STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT ("Agreement"), effective as of the date of the
last signing below, is between Garan, Incorporated ("Garan"), Royce &
Associates, Inc. ("Royce"), Brandywine Asset Management, Inc. ("Brandywine"),
and Xxxx Xxxxx, Inc. ("Xxxx Xxxxx").
RECITALS
WHEREAS, Royce and Brandywine (each a "Xxxx Xxxxx Subsidiary,"
collectively, the "Xxxx Xxxxx Subsidiaries") are wholly-owned subsidiaries of
Xxxx Xxxxx;
WHEREAS, the Xxxx Xxxxx Subsidiaries are registered investment advisers
that provide discretionary investment advisory services to various individual,
institutional and other clients ("Clients");
WHEREAS, as a result of the investment advisory services provided to
Clients, the Xxxx Xxxxx Subsidiaries together with their "Affiliates," as that
term is defined in Garan's Amended and Restated Rights Agreement dated April
21, 1993 (the "Rights Agreement"), including Private Capital Management, L.P.,
may be deemed to be the "Beneficial Owner" (as defined in the Rights
Agreement) of more than 20% of the issued and outstanding common stock of
Garan ("Garan Stock");
WHEREAS, the Xxxx Xxxxx Subsidiaries and Xxxx Xxxxx are willing to
execute this Agreement, provided Garan and its Board of Directors do not
initiate any course of action under the Rights Agreement that would result in
a dilution of the Xxxx Xxxxx Subsidiaries' holdings in Garan Stock as a result
of the present ownership of Garan Stock by Xxxx Xxxxx and its subsidiaries and
Affiliates;
NOW, THEREFORE, for and in consideration of the mutual promises set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed by Garan, the Xxxx
Xxxxx Subsidiaries and Xxxx Xxxxx as follows:
1. Standstill by Xxxx Xxxxx Subsidiaries
Each Xxxx Xxxxx Subsidiary agrees that, absent the prior written consent of
Garan, it will not:
(a) Acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise for value, or initiate contact with any
person with the intent to advise, encourage, or assist such person to purchase
or acquire in any manner any shares of Garan Stock, or participate with or
provide assistance to any person in the purchase or other acquisition of Garan
Stock;
(b) Form, join, or in any way participate in a "group" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 ("Exchange
Act") with respect to Garan Stock;
(c) "Solicit" proxies with respect to Garan Stock under any
circumstances or become a "participant" by taking a position contrary to that
of the Board of Directors of Garan in any contest relating to the election of
directors of Garan or any other matters submitted to shareholders at an annual
meeting or any special meeting; a Xxxx Xxxxx Subsidiary shall be deemed to
"solicit" or to be such a "participant" if it counsels or advises or otherwise
provides assistance to any person who undertakes or makes such a
"solicitation" or is such a "participant" but shall not, in any event, be
deemed to "solicit" or to be such a "participant" by reason of the exercise,
in compliance with this Agreement, of its voting rights with respect to Garan
Stock; or
(d) Initiate, commence or propose, or induce or attempt to induce, or
give encouragement to any other person to initiate, commence or propose, any
tender or exchange offer for Garan Stock or any "affiliated transaction" (as
that term is defined in Section 13.1-725 of the Code of Virginia, as in effect
on the date of this Agreement, but with the phrase "any other Person"
substituted for the phrase "any interested shareholder").
2. Standstill Instruction by Xxxx Xxxxx
Xxxx Xxxxx will instruct all of its investment advisory subsidiaries, other
than Xxxx Xxxxx Xxxx Xxxxxx , Incorporated ("LMWW"), to refrain from acquiring
any additional shares of Garan Stock for themselves or for any discretionary
client account for so long as Xxxx Xxxxx'x subsidiaries, in the aggregate, may
be deemed to be the Beneficial Owner of 20% or more of the outstanding Garan
Stock.
3. Standstill by Garan
Based upon the amended Sections 1(a) and 1(e)(i) of the Rights Agreement,
copies of which are attached, and the understanding that shares of Garan Stock
which LMWW may be deemed to beneficially own shall not be taken into account,
Garan and its Board of Directors agree not to take any action, including but
not limited to actions available under the Rights Agreement, that would result
in a dilution of the Xxxx Xxxxx Subsidiaries' holdings in Garan Stock as a
result of the current holdings of Garan Stock by Xxxx Xxxxx and/or its
subsidiaries and Affiliates.
4. Dispute Resolution
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration by one arbitrator in New York,
New York, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
5. Notices
All notices and other communications hereunder shall be given or made in
writing and shall be delivered personally, or sent by telex, facsimile,
express delivery or registered or certified mail, postage prepaid, return
receipt requested, to the party or parties to whom they are directed at the
following address, or at such other addresses as may be designated by notice
from such party to all other parties.
To Garan:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxxxxx, Chairman
With a copy to:
Xxxxxxxxxx Xxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
To Royce:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
To Brandywine:
Three Xxxxxxxxx Centre
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:____________________
To Xxxx Xxxxx:
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Legal and Compliance Department
6. Miscellaneous
Each of the undersigned agrees that this Agreement: (a) shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia as
if it was an agreement made and to be performed entirely within such State;
(b) may not be modified or amended except by a writing signed by each of the
undersigned; (c) may not be assigned by the undersigned; (d) shall be binding
upon each of Xxxxx, Xxxxx, Brandywine, and Xxxx Xxxxx and their successors;
and (e) contains the entire agreement and understanding between the
undersigned with respect to the subject matter of this Agreement and
supersedes all prior agreements, arrangements, and understandings, written or
oral, between the undersigned with respect to the subject matter of this
Agreement.
IN WITNESS WHEREOF, each party has signed or caused its representative
to sign this Agreement on the dates indicated below.
GARAN, INCORPORATED
By: /S/___________________________ Date: November 5, 2001
Xxxxxxx Xxxxxxxxxxxx, Chairman
ROYCE & ASSOCIATES, INC.
By: /S/___________________________ Date: November 1, 2001
______________________________
BRANDYWINE ASSET MANAGEMENT, INC.
By: /S/___________________________ Date: November 5, 2001
______________________________
XXXX XXXXX, INC.
By: /S/___________________________ Date: November 7, 2001
"1(a) 'Acquiring Person' shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall at any time become
the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
or any Person or entity organized, appointed or established by the Company or
any Subsidiary of the Company for or pursuant to the terms of any such plan;
provided that if such Person, together with all Affiliates and Associates of
such Person, became the Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding as a result of (i) a decrease in the number of
outstanding shares of Common Stock caused by a transaction approved by the
Continuing Directors or (ii) a merger or other business combination involving
such Person that the Continuing Directors determine was not effected for the
purpose of increasing such Person's ownership of shares of Common Stock, then
such Person shall not be an Acquiring Person until such time as both (A) such
Person or an Affiliate or Associate of such Person becomes the Beneficial
Owner of one or more additional shares of Common Stock (other than as the
result of a subsequent transaction described in clause (i) or (ii) above), and
(B) such Person, together with all Affiliates and Associates of such Person,
is then the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding."
"1(e)(i) that such Person or any of such Person's Affiliates or
Associates own, directly or indirectly, provided that ownership of shares of
Common Stock shall not be attributed to any Person if, assuming such shares
constituted more than 5% of the outstanding shares of Common Stock, such
Person's ownership thereof would meet the conditions in Rule 13d-1(b)(1) of
the Exchange Act for reporting on Schedule G, rather than Schedule D;"
