<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
SPRINGS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
SOUTH CAROLINA 5023 57-0252730
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
---------------------
205 NORTH WHITE STREET
FORT MILL, SOUTH CAROLINA 29715
(803) 547-1500
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
C. POWERS DORSETT, ESQ.
VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY
SPRINGS INDUSTRIES, INC.
205 NORTH WHITE STREET
FORT MILL, SOUTH CAROLINA 29715
(803) 547-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<S> <C>
George L. Cohen, Esq. Edward J. Hawie, Esq.
Sutherland, Asbill & Brennan King & Spalding
999 Peachtree Street, N.E. 191 Peachtree Street
Atlanta, GA 30309-3996 Atlanta, GA 30303-1763
(404) 853-8000 (404) 572-4600
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
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- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par value
$.25.............................. 3,000,000 shares(1) $39.1174(2) $117,352,200(2) $40,467
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the maximum number of shares of Class A Common Stock of the
Registrant issuable to shareholders of Dundee Mills, Incorporated upon the
consummation of the merger of Dundee Mills, Incorporated with Dundee
Acquisition Corp. pursuant to the terms of the Agreement and Plan of Merger.
(2) Estimated solely for purposes of calculating the registration fee and based,
pursuant to Rules 457(f)(2) and (3) promulgated under the Securities Act of
1933, on the value of the common stock of Dundee Mills, Incorporated to be
acquired by the Registrant in the merger of Dundee Mills, Incorporated with
Dundee Acquisition Corp. in exchange for the securities registered, based on
the book value of the common stock of Dundee Mills, Incorporated as of
December 31, 1994 ($121,527,846) and the maximum number of shares of Dundee
Mills, Incorporated which could be received by the Registrant in the merger
described herein less $4,175,700, representing the corresponding amount of
cash to be paid by the Registrant in the merger based on conversion of the
maximum number of shares of Dundee Common Stock convertible into Class A
Common Stock of the Registrant under the Agreement and Plan of Merger,
assuming a price of the Registrant's Class A Common Stock of $37.9375 per
share, the average of the high and low prices of the Registrant's Class A
Common Stock on the New York Stock Exchange on March 7, 1995.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE> 2
SPRINGS INDUSTRIES, INC.
CROSS-REFERENCE SHEET TO FORM S-4 REGISTRATION STATEMENT
(PURSUANT TO ITEM 501(B) OF REGULATION S-K)
PART 1 -- INFORMATION REQUIRED IN THE PROSPECTUS
<TABLE>
<CAPTION>
LOCATION IN PROXY STATEMENT AND
FORM S-4 ITEM NUMBERS AND CAPTIONS PROSPECTUS
----------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus............................ Facing Page; Outside Front Cover Page of
Proxy Statement and Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................... Inside Front Cover Page of Proxy
Statement and Prospectus; Available
Information; Information Incorporated
by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information......... Summary
4. Terms of the Transaction................ Summary; The Merger; Comparison of
Rights of Holders of Springs Class A
Stock and Holders of Dundee Common
Stock
5. Pro Forma Financial Information......... Springs Industries, Inc. Pro Forma
Combined Financial Data
6. Material Contacts with the Company Being
Acquired.............................. Summary; The Merger
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters............. *
8. Interests of Named Experts and
Counsel............................... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................... *
B. INFORMATION ABOUT THE REGISTRANT
10. Information with respect to S-3
Registrants........................... Available Information; Summary
11. Incorporation of Certain Information by
Reference............................. Information Incorporated by Reference
12. Information with Respect to S-2 or S-3
Registrants........................... *
13. Incorporation of Certain Information by
Reference............................. *
14. Information with Respect to Registrants
Other than S-2 or S-3 Registrants..... *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies............................. *
16. Information with Respect to S-2 or S-3
Companies............................. *
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
LOCATION IN PROXY STATEMENT AND
FORM S-4 ITEM NUMBERS AND CAPTIONS PROSPECTUS
----------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
17. Information with Respect to Companies
Other than S-2 or S-3 Companies....... Summary; Dundee Common Stock Prices and
Dividend Policies; Dundee Selected
Financial Data; Dundee Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business of Dundee; Dundee Voting
Securities and Principal Holders;
Dundee Mills, Incorporated Financial
Statements
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited.... Summary; The Meeting; The Merger;
Ratification of Certain Issuances of
Dundee Common Stock; Business of
Springs; Information Incorporated by
Reference; Dundee Voting Securities
and Principal Holders; Springs
Management and Principal Shareholders
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer............... *
</TABLE>
- ---------------
* Omitted since the answer is negative or the Item is not applicable.
<PAGE> 4
DUNDEE
DUNDEE MILLS INCORPORATED
, 1995
Dear Shareholder:
You are cordially invited to attend an important Special Meeting of the
Shareholders (the "Meeting") of Dundee Mills, Incorporated ("Dundee") to be held
at Griffin Technical Institute, 501 Varsity Road, Griffin, Georgia 30223 on
, 1995 at .m. local time.
At the Meeting, you will be asked to consider and vote on a proposal to
approve an Agreement and Plan of Merger, as amended (the "Merger Agreement")
which provides for the acquisition of Dundee by Springs Industries, Inc.
("Springs") in exchange for shares of Class A common stock of Springs and, to a
limited extent, cash, through the merger of Dundee with a wholly owned
subsidiary of Springs (the "Merger"). If the Merger is consummated, each
outstanding share of Dundee common stock, with certain exceptions, will be
converted into and exchanged for the right to receive an amount of Springs Class
A common stock equal in value to $2,525.00 (subject to variation based on market
prices) or cash in that amount, at the shareholder's election and subject to
certain limitations. Dundee shareholders may also elect to convert a portion of
their holdings of Dundee common stock into cash and the remaining portion into
Springs Class A common stock. Details of the Merger are set forth in the
accompanying Proxy Statement and Prospectus, which you should read carefully.
Springs' obligation to consummate the Merger is conditioned upon, among
other things, Dundee shareholder approval of the Merger Agreement and Dundee
shareholder approval and ratification of certain past issuances of Dundee common
stock. The affirmative votes of a majority of the outstanding shares of Dundee
common stock will be necessary for approval and adoption of the Merger
Agreement.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF DUNDEE HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AS BEING IN THE BEST
INTERESTS OF DUNDEE AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT ALL
SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT. THE BOARD OF DIRECTORS
OF DUNDEE HAS BEEN ADVISED BY THE ROBINSON-HUMPHREY COMPANY, INC. THAT, IN ITS
OPINION, THE CONSIDERATION TO BE PAID BY SPRINGS IN THE MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW, TO DUNDEE SHAREHOLDERS AS OF THE DATE OF SUCH OPINION.
All shareholders are invited to attend the Meeting in person. In order that
your shares may be represented at the Meeting, you are urged to promptly
complete, sign, date and return the accompanying proxy card in the enclosed,
postage-paid envelope, whether or not you plan to attend the Meeting. If you
attend the Meeting in person, you may, if you wish, vote personally on all
matters brought before the Meeting even if you have previously returned your
proxy.
If you wish to receive any cash in the Merger, you must follow the
procedures described under "IMPORTANT NOTICES" below.
Sincerely,
/s/ JOHN T. NEWTON
-----------------------------------
JOHN T. NEWTON
Chairman of the Board
P.O. Drawer E, Griffin, GA 30224
(404) 227-5581
Fax (404) 412-5656
TOWEL MAKERS SINCE 1888
<PAGE> 5
DUNDEE MILLS, INCORPORATED
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , 1995
To Our Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of Dundee
Mills, Incorporated, a Georgia corporation ("Dundee"), will be held at Griffin
Technical Institute, 501 Varsity Road, Griffin, Georgia 30223 on ,
at , local time, for the following purposes:
1. To consider and vote on a proposal to approve the Agreement and
Plan of Merger dated as of February 6, 1995, as amended (the "Merger
Agreement"), among Dundee, Springs Industries, Inc. ("Springs") and Dundee
Acquisition Corp., a wholly-owned subsidiary of Springs ("Subcorp"), which
provides for the acquisition of Dundee by Springs in exchange for shares of
Class A common stock of Springs and, to a limited extent, cash, through the
merger of Dundee with Subcorp (the "Merger"). If the Merger is consummated,
each outstanding share of Dundee common stock, with certain exceptions,
will be converted into and exchanged for the right to receive an amount of
Springs Class A common stock equal in value to $2,525.00 (subject to
variation based on market prices) or cash in that amount, at the
shareholder's election and subject to certain limitations. The terms of the
Merger are described in the accompanying Proxy Statement and Prospectus.
2. To approve and ratify the terms and conditions of certain past
issuances of Dundee common stock, as described in the accompanying Proxy
Statement and Prospectus.
3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on ,
1995 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Meeting and at any adjournment thereof.
The affirmative votes of a majority of the outstanding shares of Dundee
common stock will be necessary for approval and adoption of the Merger
Agreement, and for approval and ratification of the terms and conditions of
certain past issuances of Dundee common stock.
Shareholders of Dundee have the right to dissent from the Merger and demand
payment of the fair value of their shares of Dundee common stock if the Merger
is consummated. The right of any shareholder to receive such payment is
contingent upon strict compliance with the requirements of the applicable
provisions of Georgia law, which are attached as Exhibit C to the Proxy
Statement and Prospectus and are incorporated herein by reference.
By Order of the Board of Directors
DOUGLAS R. TINGLE
Secretary
Griffin, Georgia
, 1995
<PAGE> 6
IMPORTANT NOTICES
TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO COMPLETE, DATE
AND SIGN (EXACTLY AS YOUR NAME APPEARS THEREON) THE ENCLOSED PROXY, AND RETURN
IT PROMPTLY TO DUNDEE MILLS, INCORPORATED IN THE POSTAGE PAID ENVELOPE, WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY
YOU AT ANY TIME BEFORE IT IS VOTED.
YOU MUST RETURN THE ENCLOSED LETTER OF TRANSMITTAL WITH YOUR STOCK CERTIFICATES
REPRESENTING DUNDEE COMMON STOCK TO RECEIVE ANY MERGER CONSIDERATION. IF YOU
WANT TO RECEIVE SOME OR ALL OF YOUR MERGER CONSIDERATION IN CASH INSTEAD OF
SPRINGS CLASS A COMMON STOCK, YOU NEED TO COMPLETE THE CASH ELECTION FORM IN THE
ENCLOSED LETTER OF TRANSMITTAL AND SEND IT (WITH ALL OF YOUR STOCK CERTIFICATES)
TO WACHOVIA BANK OF NORTH CAROLINA, N.A. IN THE SEPARATE ENVELOPE PROVIDED NO
LATER THAN THE CLOSE OF BUSINESS ON , 1995. THE LETTER OF
TRANSMITTAL WILL ALSO PERMIT YOU TO RECEIVE SPRINGS CLASS A COMMON STOCK FOR
SOME OR ALL OF YOUR SHARES OF DUNDEE COMMON STOCK IF YOU SO DESIRE.
EVEN IF YOU WANT TO RECEIVE ALL CASH OR ALL SPRINGS CLASS A COMMON STOCK FOR
YOUR SHARES OF DUNDEE COMMON STOCK, IN SOME CIRCUMSTANCES YOU MAY STILL RECEIVE
THE OTHER, AS DESCRIBED IN THE FOLLOWING PROXY STATEMENT AND PROSPECTUS.
<PAGE> 7
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
DATED MARCH 8, 1995
PROXY STATEMENT AND PROSPECTUS
<TABLE>
<S> <C>
PROXY STATEMENT PROSPECTUS
DUNDEE MILLS, INCORPORATED SPRINGS INDUSTRIES, INC.
301 RAILROAD AVENUE 205 NORTH WHITE STREET
P.O. BOX E P.O. BOX 70
GRIFFIN, GEORGIA 30224 FORT MILL, SOUTH CAROLINA 29715
</TABLE>
This Proxy Statement and Prospectus and the accompanying notice and form of
proxy are being furnished to the shareholders of Dundee Mills, Incorporated, a
Georgia corporation ("Dundee") on or about , 1995 in connection
with the solicitation of proxies by the Board of Directors of Dundee from
holders of Dundee's outstanding shares of common stock, $25.00 par value
("Dundee Common Stock"), for use at a special meeting of shareholders of Dundee
to be held on , 1995, at Griffin Technical Institute, 501
Varsity Road, Griffin, Georgia 30223 at , local time, and at any
adjournments or postponements thereof (the "Meeting").
At the Meeting, the Dundee shareholders will be asked to vote upon a
proposal to approve an Agreement and Plan of Merger dated as of February 6,
1995, as amended (the "Merger Agreement"), among Springs Industries, Inc., a
South Carolina corporation ("Springs"), Dundee Acquisition Corp., a Georgia
corporation and wholly-owned subsidiary of Springs ("Subcorp"), and Dundee.
Under the Merger Agreement, Dundee will become a wholly-owned subsidiary of
Springs through a merger of Dundee with Subcorp (the "Merger"), and each
outstanding share of Dundee Common Stock, with certain exceptions, will be
converted into and exchanged for the right to receive a number of shares of
Springs Class A Common Stock, $.25 par value ("Springs Class A Stock") equal in
value to $2,525.00 (subject to variation based on market prices) or cash in that
amount, at the shareholder's election and subject to certain limitations. The
Merger Agreement is attached to this Proxy Statement and Prospectus as Exhibit A
and is incorporated herein by reference. DUNDEE SHAREHOLDERS WHO PREFER TO
RECEIVE CASH FOR SOME OR ALL OF THEIR SHARES OF DUNDEE COMMON STOCK MUST
CAREFULLY FOLLOW THE PROCEDURES DISCUSSED UNDER "THE MERGER -- CASH ELECTION
PROCEDURE."
At the Meeting, the Dundee shareholders will also be asked to vote upon the
approval and ratification of the terms and conditions of certain past issuances
of Dundee Common Stock, which are described in this Proxy Statement and
Prospectus.
The Board of Directors of Dundee knows of no business that will be
presented at the Meeting other than the matters described in this Proxy
Statement and Prospectus. If any other matters are presented at the Meeting,
proxies will be voted in accordance with the discretion of the proxy holders.
Springs has filed a Registration Statement on Form S-4 (the "Registration
Statement") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), covering up to 3,000,000 shares of Springs Class A Stock to be issued in
connection with the Merger. This Proxy Statement, along with the materials which
are incorporated by reference, also constitutes the Prospectus of Springs filed
as part of the Registration Statement.
THE DESCRIPTION OF ALL DOCUMENTS IN THIS PROXY STATEMENT AND PROSPECTUS IS
QUALIFIED BY REFERENCE TO THE TEXT OF THOSE DOCUMENTS, INCLUDING BUT NOT LIMITED
TO, THOSE DOCUMENTS ATTACHED AS EXHIBITS TO THIS PROXY STATEMENT AND PROSPECTUS.
On , 1995, the last sale price of Springs Class A Stock as
reported on the New York Stock Exchange was $ per share. Dundee
shareholders are urged to obtain current quotes for Springs Class A Stock.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement and Prospectus, and, if
given or made, such information or representation should not be relied upon as
having been authorized. This Proxy Statement and Prospectus does not constitute
an offer to sell, or a solicitation of an offer to purchase, the securities
offered by this Proxy Statement and Prospectus, or the solicitation of a proxy,
in any jurisdiction to or from any person to whom it is unlawful to make such
offer, or solicitation of an offer or proxy solicitation in such jurisdiction.
Neither the delivery of this Proxy Statement and Prospectus nor any distribution
of the securities offered pursuant to this Proxy Statement and Prospectus shall
create an implication that there has been no change in the affairs of Dundee or
Springs since the date of this Proxy Statement and Prospectus.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT AND PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Proxy Statement and Prospectus is , 1995.
<PAGE> 8
AVAILABLE INFORMATION
Springs is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and is required to file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC") relating to its business, financial statements
and other matters. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
Regional Offices located at 7 World Trade Center, Suite 1300, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials can also be obtained at prescribed rates from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, such materials may be inspected and copied at the offices of the
New York Stock Exchange, Inc. at 20 Broad Street, New York, New York 10005,
where Springs Class A Stock is listed.
Springs has filed a Registration Statement under the Securities Act with
the SEC covering the Springs Class A Stock to be issued in connection with the
Merger. This Proxy Statement and Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules thereto,
to which reference is hereby made. With respect to statements made in this Proxy
Statement and Prospectus as to the contents of any contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto may be inspected at the public
reference facilities of the Commission listed above.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. SPRINGS WILL PROVIDE WITHOUT CHARGE TO EACH PERSON
(INCLUDING ANY BENEFICIAL OWNER) TO WHOM A COPY OF THIS PROXY STATEMENT AND
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, COPIES OF
ALL SUCH DOCUMENTS (OTHER THAN THE EXHIBITS THERETO UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE DIRECTED TO SPRINGS
INDUSTRIES, INC., 205 NORTH WHITE STREET, FORT MILL, SC 29715, ATTN: C. POWERS
DORSETT, TELEPHONE: (803) 547-1500. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE NO LATER THAN , 1995
(FIVE BUSINESS DAYS BEFORE THE DATE OF THE MEETING).
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by Springs (File No. 1-5315) with the SEC
under the Exchange Act are incorporated by reference herein: (a) Springs' Annual
Report on Form 10-K for the fiscal year ended December 31, 1994; and (b) the
description of the Springs Class A Stock contained or incorporated in Springs'
Registration Statement on Form 10, filed on November 17, 1966, as updated by
certain information contained in Springs' Forms 10-Q for the quarters ended
April 7, 1987 and October 1, 1988.
All documents filed by Springs pursuant to Sections 13(a) and (c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
date of the Meeting, shall be deemed to be incorporated by reference and to be a
part of this Prospectus from the date of the filing of such document. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement and Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement and
Prospectus.
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY............................................................................... 1
The Companies....................................................................... 1
The Meeting......................................................................... 1
Reasons for the Merger; Recommendation of Dundee's Board of Directors............... 2
The Merger.......................................................................... 2
Merger Consideration................................................................ 2
Dissenters' Rights.................................................................. 4
Certain Terms of the Merger......................................................... 4
Tax Consequences.................................................................... 4
Comparison of Shareholder Rights.................................................... 5
Market Prices....................................................................... 5
Opinion of Dundee's Financial Advisor............................................... 5
Interests of Certain Persons in the Merger.......................................... 5
Governmental and Regulatory Requirements............................................ 6
Ratification of Certain Issuances of Dundee Common Stock............................ 6
Selected Financial Data............................................................. 7
Summary Pro Forma Financial Data (Unaudited)........................................ 8
Comparative Per Share Data.......................................................... 9
THE MEETING........................................................................... 10
General............................................................................. 10
Record Date and Shares Entitled to Vote............................................. 10
Vote Required; Security Ownership of Management..................................... 10
Solicitation and Revocation of Proxies.............................................. 11
Rights of Dissenting Shareholders................................................... 11
THE MERGER............................................................................ 13
Background.......................................................................... 13
Dundee Reasons for the Merger; Recommendation of the Board of Directors of Dundee... 14
Opinion of Dundee's Financial Advisor............................................... 15
Springs Reasons for the Merger...................................................... 18
The Merger Agreement................................................................ 18
Merger Consideration................................................................ 18
Limitation on Cash Elections........................................................ 19
Limitation on Springs Class A Stock................................................. 20
Cash Election Procedure............................................................. 20
Exchange of Certificates for Non-Cash Election Shares............................... 21
Fractional Shares................................................................... 21
Conditions to the Merger............................................................ 21
Effective Time and Termination...................................................... 22
Amendment........................................................................... 23
Representations, Warranties, Covenants and Agreements............................... 23
Governmental and Regulatory Requirements............................................ 23
Expenses............................................................................ 24
Resale of Springs Class A Stock..................................................... 24
Interests of Certain Persons........................................................ 24
Option and Proxy Agreements......................................................... 25
Tax Consequences.................................................................... 25
Accounting Treatment................................................................ 27
RATIFICATION OF CERTAIN ISSUANCES OF DUNDEE COMMON STOCK.............................. 27
</TABLE>
i
<PAGE> 10
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DUNDEE COMMON STOCK PRICES AND DIVIDEND POLICIES...................................... 29
DUNDEE SELECTED FINANCIAL DATA........................................................ 30
DUNDEE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.......................................................................... 31
Background.......................................................................... 31
Results of Operation................................................................ 31
Seasonality......................................................................... 32
Cost of Raw Materials............................................................... 32
BUSINESS OF SPRINGS................................................................... 33
Home Furnishings.................................................................... 33
Specialty Fabrics................................................................... 33
BUSINESS OF DUNDEE.................................................................... 35
Towels.............................................................................. 35
Baby Products/Healthcare............................................................ 35
Broadcloth Fabric................................................................... 35
Organization and Employees.......................................................... 35
Properties.......................................................................... 36
SPRINGS MANAGEMENT AND PRINCIPAL SHAREHOLDERS......................................... 37
DUNDEE VOTING STOCK AND PRINCIPAL HOLDERS............................................. 38
COMPARISON OF RIGHTS OF HOLDERS OF SPRINGS CLASS A STOCK AND HOLDERS OF DUNDEE COMMON
STOCK............................................................................... 39
Voting Rights....................................................................... 39
Liability of Directors.............................................................. 40
Indemnification of Officers and Directors........................................... 40
Directors........................................................................... 40
Dividends and Distributions......................................................... 41
Special Shareholder Meetings; Action Without a Meeting.............................. 41
Preemptive Rights................................................................... 42
Shareholder Inspection Rights....................................................... 42
Amendment of Articles of Incorporation and Bylaws................................... 42
Appraisal Rights.................................................................... 43
Anti-Takeover Provisions............................................................ 43
Shareholder Approval of Mergers and Asset Sales..................................... 44
SPRINGS CAPITAL STOCK................................................................. 45
Voting Rights....................................................................... 45
Dividends and Other Distributions................................................... 45
Convertibility of Class B Stock..................................................... 46
Restrictions on Transfer of Class B Stock........................................... 46
Other Information Regarding Class A Stock and Class B Stock......................... 46
LEGAL MATTERS......................................................................... 46
EXPERTS............................................................................... 46
OTHER MATTERS......................................................................... 47
INDEX TO FINANCIAL STATEMENTS......................................................... F-1
EXHIBIT A -- AGREEMENT AND PLAN OF MERGER, AS AMENDED
EXHIBIT B -- OPINION OF THE ROBINSON-HUMPHREY COMPANY, INC.
EXHIBIT C -- GEORGIA BUSINESS CORPORATION CODE, ARTICLE 13
</TABLE>
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SUMMARY
The following summary is intended to highlight certain information
contained elsewhere in this Proxy Statement and Prospectus. This summary is not
a complete statement of all material information presented elsewhere herein and
is qualified in its entirety by the more detailed information contained
elsewhere herein and in the accompanying exhibits and the documents referred to
herein. Shareholders are urged to read this Proxy Statement and Prospectus and
the accompanying exhibits in their entirety. As used in this Proxy Statement and
Prospectus, the terms "Springs" and "Dundee" refer to such corporations,
respectively, and, except where the context otherwise requires, such entities
and their respective subsidiaries. All information concerning Springs included
in the Proxy Statement and Prospectus has been provided by Springs, and all
information concerning Dundee included in this Proxy Statement and Prospectus
has been provided by Dundee. Unless otherwise defined herein, capitalized terms
used in this summary have the respective meanings ascribed to them elsewhere in
this Proxy Statement and Prospectus.
THE COMPANIES
Springs Industries, Inc., a South Carolina corporation ("Springs") is a
diversified textile and home furnishings manufacturer and finisher, serving a
variety of markets. Springs' principal business is concentrated in two segments.
In its home furnishings business segment, Springs manufactures, purchases for
resale and markets domestic bedding and bath products and decorative window
products. In its specialty fabrics business segment, Springs manufactures,
purchases for resale and markets a broad range of fabrics for industrial,
apparel and specialty end uses. Dundee Acquisition Corp., a Georgia corporation
("Subcorp"), is a newly formed subsidiary of Springs organized for the purpose
of effecting the Merger. The principal executive offices of Springs and Subcorp
are located at 205 North White Street, Fort Mill, South Carolina 29715, and the
telephone number is (803) 547-1500.
Dundee Mills, Incorporated, a Georgia corporation ("Dundee") is a leading
manufacturer of towels, infant and toddler bedding, knitted infant apparel, and
baby and healthcare products. The business of Dundee is divided into three
primary divisions: terry towel products, baby and healthcare products, and
broadcloth fabric. The principal executive offices of Dundee are located at 301
Railroad Avenue, Griffin, Georgia 30224, and the telephone number is (404)
227-5581.
THE MEETING
The Meeting will be held on , 1995 at local time at
Griffin Technical Institute, 501 Varsity Road, Griffin, Georgia 30223. The
purposes of the Meeting are to consider and vote upon a proposal to approve the
Merger Agreement and to consider and vote upon a proposal to approve and ratify
the terms and conditions of issuances by Dundee of Dundee common stock, $25.00
par value ("Dundee Common Stock") during 1990-1994.
Only holders of record of Dundee Common Stock at the close of business on
, 1995 (the "Record Date") will be entitled to notice of and to vote
at the Meeting. At the close of business on such date, there were 46,728 shares
of Dundee Common Stock outstanding. The affirmative votes of a majority of the
outstanding shares of Dundee Common Stock will be necessary for approval of the
Merger Agreement, and for approval and ratification of the terms and conditions
of issuances by Dundee of Dundee Common Stock during 1990-1994. See "The
Meeting."
The directors and one officer of Dundee have entered into agreements (i)
granting proxies to Springs under which Springs may vote certain shares of
Dundee Common Stock owned or controlled by such persons in favor of the Merger
at the Meeting and against any other acquisition of Dundee requiring shareholder
approval, and (ii) granting options at a cash price of $2,525.00 per share to
Springs to purchase such shares exercisable upon the occurrence of certain
events. These agreements cover approximately 23.5% of the outstanding Dundee
Common Stock. See "The Merger -- Option and Proxy Agreements." As of March 1,
1995, executive officers and directors of Dundee and their affiliates held in
the aggregate approximately 32.3% of the then outstanding Dundee Common Stock.
See "Dundee Voting Stock and Principal Holders."
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Representatives of Dundee's independent auditors, Ernst & Young LLP, will
be present at the Meeting to respond to appropriate questions and will have the
opportunity to make a statement if they desire to do so.
No vote of the shareholders of Springs is required to approve the Merger
Agreement.
REASONS FOR THE MERGER; RECOMMENDATION OF DUNDEE'S BOARD OF DIRECTORS
Dundee's Board of Directors has unanimously approved the Merger and has
determined that the Merger is fair to, and in the best interests of, Dundee and
its shareholders. Accordingly, Dundee's Board of Directors unanimously
recommends that Dundee's shareholders vote FOR approval of the Merger Agreement.
In approving the Merger Agreement, Dundee's directors considered, among other
things, Dundee's financial condition, the financial terms and tax consequences
of the Merger, and a report and opinion from The Robinson-Humphrey Company, Inc.
("Robinson-Humphrey") regarding the fairness, from a financial point of view, of
the consideration to be received in the Merger by the shareholders of Dundee.
See "The Merger -- Dundee Reasons for the Merger; Recommendation of the Board of
Directors of Dundee" and "The Merger -- Opinion of Dundee's Financial Advisor."
THE MERGER
Under the terms of the Merger Agreement, Dundee will merge with Subcorp and
will thus become a wholly-owned subsidiary of Springs. After the Merger, either
Subcorp will remain as the surviving corporation in the Merger or,
alternatively, if 80% or more of the outstanding shares of Dundee Common Stock
is converted into Springs Class A Common Stock, $.25 par value ("Springs Class A
Stock") in the Merger, Springs may, at its option, cause Subcorp to merge with
and into Dundee, thus leaving Dundee as the surviving corporation in the Merger.
Subject to the approval of the shareholders of Dundee and the satisfaction or
waiver of conditions precedent to the Merger but no later than the third
business day thereafter (the "Closing Date"), the Merger will become effective
at the time that a certificate of merger is filed with the Secretary of State of
the State of Georgia, unless a different effective time is specified in the
certificate of merger (the "Effective Time"). If Subcorp is the surviving
corporation in the Merger, at the Effective Time and by reason of the Merger,
Subcorp will change its corporate name from "Dundee Acquisition Corp." to
"Dundee Mills, Incorporated." Assuming that the Merger Agreement is approved at
the Meeting and all other conditions to the Merger are satisfied or waived, it
is anticipated that the Effective Time will occur on the date of the Meeting, or
as soon thereafter as practicable.
MERGER CONSIDERATION
Amount and Payment. At the Effective Time, each outstanding share of
Dundee Common Stock, with certain exceptions, will be converted into and
exchanged for the right to receive an amount of Springs Class A Stock equal in
value to $2,525.00 (subject to variation based on market prices) or cash in that
amount, at the shareholder's election (a "Cash Election") and subject to certain
limitations (such shares of Springs Class A Stock and cash being hereinafter
referred to as the "Merger Consideration"). Dundee shareholders may elect to
convert a portion of their holdings of Dundee Common Stock into cash and the
remaining portion into Springs Class A Stock. In order to assure that the Merger
will qualify as a tax-free reorganization, the maximum number of shares of
Dundee Common Stock that can be converted into the right to receive cash is
23,363 shares of Dundee Common Stock less the total number of shares of Dundee
Common Stock as to which the holders have exercised dissenters' rights with
respect to the Merger pursuant to Georgia law (the "Maximum Number of Cash
Election Shares"). If Cash Elections are properly made with respect to more than
the Maximum Number of Cash Election Shares, a number of shares of Dundee Common
Stock held by holders of ten or more Cash Election shares shall be treated pro
rata as if they have not been subject to Cash Elections, as necessary to reduce
the number of shares as to which Cash Elections have been made to the Maximum
Number of Cash Election Shares (or the most practicable number immediately below
such number). FOR A DISCUSSION OF THE PROCEDURES TO FOLLOW IN MAKING A CASH
ELECTION SEE "THE MERGER -- CASH ELECTION PROCEDURE." A Dundee shareholder who
makes a Cash Election will, subject to certain limitations, fix the amount of
consideration to be received for each share of Dundee Common Stock at $2,525.00
per share. A person making a Cash Election, to the extent cash is received, will
not be subject to the risk of
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declines in the market value of Springs Class A Stock but will not have the
opportunity to profit from any increases in the market value of Springs Class A
Stock. The Merger is expected to qualify as a reorganization under the Internal
Revenue Code of 1986, as amended, and thus a Dundee shareholder will not be
subject to income taxation on the Merger Consideration if the shareholder's
Merger Consideration is received solely in Springs Class A Common Stock, but
will be subject to income taxation on any gain realized to the extent the Merger
Consideration is received in cash. See "The Merger -- Tax Consequences."
The maximum number of shares of Springs Class A Stock into which shares of
Dundee Common Stock will be converted in the Merger will be 3,000,000 shares. If
Dundee shareholders not making Cash Elections or exercising dissenters' rights
would otherwise be entitled to receive a total of more than 3,000,000 shares of
Springs Class A Stock, a number of shares of Dundee Common Stock held by holders
of ten or more shares shall be treated pro rata as having been subject to Cash
Elections, as necessary to reduce the number of shares of Springs Class A Stock
issued in the Merger to 3,000,000. If the maximum number of shares of Springs
Class A Stock is issued, the 3,000,000 shares would represent approximately
23.5% of the shares of Springs Class A Stock expected to be outstanding after
the Merger, and approximately 14.6% of the aggregate number of shares of Springs
Class A Stock and Springs Class B Common Stock, $.25 par value ("Springs Class B
Stock") expected to be outstanding after the Merger (based on the number of
outstanding shares of Springs Class A Stock and Springs Class B Stock on March
6, 1995 plus the maximum number of shares of Springs Class A Stock to be issued
in the Merger). See "The Merger -- Limitation on Springs Class A Stock." As of
March 6, 1995, these 3,000,000 shares would have represented approximately 6.8%
of the voting power of all outstanding Springs voting securities, or a higher
percentage in voting on certain matters. See "Springs Capital Stock."
The conversion ratio of Dundee Common Stock into Springs Class A Stock will
be based upon the average of the closing prices per share of Springs Class A
Stock on the New York Stock Exchange ("NYSE") for the ten trading days
immediately preceding the date which is three calendar days prior to the Closing
Date (the "Reported Market Price"). If the Reported Market Price is $33.50 or
more but not more than $38.50, the conversion ratio of Dundee Common Stock into
Springs Class A Stock shall be equal to:
$2,525.00
Reported Market Price
and shares of Springs Class A Stock issued in exchange for Dundee Common Stock
will have a market value of $2,525.00 per share of Dundee Common Stock, based on
the Reported Market Price.
If the Reported Market Price of Springs Class A Stock is less than $33.50,
the conversion ratio shall be equal to:
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$2,525.00 or 75.37313 shares of
- ---------- Springs Class A Stock
$33.50 per share of Dundee Common Stock
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and shares of Springs Class A Stock issued in exchange for Dundee Common Stock
will have a market value less than $2,525.00 per share of Dundee Common Stock,
based on the Reported Market Price.
If the Reported Market Price of Springs Class A Stock exceeds $38.50, the
conversion ratio shall be equal to:
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$2,525.00 or 65.58442 shares of
- ---------- Springs Class A Stock
$38.50 per share of Dundee Common Stock
</TABLE>
and shares of Springs Class A Stock issued in exchange for Dundee Common Stock
will have a market value greater than $2,525.00 per share of Dundee Common
Stock, based on the Reported Market Price.
No fractional shares of Springs Class A Stock will be issued in the Merger.
The value of any such fractional shares will be paid by Springs in cash. See
"The Merger -- Fractional Shares."
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Cash Election Procedure. Dundee shareholders who desire to receive cash
for some or all of their shares of Dundee Common Stock must complete the Cash
Election Form (the "Cash Election Form") contained in the enclosed Letter of
Transmittal (the "Letter of Transmittal"). TO RECEIVE CASH IN EXCHANGE FOR ANY
SHARES OF DUNDEE COMMON STOCK, THE LETTER OF TRANSMITTAL CONTAINING A COMPLETED
CASH ELECTION FORM, ALONG WITH ALL CERTIFICATES REPRESENTING SHARES OF DUNDEE
COMMON STOCK HELD BY THE SHAREHOLDER MAKING THE CASH ELECTION, MUST BE RECEIVED
BY WACHOVIA BANK OF NORTH CAROLINA, N.A. (THE "EXCHANGE AGENT"), PRIOR TO THE
CLOSE OF BUSINESS ON , 1995. SEE "THE MERGER -- CASH ELECTION
PROCEDURE."
Non-Cash Election Shares. Each holder of record of Dundee Common Stock at
the Effective Time who has not made or has revoked a Cash Election will be
entitled to receive shares of Springs Class A Stock in exchange for such shares
of Dundee Common Stock. See "The Merger -- Exchange of Certificates for Non-Cash
Election Shares."
DISSENTERS' RIGHTS
Each holder of Dundee Common Stock who dissents from the Merger is entitled
to the rights and remedies of dissenting shareholders provided in the applicable
Georgia statutes, subject to compliance with the procedures set forth therein. A
copy of such statutory provisions, as in effect on the date of this Proxy
Statement and Prospectus, is attached to this Proxy Statement and Prospectus as
Exhibit C, and a summary thereof is set forth under "The Meeting -- Rights of
Dissenting Shareholders." Springs will not be obligated to complete the Merger
if holders of more than 8% of the outstanding shares of Dundee Common Stock
exercise their dissenters' rights.
CERTAIN TERMS OF THE MERGER
Conditions to the Merger. The obligations of Springs, Dundee and Subcorp
to consummate the Merger are subject to the prior satisfaction of various
conditions, including, among others, (a) approval of the Merger Agreement by
Dundee's shareholders; (b) holders of not more than 8% of the outstanding shares
of Dundee Common Stock having exercised dissenters' rights under Georgia law;
(c) Dundee having taken corporate action to assure that all shares of Dundee
Common Stock issued by Dundee since July 1, 1989 were validly issued, fully paid
and nonassessable and that no preemptive rights exist with respect to such
issuances; (d) Springs' Registration Statement for the Springs Class A Stock to
be issued in the Merger having become effective under the Securities Act and no
stop order having been issued or become pending or threatened; (e) Dundee and
Springs each having received a satisfactory opinion from Sutherland, Asbill &
Brennan, counsel for Springs, as to the tax consequences of the Merger; and (f)
the shares of Springs Class A Stock to be issued in the Merger having been
authorized for listing on the NYSE upon official notice of issuance. In
addition, neither Springs nor Dundee is obligated to complete the Merger unless
certain additional conditions have been satisfied. See "The Merger -- Conditions
to the Merger."
Termination. The Merger Agreement may be terminated prior to the filing of
the certificate of merger in certain circumstances, including (a) by mutual
action of the Springs and Dundee Boards of Directors; (b) by Springs or Dundee
if any of certain conditions to their respective obligations has not been
satisfied or waived (or by its nature cannot be cured or eliminated) prior to
the Closing Date; (c) by Springs or Dundee if any general suspension of, or
limitation on, trading on the NYSE has continued for a period of 15 days or a
bank moratorium in the United States has continued for a period of 15 days; or
(d) if the Merger has not been consummated by July 31, 1995. See "The
Merger -- Effective Time and Termination."
Under certain circumstances, if the Merger Agreement is terminated, Dundee
may be obligated to pay Springs liquidated damages in the amount of $3,000,000
plus Springs' out-of-pocket expenses reasonably incurred in connection with the
Merger. See "The Merger -- Effective Time and Termination."
TAX CONSEQUENCES
No ruling of the Internal Revenue Service is being sought in connection
with the Merger, but it is anticipated that the Merger will not result in a
taxable transaction for a holder of shares of Dundee Common Stock if the
shareholder's Merger Consideration is received solely in the form of Springs
Class A Stock, but
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the holder will be subject to income taxation on any gain realized to the extent
the Merger Consideration is received in cash. The parties' obligation to
consummate the Merger is subject to receipt of a satisfactory opinion from
Sutherland, Asbill & Brennan as to the federal income tax consequences to Dundee
and its shareholders as described above. See "The Merger -- Tax Consequences."
COMPARISON OF SHAREHOLDER RIGHTS
If the Merger is consummated, holders of shares of Dundee Common Stock will
become holders of Springs Class A Stock, which will result in their rights as
shareholders being governed by South Carolina law. A discussion of the material
differences between the rights of holders of Dundee Common Stock and holders of
Springs Class A Stock is set forth in "Comparison of Rights of Holders of
Springs Class A Stock and Holders of Dundee Common Stock."
MARKET PRICES
Springs Class A Stock is quoted on the NYSE under the symbol "SMI." There
is no public trading market for Dundee Common Stock. The following table shows
the last sale price per share of Springs Class A Stock as reported by the NYSE
(a) on January 12, 1995, the last trading day prior to the announcement of the
letter of intent between Springs and Dundee with respect to the Merger, (b) on
February 6, 1995, the last trading day prior to the announcement of the
execution of the Merger Agreement and (c) on , 1995. The table also
indicates, as of such dates, the market value of the Merger Consideration on an
equivalent per share basis of Dundee Common Stock based on the market value of
Springs Class A Stock on such dates (assuming that the Effective Time occurred
on each date and that the Reported Market Price of Springs Class A Stock used in
computing the Merger Consideration and the market value of Springs Class A Stock
were the same on each date).
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<CAPTION>
EQUIVALENT MARKET VALUE OF
MERGER CONSIDERATION
PER SHARE OF DUNDEE COMMON STOCK
--------------------------------
SPRINGS CLASS A
STOCK
MARKET VALUE --------------------
OF SPRINGS STOCK CASH
CLASS A STOCK SHARES VALUE VALUE
------------- -------- --------- ---------
<S> <C> <C> <C> <C>
Shareholder receiving 100% Springs Class A Stock:
As of January 12, 1995............................ $39.250 65.58442 $2,574.19 n/a
As of February 6, 1995............................ 36.625 68.94198 2,525.00 n/a
As of , 1995........................... n/a
Shareholder receiving 100% cash:.................. n/a n/a n/a $2,525.00
</TABLE>
DUNDEE SHAREHOLDERS ARE URGED TO OBTAIN CURRENT QUOTES FOR SPRINGS CLASS A
STOCK.
OPINION OF DUNDEE'S FINANCIAL ADVISOR
Robinson-Humphrey has rendered an opinion to Dundee that, based on and
subject to the procedures, matters and limitations described in its opinion and
such other matters as it considers relevant, as of the date of its opinion, the
consideration to be received in the Merger is fair, from a financial point of
view, to the shareholders of Dundee. The opinion of Robinson-Humphrey is
attached as Exhibit B to this Proxy Statement and Prospectus. Dundee
shareholders are urged to read the opinion in its entirety for a description of
the procedures followed, matters considered, and limitations on the review
undertaken therewith. See "The Merger -- Opinion of Dundee's Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Dundee's management and Board of Directors have
interests in the Merger in addition to their interests as shareholders of Dundee
generally. Those interests relate to, among other things, provisions in the
Merger Agreement regarding continuation of employment and compensation,
severance benefits, indemnification, and the condition to the Merger that Dundee
take corporate action to validate issuances of Dundee Common Stock since July 1,
1989. See "The Merger -- Interests of Certain Persons."
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GOVERNMENTAL AND REGULATORY REQUIREMENTS
Springs and Dundee are not aware of any governmental or regulatory
requirements for consummation of the Merger other than compliance with
applicable federal and state securities laws and the expiration or the
termination of the waiting periods applicable to the Merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and the rules and regulations thereunder. Under the HSR Act, certain acquisition
transactions, such as the Merger, may not be consummated unless required
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC")
and the specified waiting period requirements have been satisfied. On February
8, 1995 and March 7, 1995, respectively, Springs and Dundee each filed with the
Antitrust Division and the FTC a Notification and Report Form with respect to
the Merger. The applicable waiting period for the Merger will expire at 11:59
p.m. on April 6, 1995. See "The Merger -- Governmental and Regulatory
Requirements."
RATIFICATION OF CERTAIN ISSUANCES OF DUNDEE COMMON STOCK
The holders of Dundee Common Stock will also act upon a proposal to ratify
issuances of shares of Dundee Common Stock during 1990-1994. Springs' obligation
to consummate the Merger is conditioned on action by Dundee assuring that such
shares were validly issued, fully paid and nonassessable and that no preemptive
rights exist with respect to the issuance of such shares. A special committee
(the "Special Committee") of the Board of Directors of Dundee has ratified such
issuances and the terms and conditions thereof and has determined that such
shares were issued to officers and employees of Dundee who were afforded an
opportunity to purchase such shares as part of their compensation and that such
issuances qualify for an exemption from preemptive rights for issuances as
compensation to officers and employees if the terms and conditions of the
issuances are approved and ratified by a majority vote of Dundee's shareholders.
No member of the Special Committee obtained any shares in such issuances. The
Special Committee has unanimously approved and ratified the terms and conditions
of such sales and issuances and recommends that Dundee shareholders vote FOR the
approval and ratification of the terms and conditions of such issuances so as to
establish that no preemptive rights exist with respect thereto. Approval and
ratification of the terms and conditions of such issuances will require the
affirmative votes of a majority of the outstanding shares of Dundee Common
Stock. See "Ratification of Certain Issuances of Dundee Common Stock."
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SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
The following tables set forth selected financial data for Springs and
Dundee. Such information should be read in conjunction with Springs' audited
consolidated financial statements and notes and its Management's Discussion and
Analysis of Financial Condition and Results of Operations incorporated by
reference herein, Dundee's audited financial statements and notes contained
elsewhere herein and the unaudited interim financial information of Dundee and
its Management's Discussion and Analysis of Financial Condition and Results of
Operations included in this Proxy Statement and Prospectus. Unaudited interim
financial data for Dundee includes all adjustments that Dundee considers
necessary for a fair presentation of the operating results for such interim
periods. Results for the interim periods are not necessarily indicative of
results for the full year. See "Dundee Selected Financial Data."
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<CAPTION>
FOR OR AT THE END OF FISCAL YEARS(A)
------------------------------------------------------------------
1990 1991 1992(B) 1993 1994
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SPRINGS
STATEMENT OF OPERATIONS DATA:
Net sales..................... $1,877,978 $1,890,406 $1,975,692 $2,022,816 $2,068,911
Net income (loss)............. (6,833)(c) 27,097 44,530 (25,287)(d) 62,227
Earnings (loss) per common
share....................... (.39)(c) 1.53 2.50 (1.42)(d) 3.50
Weighted average number of
common shares............... 17,672 17,710 17,805 17,825 17,793
Dividends per common share:
Class A..................... 1.20 1.20 1.20 1.20 1.20
Class B..................... 1.08 1.08 1.08 1.08 1.08
BALANCE SHEET DATA:
Working capital............... 356,535 329,700 328,189 353,529 373,048
Total assets.................. 1,201,128 1,251,298 1,250,303 1,292,131 1,289,043
Total long-term debt
(excluding current
portion).................... 260,423 287,837 273,551 293,028 265,384
Shareholders' equity.......... 560,914 568,850 588,058 543,193 584,091
</TABLE>
<TABLE>
<CAPTION>
FOR OR AT THE
FOUR MONTHS ENDED
FOR OR AT THE END OF FISCAL YEARS ENDED AUGUST 31, DECEMBER 31,
------------------------------------------------------------------ --------------------------
1990(E) 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
DUNDEE
STATEMENT OF OPERATIONS DATA:
Net sales..................... $ 223,455 $ 242,386 $ 247,728 $ 263,363 $ 266,813 $ 85,107 $ 90,363
Net income (loss)............. 9,697 134 6,452 870 (1,501)(f) (241)(f) 1,065
Earnings (loss) per common
share....................... 203.66 2.80 137.50 18.60 (32.00)(f) (5.14)(f) 22.77
Weighted average number of
common shares............... 48 48 47 47 47 47 47
Dividends per common share.... 30.00 30.00 30.00 30.00 30.00 4.00 4.00
BALANCE SHEET DATA:
Working capital............... 80,199 79,293 93,085 88,424 82,728 84,864 81,251
Total assets.................. 148,194 167,837 186,151 175,562 169,007 171,981 164,942
Total long-term debt
(excluding current
portion).................... 13,060 26,615 42,670 28,670 23,715 24,670 19,715
Shareholders' equity.......... 121,751 121,417 124,300 123,925 120,736 123,495 121,528
</TABLE>
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(a) The fiscal years of Springs end on the Saturday nearest December 31.
Selected Financial Data of Springs includes financial information relating
to certain asset acquisitions accounted for by Springs as purchases from
their dates of acquisition in April 1991, August 1992 and October 1992.
Selected Financial Data of Springs also includes Springs' former subsidiary
Clark-Schwebel Distribution Corp. until the date of its sale in June 1994.
(b) Springs' 1992 fiscal year contained fifty-three weeks.
(c) Includes a $70.0 million charge ($43.9 million after tax, or $2.46 per
share) for restructuring.
(d) Includes a $72.5 million charge, net of income taxes, or $4.07 per share for
the cumulative effect of adoption of SFAS Nos. 106 and 109.
(e) Includes information as to certain acquisitions accounted for as purchases
from their dates of acquisition in January 1990 and May 1990.
(f) Includes a charge of $0.2 million, or $4.12 per share, for the adoption of
SFAS No. 109.
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SUMMARY PRO FORMA FINANCIAL DATA (UNAUDITED)
The following tables set forth certain unaudited pro forma condensed
combined financial data regarding the financial position and results of
operations of Springs and Dundee upon completion of the Merger, which will be
accounted for as a purchase by Springs in accordance with generally accepted
accounting principles.
This pro forma condensed combined financial data is based on various
assumptions and estimates in arriving at the pro forma adjustments which give
effect to the Merger as if the Merger had occurred as of the beginning of the
period presented or as of the balance sheet date, should be read in conjunction
with the Pro Forma Condensed Combined Financial Data and the notes thereto
included in this Proxy Statement and Prospectus as required by the rules and
regulations of the SEC, and is provided for comparative purposes only. This pro
forma financial information does not purport to be indicative of the results
which actually would have been obtained if the Merger had been effected on the
date indicated or of results which may be obtained in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-------------------------------
SCENARIO A(A) SCENARIO B(B)
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
SPRINGS AND DUNDEE PRO FORMA
CONDENSED COMBINED (UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Net sales......................................................... $ 2,340,981 $ 2,340,981
Net income........................................................ 64,507 62,425
BALANCE SHEET DATA:
Total assets...................................................... 1,456,208 1,456,208
Total long-term debt (excluding current portion).................. 302,587 344,090
Shareholders' equity.............................................. 684,591 643,088
</TABLE>
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(a) Scenario A assumes a Reported Market Price of $33.50 and conversion of 100%
of the outstanding shares of Dundee Common Stock into the maximum number of
shares of Springs Class A Stock issuable in the Merger (3,000,000 shares).
(b) Scenario B assumes a Reported Market Price of $38.50 and conversion of 50%
of the outstanding shares of Dundee Common Stock into the minimum number of
shares of Springs Class A Stock issuable in the Merger (1,532,380 shares).
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COMPARATIVE PER SHARE DATA
The following table sets forth certain data per share of Springs Class A
Stock, per share of Dundee Common Stock and per share pro forma combined after
giving effect to the Merger. This data should be read in conjunction with the
consolidated financial statements of Springs and the notes thereto incorporated
herein by reference, the financial statements of Dundee and the notes thereto
included herein, and the Pro Forma Condensed Combined Financial Data and the
notes thereto included herein. Equivalent pro forma combined per share
information is calculated by applying an assumed conversion ratio of (a) under
Scenario A, 75.37313 and (b) under Scenario B, 65.58442, shares of Springs Class
A Stock for each share of Dundee Common Stock (based on the minimum and maximum
possible Reported Market Price, respectively) to the pro forma combined per
share data such that the equivalent pro forma combined per share amounts are
expressed per share of Dundee Common Stock.
<TABLE>
<CAPTION>
PRO FORMA COMBINED EQUIVALENT PRO FORMA
(PER SPRINGS CLASS A COMBINED
SHARE) (PER DUNDEE SHARE)
-------------------------- -------------------------
SPRINGS DUNDEE SCENARIO SCENARIO SCENARIO SCENARIO
HISTORICAL HISTORICAL A(A) B(B) A(A) B(B)
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
COMPARATIVE PER SHARE DATA:
Earnings (loss) per common
share:
Year ended December 31,
1994...................... $ 3.50 $ (4.14) $3.10 $3.23 $ 233.66 $ 211.84
Dividends per share:
Year ended December 31,
1994...................... 1.20(c) 30.00 1.20(c) 1.20(c) 90.45 78.70
Book value per common share as
of:
December 31, 1994........... 33.20 2,600.75 33.24 33.62 2,505.40 2,204.95
</TABLE>
- ---------------
(a) Scenario A assumes a Reported Market Price of $33.50 and conversion of 100%
of the outstanding shares of Dundee Common Stock into the maximum number of
shares of Springs Class A Stock issuable in the Merger (3,000,000 shares).
(b) Scenario B assumes a Reported Market Price of $38.50 and conversion of 50%
of the outstanding shares of Dundee Common Stock into the minimum number of
shares of Springs Class A Stock issuable in the Merger.
(c) Represents dividends per share of Springs Class A Stock.
9
<PAGE> 20
THE MEETING
GENERAL
This Proxy Statement and Prospectus is being furnished to the holders of
Dundee Common Stock in connection with the solicitation by the Dundee Board of
Directors of proxies for use at the Meeting. At the Meeting, Dundee shareholders
will be asked to consider and vote upon proposals (i) to approve the Merger
Agreement, pursuant to which Dundee will merge with Subcorp, and (ii) to approve
and ratify the terms and conditions of issuances by Dundee of Dundee Common
Stock during 1990-1994 issued as compensation to officers and employees of
Dundee. If the Merger is consummated, each outstanding share of Dundee Common
Stock, with certain exceptions, will be converted into and exchanged for the
right to receive an amount of Springs Class A Stock equal in value to $2,525.00
(subject to variation based on market prices) or cash in that amount, at the
shareholder's election (a "Cash Election") and subject to certain limitations
(such shares of Springs Class A Stock and cash being referred to as the "Merger
Consideration"). The Meeting will be held on , 1995 at
, local time, at Griffin Technical Institute, 501 Varsity Road,
Griffin, Georgia 30223. Springs' obligation to consummate the Merger is
conditioned upon, among other things, Dundee shareholder approval of the Merger
Agreement, and Dundee corporate action (including shareholder approval)
approving and ratifying the terms and conditions of issuances by Dundee of
Dundee Common Stock during 1990-1994 so as to assure that such shares were
validly issued, fully paid and nonassessable and that no preemptive rights exist
with respect to such issuances, both of which are being submitted to the Dundee
shareholders at the Meeting. See "Ratification of Certain Issuances of Dundee
Common Stock."
RECORD DATE AND SHARES ENTITLED TO VOTE
The Board of Directors of Dundee has established the close of business on
, 1995 (the "Record Date") as the date for determining the
Dundee shareholders entitled to notice of and to vote at the Meeting. Only
holders of record of shares of Dundee Common Stock as of the Record Date will be
entitled to vote at the Meeting. As of the Record Date, there were 46,728 shares
of Dundee Common Stock issued and outstanding, held by approximately 290 holders
of record. Holders of record of Dundee Common Stock on the Record Date are
entitled to one vote per share on any matter that may properly come before the
Meeting.
VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT
The presence in person or by proxy of the holders of a majority of the
shares of Dundee Common Stock outstanding as of the Record Date is necessary to
constitute a quorum for the transaction of business at the Meeting. The
affirmative votes of a majority of the outstanding shares of Dundee Common Stock
will be necessary for approval of the Merger Agreement and for approval and
ratification of the terms and conditions of issuances by Dundee of Dundee Common
Stock during 1990-1994. Abstentions and broker non-votes will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum at the Meeting (assuming, with respect to broker non-votes,
that the beneficial owner has granted the nominee discretion to vote on at least
one matter). Abstentions and broker non-votes will not count as either votes for
or against any proposals at the Meeting.
As of the Record Date, the executive officers and directors of Dundee
beneficially owned an aggregate of 15,093 shares of Dundee Common Stock, or
approximately 32.3% of the shares of Dundee Common Stock then outstanding. At
the time that the Merger Agreement was executed, each director and one officer
of Dundee delivered a proxy in favor of Springs authorizing Springs to vote all
shares beneficially owned or controlled by such person in favor of approving the
Merger Agreement. Each executive officer of Dundee has advised Dundee that he
intends to vote his shares for approval of the Merger Agreement, and each
director and executive officer of Dundee has advised Dundee that he intends to
vote his shares for approval and ratification of the terms and conditions of
issuances by Dundee of Dundee Common Stock during 1990-1994.
10
<PAGE> 21
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is enclosed with this Proxy Statement and Prospectus. All
shares of Dundee Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated on such proxies. If no instructions are indicated,
such shares will be voted FOR the approval of the Merger Agreement and FOR
approval and ratification of the terms and conditions of issuances by Dundee of
Dundee Common Stock during 1990-1994, and, in the discretion of the proxy
holder, as to any other matter that may properly come before the Meeting. As of
the date of this Proxy Statement and Prospectus, Dundee is unaware of any other
matter to be presented at the Meeting.
DUNDEE SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO DUNDEE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE, EVEN IF THEY ARE PLANNING TO ATTEND THE MEETING. FAILURE TO RETURN
YOUR PROPERLY EXECUTED PROXY OR TO VOTE AT THE MEETING WILL HAVE THE SAME EFFECT
AS A VOTE AGAINST THE APPROVAL OF THE MERGER AGREEMENT AND AGAINST THE APPROVAL
AND RATIFICATION OF THE TERMS AND CONDITIONS OF CERTAIN PAST ISSUANCES OF DUNDEE
COMMON STOCK.
Any Dundee shareholder who has previously delivered a properly executed
proxy may revoke such proxy at any time before its exercise. A proxy may be
revoked either by (i) delivering to the Secretary of Dundee prior to the Meeting
either a written revocation of such proxy or a duly executed proxy bearing a
later date or (ii) attending the Meeting and voting in person, regardless of
whether a proxy has previously been given. A proxy will not be revoked for death
or intervening incapacity of the shareholder executing the proxy unless, before
the vote, notice of such death or incapacity is filed with the Secretary of
Dundee. Presence at the Meeting will not revoke a shareholder's proxy unless the
shareholder votes in person.
Solicitations of proxies will be made by mail, but also may be made by
telephone, telegram or in person by the directors, officers and employees of
Dundee, who will receive no additional compensation for such solicitation, but
may be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
DUNDEE SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. DUNDEE STOCK CERTIFICATES SHOULD BE FORWARDED TO WACHOVIA BANK OF
NORTH CAROLINA, N.A. ONLY WITH THE LETTER OF TRANSMITTAL INCLUDED WITH THIS
PROXY STATEMENT AND PROSPECTUS. SEE "THE MERGER -- CASH ELECTION PROCEDURE" AND
"THE MERGER -- EXCHANGE OF CERTIFICATES FOR NON-CASH ELECTION SHARES" FOR
INFORMATION ABOUT RETURNING YOUR SHARE CERTIFICATES.
RIGHTS OF DISSENTING SHAREHOLDERS
Each record holder of Dundee Common Stock is entitled to dissent from the
Merger and obtain payment of the Fair Value of his shares of Dundee Common Stock
pursuant to Article 13 of the Georgia Business Corporation Code (the "GBCC"), a
copy of which is attached hereto as Exhibit C. The term "Fair Value" means the
value of shares of Dundee Common Stock immediately prior to the effectuation of
the Merger, exclusive of any appreciation or depreciation in anticipation of the
Merger, as defined in Article 13 of the GBCC. The Fair Value of the Dundee
Common Stock may be more or less than the consideration that a holder of such
stock would be entitled to receive in the Merger. The following is a summary of
the procedures to be followed by record holders of Dundee Common Stock who wish
to dissent from the Merger.
Pursuant to Section 14-2-1321 of the GBCC, any record holder who wishes to
assert dissenters' rights (i) must deliver to Dundee prior to the shareholders'
vote on the Merger written notice of his intent to demand payment for his shares
if the Merger is effectuated, (ii) must not vote his shares in favor of the
11
<PAGE> 22
Merger, and (iii) must file a payment demand and deposit his shares with Dundee
in accordance with the terms set forth in the notice of approval of the Merger
described below.
Only a holder of record of shares of Dundee Common Stock is entitled to
assert dissenters' rights for the shares of Dundee Common Stock registered in
that holder's name. A record holder who wishes to dissent from the Merger must
dissent with respect to all shares he owns or over which he has power to direct
the vote, except that a record holder who is a nominee for several beneficial
shareholders may dissent with respect to the shares held for one or more
beneficial owners while not exercising such dissenters' rights with respect to
the shares of Dundee Common Stock held for other beneficial owners. In such
case, the notice provided to Dundee by the nominee pursuant to Section 14-2-1321
of the GBCC shall set forth the name and address of each person on whose behalf
the nominee asserts dissenters' rights. SHAREHOLDERS WHO HOLD THEIR SHARES OF
DUNDEE COMMON STOCK IN BROKERAGE ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO
EXERCISE DISSENTERS' RIGHTS SHOULD CONSULT WITH THEIR BROKERS TO DETERMINE THE
APPROPRIATE PROCEDURES FOR THE MAKING OF DEMAND FOR APPRAISAL BY SUCH NOMINEE.
Any record holder who does not timely and completely comply with the
provisions of Article 13 of the GBCC will be bound by the terms of the Merger
Agreement and will be entitled to receive Springs Class A Stock or cash, or a
combination thereof, as applicable, as provided in the Merger Agreement.
Within ten days of the later of the effectuation of the Merger or receipt
of a payment demand, either Subcorp or Dundee, as the surviving corporation in
the Merger (the "Surviving Corporation"), will give written notice to each
record holder of Dundee Common Stock who has perfected dissenters' rights and
will make a written offer to pay each dissenter a specified price deemed by the
Surviving Corporation to be the Fair Value of such shares, plus accrued
interest. The offer of payment will be accompanied by financial information
concerning Dundee, a statement of the Surviving Corporation's estimate of the
Fair Value and an explanation as to how the interest was calculated. If a
dissenter accepts the Surviving Corporation's offer by written notice within 30
days after the offer or is deemed to have accepted the Surviving Corporation's
offer by failing to respond within 30 days, the Surviving Corporation will pay
the Fair Value within 60 days of the making of such offer or the consummation of
the Merger, whichever is later. Upon payment of the agreed value, the dissenter
shall cease to have any interest in such shares of Dundee Common Stock.
If the Surviving Corporation fails to make such written offer, or if it
makes the offer and a dissenter believes that the amount offered is less than
the Fair Value of his shares or that the interest due is incorrectly calculated,
the dissenter may notify the Surviving Corporation in writing of his own
estimate of the Fair Value of his shares and amount of interest due.
If the Surviving Corporation and a dissenting record holder do not agree to
the Fair Value of such dissenter's shares, the Surviving Corporation may file a
petition in the Superior Court of Spalding County, Georgia to determine the Fair
Value of the shares and accrued interest within 60 days of receiving the payment
demand. If the Surviving Corporation fails to commence the proceeding within the
60-day period, it must pay the dissenter the amount demanded. Each record holder
whose demand remains unsettled shall be made a party to the proceeding and shall
be entitled to judgment for the amount which the court finds to be the Fair
Value of his shares, plus interest to the date of judgment. The Court may
appoint one or more appraisers to receive evidence and recommend a decision on
the question of Fair Value.
The Court shall determine all costs of the proceeding, including the
compensation of appraisers appointed by the Court, but not including fees and
expenses of attorneys and experts of the parties. Such costs shall be assessed
against the Surviving Corporation, except that the Court may assess the costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds any dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment. The court also may assess the fees and
expenses of attorneys and experts for the parties in amounts the court finds
equitable, (i) against the Surviving Corporation, if the court finds the
Surviving Corporation did not substantially comply with the requirements of the
GBCC, or (ii) against either the Surviving Corporation or a dissenter, in favor
of any other party, if the court finds such party acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by Article 13 of the
GBCC. If the court finds that the services of attorneys for any dissenter
substantially benefitted other similarly situated dissenters, and that the fees
for such services should not be assessed against
12
<PAGE> 23
the Surviving Corporation, then the court may award such attorneys' reasonable
fees to be paid out of the amounts awarded to those dissenters who were
benefitted.
The foregoing does not purport to be a complete statement of the
proceedings to be followed by Dundee shareholders desiring to exercise
dissenters' rights of appraisal. Because exercise of such rights requires strict
adherence to the statutory provisions referred to above, each Dundee shareholder
who may desire to exercise such rights should adhere to the provisions of such
laws and consult with such holder's legal, financial and tax advisors.
Springs will not be required to consummate the Merger if holders of more
than 8% of the outstanding shares of Dundee Common Stock elect to exercise
dissenter's rights pursuant to the GBCC.
Springs shareholders will not have dissenters' rights in connection with
the Merger.
THE MERGER
This section of the Proxy Statement and Prospectus describes certain
aspects of the Merger. It does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, which is attached to this
Proxy Statement and Prospectus as Exhibit A and is incorporated herein by
reference. Capitalized terms used herein without definition have the meaning
attributed thereto in the Merger Agreement. Shareholders are urged to read
carefully this Proxy Statement and Prospectus and the Merger Agreement in their
entirety.
BACKGROUND
Since the 1960's, executives of Springs and Dundee have communicated on an
occasional basis about the possibility of a business combination between the two
companies. During the last approximately ten years, Mr. John T. Newton, Chairman
of the Board of Dundee, and Mr. Walter Y. Elisha, Chairman of the Board and
Chief Executive Officer of Springs, have had several informal discussions
concerning possible joint ventures or the acquisition of Dundee by Springs.
During this period, Dundee opted to remain independent.
During 1992, several conversations and meetings occurred between
representatives of Springs and Dundee. On July 24, 1992, Mr. Elisha and Mrs.
Crandall Bowles, Executive Vice President of Springs, met with Mr. J. Henry
Walker, III, President and Chief Executive Officer of Dundee, to discuss a
possible acquisition of Dundee by Springs. On November 17, 1992, Mr. Walker and
Mr. M.J. Yates, Vice President of Dundee, met with Mr. Elisha and Mrs. Bowles
and toured certain of Springs' facilities in South Carolina.
In July 1993, Mr. Elisha contacted Mr. Newton again about the possible
acquisition of Dundee by Springs. On July 19, 1993, Mr. Elisha and Mrs. Bowles
met with Mr. Newton and Mr. Walker in Griffin, Georgia to discuss the potential
acquisition. The Board of Directors of Dundee considered the Springs proposal,
but on July 22, 1993 the Board resolved to decline to enter into formal
negotiations with Springs concerning the sale of Dundee. In the latter part of
1994, the directors of Dundee began reassessing their prior decision to remain
independent.
On January 3, 1995, Mr. Newton called Mr. Elisha and asked if Springs would
consider acquiring Dundee. On the morning of January 5, Mr. Newton and Mr.
Elisha had a second telephone conversation concerning a possible transaction. On
the afternoon of January 5, Mr. Newton, Mr. David G. Newton, Vice President of
Dundee, Mr. Elisha, Mrs. Bowles, and Mr. J. Spratt White, Senior Vice President
of Springs, met in Atlanta to discuss the possibility of Springs acquiring
Dundee.
On January 7, certain directors and officers of Dundee met with Dundee's
legal advisors, King & Spalding, concerning the proposed Merger. The following
day, officers and directors of both Springs and Dundee met at the offices of
Springs' legal advisors, Sutherland, Asbill & Brennan, to negotiate a letter of
intent (the "Letter of Intent"), pursuant to which Springs would exchange
Springs Class A Stock and cash for Dundee Common Stock and Dundee would be
merged with a wholly owned subsidiary of Springs. The Letter of Intent was
signed by Messrs. John Newton and Elisha on January 8, 1995.
13
<PAGE> 24
On January 12, 1995, the Board of Directors of Dundee met to consider the
Letter of Intent. At that meeting, the Board approved the Letter of Intent and
appointed a special committee of outside directors (the "Special Committee") to
(i) consider the retention of a financial advisor to prepare a fairness opinion
and (ii) consider the payment of certain compensation to certain officers of
Dundee in connection with the proposed Merger. The parties issued a press
release announcing the Letter of Intent on January 13, 1995. On January 18, the
Special Committee retained The Robinson-Humphrey Company, Inc. ("Robinson-
Humphrey") as the financial advisor to Dundee's Board of Directors.
Beginning January 9, 1995, Dundee and Springs conducted due diligence
investigations of each other and Springs' attorneys provided Dundee with a draft
of a proposed merger agreement on January 17, 1995. On February 1, 1995,
representatives of Springs and Dundee held detailed negotiations about the
Merger Agreement at the offices of King & Spalding.
On February 2, 1995, the Board of Directors of Dundee held a special
meeting to consider the proposed terms of the transaction. At such meeting,
members of Dundee's management, together with Dundee's legal and financial
advisors, discussed the strategic rationale for the Merger, financial and
valuation analyses of the transaction, the proposed terms of the Merger and the
potential benefits and disadvantages of the proposed transaction to Dundee and
its shareholders. Robinson-Humphrey discussed the basis for its opinion that the
Merger was fair to the holders of Dundee Common Stock from a financial point of
view. At this meeting, the Board of Dundee approved the proposed terms of the
Merger, subject to the review of a definitive Merger Agreement.
On February 2, 1995, at a special meeting, the Board of Directors of
Springs unanimously approved the terms of the Merger and a form of the Merger
Agreement and authorized the officers of Springs to execute the Merger
Agreement.
On February 6, 1995, the Board of Directors of Dundee held a special
meeting, which its legal advisors attended, and reviewed in detail the terms of
the Merger Agreement. The Board of Directors of Dundee then unanimously adopted
the Merger Agreement, resolved that the Merger Agreement and the actions
contemplated thereby should be submitted to the shareholders of Dundee for
approval with the Board's recommendation, and authorized the Chairman of the
Board and the Secretary to execute the Merger Agreement, which was executed by
Springs and Dundee on that day. As authorized by the Board of Directors, on
March 6, 1995, the Special Committee of the Board of Directors of Dundee by
unanimous written consent approved and ratified the terms and conditions of
issuances by Dundee of Dundee Common Stock during 1990-1994 to officers and
employees of Dundee, and recommended that the terms and conditions of such
issuances be submitted to the shareholders of Dundee for approval.
The directors and one officer of Dundee have entered into agreements
granting proxies to Springs under which Springs may vote at the Meeting certain
shares of Dundee Common Stock owned or controlled by such persons in favor of
the Merger and against any other acquisition of Dundee requiring shareholder
approval, and granting options at a cash price of $2,525.00 per share to Springs
to purchase such shares exercisable upon the occurrence of certain events. These
agreements cover approximately 23.5% of the outstanding Dundee Common Stock. See
"-- Option and Proxy Agreements." As of March 1, 1995, executive officers and
directors of Dundee and their affiliates held in the aggregate approximately
32.3% of the then outstanding Dundee Common Stock. See "Dundee Voting Stock and
Principal Holders."
DUNDEE REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF
DUNDEE
Dundee's Board of Directors believes that the Merger is in the best
interests of Dundee and its shareholders. As the home furnishings industry has
become more integrated, certain of the largest companies in the industry
manufacture both terry bath products and bedding products, many styles and
components of which are coordinated. However, Springs presently does not
manufacture towels and offers only a limited selection of terry products, and
Dundee has no products in the bedding segment of the market other than infant
and toddler bedding products. Accordingly, the Board believes that the
businesses of the companies are highly compatible and that a business
combination of Dundee and Springs will allow the combined entity to achieve an
improved competitive position under current market conditions. Springs is a
publicly traded
14
<PAGE> 25
company, which will provide Dundee shareholders who receive Springs Class A
Stock greater liquidity than they presently have with Dundee Common Stock and an
equity interest in a larger company. Additionally, the price per share offered
for the Dundee Common Stock represents a substantial premium over the price for
the stock in recent transactions of which Dundee is aware.
At its February 2 and February 6, 1995 meetings, the Dundee Board
determined that, taking into account the potential benefits of the combination
of Dundee and Springs, the Merger is advisable and in the best interests of
Dundee and its shareholders, and unanimously approved the Merger and the Merger
Agreement. The Board of Directors unanimously recommends that holders of Dundee
Common Stock vote FOR approval of the Merger Agreement.
In reaching its conclusion, the Dundee Board considered the factors set
forth above and: (i) the opinion of Robinson-Humphrey that the Merger is fair to
the holders of Dundee Common Stock, from a financial point of view, (ii) the
existing and historical financial condition, results of operations, assets,
liabilities, management, operations and business of each company, as well as
assessments of the earnings potential and future values of Dundee and Springs,
both separately and as a combined entity, (iii) the nonfinancial terms of the
Merger, including the opportunity for shareholders to receive a tax-free
exchange of Dundee Common Stock for Springs Class A Stock for federal income tax
purposes, (iv) the fact that no other entity had submitted a definitive
acquisition proposal following announcement of the Letter of Intent, (v) certain
financial information concerning publicly traded companies deemed similar to
Dundee and Springs, and (vi) the consideration paid in comparable transactions
in the home furnishings industry.
FOR THE REASONS SET FORTH ABOVE, DUNDEE'S BOARD OF DIRECTORS VOTED
UNANIMOUSLY TO APPROVE THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF DUNDEE COMMON STOCK VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
OPINION OF DUNDEE'S FINANCIAL ADVISOR
Robinson-Humphrey has delivered a written opinion to the Board of Directors
of Dundee that the purchase price to be received by the shareholders of Dundee
pursuant to the Merger is fair, from a financial point of view, to the
shareholders of Dundee. No limitations were imposed by the Board of Directors
upon Robinson-Humphrey in rendering its opinion, except that Dundee did not
request Robinson-Humphrey to solicit, and Robinson-Humphrey did not solicit, any
indications of interest from any third party with respect to acquiring all or a
portion of the Dundee Common Stock, nor did Robinson-Humphrey determine or
recommend the amount of the Merger Consideration.
The full text of the opinion of Robinson-Humphrey, dated , 1995
which sets forth the assumptions made, matters considered and limits on the
review undertaken, is attached to this Proxy and Registration Statement as
Exhibit B. Shareholders are urged to read this opinion in its entirety.
Robinson-Humphrey's opinion does not constitute a recommendation to any
shareholder as to how such shareholder should vote at the Meeting. The summary
of the opinion of Robinson-Humphrey set forth herein is qualified in its
entirety by reference to the full text of the opinion.
In rendering its opinion, Robinson-Humphrey, among other things, (i)
reviewed the Merger Agreement, (ii) reviewed financial and other information
furnished by Dundee and Springs or their representatives with respect to the
business, operations and prospects of Dundee and Springs, (iii) had discussions
with the managements of Springs and Dundee concerning their historical and
current businesses and operations and overall industry conditions, (iv) compared
the financial terms of the Merger with the terms of certain other recent
transactions that Robinson-Humphrey deemed relevant and (v) undertook such other
studies, analyses, and investigations as Robinson-Humphrey deemed appropriate,
but did not make an independent valuation or appraisal of the assets of Springs
or Dundee.
Robinson-Humphrey assumed, without independent verification, the accuracy
and completeness of the financial and other information used by it in arriving
at its opinion. With respect to the financial projections provided by Dundee and
Springs, Robinson-Humphrey assumed that such projections had been reasonably
prepared on bases reflecting the best currently available estimates and judgment
of management of Dundee
15
<PAGE> 26
and Springs as to the future financial performance of Dundee and Springs. In
arriving at its opinion, it has not conducted a physical inspection of the
properties and facilities of Dundee or Springs and has not made nor obtained any
evaluations or appraisals of the assets or liabilities of Dundee or Springs. Its
opinion is necessarily based upon market, economic and other conditions as they
existed on, and could be evaluated as of, the date of its opinion letter.
Robinson-Humphrey also relied upon the assurances of management that they were
unaware of any facts that would make the information provided incomplete or
misleading. Robinson-Humphrey has assumed that the Merger would be consummated
as described in the Merger Agreement.
In connection with rendering its written opinion, Robinson-Humphrey
performed certain financial and comparative analyses, including those described
below. The preparation of a fairness opinion involves various determinations as
to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances. In arriving at its
fairness opinion, Robinson-Humphrey made qualitative judgments as to the
significance and relevance of each analysis and factor. The following is a brief
summary of such analysis.
Comparable Company Analysis. Using publicly available information,
Robinson-Humphrey compared selected financial data of Dundee and Springs with
similar data of selected companies engaged in the business of manufacturing home
furnishings. Specifically, Robinson-Humphrey included in its review The Bibb
Company; Crown Craft, Inc.; Culp Inc.; Dan River, Inc.; Fieldcrest Cannon, Inc.;
Pillowtex Corp.; Quaker Fabric Corp.; Thomaston Mills, Inc.; WestPoint Stevens
Inc.; and Springs (the "Comparable Companies"). Robinson-Humphrey calculated,
among other things, current market price as a multiple of the latest reported
twelve months ("LTM") earnings per share ("EPS"), and estimated EPS for the
calendar years 1994 and 1995. The EPS estimates were based on the mean of
publicly available earnings estimates made by research analysts as provided by
First Call Investor Service, except for estimates for Culp Inc., Quaker Fabric
Corp. and WestPoint Stevens Inc., which were Robinson-Humphrey research
estimates. Robinson-Humphrey also compared historical sales, gross margins,
operating margins and net margins. In making its presentation, Robinson-Humphrey
noted that the operating margin of Dundee was lower than the average for the
Comparable Companies and the operating margin of Springs was higher than that of
Dundee.
Additionally, Robinson-Humphrey compared the Comparable Companies' market
capitalization plus debt minus cash and cash equivalents ("Firm Value") as a
multiple of revenues, earnings before interest and taxes plus depreciation and
amortization expenses ("EBITDA") and operating income. Robinson-Humphrey
determined that these multiples of Firm Value to (i) LTM revenues ranged from
0.49x to 1.01x (with a mean of 0.68x), (ii) LTM EBITDA ranged from 4.8x to 7.3x
(with a mean of 5.9x) and (iii) LTM operating income ranged from 7.0x to 10.8x
(with a mean of 8.7x). Robinson-Humphrey also determined that the multiples of
market value to book value ranged from 0.92x to 3.77x, with a mean of 1.35x.
Robinson-Humphrey calculated similar values for Dundee assuming the
purchase price set forth in the Merger Agreement and determined that the
multiples of Firm Value to LTM revenues for Dundee was 0.54x, the Firm Value to
LTM EBITDA was 11.4x and that the ratio of equity value to book value at
December 31, 1994 was .97x. Robinson-Humphrey indicated that the multiple of
Firm Value to operating income was a meaningful valuation measure. However, the
multiple of Firm Value to LTM operating income for Dundee did not produce a
meaningful number for purposes of the analysis.
Comparable Transaction Analysis. Using publicly available information,
Robinson-Humphrey analyzed the transaction value and imputed transaction
multiples on selected acquisitions in the textile industry (collectively, the
"Acquisition Comparables") during the period from January 1992 through February
1995. Robinson-Humphrey compared the Firm Value as a multiple of sales, EBITDA
and earnings before interest and taxes ("EBIT"). The multiples of Firm Value to
sales, EBITDA and EBIT for the Acquisition Comparables were between the
following ranges: (i) sales ranged from 0.3x to 1.9x (with a mean of 0.87x);
(ii) EBITDA ranged from 4.4x to 11.3x (with a mean of 7.3x) and (iii) EBIT
ranged from 6.6x to 18.1x (with a mean of 10.7x). The multiples of equity value
to book value ranged from 1x to 5.6x, with a mean of 3.57x for the Acquisition
Comparables.
Robinson-Humphrey compared the multiples calculated for the Acquisition
Comparables to similar multiples calculated for the Merger, and determined that
the multiple of Firm Value to EBITDA, which
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<PAGE> 27
Robinson-Humphrey emphasized as an important indicator of the fairness of the
transaction, for the Merger is 11.4x, much higher than the equivalent multiple
for the Acquisition Comparables, which was 7.3x.
No company, transaction or business used by Robinson-Humphrey in the
comparable company and comparable transactions analyses as a comparison should
be viewed as nearly identical to Dundee, Springs, Subcorp or the Merger.
Accordingly, an analysis of the results of the foregoing is not entirely
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics and other
factors that could affect the acquisition or public trading value of the
Comparable Companies or the business segment or company to which they are
compared.
Discounted Cash Flow Analysis. Robinson-Humphrey performed a discounted
cash flow analysis as of August 31, 1994, assuming, among other things, discount
rates ranging from 10.41% to 12.91% and terminal multiples of EBITDA ranging
from 6.0x to 8.0x. This analysis resulted in a range of equity value of Dundee
of approximately $51,000,000 to $85,000,000. Robinson-Humphrey focused its
analysis on a discount rate of 11.41% and a multiple of 7.0x, which resulted in
an estimated equity value of approximately $68,000,000.
Pro Forma Merger Analysis. Robinson-Humphrey analyzed certain pro forma
effects resulting from the Merger, including, among other things, the impact of
the Merger on the projected EPS of Springs for the 1995 and 1996 fiscal years.
Based on the projected estimates of EPS for Springs made by the Research
Department of Robinson-Humphrey and the projected estimates of earnings for
Dundee made by the management of Dundee, the results of the pro forma merger
analysis suggest that the Merger would dilute Springs' EPS in each year
analyzed. The actual results achieved by the combined company may vary from the
projected results and the variations may be material.
The summary of the analysis performed by Robinson-Humphrey set forth above
does not purport to be a complete description thereof. Robinson-Humphrey
believes that its analyses and the summary set forth above must be considered as
a whole and that selecting portions of its analysis or of the above summary,
without considering all factors and analyses, could create an incomplete view of
the processes underlying the analysis performed by Robinson-Humphrey and its
opinion. In performing its analysis, Robinson-Humphrey made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Springs or Dundee.
The analyses performed by Robinson-Humphrey are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Additionally, analyses relating to
the values of businesses do not purport to be appraisals.
Robinson-Humphrey is an investment banking firm which is regularly engaged
in the valuation of securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements, and valuations for estate, corporate and other
purposes. The Special Committee of Dundee's Board of Directors decided to retain
Robinson-Humphrey based upon its expertise as a financial advisor in mergers and
acquisitions of companies in the textile industry, and its knowledge of the
textile industry generally.
Pursuant to the terms of an engagement letter dated January 18, 1995,
Dundee has agreed to pay Robinson-Humphrey for its services in connection with
the Merger a retainer of $25,000, which was paid at the time of the execution of
the engagement letter, and a fee of $150,000 upon rendering a written fairness
opinion. If, during the term of Robinson-Humphrey's engagement or within twelve
months following the termination of such engagement, a sale of Dundee to Springs
or any other party occurs in which the consideration paid exceeds the
consideration proposed in the letter of intent between Springs and Dundee, then
Dundee will pay Robinson-Humphrey an additional fee equal to 2.5% of such excess
amount. Dundee has also agreed to reimburse Robinson-Humphrey for its reasonable
out-of-pocket expenses up to $15,000 and to indemnify Robinson-Humphrey against
certain liabilities, including liabilities under the federal securities laws.
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<PAGE> 28
SPRINGS REASONS FOR THE MERGER
The Springs Board of Directors, at its meeting on February 2, 1995,
considered the Merger Agreement and related matters. The determination by
Springs' Board of Directors that the proposed Merger was in the best interests
of Springs and its shareholders was based on a number of factors, including (a)
Springs' interest in expanding its lines of products through the acquisition of
a company which produces terry towels; (b) Dundee's significant and growing
presence in the terry towel market; (c) Dundee's terry manufacturing expertise;
(d) the benefits to both Springs and Dundee expected to be derived from the
combination of their businesses; and (e) the benefits to both Springs and its
customers expected to result from Springs' ability to offer terry towels in
coordination with its other bed and bath products.
THE MERGER AGREEMENT
The Merger Agreement provides that following its approval by the holders of
Dundee Common Stock, and the satisfaction or waiver of all other conditions to
the Merger, Dundee will be merged with Subcorp and will thus become a
wholly-owned subsidiary of Springs. After the Merger, Subcorp will remain as the
Surviving Corporation in the Merger or, alternatively, if 80% or more of the
outstanding Dundee Common Stock is converted into Springs Class A Stock in the
Merger, Springs may, at its option, cause Subcorp to merge with and into Dundee,
thus leaving Dundee as the Surviving Corporation in the Merger. Subject to the
approval of the shareholders of Dundee and the satisfaction or waiver of
conditions precedent to the Merger but no later than the third business day
thereafter (the "Closing Date"), the Merger will occur when a duly executed
certificate of merger is filed by Dundee and Subcorp with the Secretary of State
of the State of Georgia (unless the certificate of merger specifies a later
effective time) (the "Effective Time"). It is expected that the Effective Time
will occur on the date of the Meeting, or as soon as practicable thereafter. If
Subcorp is the Surviving Corporation, at the Effective Time and by reason of the
Merger, Subcorp will change its corporate name from "Dundee Acquisition Corp."
to "Dundee Mills, Incorporated."
Pursuant to the Merger Agreement, each issued and outstanding share of
Dundee Common Stock, excluding (a) any such shares held in the treasury of
Dundee, (b) any such shares held by Springs or its subsidiaries, and (c) any
such shares as to which the holders thereof have validly elected to pursue their
dissenters' rights under the GBCC, shall automatically be cancelled and
extinguished and shall thereafter be converted into only the right to receive
shares of Springs Class A Stock or, pursuant to a Cash Election and subject to
certain limitations, the right to receive $2,525.00 in cash. See " -- Merger
Consideration."
Under the Merger Agreement, each share of Dundee Common Stock held in the
treasury of Dundee or held by Springs or any of its subsidiaries shall be
automatically cancelled and extinguished, and no payment shall be made in
respect thereof. Any shares as to which the record holders thereof have validly
elected to pursue their dissenters' rights shall also be automatically cancelled
and extinguished, and shall thereafter represent the right to receive the Fair
Value of such shares. In addition, each issued and outstanding share of common
stock of Subcorp will continue to represent either one validly issued, fully
paid and nonassessable share of Subcorp, as the Surviving Corporation in the
Merger, or if Dundee is the Surviving Corporation, shall be converted into one
validly issued, fully paid and nonassessable share of Dundee Common Stock.
MERGER CONSIDERATION
At the Effective Time, each outstanding share of Dundee Common Stock will
be converted into the right to receive the Merger Consideration consisting of an
amount of Springs Class A Stock equal in value to $2,525.00 (subject to
variation based on market prices) based on the conversion ratio described below,
or cash in that amount, at the option of the Dundee shareholder and subject to
certain limitations. Dundee shareholders may elect to convert a portion of their
holdings of Dundee Common Stock into cash and the
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<PAGE> 29
remaining portion into Springs Class A Stock. The conversion of shares of Dundee
Common Stock into Springs Class A Stock is determined as follows:
If the average of the closing prices per share for Springs Class A
Stock on the New York Stock Exchange (the "NYSE") for the ten trading days
immediately preceding the date which is three calendar days prior to the
Closing Date (the "Reported Market Price") is $33.50 or more, but not more
than $38.50, the conversion ratio shall be equal to:
$2,525.00
----------
Reported Market Price
and shares of Springs Class A Stock issued in exchange for Dundee Common
Stock will have a market value of $2,525.00 per share of Dundee Common
Stock, based on the Reported Market Price.
If the Reported Market Price of Springs Class A Stock is less than
$33.50, the conversion ratio shall be equal to:
<TABLE>
<C> <S>
$2,525.00 or 75.37313 shares of
- ---------- Springs Class A Stock
$33.50 per share of Dundee Common Stock
</TABLE>
and shares of Springs Class A Stock issued in exchange for Dundee Common
Stock will have a market value less than $2,525.00 per share of Dundee
Common Stock, based on the Reported Market Price.
If the Reported Market Price of Springs Class A Stock exceeds $38.50,
the conversion ratio shall be equal to:
<TABLE>
<C> <S>
$2,525.00 or 65.58442 shares of
- ---------- Springs Class A Stock
$38.50 per share of Dundee Common Stock
</TABLE>
and shares of Springs Class A Stock issued in exchange for Dundee Common
Stock will have a market value greater than $2,525.00 per share of Dundee
Common Stock, based on the Reported Market Price.
After the per share purchase price for Dundee Common Stock was agreed upon
through negotiation, the formulation of the conversion ratio was determined in
an effort to ensure that in most circumstances a Dundee shareholder would
receive approximately $2,525.00 in value of Springs Class A Stock for each share
of Dundee Common Stock. Dundee shareholders are protected from market risk in
the conversion ratio for up to an 8.53% decline in the market price per share of
Springs Class A Stock from the closing market price at the date of the Merger
Agreement ($36.625), and a % decline based on the market price of Springs
Class A Stock as of , 1995 ($ ).
LIMITATION ON CASH ELECTIONS
In order to assure that the Merger will qualify as a tax-free
reorganization, the maximum number of shares of Dundee Common Stock that may be
converted into cash is 23,363 shares less the total number of shares of Dundee
Common Stock as to which the record holders thereof shall have exercised
dissenters' rights pursuant to the GBCC (the "Maximum Number of Cash Election
Shares"). If the number of shares of Dundee Common Stock on deposit with
Wachovia Bank of North Carolina, N.A. (the "Exchange Agent") pursuant to a Cash
Election and not withdrawn as provided by the Merger Agreement (the "Deposited
Shares") at the close of business on , 1995, the last business
day before the Meeting (the "Expiration Date") exceeds the Maximum Number of
Cash Election Shares, the Exchange Agent shall eliminate from the Deposited
Shares (pro rata as nearly as practicable as to each holder of ten or more
Deposited Shares) the number of Deposited Shares necessary to reduce the total
number of Deposited Shares to the Maximum Number of Cash Election Shares (or the
most practicable number thereof immediately below such number). As a result,
Dundee shareholders electing to receive cash may receive a combination of cash
and Springs Class A Stock rather than all cash in exchange for their Deposited
Shares.
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<PAGE> 30
LIMITATION ON SPRINGS CLASS A STOCK
The maximum number of shares of Springs Class A Stock into which shares of
Dundee Common Stock will be converted in the Merger will be 3,000,000 shares. If
Dundee shareholders not making Cash Elections or exercising dissenters' rights
would otherwise be entitled to receive a total of more than 3,000,000 shares of
Springs Class A Stock, a number of shares of Dundee Common Stock (pro rata as
nearly as practicable as to each holder of ten or more shares) will be treated
pro rata as having been subject to Cash Elections, as necessary to reduce the
number of shares of Springs Class A Stock issued in the Merger to 3,000,000. If
the maximum number of shares of Springs Class A Stock is issued, the 3,000,000
shares would represent approximately 23.5% of the shares of Springs Class A
Stock expected to be outstanding after the Merger, and approximately 14.6% of
the aggregate number of shares of Springs Class A Stock and Springs Class B
Common Stock, $.25 par value ("Springs Class B Stock") expected to be
outstanding after the Merger (based on the number of outstanding shares of
Springs Class A Stock and Springs Class B Stock on March 6, 1995 plus the
maximum number of shares of Springs Class A Stock issuable in the Merger). As of
March 6, 1995, these 3,000,000 shares would have represented approximately 6.8%
of the voting power of all outstanding Springs voting securities, or a higher
percentage in voting on certain matters. See "Springs Capital Stock."
CASH ELECTION PROCEDURE
Shareholders wishing to make a Cash Election for some or all of their
shares must complete and submit the Cash Election Form contained in the Letter
of Transmittal accompanying this Proxy Statement and Prospectus. The Letter of
Transmittal must be sent to the Exchange Agent at the address shown on the
Letter of Transmittal. The Letter of Transmittal must be accompanied by the
certificate or certificates, properly endorsed for transfer or with duly
executed stock transfer powers, representing all of the shares of Dundee Common
Stock held by the Dundee shareholder making the Cash Election, even if the Cash
Election is not being made for all of the shares represented by the holder's
share certificates. Those shares as to which a Cash Election has not been made
will be converted into Springs Class A Stock in accordance with the terms of the
Merger Agreement (see "-- Merger Consideration"). TO RECEIVE CASH IN EXCHANGE
FOR ANY SHARES OF DUNDEE COMMON STOCK, THE LETTER OF TRANSMITTAL, CONTAINING THE
COMPLETED CASH ELECTION FORM, MUST BE RECEIVED BY THE EXCHANGE AGENT NO LATER
THAN THE CLOSE OF BUSINESS ON THE EXPIRATION DATE ( , 1995). The
Exchange Agent will make the Letter of Transmittal available to all persons who
become holders of record of Dundee Common Stock during the period between the
Record Date and the Expiration Date. SHAREHOLDERS SHOULD NOT SEND THE LETTER OF
TRANSMITTAL OR ANY CERTIFICATES REPRESENTING SHARES OF DUNDEE COMMON STOCK TO
DUNDEE.
It is not necessary for a Dundee shareholder to vote in favor of the Merger
in order to make a valid Cash Election. Record holders of Deposited Shares shall
remain the shareholders of record with respect to such shares until the
Effective Time. Each holder of Dundee Common Stock who has made a valid Cash
Election has the right at any time prior to the close of business on the
Expiration Date to withdraw such shareholder's Deposited Shares and thereby
revoke the Cash Election by giving notice of withdrawal to the Exchange Agent
prior to the close of business on the Expiration Date.
The Exchange Agent shall in its sole discretion determine whether or not
Cash Elections have been properly or timely made or revoked. Neither Springs,
Dundee, Subcorp nor the Exchange Agent shall be under any duty to give
notification that any Cash Election has not been properly or timely made or
revoked. If the Exchange Agent determines that any Cash Election was not
properly or timely made or revoked or if any Cash Election is properly revoked
or is eliminated from deposit as described above, the shares subject to such
Cash Election shall be treated by the Exchange Agent as shares of Dundee Common
Stock which were not subject to any Cash Election and at the Effective Time such
shares shall be converted into the right to receive Springs Class A Stock. The
Exchange Agent shall make all computations as to proration, and any such
computations shall be conclusive and binding on the holders of Dundee Common
Stock. The Exchange Agent may, after consultation with Springs, make such
equitable changes in the procedures set forth in the Merger Agreement regarding
Cash Elections as are necessary or desirable to effect fully any Cash Election.
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<PAGE> 31
EXCHANGE OF CERTIFICATES FOR NON-CASH ELECTION SHARES
On and after the Effective Time, each outstanding certificate which prior
to the Effective Time represented, in whole or in part, Dundee Common Stock as
to which a Cash Election has not been made or has been revoked or shares as to
which the holder has exercised dissenters' rights (collectively, "Non-Cash
Election Shares") will be deemed to evidence the right to receive the Merger
Consideration payable with respect to such Dundee Common Stock, in the form of
whole shares of Springs Class A Stock or cash (or both), as provided in the
Merger Agreement. See "-- Fractional Shares." A Dundee shareholder who wishes to
receive Springs Class A Stock rather than cash for his or her shares of Dundee
Common Stock should complete the enclosed Letter of Transmittal (without
completing the Cash Election Form, if no cash is desired) and send it together
with all of his or her share certificates representing Dundee Common Stock,
properly endorsed for transfer or with duly executed stock transfer powers, to
the Exchange Agent at the address shown on the Letter of Transmittal. While it
is not necessary to return Dundee share certificates and the Letter of
Transmittal to the Exchange Agent by the Expiration Date if no Cash Election is
being made, it is acceptable to do so.
If any Springs Class A Stock certificate is to be issued in a name other
than that of the registered owner of Dundee Common Stock being exchanged
therefor, the person requesting the issuance must pay in advance in cash all
applicable transfer and other taxes before Springs will be obligated to issue
the certificate, unless that person establishes to the satisfaction of the
Exchange Agent that any such taxes have been paid or that no such tax is
applicable.
FRACTIONAL SHARES
No fractional shares of Springs Class A Stock will be issued in the Merger.
Each holder of Dundee Common Stock who would otherwise be entitled to a
fractional share of Springs Class A Stock as part of the Merger Consideration
will, upon surrender of such holder's Dundee share certificate, receive from
Springs a cash payment (without interest) equal to the fractional share to which
such holder would otherwise be entitled multiplied by the Reported Market Price
of Springs Class A Stock used in computing the Merger Consideration.
CONDITIONS TO THE MERGER
Dundee and Springs are not obligated to complete the Merger unless a number
of conditions are satisfied, including the following: (a) Dundee shareholders
shall have approved the Merger Agreement; (b) Springs' Registration Statement
for the Springs Class A Stock to be issued in the Merger shall have become
effective under the Securities Act and no stop order shall have been issued or
be pending or threatened; (c) the waiting period applicable to the Merger under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall
have expired or have been terminated; (d) Dundee and Springs shall each have
received a satisfactory opinion from Sutherland, Asbill & Brennan, counsel for
Springs, that the Merger constitutes a reorganization under the Internal Revenue
Code of 1986, as amended (the "Code"); and (e) the shares of Springs Class A
Stock to be issued in the Merger shall have been authorized for listing on the
NYSE upon official notice of issuance. In addition, the obligation of each of
Springs and Dundee to consummate the Merger is subject to the conditions that
the other party shall have performed its agreements and covenants under the
Merger Agreement in all material respects; that the other party's
representations and warranties, subject to certain exceptions, shall be true and
correct at the Effective Time (except where the failure of any representation
and warranty to be true and correct would not have a material adverse effect on
the party making it); and that the other party shall have delivered certain
opinions of counsel, letters from accountants and certain additional conditions,
including conditions which are customary in transactions similar to the Merger,
as set forth in the Merger Agreement.
The obligations of Springs and Subcorp to consummate the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
additional conditions: (a) dissenters' rights with respect to the Merger must
not have been exercised by holders of more than 8% of the outstanding shares of
Dundee Common Stock; (b) appropriate agreements must be obtained from all
affiliates of Dundee agreeing to
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<PAGE> 32
applicable resale restrictions with respect to Springs Class A Stock received
pursuant to the Merger; (c) the Board of Directors of Dundee must have
determined that no change in control will be considered to have occurred by
reason of the Merger under the Dundee Mills Supplemental Executive Retirement
Plan; (d) Dundee shall have taken all corporate action necessary to establish
that all issuances by Dundee of Dundee Common Stock since July 1, 1989 were
validly issued, fully paid and nonassessable and that no preemptive rights exist
with respect to such issuances; (e) Dundee must have cured all filing
deficiencies and satisfied all related obligations with respect to the HSR Act
and Dundee pension plans at no material expense to Dundee; (f) loans made by
Dundee to Dundee shareholders must have been repaid in full; and (g) Dundee and
its counsel must have taken all action necessary to preserve the tax exempt
status of certain industrial revenue bonds.
EFFECTIVE TIME AND TERMINATION
If the Merger is approved by the shareholders of Dundee and all other
conditions of the Merger are satisfied or waived (see "-- Conditions to the
Merger"), the Merger will become effective when Subcorp and Dundee file a
certificate of merger with the Secretary of State of the State of Georgia in
accordance with the GBCC unless a later time is specified in the certificate of
merger. The Merger Agreement provides that Subcorp and Dundee will make this
filing as soon as practicable after all of the conditions to completion of the
Merger are satisfied or waived. The parties anticipate that the Effective Time
will occur promptly following the Meeting.
The Merger Agreement may be terminated at any time prior to the Effective
Time: (a) by Springs and Dundee upon mutual action of their respective Boards of
Directors; (b) by either Springs or Dundee if (i) any event has occurred as a
result of which any condition to its respective obligation to consummate the
Merger is no longer capable of being satisfied (so long as, in certain
circumstances, the terminating party has not contributed to the failure of any
such condition to be satisfied), (ii) any general suspension of, or limitation
on, trading on the NYSE has continued for a period of 15 days or a bank
moratorium in the United States has continued for a period of 15 days, or (iii)
the Merger has not been consummated by July 31, 1995; (c) by Springs if (i)
Dundee has breached any representation or warranty contained in the Merger
Agreement which would be reasonably likely to have a material adverse effect on
Dundee, (ii) Dundee has materially breached any of its covenants or agreements
in the Merger Agreement which breach is not curable (or, if curable, is not
cured within 30 days after written notice from Springs), (iii) Dundee (or its
Board of Directors) has authorized, recommended, proposed or publicly announced
its intention to enter into a "Competing Transaction" not consented to by
Springs, (iv) Dundee's Board of Directors has withdrawn or materially modified
its authorization, approval or recommendation of the Merger or the Merger
Agreement in a manner adverse to Springs, or (v) a party other than Springs has
announced, commenced or consummated the acquisition of at least 15 percent of
the outstanding Dundee Common Stock or has received proxies or consents
sufficient to elect a majority of Dundee's Board of Directors or block approval
of the Merger; or (d) by Dundee if (i) Springs or Subcorp has breached any
representation or warranty contained in the Merger Agreement which would be
reasonably likely to have a material adverse effect on the ability of Springs or
Subcorp to consummate the Merger or (ii) Springs or Subcorp has materially
breached any of its covenants or agreements in the Merger Agreement which breach
is not curable (or, if curable, is not cured within 30 days after written notice
from Dundee).
As used in the Merger Agreement, "Competing Transaction" means any
acquisition of 15% or more of the stock or assets of Dundee, or a merger,
consolidation or other business combination involving Dundee, or the public
announcement of a proposal, plan or intention to effect such a transaction, or
any agreement to effect such a transaction.
The Merger Agreement also provides that if Springs terminates the Merger
Agreement because of a knowing and intentional misrepresentation or a knowing
and intentional breach of warranty or breach of any covenant by Dundee, Dundee
shall be liable to Springs, among other things, for all investment banking,
legal, accounting, expert and consulting fees and other out-of-pocket expenses
reasonably incurred by Springs in connection with the Merger. In addition, the
Merger Agreement requires Dundee to pay Springs a fee of $3,000,000 in the event
that the Merger Agreement is terminated because: (a) the condition that Dundee's
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<PAGE> 33
representations and warranties contained in the Merger Agreement be true and
correct in all respects (except where the failure of any representation and
warranty to be true and correct would not have a material adverse effect on
Dundee) is not satisfied due to Dundee's knowing and intentional
misrepresentation or knowing and intentional breach of warranty or breach of any
covenant or agreement and (i) Dundee has had contacts about or entered into
negotiations relating to a Competing Transaction during the period from the date
of the Merger Agreement through the date of termination and (ii) Dundee
consummates a Competing Transaction within one year after the date of
termination with a party with whom Dundee had such negotiations or contacts; (b)
the Merger Agreement does not receive the requisite vote of the holders of
Dundee Common Stock and at the time of such vote there existed a Competing
Transaction; (c) Dundee authorizes, recommends proposes or publicly announces
its intention to enter into a Competing Transaction not consented to by Springs;
or (d) Dundee's Board of Directors withdraws or materially modifies its
authorization, approval or recommendation of the Merger or the Merger Agreement
in a manner adverse to Springs, unless in any such case Springs has materially
breached any of its representations, warranties, covenants or agreements under
the Merger Agreement.
AMENDMENT
The Merger Agreement provides that it may be amended by the parties at any
time before or after approval thereof by the shareholders of Dundee, but that
after such approval no amendment shall be made (a) which reduces the Merger
Consideration or changes the form of the Merger Consideration to be received by
Dundee's shareholders pursuant to the Merger Agreement or (b) changes any of the
terms and conditions of the Merger Agreement if such change would adversely
affect the holders of Dundee Common Stock, unless the further approval of the
holders of Dundee Common Stock is obtained.
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
The Merger Agreement contains certain representations, warranties,
covenants and agreements by Dundee and Springs regarding, among other things,
the businesses, capital structure, assets and liabilities of Dundee and Springs
and the accuracy and completeness of information supplied in connection with the
Merger. The Merger Agreement also contains covenants of Dundee with respect to
the conduct of its business prior to the Closing Date, including covenants that
it will not (a) issue any shares of its capital stock (or related rights) or pay
any dividend, (b) sell or transfer any asset to a third party or incur any debt
or mortgage or encumber assets, except in the ordinary course of business and
within specified limits, (c) change the salaries, benefits or employment
contracts of employees of Dundee or its subsidiaries, or (d) amend its Articles
of Incorporation or Bylaws.
In addition, Dundee has agreed not to, directly or indirectly, (a) solicit,
initiate or knowingly encourage any inquiries or the making of proposals from
anyone other than Springs that constitutes or may reasonably be expected to lead
to any Competing Transaction, (b) enter into or maintain or continue discussions
or negotiate with a party other than Springs in furtherance of such inquiries or
to obtain a Competing Transaction, or (c) agree to or endorse any Competing
Transaction or authorize or permit any of the officers, directors or employees
of such party or any of its subsidiaries or any advisors to or representatives
of such party to take any such action. Dundee has also agreed to use its best
efforts to obtain the approval by Dundee's shareholders of the Merger and the
transactions contemplated by the Merger Agreement. However, the Merger Agreement
provides that neither the Board of Directors nor the officers of Dundee shall be
required to take or omit to take any action, with respect to disclosures in this
Proxy Statement and Prospectus or their recommendation to Dundee's shareholders
regarding the Merger, which the Board determines in good faith, based on the
advice of Dundee's counsel, could be held to violate their fiduciary duties to
Dundee's shareholders.
GOVERNMENTAL AND REGULATORY REQUIREMENTS
Springs and Dundee are not aware of any governmental or regulatory
requirements for consummation of the Merger other than compliance with
applicable federal and state securities laws and the expiration or the
termination of the waiting periods applicable to the Merger under the HSR Act
and the rules and regulations thereunder. Under the HSR Act, certain acquisition
transactions, such as the Merger, may not be
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<PAGE> 34
consummated unless required information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the Federal
Trade Commission (the "FTC") and the specified waiting period requirements have
been satisfied. On February 8, 1995 and March 7, 1995, respectively, Springs and
Dundee each filed with the Antitrust Division and the FTC a Notification and
Report Form with respect to the Merger. The applicable waiting period for the
Merger will expire at 11:59 p.m. on April 6, 1995.
Notwithstanding the termination or expiration of the waiting period, at any
time before or after the Effective Time, the Antitrust Division or the FTC could
take actions under the antitrust laws as either of them deem necessary and
desirable in the public interest, including seeking to enjoin the Merger, or
seeking divestitures of substantial assets of Springs or Dundee. In addition, in
appropriate circumstances, state officials and private parties may also bring
legal actions under the antitrust laws. Under the Merger Agreement, in the event
a suit is instituted challenging the Merger as violative of the antitrust laws,
Springs and Dundee have agreed to use their best efforts to resist or resolve
such a suit. If injunctive relief is sought or obtained in a challenge to the
Merger, the Merger Agreement could be terminated or the consummation of the
Merger could be delayed and, under certain circumstances, such delay could
result in consummation of the Merger being postponed to a date substantially
beyond the date of the Meeting. If the Merger is not consummated by July 31,
1995, the Merger Agreement could be terminated by Springs or Dundee.
EXPENSES
Except as otherwise provided in the Merger Agreement, if the Merger is not
consummated, Dundee and Springs shall each bear its own expenses related to the
Merger, except that the cost of printing this Proxy Statement and Prospectus and
filing fees under federal and state securities laws shall be borne equally.
RESALE OF SPRINGS CLASS A STOCK
The shares of Springs Class A Stock to be issued to Dundee shareholders in
connection with the Merger have been registered under the Securities Act.
Accordingly, such shares will be freely transferable under the Securities Act,
except for shares issued to any person who may be deemed to be an "affiliate" of
Dundee within the meaning of Rule 145 promulgated under the Securities Act
(collectively, "Dundee Affiliates"). The shares of Springs Class A Stock
received by Dundee Affiliates may not be sold without registration of such
shares for resale under the Securities Act or the availability of an exemption
(including the limited exemption provided by Rule 145) from such registration.
Dundee has agreed to use its best efforts to cause each person who Springs
believes may be deemed a Dundee Affiliate to execute and deliver to Springs an
agreement covering the foregoing restrictions on transfer and certain other
rights and obligations of such person with respect to the shares of Dundee
Common Stock and Springs Class A Stock.
INTERESTS OF CERTAIN PERSONS
In considering the Merger, holders of Dundee Common Stock should be aware
that the directors and certain members of Dundee management have interests in
the Merger in addition to their interests as shareholders of Dundee generally,
as described below.
The Merger Agreement provides for continued employment and severance
benefits for fifteen officers of Dundee. Six of the current officers of Dundee
will be employed by the Surviving Corporation for an initial term of six months
and an additional eight officers will be employed for an initial term of nine
months. After such initial period, either the Surviving Corporation or such
employee may terminate such employment, and upon such termination the terminated
employee shall be entitled to one year's compensation as a severance benefit. If
all of such Dundee officers left the employ of the Surviving Corporation after
the initial term, the Surviving Corporation would make severance payments
aggregating $2,591,675 to such persons. The following executive officers who are
entitled to such severance payments also serve as directors and would be
entitled to the amounts of severance set forth below after an initial term of
six months: John T. Newton: $242,000; J. Henry Walker, III: $309,000; R. Wayne
Boyd: $265,000; and Howard B. Gossett, Jr.: $180,000. Additionally, the
following executive officers, who are directors, would be entitled to the
following amounts of severance after an initial term of nine months: David G.
Newton: $182,000; and J. Gilliam Cheatham:
24
<PAGE> 35
$102,000. Non-director executive officers of Dundee would be entitled to the
amounts of severance set forth below after the initial terms indicated: M. J.
Yates: $142,000 (after six months); Douglas R. Tingle: $171,600 (after nine
months); and V. Larry Perkins: $149,500 (after nine months).
The Special Committee of Dundee's Board of Directors was appointed, in
part, to consider the payment of special compensation to certain executive
officers of Dundee. The Special Committee believes that the group of executives
who will receive such compensation is one of Dundee's most valuable assets and
that their expertise, hard work and determination are major reasons Springs
desires to acquire Dundee pursuant to the Merger. Additionally, the Special
Committee believes that the executives receiving such compensation are essential
to the consummation of the Merger and that the Surviving Corporation needs to
retain the management skills of these executives to ensure its continued
success. Accordingly, the Special Committee has determined that immediately
prior to the consummation of the Merger, nine executive officers of Dundee will
be entitled to receive payments aggregating $2,168,000. The following executive
officers also serve as directors of Dundee and will be entitled to receive the
amounts set forth below: John T. Newton: $368,000; J. Henry Walker, III:
$232,000; R. Wayne Boyd: $203,000; Howard B. Gossett, Jr.: $140,000; David G.
Newton: $300,000; and J. Gilliam Cheatham: $102,000. The following non-director
executive officers will be entitled to receive the amounts set forth below: M.
J. Yates: $112,000; Douglas R. Tingle: $396,000; and V. Larry Perkins: $315,000.
For information concerning the interests of certain officers and directors
of Dundee in certain issuances of shares of Dundee Common Stock during
1990-1994, see "Ratification of Certain Issuances of Dundee Common Stock."
The members of the Board of Directors who served on the Special Committee
of the Board of Directors were Harvey M. Cheatham, A. Felton Jenkins, Jr. and
Tim M. Woodall. No member of the Special Committee was an officer or employee of
Dundee or a purchaser of any of the shares of Dundee Common Stock issued during
1990-1994, or otherwise had any financial interest (except Mr. Cheatham's
interest as a shareholder of Dundee generally) in any of the matters acted upon
by the Special Committee. Each member of the Special Committee received $20,000
for his services in connection with the Merger.
Finally, pursuant to the Merger Agreement, Springs has agreed that all
rights to indemnification and all limitations of liabilities set forth in the
Articles of Incorporation and Bylaws of Dundee will be continued in the Articles
of Incorporation and Bylaws of the Surviving Corporation. Springs has agreed not
to take any action or allow any action to be taken relating to limitation of
liability or indemnification, prior to the expiration of all applicable statutes
of limitation, that would adversely affect the rights of the individuals who are
entitled to the benefits of such provisions. Further, Springs has agreed to make
proper provision to ensure that its successors and assigns assume these
obligations.
OPTION AND PROXY AGREEMENTS
As required by Springs as a condition to entering into the Merger
Agreement, all of the directors and one of the officers of Dundee have entered
into agreements granting proxies to Springs to vote certain shares of Dundee
Common Stock owned or controlled by such persons in favor of the Merger and the
transactions contemplated by the Merger Agreement and against any other merger,
sale of assets or other business combination between Dundee and any other person
or entity, and granting options at a cash exercise price of $2,525.00 per share
to Springs to purchase such shares, exercisable upon the occurrence of certain
events. These agreements cover 10,981 shares of Dundee Common Stock, or
approximately 23.5% of such shares entitled to vote at the Meeting.
TAX CONSEQUENCES
The following is a summary of certain anticipated federal income tax
consequences of the Merger. Due to the complexity and changing nature of federal
income tax laws, and considering that each shareholder's individual
circumstances affect the tax consequences of the Merger to such shareholder, the
following is not intended to and does not constitute a complete description of
all possible federal tax consequences to the shareholders of Dundee. The federal
income tax consequences to any particular shareholder may be affected
25
<PAGE> 36
by matters not described herein. Moreover, this discussion does not address the
state and local income tax consequences, if any, of the Merger. EACH SHAREHOLDER
IS THEREFORE ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE
TAX CONSEQUENCES OF THE MERGER TO HIM OR HER.
Neither Dundee nor Springs has sought or intends to seek a ruling from the
Internal Revenue Service concerning the federal income tax consequences of the
Merger. Consummation of the Merger is conditioned upon the receipt by Springs
and Dundee as of the Closing Date of an opinion from Sutherland, Asbill &
Brennan that the Merger constitutes a reorganization under the Code such that a
Dundee shareholder will not be subject to income taxation on the Merger
Consideration if the shareholder's Merger Consideration is received solely in
Springs Class A Common Stock, but will be subject to income taxation on any gain
realized to the extent the Merger Consideration is received in cash. In
rendering their opinion, Sutherland, Asbill & Brennan will make certain factual
assumptions and will rely upon certain representations of Springs and Dundee.
One such assumption/representation is that, to the best of the knowledge of the
executive officers of Dundee, there is no plan or intention by the shareholders
of Dundee to sell, exchange, or otherwise dispose of a number of shares of
Springs Class A Stock received in the Merger that would reduce the Dundee
shareholders' ownership of Springs Class A Stock to a number of shares having a
value, as of the Effective Date, of less than 50% of the value of all of the
formerly outstanding shares of Dundee Common Stock as of the Effective Date.
Assuming the Merger is treated as a reorganization for federal income tax
purposes, the Merger will have the following, among other, tax consequences to
the shareholders of Dundee.
No gain or loss will be recognized by a holder of Dundee Common Stock whose
shares are exchanged solely for Springs Class A Stock, except with respect to
cash received in lieu of a fractional share of Springs Class A Stock.
A holder of Dundee Common Stock who receives both Springs Class A Stock and
cash as Merger Consideration will recognize gain, if any, realized on the
exchange, but in an amount which is not in excess of the amount of cash
received. The gain recognized should generally be treated as gain from the
exchange of property and, assuming that the shares of Dundee Common Stock of
such shareholder are held as capital assets, would be capital gain. In certain
unusual circumstances, a Dundee shareholder who is considered to own
constructively Dundee stock which is held by another Dundee shareholder and
exchanged for Springs Class A Stock in the Merger might be required to treat any
gain recognized as a dividend. No loss will be recognized by a holder of Dundee
Common Stock who receives both Springs Class A Stock and cash as Merger
Consideration.
A holder of Dundee Common Stock who receives solely cash as Merger
Consideration, or a dissenting shareholder, should generally recognize gain or
loss, measured by the difference between the amount of cash received and the
basis of the shares of Dundee Common Stock exchanged therefor. Assuming that the
shares of Dundee Common Stock are held as capital assets, such gain or loss
would be treated as capital gain or loss. In certain unusual circumstances, a
Dundee shareholder who receives solely cash, but who is considered to own
constructively Dundee Common Stock which is held by another Dundee shareholder
and exchanged for Springs Class A Stock in the Merger, might be required to
treat the amount of cash received as a dividend.
Any Dundee shareholder who receives cash in lieu of a fractional share of
Springs Class A Stock will be treated as if a fractional share had been
distributed to him in the Merger and then redeemed by Springs. Such shareholder
will recognize gain or loss, measured by the difference between the amount of
cash received and the basis of the Dundee Common Stock allocable to such
fractional share. Such gain or loss will be capital gain or loss provided that
the shareholder's shares of Dundee Common Stock are held as capital assets.
The basis of the Springs Class A Stock received by a holder of Dundee
Common Stock will be the same as the basis of the Dundee Common Stock
surrendered in exchange therefor (excluding any basis allocable to fractional
shares of Springs Class A Stock for which cash is received), minus any amount of
cash Merger Consideration received by the shareholder, plus any amount which is
treated as gain or as a dividend to the shareholder.
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<PAGE> 37
A Dundee shareholder's holding period with respect to any Springs Class A
Stock received in the Merger will include the period during which the shares of
Dundee Common Stock surrendered in exchange therefor were held, provided that
such shares of Dundee Common Stock were held as capital assets at the Effective
Time.
No gain or loss will be recognized by Springs, Dundee or Subcorp by reason
of the Merger.
ACCOUNTING TREATMENT
The Merger will be accounted for by Springs as a purchase. Under purchase
accounting, Springs will allocate the total cost of acquiring the Dundee Common
Stock, based on the relationship of the total amount of cash paid and the market
value of Springs Class A Stock issued in the Merger to the fair value of the
assets and liabilities acquired. Springs anticipates that the consideration paid
for the Dundee Common Stock will not exceed the fair value of the assets and
liabilities acquired. Consequently, Springs does not expect to record any
goodwill in connection with the Merger.
RATIFICATION OF CERTAIN ISSUANCES OF DUNDEE COMMON STOCK
Historically, shareholders who wished to dispose of some or all of their
Dundee Common Stock have contacted Dundee to locate a prospective purchaser for
such shares, because there has been no established trading market for Dundee
Common Stock. Frequently, Dundee facilitated such transactions by negotiating a
price with the seller and delivering its check to the seller against delivery of
the certificates representing the Dundee Common Stock. In addition, Dundee
acquired 1,365 shares of Dundee Common Stock which were owned by The Hartwell
Mills when it was purchased by Dundee on June 4, 1990.
Dundee has treated all such reacquired shares as treasury shares, and
Dundee's management made shares so acquired available for purchase by selected
officers and employees (or their designated family members) as part of their
compensation. The shares acquired in the Hartwell Mills transaction were valued
by a special committee of the Board of Directors of Dundee at the time of such
acquisition at a slight premium over recent transactions in Dundee Common Stock.
These shares were reissued at such valuation, and other shares reacquired by
Dundee were reissued at the average price per share then being paid by Dundee
for its stock. Dundee utilized such opportunities to enable officers and
employees to obtain or increase their equity interest in the company and offered
this opportunity as an incident of employment and as compensation because Dundee
did not have a formal employee stock option plan or employee stock purchase
program.
During 1990-1994, Dundee used this procedure to acquire and reissue an
aggregate of 2,261 shares of Dundee Common Stock at an average price of $963 per
share to a total of 47 officers and employees (including, in several instances,
family designees of officers or employees). No individual officer or employee
(together with his family designees, if any) purchased more than an aggregate of
331 shares during such period. The dates, aggregate number of shares reissued,
and price per share of all such issuances are set forth below:
<TABLE>
<CAPTION>
DATE AND PRICE OF ISSUANCE SHAREHOLDER SHARES
- --------------------------- ------------------------------------------------ ------
<S> <C> <C>
August 28, 1990 ($650) David D. Blalock, Jr............................ 50
R. Wayne Boyd*+................................. 100
John Bray....................................... 50
Howard B. Gossett, Jr.*+........................ 50
Betty Gossett*+................................. 50
Clarence J. McMerty............................. 50
Jack Mundy...................................... 50
David J. Taylor................................. 50
Douglas R. Tingle*.............................. 100
J. Henry Walker, III*+.......................... 100
October 31, 1990 ($650) Neal E. Baldwin................................. 30
Doug Brown...................................... 7
Wayne Brown..................................... 10
William E. Head................................. 5
Harry Kierbow................................... 15
David Lamb...................................... 20
</TABLE>
27
<PAGE> 38
<TABLE>
<CAPTION>
DATE AND PRICE OF ISSUANCE SHAREHOLDER SHARES
- --------------------------- ------------------------------------------------ ------
<S> <C> <C>
V. Larry Perkins*............................... 10
James W. Roddy.................................. 10
Robert Scroggins................................ 50
J. Kenneth Stanz, Jr............................ 5
J. Frank Stewart................................ 25
Jeff Stewart.................................... 5
Hubert Sullins.................................. 50
Robert Sullins.................................. 8
Frank Westmoreland.............................. 13
M. J. Yates*.................................... 50
December 10, 1990 ($650) Henry Barton.................................... 10
Gordon H. Brown................................. 10
Everett Chalkley................................ 5
J. Gilliam Cheatham*+........................... 45
John H. Cheatham, III........................... 20
Leila Cheatham*+................................ 145
Howard B. Gossett, Jr.*+........................ 6
James A. Graham................................. 25
Robert Housworth................................ 5
David G. Newton*+............................... 125
John T. Newton*+................................ 106
Leila Von Stein*+............................... 15
Douglas R. Tingle*.............................. 6
J. Henry Walker, III*+.......................... 6
July 7, 1993 ($1,500) Neal E. Baldwin................................. 5
Gordon H. Brown................................. 5
James A. Graham................................. 5
Harry Kierbow................................... 5
David Lamb...................................... 5
William M. McSwain, Sr.......................... 5
Herbert B. Perkins.............................. 5
James W. Roddy.................................. 5
J. Frank Stewart................................ 5
August 2, 1993 ($1,500) David D. Blalock, Jr............................ 20
R. Wayne Boyd*+................................. 25
John Bray....................................... 20
J. Gilliam Cheatham*+........................... 25
John H. Cheatham, III........................... 25
Ken Gossage..................................... 2
Howard B. Gossett, Jr.*+........................ 25
William E. Head................................. 2
Francis S. Hedges............................... 5
John M. Jago.................................... 10
Christine R. Lanigan............................ 10
Clarence J. McMerty............................. 20
Walter J. McMullen.............................. 10
David G. Newton*+............................... 25
John T. Newton*+................................ 25
Mark A. Peek.................................... 10
V. Larry Perkins*............................... 25
J. Kenneth Stanz, Jr............................ 5
David J. Taylor................................. 20
Douglas R. Tingle*.............................. 25
J. Henry Walker, III*+.......................... 25
M. J. Yates*.................................... 5
</TABLE>
28
<PAGE> 39
<TABLE>
<CAPTION>
DATE AND PRICE OF ISSUANCE SHAREHOLDER SHARES
- --------------------------- ------------------------------------------------ ------
<S> <C> <C>
July 28, 1994 ($1,650) David D. Blalock, Jr............................ 10
Howard B. Gossett, Jr.*+........................ 15
Francis S. Hedges............................... 5
Christine R. Lanigan............................ 10
Clarence J. McMerty............................. 20
David G. Newton*+............................... 25
John T. Newton*+................................ 175
David J. Taylor................................. 10
Douglas R. Tingle*.............................. 10
J. Henry Walker, III*+.......................... 50
October 10, 1994 ($1,650) David G. Newton*+............................... 5
October 11, 1994 ($1,650) John T. Newton, Jr.*+........................... 25
</TABLE>
- ---------------
* Each of these individuals served as an executive officer of Dundee, or was a
designee of an executive officer, at the time of the issuance.
+ Each of these individuals served as a director of Dundee, or was a designee of
a director, at the time of the issuance, except Mr. Gossett who is currently a
director of Dundee but was not a director at the time of the issuance.
As a condition to closing the Merger, Springs has required that Dundee take
corporate action to assure that the shares of Dundee Common Stock issued during
1990-1994 were validly issued, fully paid and nonassessable and that no
preemptive rights exist with respect to such issuances. Under the GBCC, such
reissuances should have been but were not formally authorized or approved by the
directors of Dundee, and such reissuances would have given rise to preemptive
rights on the part of Dundee shareholders to purchase proportional amounts of
such shares upon their reissuance, unless an exception to statutory preemptive
rights was applicable.
The Special Committee was authorized by the Board of Directors of Dundee to
take certain action with respect to the Merger, including approval of certain
matters in which directors of Dundee had an interest other than their interests
as shareholders of Dundee generally. The Special Committee has reviewed and
approved the terms and conditions associated with the issuances of Dundee Common
Stock described above, has ratified these issuances, and has determined that, in
the light of the circumstances prevailing at the time of such issuances, the
transactions were fair to Dundee and constituted issuances as compensation to
officers and employees of Dundee so as to qualify for a statutory exception to
preemptive rights, if the holders of a majority of the shares of Dundee Common
stock entitled to vote thereon approve or ratify the terms and conditions of
such issuances. No member of the Special Committee received any shares in such
issuances. The Special Committee unanimously recommends that Dundee shareholders
vote FOR the approval and ratification of the terms and conditions of such
issuances so as to establish that preemptive rights do not exist with respect
thereto.
Approval and ratification of the terms and conditions of such issuances
will require the affirmative votes of a majority of the outstanding shares of
Dundee Common Stock.
DUNDEE COMMON STOCK PRICES AND DIVIDEND POLICIES
Dundee is privately held and there is no established market for the Dundee
Common Stock. In recent stock transactions, Dundee has purchased and sold shares
of Dundee Common Stock for $1,650 per share. There can be no assurances,
however, that Dundee would continue to purchase or sell shares at such price. As
of March 1, 1995, there were approximately 290 holders of Dundee Common Stock.
During the last two years, the Dundee Board of Directors has paid a dividend
each quarter and at the end of the fiscal year, which have aggregated $30 per
share in each fiscal year.
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<PAGE> 40
DUNDEE SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE DATA)
The selected financial information for Dundee for the periods presented are
derived from the audited financial statements of Dundee except that the selected
financial information as of December 31, 1993 and 1994 and for the four month
periods then ended are derived from unaudited financial statements of Dundee. In
the opinion of management, such unaudited financial statements include all
adjustments (consisting of only normal recurring adjustments) necessary for a
fair presentation of the financial position and results of operations for the
periods presented. The results of operations for the four month period ended
December 31, 1994 are not necessarily indicative of Dundee's results of
operations for the entire year. This information should be read in conjunction
with "Dundee Management's Discussion and Analysis of Financial Condition and
Results of Operations" and with Dundee's financial statements and the related
notes thereto included elsewhere in this Proxy Statement and Prospectus.
<TABLE>
<CAPTION>
FOR OR AT THE
FOR OR AT THE END OF THE FISCAL YEARS ENDED FOUR MONTHS ENDED
AUGUST 31, DECEMBER 31,
---------------------------------------------------- -----------------------
1990(A) 1991 1992 1993 1994 1993 1994
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.................. $223,455 $242,386 $247,728 $263,363 $266,813 $ 85,107 $ 90,363
Net income (loss).......... 9,697 134 6,452 870 (1,501)(b) (241)(b) 1,065
Earnings (loss) per common
share.................... 203.66 2.80 137.50 18.60 (32.00)(b) (5.14)(b) 22.77
Weighted average number of
common shares............ 48 48 47 47 47 47 47
Dividends per common
share.................... 30.00 30.00 30.00 30.00 30.00 4.00 4.00
BALANCE SHEET DATA:
Working capital............ 80,199 79,293 93,085 88,424 82,728 84,864 81,251
Total assets............... 148,194 167,837 186,151 175,562 169,007 171,981 164,942
Total long-term debt
(excluding current
portion)................. 13,060 26,615 42,670 28,670 23,715 24,670 19,715
Shareholders' equity....... 121,751 121,417 124,300 123,925 120,736 123,495 121,528
</TABLE>
- ---------------
(a) Includes information as to certain acquisitions accounted for as purchases
from the dates of acquisition in January 1990 and May 1990.
(b) Includes a charge of $0.2 million or $4.12 per share for the adoption of
SFAS No. 109.
30
<PAGE> 41
DUNDEE MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKGROUND
Dundee was founded on February 11, 1888, as the Kincaid Manufacturing
Company. The company was chartered under the laws of the State of Georgia as
Georgia Cotton Mills in 1911, and on August 28, 1942, the company's charter was
amended to change its name to Dundee Mills, Incorporated.
The following discussion and analysis is intended to assist in
understanding Dundee's results of operations and changes in financial position.
This discussion should be read in conjunction with the information under "Dundee
Selected Financial Data" and "Business of Dundee," as well as Dundee's financial
statements, including notes thereto, included elsewhere in this Proxy Statement
and Prospectus.
RESULTS OF OPERATIONS
Four Months Ended December 31, 1994 Compared to Four Months Ended December 31,
1993.
Net sales for the four months ended December 31, 1994 increased to $90.4
million, an increase of 6.2% compared to the same period during the prior year.
The increase in sales was due to higher average towel selling prices and an
increase in the volume of sales of broadcloth fabric. The effect of higher raw
material cost was more than offset by decreased manufacturing costs and the
higher average selling prices. Accordingly, gross profit was $13.1 million, or
14.5% of net sales, compared to $10.9 million, or 12.8% of net sales, during the
same period of fiscal 1993.
Selling, general and administrative expenses were 11.1% of net sales
compared to 10.8% of net sales for 1993. The increase resulted primarily from
higher expenditures relating to the development of management information
systems ("MIS").
Profit before taxes was $1.8 million, or 2.0% of net sales, compared to a
loss of $0.1 million, or 0.1% of net sales, for the same period during the prior
year. Dundee's net income was $1.1 million compared to a loss of $0.2 million
for the same period during the prior year.
Fiscal Year Ended August 31, 1994 Compared to Fiscal Year Ended August 31,
1993.
Net sales increased 1.3% during fiscal 1994 to $266.8 million. Gross profit
was $32.0 million, or 12.0% of net sales, compared to $34.8 million, or 13.2% of
net sales, during fiscal 1993. The lower gross margin resulted from an increase
in the cost of cotton and other raw materials and a higher level of closeout
sales aimed at reducing towel inventories. Partially offsetting these
unfavorable factors, margins on baby products improved due to favorable fabric
purchases. Selling, general and administrative expenses remained relatively flat
at $29.8 million, or 11.2% of net sales, compared to $29.1 million, or 11.0% of
net sales, in fiscal 1993.
Interest expense decreased to $1.8 million from $2.3 million in fiscal 1993
as Dundee reduced its debt by $6.2 million to $31.9 million. The net loss before
the cumulative effect of an accounting change was $1.3 million compared to net
income of $0.9 million for fiscal 1993. Effective September 1, 1993, Dundee
adopted SFAS No. 109, "Accounting for Income Taxes." The cumulative effect of
this change in Dundee's method for accounting for income taxes was to increase
the net loss in 1994 by $0.2 million to $1.5 million.
Fiscal Year Ended August 31, 1993 Compared to Fiscal Year Ended August 31,
1992.
Net sales were $263.4 million in fiscal 1993, an increase of approximately
6.3% from net sales of $247.7 million in fiscal 1992. Higher volume resulted in
increased sales revenue for both baby products and towels. However, gross profit
decreased to $34.8 million, or 13.2% of net sales, in fiscal 1993 from $43.2
million, or 17.5% of net sales, in fiscal 1992. The decrease in gross margin
reflects an increase in finishing costs resulting from retailer demand for
darker shades of towels requiring more dye, and for quicker
31
<PAGE> 42
delivery of smaller cartons requiring more handling. In addition, competitive
pricing pressures resulted in lower margins on sales of baby products.
Selling, general and administrative expenses were $29.1 million, or 11.0%
of net sales, in fiscal 1993 compared to $27.5 million, or 11.1% of net sales,
in fiscal 1992. The higher expenses in fiscal 1993 resulted primarily from an
increase in MIS development expenditures aimed at improving Dundee's forecasting
and scheduling systems.
Profit before income taxes was $1.5 million, a decrease of approximately
$8.9 million, or 85.5%, compared to fiscal 1992. Net income was $0.9 million, or
0.3% of net sales, in fiscal 1993 compared to $6.5 million, or 2.6% of net
sales, in fiscal 1992.
Liquidity and Capital Resources
Net cash provided by operating activities for the fiscal years ended August
31, 1994, 1993, and 1992 totaled $19.8 million, $15.1 million, and $7.2 million,
respectively. Net cash provided by operating activities during the four months
ended December 31, 1994, and December 31, 1993, amounted to $2.6 million and
$6.0 million, respectively.
Dundee finances its capital requirements through an unsecured revolving
bank line of credit. Dundee also has been able to obtain funding for major
expenditures through industrial revenue bonds, which are issued by local
development authorities. The industrial revenue bonds bear interest at a
floating rate, which was 4.05% at March 1, 1995.
During fiscal 1994, Dundee issued two new series of industrial revenue
bonds aggregating $10.3 million, which effectively refinanced two series of
bonds issued in 1990. At August 31, 1994, Dundee had outstanding letters of
credit from a bank totaling $12.1 million relating to industrial revenue bonds
and had pledged land, buildings and equipment with a net book value of
approximately $10.9 million as collateral.
The revolving line of credit provides Dundee with unsecured borrowing
capacity of up to $25 million. At March 1, 1995, the outstanding borrowings
under this line were approximately $16 million. Pursuant to an interest rate
swap agreement, the interest rate on the line of credit is effectively fixed at
6.1%. Dundee is required to make quarterly payments to its lender of a 1/4%
annual commitment fee on the average unused amount of the commitment. Dundee's
management believes that Dundee's available borrowings and future cash flows
from operating activities will be sufficient to fund its future cash needs.
Expenditures for the purchases of property and equipment in fiscal years
1994, 1993, and 1992 were $8.1 million, $3.4 million, and $18.4 million,
respectively. In fiscal year 1992, 84.5% of Dundee's total capital expenditures
were made to purchase land, complete construction and begin production at the
Hartwell Finishing Plant. In 1994, of the $8.1 million spent on property, plant,
and equipment, over 50% was spent to provide new finishing equipment at the
Lowell Bleachery and to augment the spinning equipment at the Hartwell
Manufacturing Plant. Dundee has planned capital expenditures of $3.8 million for
fiscal 1995, approximately 25% of which is for projects designed to allow Dundee
to more efficiently utilize utilities and assist in continued environmental
compliance.
SEASONALITY
Dundee's sales are affected by the seasonal nature of the business of its
primary customers who are in retail sales and the hospitality industry.
Accordingly, Dundee experiences its highest levels of cash flow during its first
quarter, when retailers are preparing for holiday sales. Dundee's lowest cash
flow levels generally occur during its second fiscal quarter, when retailers
clear inventory and recreational travel is down.
COST OF RAW MATERIAL
Dundee's financial performance is closely tied to the cost of raw
materials, primarily cotton. Competitive pressures have limited and may in the
future limit the ability of Dundee to raise prices to reflect the increased cost
of raw materials.
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BUSINESS OF SPRINGS
Springs began its operations in 1888 and is a diversified home furnishings
and textile manufacturer and finisher operating 39 manufacturing facilities in
nine U.S. states. Springs also has minority interests in industrial fabrics
businesses in Europe and Asia. Twenty-four manufacturing facilities are located
in South Carolina, where Springs is the state's largest manufacturing employer.
Four manufacturing facilities are located in North Carolina, three in Georgia,
two each in Alabama and California, and one each in Pennsylvania, Tennessee,
Wisconsin and Nevada. Sales, distribution and administrative offices are located
throughout the U.S. and Canada. Springs employs approximately 20,100 people.
The textile manufacturing industry in the United States has, in recent
years, undergone a series of corporate restructurings and consolidations.
Through both internal development and acquisitions of complementary businesses,
Springs has emerged as one of the most significant textile manufacturers in the
United States. Among the factors contributing to Springs' industry position are
its highly automated manufacturing facilities, its well known brands and its
commitment to fashion design and diverse product offerings in the home
furnishings field.
Springs' operations are conducted in two segments: home furnishings and
specialty fabrics.
HOME FURNISHINGS
Home furnishings is the larger segment of Springs' business, with sales of
$1.460 billion in 1994 and operating income of $97.5 million. In the home
furnishings segment, Springs manufactures, purchases for resale and markets
finished products, including sheets, pillowcases, bedspreads, comforters, shower
curtains, bath rugs and other bath products and juvenile novelties. Also in this
segment, Springs manufactures, purchases for resale and markets decorative
window products, including drapery hardware, vertical and horizontal blinds and
pleated and other window shades.
Springs' bedding and bath products are sold to a wide range of customers
and are varied in design, styling and color to appeal to a broad spectrum of
consumers. Springs' Wamsutta(R) bed and bath products are targeted to the
premium segment of the market. Springmaid(R) sheets and related bed and bath
fashions are aimed at the middle to upper range of the consumer market and are
sold primarily to major department and specialty stores. Springs markets bed and
bath products under many license agreements, including licenses with The Walt
Disney Company, Bill Blass, Ltd., and Liz Claiborne, Inc. Springs'
Performance(TM) brand bed and bath products are sold primarily to mass merchants
and to catalog operations.
During 1992, the Company acquired the marketing and distribution operations
of C.S. Brooks Canada, Inc. and the Griffiths-Kerr division of Finlayson
Enterprises, Ltd., both located in Canada, in a continuing effort to better
serve Canadian home furnishings customers and to expand the Company's presence
in the Canadian market. The Company markets bed and bath products in Canada
under the trademarks Wabasso(R) and Texmade(R) in addition to its U.S. brand
names.
Springs' Bath Fashions Division offers a wide range of bath products. These
products include tufted bath rugs, shower curtains, towels and other bath
accessories.
Springs' Window Fashions Division manufactures and markets drapery hardware
and window treatment products. Drapery hardware is marketed under the Graber(R)
trademark, and vertical and horizontal blinds are marketed under the Graber(R)
and Bali(R) trademarks. Pleated shades are marketed under the FashionPleat(R)
and CrystalPleat(R) trademarks. Private labels also are used for all products.
SPECIALTY FABRICS
The specialty fabrics segment manufactures, finishes, purchases for resale
and markets a wide variety of fabrics, with sales of $608.8 million in 1994 and
operating income of $38.3 million. Specialty fabrics products include finished
fabrics for industrial, apparel and specialty end uses.
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Springs' subsidiary, Clark-Schwebel, Inc., is the world's leading producer
of woven fiber glass fabrics and also manufactures fabrics made from Kevlar(R)
yarn. Customers of Clark-Schwebel, Inc. include producers of electronic circuit
boards, aircraft, boats and protective apparel such as anti-ballistic vests and
helmets.
The specialty fabrics segment produces and markets other finished fabrics
in a broad range of colors, weights, fibers, finishes and printed designs and
sells them principally to manufacturers of apparel and decorative home
furnishings, and to retailers of home sewing fabrics under the trademarks
Springmaid(R), Wamsutta(R) and Ultrasuede(R) and under private labels. This
segment also produces and sells protective and fire retardant fabrics for
industrial and commercial applications and manufactures and markets solid color
and printed fabric for wall panels and furniture fabrics for the office
furnishings market.
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<PAGE> 45
BUSINESS OF DUNDEE
Dundee is a leading manufacturer of towels, infant and toddler bedding,
knitted infant apparel and healthcare products. The business of Dundee is
divided into three primary divisions: terry towel products, baby and healthcare
products, and broadcloth fabric. The principal executive offices of Dundee are
located at 301 Railroad Avenue, Griffin, Georgia, 30224.
TOWELS
Sales of Dundee's towel division comprise approximately two thirds of the
company's total sales and approximately 14% of the towels sold in the United
States. The division is divided into two groups, retail towels and institutional
towels. The towel division of Dundee is vertically integrated.
Retail. Dundee manufactures solid color, embellished and printed towels
that are sold in the middle to upper middle price range. The towels are sold
directly to major department stores and mass merchandisers throughout the United
States.
Institutional. This group sells towels to institutional customers,
primarily in the hospitality and healthcare industries, and traditionally has
been Dundee's strongest. Dundee holds approximately 40% of the domestic market
for sales to hotels, motels, hospitals and convalescent homes. Sales to
institutional customers are made through distributors.
BABY PRODUCTS/HEALTHCARE
The baby products/healthcare division produces approximately 30% of
Dundee's sales through the manufacture of infant and toddler bedding and the
manufacture of infant apparel, diapers and bibs and similar products for
incontinent adults.
Baby Products. Dundee manufactures bedding, diapers and knitted apparel
products for infants and toddlers. The baby products group of the company
purchases unfinished fabrics from which it produces sheets, comforters, dust
ruffles, bumper pads and receiving blankets for infants. Additionally, Dundee
purchases yarn to knit undershirts, caps, booties and gowns for infants.
Approximately 80% of these baby products are sold to ten customers, which are
mass merchandisers. Sales of baby products are approximately 85% of Dundee's
sales in the baby products/healthcare division.
Important to the baby products group are license agreements with The Walt
Disney Company that grant Dundee the non-exclusive right to use Disney
characters with both its infant and toddler bedding and apparel products. Dundee
holds licenses to distribute these products in the United States, Central
America, Mexico and Singapore. Sales of products using Disney characters
comprise approximately 28% of Dundee's sales of baby products.
Healthcare. Adult incontinent products, such as adult diapers, bibs and
draw sheets, are sold through distributors to institutional customers, which are
primarily hospitals and convalescent homes.
BROADCLOTH FABRIC
Broadcloth fabric is manufactured at the company's plant in Dadeville,
Alabama. Broadcloth fabric is used in food distribution and as backing for
upholstery and other fabric. This product is sold by an independent sales agent
of Dundee. Sales of broadcloth fabric are approximately 2% of the Company's
total sales.
ORGANIZATION AND EMPLOYEES
Dundee employed approximately 3,740 employees at March 1, 1995,
approximately 2,100 of whom are located in Griffin, Georgia. Eighteen of these
employees, located throughout the United States and in Canada, comprise Dundee's
sales and merchandising group, which is headquartered in New York City. Each
sales and merchandising representative concentrates on a specific product
division of Dundee. The employees are not represented by a collective bargaining
unit. Management of Dundee considers relations with its employees to be good.
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PROPERTIES
Dundee owns 13 manufacturing plants in Georgia, six of which are located in
Griffin, and one in Alabama. These facilities range in size from approximately
19,000 to 670,000 square feet. Additionally, Dundee leases 13 properties which
are used for office space for sales representatives, warehouse storage and
outlet stores. These properties are leased generally for terms of two to ten
years, with varying renewal options.
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SPRINGS MANAGEMENT AND PRINCIPAL SHAREHOLDERS
Springs' 1994 Annual Report on Form 10-K, which is incorporated herein by
reference, including information incorporated in the Form 10-K by reference to
Springs' Proxy Statement for its 1995 annual meeting, contains information about
Springs' directors and executive officers, their business history, stock
ownership, compensation and direct or indirect interests in certain transactions
with Springs, information about the principal holders of Springs Class A Stock
and Springs Class B Stock and additional financial information not contained in
this Proxy and Registration Statement.
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DUNDEE VOTING STOCK AND PRINCIPAL HOLDERS
The following table sets forth, as of March 1, 1995, certain information
with respect to ownership of the outstanding Dundee Common Stock, by (i) all
persons known by Dundee to own beneficially more than 5% of the outstanding
Dundee Common Stock, (ii) each director of Dundee, (iii) each executive officer
of Dundee, and (iv) all directors and executive officers of Dundee, as a group.
<TABLE>
<CAPTION>
NAME OF SHARES OF DUNDEE COMMON PERCENT
BENEFICIAL OWNER STOCK BENEFICIALLY OWNED(A) OF CLASS
- -------------------------------------------------------- --------------------------- --------
<S> <C> <C>
Trust Company Bank(b)................................... 5,624 12.0
Trust and Investment Services
P.O. Box 4655
Atlanta, GA 30302
The Newton Family Partnership........................... 3,828 8.2
c/o John T. Newton
Dundee Mills, Incorporated
301 Railroad Avenue
Griffin, GA 30224
435 Associates, Ltd.(c)................................. 3,149 6.7
c/o Harvey M. Cheatham
P.O. Box 88185
Atlanta, GA 30356
Kendall J. Zeliff, Jr.(d)............................... 2,380 5.1
1100 Peachtree Street, NE
Suite 2050
Atlanta, GA 30309
DIRECTORS:
Harvey M. Cheatham(e)................................... 6,861 14.7
P.O. Box 88185
Atlanta, GA 30356
John T. Newton(f)....................................... 4,326 9.3
Dundee Mills, Incorporated
301 Railroad Avenue
Griffin, GA 30224
J. Gilliam Cheatham(g).................................. 1,435 3.1
David G. Newton(h)...................................... 1,340 2.9
J. Henry Walker, III.................................... 506 1.1
R. Wayne Boyd........................................... 185 *
Howard B. Gossett, Jr................................... 49 *
EXECUTIVE OFFICERS:
Douglas R. Tingle(i).................................... 216 *
M. J. Yates(j).......................................... 90 *
V. Larry Perkins........................................ 85 *
All executive officers and directors as a group (10 15,093 32.3
persons)..............................................
</TABLE>
- ---------------
* Less than 1%
(a) Unless otherwise indicated, the named beneficial owner has sole voting power
and investment power with respect to all shares of Dundee Common Stock
listed.
(b) Includes an aggregate of 4,416 shares as to which Trust Company Bank has
sole voting and investment power under the terms of five separate trusts,
wills and agreements, and an aggregate of 1,208 shares as to
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which Trust Company Bank has shared investment power under the terms of
four separate trusts and wills.
(c) Harvey M. Chatham, who serves as a member of the Board of Directors of
Dundee, has sole voting and investment power over these shares.
(d) Mr. Zeliff has sole voting and investment power over such shares as trustee
under nine separate trusts.
(e) Includes 313 shares owned by a partnership in which Harvey M. Cheatham has
shared voting and investment power and 3,149 shares owned by 435
Associates, Ltd. in which he has sole voting and investment power.
(f) Includes 3,828 shares owned by The Newton Family Partnership, in which John
T. Newton has shared voting power and investment power, and 173 shares
owned by his wife.
(g) Includes 615 shares owned by J. Gilliam Cheatham as custodian for his
children.
(h) Includes 1,150 shares owned by a trust under which David G. Newton has
shared voting and investment power and 50 shares owned by him as custodian
for his niece and nephew.
(i) Includes 6 shares owned by Douglas R. Tingle as custodian for his children.
(j) Includes 25 shares owned by M. J. Yates' wife.
COMPARISON OF RIGHTS OF HOLDERS OF SPRINGS CLASS A STOCK
AND HOLDERS OF DUNDEE COMMON STOCK
The following summary compares certain rights of Dundee shareholders under
the Georgia Business Corporation Code (the "GBCC") and Dundee's Articles of
Incorporation and Bylaws with the rights of Springs shareholders under the South
Carolina Business Corporation Act ("SCBCA") and the Springs Articles of
Incorporation and Bylaws.
Dundee is incorporated under the laws of the State of Georgia. Springs is
incorporated under the laws of the State of South Carolina. Both Georgia and
South Carolina have adopted a form of the Revised Model Business Corporation
Act, and as a result the corporate codes of both states are similar in many
respects. Dundee shareholders, whose rights as shareholders are currently
governed by Georgia law and Dundee's Articles of Incorporation and Bylaws, will
become, upon consummation of the Merger and to the extent they receive shares of
Springs Class A Stock (referred to in this section as "Class A Stock"),
shareholders of Springs, and their rights will be governed by South Carolina law
and Springs' Articles of Incorporation and Bylaws.
The following summary does not purport to be a complete statement of the
rights of Springs shareholders under the SCBCA and Springs' Articles of
Incorporation and Bylaws as compared to the rights of Dundee shareholders under
Dundee's Articles of Incorporation and Bylaws and the GBCC, to which
shareholders are referred.
VOTING RIGHTS
Under Springs' Articles of Incorporation, every holder of Class A Stock is
entitled to one vote, in person or by proxy, for each share held of record, with
cumulative voting rights in the election of directors. Holders of Springs voting
preferred stock, if any, are also entitled to one vote per share. Holders of
Springs Class B Stock (referred to in this section as "Class B Stock") are
entitled to four votes per share with cumulative voting rights, except that in
certain circumstances the voting power of the Class B Stock is reduced. Such
circumstances include (a) votes with respect to business combinations involving
a person or entity controlling or under common control with Springs, in which
event Class B Stock is entitled to only one vote per share, and (b) amendments
to Springs' Articles of Incorporation that would (i) increase or decrease the
number of authorized shares or the par value of Class A or Class B Stock; (ii)
adversely alter or change the powers, preferences, relative voting power or
special rights of Class A or Class B Stock; or (iii) require class voting under
the SCBCA, in which event the affirmative vote of the holders of the affected
class, voting separately as a class, is required to approve the amendment.
Springs' Articles of Incorporation provide for cumulative voting with
respect to the election of directors. Cumulative voting in the election of
directors permits a shareholder to cast the number of votes equal to the
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number of votes per share (one as to Class A Stock and four as to Class B Stock)
times the number of his shares, multiplied by the number of directors to be
elected. A shareholder may give one nominee all of these votes or may distribute
the votes among the nominees as he desires. Under Springs' Bylaws, a director
cannot be removed from office by the shareholders if the votes cast against his
removal would be sufficient to elect him if then cumulatively voted at an
election of the entire Board of Directors or of the class of directors of which
he is a part.
Dundee's Articles of Incorporation provide for a single class of common
stock, Dundee Common Stock, holders of which are entitled under the GBCC to one
vote per share. Preferred stock is also authorized under Dundee's Articles of
Incorporation, having no voting rights except upon Dundee's failure to pay
dividends or if Dundee's current liabilities exceed 90% of its commercial
assets.
LIABILITY OF DIRECTORS
Both the GBCC and the SCBCA allow a corporation to limit the personal
liability of directors with certain exceptions. Springs' Articles of
Incorporation provide that no director of the corporation shall have personal
liability to the corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director unless and to the extent that such elimination
or limitation of personal liability is prohibited by the laws of the State of
South Carolina. Under South Carolina law, such limitation does not eliminate or
limit the liability of a director of Springs for (a) misappropriation of
business opportunities; (b) acts or omissions not in good faith or which involve
gross negligence, intentional misconduct or a knowing violation of law; (c)
unlawful payment of a dividend or an unlawful stock purchase or redemption; or
(d) any transaction involving improper personal benefits to the director.
Although permitted by the GBCC, Dundee's Articles of Incorporation do not
attempt to limit the personal liability of its directors.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under the SCBCA, a corporation may indemnify its officers, directors,
employees and agents, and in certain circumstances, must indemnify its officers
and directors, made party to a proceeding against liability incurred in the
proceeding if the person: (a) conducted himself in good faith; (b) reasonably
believed, in the case of conduct in his official capacity with the corporation,
that his conduct was in its best interest and, in all other cases, that his
conduct was at least not opposed to its best interest; and (c) in the case of
any criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. A South Carolina corporation may not indemnify a director (i) in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or (ii) in connection with any
other proceeding charging improper personal benefit to him, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by him. Indemnification
permitted under the SCBCA in connection with a proceeding by or in the right of
the corporation is limited to reasonable expenses incurred in connection with
the proceeding.
Springs' Bylaws contain provisions for the indemnification of Springs'
officers and directors to the fullest extent provided by the SCBCA. Springs'
Bylaws also permit Springs to indemnify, or advance expenses in connection with
a proceeding that may be the subject of indemnification to, a non-officer or
non-director agent or employee of Springs to the extent and on such terms as the
Board of Directors of Springs determines from time to time.
The GBCC permits a corporation to indemnify directors and officers in
substantially the same way as the SCBCA. Pursuant to the GBCC, Dundee's Bylaws
provide for indemnification of directors and officers to the fullest extent
permitted by the GBCC.
DIRECTORS
Springs' Bylaws provide for a Board of Directors consisting of a minimum of
three and a maximum of fifteen directors, the exact number being fixed and
determined from time to time by the Board or by resolution
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<PAGE> 51
of the shareholders. Directors are elected at the annual meeting of shareholders
and serve until the next annual meeting or any special meeting of the
shareholders called earlier for the purpose of electing directors, or, if
earlier, upon the director's death, resignation or removal. Directors can be
removed from office only by a vote of the shareholders. As explained above under
"-- Voting Rights," Springs' Articles of Incorporation provide for cumulative
voting.
Dundee's Bylaws provide for a Board of Directors consisting of a minimum of
seven and a maximum of eleven directors. The number of directors is to be fixed
by the shareholders at each annual meeting. Dundee's Articles of Incorporation
do not provide for cumulative voting with respect to the election of directors.
Any vacancy on Springs' Board of Directors, including a vacancy resulting
from an increase in the number of directors, may be filled by the shareholders
at an annual meeting or a special meeting called for that purpose or by a
majority of the remaining directors, even if the directors remaining in office
constitute less than a quorum of the Board. A director so elected serves until
the next annual meeting of the shareholders or any special meeting called for
the purpose of electing directors, or until his earlier death, resignation or
removal. Any vacancy on Dundee's Board of Directors may only be filled by the
remaining directors, and the director so elected serves for the unexpired term.
DIVIDENDS AND DISTRIBUTIONS
Unless provided otherwise by its Articles of Incorporation, a South
Carolina corporation or a Georgia corporation may pay dividends or make other
distributions with respect to its shares if after the dividend or distribution
the corporation has the ability to pay its debts as they become due and has net
assets in excess of all senior claims upon dissolution. Dundee's Articles of
Incorporation do not limit its ability to pay dividends or make other
distributions on common stock except that outstanding preferred stock, if any,
has a preference as to dividends.
Springs' Articles of Incorporation provide that each share of Springs Class
A Stock and Springs Class B Stock is equal with respect to rights to
distributions (including dividend distributions) other than cash dividends and
dividends or other distributions payable in Springs stock. If cash dividends are
declared by Springs' Board of Directors on Springs Class B Stock, Springs must
declare dividends on each share of Springs Class A Stock in an amount equal to
at least 110% of the per share amount declared on each share of Springs Class B
Stock. In the event of a dividend or other distribution payable in Springs
stock, only shares of Class A Stock can be distributed with respect to Class A
Stock and only shares of Class B Stock can be distributed with respect to Class
B Stock. Payment of dividends on both Springs Class A Stock and Springs Class B
Stock is subject to the dividend preference of outstanding preferred stock, if
any.
SPECIAL SHAREHOLDER MEETINGS; ACTION WITHOUT A MEETING
As permitted by South Carolina law, Springs' Bylaws provide that a special
meeting of shareholders may be called by the Board of Directors, the Chairman of
the Board, or upon the written request of the holders of at least 10% of the
outstanding votes entitled to be cast on the issue to be considered at the
special meeting. Springs' Bylaws require that written notice of the date, time,
place and purpose of any special meeting be given to shareholders.
Georgia law provides that a special meeting of shareholders of a
corporation with more than 100 shareholders of record may be called by the Board
of Directors or any person authorized to do so by the Articles of Incorporation
or Bylaws, and a meeting must be called by the corporation upon the written
request of the holders of at least 25% (or any greater or lesser percentage as
may be provided in the articles of incorporation or bylaws) of the outstanding
shares entitled to vote on the issue to be considered at the special meeting.
Dundee's Bylaws provide that a special meeting may be called by the written
request of the holders of at least 25% of the outstanding shares of Dundee
Common Stock and by the Board of Directors, the Chairman of the Board or the
President. Dundee's Bylaws require that written notice of the time, place and
object of all special meetings be given to shareholders.
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Under both Georgia and South Carolina law, shareholders may act without a
meeting by unanimous written consent.
PREEMPTIVE RIGHTS
Under the SCBCA, shareholders of a South Carolina corporation have a
preemptive right to acquire proportional amounts of the corporation's unissued
shares except to the extent the corporation's Articles of Incorporation
otherwise provide. Springs' Articles of Incorporation provide that holders of
shares of stock of any class or series are not entitled to any preemptive rights
to subscribe for, or purchase, any shares of stock of any class or series, or
any bond, debentures or other securities of Springs.
Under the GBCC, so long as Dundee's Articles of Incorporation do not
contain a provision negating preemptive rights, Dundee shareholders have
preemptive rights to acquire proportional amounts of Dundee's unissued or
treasury shares upon the decision of the Board of Directors to issue them. No
preemptive rights would exist, however, under the GBCC as to (a) shares issued
as a share dividend, (b) fractional shares, (c) shares issued to effect a merger
or share exchange, (d) shares issued as compensation (or to satisfy conversion
or option rights created to provide compensation) to directors, officers, agents
or employees of Dundee upon terms and conditions approved or ratified by the
affirmative vote of the holders of a majority of the shares entitled to vote
thereon, (e) shares issued under bankruptcy reorganization, (f) shares sold
otherwise than for money, if deemed by the Board of Directors in good faith to
be advantageous to Dundee's business, or (g) shares released from preemptive
rights by waiver by the Dundee shareholders.
SHAREHOLDER INSPECTION RIGHTS
Under both the SCBCA and the GBCC, any shareholder may inspect and copy
certain corporate records regardless of the shareholder's purpose, and may also
inspect and copy the corporation's accounting records, the record of
shareholders, excerpts from meetings of the Board of Directors (or any committee
thereof), minutes of shareholder meetings, and any action taken by the Board of
Directors or shareholders by written consent, if the shareholder's demand is
made in good faith and for a proper purpose; provided, however, that such rights
may be limited by a Georgia corporation for shareholders owning 2% or less of
the outstanding shares. The SCBCA also allows shareholders holding at least one
percent of any class of shares to conduct an inspection of a corporation's tax
returns.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
Under South Carolina law generally, an amendment to a corporation's
articles of incorporation must be approved by: (a) two-thirds of the votes
entitled to be cast on the amendment, regardless of the class or voting group to
which the shares belong, and (b) two-thirds of the votes entitled to be cast on
the amendment within each voting group entitled to vote as a separate voting
group on the amendment. The holders of the outstanding shares of a class are
entitled to vote as a separate voting group (if shareholder voting is otherwise
required under the SCBCA) on a proposed amendment to Springs' Articles of
Incorporation if the amendment would result in certain fundamental changes to
the rights and preferences of that class. However, under Springs' Articles of
Incorporation, provisions in Springs' Articles of Incorporation relating to
special voting requirements for certain business combinations may be amended
only upon the vote of at least 75% of the outstanding shares entitled to vote,
voting together as a single class.
Both South Carolina law and Georgia law permit the following provisions of
a corporation's articles of incorporation to be amended by action of the Board
of Directors without shareholder approval: (a) changes in the issued and
unissued shares of an outstanding class of shares into a greater number of whole
shares, if the corporation has only that class of shares outstanding, (b) minor
changes to the corporate name and (c) certain minor technical amendments.
A South Carolina corporation's board of directors may amend the
corporation's bylaws unless the articles of incorporation or bylaws reserve the
power to the shareholders and except that certain types of provisions may be
amended or repealed only by the shareholders under South Carolina law. Springs'
Bylaws permit amendment of the Bylaws by either the shareholders or the Board of
Directors.
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Under Georgia law generally, an amendment to a corporation's articles of
incorporation must be approved by a majority of the votes entitled to be cast on
the amendment by each voting group entitled to vote on the amendment. Classes of
shares are entitled to vote as groups under substantially the same circumstances
as under South Carolina law. As permitted by Georgia law, Dundee's Bylaws may
only be amended or added to at any regular or special meeting of shareholders by
a vote of two-thirds of the stock represented at the meeting.
APPRAISAL RIGHTS
Under the SCBCA, shareholders who comply with the procedures for enforcing
appraisal rights may exercise such rights, under certain circumstances, upon the
merger of a corporation, the consummation of a plan of share exchange to which
the corporation is the acquired party, the sale or other disposition of all or
substantially all of the corporation's assets other than in the usual and
regular course of business, upon certain fundamental amendments to the articles
of incorporation, the approval of a control share acquisition, and as provided
by the articles of incorporation, bylaws or resolution of the board of
directors.
Under the GBCC as applicable to Dundee, shareholders who comply with the
procedures for enforcing appraisal rights may exercise such rights, under
certain circumstances, upon the merger of a corporation, the consummation of a
plan of share exchange to which the corporation is the acquired party, the sale
or other disposition of all or substantially all the corporation's assets, upon
certain fundamental amendments to the articles of incorporation, and as provided
by the articles of incorporation, bylaws or resolution of the board of
directors.
ANTI-TAKEOVER PROVISIONS
Springs' Articles of Incorporation and South Carolina law have implemented
certain measures which could have the effect of discouraging takeover attempts
not supported by Springs' Board of Directors. These provisions are discussed
below.
A special vote of Springs' shareholders is required to approve certain
mergers, consolidations, sales of assets and other transactions with any
Interested Shareholder (as defined below) or any Affiliate (as defined in Rule
12b-2 of the Exchange Act) of any Interested Shareholder. Such a "business
combination" may only be consummated if either (a) such business combination is
approved by the affirmative vote of holders of at least 75% of the voting power
of Springs' outstanding voting stock, (b) such business combination has been
approved by a majority of the Continuing Directors (as defined below) then in
office or (c) all provisions of the "fair market value" provision set forth in
Article 7(c) of Springs' Articles of Incorporation have been met. An "Interested
Shareholder" means any person (other than Springs or any subsidiary of Springs)
who (i) is the beneficial owner of more than 10% of the voting stock of Springs,
(ii) is an Affiliate of Springs and at any time within two years prior to the
date in question beneficially owned Springs voting stock having 10% or more of
the voting power of all then outstanding voting stock, or (iii) is an assignee
of or has otherwise succeeded to any shares of voting stock which were at any
time within the two-year period immediately prior to the date in question
beneficially owned by an Interested Shareholder, if such assignment or
succession occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act.
"Continuing Director" means any member of the Board of Directors who (i) was a
member of the Board of Directors on March 1, 1987, (ii) is unaffiliated with the
Interested Shareholder in question and who was a member of the Board of
Directors prior to the time that such Interested Shareholder became an
Interested Shareholder, and (iii) was nominated or elected by a majority of
Continuing Directors then on the Board of Directors. These special voting
requirements are designed to give minority shareholders a voice in approving any
merger or similar transaction following a takeover or change in control. This
right may be taken into account by shareholders in acting upon a tender offer,
and it may discourage unfriendly takeovers and make more difficult the removal
of management.
South Carolina law contains additional provisions that are similar to (but
differ in some respects from) the special voting requirements for certain
business combinations in Springs' Articles of Incorporation. These provisions
impose super majority voting requirements or a fair pricing procedure for
certain business
43
<PAGE> 54
combinations with a 10% or greater shareholder unless a "fair price" is met and
also contain provisions restricting the voting rights of persons who, through
certain acquisitions ("control share acquisitions"), are able to exercise
control over certain South Carolina corporations. A South Carolina corporation
must specifically elect, through an amendment to its Bylaws or Articles of
Incorporation, not to be governed by these provisions. Springs has not made such
an election with respect to either the fair price or the control share
acquisition provisions of South Carolina law, and thus both apply to Springs.
Georgia law also contains certain elective provisions that are similar to
(but differ in some respects from) the special voting requirements for certain
business combinations in Springs' Articles of Incorporation, and which impose
additional restrictions on a corporation's ability to engage in a business
combination with a substantial shareholder. These provisions do not apply to a
Georgia corporation unless it has affirmatively elected to be subject to them in
its articles of incorporation or bylaws. Dundee has not elected to be subject to
these provisions.
SHAREHOLDER APPROVAL OF MERGERS AND ASSET SALES
In general, unless the articles of incorporation require a greater or
smaller vote (in no event less than a majority) or the board of directors
requires a greater vote, the SCBCA requires a merger of a South Carolina
corporation to be approved by two-thirds of the total votes entitled to be cast
and two-thirds of the votes within any separate class or other voting group that
is entitled to vote separately on the matter.
Unless the articles of incorporation specify otherwise, however, the board
of directors does not need to submit a plan of merger to the shareholders of the
surviving corporation if: (a) the articles of incorporation of the surviving
corporation will not differ, with certain exceptions, from its articles of
incorporation before the merger, (b) each shareholder of the surviving
corporation whose shares were outstanding immediately before the effective date
of the merger will hold the same number of shares, with identical designations,
preferences, limitations and relative rights, immediately after the merger, (c)
the number of voting shares outstanding immediately after the merger, plus the
number of voting shares issuable as a result of the merger (either by the
conversion of securities issued pursuant to the merger or the exercise of rights
and warrants issued pursuant to the merger), will not exceed by more than 20%
the total number of voting shares of the surviving corporation outstanding
immediately before the merger, and (d) the number of shares that entitle their
holders to participate without limitation in distributions ("participating
shares") outstanding immediately after the merger, plus the number of
participating shares issuable as a result of the merger (either by the
conversion of securities issued pursuant to the merger or the exercise of rights
and warrants issued pursuant to the merger), will not exceed by more than 20%
the total number of participating shares of the surviving corporation
outstanding immediately before the merger.
In general, unless the articles of incorporation, bylaws, or the board of
directors requires a greater vote, the GBCC requires a merger of a Georgia
corporation to be approved by the holders of a majority of (a) all votes
entitled to be cast on the plan by all shares entitled to vote on the plan,
voting as a single voting group, and (b) all votes entitled to be cast by
holders of the shares of each voting group entitled to vote separately on the
plan as a voting group pursuant to the corporation's articles of incorporation.
Under Georgia law, unless the articles of incorporation specify otherwise,
the board of directors need not submit a plan of merger to the shareholders of
the surviving corporation if (a) the articles of incorporation of the surviving
corporation will not differ, with certain exceptions, from its articles before
the merger, (b) each shareholder of the surviving corporation whose shares were
outstanding immediately before the effective date of the merger will hold the
same number of shares, with identical designations, preferences, limitations and
relative rights, immediately after the merger, and (c) the number and kind of
shares outstanding immediately after the merger, plus the number and kind of
shares issuable as a result of the merger and by the conversion of securities
issued pursuant to the merger or the exercise of rights and warrants issued
pursuant to the merger, will not exceed the total number and kind of shares of
the surviving corporation authorized by its articles of incorporation
immediately before the merger.
44
<PAGE> 55
SPRINGS CAPITAL STOCK
The authorized capital stock of Springs consists of 40,000,000 shares of
Class A Common Stock, $.25 par value (referred to in this section as "Class A
Stock"), 20,000,000 shares of Class B Common Stock, $.25 par value (referred to
in this section as "Class B Stock") and 1,000,000 shares of Voting Preferred
Stock, $1.00 par value (of which no shares have been issued or are outstanding).
A total of 9,772,307 shares of Class A Stock and 7,830,375 shares of Class B
Stock were outstanding on March 6, 1995. Substantially all of the shares of
Class B Stock are held by Anne Springs Close, members of her family (including
two of her children, Crandall Close Bowles and Leroy S. Close, who are directors
of Springs) and certain of their affiliates and related parties. The shares of
Class B Stock held by the Close family and their affiliates and related parties
represented approximately 75.3% of the voting power of all Springs voting
securities outstanding as of March 6, 1995, subject to the limitations with
respect to the voting rights of Class B Stock discussed below.
VOTING RIGHTS
Holders of Class A Stock are entitled to cast one vote for each share held
in matters upon which shareholders are entitled to vote. Holders of Class B
Stock are entitled to cast four votes for each share held in all matters upon
which shareholders are entitled to vote, except that with respect to shareholder
approval of a "Business Combination," as defined in Article 7 of Springs'
Articles of Incorporation, involving an "Interested Shareholder," as defined in
Article 7, or a person or entity controlling or under common control with an
Interested Shareholder, holders of Class B Stock are entitled to cast only one
vote per share. Any such Business Combination must be approved by the
affirmative vote of the holders of at least 75% of Springs outstanding voting
stock.
Holders of Class A Stock and Class B Stock also have cumulative voting
rights in the election of directors. Cumulative voting in the election of
directors would permit a shareholder to cast a number of votes equal to the
number of votes per share (one as to Class A Stock and four as to Class B Stock)
times the number of his shares, multiplied by the number of directors to be
elected. A shareholder may give one nominee all of these votes or may distribute
the votes among the nominees as he desires.
Both classes vote together on all matters as a single class, except with
respect to (a) any amendment to Springs' Articles of Incorporation adversely
changing the powers, preferences or special rights of a class, which would
require the separate approval of a majority of the votes of the class affected
as well as the approval of two-thirds of the votes of both classes voting
together, and (b) such other matters as may require class voting under the South
Carolina Business Corporation Act.
Under a South Carolina statute regulating control share acquisitions, a
person who acquires shares under certain circumstances in certain South Carolina
corporations (including Springs), which, when aggregated with all other shares
with respect to which such person has voting control, would result in such
person having voting control over the stock of such corporation within certain
ranges (one-fifth to one-third, one-third to a majority or a majority or more)
(a "control share acquisition"), will not be able to vote any of such shares
unless and until voting rights have been granted by resolution adopted by
majority vote of the disinterested shareholders. If such voting rights are
granted and the acquiring shareholder thereby holds a majority of voting power
for the election of directors, all other shareholders have dissenters' rights to
receive "fair value" for their shares, which shall not be less that the highest
price per share paid by the acquiring shareholder for the shares in the control
share acquisition.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each share of Class A Stock and Class B Stock is equal in respect to rights
to distributions (including dividend distributions) in stock or property (other
than cash) of Springs. In the case of cash dividends, other than distributions
upon liquidation of Springs, the Board of Directors must declare dividends on
each share of Class A Stock of at least 110% of the amount, if any, declared per
share of Class B Stock. The Board of Directors, however, is not obligated to
declare any dividends on Class A Stock or Class B Stock. Dividends payable on
Class A Stock and Class B Stock will depend upon the earnings of Springs, its
financial condition
45
<PAGE> 56
and other relevant factors. Neither Class A Stock nor Class B Stock has any
cumulative dividend rights. Each class has the same rights regarding
distributions upon liquidation of Springs.
In the case of stock dividends, or other distributions payable on Class A
Stock and Class B Stock in capital stock of Springs, including distributions
pursuant to stock splits or divisions of Class A Stock or Class B Stock, only
Class A Stock will be distributed with respect to Class A Stock and only Class B
Stock will be distributed with respect to Class B Stock. Neither Class A Stock
nor Class B Stock will be split, divided or combined, nor may stock dividends be
distributed, unless the other class is also split, divided or combined, or a
stock dividend on the other class is distributed, at a rate per share that would
maintain the same relative dividend rate and voting and other rights of the two
classes.
CONVERTIBILITY OF CLASS B STOCK
Class B Stock is convertible at all times, and without cost to the
shareholder (except any transfer taxes which may be payable if certificates are
to be issued in a name other than in which the certificate surrendered is
registered), into Class A Stock on a one-for-one basis. Therefore, holders of
Class B Stock desiring to sell all or part of their equity interest represented
by their shares of Class B Stock may convert those shares into an equal number
of shares of Class A Stock and sell the shares of Class A Stock in the public
market. If the number of outstanding shares of Class B Stock falls below 16.66%
of the number of all outstanding shares of Class A Stock and Class B Stock taken
together, the outstanding shares of Class B Stock will be automatically
converted into shares of Class A Stock on a one-for-one basis without further
action or notice. Class A Stock is not exchangeable for or convertible into
Class B Stock.
RESTRICTIONS ON TRANSFER OF CLASS B STOCK
Class B Stock may be transferred only (i) to other "beneficial owners," as
defined in Article 7 of the Articles of Incorporation, of Class B Stock, or (ii)
at the death of the shareholder pursuant to will or by intestate succession.
Accordingly, there is not a trading market for Class B Stock.
OTHER INFORMATION REGARDING CLASS A STOCK AND CLASS B STOCK
Springs may not issue any additional Class B Stock except in connection
with stock splits, stock dividends and other like distributions. The Board of
Directors possesses the power to issue shares of authorized but unissued Class A
Stock without further shareholder action.
Class A Stock and Class B Stock have no sinking fund provisions and do not
carry any preemptive rights enabling a holder to subscribe for or receive shares
of stock of Springs of any class or any other securities convertible into share
of stock of Springs.
Springs Class A Stock is listed on the New York Stock Exchange. The
transfer agent for Springs Class A Stock is Wachovia Bank of North Carolina,
N.A., Winston-Salem, North Carolina.
LEGAL MATTERS
The legality of the Springs Class A Stock offered hereby and certain other
legal matters will be passed upon for Springs by Sutherland, Asbill & Brennan,
Atlanta, Georgia.
EXPERTS
The financial statements of Springs at December 31, 1994 and January 1,
1994 and for each of the three years in the period ended December 31, 1994
incorporated in this Proxy Statement and Prospectus by reference from the
Springs 1994 Form 10-K, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
46
<PAGE> 57
The financial statements of Dundee at August 31, 1993 and 1994 and for each
of the three years in the period ended August 31, 1994 included in this Proxy
Statement and Prospectus have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
OTHER MATTERS
Management of Dundee is not aware of any other matters to come before the
Meeting. If any other matter should come before the Meeting, it is the intention
of the persons named in the accompanying proxy to vote such proxy with respect
to such business in accordance with their best judgment on such matters.
47
<PAGE> 58
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPRINGS INDUSTRIES, INC.
Pro Forma Condensed Combined Financial Data (Unaudited)............................... F-2
Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 1994 (Scenario
A).................................................................................. F-3
Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 1994 (Scenario
B).................................................................................. F-4
Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended
December 31, 1994 (Scenarios A and B)............................................... F-5
Notes to Pro Forma Condensed Combined Financial Data (Unaudited)...................... F-6
DUNDEE MILLS, INCORPORATED
Report of Independent Auditors........................................................ F-8
Balance Sheets as of August 31, 1993 and August 31, 1994.............................. F-9
Statements of Stockholders' Equity for the Years Ended August 31, 1992, 1993 and
1994................................................................................ F-10
Statements of Operations for the Years Ended August 31, 1992, 1993 and 1994........... F-11
Statements of Cash Flows for the Years Ended August 31, 1992, 1993 and 1994........... F-12
Notes to Financial Statements......................................................... F-13
Balance Sheets as of December 31, 1993 and 1994 (Unaudited)........................... F-20
Statements of Operations for the Four Months Ended December 31, 1993 and 1994
(Unaudited)......................................................................... F-21
Statements of Cash Flows for the Four Months Ended December 31, 1993 and 1994
(Unaudited)......................................................................... F-22
Notes to Financial Statements (Unaudited)............................................. F-23
</TABLE>
F-1
<PAGE> 59
SPRINGS INDUSTRIES, INC.
PRO FORMA CONDENSED COMBINED FINANCIAL DATA (UNAUDITED)
The following unaudited pro forma balance sheets and statements of
operations reflect the combined financial position and results of operations of
Springs and Dundee. The information contained therein has been derived from
historical data included in the Springs and Dundee financial statements, and
should be read in conjunction therewith. The pro forma balance sheets at
December 31, 1994 assume that the acquisition of Dundee occurred on that date.
The pro forma statements of operations assume that the acquisition of Dundee was
completed on January 2, 1994.
The pro forma adjustments related to the Merger reflected in the following
balance sheets and statements of operations are based on two different scenarios
and reflect the application of purchase accounting. Scenario A assumes
conversion of 100% of the outstanding shares of Dundee Common Stock into the
maximum number of shares of Springs Class A Stock into which shares of Dundee
Common Stock may be converted (3,000,000 shares) based on a Reported Market
Price of $33.50 per share of Springs Class A Stock, reflecting the minimum
Reported Market Price under the Merger Agreement. Scenario B assumes the maximum
number of Cash Elections by holders of Dundee Common stock and conversion of the
remaining 50% of the outstanding shares of Dundee Common Stock into shares of
Springs Class A Stock based on a Reported Market Price of $38.50 per share of
Springs Class A Stock, reflecting the maximum Reported Market Price under the
Merger Agreement. The number of shares issued and the amount of cash paid in the
Merger will vary based on the actual number of Cash Elections made by Dundee
shareholders and the actual Reported Market Price.
The pro forma financial information is not necessarily indicative of the
results which actually would have occurred had the transaction been in effect on
the date and for the period indicated or which may result in the future.
F-2
<PAGE> 60
SPRINGS INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
SCENARIO A
----------------------------------------------------------------
PRO FORMA
ADJUSTMENTS
SPRINGS DUNDEE INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL) (DECREASE) COMBINED
------------ ------------ ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 769 $ 2,360 $ (1,438)(a)(n) $ 1,691
Accounts receivable................... 312,739 45,276 -- 358,015
Inventories........................... 264,161 53,709 22,175(b) 340,045
Other................................. 39,335 845 (5,446)(a)(c)(d) 34,734
------------ ------------ ----------- ----------
Total current assets.......... 617,004 102,190 15,291 734,485
------------ ------------ ----------- ----------
Property, plant and equipment........... 1,253,060 122,989 (80,373)(e)(o) 1,295,676
Accumulated depreciation.............. (697,810) (65,334) 65,334(e) (697,810)
------------ ------------ ----------- ----------
Property, plant, and equipment,
net.............................. 555,250 57,655 (15,039)(o) 597,866
------------ ------------ ----------- ----------
Other assets and deferred charges....... 116,789 5,097 1,971(c)(f) 123,857
------------ ------------ ----------- ----------
Total......................... $ 1,289,043 $164,942 $ 2,223 $1,456,208
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
maturities of long-term debt....... $ 32,418 $ 8,200 $ -- $ 40,618
Accounts payable and accrued
liabilities........................ 211,538 12,739 2,503(c)(g) 226,780
------------ ------------ ----------- ----------
Total current liabilities..... 243,956 20,939 2,503 267,398
------------ ------------ ----------- ----------
Noncurrent liabilities:
Long-term debt........................ 265,384 19,715 17,488(o) 302,587
Long-term benefit plans and deferred
compensation....................... 144,967 2,760 4,304(h) 152,031
Deferred income taxes and other
deferred credits................... 50,645 -- (1,044)(c) 49,601
------------ ------------ ----------- ----------
Total noncurrent
liabilities................. 460,996 22,475 20,748 504,219
------------ ------------ ----------- ----------
Shareholders' equity:
Class A common stock ($0.25 par
value)............................. 2,471 -- 750(o) 3,221
Class B common stock ($0.25 par
value)............................. 1,958 -- -- 1,958
Dundee common stock ($25.00 par
value)............................. -- 1,168 (1,168)(m) --
Additional paid-in capital............ 11,413 99,750(o) 111,163
Retained earnings..................... 568,403 120,360 (120,360)(m) 568,403
Treasury stock, at cost............... (2,602) -- -- (2,602)
Currency translation adjustment....... 2,448 -- -- 2,448
------------ ------------ ----------- ----------
Shareholders' equity............... 584,091 121,528 (21,028) 684,591
------------ ------------ ----------- ----------
Total......................... $ 1,289,043 $164,942 $ 2,223 $1,456,208
========= ========= ========= =========
</TABLE>
See accompanying notes to Pro Forma Condensed Combined Financial Statements.
F-3
<PAGE> 61
SPRINGS INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
SCENARIO B
-------------------------------------------------------------
PRO FORMA
ADJUSTMENTS
SPRINGS DUNDEE INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL) (DECREASE) COMBINED
------------ ------------ ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............... $ 769 $ 2,360 $ (1,438)(a)(n) $ 1,691
Accounts receivable..................... 312,739 45,276 -- 358,015
Inventories............................. 264,161 53,709 22,175(b) 340,045
Other................................... 39,335 845 (5,446)(a)(c)(d) 34,734
------------ ------------ ----------- ----------
Total current assets............ 617,004 102,190 15,291 734,485
------------ ------------ ----------- ----------
Property, plant and equipment............. 1,253,060 122,989 (80,373)(e)(o) 1,295,676
Accumulated depreciation................ (697,810) (65,334) 65,334(e) (697,810)
------------ ------------ ----------- ----------
Property, plant, and equipment,
net................................ 555,250 57,655 (15,039)(o) 597,866
------------ ------------ ----------- ----------
Other assets and deferred charges......... 116,789 5,097 1,971(c)(f) 123,857
------------ ------------ ----------- ----------
Total........................... $ 1,289,043 $164,942 $ 2,223 $1,456,208
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
maturities of long-term debt......... $ 32,418 $ 8,200 $ -- $ 40,618
Accounts payable and accrued
liabilities.......................... 211,538 12,739 2,503(c)(g) 226,780
------------ ------------ ----------- ----------
Total current liabilities....... 243,956 20,939 2,503 267,398
------------ ------------ ----------- ----------
Noncurrent liabilities:
Long-term debt.......................... 265,384 19,715 58,991(o) 344,090
Long-term benefit plans and deferred
compensation......................... 144,967 2,760 4,304(h) 152,031
Deferred income taxes and other deferred
credits.............................. 50,645 -- (1,044)(c) 49,601
------------ ------------ ----------- ----------
Total noncurrent liabilities.... 460,996 22,475 62,251 545,722
------------ ------------ ----------- ----------
Shareholders' equity:
Class A common stock ($0.25 par
value)............................... 2,471 -- 383(o) 2,854
Class B common stock ($0.25 par
value)............................... 1,958 -- -- 1,958
Dundee common stock ($25.00 par
value)............................... -- 1,168 (1,168)(m) --
Additional paid-in capital.............. 11,413 -- 58,614(o) 70,027
Retained earnings....................... 568,403 120,360 (120,360)(m) 568,403
Treasury stock, at cost................. (2,602) -- -- (2,602)
Currency translation adjustment......... 2,448 -- -- 2,448
------------ ------------ ----------- ----------
Shareholders' equity................. 584,091 121,528 (62,531) 643,088
------------ ------------ ----------- ----------
Total........................... $ 1,289,043 $164,942 $ 2,223 $1,456,208
========= ========= ========= =========
</TABLE>
See accompanying notes to Pro Forma Condensed Combined Financial Statements.
F-4
<PAGE> 62
SPRINGS INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
SCENARIO A
------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
SPRINGS DUNDEE INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL) (DECREASE) COMBINED
------------ ------------ --------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.............................. $ 2,068,911 $272,070 $ -- $2,340,981
------------ ------------ --------- ----------
Cost of goods sold................... 1,632,489 237,858 (7,715)(i) 1,862,632
Selling, general and administrative
expenses.......................... 300,580 30,683 2,171(j)(n) 333,434
------------ ------------ --------- ----------
Operating income.................. 135,842 3,529 5,544 144,915
Interest expense..................... 29,253 1,731 1,452(k) 32,436
Other (income) expense............... (123) 1,829 -- 1,706
------------ ------------ --------- ----------
Income before income taxes............. 106,712 (31) 4,092 110,773
Income tax provision................... 44,485 163 1,618(l) 46,266
------------ ------------ --------- ----------
Net income (loss)...................... $ 62,227 $ (194) $ 2,474 $ 64,507
========= ========= ======== =========
Net income per share................... $ 3.50 $ 3.10
========= =========
</TABLE>
SCENARIO B
------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
SPRINGS DUNDEE INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL) (DECREASE) COMBINED
------------ ------------ --------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.............................. $ 2,068,911 $272,070 $ -- $2,340,981
------------ ------------ --------- ----------
Cost of goods sold................... 1,632,489 237,858 (7,715)(i) 1,862,632
Selling, general and administrative
expenses.......................... 300,580 30,683 2,171(j)(n) 333,434
------------ ------------ --------- ----------
Operating income.................. 135,842 3,529 5,544 144,915
Interest expense..................... 29,253 1,731 4,896(k) 35,880
Other (income) expense............... (123) 1,829 -- 1,706
------------ ------------ --------- ----------
Income before income taxes............. 106,712 (31) 648 107,329
Income tax provision................... 44,485 163 256(l) 44,904
------------ ------------ --------- ----------
Net income (loss)...................... $ 62,227 $ (194) $ 392 $ 62,425
========= ========= ======== =========
Net income per share................... $ 3.50 $ 3.23
========= =========
</TABLE>
See accompanying notes to Pro Forma Condensed Combined Financial Statements.
F-5
<PAGE> 63
SPRINGS INDUSTRIES, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(UNAUDITED)
The following pro forma adjustments (in thousands) have been applied to the
unaudited pro forma condensed combined balance sheets and the unaudited pro
forma condensed combined statements of operations of Springs Industries, Inc.
and Dundee Mills, Incorporated to give effect to the Merger as if it had
occurred on December 31, 1994 and January 2, 1994, respectively:
(a) Reflects the collection before the Effective Time by Dundee of
notes receivable in the amount of $730 from Dundee shareholders
in accordance with the Merger Agreement.
(b) Represents an increase of $22,175 to restate Dundee's LIFO
inventory to fair value.
(c) Reflects deferred taxes associated with pro forma adjustments
and the reclassification of deferred taxes to conform with
Springs' presentation, as follows: other current assets
decreased $10,390, other assets and deferred charges decreased
$936, accounts payable and accrued liabilities decreased $605,
and deferred income taxes and other deferred credits decreased
$1,044.
(d) Reflects the fair value of Dundee's forward cotton purchase
contracts in the amount of $5,674.
(e) Reflects the elimination of $65,334 of Dundee's property and
accumulated depreciation to reflect net book value.
(f) Reflects the fair value of $4,031 for excess funding in the
qualified defined benefit plans and elimination of $1,124 of
certain Dundee intangible assets.
(g) Reflects various accruals of $3,108 including transaction costs.
(h) Reflects the fair value of the benefit obligation for a
nonqualified defined benefit pension plan in the amount of
$4,304.
(i) Reflects the reduction of depreciation expense in the amount of
$7,715 due to conforming changes in depreciation methods and
depreciable lives.
(j) Reflects the discontinuation of amortization expense relating to
certain eliminated intangible assets of Dundee and the
elimination of amortization (income) expense associated with
nonqualified and qualified defined benefit pension plans (net
expense $3).
(k) Reflects additional interest expense of $1,452 in Scenario A and
$4,896 in Scenario B associated with long-term debt incurred to
complete the Merger.
(l) Reflects the income tax expense at statutory federal and state
rates of $1,618 in Scenario A and $256 in Scenario B associated
with pro forma statements of operations adjustments.
(m) Reflects the removal of the stockholders' equity balances of
Dundee.
(n) Reflects the payment of and expense for $2,168 in non-recurring
management retention compensation to be paid by Dundee
immediately prior to the Effective Date of the Merger, as
permitted by the Merger Agreement. Such expense, net of tax
effect ($1,311), reduces pro forma net income by $0.07 per share
in each Scenario.
F-6
<PAGE> 64
(o) The allocation of Merger Consideration under two alternate
scenarios is summarized below (in thousands):
<TABLE>
<CAPTION>
SCENARIO A SCENARIO B
---------- ----------
<S> <C> <C>
Springs Class A Stock issued.................... $100,500 $ 58,997
Additional long-term debt to fund cash portion
of Merger Consideration....................... 17,488 58,991
---------- ----------
Total Merger Consideration............ 117,988 117,988
---------- ----------
Less:
Fair value of net assets acquired other than
property and equipment..................... 75,372 75,372
Historical book value of property and
equipment acquired......................... 57,655 57,655
---------- ----------
Total................................. 133,027 133,027
---------- ----------
Difference...................................... $(15,039) $(15,039)
======== ========
</TABLE>
The Springs Class A Stock issued under Scenario A would have a par value
total of $750, and additional paid in capital would increase by $99,750.
Under Scenario B, par value of Springs Class A Stock would total $383, and
additional paid in capital would increase by $58,614.
F-7
<PAGE> 65
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Dundee Mills, Incorporated
We have audited the accompanying balance sheets of Dundee Mills,
Incorporated as of August 31, 1993 and 1994, and the related statements of
stockholders' equity, operations, and cash flows for each of the three years in
the period ended August 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dundee Mills, Incorporated
at August 31, 1993 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended August 31, 1994 in
conformity with generally accepted accounting principles.
As discussed in Note 5 to the financial statements, in 1994 the Company
changed its method of accounting for income taxes.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Atlanta, Georgia
October 7, 1994,
except for Note 9, as
to which the date is
February 6, 1995
F-8
<PAGE> 66
DUNDEE MILLS, INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31,
---------------------------------
1993 1994
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 2,495,268.68 $ 6,533,690.46
Trade accounts receivable, less allowance for doubtful
accounts of $100,000.00 in 1993 and in 1994............. 45,357,408.89 49,943,523.66
Inventories (Note 2):
Finished and greige goods............................... 50,657,859.36 38,239,796.55
Stock in process........................................ 3,289,606.46 2,762,933.08
Raw materials........................................... 2,587,268.91 1,553,286.33
Supplies and noncloth inventory items................... 4,304,435.83 4,171,561.33
--------------- ---------------
60,839,170.56 46,727,577.29
Refundable income taxes.................................... 401,974.64 822,511.46
Other current assets....................................... 922,498.81 896,944.09
--------------- ---------------
Total current assets......................................... 110,016,321.58 104,924,246.96
Property, plant, and equipment on the basis of cost (Note 4):
Land....................................................... 1,829,689.38 1,680,124.35
Buildings and improvements................................. 50,594,087.41 51,091,820.45
Machinery and equipment.................................... 61,775,953.75 64,168,257.08
Furniture and fixtures..................................... 3,558,988.59 3,522,591.26
--------------- ---------------
117,758,719.13 120,462,793.14
Less allowances for depreciation and amortization.......... 56,002,044.00 61,832,495.00
--------------- ---------------
Total property, plant and equipment.......................... 61,756,675.13 58,630,298.14
Other assets (Note 3)........................................ 2,622,490.64 3,594,331.24
Deferred income taxes (Note 5)............................... -- 723,333.00
Intangibles.................................................. 1,166,267.82 1,134,532.82
--------------- ---------------
$175,561,755.17 $169,006,742.16
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable..................................... $ 6,391,686.52 $ 7,976,235.18
Salaries, wages and commissions............................ 2,130,016.92 2,329,155.57
Withholding and payroll taxes.............................. 1,204,916.66 1,141,346.48
Employees' savings accounts................................ 582,117.85 534,948.07
Deferred income taxes (Note 5)............................. -- 338,054.00
Local taxes................................................ 533,866.21 482,498.61
Other liabilities.......................................... 1,305,125.92 1,194,100.75
Current portion of long-term debt (Note 4)................. 9,445,000.00 8,200,000.00
--------------- ---------------
Total current liabilities.................................... 21,592,730.08 22,196,338.66
Long-term debt, less current portion (Note 4)................ 28,670,000.00 23,715,000.00
Deferred income taxes (Note 5)............................... 217,000.00 --
Supplemental executive retirement plan liability (Note 6).... 1,157,520.00 2,359,557.00
Stockholders' equity:
Common stock, par value $25.00 a share:
Authorized -- 200,000 shares; 46,946 shares issued in
1993, 46,775 shares issued in 1994.................... 1,173,650.00 1,169,375.00
Retained earnings.......................................... 122,750,855.09 119,566,471.50
--------------- ---------------
123,924,505.09 120,735,846.50
--------------- ---------------
$175,561,755.17 $169,006,742.16
============== ==============
</TABLE>
See accompanying notes.
F-9
<PAGE> 67
DUNDEE MILLS, INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
------------- --------------- ---------------
<S> <C> <C> <C>
Balance at September 1, 1991................... $1,200,000.00 $120,216,993.39 $121,416,993.39
Net income................................... -- 6,452,497.45 6,452,497.45
Cash dividends ($30 per share)............... -- (1,411,665.00) (1,411,665.00)
Purchase of common stock..................... (29,375.00) (2,128,615.00) (2,157,990.00)
------------- --------------- ---------------
Balance at August 31, 1992..................... 1,170,625.00 123,129,210.84 124,299,835.84
Net income................................... -- 869,567.25 869,567.25
Cash dividends ($30 per share)............... -- (1,405,448.00) (1,405,448.00)
Purchase of common stock..................... (7,200.00) (445,750.00) (452,950.00)
Sale of common stock......................... 10,225.00 603,275.00 613,500.00
------------- --------------- ---------------
Balance at August 31, 1993..................... 1,173,650.00 122,750,855.09 123,924,505.09
Net loss..................................... -- (1,500,651.59) (1,500,651.59)
Cash dividends ($30 per share)............... -- (1,406,307.00) (1,406,307.00)
Purchase of common stock..................... (12,525.00) (813,675.00) (826,200.00)
Sale of common stock......................... 8,250.00 536,250.00 544,500.00
------------- --------------- ---------------
Balance at August 31, 1994..................... $1,169,375.00 $119,566,471.50 $120,735,846.50
============ ============== ==============
</TABLE>
See accompanying notes.
F-10
<PAGE> 68
DUNDEE MILLS, INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------------
1992 1993 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales............................ $247,728,410.96 $263,362,974.73 $266,813,950.08
Cost of goods sold................... 204,490,367.06 228,522,047.06 234,826,693.41
--------------- --------------- ---------------
43,238,043.90 34,840,927.67 31,987,256.67
Expenses:
Selling............................ 13,601,205.24 14,040,155.50 14,266,890.75
General and administrative......... 13,928,773.31 15,054,508.25 15,499,209.91
--------------- --------------- ---------------
27,529,978.55 29,094,663.75 29,766,100.66
--------------- --------------- ---------------
15,708,065.35 5,746,263.92 2,221,156.01
Other income......................... 1,245,071.54 1,411,608.65 679,376.50
--------------- --------------- ---------------
16,953,136.89 7,157,872.57 2,900,532.51
Other deductions:
Interest........................... 2,839,752.79 2,341,570.42 1,785,305.21
Other.............................. 3,672,886.65 3,301,734.90 3,011,366.89
--------------- --------------- ---------------
6,512,639.44 5,643,305.32 4,796,672.10
--------------- --------------- ---------------
Income (loss) before income taxes and
cumulative effect of accounting
change............................. 10,440,497.45 1,514,567.25 (1,896,139.59)
Income taxes (credit) (Note 5)....... 3,988,000.00 645,000.00 (588,696.00)
--------------- --------------- ---------------
Income (loss) before cumulative
effect of accounting change........ 6,452,497.45 869,567.25 (1,307,443.59)
Cumulative effect of
accounting change (Note 5)......... -- -- (193,208.00)
--------------- --------------- ---------------
Net income (loss).................... $ 6,452,497.45 $ 869,567.25 $ (1,500,651.59)
============== ============== ==============
Weighted average number of shares
outstanding........................ 46,927 46,751 46,895
============== ============== ==============
Per share data:
Income (loss) before cumulative
effect of accounting change..... $ 137.50 $ 18.60 $ (27.88)
Cumulative effect of accounting
change.......................... -- -- (4.12)
--------------- --------------- ---------------
Net income (loss) per common share... $ 137.50 $ 18.60 $ (32.00)
============== ============== ==============
</TABLE>
See accompanying notes.
F-11
<PAGE> 69
DUNDEE MILLS, INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------
1992 1993 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......................... $ 6,452,497.45 $ 869,567.25 $ (1,500,651.59)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Cumulative effect of accounting change... -- -- 193,208.00
Depreciation and amortization............ 12,969,248.00 12,628,976.50 11,418,045.00
Other noncash charges.................... 306,740.00 -- --
Provision for deferred income taxes...... (226,000.00) (762,000.00) (1,390,593.00)
Gain on sale of property, plant
and equipment......................... (681,194.37) -- --
Changes in operating assets and
liabilities:
Trade accounts receivable............. (923,848.69) 14,813.59 (4,586,114.77)
Inventories........................... (10,707,980.75) 530,613.78 14,111,593.27
Refundable income taxes............... 472,266.40 (401,974.64) (182,110.82)
Other current assets.................. 667,380.51 129,327.34 25,556.22
Prepaids and deposits................. (232,168.76) 53,101.52 (1,017,323.60)
Trade accounts payable................ (2,199,045.25) 731,333.58 1,584,548.66
Other current liabilities............. 1,301,098.93 104,366.11 (73,994.08)
Other non-current liabilities......... -- 1,157,520.00 1,202,037.00
-------------- -------------- ---------------
Net cash provided by operating
activities............................... 7,198,993.47 15,055,645.03 19,784,200.29
INVESTING ACTIVITIES
Purchases of property, plant and
equipment................................ (18,358,529.43) (3,405,064.14) (8,052,819.51)
Proceeds from sale of property, plant, and
equipment................................ 1,048,563.50 -- 149,565.00
Payments received on notes receivable...... 28,110.68 41,198.23 45,483.00
-------------- -------------- ---------------
Net cash used in investing activities...... (17,281,855.25) (3,363,865.91) (7,857,771.51)
FINANCING ACTIVITIES
Principal payments on revolving line of
credit and long-term debt................ (2,445,000.00) (11,445,000.00) (16,530,000.00)
Proceeds from revolving line of credit and
long-term debt........................... 19,000,000.00 -- 10,330,000.00
Purchases of common stock.................. (2,157,990.00) (452,950.00) (826,200.00)
Dividends paid............................. (1,411,665.00) (1,405,448.00) (1,406,307.00)
Proceeds from sale of common stock......... -- 613,500.00 544,500.00
-------------- -------------- ---------------
Net cash provided by (used in) financing
activities............................... 12,985,345.00 (12,689,898.00) (7,888,007.00)
-------------- -------------- ---------------
Net increase (decrease) in cash and cash
equivalents.............................. 2,902,483.22 (998,118.88) 4,038,421.78
Cash and cash equivalents at beginning of
year..................................... 590,904.34 3,493,387.56 2,495,268.68
-------------- -------------- ---------------
Cash and cash equivalents at end of year... $ 3,493,387.56 $ 2,495,268.68 $ 6,533,690.46
============= ============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Income taxes............................... $ 3,501,527.00 $ 2,084,919.00 $ 1,131,300.00
============= ============= ==============
Interest................................... $ 2,639,788.00 $ 2,431,977.00 $ 1,947,176.38
============= ============= ==============
Noncash investing activity:
Deposits applied to the purchase of
machinery and equipment............... $ 3,499,818.57 $ -- $ 362,011.50
============= ============= ==============
</TABLE>
See accompanying notes.
F-12
<PAGE> 70
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1994
1. SUMMARY OF ACCOUNTING POLICIES
Industry Segment
Dundee Mills, Incorporated (the Company) is a leading manufacturer of
towels, bedding, knitted infant wear, baby and health products.
Accounts Receivable
The Company manufactures and sells textile products to companies in
diversified industries. The Company performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.
Receivables generally are due within 60 days. Credit losses have been within
management's expectations.
Inventories
Raw materials and raw material content, manufacturing costs and finishing
costs of cloth inventory items are valued at the lower of cost, as determined by
the last-in, first-out method, or market. Other inventories are valued at the
lower of cost, as determined by the first-in, first-out method, or market.
Property, Plant and Equipment
The Company provides depreciation for both book and tax purposes
principally using accelerated methods.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Intangibles
The cost of intangible assets, principally cost in excess of net assets
acquired, are amortized over forty years using the straight-line method.
Accumulated amortization amounted to $103,139.00 and $134,874.00 at August 31,
1993 and 1994, respectively.
Revenue Recognition
In general, the Company recognizes revenue on product sales when the units
are shipped.
Net Income (Loss) Per Common Share
Net income (loss) per common share is based on the weighted average number
of shares of common stock outstanding during each year.
Reclassifications
Certain 1992 and 1993 balances have been reclassified to conform with the
1994 classification.
2. INVENTORIES
Inventories valued at cost as determined by the last-in, first-out method
amounted to $56,534,734.73 and $42,556,015.96 in 1993 and 1994, respectively.
Inventories valued at cost as determined by the first-in, first-out method
amounted to $4,304,435.83 and $4,171,561.33 in 1993 and 1994, respectively. If
the first-in, first-
F-13
<PAGE> 71
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
out (FIFO) method of inventory accounting had been used by the Company for all
inventories, inventories would have been $17,253,002.00 and $19,083,565.10
higher than reported in 1993 and 1994, respectively.
3. OTHER ASSETS
Other assets are comprised of the following:
<TABLE>
<CAPTION>
AUGUST 31,
---------------------------------
1993 1994
------------- -------------
<S> <C> <C>
Cash surrender value of life insurance......... $2,067,010.51 $2,675,500.84
Prepaid pension asset.......................... 409,558.00 456,380.00
Deposits on machinery.......................... -- 362,011.50
Other.......................................... 145,922.13 100,438.90
------------- -------------
$2,622,490.64 $3,594,331.24
============ ============
</TABLE>
4. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
AUGUST 31,
---------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
Industrial revenue bonds payable in annual
principal payments of $55,000.00 on June 1,
1997 and $110,000.00 beginning June 1, 1998,
with interest payments due monthly at an
adjustable rate................................ $ 385,000.00 $ 385,000.00
Industrial revenue bonds payable in ten annual
principal payments of $200,000.00 beginning
June 1, 1991, with interest payments due
monthly at an adjustable rate.................. 1,400,000.00 1,200,000.00
Industrial revenue bonds payable in twelve annual
principal payments of $175,000.00 beginning May
1, 1998, with interest payments due monthly at
an adjustable rate............................. -- 2,100,000.00
Industrial revenue bonds payable in ten annual
principal payments of $300,000.00 beginning
June 1, 1991, with interest payments due at an
adjustable rate. This debt was retired during
1994........................................... 2,100,000.00 --
Industrial revenue bonds payable in eleven annual
principal payments of $685,000.00 beginning May
1, 1998 and lump sum payment of $695,000.00 on
May 1, 2009, with interest payments due monthly
at an adjustable rate.......................... -- 8,230,000.00
Industrial revenue bonds payable in ten annual
principal payments of $890,000.00 beginning
June 1, 1991, with interest payments due
monthly at an adjustable rate. This debt was
retired during 1994............................ 6,230,000.00 --
Revolving credit agreement, interest payments due
monthly........................................ 28,000,000.00 20,000,000.00
-------------- --------------
38,115,000.00 31,915,000.00
Less amounts due within one year................. 9,445,000.00 8,200,000.00
-------------- --------------
$28,670,000.00 $23,715,000.00
============= =============
</TABLE>
F-14
<PAGE> 72
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The revolving credit agreement ("RCA") provides the Company with unsecured
borrowings, under a revolving credit note ("RCN"), of up to $35,000,000.00
($20,000,000.00 outstanding at August 31, 1994). The RCA also provides for
quarterly payments of a 1/4% annual commitment fee on the average unused amount
of the commitment.
The Company is party to an interest rate swap with a decreasing notional
amount equal to the outstanding balance of the RCN which changed the floating
interest rate exposure on the RCN to a fixed interest rate exposure. Under this
swap agreement, the Company pays a fixed interest rate of 6.1% and receives the
3 month LIBOR rate reset quarterly (3.31% and 4.56% at August 31, 1993 and 1994,
respectively) on the notional amount. This interest rate swap expires in
December 1996.
The RCN matured on August 31, 1994. In accordance with the RCA,
$15,000,000.00 of the RCN is eligible for a five year "term out" provision. The
term out provision may be initiated, at the option of the Company by executing a
term note. Upon execution of the term note, the Company would be required to
make twenty quarterly principal payments of $750,000.00 each, commencing
December 31, 1994, with interest due at varying dates depending on one of three
variable interest charge methods (prime rate minus one-half percent per annum;
LIBOR for interest periods of 30, 60 or 90 days, plus an additional one-half
percent per annum; or the secondary C/D rate for interest periods of 30, 60 or
90 days, plus an additional five-eighths percent per annum) selected by the
Company in accordance with the terms of the note. The Company is currently
negotiating a new RCA with its lender.
During fiscal year 1994, the Company issued two new series of industrial
revenue bonds aggregating $10,330,000.00. These industrial revenue bonds
effectively refinanced two of the 1990 series industrial revenue bonds totaling
$8,330,000.00 at August 31, 1993. At August 31, 1994, the Company had
outstanding letters of credit in the amount of $12,132,995.00 from a bank
pertaining to all industrial revenue bonds outstanding and has pledged land,
buildings and equipment with a net book value of approximately $10,927,230.00 as
collateral. The adjustable rate industrial revenue bonds bear interest at a
floating rate determined by the Remarketing Agents as defined in the respective
Indentures of Trust (approximately 2.7% and 3.25% at August 31, 1993 and 1994,
respectively).
The revolving credit agreement and industrial revenue bonds contain various
restrictions relating to, among other things, net working capital, debt to
equity and fixed charges ratios and maintenance of net worth of at least
$100,000,000.00. At August 31, 1993 and 1994, the Company was not in compliance
with the fixed charges coverage ratio. However, the Company has obtained waivers
on this covenant from its lender through September 1, 1995.
Maturities of long-term debt are as follows: $8,200,000.00 in 1995;
$8,200,000.00 in 1996; $4,255,000.00 in 1997; $1,170,000.00 in 1998;
$1,170,000.00 in 1999; and $8,920,000.00 thereafter.
The fair value of the Company's long-term debt was estimated using
discounted cash flow analyses, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements. Based on these
analyses, the fair value of the Company's long-term debt does not significantly
differ from its carrying value.
5. INCOME TAXES
Effective September 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes" ("SFAS 109"). Although permitted under the new rules, prior year's
financial statements have not been restated.
The cumulative effect of adopting SFAS 109 as of September 1, 1993 was to
reduce net income by $193,208.00 ($4.12 per common share). The current year
effect of adopting SFAS 109 was not material.
F-15
<PAGE> 73
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The components of income tax expense (benefit) for the years ended August
31, excluding the cumulative effect of change in accounting principles, are as
follows:
<TABLE>
<CAPTION>
1992 1993 1994
(DEFERRED (DEFERRED (LIABILITY
METHOD) METHOD) METHOD)
------------- ------------- --------------
<S> <C> <C> <C>
Current:
Federal............................... $3,637,000.00 $1,259,000.00 $ 805,757.00
State................................. 577,000.00 148,000.00 (3,860.00)
------------- ------------- --------------
4,214,000.00 1,407,000.00 801,897.00
Deferred benefit...................... (226,000.00) (762,000.00) (1,390,593.00)
------------- ------------- --------------
$ 3,988,000.0 $ 645,000.00 $ (588,696.00)
============ ============ =============
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company's deferred
tax liabilities and assets as of August 31, 1994 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Supplemental executive retirement plan.............................. $ 896,632.00
Alternative minimum tax carryforward................................ 805,757.00
Bad debt reserve.................................................... 38,000.00
Net operating loss carryforward..................................... 25,600.00
Fixed assets........................................................ 125.00
-------------
Total deferred tax assets............................................. 1,766,114.0
Deferred tax liabilities:
Inventory........................................................... 1,207,411.00
Pension............................................................. 173,424.00
-------------
Total deferred tax liabilities........................................ 1,380,835.0
-------------
Net deferred tax assets............................................... $ 385,279.00
============
</TABLE>
No valuation allowance was provided for deferred tax assets as realization
of such assets is more likely than not.
Deferred income tax benefit under the provisions of APB No. 11 resulted
from the following:
<TABLE>
<CAPTION>
1992 1993
------------ ------------
<S> <C> <C>
Supplemental Executive Retirement Plan.................. $(226,000.00) $(440,000.00)
Alternative minimum tax carryforward.................... -- (273,000.00)
Pension................................................. -- (253,000.00)
Fixed assets............................................ -- 133,000.00
Tax accruals............................................ -- 58,000.00
Other................................................... -- 13,000.00
------------ ------------
$(226,000.00) $(762,000.00)
=========== ===========
</TABLE>
F-16
<PAGE> 74
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The reasons for the difference between total tax expense and the amount
computed by applying the statutory Federal income tax rate to income before
income taxes were as follows:
<TABLE>
<CAPTION>
1992 1993 1994
------------- ----------- ------------
<S> <C> <C> <C>
Tax at statutory rates...................... $3,549,769.00 $514,953.00 $(644,688.00)
State income taxes net of Federal benefit... 351,785.00 49,941.00 (75,845.00)
Non-deductible insurance premiums........... -- -- 113,888.00
Depreciation................................ 63,700.00 63,700.00 --
Other items................................. 22,746.00 16,406.00 17,949.00
------------- ----------- ------------
$3,988,000.00 $645,000.00 $(588,696.00)
============ ========== ===========
</TABLE>
6. BENEFIT PLANS
Two Company sponsored qualified noncontributory defined benefit pension
plans cover substantially all employees. In addition, an unfunded nonqualified
defined benefit plan covers certain management personnel. For both the qualified
and nonqualified plans, benefits are based on years of service and the
employee's three highest years of compensation during the last five years of
employment. In addition, contributions are intended to provide not only for
benefits attributed to service to date but also for those expected to be earned
in the future. For the qualified plans, the Company's funding policy is to
contribute annually such amounts as are necessary to provide assets sufficient
to meet the benefits to be paid to the plans' members and to keep the plans
actuarially sound. The non-qualified plan is unfunded.
A summary of the components of net periodic pension cost for the qualified
pension plans for the years ended August 31, 1992, 1993 and 1994 is as follows:
<TABLE>
<CAPTION>
1992 1993 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Service cost -- benefits earned
during the period................. $ 1,119,585.00 $ 1,247,993.00 $ 1,136,026.00
Interest cost on projected benefit
obligation........................ 2,842,088.00 3,015,717.00 2,931,874.00
Actual return on plan assets........ (3,773,255.00) (3,233,107.00) (3,409,306.00)
Net amortization and deferral....... 415,630.00 (364,791.00) (425,040.00)
-------------- -------------- --------------
Total pension expense............... $ 604,048.00 $ 665,812.00 $ 233,554.00
============= ============= =============
</TABLE>
The following table sets forth the funded status of the qualified plans and
amounts recognized in the balance sheet.
<TABLE>
<CAPTION>
AUGUST 31,
---------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $32,419,070.00 in 1993 and $32,021,509.00 in 1994.... $33,166,017.00 $32,710,266.00
============= =============
Projected benefit obligation................................. $39,025,796.00 $38,914,007.00
Plan assets at fair value.................................... 43,754,950.00 42,944,999.00
-------------- --------------
Funded status -- plan assets in excess of projected benefit
obligation................................................. $ 4,729,154.00 $ 4,030,992.00
============= =============
</TABLE>
F-17
<PAGE> 75
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AUGUST 31,
---------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
Comprised of:
Prepaid pension expense.................................... $ 462,965.00 $ 509,787.00
Unrecognized net gain...................................... 2,063,467.00 1,588,552.00
Unrecognized prior service cost............................ (157,394.00) (169,285.00)
Unrecognized net gain at September 1, 1987, net of
amortization............................................ 2,360,116.00 2,101,938.00
-------------- --------------
$ 4,729,154.00 $ 4,030,992.00
============= =============
</TABLE>
Substantially all of the plans' assets at August 31, 1994 are invested in
United States Government Agency securities, insurance contracts and general
obligation and revenue bonds of municipalities and political subdivisions.
A summary of the components of net periodic cost for the nonqualified
pension plan for the years ended August 31, 1993 and 1994 is as follows:
<TABLE>
<CAPTION>
1993 1994
------------- -------------
<S> <C> <C>
Service cost -- benefits earned during the period...... 343,716.00 322,448.00
Interest cost on projected benefit obligation.......... 423,306.00 489,091.00
Net amortization and deferral.......................... 390,498.00 390,498.00
------------- -------------
Total pension expense.................................. $1,157,520.00 $1,202,037.00
============ ============
</TABLE>
The following table sets forth the amounts recognized in the balance sheet
for the nonqualified plan.
<TABLE>
<CAPTION>
AUGUST 31,
-------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $4,042,715.00 in 1993 and
$4,533,661.00 in 1994........................... $ 4,100,117.00 $ 4,616,763.00
============= =============
Projected benefit obligation......................... $ 6,003,837.00 $ 6,663,943.00
Plan assets at fair value............................ -- --
-------------- --------------
Funded status -- projected benefit obligation in
excess of plan assets.............................. $(6,003,837.00) $(6,663,943.00)
============= =============
Comprised of:
Accrued pension expense............................ $(1,157,520.00) $(2,359,557.00)
Unrecognized net loss.............................. (289,201.00) (137,768.00)
Unrecognized net loss at September 1, 1993, net of
amortization.................................... (4,557,116.00) (4,166,618.00)
-------------- --------------
$(6,003,837.00) $(6,663,943.00)
============= =============
</TABLE>
Assumptions used in accounting for the pension plans were:
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Weighted-average discount rates............................... 8% 8% 8.25%
Rates of increase in compensation levels...................... 6% 6% 5.25%
Expected long-term rates of return on assets.................. 8% 8% 8%
</TABLE>
During 1993, the Company began sponsoring a defined contribution profit
sharing plan for substantially all salaried and hourly employees. Voluntary
employee contributions are based upon a percentage of each employee's
compensation. The Company matches a percentage, as defined, of each eligible
employee's
F-18
<PAGE> 76
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
voluntary contributions up to a specified limit. The cost of the plan was
$276,923.26 and $318,872.07 for the years ended August 31, 1993 and 1994,
respectively.
7. PURCHASE COMMITMENTS
To ensure procurement of raw cotton inventory, it is the Company's policy
to execute non-cancellable purchase contracts with certain vendors. Such
contracts allow for the future delivery to the Company of raw cotton inventory
at current market prices. As of August 31, 1994, the Company is obligated to
purchase 117,064 bales of cotton through July 1995 at an aggregate cost
approximating $41,610,000.00.
8. PREFERRED STOCK
There are 9,000 authorized shares of preferred stock ($100 par value), 7%
cumulative, none of which were outstanding at August 31, 1994.
9. SUBSEQUENT EVENT
On February 6, 1995, the Board of Directors of the Company approved a
Merger Agreement, subject to shareholder approval, in which Springs Industries,
Inc. would exchange common stock and cash for all of the issued and outstanding
common stock of the Company. Upon approval of the merger by the shareholders,
the Company will pay $2,168,000 to certain officers of the Company.
F-19
<PAGE> 77
DUNDEE MILLS, INCORPORATED
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1993 1994
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 2,750,688.27 $ 2,360,074.09
Trade accounts receivable, less allowance for doubtful
accounts of $100,000.00 in 1993 and in 1994........... 44,818,586.04 45,276,315.51
Inventories:
Finished and greige goods................................ 46,919,642.73 43,460,623.96
Stock in process......................................... 3,306,828.00 2,924,909.00
Raw materials............................................ 2,898,938.00 2,973,216.00
Supplies and noncloth inventory items.................... 4,304,435.83 4,350,628.33
--------------- ---------------
57,429,844.56 53,709,377.29
Refundable income taxes.................................. 1,318,534.64 --
Other current assets..................................... 804,279.58 845,066.12
--------------- ---------------
Total current assets....................................... 107,121,933.09 102,190,833.01
Property, plant, and equipment on the basis of cost:
Land..................................................... 1,829,689.38 1,698,389.95
Buildings and improvements............................... 50,594,086.41 51,434,650.45
Machinery and equipment.................................. 63,663,524.37 65,998,812.84
Furniture and fixtures................................... 3,609,791.54 3,857,435.37
--------------- ---------------
119,697,091.70 122,989,288.61
Less allowances for depreciation and amortization........ 59,804,569.00 65,334,195.00
--------------- ---------------
Total property, plant and equipment........................ 59,892,522.70 57,655,093.61
Other assets............................................... 3,363,771.34 3,035,231.43
Deferred income taxes...................................... 447,492.00 937,225.00
Intangibles................................................ 1,155,689.82 1,123,954.82
--------------- ---------------
$171,981,408.95 $164,942,337.87
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable................................... $ 8,060,279.46 $ 8,238,054.98
Salaries, wages and commissions.......................... 1,855,569.95 1,238,794.63
Withholding and payroll taxes............................ 827,503.09 979,990.07
Deferred income taxes.................................... 989,275.00 605,419.00
State and local taxes.................................... 41,589.75 553,830.19
Other liabilities........................................ 1,038,590.92 1,123,344.75
Current portion of long-term debt........................ 9,445,000.00 8,200,000.00
--------------- ---------------
Total current liabilities.................................. 22,257,808.17 20,939,433.62
Long-term debt, less current portion....................... 24,670,000.00 19,715,000.00
Supplemental executive retirement plan liability........... 1,558,199.00 2,759,557.00
Stockholders' equity:
Common stock, par value $25.00 a share:
Authorized -- 200,000 shares 46,946 shares issued in
1993, 46,728 shares issued in 1994.................. 1,173,650.00 1,168,200.00
Retained earnings........................................ 122,321,751.78 120,360,147.25
--------------- ---------------
123,495,401.78 121,528,347.25
--------------- ---------------
$171,981,408.95 $164,942,337.87
============== ==============
</TABLE>
See accompanying notes.
F-20
<PAGE> 78
DUNDEE MILLS, INCORPORATED
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOUR MONTHS ENDED
DECEMBER 31,
-------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
Net sales...................................................... $85,107,326.17 $90,362,986.91
Cost of goods sold............................................. 74,231,672.50 77,263,043.26
-------------- --------------
10,875,653.67 13,099,943.65
Expenses:
Selling...................................................... 4,550,116.55 4,759,339.81
General and administrative................................... 4,608,310.78 5,315,873.60
-------------- --------------
9,158,427.33 10,075,213.41
-------------- --------------
1,717,226.34 3,024,730.24
Other income................................................... 137,676.39 426,876.17
-------------- --------------
1,854,902.73 3,451,606.41
Other deductions:
Interest..................................................... 601,320.66 547,088.41
Other........................................................ 1,323,358.38 1,109,512.25
-------------- --------------
1,924,679.04 1,656,600.66
-------------- --------------
(Loss) income before income taxes and cumulative effect of
accounting change............................................ (69,776.31) 1,795,005.75
Income taxes (credit).......................................... (21,665.00) 729,803.00
-------------- --------------
(Loss) income before cumulative effect of accounting change.... (48,111.31) 1,065,202.75
Cumulative effect of accounting change......................... (193,208.00) --
-------------- --------------
Net (loss) income.............................................. $ (241,319.31) $ 1,065,202.75
============= =============
Weighted average number of shares outstanding.................. 46,946 46,791
============= =============
Per share data:
(Loss) income before cumulative effect of accounting
change.................................................... $ (1.02) $ 22.77
Cumulative effect of accounting change....................... (4.12) --
-------------- --------------
Net (loss) income per common share............................. $ (5.14) $ 22.77
============= =============
Dividends paid................................................. $ 4.00 $ 4.00
============= =============
</TABLE>
See accompanying notes.
F-21
<PAGE> 79
DUNDEE MILLS, INCORPORATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOUR MONTHS ENDED
DECEMBER 31,
-----------------------------
1993 1994
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income................................................ $ (241,319.31) $1,065,202.75
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Cumulative effect of accounting change......................... 193,208.00 --
Depreciation and amortization.................................. 3,813,103.00 3,512,277.81
Provision for deferred income tax.............................. (463,531.00) 53,473.00
Changes in operating assets and liabilities:
Trade accounts receivable................................... 538,822.85 4,667,208.15
Inventories................................................. 3,409,326.00 (6,981,800.00)
Refundable income taxes..................................... (678,134.00) 822,511.46
Other current assets........................................ 118,219.23 51,877.97
Prepaids and deposits....................................... (741,280.70) 559,100.00
Trade accounts payable...................................... 1,668,592.94 261,819.80
Other current liabilities................................... (1,992,789.85) (1,786,089.84)
Supplemental executive retirement plan liability............ 400,679.00 400,000.00
------------- -------------
Net cash provided by operating activities........................ 6,024,896.16 2,625,581.10
INVESTING ACTIVITIES
Purchases of property, plant and equipment....................... (1,581,692.57) (2,526,495.47)
------------- -------------
Net cash used in investing activities............................ (1,581,692.57) (2,526,495.47)
FINANCING ACTIVITIES
Principal payments on revolving line of credit and long-term
debt........................................................... (4,000,000.00) (4,000,000.00)
Purchases of common stock........................................ -- (135,102.00)
Dividends paid................................................... (187,784.00) (187,100.00)
Proceeds from sale of common stock............................... -- 49,500.00
------------- -------------
Net cash used in financing activities............................ (4,187,784.00) (4,272,702.00)
------------- -------------
Net increase (decrease) in cash and cash equivalents............. 255,419.59 (4,173,616.37)
Cash and cash equivalents at beginning of year................... 2,495,268.68 6,533,690.46
------------- -------------
Cash and cash equivalents at end of year......................... $2,750,688.27 $2,360,074.09
============ ============
</TABLE>
See accompanying notes.
F-22
<PAGE> 80
DUNDEE MILLS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.
The sales of Dundee are affected by the seasonal nature of the business of
its primary customers, who are in retail sales and the hospitality industry.
Accordingly, Dundee experiences its highest levels of sales during its first
fiscal quarter, when retailers are preparing for holiday sales. Dundee's lowest
sales levels generally occur during its second fiscal quarter, when retailers
clear inventory and recreational travel is down. Therefore, operating results
for the four month period ended December 31, 1994, are not necessarily
indicative of the results that may be expected for the year ended August 31,
1995.
2. INCOME TAXES
Effective September 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes" ("SFAS 109"). Although permitted under the new rules, prior year's
financial statements have not been restated.
The cumulative effect of adopting SFAS 109 as of September 1, 1993 was to
reduce net income by $193,208.00 ($4.12 per common share).
3. LONG TERM DEBT
The Company amended its revolving credit agreement, effective as of August
31, 1994, (the "Amended RCA") to provide for unsecured borrowings, under a
revolving credit note ("RCN"), of up to $25,000,000.00. The commitment is,
however, reduced by each payment made by the Company, unless the Company
notifies the lender to the contrary. The commitment shall be reduced by the
amount of such repayment, unless notification is given, until the commitment is
reduced to $10,000,000.00. The RCN matures on August 31, 1997. Under the Amended
RCA, $15,000,000.00 of the RCN is eligible for conversion to a five-year term
loan. The term conversion provision may be initiated by the Company upon
maturity, and the Company would be required to make twenty equal quarterly
principal payments commencing September 30, 1997.
The Amended RCA provides for interest at the prime rate minus one-half
percent per annum or LIBOR for interest periods of 30, 60 or 90 days, plus an
additional 35/100 percent per annum. However, Dundee is party to an interest
rate swap with a decreasing notional amount equal to the outstanding balance of
the RCN which changed the floating interest rate exposure on the RCN to a fixed
interest rate exposure. Under this swap agreement, the Company pays a fixed
interest rate of 6.1% and receives the 3 month LIBOR rate reset quarterly (6.5%
at December 31, 1994) on the notional amount. This interest rate swap expires in
December 1996.
The amount of $8,000,000.00 has been included in current liabilities at
December 31, 1994 since the Company intends to repay that amount in the next
twelve month period.
4. SUBSEQUENT EVENT
On February 6, 1995, the Board of Directors of the Company approved a
Merger Agreement, subject to shareholder approval, in which Springs Industries,
Inc. would exchange common stock and cash for all of the issued and outstanding
common stock of the Company. Upon approval of the merger by the shareholders,
the Company will pay $2,168,000 to certain officers of the Company.
F-23
<PAGE> 81
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AMONG
SPRINGS INDUSTRIES, INC.
DUNDEE ACQUISITION CORP.
AND
DUNDEE MILLS, INCORPORATED
FEBRUARY 6, 1995
<PAGE> 82
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
ARTICLE 1
THE BUSINESS COMBINATION
1.1 The Merger...................................................................... A-8
1.2 Closing......................................................................... A-8
1.3 Effective Time of the Merger.................................................... A-8
1.4 Articles of Incorporation; Bylaws............................................... A-8
1.5 Directors and Officers of the Surviving Corporation............................. A-9
ARTICLE 2
CONVERSION AND EXCHANGE OF SHARES; ADDITIONAL ACTION
2.1 Conversion of Shares............................................................ A-9
(a) Dundee Shares............................................................. A-9
(b) Treasury Shares........................................................... A-9
(c) Subcorp Common Stock...................................................... A-9
2.2 Merger Consideration............................................................ A-9
(a) Payment of Merger Consideration........................................... A-9
2.3 Limited Cash Election........................................................... A-10
2.4 No Fractional Shares............................................................ A-10
2.5 Reported Market Price........................................................... A-11
2.6 Stock Transfer Books............................................................ A-11
2.7 Surrender and Exchange of Certificates Representing Dundee Shares............... A-11
(a) Exchange Agent............................................................ A-11
(b) Surrender of Certificates................................................. A-11
(c) Lost Certificates......................................................... A-11
(d) No Interest............................................................... A-12
(e) Dividends on Springs Shares............................................... A-12
2.8 Adjustments Because of Changes in Springs Shares................................ A-12
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties by Dundee........................................ A-12
(a) Organization and Qualification............................................ A-12
(b) Capitalization............................................................ A-12
(c) Authority................................................................. A-13
(d) Non-Contravention......................................................... A-13
(e) Consents.................................................................. A-13
(f) Subsidiaries.............................................................. A-13
(g) Financial Statements...................................................... A-14
(h) Absence of Certain Changes or Events...................................... A-14
(i) Governmental Authorization and Compliance with Laws....................... A-14
(j) Absence of Undisclosed Liabilities........................................ A-15
(k) Tax Matters............................................................... A-15
(l) Title to Properties....................................................... A-15
(m) Material Contracts........................................................ A-16
(n) Legal Proceedings......................................................... A-16
(o) Labor Relations........................................................... A-16
(p) Insider Interests......................................................... A-17
(q) Intellectual Property..................................................... A-17
</TABLE>
A-1
<PAGE> 83
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
(r) Insurance................................................................. A-17
(s) Proxy Statement; Registration Statement................................... A-18
(t) Employee and Fringe Benefit Plans......................................... A-18
(u) Major Customers........................................................... A-20
(v) Environmental............................................................. A-21
(w) Continuity of Stock Ownership............................................. A-22
(x) Fairness Opinion.......................................................... A-22
(y) Brokers, Finders and Investment Bankers................................... A-22
3.2 Representations and Warranties by Springs....................................... A-23
(a) Organization and Qualification, etc....................................... A-23
(b) Capitalization............................................................ A-23
(c) Authority................................................................. A-23
(d) Non-Contravention......................................................... A-23
(e) Consents.................................................................. A-24
(f) Periodic Reports.......................................................... A-24
(g) Financial Statements...................................................... A-24
(h) Absence of Certain Changes or Events...................................... A-24
(i) Proxy Statement; Registration Statement................................... A-24
(j) Absence of Undisclosed Liabilities and Agreements......................... A-24
(k) Activities of Subcorp..................................................... A-25
(l) Brokers, Finders and Investment Bankers................................... A-25
(m) Governmental authorization and Compliance with Laws....................... A-25
(n) Legal Proceedings......................................................... A-25
ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 Conduct of Business............................................................. A-25
(a) Operation by Dundee in the Ordinary Course of Business.................... A-25
(b) Forbearances by Dundee.................................................... A-26
(c) Actions by Springs........................................................ A-27
4.2 Meeting of Dundee Shareholders.................................................. A-27
(a) Approval of Merger........................................................ A-27
(b) Other Matters............................................................. A-27
4.3 Best Efforts; Further Assurances; Cooperation................................... A-28
(a) Regulatory Action......................................................... A-28
(b) Certain Legal Proceedings................................................. A-28
(c) Notice.................................................................... A-28
4.4 Investigation................................................................... A-28
4.5 Expenses........................................................................ A-28
4.6 No Solicitation of Transactions................................................. A-29
4.7 Registration Statement and Proxy Statement...................................... A-29
4.8 NYSE Listings................................................................... A-30
4.9 Affiliates of Dundee............................................................ A-30
4.10 Rule 145........................................................................ A-30
4.11 Public Announcements............................................................ A-30
4.12 Antitrust Challenges............................................................ A-30
4.13 Employee Matters................................................................ A-31
(a) Employee Benefits and Agreements.......................................... A-31
(b) Employment................................................................ A-31
</TABLE>
A-2
<PAGE> 84
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
4.14 Indemnification................................................................. A-31
(a) Articles of Incorporation ByLaws.......................................... A-31
(b) Reorganization, etc....................................................... A-31
4.15 Accountants' Letters............................................................ A-32
4.16 Financial Statements of Dundee.................................................. A-32
4.17 Springs Actions................................................................. A-32
ARTICLE 5
CONDITIONS TO THE MERGER
5.1 Conditions to Obligations of Each Party......................................... A-32
(a) Dundee Shareholder Approval............................................... A-32
(b) HSR Act................................................................... A-32
(c) Tax Effect of Merger...................................................... A-32
(d) Registration Statement.................................................... A-32
(e) NYSE Listing.............................................................. A-33
5.2 Conditions to Obligations of Springs and SubCorp................................ A-33
(a) Consents, Authorizations, etc............................................. A-33
(b) Injunction, etc........................................................... A-33
(c) Representations and Warranties............................................ A-33
(d) Affiliate Agreements...................................................... A-33
(e) Certificate............................................................... A-33
(f) Opinion and Confirmation of Dundee's Counsel.............................. A-33
(g) Letters from Accountants.................................................. A-35
(h) Certain Antitrust Matters................................................. A-35
(i) SERP Determination........................................................ A-35
(j) Appraisal Rights.......................................................... A-35
(k) Additional Certificates, etc.............................................. A-35
(l) Certain Shareholder Action................................................ A-35
(m) Filing Deficiencies....................................................... A-35
(n) Shareholder Loans......................................................... A-36
(o) IDB Financings............................................................ A-36
5.3 Conditions to Obligations of Dundee............................................. A-36
(a) Consents, Authorizations, etc............................................. A-36
(b) Injunction, etc........................................................... A-36
(c) Representations and Warranties............................................ A-36
(d) Springs Shares............................................................ A-36
(e) Certificate............................................................... A-36
(f) Opinion and Confirmation of Springs's and Subcorp's Counsel............... A-36
(g) Letters from Accountants.................................................. A-38
(h) Tax Advice................................................................ A-38
(i) Investment Banker's Opinion............................................... A-38
(j) Additional Certificates, etc.............................................. A-38
ARTICLE 6
TERMINATION AND ABANDONMENT
6.1 Termination and Abandonment..................................................... A-38
6.2 Specific Performance............................................................ A-39
6.3 Rights and Obligations upon Termination......................................... A-39
6.4 Certain Fees and Expenses....................................................... A-40
(a) Expenses.................................................................. A-40
(b) Fee....................................................................... A-40
</TABLE>
A-3
<PAGE> 85
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
(c) Payment................................................................... A-40
(d) Effect of Payment......................................................... A-41
6.5 Effect of Termination........................................................... A-41
ARTICLE 7
GENERAL PROVISIONS
7.1 Waiver of Certain Conditions.................................................... A-41
7.2 Notices......................................................................... A-41
7.3 Table of Contents; Headings..................................................... A-42
7.4 Variation and Amendment......................................................... A-42
7.5 No Survival of Representations or Warranties.................................... A-42
7.6 Arbitration..................................................................... A-42
7.7 Severability.................................................................... A-42
7.8 Waiver.......................................................................... A-42
7.9 No Third Party Beneficiaries; Assignment........................................ A-43
7.10 Time of the Essence; Computation of Time........................................ A-43
7.11 Counterparts.................................................................... A-43
7.12 Governing Law................................................................... A-43
7.13 Entire Agreement................................................................ A-43
</TABLE>
A-4
<PAGE> 86
LIST OF EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A -- Certificate of Merger
Exhibit B -- Dundee Audited Financial Statements
Exhibit C -- Dundee Unaudited Financial Statements
</TABLE>
LIST OF SCHEDULES
<TABLE>
<S> <C> <C> <C>
3.1 (a) Jurisdictions Where Dundee is Qualified
3.1 (b) Capitalization
3.1 (d) Non-Contravention
3.1 (e) Required Consents
3.1 (f) Subsidiaries
3.1 (h) Certain Changes and Events
3.1 (j) Undisclosed Liabilities and Agreements
3.1 (k) Tax Matters
3.1 (l) Title to Properties
3.1 (m) Material Contracts
3.1 (n) Litigation Involving Dundee or its Subsidiaries
3.1 (o) Labor Controversies
3.1 (p) Insider Interests
3.1 (q) Intellectual Property
3.1 (r) Insurance
3.1 (t) Employee and Fringe Benefit Plans
3.1 (u) Major Customers of Dundee
3.1 (v) Environmental Matters
4.1 Conduct of Business
4.1 (b) Forbearances by Dundee
4.1 (b) (viii) Additional Compensation to Certain Individuals
4.13 (b) Employment Matters
5.2 (n) Shareholder Loans
</TABLE>
A-5
<PAGE> 87
DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
---------------
<S> <C>
Affiliate Agreement......................................................... 4.9
Agreement................................................................... Preamble
Applicable Plan Year-End.................................................... 3.1(t)(iii)(A)
Cash Election............................................................... 2.2(b)(i)
CERCLA...................................................................... 3.1(v)
Certificate of Merger....................................................... 1.3
Certificates................................................................ 2.7(b)
Closing..................................................................... 1.2
Closing Date................................................................ 1.2
Code........................................................................ 3.1(k)
Competing Transaction....................................................... 4.6
Confidentiality Agreement................................................... 4.4
Deposited Shares............................................................ 2.3(a)
Dissenting Shares........................................................... 2.2(b)(ii)
Dundee...................................................................... Preamble
Dundee Audited Financial Statements......................................... 3.1(g)
Dundee Financial Statements................................................. 3.1(g)
Dundee's Auditors........................................................... 3.1(g)
Dundee Shareholders Meeting................................................. 3.1(s)
Dundee Shares............................................................... Preamble
EEOC........................................................................ 3.1(o)
Effective Time.............................................................. 1.3
Employee Plans.............................................................. 3.1(t)(i)
Environmental Laws.......................................................... 3.1(v)
ERISA....................................................................... 3.1(t)(i)(A)
ERISA Affiliate............................................................. 3.1(t)(i)
Exchange Agent.............................................................. 2.3(a)
Exchange Agent Agreement.................................................... 2.7(a)
Expenses.................................................................... 6.4(a)
Expiration Date............................................................. 2.3(a)
Fee......................................................................... 6.4(b)
FTC......................................................................... 3.1(e)
GAAP........................................................................ 3.1(g)
GBCC........................................................................ 1.1
Governmental Entity......................................................... 3.1(e)
Hazardous Substance......................................................... 3.1(v)
HSR Act..................................................................... 3.1(d)
Initial Term................................................................ 4.13(b)
Intellectual Property....................................................... 3.1(q)
Intellectual Property Agreements............................................ 3.1(q)
IRS......................................................................... 3.1(t)(i)
Justice..................................................................... 3.1(e)
Material Contracts.......................................................... 3.1(m)
Maximum Number of Cash Election Shares...................................... 2.2(b)(ii)
Merger...................................................................... Preamble
Merger Consideration........................................................ 2.1(a)
Merger Consideration Per Share.............................................. 2.2(a)
MSDS........................................................................ 3.1(v)
Multi-Employer Plan......................................................... 3.1(t)(i)(B)
</TABLE>
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<TABLE>
<CAPTION>
SECTION
---------------
<S> <C>
NLRB........................................................................ 3.1(o)
NYSE........................................................................ 2.5
OSHA........................................................................ 3.1(v)
PBCG........................................................................ 3.1(t)(i)
Pension/Profit-Sharing Plan................................................. 3.1(t)(i)(A)
Permits..................................................................... 3.1(v)(iii)
Proxy Statement............................................................. 3.1(s)
RCRA........................................................................ 3.1(v)
Registration Statement...................................................... 3.1(s)
Reported Market Price....................................................... 2.5
SEC......................................................................... 3.1(e)
Securities Act.............................................................. 3.1(s)
Springs..................................................................... Preamble
Springs Annual Report....................................................... 3.2(f)
Springs Audited Financial Statements........................................ 3.2(g)
Springs Class B Shares...................................................... 3.2(b)
Springs Financial Statements................................................ 3.2(g)
Springs Material Contract................................................... 3.2(d)
Springs Preferred Shares.................................................... 3.2(b)
Springs Quarterly Reports................................................... 3.2(f)
Springs Shares.............................................................. Preamble
Subcorp..................................................................... Preamble
Subsidiary.................................................................. 3.1(f)
Super Fund.................................................................. 3.1(v)
Super Lien.................................................................. 3.1(v)
Surviving Corporation....................................................... 1.1
Taxes....................................................................... 3.1(k)
Tax Opinion................................................................. 5.1(c)
Tax Returns................................................................. 3.1(k)
Waste....................................................................... 3.1(v)
Welfare Plan................................................................ 3.1(t)(i)(C)
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 6, 1995 between DUNDEE
MILLS, INCORPORATED., a Georgia corporation ("Dundee"), DUNDEE ACQUISITION
CORP., a Georgia corporation ("Subcorp"), and SPRINGS INDUSTRIES, INC.
("Springs"), a South Carolina corporation (the "Agreement").
BACKGROUND STATEMENT
Springs and Dundee desire to effect a business combination of Dundee and
SubCorp pursuant to which Dundee will merge with and into Subcorp, and the
holders of shares of Dundee Common Stock, $25.00 par value ("Dundee Shares"),
will receive shares of Springs Class A Common Stock, par value $.25 per share
("Springs Shares"), in exchange for Dundee Shares, as provided in this Agreement
(the "Merger"), subject to the limited right to make an election to receive
cash. The Merger is intended to be a reorganization under Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended. The
respective Boards of Directors of Springs, Subcorp and Dundee each has approved
this Agreement and the Merger. The Board of Directors of Dundee has directed
that this Agreement be submitted to the shareholders of Dundee for their
approval.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
THE BUSINESS COMBINATION
1.1 The Merger. At the Effective Time (as defined in Section 1.3 hereof),
Dundee shall be merged with and into Subcorp in accordance with the provisions
of this Agreement and the Georgia Business Corporation Code, (the "GBCC"), and
the separate existence of Dundee shall thereupon cease, and Subcorp, as the
surviving corporation in the Merger (hereinafter sometimes referred to as the
"Surviving Corporation"), shall continue its corporate existence under the laws
of the State of Georgia as a wholly-owned subsidiary of Springs. The Merger
shall have the effects provided under the applicable laws of the State of
Georgia including, but not limited to, Section 14-2-1106 of the GBCC.
1.2 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Sutherland, Asbill
& Brennan, 999 Peachtree Street, N.E., Atlanta, Georgia 30309-3996, as soon as
possible after all conditions set forth in Article 5 have been satisfied or
waived in writing but in no event later than the third business day after all
such conditions shall have been satisfied or waived (the "Closing Date").
1.3 Effective Time of the Merger. If all the conditions set forth in
Article 5 shall have been fulfilled or waived in accordance with this Agreement
and provided that this Agreement has not been terminated pursuant to Article 6,
on the Closing Date the parties shall cause the certificate of merger attached
hereto as Exhibit A (the "Certificate of Merger") to be executed, delivered and
filed with the Secretary of State of Georgia in accordance with the provisions
of the GBCC. The Merger shall become effective at the time of such filing unless
a different effective time is specified in the Certificate of Merger pursuant to
the GBCC (the "Effective Time").
1.4 Articles of Incorporation; Bylaws. The Articles of Incorporation and
Bylaws of Subcorp as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation and Bylaws of the Surviving Corporation, until
duly amended in accordance with applicable law (subject to Section 4.14 hereof),
except that the name of the Surviving Corporation shall be changed to Dundee
Mills, Incorporated.
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1.5 Directors and Officers of the Surviving Corporation. At the Effective
Time the persons who are directors and officers of Subcorp at the Effective Time
will become the directors and officers of the Surviving Corporation until such
time as they may be replaced in accordance with the Bylaws of the Surviving
Corporation.
ARTICLE 2
CONVERSION AND EXCHANGE OF SHARES; ADDITIONAL ACTION
2.1 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder thereof:
(a) Dundee Shares. Subject to Section 2.2, each issued and
outstanding Dundee Share (excluding any Dundee Shares held by Springs or
its Subsidiaries), shall automatically be cancelled and extinguished and
shall thereafter be converted into only the right to receive the
consideration for the Merger as set forth in Sections 2.2, 2.3 and 2.4 (the
"Merger Consideration").
(b) Treasury Shares. Each Dundee Share held in the treasury of Dundee
shall be automatically cancelled and extinguished, and no payment shall be
made in respect thereof.
(c) Subcorp Common Stock. Each issued and outstanding share of
Subcorp common stock at the Effective Time shall thereafter represent one
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
2.2 Merger Consideration. The Merger Consideration to be paid for each
Dundee Share shall be equal to Two Thousand Five Hundred Twenty Five dollars
($2,525.00). The Merger Consideration shall be paid in Springs Shares as
provided in this Section 2.2 and, to the extent applicable, cash pursuant to
Section 2.3 and Section 2.4.
(a) Payment of Merger Consideration. The Merger Consideration to be
paid in Springs Shares shall be determined as follows:
(i) Subject to the limitations set forth in this Section 2.2, each
Dundee Share shall be converted into the right to receive a number of
Springs Shares equal to the result of dividing the Merger Consideration
by the Reported Market Price (as hereinafter defined) of Springs Shares;
provided, however, that in lieu of conversion of Dundee Shares into
Springs Shares, holders of Dundee Shares may elect in accordance with
and subject to the conditions of Section 2.3 (a "Cash Election") to
receive payment of the Merger Consideration in cash.
(ii) The maximum number of Dundee Shares that shall be converted
into the right to receive cash shall be 23,363 Dundee Shares, less the
total number of Dundee Shares as to which the holders have exercised
appraisal rights with respect to the Merger pursuant to the GBCC
("Dissenting Shares"), which maximum number of Dundee Shares as to which
Cash Elections may be made is hereinafter referred to as the "Maximum
Number of Cash Election Shares."
(iii) The maximum number of Springs Shares that shall be issued as
Merger Consideration shall be three million Springs Shares. If the
number of Dundee Shares as to which a Cash Election has not been validly
made or as to which a Cash Election has been validly made but has been
withdrawn by the holder or eliminated or rejected by the Exchange Agent
(as hereinafter defined) would be converted into the right to receive
more than three million Springs Shares, the Exchange Agent shall treat a
number of Dundee Shares as to which Cash Elections have not been made
(pro rata as nearly as practicable as to each holder of ten (10) or more
such Dundee Shares) as having been subject to Cash Elections as
necessary to reduce the number of Springs Shares issuable as Merger
Consideration to three million Springs Shares.
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2.3 Limited Cash Election.
(a) Any holder of record of Dundee Shares shall have the right to make
a Cash Election with respect to all or any portion of his Dundee Shares by
surrendering and depositing with Wachovia Bank of North Carolina, N.A. (the
"Exchange Agent") at its office in Winston-Salem, North Carolina, no later
than the close of business on the Expiration Date (as hereinafter defined)
the certificate or certificates representing such Dundee Shares, properly
endorsed for transfer or with duly executed stock powers attached,
accompanied by a duly executed and properly completed letter of transmittal
with respect to such Cash Election to be provided by Springs. The form of
letter of transmittal with respect to Cash Elections shall be mailed to the
holders of record of Dundee Shares as of the record date for the meeting of
holders of Dundee Shares called to vote on this Agreement no later than
five (5) business days after the date on which the Proxy Statement (as
herein defined) is first mailed to holders of Dundee Shares. The Exchange
Agent shall make available the form of letter of transmittal with respect
to Cash Elections to all persons who become holders of record of Dundee
Shares during the period between such record date and the Expiration Date.
Record holders of Dundee Shares on deposit with the Exchange Agent pursuant
to a Cash Election and not withdrawn as provided hereby (the "Deposited
Shares") shall remain stockholders of record with respect to such shares
until immediately prior to the Effective Time. For purposes of this
Agreement, "Expiration Date" means the last business day prior to the date
on which the Dundee Stockholders vote upon the approval of the Merger, or
such later date determined by Springs by notice thereof to the Exchange
Agent.
(b) If the number of Deposited Shares exceeds the Maximum Number of
Cash Election Shares, the Exchange Agent shall eliminate from the Deposited
Shares (pro rata as nearly as practicable as to each holder of ten (10) or
more Deposited Shares) the number of Deposited Shares necessary to reduce
the number of Deposited Shares to the Maximum Number of Cash Election
Shares (or the most practicable number thereof immediately below such
number), and such Dundee Shares eliminated from the Deposited Shares shall
be converted into the right to receive the Merger Consideration in Springs
Shares as provided in Section 2.2.
(c) Each holder of Dundee Shares who has made a valid Cash Election
shall have the right at any time prior to the close of business on the
Expiration Date to withdraw the shares deposited by such stockholder and
thereby revoke the Cash Election by giving written notice of withdrawal to
the Exchange Agent prior to the close of business on the Expiration Date.
(d) The Exchange Agent shall in its sole discretion determine whether
or not Cash Elections have been properly or timely made or revoked. Neither
Springs, Dundee nor the Exchange Agent shall be under any duty to give
notification that any Cash Election has not been properly or timely made or
revoked. If the Exchange Agent determines that any Cash Election was not
properly or timely made or revoked, the shares subject to this Cash
Election shall be treated by the Exchange Agent as Dundee Shares which were
not subject to any Cash Election, and at the Effective Time such shares
shall be converted into the right to receive Springs Shares pursuant to
Section 2.2. The Exchange Agent may, after consultation with Springs, make
such equitable changes in the procedures set forth herein as are necessary
or desirable to effect fully any Cash Election.
(e) Anything to the contrary notwithstanding in this Section 2.3, if
this Agreement is terminated pursuant to Article 6, any certificate or
certificates representing Dundee Shares that have been deposited with the
Exchange Agent in connection with a Cash Election shall be promptly
returned by the Exchange Agent to the record holder of any such
certificate.
2.4 No Fractional Shares. No scrip or fractional Springs Shares shall be
issued in the Merger upon conversion of Dundee Shares as provided in Section
2.1. Each holder of Dundee Shares who would otherwise have been entitled to
receive a fraction of a Springs Share upon conversion of his Dundee Shares shall
be entitled to receive a cash payment with respect to such fractional share in
an amount equal to the product of the Reported Market Price as defined below of
Springs Shares multiplied by such fractional share. Springs will make available
to the Exchange Agent the funds necessary for the purpose of paying cash for
fractional shares.
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2.5 Reported Market Price. As used in this Agreement, the Reported Market
Price for Springs Shares shall be the arithmetic average of the closing prices
for Springs Shares on the New York Stock Exchange ("NYSE") for the ten (10)
trading days immediately preceding the date which is three (3) calendar days
prior to the Closing Date; provided, however, that
(a) If such average is greater than $38.50, the Reported Market Price
shall be $38.50; and
(b) If such average is less than $33.50, the Reported Market Price
shall be $33.50.
2.6 Stock Transfer Books. From and after the Effective Time, no transfer
of Dundee Shares outstanding prior to the Effective Time shall be registered on
the stock transfer books of the Surviving Corporation. If, after the Effective
Time, certificates for Dundee Shares are presented to the Surviving Corporation
for transfer, such certificates shall be cancelled and exchanged for the
consideration described in Sections 2.2 and 2.4.
2.7 Surrender and Exchange of Certificates Representing Dundee Shares.
(a) Exchange Agent. Prior to the mailing of the Proxy Statement to
the holders of record of Dundee Shares, Springs shall appoint Wachovia Bank
of North Carolina, N.A. as Exchange Agent pursuant to an exchange agent
agreement reasonably acceptable to Dundee (the "Exchange Agent Agreement").
At the Effective Time, Springs shall, pursuant to irrevocable instructions,
direct the Exchange Agent to issue the number of Springs Shares and pay the
amounts of cash provided for in Sections 2.2, 2.3 and 2.4 to which the
holders of Dundee Shares are entitled pursuant to Sections 2.2, 2.3 and
2.4.
(b) Surrender of Certificates. Promptly after the Effective Time,
Springs shall cause the Exchange Agent to mail and otherwise make available
to each record holder as of the Effective Time of an outstanding
certificate or certificates which immediately prior to the Effective Time
represented Dundee Shares (the "Certificates") and who has not already
properly made (and not withdrawn or revoked) a Cash Election with respect
to the Dundee Shares represented by such Certificates, a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates for payment therefor and
conversion thereof. Upon surrender to the Exchange Agent of the
Certificates, together with such letter of transmittal, or the letter of
transmittal delivered pursuant to Section 2.3 with respect to Deposited
Shares, in each case duly executed, the holder of such Certificates shall
be entitled to receive in exchange therefor (i) the Merger Consideration as
set forth in Section 2.2 and (ii) as to any fractional share, a check
representing the cash consideration to which such holder shall have become
entitled pursuant to Section 2.4, and the Certificates so surrendered shall
forthwith be cancelled. If any portion of the Merger Consideration to be
received upon exchange of a Certificate (whether a certificate representing
Springs Shares or a check representing cash) is to be issued or paid to a
person other than the person in whose name the Certificate surrendered and
exchanged therefor is registered, it shall be a condition of such issuance
and payment that the Certificate so surrendered shall be properly endorsed
or otherwise is in proper form for transfer and that the person requesting
such exchange shall pay in advance in cash any transfer or other taxes
required by reason of the issuance of a certificate representing Springs
Shares or a check representing cash to such other person, or establish to
the satisfaction of the Exchange Agent that such tax has been paid or that
no such tax is applicable. From the Effective Time until surrender in
accordance with the provisions of this Section 2.7, each Certificate (other
than Certificates representing treasury shares) shall represent for all
purposes only the right to receive the Merger Consideration. All payments
in respect of Dundee Shares that are made in accordance with the terms
hereof shall be deemed to have been made in full satisfaction of all rights
pertaining to such securities.
(c) Lost Certificates. In the case of any lost, misplaced, stolen or
destroyed Certificate, the holder thereof may be required, as a condition
precedent to delivery to such holder of the Merger Consideration, to
deliver to Springs an indemnity agreement and bond in such reasonable sum
as Springs may direct as
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indemnity against any claim that may be made against the Exchange Agent,
Springs or the Surviving Corporation with respect to the Certificate
alleged to have been lost, misplaced, stolen or destroyed.
(d) No Interest. No interest shall be paid or accrued at any time on
any portion of the Merger Consideration regardless of the cause for delay
in payment of the Merger Consideration.
(e) Dividends on Springs Shares. No holder of a Certificate shall be
entitled to receive any dividend or other distribution from Springs
declared with a record date after the Effective Time until surrender of
such holder's Certificate pursuant to this Section 2.7. Upon such
surrender, there shall be paid to the holder the amount of any dividends or
other distributions (without interest) that theretofore became payable by
Springs, but were not paid by reason of the foregoing with respect to the
number of whole Springs Shares represented by the certificate or
certificates issued upon such surrender. From and after the Effective Time,
Springs shall be entitled, however, to treat any such Certificate that has
not yet been surrendered for exchange as evidencing the ownership of the
aggregate Merger Consideration into which the Dundee Shares represented by
such Certificate shall have been converted, notwithstanding any failure to
surrender such Certificate.
2.8 Adjustments Because of Changes in Springs Shares. If, between the date
of this Agreement and the Effective Time, the outstanding Springs Shares shall
be changed into a different number of shares or a different class by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall be distributed as of a
date prior to the Effective Time, or declared with a record date prior to the
Effective Time and a distribution date after the Effective Time, the Reported
Market Price shall be appropriately adjusted.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties by Dundee. All references in Articles 3
and 4 of this Agreement to Dundee, other than in Sections 3.1(a), (b) and (c),
4.2 and 4.14, shall be deemed to refer to Dundee and all its Subsidiaries as
hereinafter defined, and all references to the assets, liabilities, business,
financial condition, results of operations or prospects of Dundee shall be
deemed to refer to Dundee and its Subsidiaries, taken as a whole. Dundee
represents and warrants to and agrees with Springs and Subcorp as of the date of
this Agreement and as of the Closing as follows:
(a) Organization and Qualification. Dundee is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia, has the corporate power and authority to own all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in
the jurisdictions shown on Schedule 3.1(a), which are all of the
jurisdictions in which Dundee owns any real property or has any place of
business or where such qualification is required. The copies of Dundee's
Articles of Incorporation and Bylaws, as amended to date, which have been
delivered to Springs, are complete and correct, and such instruments, as so
amended, are in full force and effect at the date hereof.
(b) Capitalization. The authorized capital stock of Dundee consists
of 200,000 Dundee Shares. Except as set forth on Schedule 3.1(b), all of
the issued and outstanding Dundee Shares are duly authorized, validly
issued, fully paid and nonassessable, and not issued in violation of any
preemptive rights. As of the date hereof: (i) 46,728 Dundee Shares are
issued and outstanding and (ii) no Dundee Shares are reserved for issuance
pursuant to any stock incentive plans. Except as set forth in this Section
3.1(b), there are no shares of capital stock of Dundee outstanding, and
there are no subscriptions, options, convertible securities, calls, rights,
warrants or other agreements, claims or commitments of any nature
whatsoever obligating Dundee to issue, transfer, deliver or sell or cause
to be issued, transferred, delivered or sold, additional shares of the
capital stock or other securities of Dundee or obligating Dundee to grant,
extend or enter into any such agreement or commitment.
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(c) Authority. Dundee has the corporate power and authority to
execute and deliver this Agreement and, subject to the receipt of the
approval of the Merger by the affirmative vote of the holders of a majority
of the outstanding Dundee Shares, to consummate the transactions
contemplated on the part of Dundee hereby. The execution and delivery by
Dundee of this Agreement and the consummation by Dundee of the transactions
contemplated on its part hereby have been duly authorized by its Board of
Directors. Except for the approval of the Merger by a majority of the
holders of Dundee Shares, no other corporate action on the part of Dundee
is necessary to authorize the execution and delivery of this Agreement by
Dundee or the consummation by Dundee of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Dundee and
is a valid, binding and enforceable agreement of Dundee.
(d) Non-Contravention. Except as set forth on Schedule 3.1(d), the
execution and delivery of this Agreement by Dundee do not and, subject to
the adoption of this Agreement by the holders of a majority of the
outstanding Dundee Shares and the expiration of all applicable waiting
periods after the filings required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") referred to in paragraph (e)
below, the consummation by Dundee of the transactions contemplated hereby
does not and will not (i) violate or conflict with any provision of the
Articles or Certificate of Incorporation or Bylaws of Dundee, or (ii)
violate or conflict with, or result (with the giving of notice or the lapse
of time or both) in a violation of or constitute a default under any
provision of, or result in the acceleration or termination of or entitle
any party to accelerate or terminate (whether after the giving of notice or
lapse of time or both), any obligation or benefit under, or result in the
creation or imposition of any lien, charge, pledge, security interest or
other encumbrance upon any of the material assets or properties of Dundee
pursuant to any provision of, any "Material Contract" (as hereinafter
defined), "Intellectual Property Agreement" (as hereinafter defined), law,
ordinance, regulation, order, arbitration award, judgment or decree to
which Dundee is a party or by which Dundee or its assets or properties is
bound and do not and will not violate or conflict with any other material
restriction of any kind or character to which Dundee is subject or by which
any of its assets or properties may be bound, and the same does not and
will not constitute an event permitting termination of any Material
Contract or Intellectual Property Agreement to which Dundee is a party. No
such violation, conflict, default, acceleration, termination, entitlement,
creation or imposition of a lien, charge, pledge, security interest or
other encumbrance or event, regardless of whether it is described in
Schedule 3.1(d), shall cause any substantial damage, additional cost or
expense (including any payments or expenses incurred to obtain consents or
waivers) to Dundee, Springs or the Surviving Corporation. Except for the
agreements, statutes and other arrangements noted on Schedule 3.1(d), to
the knowledge of Dundee, Dundee has no reasonable basis to believe that it
will not be able to obtain (without additional payment or expense) all
consents and waivers necessary to avoid any such violation, acceleration,
entitlement to accelerate, creation or imposition of a lien, charge,
pledge, security interest or other encumbrance, conflict or event.
(e) Consents. Except as set forth in Schedule 3.1(e) and except for
the filing of the Registration Statement (as hereinafter defined) with the
Securities and Exchange Commission (the "SEC") and, to the extent required,
any required filings with or approvals by any state securities commissions,
filings with the Federal Trade Commission (the "FTC") and the Department of
Justice ("Justice") under the HSR Act and the filing of the Certificate of
Merger with the Secretary of State of Georgia, no consent, authorization,
clearance, order or approval of, or filing or registration with, any
executive, judicial or other public authority, agency, department, bureau,
division, unit or court or other public person or entity (any of which is
hereinafter referred to as a "Governmental Entity") or any other third
party is required for or in connection with the execution and delivery of
this Agreement by Dundee and the consummation by Dundee of the transactions
contemplated hereby.
(f) Subsidiaries. Schedule 3.1(f) sets forth each Subsidiary (as
hereafter defined) of Dundee. Dundee owns, directly or indirectly, all the
outstanding capital stock of each of its Subsidiaries, free and clear of
all liens, charges, pledges, security interests or other encumbrances, and
all such capital stock is duly authorized, validly issued and outstanding,
fully paid and nonassessable, and except as set forth in Schedule 3.1(f),
neither Dundee nor any Subsidiary has made any material investment in, or
material
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advance of cash or other extension of credit to, any person, corporation or
other entity other than its Subsidiaries. None of such Subsidiaries has any
commitment to issue or sell any shares of its capital stock or any
securities or obligations convertible into or exchangeable for, or giving
any person (other than Dundee) any right to acquire from such Subsidiary,
any shares of its capital stock, and no such securities or obligations are
outstanding. Each Subsidiary is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority to own all of its
properties and assets and to carry on its business as it is now being
conducted. Each Subsidiary is duly qualified to do business and is in good
standing in the jurisdictions shown on Schedule 3.1(f), which are all
jurisdictions in which each such Subsidiary owns any real property, has any
place of business, or where such qualification is required. As used in this
Agreement, the term "Subsidiary" means, with respect to any person,
corporation or other entity, any corporation or other organization, whether
incorporated or unincorporated, of which at least a majority of the
securities or interests having by the terms thereof voting power to elect a
majority of the board of directors or others performing similar functions
with respect to such corporation or other organization is at that time
directly or indirectly owned or controlled by such person, corporation or
other entity, or by any one or more of its Subsidiaries, or by such person,
corporation or other entity, and one or more of its Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit B are true and
complete copies of the balance sheets of Dundee as of August 31, 1994, 1993
and 1992 and the related statements of income, stockholders' equity and
cash flows for the years then ended, including the notes thereto, certified
by Ernst & Young, LLC ("Dundee's Auditors") (the "Dundee Audited Financial
Statements"). The Dundee Audited Financial Statements and the unaudited
balance sheets of Dundee as of December 31, 1994 and December 31, 1993 and
the related statements of income and cash flows for the four-month periods
then ended attached hereto as Exhibit C (together with the Dundee Audited
Financial Statements, the 'Dundee Financial Statements") (i) have been
prepared from, and are in accordance with, the books and records of Dundee;
(ii) present fairly in all material respects the financial position and
results of operations and cash flows of Dundee as of the dates and for the
periods indicated, in each case in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as stated herein or therein), and (iii) include
all adjustments (consisting only of normal recurring accruals) that are
necessary for the fair presentation of the financial position of Dundee and
the results of its operations and cash flows except as otherwise stated in
the Dundee Financial Statements. The unaudited December 31, 1994 and
December 31, 1993 financial statements are subject to year-end closing
adjustments and do not contain footnote disclosures required by GAAP.
(h) Absence of Certain Changes or Events. Except as set forth on
Schedule 3.1(h), since August 31, 1994, there has not been: (i) any
material adverse change in the assets, liabilities, business, financial
condition, results of operations or, other than as a result of a change in
general conditions in the textile industry or in the United States economy,
prospects of Dundee; (ii) any damage, destruction, loss or casualty to
property or assets of Dundee, whether or not covered by insurance, which
property or assets are material to the operations or business of Dundee;
(iii) any strike, work stoppage or slow down or other labor trouble
involving Dundee; (iv) any declaration, setting aside or payment of any
dividend or distribution (whether in cash, capital stock or property) with
respect to the capital stock of Dundee; (v) any redemption or other
acquisition by Dundee of any of the capital stock of Dundee; (vi) any
split, combination, reclassification or other similar change in the
outstanding Dundee Shares; (vii) any transaction outside the ordinary
course of business; or (viii) any agreement to do any of the foregoing.
Except as set forth on Schedule 3.1(h), since August 31, 1994, there has
not been any issuance by Dundee of any shares, or options, calls or
commitments relating to shares of its capital stock, or any securities or
obligations convertible into or exchangeable for, or giving any person any
right to acquire from it, any shares of its capital stock.
(i) Governmental Authorization and Compliance with Laws. Dundee is in
substantial compliance in all respects with all laws, orders, regulations,
policies and guidelines of all Governmental Entities applicable to Dundee
or any of its businesses or properties and assets. Dundee has all permits,
certificates,
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licenses, approvals and other authorizations required in connection with
the operation of its businesses. No notice has been issued and to Dundee's
knowledge no investigation or review is pending or is contemplated or
threatened against Dundee by any Governmental Entity (i) with respect to
any alleged violation by Dundee of any law, order, regulation, policy or
guideline of any Governmental Entity, or (ii) with respect to any alleged
failure to have all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of the businesses
of Dundee. Dundee is not in violation of any judgment, decree, injunction,
ruling or order of any court, governmental department, commission, agency
or instrumentality, arbitrator or other person.
(j) Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.1(j) or in the balance sheet as of December 31, 1994 included in
the Dundee Financial Statements, Dundee (i) did not have, as of December
31, 1994, any debts, liabilities or obligations, whether accrued, absolute,
contingent or otherwise and whether due or to become due (including without
limitation any uninsured liabilities resulting from failure to comply with
any law applicable to the conduct of its business) (ii) has not incurred
since December 31, 1994, any such debts, liabilities or obligations (other
than debts, liabilities or obligations incurred in the ordinary and usual
course of business after December 31, 1994), and (iii) has not, since
December 31, 1994, conducted its business otherwise than in the ordinary
and usual course.
(k) Tax Matters. Except as set forth in Schedule 3.1(k), Dundee has
properly completed and timely filed in correct form all federal, state,
local, provincial, foreign and other tax returns and reports of every
nature (collectively, "Tax Returns") required to be filed by Dundee, no
extensions of time in which to file any such Tax Returns are in effect, and
all such Tax Returns are true and correct. All taxes arising under the
Internal Revenue Code of 1986, as amended (the "Code"), or any law, rule,
regulation or order promulgated thereunder, or arising under any federal,
state, local or foreign law, rule, regulation or order including, without
limitation any income, profits, employment, sales, use, occupation, excise,
real property, personal property or ad valorem taxes or any license or
franchise fee or tax (collectively, "Taxes"), currently due and payable by
Dundee have been paid or provided for in the Dundee Financial Statements
and are not delinquent. All Taxes incurred but not yet due have been fully
accrued on the books of Dundee through August 31, 1994 and adequate
reserves have been established therefor. The charges, accruals and reserves
which have been provided in the Dundee Financial Statements in respect of
Taxes for all fiscal periods prior to and ending at August 31, 1994, are
sufficient for the payment of all unpaid taxes, whether or not disputed,
that are accrued or applicable for the period ended August 31, 1994 and for
all years and periods ended prior thereto. There are no pending claims
asserted for Taxes against Dundee or outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return
of Dundee for any period. Dundee has not filed a consent to the application
of Section 341(f) of the Code. Dundee has made all estimated income tax
deposits and all other required tax payments or deposits and has complied
for all prior periods in all material respects with the tax withholding
provisions of all applicable federal, state, local and other laws.
(l) Title to Properties. Except as set forth on Schedule 3.1(l),
Dundee has good and marketable title to all properties and assets reflected
in the balance sheet dated December 31, 1994, included in the Dundee
Financial Statements (or acquired after that date) and has valid leasehold
interests in all properties and assets not reflected on such balance sheet
but used by Dundee in its businesses, free and clear of any title defects,
liens, charges, pledges, security interests, adverse claims, or other
encumbrances, except (i) mortgages and liens securing debt reflected as
liabilities on such balance sheet, (ii) liens for current taxes and
assessments not in default, (iii) mechanics', carriers', workmen's,
repairman's, statutory or common law liens either not delinquent or being
contested in good faith and (iv) liens, mortgages, encumbrances, covenants,
rights-of-way, building or use restrictions, easements, exceptions,
variances, reservations and other matters or limitations of any kind, if
any, which do not have an adverse effect on Dundee's use of the property
affected. No person other than Dundee is entitled to possession or use of
any of the properties of Dundee, whether owned or leased by Dundee. The
real property, buildings, structures and improvements owned or leased by
Dundee conform in all substantial respects to all applicable laws,
ordinances and regulations, including zoning regulations, none of which
would upon consummation of the Merger adversely interfere with the use of
such properties, buildings,
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structures or improvements for the purposes for which they are now
utilized. The properties and assets owned or leased by Dundee are adequate
in all material respects for the conduct of its businesses as presently
conducted.
(m) Material Contracts. Schedule 3.1(m) contains a correct and
complete list of the following (hereinafter referred to as the "Material
Contracts"):
(i) all bonds, interest rate swap agreements, debentures, loan
agreements, notes, mortgages, deeds to secure debt, deeds of trust,
indentures or guaranties to which Dundee is a party or by which it or
its properties or assets are bound;
(ii) all leases (whether capital or operating) under which Dundee
is the lessee or lessor of real or personal property;
(iii) all employment agreements of Dundee; and
(iv) all existing contracts and commitments (other than those
described in subparagraphs (i), (ii) or (iii) and any "Employee Plans"
(as defined in Section 3.1(t)) to which Dundee is a party or by which
any of its properties or assets may be bound involving an annual
commitment or annual payment by any party thereto of more than $100,000
individually, or which have a fixed term extending more than 12 months
from the date hereof and which involve an annual commitment or annual
payment by any party thereto of more than $50,000 individually.
True and complete copies of all Material Contracts, including all
amendments thereto, have been made available to Springs. Except as set
forth on Schedule 3.1(m): (i) all Material Contracts are in full force and
effect and constitute the valid and binding obligations of the respective
parties thereto; (ii) there has not been and there currently is no default
under any Material Contract by any party thereto; (iii) no event has
occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default
thereunder by Dundee or (to the knowledge of Dundee) any other party
entitling any party to terminate a Material Contract; and (iv) the
continuation, validity and effectiveness of all such Material Contracts
under the current terms thereof and the current rights and obligations of
Dundee thereunder will in no way be affected, altered or impaired by the
consummation of the Merger. Except as disclosed in Schedule 3.1(m), there
are no contracts or options to sell or lease any properties or assets of
Dundee other than in the ordinary course of business.
(n) Legal Proceedings. Except as set forth on Schedule 3.1(n), (i)
there is no claim, action, suit, proceeding or investigation pending or, to
the knowledge of Dundee, contemplated or threatened against Dundee or any
of its properties or assets (or any of its officers or directors in
connection with the business of Dundee) before any arbitrator or
Governmental Entity, domestic or foreign, which in the event of a final
adverse determination, considered individually or in the aggregate with all
such other claims, actions, suits or proceedings, would adversely affect
the assets, liabilities, financial condition, results of operations,
business or prospects of Dundee, or which seeks treble damages, seeks
damages in connection with any of the transactions contemplated by this
Agreement or to prohibit, restrict or delay consummation of the Merger or
any of the conditions to consummation of the Merger or to limit in any
material manner the right of Springs to control the Surviving Corporation
or any aspect of the businesses of Dundee after the Effective Time, nor is
there any judgment, decree, injunction, ruling or order of any Governmental
Entity, arbitrator or any other person outstanding against Dundee having
any such effect; and (ii) Dundee is not a party to or bound by any
judgment, decree, injunction, ruling or order of any Governmental Entity,
arbitrator or any other person against Dundee which, when considered
individually or in the aggregate with all such other judgments, decrees,
injunctions, rulings or orders, adversely affects the assets, liabilities,
financial condition, results of operations, businesses or prospects of
Dundee.
(o) Labor Relations. Dundee is in compliance in all substantial
respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours,
and, to the knowledge of Dundee, is not engaged in any unfair labor or
unlawful employment practice. Except as set forth on Schedule 3.1(o), to
the knowledge of Dundee, there is no unlawful employment practice
discrimination charge pending before the Equal Employment Opportunity Com-
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mission ("EEOC") or any EEOC recognized state "referral agency." To the
knowledge of Dundee, there is no unfair labor practice charge or complaint
against Dundee pending before the National Labor Relations Board ("NLRB").
There is no labor strike, dispute, slowdown or stoppage actually pending
or, to the best knowledge of Dundee, threatened against or involving or
affecting Dundee, and no NLRB representation question exists respecting any
of their respective employees. No grievance or arbitration proceeding is
pending and no written claim therefor exists. There is no collective
bargaining agreement that is binding on Dundee. Except for any Material
Contract disclosed pursuant to Section 3.1(m), Dundee is not a party to or
bound by any agreement, arrangement or understanding with any employee or
consultant that cannot be terminated on notice of ninety (90) or fewer days
without liability to Dundee or that entitles the employees or consultant to
receive any salary continuation or severance payment or retain any
specified position with Dundee.
(p) Insider Interests. Except as disclosed in the Dundee Financial
Statements or on Schedule 3.1(p) no shareholder, affiliate, officer or
director of Dundee (i) has any agreement with Dundee or any interest in any
property, real or personal, tangible or intangible, including without
limitation trade names or trademarks used in or pertaining to the
businesses of Dundee, except for the normal rights as a shareholder or (ii)
has any claim or cause of action against Dundee except for accrued
compensation and benefits, expenses and similar obligations incurred in the
ordinary course of business (including reimbursement of medical expenses
pursuant to Employee Plans) with respect to employees of Dundee.
(q) Intellectual Property. Schedule 3.1(q) lists all patents,
trademarks, service marks, trade names, copyrights or applications for the
foregoing, and all computer programs, firmware and documentation relating
thereto, and all other intellectual properties other than trade secrets
(which have been separately disclosed to Springs) (including such trade
secrets, the "Intellectual Property") which are owned or are used and are
necessary for the conduct of the businesses of Dundee, and all royalty,
transfer or similar fees relating thereto. Dundee owns or has the right to
use pursuant to an Intellectual Property Agreement (as hereinafter defined)
all such Intellectual Property. Schedule 3.1(q) lists all licenses or other
agreements (other than licenses of generally available software programs
for personal computers) pursuant to which Dundee has any right to use or
enjoy any Intellectual Property that is owned by others or pursuant to
which Dundee is under a duty of confidentiality with respect to any
Intellectual Property owned by others (the "Intellectual Property
Agreements"). As to any Intellectual Property owned by Dundee, such
Intellectual Property is owned free and clear of all claims of others,
including employees, former employees or independent contractors of Dundee,
and Dundee has received no notice that the use of such Intellectual
Property in any business of Dundee violates or infringes upon the claimed
rights of others. As to the Intellectual Property Agreements, (i) all such
agreements are in full force and effect, (ii) neither Dundee nor, to the
knowledge of Dundee, any other party thereto, is in default under any such
agreement, (iii) Dundee is not and will not become obligated to make any
additional royalty or similar payments under any such agreements as a
result of the transactions contemplated by this Agreement, and (iv) the
exercise by Dundee of its rights under any such agreements does not
infringe upon the claimed rights of others. Dundee has not received any
notice that any of the products or services of Dundee, nor any products
held for future sale or license by Dundee, infringes upon the claimed
rights of others. Except as set forth in Schedule 3.1(q), Dundee has not
granted to any person any license or other right to use in any manner any
of the Intellectual Property owned by Dundee has not granted any sublicense
or right to use any Intellectual Property licensed to Dundee under the
Intellectual Property Agreements; and Dundee has not granted any software
licenses or sublicenses that would authorize any person to use any software
licensed or sublicensed thereunder for any purpose other than uses solely
internal to such person.
(r) Insurance. Schedule 3.1(r) summarizes the amount and scope of all
insurance policies or contracts providing coverage to Dundee. In the
opinion of the management of Dundee, all such policies or contracts of
insurance are in scope and in an amount usual and customary for businesses
engaged in by Dundee and are sufficient for compliance with all
requirements of law and of all agreements to which Dundee is a party. All
insurance policies pursuant to which any such insurance is provided are in
full force and effect and no notice of cancellation or termination of any
such insurance policies has been given
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to Dundee by the carrier of any such policy. Through the date hereof, all
premiums required to be paid in connection therewith have been paid in
full.
(s) Proxy Statement; Registration Statement. The information with
respect to Dundee and its officers and directors that shall have been
supplied by Dundee or its authorized representatives in writing for use in
the definitive proxy statement that will be distributed to Shareholders of
Dundee in connection with the meeting of such Shareholders (the "Dundee
Shareholders Meeting") to approve the adoption of this Agreement (the
"Proxy Statement") and that will form a part of the registration statement
of Springs under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Springs Shares to be issued in the Merger (the
"Registration Statement"), or in the Registration Statement, will not, on
the date or dates the Proxy Statement is first mailed to shareholders of
Dundee, or in the case of the Registration Statement at the time it becomes
effective, and at the Effective Time, as such Proxy Statement or
Registration Statement is then amended or supplemented, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier filing with the SEC of such
Registration Statement or amendment thereto or any earlier communication in
the preparation of which Dundee participated (including the Proxy
Statement) to shareholders of Dundee with respect to the Merger.
(t) Employee and Fringe Benefit Plans.
(i) Schedule of Plans. Schedule 3.1(t) to this Agreement lists
each of the following that Dundee or any Dundee Subsidiary either
maintains, is required to contribute to or otherwise participates in (or
at any time during the preceding seven years maintained, contributed to
or otherwise participated in or as to which Dundee or any of its
Subsidiaries has any unsatisfied material liability or obligation,
whether accrued, contingent or otherwise:
(A) any employee pension benefit plan ("Pension/Profit-Sharing
Plan") (as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), including any pension,
profit-sharing, retirement, thrift or stock bonus plan;
(B) any "multi-employer plan" ("Multi-Employer Plan") (as such
term is defined in ERISA);
(C) any employee welfare benefit plan ("Welfare Plan") (as such
term is defined in ERISA); or
(D) any other commission, bonus or deferred compensation, stock
option, restricted stock, fringe benefit or retirement plan, program,
policy, understanding or arrangement of any kind whatsoever, whether
formal or informal, not included in the foregoing and providing for
benefits for, or the welfare of, any or all of the current or former
employees or agents of Dundee or any Dundee Subsidiary or their
beneficiaries or dependents or with respect to which Dundee or a
Dundee Subsidiary has any material liability, including any group
health, life insurance, retiree medical, bonus, incentive or
severance arrangement;
(all of the foregoing in items (i), (ii), (iii) and (iv) being referred
to as "Employee Plans"). "ERISA Affiliate" means each trade or business
(whether or not incorporated) which together with Dundee is treated as a
single employer pursuant to Code Section 414(b), (c), (m) or (o). Dundee
has delivered to Springs (and Schedule 3.1(t) lists each item delivered)
copies of the following: (A) each written Employee Plan, as amended
(including either the original plan or the most recent restatement and
all subsequent amendments); where applicable, (B) the most recent
Internal Revenue Service ("IRS") determination letter issued with
respect to each Pension/Profit-Sharing Plan; (C) the latest actuarial
valuation (if any) for each Pension/Profit-Sharing Plan; (D) the three
most recent annual reports on the Form 5500 series for each Employee
Plan; (E) each trust agreement, insurance contract or document setting
forth any other funding arrangement, if any, with respect to each
Employee Plan; (F) the most recent ERISA summary plan description or
other summary of plan provisions distributed to participants or
beneficiaries for each Employee Plan;
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(G) each opinion or ruling from the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation ("PBGC") concerning any Employee
Plan; and (H) each Registration Statement, amendment thereto and
prospectus relating thereto filed with the SEC or furnished to
participants in connection with any Employee Plan.
(ii) Qualification. Except as set forth in Schedule 3.1(t) each
Pension/Profit-Sharing Plan: (i) has received a favorable determination
letter from the IRS to the effect that it is qualified under Code
Sections 401(a) and 501, both as to the original plan and all
restatements or material amendments; (ii) has never been subject to any
assertion by any governmental agency that it is not so qualified; and
(iii) has been operated so that it has always been so qualified.
(iii) Accruals; Funding.
(A) Pension/Profit-Sharing Plans. Schedule 3.1(t) fully and
accurately discloses, as of the end of each Plan's most recently
ended fiscal year (or, each Plan's second most recently ended fiscal
year if the required information is not yet available for such Plan's
most recently ended fiscal year) (such year end, as applicable, being
referred to as the "Applicable Plan Year-End"), the total assets, and
where applicable the actuarially computed present value of the
accrued benefits or other liabilities or obligations, and the
actuarially computed present value of the vested benefits or other
liabilities or obligations, for each Pension/Profit-Sharing Plan
subject to ERISA Title IV (including those for retired, terminated or
other former employees and agents) based on the actuarial assumptions
set forth in the plan valuations included as part of Schedule 3.1(t),
unless otherwise indicated on such Schedule. None of the
Pension/Profit-Sharing Plans subject to ERISA Title IV has incurred
any "accumulated funding deficiency" (as such term is defined in
ERISA), there is no employer liability with respect to any of such
Plans as determined in accordance with ERISA Section 4062, and the
actuarially computed present value of the benefits of each such Plan,
accrued to the Applicable Plan Year-End, does not exceed the value of
the assets of such Employee Plan. Schedule 3.1(t) further sets forth
as of the Applicable Plan Year End the actuarially computed present
value of the accrued benefit liabilities of each such
Pension/Profit-Sharing Plan subject to Title IV of ERISA, determined
on the basis of the assumptions prescribed by the PBGC pursuant to
ERISA Section 4044 for use in valuing accrued benefit liabilities
upon a plan termination, and the value of such benefit liabilities
does not exceed the value of the assets of any such Plan. There have
been no material changes in the financial condition of any of the
Pension/Profit-Sharing Plans since the Applicable Plan Year-End.
(B) Other Plans. Schedule 3.1(t) fully and accurately discloses
any funding liability under each Employee Plan not subject to ERISA
Title IV, whether insured or otherwise, specifically setting forth
any liabilities under any retiree medical, dental or life insurance
arrangement and specifically designating any insured plan which
provides for retroactive premium or other adjustments. The levels of
insurance reserves and accrued liabilities with regard to each such
Employee Plan are reasonable and are sufficient to provide for all
incurred but unreported claims and any retroactive premium
adjustments.
(C) Contributions. Except as fully and accurately disclosed in
Schedule 3.1(t): (I) Dundee and each Dundee Subsidiary have in all
material respects made full and timely payment of all amounts
required to be contributed under the terms of each Employee Plan and
applicable law, or required to be paid as expenses under such
Employee Plan, including PBGC premiums and amounts required to be
contributed under Code Section 412; and (II) no excise taxes or liens
are assessable against Dundee as a result of any nondeductible or
other contributions made or not made to an Employee Plan or any other
plan of an ERISA Affiliate.
(iv) Reporting and Disclosure. Except as fully and accurately
disclosed in Schedule 3.1(t), summary plan descriptions and all other
returns, reports, registration statements, prospectuses, documents,
statements and communications which are required to have been filed,
published or disseminated under ERISA or other federal law and the rules
and regulations promulgated by the
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Department of Labor under ERISA and the Treasury Department or by the
SEC with respect to the Employee Plans have been so filed, published or
disseminated.
(v) Prohibited Transactions; Terminations; Other Reportable
Events. Except as set forth in Schedule 3.1(t):
(A) neither Dundee nor any Dundee Subsidiary, any Employee Plan,
any trust or arrangement created under any of them, nor any trustee,
fiduciary, custodian, administrator or any person or entity holding
or controlling assets of any of the Employee Plans has engaged in any
"prohibited transaction" (as such term is defined in ERISA or the
Code) which could subject Dundee or a Dundee Subsidiary to any
material tax, penalty or other cost or liability of any kind;
(B) no termination has occurred with respect to any Employee
Plan subject to ERISA since 1991;
(C) no "reportable event" (as such term is defined in ERISA)
(other than a reportable event for which the statutory notice
requirements have been waived by regulation) has occurred with
respect to any Employee Plan subject to Title IV of ERISA; and
(D) no Internal Revenue Service or Department of Labor
investigation with respect to any Employee Plan is currently underway
or to Dundee's knowledge has been threatened.
(vi) Claims for Benefits. Other than claims for benefits arising
in the ordinary course of the administration and operation of the
Employee Plans no claims, investigations or arbitrations are pending or
to Dundee's knowledge threatened against any Employee Plan or against
Dundee, any Dundee Subsidiary, any trust or arrangement created under or
as part of any Employee Plan, any trustee, fiduciary, custodian,
administrator or other person or entity holding or controlling assets of
any Employee Plan, and to Dundee's knowledge no basis to anticipate any
such claim or claims exists.
(vii) Other. Except as fully and completely disclosed in Schedule
3.1(t), Dundee and each Dundee Subsidiary have fully complied with all
of their obligations under each of the Employee Plans and with all
provisions of ERISA and any and all other law applicable to the Employee
Plans. No written notice has been received by Dundee of any claim by any
participant in the Employee Plans of any violations of such laws, and to
the best knowledge of Dundee, no such claims are pending or threatened.
(viii) Creation of Obligations By Reason of Merger. Except as set
forth in Schedule 3.1(t), the execution of or performance of the
transactions contemplated by this Agreement will not constitute an event
under any Employee Plan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any employee, including any obligation
to make a payment that would be nondeductible under Code Section 280G or
any other Code provision.
(ix) No Multi-Employer Plans. Except as set forth in Schedule
3.1(t), none of the Employee Plans are Multi-Employer Plans, and neither
Dundee nor to Dundee's knowledge any ERISA Affiliate has any liability,
joint or otherwise, for any withdrawal liability (potential, contingent
or otherwise) under ERISA Title IV for a complete or partial withdrawal
from any Multi-Employer Plan.
(u) Major Customers. Schedule 3.1(u) sets forth (i) the names of the
twenty largest customers of Dundee in each of its four principal product
lines (i.e., retail and institutional towels, baby products and health care
products) based on revenues during the year ended August 31, 1994; and (ii)
the name of each customer of Dundee (a) described in clause (i), or (b)
which during the year ended August 31, 1994, or during the four months
ended December 31, 1994, generated revenue or annualized revenue,
respectively, of $300,000 or more, and in either case as to which Dundee
has received notice or otherwise
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has a reasonable basis to believe that such customer will terminate or
materially reduce its purchases from Dundee on or before December 31, 1995.
(v) Environmental. Except as set forth in Schedule 3.1(v):
(i) no generation, storage, presence, contamination, transport,
emission, discharge or "release" (as such term is defined in 42 U.S.C.
sec.9601(22)) of any Hazardous Substance (as defined below) exists or is
occurring (or has existed or occurred) from, under or upon, any property
owned, leased, used or controlled at any time by Dundee or any
predecessor of Dundee;
(ii) there is no past or present action, activity, event, omission,
condition or circumstance (A) that could be reasonably expected to
require Dundee to incur costs of removal, remedial, response or
corrective action (and the terms "removal," "remediation" and "response"
action include the types of activities covered by CERCLA (as defined
below) pursuant to any Environmental Laws (as defined below) with
respect to any Hazardous Substances or Waste (each as defined below) or
(B) that could be reasonably expected to give rise to any common law or
statutory liability (including punitive or exemplary damages and whether
assessed with respect to personal injury or property damage, negligence,
nuisance, trespass, damage to natural resources or the environment or
otherwise) on the part of Dundee;
(iii) Dundee (A) has obtained, maintained and complied with all
permits, registrations, licenses, approvals and other authorizations
(collectively, "Permits") that are required for the operation of its
businesses or the ownership or operation of any of its properties, and
(B), has maintained all records and has made all filings required by
applicable Environmental Laws for Dundee's operations at past or present
operating levels, including all records, filings and Permits with
respect to treatment, storage, presence, contamination, generation,
transport, emission, discharge or release into the environment of any
substance (including solids, liquids and gases) and the proper disposal
of such materials (including solid waste materials and petroleum or any
fractions or by-products of it);
(iv) without limiting or being limited by the foregoing, Dundee is
(and has been) otherwise in compliance with all Environmental Laws in
respect of any of the properties owned, leased, used or controlled at
any time by Dundee of any of the products, business operations or other
activities of Dundee, and no facts or circumstances exist that could be
reasonably expected to interfere with Dundee's compliance with
Environmental Laws; and
(v) Dundee has not received since December 31, 1991 any notice of
any action, activity, event, pending or threatened investigation,
condition or circumstance covered by any of clauses (i), (ii), (iii) or
(iv) above or otherwise alleging any liability or potential liability
under any Environmental Law, including CERCLA and OSHA (as defined
below).
Schedule 3.1(v) to this Agreement lists: (A) all Permits, regulatory
plans and compliance schedules of Dundee pertaining to its businesses,
together with their expiration and renewal dates (a copy of which have
been delivered by Dundee to Springs) and all environmental audit reports
or site investigations with respect to any facilities or properties
currently or formerly used by Dundee in its businesses; (B) all Waste
dumps and disposal, treatment and storage sites used by Dundee in
connection with its businesses or located on real property owned, used
or leased by Dundee at any time, and the names of the entities that have
been engaged in the handling, transportation and disposal of waste
materials for Dundee; (C) the material safety data sheets ("MSDS") for
each "hazardous chemical" (as such term is defined under OSHA) produced
by (or in products produced by) or used by Dundee; (D) all "underground
storage tanks" (as defined under RCRA) and the Substances stored in them
presently or formerly located on any real properties currently or
formerly owned, leased or operated by Dundee; (E) all asbestos on
property owned, leased or used by Dundee and (F) Emergency and Hazardous
Chemical Inventory Forms for each "toxic chemical" which Dundee has
notice that it is required to furnish pursuant to the Emergency Planning
and Community Right to Know Act of 1986. "Environmental Laws" means and
includes: (i) all applicable federal,
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state, or local laws relating to protection, preservation, or
restoration of the environment, prevention or minimization of pollution,
control and tracking of Hazardous Substances and Wastes, protection of
public or employee health and safety, or similar matters, or the
generation, use, collection, treatment, storage, transportation,
recovery, removal, discharge or disposal of Hazardous Substances (as
defined below) and any record keeping, notification and reporting
requirements of them, including the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource
Conservation and Recovery Act ("RCRA"), the Clean Air Act, the Federal
Water Pollution Control Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right to Know Act of 1986, the
Occupational Safety and Health Act of 1970 ("OSHA") and all comparable
state and local laws, as amended from time to time, and (ii) any common
law (including common law that may impose strict liability) that may
impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous
Substance or Waste. "Hazardous Substance" means and includes: [s] any
substance currently or which, to the knowledge of Dundee, may in the
future be listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Law (including any substances defined as "hazardous
substances" under CERCLA), whether by type or by quality, including any
material containing any such substance as a component, petroleum and any
products or fractions thereof; and [t] any toxic or hazardous wastes,
materials, pollutants or substances regulated under any other applicable
law, including any so-called "Super Fund" or "Super Lien" legislation,
now existing or hereafter enacted, relating to environmental, pollution
or similar matters. "Waste" means and includes any garbage, refuse or
waste, whether or not involving Hazardous Substances.
(w) Continuity of Stock Ownership.
(i) To the best of the knowledge of the executive officers of
Dundee, there is no plan or intention by the holders of Dundee Shares to
sell, exchange, or otherwise dispose of a number of Springs Shares
received in the Merger that would reduce the ownership of Springs Shares
by the holders of Dundee Shares to a number of Springs Shares having a
value, as of the date of the Merger, of less than 50 percent of the
value of all the formerly outstanding Dundee Shares as of the same date.
For purposes of this representation, Dundee Shares Exchanged for cash
pursuant to Section 2.3, surrendered by dissenters or exchanged for cash
in lieu of fractional Springs Shares will be treated as outstanding on
the date of the Merger. Moreover, Dundee Shares and Springs Shares held
by holders of Dundee Shares and otherwise sold, redeemed, or disposed of
prior or subsequent to the Merger will be considered in making this
representation;
(ii) SubCorp will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value
of the gross assets held by Dundee immediately prior to the transaction.
For purposes of this representation, amounts paid by Dundee to
dissenters, Dundee assets used to pay its Merger expenses, and all
redemptions and distributions (except for regular, normal dividends)
made by Dundee immediately preceding the Merger, will be included as
assets of Dundee held immediately prior to the Merger; and
(iii) the liabilities of Dundee to be assumed by Subcorp and the
liabilities to which the assets of Dundee are subject were incurred by
Dundee in the ordinary course of business.
(x) Fairness Opinion. The Board of Directors of Dundee has received
an opinion from The Robinson-Humphrey Company, Inc. as of the date of this
Agreement to the effect that the consideration to be received by the
holders of the Dundee Shares pursuant to the Merger is fair to such holders
from a financial point of view.
(y) Brokers, Finders and Investment Bankers. None of Dundee or any of
its officers, directors or employees have employed any broker, finder or
investment banker or incurred any liability for any investment banking
fees, financial advisory fees, brokerage fees or finders' fees in
connection with the transactions contemplated by this Agreement, except
that Dundee has arrangements with The Robinson-Humphrey Company, Inc., the
complete terms of which have been disclosed to Springs.
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3.2 Representations and Warranties by Springs. Springs represents and
warrants to, and agrees with, Dundee as of the date hereof and as of the Closing
as follows and, as to matters regarding Subcorp, Subcorp represents and warrants
to, and agrees with, Dundee as of the date hereof and as of the Closing as
follows:
(a) Organization and Qualification, etc. Springs is a corporation
duly organized, validly existing and in good standing under the laws of the
State of South Carolina, has the corporate power and authority to own all
its properties and assets and to carry on its business as it is now being
conducted. SubCorp is a corporation duly organized under the laws of the
State of Georgia and has the corporate power and authority to own all its
properties and assets and to carry on its business as it is now being
conducted. The copies of Springs's Articles of Incorporation and Bylaws and
Subcorp's Articles of Incorporation and Bylaws, in each case, as amended to
date, which have been delivered to Dundee, are complete and correct, and
such instruments, as so amended, are in full force and effect at the date
hereof.
(b) Capitalization. The authorized capital stock of Springs consists
of 40,000,000 Springs Shares, 20,000,000 shares of Class B Common Stock
(the "Springs Class B Shares") and 1,000,000 shares of $1.00 par value
preferred stock (the "Springs Preferred Shares"). As of December 31, 1994,
9,764,558 Springs Shares were validly issued and outstanding, fully paid
and non-assessable, and 119,585 Springs Shares were held in the treasury of
Springs. As of December 31, 1994, 7,830,375 Springs Class B Common Shares
were validly issued and outstanding, fully paid and nonassessable, and no
Springs Class B Common Shares were held in the treasury of Springs. No
Springs Preferred Shares are issued or outstanding or held in the treasury
of Springs. The authorized capital stock of Subcorp consists of 10,000
shares of common stock of no par value, of which 1,000 shares are validly
issued and outstanding, fully paid and non-assessable. Springs owns all of
the outstanding share of Subcorp, and no shares of Subcorp are held in its
treasury.
(c) Authority. Each of Springs and Subcorp has the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on the part of Springs and SubCorp hereby. The
execution and delivery by each of Springs and Subcorp of this Agreement and
the consummation by each of Springs and Subcorp of the transactions
contemplated on its part hereby have been duly authorized by its Board of
Directors (or a duly authorized committee thereof) and by Springs as the
sole shareholder of Subcorp. No other corporate action on the part of
Springs or Subcorp is necessary to authorize the execution and delivery of
this Agreement by Springs or Subcorp or the consummation by Springs or
Subcorp of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Springs and Subcorp and is a valid, binding
and enforceable agreement of Springs and Subcorp.
(d) Non-Contravention. The execution and delivery of this Agreement
by Springs and Subcorp do not and, subject to the expiration of the
applicable waiting periods after the filings required by the HSR Act
referred to in paragraph (e) below, the consummation by Springs and Subcorp
of the transactions contemplated hereby do not and will not (i) violate or
conflict with any provision of the Articles of Incorporation or Bylaws of
Springs or Subcorp or (ii) violate or conflict with, or result (with the
giving of notice or the lapse of time or both) in a violation of or
constitute a default under, any provision of, or result in the acceleration
or termination of or entitle any party to accelerate or terminate (whether
after the giving of notice or lapse of time or both) any obligation or
benefit under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the assets or
property of Springs or Subcorp pursuant to any provision of, any contract,
agreement, commitment, undertaking, arrangement or understanding to which
Springs or any of its Subsidiaries is a party or bound or to which any of
their assets or properties are subject that is (A) described in Item
14(a)(3) of Springs Annual Report (as hereinafter defined) in response to
Items 601(b)(4) and 601(b)(10) of Regulation S-K, (B) described in Item
6(a) of Part II of the Springs Quarterly Reports (as hereinafter defined)
in response to Items 601(b)(4) and 601(b)(10) of Regulation S-K or (C)
required to be disclosed in Item 21(a) of the Registration Statement in
response to Items 601(b)(4) and 601(b)(10) of Regulation S-K (a "Springs
Material Contract"), or any law, ordinance, regulation, order, arbitration
award, judgment or decree to which Springs or Subcorp is a party or by
which either of them or their respective assets or properties is bound, and
the same does not and will not constitute an event permitting termination
of any
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Springs Material Contract, if such violation, conflict, default,
acceleration, termination, entitlement, creation or imposition of a lien,
charge, pledge, security interest or other encumbrance or event would, when
taken together with all other such violations, conflicts, defaults,
accelerations, terminations, entitlements to accelerate, creations and
impositions of liens, charges, pledges, security interests and other
encumbrances and events, affect adversely the assets, liabilities,
financial condition, results of operations, business or prospects of
Springs and its Subsidiaries taken as a whole.
(e) Consents. Except for the filing of the Registration Statement
with the SEC and state securities commissions, filings with the FTC and
Justice as required by the HSR Act, the filing of the Certificate of Merger
with the Secretary of State of Georgia, no consent, authorization, order or
approval, or filing or registration with, any Governmental Entity is
required for or in connection with the execution and delivery of this
Agreement by Springs or Subcorp and the consummation by Springs and Subcorp
of the transactions contemplated hereby, if the failure to make such filing
or registration or to obtain such consent, authorization, order or approval
would have an adverse effect on the consummation of the Merger.
(f) Periodic Reports. The information in the Springs's Annual Report
on Form 10-K for the year ended January 1, 1994, including the proxy
statement incorporated by reference therein (the "Springs Annual Report"),
and its Quarterly Reports on Form 10-Q for the first three quarters of 1994
(the "Springs Quarterly Reports") (i) were prepared in all material
respects in accordance with the applicable requirements of the Securities
Exchange Act of 1934, as amended, and the Rules and Regulations thereunder,
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(g) Financial Statements. Springs has previously furnished Dundee
with a true and complete copy of the consolidated balance sheets of Springs
and its Subsidiaries as of January 1, 1994, January 2, 1993 and December
28, 1991 and the related consolidated statements of operations, retained
earnings and cash flows for the years then ended, including the notes
thereto, certified by Deloitte & Touche, independent certified public
accountants (the "Springs Audited Financial Statements"). The Springs
Audited Financial Statements and the financial statements included in the
Springs Quarterly Reports (together with the Springs Audited Financial
Statements, the "Springs Financial Statements") have been prepared from,
and are in accordance with, the books and records of Springs and its
Subsidiaries and present fairly in all material respects the consolidated
financial position and consolidated results of operations of Springs and
Springs's Subsidiaries as of the dates and for the periods indicated, in
each case in conformity with generally accepted accounting principles,
consistently applied, except as otherwise stated in such financial
statements (including the notes thereto) and the audit reports thereon.
(h) Absence of Certain Changes or Events. Since October 1, 1994,
there has not been any material adverse change in the business, financial
condition or results of operations of Springs and its Subsidiaries, taken
as a whole.
(i) Proxy Statement; Registration Statement. The information with
respect to Springs, its officers and directors and its Subsidiaries
(including SubCorp) that shall have been supplied by Springs or its
authorized representatives in writing for use in the Proxy Statement or as
contained in the Registration Statement, will not, on the date or dates the
Proxy Statement is first mailed to shareholders of Dundee, or in the case
of the Registration Statement at the time it becomes effective, and at the
Effective Time, as such Proxy Statement or Registration Statement is then
amended or supplemented, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading or necessary to correct statements in any earlier
filing with the SEC of such Registration Statement or amendment thereto or
any earlier communication in the preparation of which Springs participated
(including the Proxy Statement) to shareholders of Dundee or Springs with
respect to the Merger.
(j) Absence of Undisclosed Liabilities and Agreements. Except as set
forth on the balance sheet as of October 1, 1994 included in the Springs
Quarterly Reports, neither Springs nor any of its Subsidiaries
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had, as of October 1, 1994 debts, liabilities or obligations, whether
accrued, absolute, contingent or otherwise and whether due or to become due
(including without limitation any uninsured liabilities resulting from
failure to comply with any law applicable to the conduct of its business)
required by generally accepted accounting principles to be set forth on
such balance sheet or disclosed in the notes thereto.
(k) Activities of Subcorp. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions
contemplated hereby, Subcorp has neither incurred any obligations or
liabilities nor engaged in any business or activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
(l) Brokers, Finders and Investment Bankers. None of Springs, any of
its Subsidiaries or any of their respective officers, directors or
employees have employed any broker, finder or investment banker or incurred
any liability for any investment banking fees, financial advisory fees,
brokerage fees or finders' fees in connection with the transactions
contemplated by this Agreement, except that Springs has arrangements with
Goldman, Sachs & Co. and McGrath & Company, the complete terms of which
have been disclosed to Dundee.
(m) Governmental authorization and Compliance with Laws. Springs is
in substantial compliance in all respects with all laws, orders,
regulations, policies and guidelines of all Governmental Entities
applicable to Springs or any of its businesses or properties and assets.
Springs has all material permits, certificates, licenses, approvals and
other authorizations required in connection with the operation of its
businesses. No notice has been issued and to Springs' knowledge no
investigation or review is pending or threatened against Springs by any
Governmental Entity (i) with respect to any alleged violation by Springs of
any law, order, regulation, policy or guidelines of any Governmental
entity, or (ii) with respect to any alleged failure to have all permits,
certificates, licenses, approvals and other authorizations required in
connection with the operation of the business of Springs, except for
violations or failures that, individually or in the aggregate, would not
materially and adversely affect the assets, liabilities, financial
condition, results of operations or business of Springs and its
Subsidiaries, taken as a whole. Springs is not in violation of any
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality, arbitrator or other
person.
(n) Legal Proceedings. There is no claim, action, suit, proceeding or
investigation pending or, to the knowledge of Springs, contemplated or
threatened against Springs or any of its properties or assets (or any of
its officers or directors in connection with the business of Springs)
before any arbitrator or Governmental Entity, domestic or foreign, which in
the event of a final adverse determination, considered individually or in
the aggregate with all such other claims, actions, suits or proceedings,
would materially and adversely affect the assets, liabilities, financial
condition, results of operations or business of Springs and its
Subsidiaries, taken as a whole, nor it there any judgment, decree,
injunction, ruling or order of any Governmental Entity, arbitrator or any
other person outstanding against Springs having such effect; and (ii)
Springs is not a party to or bound by any judgment, decree, injunction,
ruling or order of any Governmental Entity, arbitrator or any other person
against Springs which, when considered individually or in the aggregate
with all such other judgments, decrees, injunctions, rulings or orders,
adversely affects the assets, liabilities, financial condition, results of
operations or business of Springs and its Subsidiaries, taken as a whole.
ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 Conduct of Business. During the period from the date hereof to the
Effective Time (except as required by law, as set forth on Schedule 4.1 and for
the transactions contemplated by this Agreement):
(a) Operation by Dundee in the Ordinary Course of Business. Dundee
shall conduct its operations according to its ordinary and usual course of
business in substantially the same manner as heretofore
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conducted and use its best efforts to preserve intact its business
organization, keep available the services of its officers and employees,
and maintain satisfactory relationships with licensors, suppliers,
distributors, customers and others having business relationships with it.
Dundee shall prepare and file all federal, state, local and foreign returns
for Taxes and other tax reports, filings and amendments thereto required to
be filed by it, and allow Springs, at its request, to review all such
returns, reports, filings and amendments at Dundee's offices prior to the
filing thereof, which review shall not interfere with the timely filing of
such returns.
(b) Forbearances by Dundee. Dundee shall not, without the prior
written consent of Springs, which consent shall not be unreasonably
withheld (and shall be deemed given if no written response shall have been
made within five (5) days after receipt by Springs of a written request
therefor by Dundee):
(i) incur any debt, liability or obligation, direct or indirect,
whether accrued, absolute, contingent or otherwise, other than current
liabilities incurred in the ordinary and usual course of business, or
pay any debt, liability or obligation of any kind other than such
current liabilities and current maturities of existing long-term debt
(including interest when due) in each case only in accordance with the
terms of the document creating and evidencing such debt, or fail to pay
any debt when due or take or fail to take any action, which taking or
failing to take would permit any debt to be accelerated;
(ii) assume, guarantee, endorse or otherwise become responsible for
the obligations of any other individual, firm or corporation, or make
any loans or advances to any individual, firm or corporation;
(iii) declare, set aside or pay any dividend (whether in cash,
capital stock or property) with respect to its capital stock or declare
or make any distribution on, redeem, or purchase or otherwise acquire
any Dundee Shares, or split, combine or otherwise similarly change the
outstanding Dundee Shares, or authorize the creation or issuance of or
issue or sell any shares of its capital stock or any securities or
obligations convertible into or exchangeable for, or giving any person
any right to acquire from it, any shares of its capital stock, or agree
to take any such action;
(iv) mortgage, pledge or otherwise encumber any property or asset,
except in the ordinary and usual course of business;
(v) sell, lease, transfer or dispose of any of its properties or
assets, waive or release any rights or cancel, compromise, release or
assign any indebtedness owed to it or any claims held by it, except in
the ordinary and usual course of business but in no event shall any such
sale or disposition exceed $100,000;
(vi) acquire any subsidiary or make any investment of a capital
nature either by purchase of stock or securities, contributions to
capital, property transfers or otherwise, or by the purchase of any
property or assets of any other individual, firm or corporation, except
in the ordinary and usual course of business but in no event greater
than $100,000;
(vii) fail to perform in all material respects its obligations
under Material Contracts (except those being contested in good faith) or
enter into, assume or amend any contract or commitment that (A) extends
for more than six months after the date of this Agreement and calls for
the payment or receipt of more than $50,000 by Dundee, or (B) would be a
Material Contract other than, in the case of this clause (B), contracts
or the sale of products entered into in the ordinary and usual course of
business;
(viii) except as set forth on Schedule 4.1(b)(viii) and except for
regularly scheduled increases for non-officer employees made prior to
the Effective Time in accordance, both as to timing and amount, with
normal prior practice, increase in any manner the compensation or fringe
benefits of any of its officers or employees or pay or agree to pay any
bonus or severance pay or pension or retirement allowance not required
by any existing plan or agreement to any of its officers or employees,
or commit itself to or enter into any employment agreement or any
incentive compensa-
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tion, deferred compensation, profit sharing, stock option, stock
purchase, savings, consulting, retirement, pension or other "fringe
benefit" plan or arrangement with or for the benefit of any officer,
employee or other person;
(ix) permit any insurance policy naming it as a beneficiary or a
loss payable payee to be cancelled or terminated or any of the coverage
thereunder to lapse, unless Dundee makes reasonable efforts to obtain
simultaneously with such termination or cancellation replacement
policies providing substantially the same coverage on commercially
reasonable terms and, if so available, such replacement policies shall
be maintained in full force and effect;
(x) amend its Articles of Incorporation or Bylaws;
(xi) enter into any union, collective bargaining or similar
agreement;
(xii) make sales of goods other than in accordance with its
customary practices regarding price and credit or make any shipment of
goods other than in accordance with its customary practices regarding
delivery dates requested by customers; or
(xiii) enter into an agreement or commitment to do any of the
things described in clauses (i) through (xii).
In connection with the continued operation of the businesses of Dundee between
the date of this Agreement and the Effective Time, Dundee shall confer in good
faith on a regular and frequent basis with one or more representatives of
Springs designated in writing to receive reports on operational matters and the
general status of ongoing operations, and Springs shall be entitled to have its
representatives present in the offices, plants and other facilities of Dundee to
monitor its business activities and its compliance with the provisions of this
Agreement. Dundee acknowledges that Springs does not and will not waive any
rights it may have under this Agreement as a result of such consultations
including the requirement that Dundee obtain the written consent of Springs to
certain actions as required by this Section 4.1(b), nor shall Springs be
responsible for any decisions made by Dundee's officers and directors with
respect to matters which are the subject of such consultation.
(c) Actions by Springs. Springs shall not, without the prior written
consent of Dundee, which consent shall not be unreasonably withheld (and
shall be deemed given if no written response shall have been made within
five (5) days after receipt by Dundee of a written request therefor by
Springs):
(i) declare, set aside or pay any dividend (whether in cash,
capital stock or property) with respect to its capital stock or declare
or make any distribution on any of its capital stock, except for regular
quarterly dividends at a rate not exceeding 125% of the last such
dividend; or
(ii) amend its Articles of Incorporation or Bylaws in any manner
that adversely affects the rights of holders of Springs Shares.
4.2 Meeting of Dundee Shareholders.
(a) Approval of Merger. Dundee covenants and agrees that its Board of
Directors shall (i) cause the Dundee Shareholders Meeting to be duly called
and held in accordance with Dundee's Articles of Incorporation, its Bylaws
and applicable law as soon as reasonably practicable to consider and vote
upon this Agreement; (ii) recommend approval of this Agreement to the
holders of the Dundee Shares; and (iii) use its best efforts to cause such
meeting to take place and to obtain the approval by the holders of the
Dundee Shares of the Merger and other transactions contemplated by this
Agreement in accordance with its Articles of Incorporation, Bylaws and the
GBCC.
(b) Other Matters. At the Dundee Shareholders Meeting the holders of
the Dundee Shares will be asked to approve or ratify the following matters:
(i) all issuances or sales by Dundee of Dundee Shares since July 1,
1989; and
(ii) the waiver of preemptive rights by holders of Dundee Shares
with respect to all issuances or sales of Dundee Shares by Dundee since
February 1, 1990.
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4.3 Best Efforts; Further Assurances; Cooperation. Subject to the other
provisions in this Agreement, the parties hereto shall each use their best
efforts to perform their respective obligations herein and to take, or cause to
be taken or do, or cause to be done, all things necessary, proper or advisable
under applicable law to obtain all regulatory approvals and satisfy all
conditions to the obligations of the parties under this Agreement and to cause
the Merger and the other transactions contemplated by this Agreement to be
carried out promptly in accordance with the terms hereof and shall cooperate
fully with each other and their respective officers, directors, employees,
agents, counsel, accountants and other designees in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, including without limitation:
(a) Regulatory Action. Subject to the terms and conditions of Section
4.12, Dundee and Springs shall promptly make their respective filings and
submissions and shall take, or cause to be taken, all action and do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to (i) comply with the provisions of the
HSR Act and (ii) obtain any other required approval of any other
Governmental Entity with jurisdiction over the transactions contemplated by
this Agreement.
(b) Certain Legal Proceedings. Subject to the terms and conditions of
Section 4.12, in the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other person is commenced which
questions the validity or legality of the Merger or any of the other
transactions contemplated hereby or seeks damages in connection therewith,
the parties agree to cooperate and use their best efforts to defend against
such claim, action, suit, investigation or other proceeding and, if an
injunction or other order is issued in any such action, suit or other
proceeding, to use their best efforts to have such injunction or other
order lifted, and to cooperate reasonably regarding any other impediment to
the consummation of the transactions contemplated by this Agreement.
(c) Notice. Each party shall give prior written notice to the others
of (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of
Dundee, Springs or SubCorp, as the case may be, contained in this Agreement
to be untrue or inaccurate in any material respect at any time from the
date hereof to the Effective Time or that will or may result in the failure
to satisfy any of the conditions specified in Article 5 and (ii) any
failure of Dundee, Springs or SubCorp, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
4.4 Investigation. Dundee agrees to permit Springs and its authorized
representatives to have or cause them to be permitted to have, after the date
hereof and until the Effective Time, full access to the premises, books and
records of Dundee at reasonable hours, and, subject to Dundee's consent which
shall not be unreasonably withheld, to enter upon any and all of the properties
of Dundee for purposes of testing of the soil, water, groundwater, tanks,
containers, effluent, equipment, building components, raw materials, finished
products and wastes, or conducting such other tests and studies as Springs or
its consultants in their reasonable opinion deem appropriate or necessary, and
the officers of Dundee will furnish Springs with such financial and operating
data and other information with respect to Dundee's business and properties as
Springs shall from time to time reasonably request. Dundee will instruct its
auditing firm to permit Springs and its representatives, including its auditing
firm, to review the work papers of Dundee's Auditors relating to their
examination of the Dundee Audited Financial Statements. No investigation by
Springs heretofore or hereafter made shall affect the representations and
warranties of Dundee, and each such representation and warranty shall survive
any such investigation, subject to Section 7.5. Springs covenants and agrees to
hold all information received by it in connection herewith in accordance with
the Confidentiality Agreement dated January 6, 1995 between Springs and Dundee
(the "Confidentiality Agreement").
4.5 Expenses. Except as otherwise provided in this Agreement, if the
Merger is not consummated, all costs and expenses (including any brokerage
commissions or any finder's or investment banker's fees and including attorney's
and accountants' fees) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except that Springs and Dundee shall share equally the costs of
printing the Proxy Statement and Registration Statement and filing such
documents with the SEC and any state securities commission.
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4.6 No Solicitation of Transactions. From the date hereof until the
Effective Time or until this Agreement is terminated or abandoned as provided in
Article 6, Dundee shall not, directly or indirectly, through any officer,
director, agent, shareholder or otherwise, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as such term is defined below in this Section 4.6), or
enter into or maintain or continue discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction or authorize or permit any of the
officers, directors or employees of such party or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by such party or any of such party's subsidiaries to
take any such action, and Dundee shall notify Springs thereof orally (within one
business day) and in writing (as promptly as practicable) of all of the relevant
details relating to all inquiries and proposals which it or any of its
Subsidiaries or any such officer, director, employee, investment banker,
financial advisor, attorney, accountant or other representative may receive
relating to any of such matters and if such inquiry or proposal is in writing,
Dundee shall deliver to Springs a copy of such inquiry or proposal; provided,
however, that nothing contained in this Section 4.6 or elsewhere in this
Agreement shall prohibit the Board of Directors of Dundee, as the case may be,
from: (i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited written, bona
fide proposal, which is not subject to any material contingencies that the Board
of Directors of Dundee determines in good faith are not reasonably capable of
being satisfied (and nothing contained in this Section 4.6 or elsewhere in this
Agreement shall prohibit Dundee from holding discussions necessary to make this
determination), to acquire Dundee pursuant to a merger, consolidation, share
exchange, business combination, tender or exchange offer or other similar
transaction if, and only to the extent that, (A) the Board of Directors of
Dundee, after consultation with and based upon the advice of independent legal
counsel (who may be Dundee's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board of
Directors of Dundee to comply with its fiduciary duties to shareholders under
applicable law and (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, Dundee (I) provides
reasonable notice to Springs to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person or entity and
(II) receives from such person or entity an executed confidentiality agreement
in reasonably customary form on terms not more favorable to such person or
entity than the terms contained in the Confidentiality Agreement; (ii) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer; or (iii) failing to make or withdrawing or modifying its
recommendation referred to in Section 4.2 following the occurrence of a
Competing Transaction if the Board of Directors of Dundee, after consultation
with and based upon the advice of independent legal counsel (who may be Dundee's
regularly engaged independent legal counsel), determines in good faith that such
action is necessary for the Board of Directors of Dundee to comply with its
fiduciary duties to shareholders under applicable law. For purposes of this
Agreement, "Competing Transaction" shall mean any of the following involving
Dundee: (i) any merger, consolidation, share exchange, business combination, or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of Dundee, taken as a
whole, in a single transaction or series of transactions; (iii) any tender offer
or exchange offer for 15% or more of the outstanding shares of capital stock of
Dundee or the filing of a registration statement under the Securities Act in
connection therewith; (iv) any person having acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) having been formed which beneficially owns or has the
right to acquire beneficial ownership of, 15% or more of the then outstanding
shares of capital stock of Dundee; or (v) any public announcement of a proposal,
plan or intention to do any of the foregoing or any agreement to engage in any
of the foregoing. Nothing in this Section 4.6 shall (i) permit Dundee to
terminate this Agreement, (ii) permit Dundee to enter into any agreement with
respect to a Competing Transaction during the term of this Agreement or (iii)
affect any other obligation of Dundee under this Agreement.
4.7 Registration Statement and Proxy Statement. Springs shall, and Dundee
shall cooperate in taking steps to, (i) prepare and file with the SEC as soon as
is practicable the Registration Statement, which shall
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contain a preliminary draft of the Proxy Statement, and (ii) use best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable. Promptly after the Registration Statement has been
declared effective by the SEC, Dundee shall mail the Proxy Statement to the
holders of Dundee Shares, and Dundee shall use its best efforts to solicit
proxies in favor of the adoption and approval of this Agreement and the Merger.
Springs shall also take any action required to be taken under state blue sky or
securities laws in connection with the Merger. The Registration Statement and
the Proxy Statement shall conform as to form in all material respects with all
applicable requirements of the federal securities laws and Georgia law.
4.8 NYSE Listings. Springs shall cause the Springs Shares to be issued in
connection with the Merger to be authorized for listing on the New York Stock
Exchange, upon official notice of issuance, prior to the Effective Time.
4.9 Affiliates of Dundee. Dundee will provide Springs with such
information as Springs may reasonably request to determine the identity of those
persons (as defined in Rule 145(e)) who may be deemed "affiliates" of Dundee
under Rule 145 promulgated by the SEC under the Securities Act, and shall
identify those persons whom Dundee believes may be deemed affiliates thereunder
at the time the Merger is submitted to a vote of Dundee's shareholders. Dundee
shall use its best efforts to cause each person who is so identified as an
"affiliate" to deliver to Springs prior to the Closing a written agreement (an
"Affiliate Agreement") providing that such person will not sell, pledge,
transfer or otherwise dispose of the Springs Shares to be received by such
person in the Merger except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder. Springs shall not be
required to maintain the effectiveness of the Registration Statement under the
Securities Act for the purposes of resales of Springs Shares by "affiliates" or
to deliver any certificates evidencing Springs Shares to any "affiliate" from
whom an Affiliate Agreement has not been received unless any such certificate
contains a legend stating in substance that Springs may refuse to transfer such
Springs Shares in the absence of an effective Registration Statement as to such
transfer, or unless Springs receives an opinion of counsel satisfactory to
Springs that registration with respect to such transfer is not required. Such
Affiliate Agreements shall provide that such "affiliates" agree that during the
period of time following the consummation of the Merger when the Springs Shares
of "affiliates" may be sold without registration only in compliance with Rule
145 there may be placed upon the certificates representing Springs Shares
received by them pursuant to the Merger, or any substitutions therefor, a legend
stating in substance that Springs may refuse to transfer such shares in
violation of the Affiliate Agreement or in the absence of an effective
Registration Statement as to such transfer, or an opinion of counsel
satisfactory to Springs that such registration is not required.
4.10 Rule 145. Springs covenants for a period of three years following the
Effective Time of the Merger that it will file any reports required to be filed
by it under the Securities Act and the Exchange Act, and the rules and
regulations adopted by the SEC thereunder (or, if Springs is not required to
file such reports, it will, upon the request of any holder of Springs Shares
issued in connection with the Merger, make publicly available other information
so long as it is necessary to permit sales under Rule 145 under the Securities
Act but only if Springs otherwise makes such information publicly available),
that it will take such further action as any holder of Springs Shares issued in
connection with the Merger may reasonably request, all to the extent required
from time to time to enable such shareholders to sell Springs Shares within the
limitation of the exemptions provided by (i) Rule 145 under the Securities Act,
as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC.
4.11 Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Merger to the financial community,
government agencies, employees or the general public shall be mutually agreed
upon in advance unless Springs or Dundee is advised by counsel that any such
announcement or other disclosure not mutually agreed upon in advance is required
to be made by law or applicable NYSE rules and then only after making a
reasonable attempt to comply with provisions of this Section 4.11.
4.12 Antitrust Challenges. In the event a suit is instituted challenging
the Merger as violative of the antitrust laws, each of Springs and Dundee will
use its best efforts to defend against such suit. Springs and
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Dundee will use their best efforts to take such action as may be required by any
federal or state court of the United States, in any suit brought by a private
party or Governmental Entity challenging the Merger as violative of the
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order or other order which has the effect
of preventing the consummation of the Merger; provided, however, that Springs
shall not be required to agree to any divestiture by Springs or Dundee or any of
Springs' Subsidiaries of any shares of capital stock or of any business,
properties or assets of Springs or Dundee or any of Springs' Subsidiaries, or
the imposition of any material limitation on the ability of Springs to conduct
such business or to own or exercise control of such stock, business, properties
or assets.
4.13 Employee Matters.
(a) Employee Benefits and Agreements. Springs shall provide the
employees of Dundee as of the Effective Time with employee benefit plans
that are in the aggregate not materially less favorable to such employees
than the Employee Plans provided by Dundee and shall give each Dundee
employee credit for employment with Dundee for purposes of eligibility to
participate in, vesting and eligibility to receive benefits (but not for
purposes of retirement plan benefit accruals) under such plans; provided,
however, that, except as otherwise specifically provided in subsection (b),
nothing in this Agreement shall be deemed to require Springs to cause to be
continued any employee's employment, responsibilities or officer title for
any definite period.
(b) Employment. Springs will cause the Surviving Corporation to agree
to employ each of the Dundee employees listed on Schedule 4.13(b) for the
number of months following the Closing set forth beside his name on
Schedule 4.13(b) (the "Initial Term") for compensation at the annual rate
set forth beside the employee's name on Schedule 4.13(b); provided,
however, that either Springs or any such employee shall be entitled to
terminate the employment of such employee effective upon the completion of
his Initial Term, after not less than two weeks notice to the other party,
and upon such termination the terminated employee shall receive a one time
payment equal to the amount set forth beside his name on Schedule 4.13(b).
No such employee shall be required by Springs to relocate during his
Initial Term without such employee's consent. Such employment shall be in
such executive capacity and with such title as Springs shall determine. In
addition, Springs shall offer to employ Lowell Belk until December 31, 1997
at total annual compensation of at least $118,000, provided that he agrees
to relocate his office to Lancaster, S.C. at the request of Springs.
(c) Springs agrees that upon any termination or suspension of further
benefits accruals under Dundee's qualified pension plans, any funds held in
trust for the pension plans will be credited to the accounts of pension
plan participants of those plans in those or other qualified employee
benefit plans as Springs may determine subject to any applicable ERISA
requirements.
(d) Springs agrees to guarantee Dundee's obligations under the Dundee
Mills Supplemental Executive Retirement Plan following the Closing.
4.14 Indemnification.
(a) Articles of Incorporation; ByLaws. At the Effective Time, the
Articles of Incorporation and Bylaws of Dundee will contain provisions
relating to limitation of liability and indemnification which shall be
continued in the Articles of Incorporation and Bylaws of the Surviving
Corporation. Springs agrees that these provisions of the Articles of
Incorporation and Bylaws of the Surviving Corporation will be deemed to
have been duly adopted by Dundee and will be complied with by the Surviving
Corporation. From and after the Effective Time, Springs will not take any
action, nor permit any action to be taken, which would change or amend the
provisions of the Articles of Incorporation or Bylaws of the Surviving
Corporation in effect at the Effective Time relating to limitation of
liability or indemnification, prior to the expiration of all statutes of
limitation applicable to events occurring on or prior to the Effective
Time, in any manner that would adversely affect the rights thereunder of
individuals who at or prior to the Effective Time were entitled to the
benefits of such provisions.
(b) Reorganization, etc. In the event the Surviving Corporation or
any of its successors or assigns (i) reorganizes or consolidates with or
merges into or enters into another business combination
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transaction with any other person or entity and is not the resulting,
continuing or surviving corporation or entity of such consolidation, merger
or transaction or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person or entity,
then, and in each such case, proper provision will be made so that the
successors and assigns of the Surviving Corporation assume the obligations
set forth in this Section 4.14.
4.15 Accountants' Letters. Each of Dundee and Springs agrees to use its
best efforts to obtain and deliver to the other letters of Springs Auditors and
Dundee's Auditors, dated the date of the Proxy Statement/Prospectus included
within the Registration Statement, the effective date of the Registration
Statement and the Closing Date (or such other dates reasonably acceptable to the
parties) with respect to certain financial statements and other financial
information included in the Registration Statement, which letters shall be in
form reasonably satisfactory to the addressee.
4.16 Financial Statements of Dundee. Dundee shall cause to be prepared and
delivered to Springs as soon as practicable after they have been prepared (but
in no event later than February 15, 1994) unaudited balance sheets of Dundee as
of December 31, 1994 and December 31, 1993 and the related unaudited statements
of income, stockholders equity and cash flows, including the notes thereto. Such
financial statements shall be in conformity with GAAP in all respects and shall
otherwise meet the requirements for Dundee Financial Statements in Section
3.1(g), and shall be prepared in such manner and include such information
necessary in order to satisfy Springs' disclosure requirements under the United
States securities laws as determined by Springs in its reasonable judgment.
4.17 Springs Actions. Following the Effective Time, Springs shall not take
any action that would disqualify, or fail to take any action necessary to
preserve, the Merger as a reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended.
ARTICLE 5
CONDITIONS TO THE MERGER
5.1 Conditions to Obligations of Each Party. The respective obligations of
each party to effect the Merger shall be subject to the fulfillment at or prior
to the Closing of each of the following conditions:
(a) Dundee Shareholder Approval. This Agreement and the Merger shall
have been approved at the Dundee Shareholders Meeting duly called and held
in accordance with Dundee's Articles of Incorporation and Bylaws and the
GBCC, by the holders of a majority of the Dundee Shares outstanding and
entitled to vote thereon.
(b) HSR Act. All applicable waiting periods under the HSR Act shall
have expired or been terminated.
(c) Tax Effect of Merger. Dundee and Springs shall each have received
a written opinion of Sutherland, Asbill & Brennan, in form reasonably
satisfactory to Dundee and Springs (the "Tax Opinion"), to the effect that
to the extent the Merger Consideration is comprised of Springs Shares, the
Merger shall be treated as a tax-free reorganization under the applicable
provisions of the Code. In connection with the Tax Opinion, Sutherland,
Asbill & Brennan shall be entitled to make factual assumptions as are
customary in similar tax opinions, and such factual assumptions shall be
confirmed by certificates executed by responsible officers of Dundee and
Springs. Sutherland, Asbill & Brennan may also rely on all representations,
warranties, covenants and agreements of the parties contained in this
Agreement or any Schedule hereto.
(d) Registration Statement. The Registration Statement shall be
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose, or under the proxy rules of the SEC pursuant
to the Exchange Act and with respect to the transactions contemplated
hereby, shall be pending before or threatened by the SEC.
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(e) NYSE Listing. The Springs Shares to be issued in the Merger shall
have been authorized for listing on the NYSE upon official notice of
issuance.
5.2 Conditions to Obligations of Springs and SubCorp. Consummation of the
Merger is subject to the fulfillment to the reasonable satisfaction of Springs,
prior to or at the Closing, of each of the following conditions:
(a) Consents, Authorizations, etc. All consents, authorizations and
approvals required under the items listed on Schedule 3.1(e) shall have
been obtained or made.
(b) Injunction, etc. The consummation of the Merger will not violate
the provisions of any injunction, order, judgment, decree, law or
regulation applicable or effective with respect to Springs, SubCorp or
their respective officers and directors. No suit or proceeding shall have
been instituted by any person, or, to the knowledge of Springs, shall have
been threatened by any Governmental Entity, which seeks (i) to prohibit,
restrict or delay consummation of the Merger or to limit in any material
respect the right of Springs to control any material aspect of the business
of Springs and its Subsidiaries or Dundee and its Subsidiaries after the
Effective Time, or (ii) to subject Springs or Dundee or their respective
directors or officers to material liability on the ground that it or they
have breached any law or regulation or otherwise acted improperly in
relation to the transactions contemplated by this Agreement; provided,
however, that in the case of (ii) above, Springs shall have made a good
faith determination that a substantial basis exists which would support a
finding of such liability against the officers and directors of Dundee or
Springs.
(c) Representations and Warranties. The representations and
warranties of Dundee contained in this Agreement shall have been true and
correct in all respects at the date hereof and shall also be true and
correct in all respects at and as of the Effective Time, except for changes
contemplated in this Agreement, with the same force and effect as if made
at and as of the Effective Time, except in either case as such
representations and warranties by their terms relate only to periods of
time prior to the Effective Time, or except where the failure of any
representation and warranty to be true and correct would not have a
material adverse effect on the assets, liabilities, financial condition,
results of operations, business or prospects of Dundee; and Dundee shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
at or prior to the Effective Time.
(d) Affiliate Agreements. There shall have been delivered to Springs
Affiliate Agreements as described in Section 4.9.
(e) Certificate. Dundee shall have delivered to Springs a
certificate, dated as of the Effective Time, of the Chief Executive Officer
and the Chief Financial Officer of Dundee to the effect that (i) they are
familiar with the provisions of this Agreement and (ii) to the best of
their knowledge the conditions specified in paragraph (c) of this Section
5.2 have been satisfied. Such certificate shall also specify the number of
issued and outstanding shares of Dundee Common Stock and shall certify that
to the best of their knowledge there has been no violation by Dundee of
Sections 4.1 or 4.6 hereof.
(f) Opinion and Confirmation of Dundee's Counsel.
(i) Springs and Subcorp shall have received an opinion or opinions,
dated as of the Effective Time, of King & Spalding in form and substance
and with such exceptions and limitations as shall be reasonably
satisfactory to Springs, substantially to the effect that:
(A) Dundee is a corporation incorporated, validly existing and
in good standing under the laws of the State of Georgia, and has the
corporate power and authority to own its properties and assets and to
conduct its business as it is described in the Registration
Statement.
(B) The authorized capital stock of Dundee consists of 200,000
Dundee Shares. As of the date of such opinion, there are 46,728
Dundee Shares issued and outstanding. Dundee owns all of the
outstanding shares of capital stock of its Subsidiaries.
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(C) Dundee has the corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated on the part of Dundee. The Agreement has been duly
adopted by the Board of Directors of Dundee and duly approved by its
shareholders, duly executed and delivered by Dundee, and is a valid
and binding agreement of Dundee enforceable in accordance with its
terms, subject to: (i) bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting creditors' rights
generally; and (ii) general principles of equity, regardless of
whether enforceability is considered in a proceeding in equity or at
law, provided that no opinion is expressed with respect to the
enforceability of Sections 4.6, 6.2 or 6.4.
(D) Neither the execution nor delivery by Dundee of this
Agreement nor the performance of its obligations hereunder will (with
the passage of time or the giving of notice or both): (i) constitute
a violation of, constitute a default or require any payment under,
permit a termination of, or result in the creation or imposition of
any security interest, lien or other encumbrance or adverse claim
against, or upon any of the property of, Dundee or any of its
Subsidiaries under (I) any term or provision of the Articles of
Incorporation or Bylaws of Dundee, (II) any contract, agreement,
commitment, undertaking, arrangement, or understanding (including
without limitation those imposing any rights of first refusal or
transfer restrictions) to which Dundee or any of its Subsidiaries is
a party or bound or to which any of its properties is subject, that
is listed on Schedule 3.1(n) or that is known to such counsel, (III)
any permit, judgment, decree or order of any Governmental Entity that
is listed on Schedule 3.1(e) or that is known to such counsel or (IV)
any applicable law which in the experience of such counsel is
normally applicable to transactions of the type contemplated by this
Agreement; or (ii) create or cause the acceleration of the maturity
of, any indebtedness, obligation, or liability of Dundee that is
listed on Schedule 3.1(n) or that is known to such counsel.
(E) Except for the filing of the Certificate of Merger with the
Secretary of State of Georgia, each consent, authorization, order and
approval of, and filing and registration with, any Governmental
Entity required to be made or obtained by Dundee for the execution
and delivery of this Agreement and the other documents and agreements
contemplated hereby and the consummation of the transactions
contemplated by this Agreement have been made or obtained.
(F) The Proxy Statement sent by Dundee to its shareholders for
purposes of the Dundee Shareholders Meeting held pursuant to Section
5.2 of this Agreement complied as to form in all material respects
with the requirements of Georgia law.
(G) The Shareholders of Dundee have duly approved or ratified
the matters described in Section 4.2(b)(i) and (ii) and a
disinterested committee of the Board of Directors of Dundee has duly
authorized and approved the payments to officers of Dundee as set
forth on Schedule 4.1(b)(viii) pursuant to Section 14-2-862 of the
Georgia Business Corporation Code.
(H) The Directors of Dundee have taken action with respect to
the Dundee Mills Supplemental Executive Retirement Plan that has the
effect of preventing a Change in Control (as defined in Section 1.5
of such plan) from being considered to have occurred by reason of the
Merger.
(I) Upon the filing of the Certificate of Merger with the
Secretary of State of Georgia in accordance with Section 1.3 of the
Agreement, the Merger shall become effective in accordance with the
GBCC;
(J) Each of Dundee's Subsidiaries listed on Schedule 3.1(f) is a
corporation incorporated, validly existing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority to own all of its properties and assets and to carry on its
business as it is described in the Proxy Statement.
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(ii) Springs and Subcorp shall have received confirmation, dated as
of the Effective Time, from King & Spalding, substantially to the effect
that:
(A) Such counsel has participated in the preparation and review
of the Registration Statement and the Proxy Statement. From time to
time such counsel has had discussions with officers, directors and
employees of Dundee and the independent accountants who examined
certain consolidated financial statements of Dundee and its
Subsidiaries and, based thereon, no facts have come to such counsel's
attention which lead such counsel to believe that the Registration
Statement or the Proxy Statement (except for the financial
statements, schedules and other financial and statistical information
included therein, as to which such counsel need express no opinion)
or any amendment or supplement thereto, at the time they were mailed
to the shareholders of Dundee and at the time of the Dundee
Shareholders Meeting, contained any untrue statement of a material
fact regarding Dundee and its Subsidiaries or omitted to state a
material fact regarding Dundee and its Subsidiaries required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. Such counsel has not, however, independently verified, is
not passing upon, and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Proxy Statement;
(B) To the knowledge of such counsel there is no litigation or
other proceeding against Dundee or any its Subsidiaries, or its
properties and assets, pending or overtly threatened by a written
communication to Dundee, that would be required to be disclosed
pursuant to the requirements of Item 103 of Regulation S-K if Dundee
were subject thereto.
Such opinion may be limited to the laws of the State of Georgia and the
federal laws of the United States of America and, except as set forth in
Section 6.2(f)(i)(E), may exclude the applicability and effect of any
antitrust and unfair competition laws. In rendering such opinions such
counsel may rely upon opinions of other counsel and may rely upon
certificates of public officials and officers of Dundee as to factual
matters and shall be under no obligation to make any independent
investigation as to factual matters.
(g) Letters from Accountants. Springs shall have received the letters
of Ernst & Young contemplated by Section 4.15.
(h) Certain Antitrust Matters. No proceeding shall be pending or
threatened with respect to the transactions hereunder and no order, decree
or judgement shall have been entered or issued, which, in any such case,
would require any divestiture by Springs or Dundee or any of Springs' or
Dundee's Subsidiaries of any shares of capital stock or of any business,
properties or assets of Springs or Dundee or any of Dundee's or Springs'
Subsidiaries, or the imposition of any material limitation on the ability
of Springs to conduct its business or to own or exercise control of such
stock, business, properties or assets.
(i) SERP Determination. The Board of Directors of Dundee shall have
determined that, for purposes of the Dundee Mills Supplemental Executive
Retirement Plan, no Change in Control (as defined in Section 1.5 of such
plan) will be considered to have occurred by reason of the Merger.
(j) Appraisal Rights. Appraisal rights under the GBCC shall have been
perfected by holders of not more than eight (8) percent of the outstanding
Dundee Shares.
(k) Additional Certificates, etc. Dundee shall have furnished to
Springs such additional certificates, opinions and other documents as
Springs may have reasonably requested as to any of the conditions set forth
in Sections 5.1 and 5.2.
(l) Certain Shareholder Action. The shareholders of Dundee shall have
duly approved or ratified the matters described in Section 4.2(b).
(m) Filing Deficiencies. Dundee shall have cured all deficiencies
with respect to the filing of required forms or documents and satisfied all
related obligations (including late fees or penalties) with respect to the
HSR Act and all Dundee pension plans, all at no material expense to Dundee.
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(n) Shareholder Loans. All of the loans made by Dundee to Dundee
Shareholders set forth on Schedule 5.2(n) shall have been repaid in full
with interest in accordance with their terms.
(o) IDB Financings. Dundee and its counsel shall have taken all
action necessary to preserve the tax exempt status of the Industrial
Revenue Bonds set forth on Schedule 3.1(e).
5.3 Conditions to Obligations of Dundee. Consummation of the Merger is
subject to the fulfillment to the reasonable satisfaction of Dundee, prior to or
at the Effective Time, of each of the following conditions:
(a) Consents, Authorizations, etc. All consents, authorizations,
orders and approvals of, and filings and registrations with, any
Governmental Entity, (other than the filing of the Certificate of Merger
with the Secretary of State of Georgia) which are required for or in
connection with the execution and delivery of this Agreement by Springs and
SubCorp and the consummation by Springs and SubCorp of the transactions
contemplated hereby shall have been obtained or made.
(b) Injunction, etc. The consummation of the Merger will not violate
the provisions of any injunction, order, judgment, decree, law or
regulation applicable or effective with respect to Dundee or its officers
or directors.
(c) Representations and Warranties. The representations and
warranties of Springs and Subcorp contained in this Agreement shall have
been true and correct in all respects at the date hereof and shall also be
true and correct in all respects at and as of the Effective Time, except
for changes contemplated in this Agreement, with the same force and effect
as if made at and as of the Effective Time or except as such
representations and warranties by their terms relate only to periods of
time prior to the Effective Time or except where the failure of any
representation or warranty to be correct would not have a material adverse
effect on the ability of Springs to consummate the Merger or would not have
a material adverse effect on the consolidated assets, liabilities,
financial condition, results of operation, business or prospects of Springs
and its subsidiaries, taken as a whole; and Springs shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or
prior to the Effective Time.
(d) Springs Shares. The Springs Shares issued to the shareholders of
Dundee pursuant to the Merger shall, upon consummation of the Merger, be
validly authorized and issued, fully paid and nonassessable.
(e) Certificate. Springs shall have delivered to Dundee a
certificate, dated as of the Effective Time, of the Chief Executive Officer
or a senior executive officer of Springs to the effect that (i) he is
familiar with the provisions of this Agreement and (ii) to the best of his
knowledge the conditions specified in paragraph (c) of this Section 5.3
have been satisfied.
(f) Opinion and Confirmation of Springs's and Subcorp's Counsel.
(i) Dundee shall have received an opinion, dated as of the
Effective Time, of Sutherland, Asbill & Brennan, counsel to Springs and
Subcorp, in form and substance and with such exceptions and limitations
as shall be reasonably satisfactory to Dundee, substantially to the
effect that:
(A) Springs is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of South Carolina
and has the corporate power and authority to own its properties and
assets and to conduct its business as it is described in the
Registration Statement.
(B) SubCorp is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Georgia and has
corporate power and authority to own its properties and assets and to
carry on its business as it is described in the Registration
Statement.
(C) The authorized capital stock of Springs consists of
40,000,000 Springs Shares, 20,000,000 shares of Class B Common Stock
and 1,000,000 shares of Springs Preferred Stock. As of the date of
such opinion there are Springs Shares, shares of
Springs
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Class B shares and shares of Preferred Stock issued and
outstanding. The issued and outstanding Springs Shares are duly
authorized, validly issued, fully paid and non-assessable.
(D) Each of Springs and Subcorp has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated on the part of Springs and SubCorp. Each of
Springs and Subcorp has taken all necessary corporate action to
authorize the execution and delivery of this Agreement and the
consummation by it of the transactions contemplated hereby. The
Agreement has been duly adopted by the respective Boards of Directors
of Springs and SubCorp, executed and delivered by each of Springs and
Subcorp and is a valid and binding agreement of Springs and SubCorp
and enforceable in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting creditors' rights generally; and (ii) general
principles of equity, regardless of whether enforceability is
considered in a proceeding in equity or at law, provided that no
opinion is expressed with respect to the enforceability of Sections
4.6, 6.2 or 6.4.
(E) Except for the filing of the Certificate of Merger with the
Secretary of State of Georgia, each consent, authorization, order and
approval of, and filing and registration with, any Governmental
Entity required to be made or obtained by each of Springs and Subcorp
for the execution and delivery of this Agreement and the other
documents and agreements contemplated hereby and the consummation of
the transactions contemplated by this Agreement have been made or
obtained.
(F) The Springs Shares issued to the shareholders of Dundee
shall, upon consummation of the Merger, be validly authorized and
issued, fully paid and nonassessable.
(G) Neither the execution nor delivery of this Agreement by each
of Springs and Subcorp and the performance by Springs and Subcorp of
their respective obligations hereunder will constitute a violation of
(i) any term or provision of the respective Articles of Incorporation
or Bylaws of Springs or SubCorp, (ii) any permit, judgment, decree or
order of any Governmental Entity known to such counsel or (iii) any
applicable law which in such counsel's experience is normally
applicable to transactions of the type contemplated by the this
Agreement.
(H) The Registration Statement with respect to the distribution
of Springs Shares to the shareholders of Dundee pursuant to this
Agreement complied as to form in all material respects with the
requirements of the federal securities laws.
(I) Upon the filing of the Certificate of Merger with the
Secretary of State of Georgia in accordance with Section 1.3 of this
Agreement, the Merger shall become effective in accordance with the
GBCC.
(ii) Dundee shall have received confirmation, dated as of the
Effective Time, from Sutherland, Asbill & Brennan, substantially to the
effect that:
(A) Such counsel has participated in the preparation and review
of the Registration Statement and the Proxy Statement. From time to
time such counsel has had discussions with officers, directors and
employees of Springs and the independent accountants who examined
certain financial statements of Springs and its Subsidiaries and,
based thereon, no facts have come to such counsel's attention which
leads such counsel to believe that the Registration Statement or
Proxy Statement (except for the financial statements, schedules and
other financial and statistical information included therein, as to
which such counsel need express no opinion) or any amendment or
supplement thereto contained, at the time they were mailed to the
holders of Dundee Shares and at the time of the Dundee Shareholders
Meeting, any untrue statement of a material fact regarding Springs or
omitted to state a material fact regarding Springs required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. Such counsel has not, however, independently verified,
and is not passing upon, and does not assume any responsibility
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for the accuracy, completeness or fairness of the statements
contained the Registration Statement and the Proxy Statement.
(B) The Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and insofar, as such counsel
knows, no proceeding for that purpose has been instituted or is
pending or contemplated.
Such opinion may be limited to the laws of the State of Georgia, the
corporation law of the State of South Carolina and the federal laws of
the United States of America and, except as set forth in Section
5.3(f)(i)(E), may exclude the applicability and effect of any antitrust
and unfair competition laws. In rendering such opinions such counsel may
rely upon opinions of C. Powers Dorsett, General Counsel of Springs, and
other counsel and may rely upon certificates of public officials and
officers of Springs, SubCorp or any of Springs's other Subsidiaries as
to factual matters and shall be under no obligation to make any
independent investigation as to factual matters.
(g) Letters from Accountants. Dundee shall have received the letters
of Deloitte & Touche contemplated by Section 4.15.
(h) Tax Advice. Dundee shall not have been advised by King & Spalding
that in its opinion the Merger shall not be treated as a tax-free
reorganization under the applicable provisions of the Code to the extent
the Merger Consideration consists of Springs Shares.
(i) Investment Banker's Opinion. The Robinson Humphrey Company, Inc.
shall have delivered to Dundee its written opinion, dated approximately the
date of mailing of the Proxy Statement, that the consideration to be
received by the holders of the Dundee Shares pursuant to the Merger is fair
to such holders from a financial point of view and shall have consented to
the inclusion of a copy of such opinion in the Proxy Statement.
(j) Additional Certificates, etc. Springs shall have furnished to
Dundee such additional certificates, opinions and other documents as Dundee
may have reasonably requested as to any of the conditions set forth in
Sections 5.1 and 5.3.
ARTICLE 6
TERMINATION AND ABANDONMENT
6.1 Termination and Abandonment. This Agreement and the Merger may be
terminated and abandoned at any time prior to the Effective Time:
(a) By mutual action of the Board of Directors of Springs and Dundee,
whether before or after any action by shareholders.
(b) By Springs:
(i) if any event shall have occurred as a result of which any
condition set forth in Section 5.2 is no longer capable of being
satisfied; or
(ii) if there has been a breach by Dundee of any representation or
warranty contained in this Agreement which would have or would be
reasonably likely to have a material adverse effect on the assets,
liabilities, financial condition, results of operations, business or
prospects of Dundee and its Subsidiaries taken as a whole, or there has
been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of Dundee, which breach is not curable,
or, if curable, is not cured within 30 days after written notice of such
breach is given by Springs to Dundee.
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(c) By Springs in the event that:
(i) Dundee (or its Board of Directors) shall have authorized,
recommended, proposed or publicly announced its intention to enter into
a Competing Transaction which has not been consented to in writing by
Springs;
(ii) The Board of Directors of Dundee shall have withdrawn or
materially modified its authorization, approval or recommendation to the
holders of Dundee Shares with respect to the Merger or this Agreement in
a manner adverse to Springs or shall have failed to make such favorable
recommendation; or
(iii) Any person, entity or "group" (as that term is used in
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) (other than Springs or any of its affiliates)
shall have (A) commenced or publicly proposed to commence a tender offer
or exchange offer for at least 15 percent of the then total outstanding
Dundee Shares, (B) acquired more than 15 percent of the then total
outstanding Dundee Shares or (C) solicited and received proxies or
consents sufficient to permit it to elect directors nominated by it to a
majority of the members of Dundee's Board of Directors or to block
approval of the Merger and the transactions contemplated by this
Agreement by the holders of Dundee Shares.
(d) By Dundee:
(i) if any event shall have occurred as a result of which any
condition set forth in Section 5.3 is no longer capable of being
satisfied.
(ii) if there has been a breach by Springs or SubCorp of any
representation or warranty contained in this Agreement which would have
or would be reasonably likely to have a material adverse effect on the
ability of Springs or SubCorp to consummate the Merger, or there has
been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of Springs or SubCorp, which breach is not
curable or, if curable, is not cured within 30 days after written notice
of such breach is given by Dundee to Springs.
(e) By Springs or Dundee if there shall have occurred (i) any general
suspension of, or limitation on, trading in securities generally on the
NYSE continuing for a period of 15 days, or (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States continuing for a period of 15 days.
(f) By either Springs or Dundee if (i) any event shall have occurred
as a result of which any condition set forth in Section 5.1 is no longer
capable of being satisfied or (ii) the Merger shall not have been
consummated by July 31, 1995; provided, however, that the terminating party
shall not have breached in any material respect its obligations under this
Agreement in any manner which proximately contributed to the failure of any
such condition to be satisfied or the failure to consummate the Merger.
6.2 Specific Performance. The parties acknowledge that the rights of each
party to consummate the transactions contemplated hereby are special, unique,
and of extraordinary character, and that, in the event that either violates or
fails and refuses to perform any covenant made by it herein, the other party or
parties will be without adequate remedy at law. Each party agrees, therefore,
that, in the event that it violates or fails and refuses to perform any covenant
made by it herein, the other party or parties so long as it or they are not in
breach hereof, may, in addition to any remedies at law, institute and prosecute
an action in a court of competent jurisdiction to enforce specific performance
of such covenant or seek any other equitable relief.
6.3 Rights and Obligations upon Termination. If this Agreement is
terminated and abandoned as provided herein, each party will redeliver all
documents, work papers, and other materials of any party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same, except to the extent previously
delivered to third parties in connection with the transactions contemplated
hereby, and all information received by any party hereto with respect to the
business of any other party shall not at any time be used for the advantage of,
or disclosed to third parties by, such party to the detriment of the party
furnishing such information; provided, however that this Section 6.3
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shall not apply to any documents, work papers, material, or information which is
a matter of public knowledge or which heretofore has been or hereafter is
published in any publication for public distribution or filed as public
information with any governmental agency.
6.4 Certain Fees and Expenses. Dundee acknowledges that Springs has spent,
and will be required to spend, substantial time and effort in examining the
business, properties, affairs, financial condition and prospects of Dundee and
its Subsidiaries, and has incurred, and will continue to incur, substantial fees
and expenses in connection with such examination, the preparation of this
Agreement and the accomplishment of the transactions contemplated hereunder, and
will be unable to evaluate and, possibly, make investments in or acquire other
entities due to the limited number of personnel available for such purpose and
the constraints of time. Therefore, to induce Springs to enter this Agreement:
(a) Expenses. In the event that Springs terminates this Agreement
pursuant to Section 6.1 (b) by reason of the failure to meet the condition
of Section 5.2(c) due to Dundee's knowing and intentional misrepresentation
or knowing and intentional breach of warranty or breach of any covenant or
agreement, then Dundee shall pay Springs on demand, in same day funds, the
Expenses. For purposes of this Section 6.4, "Expenses" shall include all
reasonable out-of-pocket expenses and fees (including, without limitation,
fees and expenses payable to all investment banking firms and their
respective agents and counsel, and all fees of counsel, accountants,
experts and consultants to Springs) actually incurred by Springs or on its
behalf in connection with the Merger and all transactions contemplated by
this Agreement; and
(b) Fee. If this Agreement is terminated pursuant to:
(i) Section 6.1(b) by reason of the failure to meet the condition
of Section 5.2(c) due to Dundee's knowing and intentional
misrepresentation or knowing and intentional breach of warranty or
breach of any covenant or agreement and (A) Dundee shall have had
contacts about or entered into negotiations relating to a Competing
Transaction during the period from the date of this Agreement through
the date of termination of this Agreement; and (B) within one year after
the date of such termination a Competing Transaction shall have been
consummated involving a person with whom Dundee has had such
negotiations or contacts;
(ii) Section 6.1(f) because this Agreement does not receive the
requisite vote of the holders of Dundee Shares and at the time of such
vote, there existed a Competing Transaction; or
(iii) Section 6.1(c)(i) or (ii).
then Dundee shall pay to Springs in addition to the Expenses a Fee in
the amount of three million dollars ($3,000,000) (the "Fee"), not as a
penalty but as full and complete liquidated damages; provided, however,
that no amount shall be paid pursuant to this Section 6.4(b) if Springs
shall be in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement. The Fee shall be
payable to Springs notwithstanding that any action taken by the Board of
Directors of Dundee which may give rise to the obligation to pay the Fee
may have been taken in accordance with the fiduciary duties of the Board
of Directors.
(c) Payment. Any payment required pursuant to this Section 6.4 shall
be made as promptly as practicable, but in no event later than five
business days after termination of this Agreement and shall be made by wire
transfer of immediately available funds to an account designated by the
Springs; provided, however, that any payment required pursuant to
subsection (b)(i) of this Section 6.4 shall be made as promptly as
practicable, but in no event later than five business days after the
occurrence of the Competing Transaction. In the event that Springs is
entitled to the Expenses or the Fee, Dundee shall also pay to Springs
interest at the rate of 8 1/2% per year on any amounts that are not paid
when due, plus all costs and expenses in connection with or arising out of
the enforcement of the obligation of Dundee to pay the Expenses, the Fee or
such interest.
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(d) Effect of Payment. Except as provided in Section 6.5, upon
payment of the Expenses and, if applicable, the Fee, this Agreement shall
terminate with no further liability of Dundee or Springs at law or equity
resulting therefrom.
6.5 Effect of Termination. In the event of a termination and abandonment
of this Agreement pursuant to Section 6.1 above, this Agreement shall forthwith
become void and have no further effect, without any liability on the part of any
party hereto or its respective officers, directors or stockholders, other than
the provisions of Section 4.4, 4.5, 4.11, 6.3, 6.4 and this Section 6.5.
Notwithstanding the foregoing, nothing contained in this Section 6.5 shall
relieve any party from liability for any breach of this Agreement, and any such
termination shall be without prejudice to the rights of any party hereto arising
out of the willful breach by any other party of any covenant or agreement
contained in this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1 Waiver of Certain Conditions. Any party may, at its option, waive in
writing any or all of the conditions herein contained to which its obligations
hereunder are subject, except that the conditions contained in Section 5.1,
Section 5.2(a) (with respect to consents and authorizations, orders and
approvals of, and filings and registrations with, any Governmental Entity)
and -- (b) (first sentence) and Section 5.3(a) and -(b) may not be so waived.
7.2 Notices. All notices and other communications under this Agreement
shall be in writing and may be given by any of the following methods: (i)
personal delivery; (ii) facsimile transmission; (iii) registered or certified
mail, postage prepaid, return receipt requested; or (iv) overnight delivery
service requiring acknowledgment of receipt. Notices shall be sent to the
appropriate party at its address or facsimile number given below (or at such
other address or facsimile number for such party as shall be specified by notice
given hereunder):
If to Springs and any SubCorp, to:
Springs Industries, Inc.
205 North White Street
P. O. Box 70
Fort Mill, S.C. 29715
Fax No. 803-547-3766
Attention: Walter Y. Elisha
Chairman of the Board and Chief Executive Officer
and
C. Powers Dorsett
Vice President/General Counsel and Secretary
with a copy to:
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309-3996
Fax No. (404) 853-8806
Attention: George L. Cohen
If Dundee, to:
Dundee Mills, Incorporated
P.O. Box E
Griffin, Georgia 30224-0199
Fax No: (404) 412-5656
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Attention: John T. Newton
Chairman
with a copy to:
King & Spalding
42nd Floor
191 Peachtree Street, N.E.
Fax No. (404) 572-5146
Attention: Edward J. Hawie
All such notices and communications shall be deemed received upon (i) actual
receipt thereof by the addressee, (ii) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt, or (iii) in the
case of a facsimile transmission, upon transmission thereof by the sender and
telephonic confirmation of receipt. In the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice to
the addressee at the address provided for above. However, such mailing shall in
no way alter the time at which the facsimile notice is deemed received.
7.3 Table of Contents; Headings. The Table of Contents, cross reference
pages and headings contained herein are for convenience of reference only, do
not constitute a part of this Agreement, and shall not be deemed to limit or
affect any of the provisions hereof.
7.4 Variation and Amendment. Before or after the approval of this
Agreement by the holders of Dundee Shares, this Agreement may be varied or
amended at any time without action by the holders of Dundee Shares by action of
the respective Boards of Directors of Dundee, Springs and Subcorp; provided,
however, that any variance or amendment made after approval of the Merger by the
holders of Dundee Shares that (i) reduces the Merger Consideration or changes
the form of the Merger Consideration or (ii) changes any of the terms and
conditions of this Agreement if such change would adversely affect the holders
of Dundee Shares shall be subject to the further approval of the holders of
Dundee Shares. Any variation, modification or amendment to this Agreement must
be made in writing and executed by each of the parties hereto.
7.5 No Survival of Representations or Warranties. None of the
representations or warranties made in Article 3 of this Agreement shall survive
the Effective Time.
7.6 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration in accordance with
the then-prevailing Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration shall be held in Atlanta, Georgia before a panel
of three (3) arbitrators, one selected by Springs and SubCorp, one selected by
Dundee and the third selected by mutual agreement of the first two arbitrators.
Each arbitrator shall be independent and impartial. Judgment upon any award
rendered by the arbitrators may be entered into any court of competent
jurisdiction. The determination of which party (or combination of them) bears
the costs and expenses incurred, including reasonable attorneys fees, in
connection with any such arbitration proceeding shall be determined by the
arbitrators.
7.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law of public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party hereto. Upon any such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are consummated to the
extent possible.
7.8 Waiver. The failure of any party hereto at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition, or the breach of
any term, provision, warranty, representation, agreement or covenant contained
in this Agreement or
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the other agreements contemplated hereby, whether by conduct or otherwise, in
any one or more instances shall be deemed or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, provision, warranty,
representation, agreement or covenant herein or therein contained.
7.9 No Third Party Beneficiaries; Assignment. This Agreement shall inure
to the benefit of the parties and their respective successors and permitted
assignees. Except as set forth in Sections 4.10, 4.13, 4.14 and 4.17, nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity, including, without limitation, employees not a
party to this Agreement. Except for assignments to wholly-owned subsidiaries
(direct or indirect) of Springs, in which event Springs shall remain liable for
the performance of this Agreement, no transfer or assignment (including by
operation of law) of this Agreement or of any rights or obligations under this
Agreement may be made by any party without the prior written consent of the
other parties and any attempted transfer or assignment without that required
consent shall be void. No transfer or assignment by a party of its rights under
this Agreement shall relieve it of any of its obligations to the other parties
under this Agreement.
7.10 Time of the Essence; Computation of Time. Time is of the essence of
each and every provision of this Agreement. Whenever the last day for the
exercise of any right or the discharge of any duty under this Agreement shall
fall upon Saturday, Sunday or a public or legal holiday, the party having such
right or duty shall have until 5:00 p.m. Atlanta, Georgia time on the next
succeeding regular business day to exercise such right or to discharge such
duty.
7.11 Counterparts. This Agreement may be executed by each party upon a
separate copy, and in such case one counterpart of this Agreement shall consist
of enough of such copies to reflect the signatures of all of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be an
original, and each of which shall constitute one and the same agreement. Any
party may deliver an executed copy of this Agreement and of any documents
contemplated hereby by facsimile transmission to another party and such delivery
shall have the same force and effect as any other delivery of a manually signed
copy of this Agreement or of such other documents.
7.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without giving effect to the
conflicts of law principles thereof.
7.13 Entire Agreement. This Agreement (with its Schedules) together with
the Confidentiality Agreement, contain, and is intended as, a complete statement
of all the terms of the arrangements among the parties with respect to the
matters provided for, supersedes any previous agreements and understandings
between the parties with respect to those matters and cannot be changed or
terminated orally.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, and their corporate seals affixed, as of the date first above
written.
DUNDEE MILLS, INCORPORATED
By: /s/ JOHN T. NEWTON
--------------------------------------
John T. Newton
[Corporate Seal]
Attest:
/s/ DOUGLAS R. TINGLE
- --------------------------------------
Douglas R. Tingle, Secretary
SPRINGS INDUSTRIES, INC.
By: /s/ WALTER Y. ELISHA
--------------------------------------
Walter Y. Elisha
[Corporate Seal]
Attest:
/s/ C. POWERS DORSETT
- --------------------------------------
C. Powers Dorsett, Secretary
DUNDEE ACQUISITION CORP.
By: /s/ THOMAS P. O'CONNOR
--------------------------------------
Thomas P. O'Connor
[Corporate Seal]
Attest:
/s/ C. POWERS DORSETT
- --------------------------------------
C. Powers Dorsett, Secretary
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<PAGE> 126
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this "Amendment"),
dated as of March , 1995, is by and among DUNDEE MILLS INCORPORATED, a Georgia
corporation ("Dundee"), DUNDEE ACQUISITION CORP., a Georgia corporation
("Subcorp"), and SPRINGS INDUSTRIES, INC. a South Carolina Corporation
("Springs").
RECITALS:
WHEREAS, Dundee, Subcorp and Springs entered into an Agreement and Plan of
Merger dated as of February 6, 1995 (the "Merger Agreement") with respect to a
business combination of Dundee and Subcorp;
WHEREAS, Dundee, Subcorp and Springs desire to amend the Merger Agreement
in certain respects as provided herein.
STATEMENT OF AMENDMENT:
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements of the parties herein and in the Merger Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the respective meanings given to those
terms in the Merger Agreement.
2. Approval of Dundee Shareholders. Section 4.2 of the Merger
Agreement is hereby amended by deleting Section 4.2(b) in its entirety and
substituting the following new Section 4.2(b) in lieu thereof:
(b) Other Matters. At the Dundee Shareholders Meeting the holders of
Dundee Shares will be asked to approve and ratify the terms and conditions
of all issuances or sales by Dundee of Dundee Shares since July 1, 1989.
3. Certain Issuances of Dundee Shares. Section 5.2 of the Merger
Agreement is hereby amended by deleting Section 5.2(l) in its entirety and
substituting the following new Section 5.2(l) in lieu thereof:
(1) Certain Issuances of Dundee Shares. Dundee shall have taken
all corporate action necessary to establish that all Dundee Shares
issued since July 1, 1989 were validly issued, fully paid and
nonassessable and that no preemptive rights exist with respect to such
issuances.
4. Opinion of Dundee's Counsel. Section 5.2 of the Merger Agreement is
hereby amended by deleting Section 5.2(f)(i)(G) in its entirety and substituting
the following new Section 5.2(f)(i)(G) in lieu thereof:
(G)(i) The Shareholders of Dundee have duly approved or ratified the
matters described in Section 4.2(b), (ii) all corporate action has been
taken that is necessary to establish that all Dundee Shares issued since
July 1, 1989 were validly issued, fully paid and nonassessable and that no
preemptive rights exist with respect to such issuances, and (iii) a
disinterested committee of the Board of Directors of Dundee has duly
authorized and approved the payments to officers of Dundee as set forth on
Schedule 4.1(b)(viii) pursuant to Section 14-2-862 of the Georgia Business
Corporation Code.
5. Tax Structure. The Merger Agreement is hereby amended by adding the
following to Section 1.1:
In the event that 20% or less of the outstanding Dundee Shares are subject
either to a Cash Election (as defined herein) or to an exercise of dissenter's
rights with respect to the Merger at the time of the Dundee Shareholder's
Meeting, the Merger may, at Springs' option, be consummated as a reorganization
under Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, and
Subcorp will be merged into Dundee with Dundee as the Surviving Corporation. In
the event Springs exercises this option, this Agreement will be deemed to have
been amended to make all changes necessary to reflect the alternative structure
of the Merger.
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6. General. As hereby amended, all the terms and provisions of the Merger
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representative to execute this Amendment as of the date first set
forth above.
DUNDEE MILLS, INCORPORATED
By: /s/ Douglas R. Tingle
---------------------------
DUNDEE ACQUISITION CORP.
By: /s/ James F. Zahrn
---------------------------
SPRINGS INDUSTRIES, INC.
By: /s/ Walter Y. Elisha
---------------------------
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EXHIBIT B
FORM OF OPINION OF THE ROBINSON-HUMPHREY COMPANY, INC.
, 1995
Board of Directors
Dundee Mills, Inc.
301 Railroad Avenue
Griffin, Georgia 30223
Dear Gentlemen:
We understand that Dundee Mills, Inc. (the "Company") has entered into an
agreement and plan of merger among the Company, Springs Industries, Inc.
("Springs") and a wholly owned subsidiary of Springs (the "Subsidiary"). We
understand that under this proposal (the "Proposed Transaction"), (i) Dundee
will be merged into the Subsidiary (the "Merger") and (ii) each share of Dundee
stock would be converted into the right to receive consideration of $2,525,
consisting of at least 50% in the form of shares of Springs Class A Common
Stock, with the remainder payable in cash. Each shareholder of Dundee will be
entitled to elect the portion of the consideration to be paid in cash, subject
to a limitation that no more than 3 million shares of Springs Class A Common
Stock will be issued in the Merger. The terms and conditions of the Proposed
Transaction are set forth in more detail in the Agreement and Plan of Merger, as
amended (the "Agreement") by and among the Company, Springs and the Subsidiary.
We have been requested by the Company to render our opinion with respect to
the fairness, from a financial point of view, to the Company's shareholders of
the consideration to be offered in the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement,
(2) such publicly available information concerning the Company and Springs as we
believe to be relevant to our inquiry, (3) financial and operating information
with respect to the business, operations and prospects of the Company and
Springs furnished to us by the Company and Springs, (4) a history of
transactions involving the Company's common stock from October 1991 to the
present, (5) a comparison of the historical financial results and present
financial condition of the Company with those of other companies which we deemed
relevant, and (6) a comparison of the financial terms of the Proposed
Transaction with the terms of certain other recent transactions which we deemed
relevant. In addition, we have had discussions with the management of the
Company and Springs concerning the respective businesses, operations, assets,
present condition and future prospects of each, and undertook such other
studies, analyses and investigations as we deemed appropriate.
We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion without
independent verification. With respect to the financial projections provided by
the Company and Springs, we have assumed that such projections have been
reasonably prepared on bases reflecting the best currently available estimates
and judgment of management of the Company and Springs as to the future financial
performance of the Company and Springs. In arriving at our opinion, we have not
conducted a physical inspection of the properties and facilities of the Company
or Springs and have not made nor obtained any evaluations or appraisals of the
assets or liabilities of the Company. Our opinion is necessarily based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.
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Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered in the Proposed Transaction is fair to the Company's shareholders.
Very truly yours,
The Robinson-Humphrey Company, Inc.
By:
----------------------------------
Charles H. Ogburn
Managing Director
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EXHIBIT C
GEORGIA BUSINESS CORPORATION CODE
TITLE 14. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS
CHAPTER 2. BUSINESS CORPORATIONS
ARTICLE 13. DISSENTERS' RIGHTS
SEC.14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right
when and in the manner required by Code Sections 14-2-1320 through
14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action.
(6) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(8) "Shareholder" means the record shareholder or the beneficial
shareholder.
SEC.14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is required
for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially
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all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
SEC. 14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
SEC. 14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
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(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322 no later than ten days after the corporate action was taken.
SEC. 14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
SEC.14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
SEC.14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his certificates in accordance
with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
SEC.14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
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SEC.14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
SEC.14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
SEC.14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest
due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his or her demand in writing under subsection (a) of
this Code section within 30 days after the corporation offered payment for his
or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
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(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of
the fair value of his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares and interest due.
SEC.14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
SEC.14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section
14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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SEC.14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
South Carolina Business Corporation Act
Section 33-8-510 of the South Carolina Business Corporation Act ("SCBCA")
authorizes a South Carolina corporation to indemnify a director against loss or
expense incurred by the director as a result of a civil, criminal,
administrative, or investigative proceeding to which the director is made a
party by virtue of his status as a director, provided that the director
conducted himself in good faith and reasonably believed (1) in the case of
conduct in his official capacity, that his conduct was in the best interest of
the corporation, and (2) in all other cases, that his conduct was at least not
opposed to its best interest, and in the case of any criminal proceeding, that
the director had no reasonable cause to believe his conduct was unlawful.
Section 33-8-510 prohibits a South Carolina corporation from indemnifying a
director in the event of adjudicated liability in connection with a proceeding
by or in the right of the corporation, or in any other proceeding whether or not
in his official capacity, if the director was adjudged liable on the basis that
personal benefit was improperly received by him. Indemnification in connection
with a proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
This indemnification under the SCBCA may be made by a South Carolina
corporation only upon (1) a determination that the standard of conduct set forth
in Section 33-8-510 has been met, made by the majority vote of a quorum of
non-party directors, or if such a quorum cannot be obtained, by majority vote of
a committee consisting of two or more non-party directors, by special legal
counsel, or by the affirmative vote of shareholders excluding shares owned, or
the voting of which is controlled, by directors who are parties to the
proceeding; and (2) authorization of indemnification, made in the same manner as
the determination that indemnification is permissible, except that, if the
determination is made by special legal counsel, authorization must be made by
majority vote of a quorum of non-party directors of a special committee
consisting of two or more non-party directors, or if such quorum or committee
cannot be obtained, by majority vote of the board of directors.
Section 33-8-520 of the SCBCA also provides for the mandatory
indemnification of a director for reasonable expenses if the director has been
wholly successful (whether or not on the merits) in the defense of any
proceeding to which he was a party because he is or was a director, unless
provided otherwise by the articles of incorporation. In addition, unless
provided otherwise by a corporation's articles of incorporation, Section
33-8-540 of the SCBCA authorizes a director to apply for indemnification by
court order, which may be granted if the court determines that the director is
entitled to mandatory indemnification or is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not the
director met the statutory standard of conduct, or was adjudged liable to the
corporation or improperly derived a personal benefit, but in that event
court-ordered indemnification is limited to reasonable expenses incurred in
connection with the proceeding.
A South Carolina corporation may pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if (1) the director furnishes the
corporation with a written affirmation of his good faith belief that he has met
the statutory standard of conduct described in Section 33-8-510, (2) the
director furnishes the corporation with a written promise to repay expenses
advanced if it is ultimately determined that he did not meet the standard of
conduct, and (3) the corporation determines, in the same manner required for
determining the statutory standard of conduct, that the facts as known would not
preclude indemnification under the SCBCA.
Section 33-8-560 of the SCBCA permits a South Carolina corporation to
indemnify an officer, employee or agent who is not a director to the same extent
as to a director. An officer who is not a director is also entitled to the
mandatory indemnification and court-ordered indemnification available to a
director. A South Carolina corporation may also indemnify and advance expenses
to an officer, employee, or agent who is not a director to
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the extent, consistent with public policy, that may be provided by its articles
of incorporation, bylaws, general or specific action of its board of directors,
or contract.
The SCBCA provides that a South Carolina corporation has the power to
purchase and maintain insurance on behalf of any director, officer, employee or
agent of the corporation, or one serving as such for another entity or
enterprise at the request of the corporation, against liability whether or not
the corporation would have the power to indemnify him against such liability
under the SCBCA.
The SCBCA validates provisions in the articles of incorporation or bylaws
of a South Carolina corporation, resolutions of its shareholders or board of
directors, or otherwise, only to the extent such provisions or resolutions are
consistent with the SCBCA, but does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with his appearance as a
witness in a proceeding at a time when he is not a defendant or respondent to
the proceeding.
Bylaws
Under Article Seven of the Registrant's Bylaws, any present or former
director or, officer of the Registrant, or any director or officer who, at the
request of the Registrant, may have served at the request of the Registrant as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, is entitled to reimbursement of expenses and other
liabilities, including attorney's fees actually and reasonably incurred by him
and any amount owing or paid by him in connection with a civil, criminal or
administrative proceeding to which he is a party by reason of being or having
been a director or officer of the Registrant or a director, officer, partner,
trustee, employee or agent of such other company. The Registrant may also
indemnify, or advance expenses in connection with a proceeding that may be the
subject of indemnification to, a non-officer or non-director agent or employee
of the Registrant if, to the extent and on such terms as the board of directors
of the Registrant may from time to time determine. Article Seven also authorizes
the Registrant to enter into agreements which provide indemnification rights and
procedures permitted by the SCBCA.
Insurance
The Company has purchased an executive protection policy covering persons
serving as directors, officers and assistant officers or in certain specified
positions ("insured persons") with the Company or its subsidiaries or, at the
direction or request of the Company, with certain outside entities, including
non-profit entities. Subject to certain exclusions, insured persons are covered
for liability incurred because of any error, misstatement, misleading statement,
act, omission, neglect, or breach of duty committed, attempted, or allegedly
committed or attempted in their capacity with the Company or its subsidiaries or
such outside entity, or for any matter claimed against an insured person solely
by reason of serving as director, officer or assistant officer or in such
specified capacity. The insurance policy provides that the insurance company
shall pay the total amount which an insured person becomes legally obligated to
pay including damages, judgments, settlements, costs and defense costs
(excluding fines or penalties imposed by law or the multiple portion of any
multiplied damage award and matters uninsurable under applicable law). The
maximum coverage under the policy is $20 million per loss and per year. If an
insured person incurs liability for which he is not indemnified by the Company
or its subsidiaries, then no deductible applies. If the individual is
indemnified by the Company or a subsidiary, then the insurance company
reimburses the Company for the indemnification payment subject to the policy
limits and to a deductible of $500,000.
The Company has obtained liability coverage under the above insurance
policy, covering all directors, officers and employees of the Company or its
subsidiaries serving as fiduciaries of the employee welfare or benefit plans of
the Company and its subsidiaries. The maximum coverage provided by this
insurance policy for such liabilities is an aggregate of $10 million per year
subject to a deductible amount of $25,000 per loss applicable to defense costs,
charges and expenses.
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ITEM 21. EXHIBITS
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S> <C>
2 -- Agreement and Plan of Merger dated as of February 6, 1995, as amended by Amendment
No. 1 thereto, dated March 7, 1995, by and among Springs, Subcorp and Dundee
(included as Exhibit A to the Proxy Statement and Prospectus which is a part of this
Registration Statement). The exhibits and schedules to the Agreement and Plan of
Merger have been omitted from Exhibit A to the Proxy Statement and Prospectus.
Springs agrees to furnish supplementally such exhibits and schedules to the
Commission upon request.
3.1 -- Registrant's Restated Articles of Incorporation (filed as an exhibit to Registrant's
Form 10-Q filed August 15, 1994 and incorporated herein by reference).
3.2 -- Registrant's Bylaws (filed as an exhibit to Registrant's Form 10-Q filed May 17,
1994 and incorporated herein by reference).
4 -- See Articles 6, 7 and 8 of the Registrant's Restated Articles of Incorporation, as
amended (filed as an exhibit to Registrant's Form 10-Q filed August 15, 1994 and
incorporated herein by reference), and Articles II, III, VI and VII of the
Registrant's Bylaws, as amended (filed as an exhibit to Registrant's Form 10-Q filed
May 17, 1994 and incorporated herein by reference).
5 -- Opinion of Sutherland, Asbill & Brennan.
8 -- Form of Opinion of Sutherland, Asbill & Brennan regarding tax consequences of the
Merger.
23.1 -- Consent of Sutherland, Asbill & Brennan is contained in its legal opinions filed as
Exhibits 5 and 8.
23.2 -- Consent of Deloitte & Touche LLP.
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of The Robinson-Humphrey Company, Inc.
24 -- Power of Attorney authorizing Walter Y. Elisha and James F. Zahrn to sign on behalf
of the other directors is contained on Page II-5 of this Registration Statement.
99.1 -- Form of Proxy to be used by Dundee Mills, Incorporated.
99.2 -- Form of Letter of Transmittal.
99.3 -- Form of Option and Proxy Agreement executed by Springs Industries, Inc. and each of
the directors and one of the officers of Dundee Mills, Incorporated.
</TABLE>
(B) FINANCIAL STATEMENTS SCHEDULES
Not applicable.
(C) REPORTS, OPINIONS, APPRAISALS
Opinion of The Robinson-Humphrey Company, Inc., dated , 1995
(included as Exhibit B to the Proxy Statement and Prospectus which is a
part of this Registration Statement).
ITEM 22. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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(2) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14c-3 or Rule 14d-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulations S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(3) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(4) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(6) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(7) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Mill, State of South
Carolina on March 8, 1995.
SPRING INDUSTRIES, INC.
By: /s/ WALTER Y. ELISHA
------------------------------------
Walter Y. Elisha
Chairman of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Walter Y. Elisha and James F. Zahrn, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and their substitutes, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------------ ---------------
<C> <S> <C>
/s/ WALTER Y. ELISHA Chairman of the Board, President, March 8, 1995
- ---------------------------------------- Chief Executive Officer and
Walter Y. Elisha Director
/s/ JAMES F. ZAHRN Vice President-Finance and Treasurer March 8, 1995
- ---------------------------------------- (Principal Financial Officer)
James F. Zahrn
/s/ JAMES C. McKELVEY Vice President and Controller March 8, 1995
- ---------------------------------------- (Principal Accounting Officer)
James C. McKelvey
/s/ JOHN F. AKERS Director March 8, 1995
- ----------------------------------------
John F. Akers
/s/ CRANDALL C. BOWLES Director March 8, 1995
- ----------------------------------------
Crandall C. Bowles
/s/ JOHN L. CLENDENIN Director March 8, 1995
- ----------------------------------------
John L. Clendenin
/s/ LEROY S. CLOSE Director March 8, 1995
- ----------------------------------------
Leroy S. Close
</TABLE>
II-5
<PAGE> 141
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------------ ---------------
<C> <S> <C>
/s/ CHARLES W. COKER Director March 8, 1995
- ----------------------------------------
Charles W. Coker
/s/ DAN M. KRAUSSE Director March 8, 1995
- ----------------------------------------
Dan M. Krausse
/s/ JOHN H. McARTHUR Director March 8, 1995
- ----------------------------------------
John H. McArthur
/s/ ALDO PAPONE Director March 8, 1995
- ----------------------------------------
Aldo Papone
/s/ ROBIN B. SMITH Director March 8, 1995
- ----------------------------------------
Robin B. Smith
/s/ SHERWOOD H. SMITH Director March 8, 1995
- ----------------------------------------
Sherwood H. Smith
/s/ STEWART TURLEY Director March 8, 1995
- ----------------------------------------
Stewart Turley
</TABLE>
II-6
<PAGE> 142
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------- ------------
<C> <S> <C> <C>
2 -- Agreement and Plan of Merger dated as of February 6, 1995, as amended by
Amendment No. 1 thereto, dated March 7, 1995, by and among Springs,
Subcorp and Dundee (included as Exhibit A to the Proxy Statement and
Prospectus which is a part of this Registration Statement). The exhibits
and schedules to the Agreement and Plan of Merger have been omitted from
Exhibit A to the Proxy Statement and Prospectus. Springs agrees to
furnish supplementally such exhibits and schedules to the Commission upon
request..................................................................
3.1 -- Registrant's Restated Articles of Incorporation (filed as an exhibit to
Registrant's Form 10-Q filed August 15, 1994 and incorporated herein by
reference)...............................................................
3.2 -- Registrant's Bylaws (filed as an exhibit to Registrant's Form 10-Q filed
May 17, 1994 and incorporated herein by reference).......................
4 -- See Articles 6, 7 and 8 of the Registrant's Restated Articles of
Incorporation, as amended (filed as an exhibit to Registrant's Form 10-Q
filed August 15, 1994 and incorporated herein by reference), and Articles
II, III, VI and VII of the Registrant's Bylaws, as amended (filed as an
exhibit to Registrant's Form 10-Q filed May 17, 1994 and incorporated
herein by reference).....................................................
5 -- Opinion of Sutherland, Asbill & Brennan..................................
8 -- Form of Opinion of Sutherland, Asbill & Brennan regarding tax
consequences of the Merger...............................................
23.1 -- Consent of Sutherland, Asbill & Brennan is contained in its legal
opinions filed as Exhibits 5 and 8.......................................
23.2 -- Consent of Deloitte & Touche LLP.........................................
23.3 -- Consent of Ernst & Young LLP.............................................
23.4 -- Consent of The Robinson-Humphrey Company, Inc............................
24 -- Power of Attorney authorizing Walter Y. Elisha and James F. Zahrn to sign
on behalf of the other directors is contained on Page II-5 of this
Registration Statement...................................................
99.1 -- Form of Proxy to be used by Dundee Mills, Incorporated...................
99.2 -- Form of Letter of Transmittal............................................
99.3 -- Form of Option and Proxy Agreement executed by Springs Industries, Inc.
and each of the directors and one of the officers of Dundee Mills,
Incorporated.............................................................
</TABLE>
<PAGE> 1
EXHIBIT 5
March 8, 1995
Springs Industries, Inc.
205 North White Street
Fort Mill, South Carolina 29715
Ladies and Gentlemen:
We are acting as your counsel in connection with the registration of an
aggregate of 3,000,000 shares of $.25 par value Class A Common Stock (the
"Shares") of Springs Industries, Inc., a South Carolina corporation ("Springs").
The Shares are being registered with the Securities and Exchange Commission
under a Registration Statement on Form S-4 (the "Registration Statement") for a
public offering to the shareholders of Dundee Mills, Incorporated, a Georgia
corporation ("Dundee") in connection with a proposed merger of Dundee with a
wholly-owned subsidiary of Springs (the "Merger"). Up to 3,000,000 of the Shares
will be exchanged for the outstanding shares of Dundee Common Stock (excluding
any such shares held by Springs or its subsidiaries and any such shares held in
the treasury of Dundee) in accordance with the Agreement and Plan of Merger,
dated February 6, 1995, as amended by Amendment No. 1 dated March 7, 1995,
between Springs, Dundee and Dundee Acquisition Corp., a Georgia corporation (the
"Merger Agreement"). We are familiar with the Merger Agreement and the relevant
documents and materials used in preparing the Registration Statement.
Based on our review of the relevant documents and materials, it is our
opinion that when the Registration Statement shall have been declared effective
by order of the Securities and Exchange Commission, such number of Shares which
are issued in exchange for shares of Dundee Common Stock upon the terms and
conditions set forth in the Merger Agreement and in the Registration Statement,
will, when so issued, be legally issued, fully paid and nonassessable.
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus included in the Registration Statement and to the
filing of this opinion as an exhibit to the Registration Statement.
Yours very truly,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ GEORGE L. COHEN
------------------------------------
George L. Cohen
<PAGE> 1
EXHIBIT 8
[FORM OF OPINION OF SUTHERLAND, ASBILL & BRENNAN]
, 1995
<TABLE>
<S> <C>
Board of Directors Board of Directors
Springs Industries, Inc. Dundee Mills, Incorporated
205 North White Street Railroad Avenue
Fort Mill, South Carolina 29715 Griffin, Georgia 30224
</TABLE>
Members of the Boards:
We have acted as counsel for Springs Industries, Inc. ("Springs"), a South
Carolina corporation, in connection with the proposed merger of Dundee Mills,
Incorporated ("Dundee"), a Georgia corporation, into Dundee Acquisition Corp.
("Subcorp"), a newly-organized Georgia corporation and a wholly-owned subsidiary
of Springs (the "Merger"). The Merger will be effected pursuant to the terms of
an Agreement and Plan of Merger among Springs, Dundee and Subcorp, dated as of
February 6, 1995 (the "Agreement"). This opinion is being given to Springs and
Dundee pursuant to Section 5.1(c) of the Agreement. The capitalized terms which
are used in this letter but not defined herein shall have the same meaning in
this opinion as in the Agreement.
Our opinion is based upon the terms of the Agreement, the facts set forth
in the Proxy Statement and Prospectus included as part of a Form S-4
Registration Statement filed by Springs with the Securities and Exchange
Commission on March 8, 1995, and upon our understanding that the facts and
representations set forth in this letter are true and correct as of the present
time and will be true and correct as of the Effective Time of the Merger.
Springs is a diversified textile and home furnishings manufacturer and
finisher. Dundee is a leading manufacturer of towels, infant and toddler
bedding, knitted infant apparel and baby and healthcare products. Subcorp is a
newly formed subsidiary of Springs organized for the purpose of effecting the
Merger. The Boards of Directors of Springs and Dundee have determined that the
Merger is in the best interests of the respective companies and their
shareholders.
Dundee has outstanding 46,728 shares of Dundee Common Stock. Dundee has no
employee stock options, warrants or convertible securities outstanding. As of
March 6, 1995, Springs had outstanding 9,772,307 shares of Springs Class A Stock
and 7,830,375 shares of Springs Class B Stock. The Springs Class A Stock is
entitled to one vote per share. The Springs Class B Stock is entitled to four
votes per share, subject to certain limitations.
Pursuant to the Merger, which will be effected in accordance with the
Georgia Business Corporation Code, each outstanding share of Dundee Common Stock
(excluding treasury shares, any shares held by Springs or its subsidiaries and
any shares with respect to which dissenters' rights are exercised) will be
converted into the right to receive Springs Class A stock equal in value to
$2,525.00 (subject to variation based on market prices, as described in Section
2.5 of the Agreement) or, at the Dundee shareholder's election, cash of
$2,525.00, subject in each case to certain limitations described in the
Agreement. The per share merger consideration of $2,525.00 was agreed upon after
arm's-length negotiation between representatives of Springs and Dundee. The
provisions of the Agreement concerning the ratio for the conversion of Dundee
Common Stock into Springs Class A Stock were then determined in an effort to
ensure that in most circumstances a Dundee shareholder would receive
approximately $2,525.00 in value of Springs Class A Stock for each share of
Dundee Common Stock.
The maximum number of shares of Dundee Common Stock that may be converted
into cash is 23,363 shares less the number of shares of Dundee Common Stock with
respect to which dissenters' rights are exercised (the "Maximum Number of Cash
Election Shares"). If the number of shares of Dundee Common Stock for which a
cash election is made exceeds the Maximum Number of Cash Election Shares, an
<PAGE> 2
adjustment will be made so that no more than the Maximum Number of Cash Election
Shares will be converted into cash. The Agreement also provides that the maximum
number of shares of Springs Class A Stock which may be issued in the Merger is
3,000,000 shares. In the event that Dundee shareholders who do not elect to
receive cash or exercise dissenters' rights would otherwise be entitled to
receive more than 3,000,000 shares of Springs Class A stock, a cash election
will be treated as having been made for a number of shares of Dundee Common
Stock as is necessary to reduce the number of Springs Class A Stock issued in
the Merger to 3,000,000.
Each holder of Dundee Common stock who dissents from the Merger in
accordance with the procedures provided by Georgia law will be entitled to
obtain payment of the fair value of his shares. Springs is not required to
consummate the Merger if holders of more than 8 percent of the outstanding
shares of Dundee Common Stock elect to exercise dissenters' rights.
No fractional shares of Springs Class A Stock will be issued in the Merger.
Each holder of Dundee Common Stock who would otherwise be entitled receive a
fractional share in the Merger shall instead be entitled to receive a cash
payment from Springs equal to such fractional share multiplied by the Reported
Market Price of Springs Class A Stock used in computing the Merger
Consideration.
No party to the proposed transaction is an investment company within the
meaning of sections 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of
1986, as amended (the "Code"). Dundee is not under the jurisdiction of a court
in a Title 11 or similar case within the meaning of section 368(a)(3)(A) of the
Code.
If holders of 80 percent or more of the outstanding Dundee Common Stock
elect to receive Springs Class A Stock in the merger, Springs may, at its
option, cause Subcorp to merge with and into Dundee, thus leaving Dundee as the
surviving corporation of the merger. The shareholders of Dundee would exchange
at least 80 percent of the Dundee Common Stock for Springs Class A Stock in such
a merger. In the event that the transaction is effected in this form, the
references to the "Merger" in the opinions set forth below shall refer to the
merger of Subcorp into Dundee.
The following representations have been made to us in connection with the
proposed transaction:
(a) To the best of the knowledge of the executive officers of Dundee,
there is no plan or intention by the holders of shares of Dundee Common
Stock to sell, exchange, or otherwise dispose of a number of shares of
Springs Class A Stock received in the Merger that would reduce the
ownership of Springs Class A Stock by the holders of shares of Dundee
Common Stock to a number of Springs Class A Stock having a value, as of the
date of the Merger, of less than 50 percent of the value of all of the
formerly outstanding shares of Dundee Common Stock as of the same date. For
purposes of this representation, shares of Dundee Common Stock exchanged
for cash pursuant to Section 2.3 of the Agreement, surrendered by
dissenters or exchanged for cash in lieu of fractional Springs Class A
Stock will be treated as outstanding on the date of the Merger. Moreover,
shares of Dundee Common Stock and shares of Springs Class A Stock held by
holders of Dundee Common Stock and otherwise sold, redeemed or disposed of
prior to or subsequent to the Merger will be considered in making this
representation.
(b) Subcorp will acquire at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the
gross assets held by Dundee immediately prior to the transaction. (If
Subcorp is merged into Dundee, Dundee will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets and at least 90 percent of the fair market
value of Subcorp's net assets and at least 70 percent of the fair market
value of Subcorp's gross assets held immediately prior to the Merger.) For
purposes of this representation, amounts paid by Dundee to dissenters,
Dundee assets used to pay its Merger expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Dundee
immediately preceding the Merger, will be included as assets of Dundee held
immediately prior to the Merger.
(c) The liabilities of Dundee to be assumed by Subcorp and the
liabilities to which the assets of Dundee are subject were incurred by
Dundee in the ordinary course of Dundee's business. (If Subcorp is
2
<PAGE> 3
merged into Dundee, Subcorp will have no liabilities assumed by Dundee, and
will not transfer to Dundee any assets subject to liabilities.)
(d) Springs has no plan or intention to liquidate Subcorp; to merge
Subcorp with or into another corporation; to sell or otherwise dispose of
the stock of Subcorp; or to cause Subcorp to sell or otherwise dispose of
any of the assets of Dundee acquired in the Merger, except for dispositions
made in the ordinary course of business or transfers described in section
368(a)(2)(C) of the Code. (If Subcorp is merged into Dundee, Springs has no
plan or intention to liquidate Dundee; to merge Dundee with or into another
corporation; to sell or otherwise dispose of the stock of Dundee except for
transfers of stock to corporations controlled by Springs; or to cause
Dundee to sell or otherwise dispose of any of its assets or any of the
assets acquired from Subcorp, except for dispositions made in the ordinary
course of business or transfers of assets to a corporation controlled by
Dundee.)
(e) Following the Merger, Subcorp will continue the historic business
of Dundee or use a significant portion of Dundee's business assets in a
business. (If Subcorp is merged into Dundee, Dundee will continue its
historic business or use a significant portion of its historic business
assets in a business.)
(f) Following the Merger, Subcorp will not issue additional shares of
its stock that would result in Springs losing control of Subcorp within the
meaning of section 368(c) of the Code. (If Subcorp is merged into Dundee,
Dundee will not issue additional shares of its stock that would result in
Springs losing control of Dundee.)
(g) Springs has no plan or intention to reacquire any of its stock
issued in the Merger.
(h) There is no intercorporate indebtedness existing between Springs
and Dundee or between Subcorp and Dundee that was issued, acquired, or will
be settled at a discount.
(i) No stock of Subcorp will be issued in the transaction.
(j) None of the compensation received by any shareholder-employee of
Dundee will be separate consideration for, or allocable to, any of his
shares of Dundee Common Stock, and none of the shares of Springs Class A
Stock received by any shareholder-employee of Dundee in the Merger will be
separate consideration for, or allocable to, any employment agreement.
(k) The payment of cash in lieu of fractional shares of Springs Class
A Stock is solely for the purpose of avoiding the expense and inconvenience
of issuing fractional shares and does not represent separately
bargained-for consideration.
* * *
On the basis of the above facts and representations and the terms of the
Agreement, it is our opinion that the Merger will have the following Federal
income tax consequences:
(1) The merger of Dundee with and into Subcorp will qualify as a
reorganization under the provisions of sections 368(a)(1)(A) and
368(a)(2)(D) of the Code. In the event that Subcorp is merged with and into
Dundee, such merger will qualify as a reorganization under the provisions
of sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
(2) No gain or loss will be recognized to the shareholders of Dundee
upon the exchange of Dundee Common Stock solely for Springs Class A Stock
(including the fractional shares to which they may be entitled) pursuant to
the Merger (Code section 354(a)(1)).
(3) The receipt of cash in lieu of fractional shares of Springs Class
A Stock will be treated as if the fractional shares were received in the
Merger and then redeemed by Springs. The cash received will be treated as
having been received in full payment in exchange for the fractional shares
redeemed under section 302(a) of the Code.
3
<PAGE> 4
(4) A Dundee shareholder who exchanges his Dundee Common Stock for
Springs Class A Stock and cash in the Merger will recognize gain, if any,
but not in excess of the amount of cash received. Section 356(a)(1).
(5) A Dundee shareholder who receives solely cash in the Merger in
exchange for his Dundee Common Stock or who dissents from the Merger will
be treated as having received a distribution in redemption which is subject
to the provisions of section 302 of the Code.
(6) The aggregate basis of the Springs Class A Stock deemed received
by the shareholders of Dundee in the Merger (including the fractional
shares to which they may be entitled) will be the same as the aggregate
basis of the Dundee Common Stock surrendered in exchange therefor (Code
section 358(a)(1)). Since no fractional shares of Springs Class A Stock
will actually be issued in the Merger, the aggregate basis of the Springs
Class A Stock actually received by Dundee shareholders will not include
that portion of the aggregate basis of the Dundee Common Stock exchanged in
the Merger which is allocable to shares of Dundee Common Stock exchanged
for cash in lieu of fractional shares.
(7) The holding period of the Springs Class A Stock received by the
shareholders of Dundee in the Merger (including the fractional shares to
which they may be entitled) will include the period during which the Dundee
Common Stock surrendered therefor was held, provided the stock of Dundee is
a capital asset in the hands of the Dundee shareholders on the date of the
Merger (Code section 1223(1)).
We express no opinion as to the treatment of the Merger under the income
tax laws of any state, county or local jurisdiction. We further express no
opinion as to any tax consequences of the Merger other than those specifically
set forth above.
Our opinions are based upon the present provisions of the Code and current
interpretations of these and predecessor provisions in Treasury Income
Regulations and published rulings of the Service. Such opinions may be affected
by subsequent modifications of applicable provisions of the Code, such
regulations or rulings.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement of Springs on Form S-4, and to the references to our firm
under the captions "Summary -- Tax Consequences" and "The Merger -- Tax
Consequences" in the Proxy Statement and Prospectus included within said
Registration Statement.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
4
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Springs Industries, Inc. on Form S-4 of our report dated January 25, 1995,
appearing in the Annual Report on Form 10-K of Springs Industries, Inc. for the
year ended December 31, 1994 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
March 7, 1995
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated October 7, 1994, except for Note 9 as to which the
date is February 6, 1995, with respect to the financial statements of Dundee
Mills, Incorporated, included in the Proxy Statement of Dundee Mills,
Incorporated which is made a part of the Registration Statement (Form S-4) and
Prospectus of Springs Industries, Inc. for the registration of 3,000,000 shares
of its common stock.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Atlanta, Georgia
March 7, 1995
<PAGE> 1
EXHIBIT 23.4
CONSENT
OF
THE ROBINSON-HUMPHREY COMPANY, INC.
We hereby consent to (i) the inclusion of our opinion letter to the Board
of Directors of Dundee Mills, Incorporated ("Dundee") as Exhibit B to the Proxy
Statement/Prospectus of Dundee relating to the proposed merger transaction
involving Dundee, Springs Industries, Inc. and Dundee Acquisition Corp., and
(ii) references made to our firm and such opinion in (A) such Proxy
Statement/Prospectus under the captions "SUMMARY -- Opinion of Dundee's
Financial Advisor" and "THE MERGER -- Opinion of Dundee's Financial Advisor" and
(B) the Letter to Shareholders of Dundee accompanying such Proxy
Statement/Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under, and we do not
admit and we disclaim that we are "experts" for purposes of, the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder.
By: /s/ Charles H. Ogburn
------------------------------------
The Robinson-Humphrey Company, Inc.
Atlanta, Georgia
March 7, 1995
<PAGE> 1
EXHIBIT 99.1
DUNDEE MILLS, INCORPORATED
PROXY FOR
SPECIAL MEETING OF STOCKHOLDERS
The undersigned, the registered owner of one or more shares of the common
stock of Dundee Mills, Incorporated (the "Company"), hereby appoints John T.
Newton and Douglas R. Tingle, and each of them, with full power of substitution
to each, as the true and lawful proxies of the undersigned, to vote all shares
of common stock of the Company owned by the undersigned or standing in the
undersigned's name at the special meeting of shareholders of the Company to be
held at Griffin Technical Institute, 501 Varsity Road, Griffin, Georgia 30223,
on , 1995 at .m., local time, or on such other day as the
meeting may be thereafter held by adjournment or otherwise, according to the
number of votes the undersigned is now or may then be entitled to cast, hereby
granting the said proxies, and each of them, full power and authority to act for
the undersigned and in the undersigned's name at the said meeting or meetings,
as follows with respect to the matters set forth below, as fully as the
undersigned could do if personally present.
THE OBLIGATION OF SPRINGS INDUSTRIES, INC. TO CLOSE THE MERGER WITH THE
COMPANY IS CONDITIONED UPON, AMONG OTHER THINGS, A MAJORITY OF SHAREHOLDERS
VOTING FOR EACH OF PROPOSAL 1 AND 2.
1. Proposal to approve and ratify the terms and conditions of certain past
issuances of the common stock of the Company as described in the accompanying
Proxy Statement and Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. Proposal to approve the Agreement and Plan of Merger dated February 6, 1995,
as amended, among the Company, Springs Industries, Inc. and Dundee
Acquisition Corp.
/ / FOR / / AGAINST / / ABSTAIN
3. In the discretion of the proxies, on any other matter that may properly come
before the meeting or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
IN THE ABSENCE OF AN INDICATION TO THE CONTRARY, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 SET FORTH ON THE REVERSE SIDE HEREOF. IF OTHER MATTERS ARE
PROPERLY PRESENTED TO THE MEETING FOR ACTION, THE PROXIES WILL VOTE IN
ACCORDANCE WITH THEIR BEST JUDGMENT. THIS PROXY MAY BE REVOKED BY GIVING WRITTEN
NOTICE TO THE SECRETARY OF THE COMPANY AT ANY TIME BEFORE THIS PROXY IS VOTED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Date:
------------------------------
------------------------------
Signature
------------------------------
Signature
(Please sign, exactly as name
appears on this Proxy. If
shares are registered in more
than one name, each should
sign. Executors,
administrators, trustees,
guardians and attorneys should
add their title. A corporation
should sign in its full
corporate name by a duly
authorized officer, stating
his title.)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING.
<PAGE> 1
EXHIBIT 99.2
FORM OF LETTER OF TRANSMITTAL
TO ACCOMPANY CERTIFICATES REPRESENTING COMMON STOCK OF DUNDEE MILLS,
INCORPORATED WHEN SUBMITTED IN CONNECTION WITH THE MERGER OF DUNDEE MILLS,
INCORPORATED WITH DUNDEE ACQUISITION CORP., A WHOLLY-OWNED SUBSIDIARY OF SPRINGS
INDUSTRIES, INC.
This Letter of Transmittal ("Letter of Transmittal"), properly completed
and signed in accordance with the instructions provided with this Letter of
Transmittal, together with the certificates for all of the shares of common
stock of Dundee Mills, Incorporated ("Dundee") held by the party completing this
Letter of Transmittal, must be received by Wachovia Bank of North Carolina, N.A.
(the "Exchange Agent") at the appropriate address set forth below. If a Cash
Election is being made, the completed Letter of Transmittal with the holder's
Dundee stock certificates must be received by the Exchange Agent no later than
the close of business on , 1995.
<TABLE>
<S> <C>
By Regular Mail to: By Hand Delivery to:
Wachovia Bank of North Carolina, N.A. Wachovia Bank of North Carolina, N.A.
Corporate Trust Department Corporate Trust Department
P.O. Box 3001 Wachovia East Building, 2nd Floor
Winston-Salem, NC 27102 301 North Church Street
Winston-Salem, NC 27101
</TABLE>
By Overnight Delivery to:
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
Wachovia East Building, 2nd Floor
301 North Church Street
Winston-Salem, NC 27101
If you have any questions concerning this Letter of Transmittal, please
contact the Exchange Agent at (800) 633-4236.
Enclosed are the following certificates representing the common stock,
$25.00 par value, of Dundee ("Dundee Common Stock"), which are surrendered for
payment pursuant to the Agreement and Plan of Merger, dated as of February 6,
1995, as amended (the "Merger Agreement") among Springs Industries, Inc., a
South Carolina corporation ("Springs"), Dundee Acquisition Corp., a Georgia
corporation and a wholly-owned subsidiary of Springs ("Subcorp"), and Dundee, a
Georgia corporation, pursuant to which Dundee will become a wholly-owned
subsidiary of Springs through a merger of Dundee and Subcorp:
-1-
<PAGE> 2
BOX A: CERTIFICATES SURRENDERED
(Please list in Box A all the certificates representing Dundee Common Stock
that you hold (all of which should be submitted with this Letter of Transmittal)
regardless of how many, if any, are covered by a Cash Election. (If there is not
enough space below to list all of your certificates, see Attachment A.) Use Box
B to specify how many shares, if any, are covered by a Cash Election. A separate
Letter of Transmittal should be submitted for shares registered in different
names. (See General Instruction 2.)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
NAME(S)AND ADDRESS OF REGISTERED HOLDER(S)
(PLEASE FILL IN OR MAKE CORRECTIONS NEEDED
IF LABEL IS AFFIXED) CERTIFICATES ENCLOSED
- --------------------------------------------------------------------------------------------------------
CERTIFICATE NO. NO. OF SHARES
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- --------------------------------------------------------------------------------------------------------
</TABLE>
The undersigned represents and warrants (and if more than one, each
undersigned represents and warrants jointly and severally) that the undersigned
has full power and authority to assign and transfer the certificates surrendered
and that the transferee (either Subcorp or Dundee, as the surviving corporation
in the Merger) will acquire good title to such certificates, free and clear of
all liens, restrictions, charges, encumbrances, pledges, security interests, or
other obligations affecting the assignment or transfer of the certificates and
will not be subject to any adverse claim. All authority conferred or agreed to
be conferred in this Letter of Transmittal shall not be affected by, and shall
survive the death or incapacity of the undersigned and any obligation of the
undersigned under this Letter of Transmittal shall be binding upon successors,
assigns, heirs, executors, administrators, and legal representatives of the
undersigned.
Upon request, the undersigned agrees to execute and deliver any additional
documents deemed necessary or desirable by the Exchange Agent to complete the
exchange of the certificates. If required by General Instruction 4, the
certificates submitted with this Letter of Transmittal are duly endorsed in
blank or otherwise in a form acceptable for transfer on the books of Dundee.
Subject to the terms, conditions and limitations set forth in the Merger
Agreement and the terms, conditions and limitations specified in the
Instructions for this Letter of Transmittal, the undersigned elects to receive
in exchange for the number of shares of Dundee Common Stock submitted with this
Letter of Transmittal as to which the Cash Election is made below, and
authorizes and instructs you, as Exchange Agent, to deliver in exchange for such
shares, a check in an amount equal to $2,525.00 multiplied by the number of
shares of Dundee Common Stock covered by such Cash Election, or, in the event of
proration, in the amount, if any, computed in accordance with Instruction C. For
all other shares submitted herewith, the undersigned authorizes and instructs
you, as Exchange Agent, to deliver in exchange for such shares the Merger
Consideration payable for shares of Dundee Common Stock as to which a Cash
Election has not been made.
-2-
<PAGE> 3
BOX B: CASH ELECTION FORM
- --------------------------------------------------------------------------------
IF YOU ARE NOT MAKING A CASH ELECTION AS TO ANY OF YOUR SHARES OF DUNDEE
COMMON STOCK, YOU SHOULD NOT COMPLETE THIS CASH ELECTION FORM
If you are making a Cash Election, check only one of the boxes below and,
if the second box is checked, fill in the numbers as indicated:
Please read carefully Instructions A through F, pertaining to Cash
Elections
/ / The Cash Election is made as to all of the shares of Dundee
Common Stock represented by the certificate(s) submitted with
this Letter of Transmittal.
/ / The Cash Election is made only as to some of the shares of
Dundee Common Stock represented by the certificate(s)
submitted with this Letter of Transmittal, as follows:
<TABLE>
<CAPTION>
NO. SHARES AS TO
NO. SHARES REPRESENTED WHICH CASH ELECTION
CERTIFICATE NO. BY CERTIFICATE IS MADE
- ---------------- ---------------------- -------------------
<S> <C> <C>
- ---------------- ---------------------- -------------------
- ---------------- ---------------------- -------------------
- ---------------- ---------------------- -------------------
- ---------------- ---------------------- -------------------
- ---------------- ---------------------- -------------------
</TABLE>
For information as to the federal income tax consequences of the Cash
Election, see "Tax Consequences" in the Proxy Statement and Prospectus.
- --------------------------------------------------------------------------------
Except as otherwise requested in the "Special Payment Instructions" or the
"Special Delivery Instructions" below, the undersigned requests that the check
for any cash payment and the stock certificate for any shares of Springs Class A
Stock to which the undersigned is entitled be made payable to the order of and
registered in the name of, and be delivered to the registered holder(s) set
forth in Box A above at the address set forth in Box A above.
NOTE: If you want to give Special Payment Instructions or Special Delivery
Instructions with respect to more than one person or entity, complete
Attachment B.
-3-
<PAGE> 4
BOX C -- SPECIAL PAYMENT INSTRUCTIONS
Fill in ONLY if the check or certificates are to be issued in a name OTHER
than the name appearing in Box A above. (If this Box C is filled in, then unless
otherwise indicated in Box D, any check or certificates for the shares specified
below will be mailed to the address indicated in this Box C.)
Amount of cash covered by these Special Payment Instructions: $
OR
Number of shares Covered by these Special Payment Instructions:
Register in the name of
Name
- ----------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
- ------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------
SOCIAL SECURITY OR TIN NUMBER
OF PERSON NAMED ABOVE
BOX D -- SPECIAL DELIVERY INSTRUCTIONS
Fill in ONLY if the check or certificates are to be sent to an address OTHER
than the address appearing in Box A above or, if Box C is filled in, to an
address OTHER than the address appearing in Box C.
Amount of cash covered by these Special Delivery Instructions: $
OR
Number of shares Covered by these Special Delivery Instructions:
Mail or deliver to:
Name
- ----------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
- ------------------------------------------------------
(ZIP CODE)
Please indicate whether these Special Delivery Instructions apply to the
shares covered in Box C (Yes No ) or only to shares covered in Box A
(Yes No ).
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS RECEIVED
AND READ THE PROXY STATEMENT AND PROSPECTUS DATED , 1995 OF SPRINGS
AND DUNDEE RELATING TO THE MERGER. Additional copies of the Proxy Statement and
Prospectus may be obtained from Springs (at 205 North White Street, P.O. Box 70,
Fort Mill, South Carolina 29715 Attention: C. Powers Dorsett, Vice
President - General Counsel and Secretary) or from Dundee (at 301 Railroad
Avenue, Griffin, Georgia 30224 Attention: Douglas R. Tingle, Secretary).
-4-
<PAGE> 5
- --------------------------------------------------------------------------------
SIGN HERE
(Please complete Substitute Form W-9)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
--------------------------------------------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on certificate(s), or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted with this Letter of
Transmittal. If signature is by an agent, trustee, executor,
administrator, guardian, attorney, or others acting in a fiduciary or
representative capacity, or by an officer of a corporation on behalf of
the corporation, please set forth full title and furnish appropriate
supporting evidence. (See General Instructions 2, 4 and 5).
Name(s)
--------------------------------------------------------------------------
--------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
--------------------------------------------------------------------------
Address
--------------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(INCLUDE ZIP CODE)
(Area Code and Daytime
Telephone Number) ( )
--------------------------------------------------------------------------
(Tax Identification or
Social Security Number)
--------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
MEDALLION SIGNATURE GUARANTEE
SIGNATURE(S) GUARANTEED BY:
NOTE: Signature Guarantee is required only when General Instruction 4
applies.
If the first sentence of General Instruction 3 applies, no Signature
Guarantee is needed.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-5-
<PAGE> 6
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE ---------------------------------------------------------------------------------------------
FORM W-9 Name
---------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY Address (number and street)
INTERNAL REVENUE SERVICE ---------------------------------------------------------------------------------------------
REQUEST FOR TAXPAYER City, State and ZIP Code
IDENTIFICATION NUMBER (TIN) ---------------------------------------------------------------------------------------------
AND CERTIFICATION
PART I -- ENTER YOUR TIN Social Security Number or
IN THE BOX AT RIGHT Employer Identification Number
---------------------------------------------------------------------------------------------
PART II -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
(SEE GENERAL INSTRUCTION 7)
---------------------------------------------------------------------------------------------
CERTIFICATION -- Under Penalties of Perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am
waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from backup withholding,
or (b) I have not been notified by the Internal Revenue Service that I am subject to backup
withholding as a result of a failure to report all interest and dividends, or (c) the
Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item 2 if you have been notified by the
Internal Revenue Service that you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax return.
------------------------------------- -------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU.
-6-
<PAGE> 7
ATTACHMENT A
This is a continuation of Box A on page 2. YOU DO NOT NEED TO COMPLETE THIS
UNLESS THERE WAS NOT ENOUGH ROOM ON PAGE 2 TO LIST ALL OF YOUR STOCK
CERTIFICATES.
CONTINUATION OF BOX A: CERTIFICATES SURRENDERED
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
NAME(S)AND ADDRESS OF REGISTERED HOLDER(S)
(PLEASE FILL IN) CERTIFICATES ENCLOSED
- --------------------------------------------------------------------------------------------------------
CERTIFICATE NO. NO. OF SHARES
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- --------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE> 8
ATTACHMENT B
Boxes C and D from page 4 are duplicated below in case there was not enough
room on page 4. YOU DO NOT NEED TO COMPLETE THIS UNLESS YOU WANT TO PROVIDE MORE
THAN ONE SET OF SPECIAL PAYMENT INSTRUCTIONS OR SPECIAL DELIVERY INSTRUCTIONS.
BOX C -- SPECIAL PAYMENT INSTRUCTIONS
Fill in ONLY if the check or certificates are to be issued in a name OTHER
than the name appearing in Box A above. (If this Box C is filled in, then unless
otherwise indicated in Box D, any check or certificates for the shares specified
below will be mailed to the address indicated in this Box C.)
Amount of cash covered by these Special Payment Instructions: $
OR
Number of shares Covered by these Special Payment Instructions:
Register in the name of
Name
- ----------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
- ------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------
SOCIAL SECURITY OR TIN NUMBER
OF PERSON NAMED ABOVE
BOX D -- SPECIAL DELIVERY INSTRUCTIONS
Fill in ONLY if delivery of the check or certificates are to be sent to an
address OTHER than the address appearing in Box A above or, if Box C is filled
in, to an address OTHER than the address appearing in Box C.
Amount of cash covered by these Special Delivery Instructions: $
OR
Number of Shares Covered by these Special Delivery Instructions: $
Mail or deliver to:
Name
- ----------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
- ------------------------------------------------------
(ZIP CODE)
Please indicate whether these Special Delivery Instructions apply to the
shares listed in Box C on this page (Yes No ) or on page 4
(Yes No ) or only to shares listed in Box A (Yes No ).
-8-
<PAGE> 9
ATTACHMENT C
INSTRUCTIONS FOR COMPLETING
NOTICE OF LOST STOCK CERTIFICATE(S)
IMPORTANT: THE NOTICE ON THE FOLLOWING PAGE SHOULD BE COMPLETED ONLY BY
SHAREHOLDERS WITH LOST, STOLEN OR DESTROYED CERTIFICATE(S). IF YOUR
CERTIFICATE(S) ARE NOT LOST, STOLEN OR DESTROYED, STOP HERE AND DO NOT COMPLETE
THIS ATTACHMENT C.
If any certificates representing shares of Dundee Common Stock that you are
submitting with this Letter of Transmittal have been lost, stolen or destroyed,
you will need to complete the Notice of Lost Stock Certificate(s) ("Notice") on
the following page and will need to return the Notice, along with your properly
completed Letter of Transmittal and any certificate(s) representing shares of
Dundee Common Stock you are submitting at this time that have not been lost,
stolen or destroyed, to the Exchange Agent at the address shown on page 1 of the
Letter of Transmittal.
Once the Notice is received by the Exchange Agent, the Exchange Agent will
send you an affidavit of loss and indemnity agreement, along with instructions
for replacing the lost certificate(s). In order to replace the lost
certificate(s) and receive the Merger Consideration, you will be required to pay
for an indemnity bond covering the lost certificate(s). The cost of this bond
will be based on the value of the shares of Dundee Common Stock represented by
the lost certificates. THE EXCHANGE AGENT IS NOT AUTHORIZED TO PAY YOU ANY
MERGER CONSIDERATION UNTIL YOU HAVE COMPLETED THE PROCEDURE FOR REPLACING LOST
CERTIFICATE(S) AND HAVE PAID FOR THE INDEMNITY BOND.
If you are able to locate your certificates and send them to the Exchange
Agent prior to paying for the indemnity bond, you will not be required to pay
for the indemnity bond.
If you have any questions, contact the Exchange Agent at (800) 633-4236.
-9-
<PAGE> 10
NOTICE OF LOST STOCK CERTIFICATE(S)
, 1995
DATE
TO: Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
ATTN: [ ]
Dear [ ]:
Upon receipt of this Notice of Lost Stock Certificate(s) ("Notice"), please
have a stop transfer order placed on my certificate(s) specified below and
assist me with the payment of the Merger Consideration described in the Proxy
Statement and Prospectus in exchange for these certificate(s). (PLEASE PRINT OR
TYPE ALL INFORMATION.)
- ------------------------------------------------------------
SHAREHOLDER NAME
- ------------------------------------------------------------
SOCIAL SECURITY OR TIN NUMBER
- --------------------------------------------------------------------------------
STREET CITY STATE ZIP CODE
DESCRIPTION OF LOST CERTIFICATES (ATTACH ADDITIONAL SHEETS IF NECESSARY):
<TABLE>
<CAPTION>
CERTIFICATE NUMBER OF
NUMBER SHARES DATE ISSUED NATURE OF LOSS (LOST, STOLEN, DESTROYED, ETC.)
- ------------ ---------- ------------------ -------------------------------------------------------
<C> <S> <C> <C>
- ------------ ---------- ------------------ -------------------------------------------------------
- ------------ ---------- ------------------ -------------------------------------------------------
- ------------ ---------- ------------------ -------------------------------------------------------
</TABLE>
I understand that upon receipt of this Notice, Wachovia Bank of North
Carolina, N.A., as the Exchange Agent, will place (or if prior to the Merger
will ask Dundee to place) a stop transfer order on the above described
certificate(s) and forward an indemnity agreement and bond application to me for
obtaining the Merger Consideration described in the Proxy Statement and
Prospectus in exchange for these certificate(s). If I should locate the above
described certificate(s), I will immediately notify Wachovia in writing to
release the stop transfer order. If I should locate the certificates after I
have returned my indemnity agreement to Wachovia, I will send the stock
certificate(s) to Wachovia for cancellation.
- ---------------------------------------------------
SHAREHOLDER SIGNATURE
-10-
<PAGE> 11
INSTRUCTIONS FOR LETTER OF TRANSMITTAL
Accompanying this Form is a Proxy Statement and Prospectus that describes a
proposed acquisition of Dundee Mills, Incorporated ("Dundee") by Springs
Industries, Inc. ("Springs"). In connection with the proposed Merger of Dundee
with a wholly-owned subsidiary of Springs, each Dundee shareholder has the right
to choose, subject to certain limitations, whether to receive cash or shares of
Springs Class A Common Stock, $.25 par value ("Springs Class A Stock"), or a
combination of cash and Springs Class A Stock, in exchange for his or her shares
of Dundee Common Stock, $25.00 par value ("Dundee Common Stock"). Please refer
to the Proxy Statement and Prospectus for information about the Merger and the
choices between cash, Springs Class A Stock or a combination of both.
IF YOU WANT TO BE SURE TO RECEIVE CASH FOR SOME OR (SUBJECT TO CERTAIN
LIMITS) ALL OF YOUR SHARES OF DUNDEE COMMON STOCK, YOU MUST COMPLETE THE "CASH
ELECTION FORM" CONTAINED IN THIS FORM CAREFULLY AND SEND THIS COMPLETED LETTER
OF TRANSMITTAL, WITH YOUR STOCK CERTIFICATES FOR ALL OF YOUR SHARES OF DUNDEE
COMMON STOCK, TO THE EXCHANGE AGENT DESCRIBED BELOW IN TIME TO BE RECEIVED BY
THE CLOSE OF BUSINESS ON , 1995.
IF YOU DO NOT WANT TO RECEIVE CASH, YOU SHOULD NOT COMPLETE THE CASH
ELECTION FORM AND YOU SHOULD SEND THIS COMPLETED LETTER OF TRANSMITTAL, LEAVING
THE CASH ELECTION FORM BLANK, WITH YOUR STOCK CERTIFICATES FOR SHARES OF DUNDEE
COMMON STOCK, TO THE EXCHANGE AGENT. IT IS NOT NECESSARY TO RETURN THIS LETTER
OF TRANSMITTAL WITH YOUR STOCK CERTIFICATES BY , 1995 IF NO
CASH ELECTION IS BEING MADE, ALTHOUGH IT IS ACCEPTABLE TO DO SO.
PLEASE DO NOT SEND THIS LETTER OF TRANSMITTAL TO DUNDEE; IT MUST BE SENT TO
THE EXCHANGE AGENT.
Sending in your stock certificates now will not limit your right to vote
your shares of Dundee Common Stock. If the Merger is not approved by the
shareholders or is not completed for any other reason, your stock certificates
will be returned to you.
Please read the following Instructions carefully before completing this
Letter of Transmittal ("Letter of Transmittal").
CASH ELECTION AND NON-CASH ELECTION SHARES
A. SPECIAL CONDITIONS FOR CASH ELECTIONS
1. Deadline for Cash Election
To be effective, this Letter of Transmittal (or a photocopy of it),
containing a completed Cash Election Form, and all of your stock certificate(s)
representing shares of Dundee Common Stock must be received by Wachovia Bank of
North Carolina, N.A. (the "Exchange Agent") no later than the close of business
on , 1995 (the "Cash Election Deadline"). PERSONS WHOSE
CERTIFICATES AND LETTERS OF TRANSMITTAL ARE NOT SO RECEIVED WILL NOT BE ENTITLED
TO MAKE A CASH ELECTION.
2. Revocation
You may revoke a Cash Election or revoke any other instruction in your
Letter of Transmittal only by written notice to the Exchange Agent. Such written
notice must be received by the Exchange Agent prior to the close of business on
the Cash Election Deadline. If a Cash Election is revoked or other instructions
in your Letter of Transmittal are revoked before the Cash Election Deadline, the
certificate(s) for your shares of Dundee Common Stock will be promptly returned
to you, and you will then be required to resubmit them with another Letter of
Transmittal which will be sent to you with your Dundee stock certificates.
Record holders of shares of Dundee Common Stock on deposit with the
Exchange Agent will remain shareholders of record of Dundee with respect to such
shares until the effective time of the Merger (the "Effective Time").
3. Termination of Right to Elect.
All Cash Elections and other instructions in the Letter of Transmittal will
be void and of no effect if the Merger is not consummated. If the Merger
Agreement is terminated, the Dundee stock certificates submitted to the Exchange
Agent will be promptly returned.
B. SHARES AS TO WHICH CASH ELECTION IS MADE
You may elect to receive cash with respect to all or a portion of your
shares of Dundee Common Stock by checking the appropriate box on the Cash
Election Form contained in the Letter of Transmittal. If you make a Cash
Election as to less than all of your shares, you should also identify, by
certificate number, the stock certificate(s) representing shares covered by your
Cash Election. Depending on your tax basis in these shares, the certificate(s)
you select may affect the amount of your taxable gain. You should consult your
tax advisor if you hold more than one certificate representing shares of Dundee
Common Stock and you are uncertain which certificate(s) should represent Cash
Election shares. NO CASH ELECTION WILL BE DEEMED TO HAVE BEEN MADE FOR ANY OF
THE SHARES OF DUNDEE COMMON STOCK YOU SUBMIT WITH THE LETTER
(i)
<PAGE> 12
OF TRANSMITTAL UNLESS YOU CLEARLY INDICATE THE CASH ELECTION COVERS A SPECIFIC
PORTION OR ALL OF YOUR SHARES. The Dundee shares for which a Cash Election is
not made will be treated as provided below in Instruction D.
C. PRORATION
The number of shares of Dundee Common Stock as to which Cash Elections will
be accepted is limited to 23,363 shares less the total number of shares of
Dundee Common Stock as to which the holders thereof shall have exercised
dissenters' rights pursuant to the Georgia Business Corporation Code (the
"GBCC") (the "Maximum Number of Cash Election Shares").
If Cash Elections are submitted for more than the Maximum Number of Cash
Election Shares, the Exchange Agent shall eliminate from the number of shares
subject to Cash Elections (pro rata as nearly as practicable as to each holder
of ten or more shares for which Cash Elections have been made) the number of
shares necessary to reduce the number of shares subject to Cash Elections to the
Maximum Number of Cash Election Shares (or the most practicable number thereof
immediately below such number). The shares for which the Cash Elections are
accepted will be treated as "Cash Election Shares" and all other shares of
Dundee Common Stock (including those for which Cash Elections are rejected or
are not properly submitted) will be treated as "Non-Cash Election Shares."
D. MERGER CONSIDERATION FOR NON-CASH ELECTION SHARES
The maximum number of shares of Springs Class A Stock into which shares of
Dundee Common Stock will be converted in the Merger will be 3,000,000 shares. If
Dundee shareholders not making Cash Elections or exercising dissenters' rights
would otherwise be entitled to receive a total of more than 3,000,000 shares of
Springs Class A Stock, a number of shares of Dundee Common Stock (pro rata as
nearly as practicable as to each holder of ten or more shares) will be treated
as having been subject to Cash Elections, as necessary to reduce the number of
shares of Springs Class A Stock issued to 3,000,000.
E. EXCHANGE OF CERTIFICATES FOR NON-CASH ELECTION SHARES
Certificates representing Non-Cash Election Shares should be submitted to
the Exchange Agent with the attached Letter of Transmittal. If no Cash Election
is being made, the Cash Election Form contained in the Letter of Transmittal
should be left blank. Dundee shareholders who do not complete the Cash Election
Form will be deemed not to have made any Cash Election. It is not necessary to
return the completed Letter of Transmittal with your stock certificates for
shares of Dundee Common Stock by , 1995 if you are not making a
Cash Election, although it is acceptable to do so.
F. NO FRACTIONAL SHARES OF SPRINGS CLASS A STOCK
No fractional shares of Springs Class A Stock will be issued. Each holder
of Dundee Common Stock who would otherwise be entitled to a fractional share of
Springs Class A Stock as part of the Merger Consideration will, upon surrender
of such holder's Dundee stock certificate, receive from Springs a cash payment
(without interest) equal to the fractional share to which such holder would
otherwise be entitled multiplied by the price of Springs Class A Stock used in
computing the Merger Consideration.
(ii)
<PAGE> 13
GENERAL INSTRUCTIONS
1. General
The Letter of Transmittal or a photocopy of it should be properly filled
in, dated and signed, and should be delivered (together with all of your stock
certificates representing shares of Dundee Common Stock) to the Exchange Agent
at the appropriate address set forth in the Letter of Transmittal. THE METHOD OF
DELIVERY OF ALL DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR OPTION AND RISK, BUT
IF SENT BY MAIL, CERTIFIED OR REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. THESE DOCUMENTS MUST BE SENT DIRECTLY TO THE EXCHANGE AGENT AND NOT
TO DUNDEE.
2. Signatures
The signature (or signatures, in the case of certificates owned by two or
more joint holders) on the Letter of Transmittal must correspond exactly to the
name as written on the face of the stock certificate(s) sent to the Exchange
Agent, unless the shares of Dundee Common Stock have been transferred by the
registered holder. (If there has been any such transfer, the signatures on this
Letter of Transmittal should be signed in exactly the same form as the name of
the last transferee indicated on the accompanying stock powers attached to or
endorsed on the certificate(s)). (See General Instruction 4 below.) If there is
insufficient space to list all of your stock certificates being submitted to the
Exchange Agent or to respond to any other information, please use Attachment A
or Attachment B (if applicable) or attach a separate sheet.
If shares of Dundee Common Stock are registered in different names on
several certificates, it will be necessary to complete, sign and submit a
separate Letter of Transmittal for each different registration of certificates.
For example, if some certificates are registered solely in your name, some are
registered solely in your spouse's name and some are registered jointly in the
name of you and your spouse, three separate Letters of Transmittal should be
submitted.
3. Checks and/or Certificates in Same Name
If checks in payment of any cash merger consideration and/or any new stock
certificates (representing shares of Springs Class A Stock) are to be payable to
the order of and registered in exactly the same name as inscribed on the
surrendered certificate(s) (representing Dundee Common Stock), you will not be
required to endorse the old certificates or make payment for transfer taxes or
have your signature guaranteed. For corrections in name or changes in name not
involving changes in ownership, see General Instruction 4(d).
4. Checks and/or Certificates in Different Names
(IGNORE THIS INSTRUCTION 4 IF THE FIRST SENTENCE OF INSTRUCTION 3 APPLIES.)
If checks in payment of any cash merger consideration and/or any new stock
certificates (representing shares of Springs Class A Stock) are to be payable to
the order of and registered in a different name from exactly the registered name
inscribed on the surrendered certificate(s), please follow these instructions:
(a) Endorsement and Guarantee. The certificate(s) surrendered must be
properly endorsed or accompanied by appropriate stock power(s) properly
executed by the record holder of such certificate(s) to the person who is
to receive the check or certificate. The signature of the record holder on
the endorsement(s) or stock power(s) must correspond with the name that
appears on the face of the certificate(s) in every particular and must be
guaranteed by a financial institution or brokerage firm having membership
in good standing in a recognized guarantee program (Securities Transfer
Agent Medallion Program, New York Stock Exchange Medallion Signature
Program or Stock Exchange Medallion Program (a "Qualified Guarantor")). If
this General Instruction 4 applies, please check with your financial
institution or brokerage firm right away to determine whether it is a
Qualified Guarantor or will need to help you locate a Qualified Guarantor.
No guarantee will be accepted if the aggregate value of the Dundee shares
subject to the signature guarantee exceeds the limit authorized for the
Qualified Guarantor. Notaries Public cannot execute acceptable guarantees
of signatures.
(b) Transferee's Signature. If a certificate has previously been
properly transferred but the transfer has not yet been recorded on the
books of Dundee, the Letter of Transmittal must be signed by the transferee
or by his agent and should not be signed by the transferor. The signature
of such transferee or agent on the Letter of Transmittal must be guaranteed
by a Qualified Guarantor as defined in General Instruction 4(a).
(c) Transfer Taxes. In the event that any transfer or other tax
becomes payable by reason of the issuance of a check in payment of any cash
merger consideration and/or the issuance of any stock certificates for
Springs Class A Stock in any name other than that of the record holder, the
transferee or assignee must pay such tax to the Exchange Agent or must
establish to the satisfaction of the Exchange Agent that such tax has been
paid.
(d) Correction of or Change in Name. For a correction in name, the
surrendered certificate(s) should be appropriately endorsed, for example,
"James E. Brown, incorrectly inscribed as James S. Brown," with the
signature guaranteed by a Qualified Guarantor as defined in General
Instruction 4(a). For a change in name by marriage, etc., the surrendered
certificate(s) should be appropriately endorsed, for example, "Mary Doe,
now by marriage Mrs. Mary Jones," with the signature guaranteed by a
Qualified Guarantor as defined in General Instruction 4(a).
(iii)
<PAGE> 14
5. Supporting Evidence
If the Letter of Transmittal, certificate, endorsement or stock power is
executed by an agent, trustee, executor, administrator, guardian, attorney, or
any other person acting in a representative or fiduciary capacity, or by an
officer of a corporation on behalf of the corporation, such person should so
indicate when signing and must submit with the Letter of Transmittal,
surrendered certificate(s) and stock power(s), documentary evidence of
appointment and authority to act in such capacity (including court orders and
corporate resolutions when necessary) as well as evidence of the authority of
the person making such execution to assign, sell or transfer the shares. Such
documentary evidence of authority must be in a form satisfactory to the Exchange
Agent.
6. Validity of Surrender
A surrender of certificate(s) will not be deemed to have been made until
all irregularities and defects have been cured or waived. All questions as to
validity, form and eligibility of any surrender of the certificate(s) will be
determined by Springs (which may delegate power in whole or in part to the
Exchange Agent), and such determination will be final and binding.
7. Federal Tax Withholding
Under federal income tax law, the Exchange Agent is required to file a
report with the Internal Revenue Service ("IRS") disclosing the payments being
made to you as an exchanging shareholder. Federal law also requires each
shareholder to provide the Exchange Agent with a correct Taxpayer Identification
Number ("TIN") on a Substitute Form W-9 set forth in the Letter of Transmittal.
If the Exchange Agent is not provided with the correct TIN, you may be subject
to a $50 penalty by the IRS and payments that are made to you with respect to
surrendered shares may be subject to backup withholding. If you are an
individual, your TIN is your social security number. Your TIN number should be
included in Part I of the substitute W-9 form provided in the Letter of
Transmittal.
If you are exempt from backup withholding, you should complete the
substitute W-9 to avoid possible erroneous backup withholding. Enter your
correct TIN in Part I, write "EXEMPT" in the block in Part II, and sign and date
the form.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments to be made to you. Backup withholding is not an additional
tax. Rather, the amount of tax withheld will be applied as a credit against the
tax liability of persons subject to backup withholding. If withholding results
in an overpayment of taxes, a refund may be obtained by filing a tax return with
the IRS. The Exchange Agent cannot refund amounts withheld by reason of backup
withholding. Certain shareholders, such as corporations, are exempt from backup
withholding and should so indicate by writing "exempt" on the substitute W-9 in
the Letter of Transmittal.
To complete the form if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I and sign and date the form. Generally, you will then
have 60 days to obtain a TIN and furnish it to the Exchange Agent. If the
Exchange Agent does not receive your TIN within 60 days, backup withholding may
apply.
8. Lost Stock Certificates
If you are unable to locate your certificates representing shares of Dundee
Common Stock, you should follow the "Instructions for Completing Notice of Lost
Stock Certificate(s)" on Attachment C to the Letter of Transmittal.
9. Miscellaneous
As soon as practicable after the Effective Time, the Exchange Agent will
begin mailing and delivering checks and stock certificates for Springs Class A
Stock in exchange for stock certificates representing shares of Dundee Common
Stock that have been received by the Exchange Agent. There will be a delay,
however, if General Instruction 7 applies.
No holder of any surrendered certificate for shares of Dundee Common Stock
will be entitled under any circumstances to receive any interest on cash to be
received in the Merger.
Additional copies of the Letter of Transmittal may be obtained from the
Exchange Agent.
For further information or assistance concerning the Letter of Transmittal,
contact the Exchange Agent, Wachovia Bank of North Carolina, N.A., at (800)
633-4236.
(iv)
<PAGE> 1
EXHIBIT 99.3
FORM OF OPTION AND IRREVOCABLE PROXY
THIS AGREEMENT, dated as of February , 1995, between Springs Industries,
Inc., a South Carolina corporation ("Springs"), and
(the "Shareholder"), a shareholder of Dundee Mills, Incorporated, a Georgia
corporation ("Dundee"),
WITNESSETH:
WHEREAS, Dundee and Springs propose to negotiate and enter into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Dundee
would be merged with a wholly-owned subsidiary of Springs (the "Merger") and the
holders of Dundee's Common Stock ("Dundee Stock"), would receive shares of
Springs's Class A Common Stock, par value $0.25 per share ("Springs Common
Stock") and, subject to a limited election, cash, for shares of Dundee Common
Stock;
WHEREAS, Springs may be required to incur substantial expenses in
connection with the negotiation and performance of the Merger Agreement;
WHEREAS, Springs, as a condition to its willingness to negotiate and enter
into the Merger Agreement, has required the Shareholder to grant Springs,
effective upon execution of the Merger Agreement by Springs and Dundee, an
option and irrevocable proxy with respect to shares of Dundee Stock owned
by the Shareholder, together with any additional shares of Dundee Stock
hereafter acquired by the Shareholder (pursuant to Section 6, by purchase or
otherwise) (such specified number of shares, and any additional shares when and
if they are acquired, being referred to as the "Shares") on the terms and
conditions hereinafter set forth; and
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION. The Shareholder hereby grants to Springs an option
(the "Option") to purchase all or any portion of the Shares at a purchase
price of Two Thousand Five Hundred Twenty Five Dollars ($2,525) per share
(the "Purchase Price") in cash (subject to adjustment pursuant to Section 6
below) for each Share purchased.
2. EXERCISE OF OPTION. At any time following the execution of the
Merger Agreement and prior to the expiration of the Option in accordance
with the terms of Section 11, Springs may exercise the Option, in whole, or
in part, if:
(a) Shareholder fails to perform any agreement or covenant of
Shareholder contained herein; or
(b) (i) Dundee (or its Board of Directors or any committee thereof)
shall have authorized, recommended, proposed, or publicly announced its
intention to enter into, any merger (other than the Merger),
consolidation, share exchange, liquidation, dissolution, business
combination, recapitalization, acquisition or disposition of a material
amount of assets or securities or any comparable transaction (each an
"Acquisition Transaction") which has not been consented to in writing by
Springs;
(ii) the Board of Directors of Dundee (or a committee thereof)
shall have withdrawn or materially modified its authorization, approval
or recommendation to the shareholders of Dundee with respect to the
Merger or the Merger Agreement or shall have failed to make such a
favorable recommendation as required by the Merger Agreement and at such
time there is a "Competing Transaction" (as defined in the Merger
Agreement);
(iii) any person, entity or group (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) shall have commenced or
publicly proposed to commence a tender offer or an exchange offer for
twenty-five percent (25%) or more of the then total outstanding shares
of Common Stock of Dundee;
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(iv) any person, entity or group (as defined above) shall have
commenced or publicly proposed to commence any solicitation of proxies
with respect to Dundee's outstanding shares of Common Stock; or
(v) any person, entity or group (as defined above) shall have
acquired or beneficially own twenty percent (20%) or more of the then
issued and outstanding shares of Dundee's Common Stock (excluding the
existing shareholders of Dundee Common Stock);
provided, however, that the Option may not be exercised if Springs is in
material default in respect of the performance of its material obligations
under the Merger Agreement. At any time when Springs wishes to exercise the
Option, Springs shall give written notice (the "Notice") to the Shareholder
specifying a place and a date not less than one nor more than five business
days from the date of the Notice for the closing of such purchase;
provided, however, that such date may be extended to the extent necessary
to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act") and applicable regulations thereunder.
3. PAYMENT AND DELIVERY OF CERTIFICATE(S). At the Closing hereunder:
(a) Springs will make payment to Shareholder of the aggregate
Purchase Price for the Shares being purchased upon exercise of the
Option in immediately available funds in the amount of the Purchase
Price multiplied by the total number of Shares by wire transfer to a
bank designated by Shareholder prior to such Closing; and
(b) Shareholder will deliver to Springs against payment to
Shareholder as provided in Section 3(a), a certificate or certificates
representing the number of Shares so purchased by Springs duly endorsed
or with executed blank stock power attached, in either event with
signature guaranteed such that registered ownership of the Shares may be
registered for transfer on the books of the Company.
4. IRREVOCABLE PROXY. The Shareholder hereby irrevocably appoints
Springs or any designee of Springs the lawful agent, attorney and proxy of
such Shareholder, effective upon execution of the Merger Agreement and
during the term of this Agreement, to vote all of the Shares at any meeting
or in connection with any written consent of the Dundee shareholders (i) in
favor of the Merger, (ii) in favor of the Merger Agreement and any other
related transactions or matters presented in connection with the Merger
combination, (iii) against any action that would violate or conflict with
the Merger Agreement, and (iv) against any other proposal which provides
for any merger, sale of assets or other business combination between Dundee
and any other person or entity or which would make it impractical for
Springs to effect the Merger; provided, however, that this proxy shall be
ineffective at the meeting of Dundee shareholders called to consider
approval of the Merger if the "Reported Market Price" (as defined in the
Merger Agreement) of Springs Common Stock at the date of such meeting is
less than $30 per share, unless at such date there is a "Competing
Transaction" (as defined in the Merger Agreement). This proxy shall not
authorize Springs to vote the Shares on any matters other than those
specified above which may be presented to Dundee's shareholders at any
meeting or in connection with any written consent of the shareholders.
5. LEGENDING OF CERTIFICATES; NOMINEE SHARES. The Shareholder agrees
to submit to Springs contemporaneously with or promptly following execution
of this Agreement (and promptly following receipt of any additional
certificates with respect to any additional Shares acquired hereafter) all
certificates representing the Shares so that Springs may note thereon a
legend referring to the option and proxy granted to it by this Agreement.
If any of the Shares beneficially owned by the Shareholder are held of
record by a brokerage firm in "street name" or in the name of any other
nominee (a "Nominee," and, as to such Shares, "Nominee Shares"), the
Shareholder agrees that, upon written notice by Springs requesting it, the
Shareholder will within five days of the giving of such notice execute and
deliver to Springs a limited power of attorney in such form as shall be
reasonably satisfactory to Springs enabling Springs to require the Nominee
to grant to Springs an option and irrevocable proxy to the same effect as
Sections 1, 2 and 4 hereof with respect to the Nominee Shares held by such
Nominee
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and to submit to Springs the certificates representing such Nominee Shares
for notation of the above-referenced legend thereon.
6. ADJUSTMENTS TO PREVENT DILUTION, ETC. In the event of a stock
dividend or distribution, or any change in Dundee Common Stock by reason of
any stock dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term "Shares" shall be deemed to refer to and
include the Shares as well as all such stock dividends and distributions
and any shares into which or for which any or all of the Shares may be
changed or exchanged. In such event, the amount to be paid per share by
Springs shall be proportionately adjusted.
7. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The Shareholder
represents and warrants to Springs that:
(a) The Shareholder is the sole beneficial owner of the Shares; the
Shares are all of the shares of the capital stock of Dundee owned
beneficially or of record by the Shareholder; the Shares are validly
issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof; and the Shareholder has good title
to the Shares, free and clear of any agreements, liens, adverse claims
or encumbrances whatsoever with respect to the ownership of or the right
to vote the Shares.
(b) The Shareholder has the full right, power and authority to
enter into this Agreement, and this Agreement has been duly and validly
executed and delivered by the Shareholder and is a valid and binding
agreement, enforceable against the Shareholder in accordance with its
terms.
(c) The execution, delivery and performance of this Agreement will
not, with or without the giving of notice or the passage of time, (i)
violate any judgment, injunction or order of any court, arbitrator or
governmental agency applicable to the Shareholder, or (ii) conflict
with, result in the breach of any provision of, constitute a default
under, or require the consent of any third party under, any agreement,
instrument, judgment, order or decree to which the Shareholder is a
party or by which the Shareholder may be bound.
8. ADDITIONAL COVENANTS OF THE SHAREHOLDER. The Shareholder hereby
covenants and agrees that upon execution of the Merger Agreement:
(a) The Shareholder will not enter into any transaction, take any
action, or by inaction permit any event to occur that would result in
any of the representations or warranties of such Shareholder herein
contained not being true and correct.
(b) Until the termination of this Agreement, the Shareholder shall
not, directly or indirectly, through any employee, agent or otherwise:
(i) solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a
material part of the assets of, or any equity interest in, or any
merger, consolidation or business combination with, Dundee or any of its
subsidiaries (an "acquisition proposal"), or (ii) participate in any
discussions or negotiations regarding, or furnish to any other person
any information with respect to, or otherwise cooperate in any way or
assist, facilitate or encourage any acquisition proposal by any other
person except for actions taken by the Shareholder in his capacity as a
director of Dundee as may be permitted by the Merger Agreement.
(c) Until the termination of this Agreement, the Shareholder will
at all times use his or its best efforts to prevent Dundee from taking
any action precluded by the Merger Agreement.
(d) Until the termination of this Agreement, Shareholder shall not
transfer, pledge, hypothecate, transfer by gift, or otherwise dispose of
the Shares in any manner whatsoever or agree to do any of the foregoing;
(e) The Shareholder shall execute and deliver any additional
documents reasonably necessary or desirable, in the opinion of Springs's
or Dundee's counsel, to evidence the Option granted in
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<PAGE> 4
Sections 1 and 2 and the irrevocable proxy granted in Section 4 with
respect to the Shares or otherwise implement and effect the provisions
of this Agreement.
(f) Subject to the terms hereof, the Shareholder shall use his or
its best efforts to effectuate the Merger.
9. REPRESENTATIONS AND WARRANTIES OF SPRINGS. Springs represents and
warrants to the Shareholder that:
(a) Springs has all requisite corporate power and authority to
enter into and perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action on the part of Springs.
This Agreement has been duly executed and delivered by Springs and is a
valid and binding agreement, enforceable against Springs in accordance
with its terms.
10. COOPERATION AS TO REGULATORY MATTERS. Springs will, and the
Shareholder will use its best efforts to cause Dundee to, seek all
consents, authorizations, clearances, orders or approvals of any executive,
judicial or other public authority, agency, department, bureau, division,
unit or course or other public body, person or entity required in
connection with the transactions contemplated hereby and comply fully with
all applicable notification, reporting and other requirements of the HSR
Act and cooperate with one another in satisfying such requirements. As
promptly as possible after the execution hereof, Springs will, and the
Shareholder will use its best efforts to cause Dundee to, file any required
notifications with the Federal Trade Commission ("FTC") and the Antitrust
Division of the Department of Justice ("Justice") pursuant to and in
compliance with the HSR Act. The Shareholder shall cause Dundee to, and
Springs shall, use their best efforts to promptly supply information
required by the FTC and Justice under the HSR Act. At all times from the
date hereof until the termination of this Agreement, the Shareholder shall
use its best efforts to cause Dundee to cooperate fully and promptly with
Springs's efforts to obtain any and all regulatory approvals and to make
any filings under federal and state securities laws necessary in connection
with the transactions contemplated hereby.
11. TERMINATION. This Agreement shall terminate on the earlier of (i)
the Effective Time (as defined in the Merger Agreement) of the Merger or
(ii) 30 days following the date of termination of the Merger Agreement.
Notwithstanding the foregoing, in the event litigation is brought by a
third party against Dundee or Springs which either party reasonably
believes, on the advice of counsel, prohibits or materially interferes with
the consummation of the Merger (the "Pending Litigation"), then Springs's
right to acquire Dundee Stock hereunder shall not terminate until the
earlier of (i) 30 days after the final resolution of the Pending Litigation
or (ii) December 31, 1995. Furthermore, in the event that Springs is at any
time prohibited from exercising any option it holds to obtain shares of
Dundee Stock as a result of the HSR Act or FTC or Justice actions , then
this Agreement shall not terminate until (i) the earlier of 30 days from
the date such prohibition is removed by FTC or Justice, or (ii) December
31, 1995.
12. BINDING EFFECT; ASSIGNMENT. All rights and authority granted
herein by the Shareholder shall survive the death or incapacity of such
Shareholder. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective heirs, personal representatives,
successors and permitted assigns. Springs may assign its rights and
obligations hereunder to an entity controlled by or under common control
with Springs. The Shareholder shall not assign its rights or obligations
hereunder without Springs's written consent except pursuant to the
Shareholder's last will and testament or applicable laws of intestate
succession.
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<PAGE> 5
13. NOTICES. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally
or by Federal Express or other courier service or sent by express mail,
postage prepaid, return receipt requested, addressed to the respective
party at the applicable address below, on the date of such personal
delivery or on the date received:
<TABLE>
<S> <C>
If to Springs: Springs Industries, Inc.
205 North White Street
Fort Mill, SC 29715
Attn: Legal Department
with a copy to: Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, GA 30309-3996
Attn: George L. Cohen
If to the Shareholder:
Attn:
with a copy to:
Attn:
</TABLE>
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
14. INJUNCTIVE RELIEF; REMEDIES CUMULATIVE.
(a) Each party hereto acknowledges that the other party will be
irreparably harmed and that there will be no adequate remedy at law for
a violation of any of the covenants or agreements of such party that are
contained in this Agreement. It is accordingly agreed that, in addition
to any other remedies that may be available to the non-breaching party
upon the breach by any other party of such covenants and agreements, the
non-breaching party shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of such covenants or agreements
or otherwise to obtain specific performance of any of such covenants or
agreements.
(b) No remedy conferred upon or reserved to any party herein is
intended to be exclusive of any other remedy, and every remedy shall be
cumulative and in addition to every other remedy herein or now or
hereafter existing at law, in equity or by statute.
15. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia, without regard to the
principles of conflicts of laws thereof.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which together shall constitute a single agreement.
17. EFFECT OF PARTIAL INVALIDITY. Whenever possible, each provision of
this Agreement shall be construed in such a manner as to be effective and
valid under applicable law. If any provision of this Agreement or the
application thereof to any party or circumstance shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the
extent of such prohibition without invalidating the remainder of such
provision or any other provisions of this Agreement or the application of
such provision to the other party or other circumstances.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first above written.
--------------------------------------
By:
------------------------------------
SPRINGS INDUSTRIES, INC.
By:
------------------------------------
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