termination of this Agreement pursuant to Section 8.01(f) and
the Company Termination Fee required to be paid pursuant to Section 8.05(b)(iii)
shall be paid to IHK on the next Business Day after a definitive agreement is
entered into with a third party with respect to an Acquisition Proposal with
respect to the Company. Any payment of a Company Termination Fee otherwise
required to be made pursuant to Section 8.05(b) or an IHK Termination Fee
required to be made pursuant to Section 8.05(c) shall be made not later than two
Business Days after termination of this Agreement. All payments under this
Section 8.05 shall be made by wire transfer of immediately available funds to an
account designated by the payee.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that representations,
warranties and agreements set forth in Articles I and II and Sections 6.06, 6.07
and 6.12 and Article IX shall survive the Effective Time for the respective
periods set forth in such sections or, if no such period is specified,
indefinitely and those set forth in Sections 3.19, 4.19, 6.03(b), 8.02 and 8.05
and Article IX shall survive termination for the respective periods set forth in
such sections or, if no such period is specified, indefinitely.
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SECTION 9.02 Notices.
(a) All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be sent by an overnight courier service
that provides proof of receipt, mailed by registered or certified mail (postage
prepaid, return receipt requested) or telecopied to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to the Company:
Savannah Foods & Industries, Inc.
Two East Bryan Street
Savannah, Georgia 81401
Attention: Corporate Secretary
Telecopier No.: (912) 651-4905
with a copy to:
Skadden Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 735-2000
Attention: Stephen M Banker
if to IHK or Merger Sub:
Imperial Holly Corporation
One Imperial Square
P.O. Box 9
Sugar Land, Texas 77847
Attention: James C. Kempner
Telecopier No.: (281) 490-4895
with a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: Robert V. Jewell
Telecopier No.: (713) 220-4285
(b) If this Agreement provides for a designated period after a notice
within which to perform an act, such period shall commence on the date of
receipt or refusal of the notice.
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(c) If this Agreement requires the exercise of a right by notice on or
before a certain date or within a designated period, such right shall be deemed
exercised on the date of delivery to the courier service, telecopying or mailing
of the notice pursuant to which such right is exercised.
(d) Notices of changes of address shall be effective only upon receipt.
SECTION 9.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Merger be consummated as originally contemplated to the fullest extent possible.
SECTION 9.04 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.
SECTION 9.05 Interpretation.
(a) When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents, glossary of
defined terms 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. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The phrases "the date of this Agreement" and "the date
hereof" shall be deemed to refer to the date in the first paragraph of this
Agreement.
(b) The Parties hereto acknowledge that certain matters set forth in the
applicable Disclosure Schedule are included for informational purposes only,
notwithstanding the fact that, because they do not rise above applicable
materiality thresholds or otherwise, they would not be required to be set forth
therein by the terms of this Agreement and that disclosure of such matters shall
not be taken as an admission by the Company or IHK that such disclosure is
required to be made under the terms or any provision of this Agreement and in no
event shall the disclosure of such matters be deemed or interpreted to broaden
or otherwise amplify the representations and warranties contained in this
Agreement. Notwithstanding anything to the contrary in Articles III and IV,
each section of the Disclosure Schedule that includes an asterisk in its heading
is intended to be responsive to statements in the correspondingly numbered
representation or warranty requesting a listing of specified matters and does
not list exceptions to the correspondingly numbered representation and warranty.
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SECTION 9.06 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.07 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the state of Delaware applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any Delaware state or federal court.
SECTION 9.08 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Article II (which may be enforced by the
beneficiaries thereof), Sections 6.06 and 6.07 (which are intended to be for the
benefit of the persons covered thereby and may be enforced by such persons) and
Section 6.13.
SECTION 9.09 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.10 Waiver of Jury Trial. Each of IHK, the Company and Merger
Sub hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise),
arising out of or relating to this Agreement or the actions of IHK, the Company
or Merger Sub in the negotiation, administration, performance and enforcement
thereof.
SECTION 9.11 Entire Agreement. This Agreement (including the Annexes,
the Exhibits, the Company Disclosure Schedule and the IHK Disclosure Schedule)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and, except for the Confidentiality Agreements, supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
SECTION 9.12 Certain Definitions.
For purposes of this Agreement:
(a) "Affiliate" of a specified Person means a Person who directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, such specified Person;
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(b) "Beneficial Owner" with respect to any shares of Company Common Stock
means a Person who shall be deemed to be the beneficial owner of such shares (i)
which such Person or any of its Affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such Person or any of its Affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly, by any other Persons
with whom such Person or any of its Affiliates or associates or Person with whom
such Person or any of its Affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares;
(c) "Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in New York, New York are authorized or
required by law or executive order to close;
(d) "Closing Price" means the volume weighted average of the trading prices
of IHK Common Stock, rounded to three decimal places, as reported by Bloomberg
Financial Markets, for each of the first 15 consecutive Trading Days in the
period commencing 20 Trading Days prior to the date of the Closing;
(e) "Company Specified Stockholders" means substantially all of the
directors and executive officers of the Company.
(f) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended or
in effect from time to time;
(h) "Governmental Entity" means any United States (federal, state or local)
or foreign government or governmental, regulatory or administrative authority,
agency or commission;
(i) "IHK Specified Stockholders" means P. C. Carrothers, John D. Curtin, D.
W. Ehrenkranz, E. O. Gaylord, Gerald Greinstein, Ann O. Hamilton, B. T.
Harrison, R. E. Henderson, Roger W. Hill, C. K. Jones, Harris L. Kempner, Jr.,
I. H. Kempner, James C. Kempner, R. L. Knecht, A. K. Lebsock, H. E. Lentz,
Robert L. K. Lynch, H. P. Mechler, K. L. Mercer, J. A. Richmond, Fayez Sarofim,
W. F. Schwer, R. W. Strickland, Daniel K. Thorne (individually, and as trustee
for certain trusts), Harris Weston (individually, and as trustee for certain
trusts), Greencore
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Group plc, H. Kempner Trust Association, Harris and Eliza Kempner Fund and U. S.
National Bank (as trustee for certain trusts).
(j) "Knowledge" or "Known" means, with respect to any matter in question,
in the case of IHK or the Company, as the case may be, if any of the executive
officers of IHK or the Company has actual knowledge of such matter after making
due inquiry of all Persons who directly report to such executive officers;
(k) "Law" means any United States (federal, state or local) or foreign law,
statute, ordinance, rule, regulation, order, judgment or decree;
(l) "Order" means any decree, judgment, injunction, ruling, writ or other
order (whether temporary, preliminary or permanent);
(m) "Person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
(n) "Securities Act" means the Securities Act of 1933, as amended and in
effect from time to time;
(o) "Stock Consideration" is (i) if the Closing Price of IHK Common Stock
is $13.25 or lower, a number of shares of IHK Common Stock equal to the quotient
of the Offer Price divided by $13.25, together with a corresponding number of
IHK Purchase Rights (as defined in Section 2.06(a)); (ii) if the Closing Price
of IHK Common Stock is $17.25 or greater, a number of shares of IHK Common Stock
equal to the quotient of the Offer Price divided by $17.25, together with a
corresponding number of IHK Purchase Rights; or (iii) if the Closing Price of
the IHK Common Stock is greater than $13.25 but less than $17.25, that portion
of a share of IHK Common Stock equal to the quotient of the Offer Price divided
by the Closing Price of the IHK Common Stock, together with a corresponding
number of IHK Purchase Rights;
(p) "Subsidiary" or "Subsidiaries" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity;
(q) "Trading Day" means a day on which the New York Stock Exchange, Inc.
(the "NYSE") and the American Stock Exchange (the "AMEX") are both open for
trading.
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IN WITNESS WHEREOF, IHK, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
IMPERIAL HOLLY CORPORATION
By: /s/ James C. Kempner
---------------------------------------------------
Name: JAMES C. KEMPNER
--------------------
Title: President and Chief Executive Officer
-------------------------------------
IHK MERGER SUB CORPORATION
By: /s/ James C. Kempner
---------------------------------------------------
Name: JAMES C. KEMPNER
--------------------
Title: President and Chief Executive Officer
-------------------------------------
SAVANNAH FOODS & INDUSTRIES, INC.
By: /s/ William W. Sprague III
---------------------------------------------------
Name: WILLIAM W. SPRAGUE III
--------------------------
Title: President and CEO
-----------------
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ANNEX A TO THE
AGREEMENT AND PLAN OF MERGER
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex A shall have the meanings assigned to
them in the Agreement to which it is attached (the "Merger Agreement").
Merger Sub shall not be required to accept for payment, purchase or,
subject to any applicable rules and regulations of the SEC, including Rule 14e-
l(c) under the Exchange Act, to pay for, any shares of Company Common Stock
tendered pursuant to the Offer until the expiration of any applicable waiting
period under the HSR Act and Merger Sub may, subject to the terms and conditions
of the Merger Agreement, terminate or amend the Offer as to any shares of
Company Common Stock not then accepted for payment, or may delay the acceptance
for payment of or (subject to such Merger Agreement, rules or regulations)
payment for shares of Company Common Stock tendered, if (1) at the expiration of
the Offer, the number of shares of Company Common Stock validly tendered and not
withdrawn, together with any other shares of Company Common Stock owned by IHK
or Merger Sub or their affiliates, shall not constitute at least 50.1% of the
outstanding shares of Company Common Stock on a fully diluted basis, (2) IHK
shall not have obtained financing sufficient to enable IHK (or cause Merger Sub)
to pay the amounts set forth in clauses (a), (b) and (c) of Section 4.21 of the
Merger Agreement or (3) at any time on or after the date of the Merger Agreement
and prior to the acceptance for payment of shares of Company Common Stock, any
of the following events shall have occurred and be continuing:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, administrative interpretation, Order or injunction
enacted, promulgated, entered, enforced or deemed applicable to the
Offer or the Merger (other than the application of the waiting period
provisions of the HSR Act) by any court of competent jurisdiction in the
United States or other Governmental Entity, which would (i) restrain,
prohibit or make illegal or otherwise prohibit (A) the acceptance for
payment of, or payment for or purchase of at least 50.1% of the shares
of Company Common Stock or (B) the consummation of the Merger, or (ii)
prohibiting IHK or any of its affiliates to exercise full rights of
ownership of the shares of Company Common Stock, including without
limitation the right to vote any shares of Company Common Stock
purchased by them on all matters properly presented to the stockholders
of the Company, including without limitation the adoption and approval
of this Agreement and the Merger;
(b) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii)
the declaration of any banking moratorium or any suspension of payments
in respect of banks or any material limitation (whether or not
mandatory) on the extension of credit by lending institutions in the
United States, (iii) the commencement of a war, material armed
hostilities or any other material international or national calamity
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involving the United States having a significant adverse effect on the
functioning of the financial markets in the United States, or (iv) in
the case of any of the foregoing existing at the time of the execution
of the Merger Agreement, a material acceleration or worsening thereof;
(c) the Company shall have breached or failed to comply with any of
its obligations under the Merger Agreement (other than as a result of a
breach by IHK or Merger Sub of any of their obligations under the Merger
Agreement) and such breach or failure shall continue unremedied for ten
(10) business days after the Company has received written notice from
IHK or Merger Sub of the occurrence of such breach or failure, except
such breaches or failures (i) which, individually and in the aggregate,
would not have a Company Material Adverse Effect and (ii) which,
individually and in the aggregate, would not materially impair or delay
the ability of Merger Sub to consummate the Offer or the ability of IHK,
Merger Sub and the Company to effect the Merger;
(d) any representation or warranty of the Company contained in the
Merger Agreement shall fail to be true and correct as of such expiration
or proposed termination of the Offer except for such failures (i) which,
individually and in the aggregate, would not have a Company Material
Adverse Effect and (ii) which, individually and in the aggregate, would
not materially impair or delay the ability of Merger Sub to consummate
the Offer or the ability of IHK, Merger Sub and the Company to effect
the Merger, provided that IHK shall have notified the Company promptly
upon learning of such failure;
(e) the Merger Agreement shall have been terminated pursuant to its
terms or amended pursuant to its terms to provide for such termination
or amendment of the Offer; or
(f) the Company's Board of Directors shall have (i) (including by
amendment of the Schedule 14D-9) withdrawn or modified in any manner
adverse to IHK or Merger Sub its approval or recommendation of the
Offer, the Merger or this Agreement or (ii) resolved to do any of the
foregoing;
which, in the good faith reasonable judgment of IHK and Merger Sub, makes it
inadvisable to proceed with acceptance for payment or payment for shares of
Company Common Stock.
Except as set forth in the Merger Agreement, the foregoing conditions are
for the sole benefit of IHK and Merger Sub and may be asserted regardless of the
circumstances (including any action or inaction by IHK or Merger Sub other than
a breach by IHK or Merger Sub of the Merger Agreement) giving rise to any such
condition or waived by IHK or Merger Sub, in whole or in part, at any time or
from time to time, in its discretion. The failure of IHK or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-2
<PAGE>
ANNEX B TO THE
AGREEMENT AND PLAN OF MERGER
AGREEMENTS RESPECTING PLANS AND
OTHER EMPLOYEE BENEFIT MATTERS
1. (a) For a period of one year immediately following the Closing
Date, IHK shall provide or cause the Surviving Corporation to provide all
employees of the Company who continue to be employed by IHK or the Surviving
Corporation or any of their respective Affiliates as of the Effective Time
("Continuing Employees") with compensation and benefits on terms which are, in
the aggregate, not substantially less favorable than those provided to the
Continuing Employees immediately prior to the date hereof.
(b) IHK further agrees that, for purposes of all employee benefit
plans of IHK or the Surviving Corporation or any of their respective Affiliates
in which Continuing Employees participate from and after the Effective Time and
under which an employee's benefit depends, in whole or in part, on length of
service, credit will be given to Continuing Employees for service previously
credited with the Company or any Company Subsidiary prior to the Effective Time
to the extent that such crediting of service does not result in duplication of
benefits.
(c) IHK shall cause each employee benefit plan in which
Continuing Employees participate from and after the Effective Time to waive (i)
any preexisting condition restriction which was waived under the terms of any
analogous Company plan prior to the Effective Time and (ii) any waiting period
limitation which would otherwise be applicable to a Continuing Employee on or
after the Effective Time to the extent the Continuing Employee had satisfied any
similar waiting period under an analogous Company plan prior to the Effective
Time. IHK further agrees that it shall guarantee all obligations of the Company
under any Company Plan.
2. IHK and the Company acknowledge that the consummation of the
Offer shall constitute a "Change in Control" for purposes of the Company Stock
Option Plan.
3. (a) IHK will consent to the Company's entering into a new or
amended employment agreement with William W. Sprague III on the terms agreed to
by IHK, Merger Sub and the Company.
(b) IHK intends to consent to the Company's entering into new or
amended employment agreements as soon as practicable following the date hereof
with the Continuing Employees agreed to by IHK and the Company.
4. The Company will cause the following actions with respect to the
Company's Benefit Trust Agreement dated March 14, 1996 as amended (the "Benefit
Trust Agreement") to occur prior to the execution of this Agreement:
B-1
<PAGE>
(a) The Company will amend the Benefit Trust Agreement in the
following respects:
(i) provide for the corpus of the trust to be invested in IHK
Common Stock, rather than Company Common Stock;
(ii) provide for prepayment of the Note, at the Company's
direction, with corpus (cash or IHK Common Stock as directed);
(iii) clarify Section 3.2 of the Trust Agreement to ensure that a
release of pledged stock is not distributed to participants on release,
but held in trust to pay benefits when due;
(iv) provide that the Offer and the Merger will not constitute a
Proposed Change in Control under the Trust Agreement;
(v) provide that the Trustee can only sell IHK Common Stock after
giving IHK a right of first refusal;
(vi) provide that shares of IHK Common Stock held by the Trust will
be voted in proportion to all other outstanding IHK Common Stock; and
(vii) provide that the Trustee will tender or exchange of IHK
Common Stock held by the Trust as directed by the Company's Board of
Directors.
(b) The cash received by the Benefit Trust in the Offer and the Merger
will be used to repay the existing Note of the Benefit Trust to the Company and
to purchase additional shares of IHK Common Stock.
B-2
<PAGE>
EXHIBIT 6.09 TO THE
AGREEMENT AND PLAN OF MERGER
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[DATE]
IMPERIAL HOLLY CORPORATION
One Imperial Square, Suite 200
Sugar Land, Texas 77487
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Savannah Foods & Industries, Inc., a Delaware
corporation (the "Company"), as the term "Affiliate" is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules And
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms
of the Agreement and Plan of Merger dated as of September , 1997 (the "Merger
Agreement") among Imperial Holly Corporation, a Texas corporation ("IHK"), IHK
Merger Sub Corporation, a Delaware corporation ("Merger Sub"), and the Company,
Merger Sub will be merged with and into the Company (the "Merger"). Capitalized
terms used in this letter without definition shall have the meanings assigned to
them in the Merger Agreement.
As a result of the Merger, I may receive shares of common stock, no
par value, of IHK ("IHK Common Stock"). I would receive such IHK Common Stock
(the "Shares") in exchange for shares (or upon exercise of options for shares)
owned by me of common stock, par value $.25 per share, of the Company ("Company
Common Stock").
1. I represent, warrant and covenant to IHK that in the event I receive
any Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Shares, to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Shares to me
pursuant to the Merger has been registered with the Commission under the Act on
a Registration Statement on Form
1
<PAGE>
S-4. However, I have also been advised that, because at the time the Merger is
submitted for a vote of the stockholders of the Company, (a) I may be deemed to
be an affiliate of the Company and (b) distribution by me of the IHK Common
Stock has not been registered under the Act, I may not sell, transfer or
otherwise dispose of the IHK Common Stock issued to me in the Merger unless (i)
such sale, transfer or other disposition is made in conformity with the volume
and other limitations of Rule 145 promulgated by the Commission under the Act,
(ii) such sale, transfer or other disposition has been registered under the Act,
the Company shall include the Shares in the Registration Statement and to
maintain the effectiveness of the Registration statement for a period of 100
days after the effective date hereof or (iii) in the opinion of counsel
reasonably acceptable to IHK, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. Except as provided in paragraph C, I understand that IHK is under
no obligation to register the sale, transfer or other disposition of the Shares
by me or on my behalf under the Act or, except as provided in paragraph 2(A)
below, to take any other action necessary in order to make compliance with an
exemption from such registration available.
E. I understand that there will be placed on the certificates for
the Shares issued to me, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED , 1997 BETWEEN THE REGISTERED HOLDER
HEREOF AND IMPERIAL HOLLY CORPORATION, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICES OF IMPERIAL HOLLY CORPORATION."
F. I understand that unless a sale or transfer is made in conformity
with the provisions of Rule 145, or pursuant to a registration statement, IHK
reserves the right to put the following legend on the certificates issued to my
transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO,
OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
2
<PAGE>
G. Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
2. By IHK's acceptance of this letter, IHK hereby agrees with me as
follows:
A. For so long as and to the extent necessary to permit me to sell
the Shares pursuant to Rule 145 and, to the extent applicable, Rule 144 under
the Act, IHK shall (a) use its reasonable efforts to (i) file, on a timely
basis, all reports and data required to be filed with the Commission by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and (ii) furnish to me upon request a written statement as to
whether IHK has complied with such reporting requirements during the 12 months
preceding any proposed sale of the IHK Common Stock by me under Rule 145, and (
b) otherwise use its reasonable efforts to permit such sales pursuant to Rule
145 and Rule 144. IHK hereby represents to me that it has filed all reports
required to be filed with the Commission under Section 13 of the 1934 Act during
the preceding 12 months.
B. It is understood and agreed that certificates with the legends
set forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the IHK Common Stock received in the Merger and
the provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the IHK Common
Stock received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) IHK has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to IHK, or a
"no action" letter obtained by the undersigned from the staff of the Commission,
to the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Very truly yours,
-------------------------------------
Name:
Agreed and accepted this ____ day of
[_______________], 1997, by
IMPERIAL HOLLY CORPORATION
By:
--------------------------------
Name:
Title:
3
<PAGE>
EXHIBIT 99(c)(2)
STOCKHOLDERS AGREEMENT dated as of September , 1997, among
Imperial Holly Corporation, a Texas corporation ("IHK"), IHK Merger Sub
Corporation, a Delaware corporation and wholly owned subsidiary of IHK ("Merger
Sub"), and the other parties identified on Schedule A hereto (each, a
"Stockholder").
WHEREAS, each Stockholder desires that Savannah Foods & Industries,
Inc., a Delaware corporation (the "Company"), IHK and Merger Sub enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") with respect to the merger of
Merger Sub with and into the Company (the "Merger"); and
WHEREAS, such Stockholder is executing this Agreement as an inducement
to IHK and Merger Sub to enter into and execute the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by IHK
and Merger Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
SECTION 1. Representations and Warranties. Each Stockholder
severally, and not jointly, represents and warrants to IHK and Merger Sub as
follows:
(a) Such Stockholder is the record or beneficial owner of the number
of shares of Common Stock, par value $0.25 per share, of the Company (the
"Company Common Stock") and holds options for shares of Company Common
Stock, each as set forth opposite such Stockholders' name in Schedule A
hereto (as may be adjusted from time to time pursuant to Section 4, such
Stockholder's "Shares"). Except for such Stockholder's Shares, such
Stockholder is not the record or beneficial owner of any shares of Company
Common Stock. Any of such Shares which are described on Schedule A as
option shares shall be deemed "Option Shares" for the purposes of this
Agreement. All other shares shall be deemed "Owned Shares." Any Option
Shares which are exercised prior to the termination of this Agreement shall
be deemed to be "Owned Shares."
(b) This Agreement has been duly authorized, executed and delivered by
such Stockholder and constitutes the legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with
its terms. Neither the execution and delivery of this Agreement nor the
consummation by such Stockholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Stockholder is a party or bound or to
which such Stockholder's Shares are subject. The consummation by such
Stockholder of the transactions contemplated hereby
<PAGE>
will not violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or regulation
applicable to such Stockholder or such Stockholder's Shares.
(c) Such Stockholder's Owned Shares and the certificates representing
such Owned Shares are now and at all times during the term hereof will be
held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances arising
hereunder.
(d) Such Stockholder understands and acknowledges that IHK is entering
into, and causing Merger Sub to enter into, the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.
SECTION 2. Purchase and Sale of Shares. So long as the Per Share
Amount in the Offer is not less than $20.25 in cash (net to the seller), each
Stockholder hereby severally agrees that he shall tender his Owned Shares into
the Offer prior to the expiration of the Offer and that it shall not withdraw
any Shares so tendered (it being understood that the obligation contained in
this sentence is unconditional).
SECTION 3. Covenants. Each Stockholder severally, and not
jointly, agrees with, and covenants to, IHK and Merger Sub as follows: such
Stockholder shall not, except as contemplated by the terms of this Agreement,
during the term of this Agreement, (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of such
Stockholder's Shares or any interest therein, (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer of any
or all of such Shares or any interest therein, (iii) grant any proxy, power-of-
attorney or other authorization or consent in or with respect to such Shares,
(iv) deposit such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or (v) take any action that would in any
way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby; provided that each
Stockholder shall be entitled to transfer all or any portion of such
Shareholder's Shares to any person or entity which agrees in writing to be bound
by the provisions of this Agreement.
SECTION 4. Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation such Stockholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Company Common Stock, or the acquisition
of additional shares of Company Common Stock or other securities or rights of
the Company by any Stockholder, the number of Owned Shares and Option Shares
listed on Schedule A
-2-
<PAGE>
beside the name of such Stockholder shall be adjusted appropriately and this
Agreement and the obligations hereunder shall attach to any additional shares of
Company Common Stock or other securities or rights of the Company issued to or
acquired by such Stockholder.
SECTION 5. Transfer. Each Stockholder agrees with and covenants
to IHK that such Stockholder shall not request that the Company register the
transfer (booked as entry or otherwise) of any certificated or uncertificated
interest representing any of the securities of the Company, unless such transfer
is made in compliance with this Agreement.
SECTION 6. Stockholder Capacity. No person executing this Agreement
who is or becomes during the term hereof a director or officer of the Company
makes any agreement or understanding herein in his or her capacity as such
director or officer. Each Stockholder signs solely in his or her capacity as the
record holder and beneficial owner of such Stockholder's Shares and nothing
herein shall limit or affect any actions taken by a Stockholder in its capacity
as an officer or director for the Company to the extent specifically permitted
by the Merger Agreement.
SECTION 7. Further Assurances. Each Stockholder shall, upon request
of IHK or Merger Sub, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by IHK or Merger Sub to be necessary
or desirable to carry out the provisions hereof.
SECTION 8. Termination. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the earlier of (a)
the date upon which the Merger Agreement is terminated by the Company, IHK or
Merger Sub for any reason in accordance with its terms or (b) the date that IHK
or Merger Sub shall have purchased and paid for the Shares of each Stockholder
pursuant to the Offer.
SECTION 9. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to such terms in the Merger
Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or such other address
for a party as shall be specified by like notice): (i) if to IHK or Merger
Sub, to the address set forth in Section 9.02 of the Merger Agreement; and
(ii) if to a Stockholder, to the address set forth on Schedule A hereto, or
such other address as may be specified in writing by such Stockholder.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
-3-
<PAGE>
(d) 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 (even without the signature of any other Stockholder) as to any
Stockholder when one or more counterparts have been signed by each of IHK,
Merger Sub and such Stockholder and delivered to IHK and such Stockholder.
(e) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts or laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior
written consent of the other parties, except by laws of descent. Any
assignment in violation of the foregoing shall be void.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstances, shall, to any extent, be held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and
the application thereof to any other circumstances, shall remain in full
force and effect, shall not in any way be affected, impaired or
invalidated, and shall be enforced to the fullest extent permitted by law.
(i) Each Stockholder agrees that irreparable damage would occur and
that IHK and Merger Sub would not have any adequate remedy at law 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 IHK and Merger Sub shall be entitled to an
injunction or injunctions to prevent breaches by any Stockholder of this
Agreement and to enforce specifically the terms and provisions of this
Agreement.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and
signed by such party.
IN WITNESS WHEREOF, IHK, Merger Sub and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
-4-
<PAGE>
IMPERIAL HOLLY CORPORATION
By:_________________________________
Name:
Title:
IHK MERGER SUB CORPORATION
By:_________________________________
Name:
Title:
-5-
<PAGE>
SCHEDULE A
NUMBER OF SHARES OF
NUMBER OF SHARES OF COMMON STOCK ISSUABLE
STOCKHOLDER (INCLUDING ADDRESS) COMMON STOCK OWNED UPON EXERCISE OF OPTIONS
- ------------------------------- ------------------- ------------------------
W. Waldo Bradley
John D. Carswell
R. Eugene Cartledge
Dale C. Critz
Lee B. Durham, Jr.
F. Sprague Exley
Arthur M. Gignilliat, Jr.
Robert L. Harrison
James M. Reed
William W. Sprague III
Hugh M. Tarbutton
Arnold Tenenbaum
D. Richard Donnelly
James M. Kelley
David H. Roche
Gregory H. Smith
-6-
<PAGE>
EXHIBIT 99(c)(3)
AGREEMENT AND IRREVOCABLE PROXY
This Agreement and Irrevocable Proxy, dated as of September , 1997
(the "Agreement"), is by and between Savannah Foods & Industries, Inc., a
Delaware corporation (the "Company"), and the party identified as the
"Stockholder" on the signature page hereof (the "Stockholder").
R E C I T A L S:
WHEREAS, the Company, Imperial Holly Corporation, a Texas corporation
("IHK"), and IHK Merger Sub Corporation, a Delaware corporation ("Merger Sub"),
propose to enter into an Agreement of Merger, dated as of the date hereof (the
"Merger Agreement"), providing, among other things, for the merger of the
Company and Merger Sub in accordance with the terms and provisions of, and
subject to the conditions set forth in, the Merger Agreement (the "Merger"); and
WHEREAS, the Stockholder is the owner, beneficially and of record, of
the number of shares of Company Common Stock (the "Shares") identified on the
signature page of this Agreement; and
WHEREAS, the Stockholder has agreed to vote the Shares in favor of the
issuance of the Stock Consideration upon consummation of the Merger at IHK's
Shareholders' Meeting;
NOW, THEREFORE, to induce the Company to enter into the Merger
Agreement and in consideration of the aforesaid and the representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, including the benefits that the parties hereto expect to derive from
the Merger, the receipt and sufficiency of all of which are hereby acknowledged
by the parties, the parties hereto agree as follows:
1. Revocation of Prior Proxies. The Stockholder hereby revokes all
previous proxies granted with respect to any of the Shares owned by the
Stockholder that would conflict with the terms of the Proxy granted hereby.
2. Grant of Irrevocable Proxy. The Stockholder hereby irrevocably
constitutes and appoints the Company and R. Eugene Cartledge, Chairman of
the Board of the Company, and William W. Sprague III, President and Chief
Executive Officer of the Company, in their respective capacities as
officers of the Company, and any individual, who shall hereafter succeed to
the office of Chairman of the Board or President and Chief Executive
Officer, respectively, of the Company, and each of them individually, as
its true and lawful proxy and attorney-in-fact, with full power of
substitution, for and in the name, place and stead of the Stockholder, to
call and attend any and all meetings of IHK's stockholders, including IHK's
Shareholders' Meeting, at which the issuance of the Stock
<PAGE>
Consideration by IHK upon consummation of the Merger is to be considered
and voted upon by IHK's stockholders, and any adjournments thereof, to
execute any and all written consents of stockholders of IHK and to vote all
of the Shares and any and all shares of any other class of capital stock of
IHK presently or at any future time owned beneficially or of record by the
Stockholders, including any and all securities having voting rights issued
or issuable in respect thereof, which the Stockholder is entitled to vote
other than as set forth on Exhibit B hereto (all of the foregoing being
collectively referred to as the "Subject Stock"), and to represent and
otherwise act as the Stockholder could act, in the same manner and with the
same effect as if the Stockholder were personally present, at any such
annual, special or other meeting of the stockholders of the Company
(including the IHK's Shareholders' Meeting), and at any adjournment thereof
(a "Meeting"), or pursuant to any written consent in lieu of meeting or
otherwise; provided, however, that any such vote or consent in lieu thereof
or any other action so taken shall be solely for the purposes of voting in
favor of issuance of the Stock Consideration upon consummation of the
Merger and any transactions contemplated thereby. Such attorneys and
proxies are hereby authorized to vote the Subject Stock in accordance with
the terms of the Proxy contemplated hereby.
3. Vote in Favor of Stock Consideration. If the Company is unable or
declines to exercise the power and authority granted by the Proxy for any
reason, the Stockholder covenants and agrees to vote all the Subject Stock
in favor of approval of the issuance of the Stock Consideration upon
consummation of the Merger at any Meeting (including the IHK Shareholders'
Meeting) and, upon request of the Company, to provide the Stockholder's
written consent thereto.
4. No Action Without the Company's Consent. The Stockholder hereby
covenants and agrees that it will not vote or take any action by written
consent of stockholders in lieu of meeting on any matter that is subject to
the Proxy without the Company's prior written consent.
5. Negative Covenants of the Stockholder. Except to the extent
contemplated herein or in the Merger Agreement, the Stockholder hereby
covenants and agrees that the Stockholder will not, and will not agree to,
directly or indirectly, (a) sell, transfer, assign, cause to be redeemed or
otherwise dispose of any of the Subject Stock or enter into any contract,
option or other agreement or understanding with respect to the sale,
transfer, assignment, redemption or other disposition of any Subject Stock;
or (b) grant any proxy, power-of-attorney or other authorization or
interest in or with respect to such Subject Stock pertaining or relating to
the Merger Agreement, the Merger, the issuance of the Stock Consideration
upon consummation of the Merger, or any of the transactions contemplated
thereby; or (c) deposit such Subject Stock into a voting trust or enter
into a voting agreement or arrangement with respect to such Subject Stock,
unless and until, in the case of (a), (b) or (c) above, the Stockholder
shall have taken all actions (including, without limitation, the
endorsement of a legend on the certificates evidencing such Subject Stock)
reasonably necessary to ensure that such Subject Stock shall at all times
be subject to all the rights,
-2-
<PAGE>
powers and privileges granted or conferred, and subject to all the
restrictions, covenants and limitations imposed, by this Agreement and
shall have caused any transferee of any of the Subject Stock to execute and
deliver to the Company, an Agreement and Irrevocable Proxy, in
substantially the form of this Agreement with respect to the Subject Stock.
Nothing contained herein shall be construed in any way as affecting the
right of the Stockholder to grant a security interest, by way of pledge, by
hypothecation or otherwise, in the Subject Stock in connection with bona
fide credit arrangements or as requiring the lender in such bona fide
credit arrangement to be bound by the terms of this Agreement, provided
that the Stockholder shall promptly notify the Company of any such grant.
6. Negative Covenants of the Company. The Company covenants and
agrees that it will not (a) amend in any material respect the Merger
Agreement, unless it obtains the Stockholder's prior written consent
thereof, or (b) modify the terms of any other Agreement and Irrevocable
Proxy between the Company and any other stockholder of IHK, dated as of
even date herewith, unless the Company shall have offered to modify the
terms of this Agreement and Irrevocable Proxy in the same manner and the
Stockholder has elected not to accept such offer. Provided that the
Company shall have notified the Stockholder of any such amendment or
modification, the Company and the Stockholder hereby agree that the sole
remedy of the Stockholder for a breach by the Company of the foregoing
covenant shall be to elect to terminate this Agreement and Irrevocable
Proxy by notice to the Company.
7. Stockholder's Representations and Warranties. The Stockholder
represents and warrants to the Company that (a) the Stockholder has duly
authorized, executed and delivered this Agreement and this Agreement
constitutes a valid and binding agreement, enforceable in accordance with
its terms and neither the execution and delivery of this Agreement nor the
consummation by the Stockholder of the transactions contemplated hereby
will constitute a violation of, a default under, or conflict with any
contract, commitment, agreement, understanding, arrangement or restriction
of any kind to which the Stockholder is a party or by which the Stockholder
is bound; or (b) consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under, any provision of law other than filing on Form 13D that may
be required under the Securities Exchange Act of 1934, as amended; (c)
except to the extent contemplated herein and except as described in the
final sentence of this Section 7, the Subject Stock and the certificates
representing same are now and at all times during the term of this
Agreement will be held by the Stockholder, or by a nominee or custodian for
the benefit of the Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreement or any other
encumbrances whatsoever ("Encumbrances") with respect to the ownership or
voting of the Subject Stock or otherwise, other than Encumbrances created
by or arising pursuant to this Agreement; and there are no outstanding
options, warrants or rights to purchase or acquire, or proxies, powers-of-
attorney, voting agreements, trust agreements or other agreements relating
to, the Subject Stock other than this Agreement; (d) except as set forth on
Exhibit B, such Subject Stock constitutes all of the securities of IHK
owned beneficially or of record by the Stockholder on the date hereof; and
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(e) the Stockholder has the present power and right to vote all of the
Subject Stock as contemplated herein. The Stockholder hereby advises the
Company that the Shares are pledged as security under that certain
Agreement [describe if applicable], and that no default, event of default,
or event of acceleration has occurred thereunder.
8. Certain Defined Terms. Unless otherwise expressly provided
herein, all capitalized terms used herein without definition shall have the
meanings assigned to them in the Merger Agreement.
9. Choice of Law. The terms and provisions of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the provisions thereof relating to
conflicts of law.
10. Binding Effect; Assignability. The terms and provisions of this
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the successors and permitted assigns of the parties hereto.
This Agreement and the rights hereunder may not be assigned or transferred
by the Company, except with the prior written consent of the Stockholder.
11. Term. This Agreement shall terminate at the earlier of (i) the
Effective Time, or (ii) the termination of the Merger Agreement in
accordance with its terms, or (iii) upon written notice of termination of
this Agreement given by the Company to the Stockholder expressly referring
to this paragraph, or (iv) the revocation by the Company of the
recommendation to its stockholders to approve the Merger, the Merger
Agreement, and the transactions contemplated thereby or (v) termination of
this Agreement in accordance with Section 6 hereof or (vi) May 31, 1998.
12. Irrevocable Proxy Coupled with an Interest. The Stockholder
acknowledges that the Company will enter into the Merger Agreement in
reliance upon this Agreement, including the Proxy, and that the Proxy is
granted in consideration for the execution and delivery of the Merger
Agreement by the Company. THE STOCKHOLDER AGREES THAT THE PROXY AND ALL
OTHER POWER AND AUTHORITY INTENDED TO BE CONFERRED HEREBY IS COUPLED WITH
AN INTEREST SUFFICIENT IN LAW TO SUPPORT AN IRREVOCABLE POWER AND, EXCEPT
AS PROVIDED IN SECTION 11 ABOVE, SHALL NOT BE TERMINATED BY ANY ACT OF THE
STOCKHOLDER BY LACK OF APPROPRIATE POWER OR AUTHORITY OR BY THE OCCURRENCE
OF ANY OTHER EVENT OR EVENTS.
13. Specific Performance. The parties acknowledge and agree that
performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will result in
irreparable harm to the other and will not be compensable by money damages.
The parties therefore agree that this Agreement, including the Proxy, shall
be specifically enforceable and that specific enforcement and injunctive
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relief shall be a remedy properly available to the Company and the
Stockholder for any breach of any agreement, covenant or representation of
the other hereunder.
14. Further Assurance. The Stockholder will, upon request, execute
and deliver any additional documents and take such further actions as may
reasonably be deemed by the Company or its counsel to be necessary or
desirable to carry out the provisions hereof.
15. Severability. If any term, provision, covenant or restriction of
this Agreement, or the applicable thereof to any circumstance shall, to any
extent, be held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement or the application thereof to any other
circumstance, shall remain in full force and effect, shall not in any way
be affected, impaired or invalidated and shall be enforced to the fullest
extent permitted by law.
16. Counterparts. This Agreement and Irrevocable proxy may be
executed in counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same document.
17. Notice. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof
of delivery) to the parties at the following addresses (or such other
address for a party as shall be specified by like notice): (i) if to the
Company, to the address set forth in Section 9.02 of the Merger Agreement;
and (ii) if to a Stockholder, to the address set forth on the signature
page hereof, or such other address as may be specified in writing by such
Stockholder.
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IN WITNESS WHEREOF, the Company and the Stockholder have duly executed
this Agreement or caused this Agreement to be duly executed as of the date first
set forth hereinabove.
THE STOCKHOLDER:
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