SPAN Span-America Medical Systems, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported)

September 28, 2015

 

 

SPAN-AMERICA MEDICAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

 

South Carolina		0-11392		57-0525804
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer  Identification No.)

 

 

70 Commerce Center, Greenville, South Carolina	29615
(Address of principal executive offices)	(Zip Code)

 

Registrant’s telephone number, including area code

(864) 288-8877

 

N/A

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On September 28, 2015, Span-America Medical Systems, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased (the “Zucker Trustee”), and Robert B. Johnston, a director of the Company, pursuant to which the Company purchased 249,310 shares of the Company’s common stock from Ms. Zucker (in her capacity as trustee) and 12,000 shares of the Company’s common stock from Mr. Johnston at a price of $17.49 per share or an aggregate of $4,570,312. The $17.49 per share purchase price was the closing price of the Company’s common stock on the Nasdaq Global Market on Thursday, September 24, 2015, the day before the parties started negotiating the transaction. The Company used cash on hand to pay the entire purchase price of the common stock and obtained a waiver from its credit facility lender with respect to a covenant restricting stock purchases in excess of $1 million in any 12-month period. Ms. Zucker is the Chairperson and Chief Executive Officer of The InterTech Group, Inc. (“InterTech”), and Mr. Johnston is the Executive Vice President and Chief Strategy Officer of InterTech. The transaction resulted in Ms. Zucker, Mr. Johnston, InterTech and their affiliates and associates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) ceasing to beneficially own any shares of the Company’s common stock. Immediately prior to the acquisition, the acquired shares represented approximately 9% of the Company’s outstanding shares.

 

Mr. Johnston resigned from his position as a director of the Company upon execution and delivery by the parties of the Stock Purchase Agreement.

 

Also simultaneously with the Company’s entry into the Stock Purchase Agreement, the Company, the Zucker Trustee, Mr. Johnston and InterTech, entered into an Amended & Restated Standstill Agreement that amended and restated in its entirety the Standstill Agreement between those parties dated March 1, 2013 (the “Original Standstill Agreement”), a copy of which was filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the commission on March 5, 2013. The Amended & Restated Standstill Agreement reduced the maximum beneficial ownership of the Company’s common stock that Ms. Zucker, Mr. Johnston, InterTech and their affiliates and associates can acquire during the standstill period under the agreement from 20% to 5% of the Company’s total outstanding common stock and deleted provisions related to the continued service of Mr. Johnston or any other InterTech affiliate as a director of the Company. The standstill period under the agreement will expire on September 28, 2016.

 

Copies of the Amended & Restated Standstill Agreement and the Stock Purchase Agreement are filed herewith as Exhibits 4.1 and 10.1 hereto, respectively, and the descriptions of these agreements set forth above are qualified in their entireties by reference to the texts of the agreements which are incorporated herein by reference.

 

Item 5.02. Departure of Director.

 

Upon execution and delivery by the parties of the Stock Purchase Agreement, Mr. Johnston resigned from his position as a director of the Company. The Company understands that Mr. Johnston resigned because he and other affiliates and associates of Ms. Zucker and InterTech ceased to beneficially own any shares of the Company’s common stock.

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Number

Description of Exhibit

 

4.1	Amended & Restated Standstill Agreement dated September 28, 2015 between the Company, Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased, Robert B. Johnston and The InterTech Group, Inc.

 

10.1	Stock Purchase Agreement dated September 28, 2015 by and between the Company, Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased, and Robert B. Johnston.

 

99.1	Press Release dated October 2, 2015.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	SPAN-AMERICA MEDICAL SYSTEMS, INC.
		(Registrant)
Date: October 2, 2015
	By:	/s/ Richard C. Coggins
		Richard C. Coggins
		Chief Financial Officer

 

 

EXHIBIT INDEX

 

Exhibit Number

Description of Exhibit

 

4.1	Amended & Restated Standstill Agreement dated September 28, 2015 between the Company, Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased, Robert B. Johnston and The InterTech Group, Inc.

 

10.1	Stock Purchase Agreement dated September 28, 2015 by and between the Company, Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased, and Robert B. Johnston.

 

99.1	Press Release dated October 2, 2015.

 

Exhibit 4.1

 

 

AMENDED & RESTATED STANDSTILL AGREEMENT

 

This Amended & Restated Standstill Agreement (this “Agreement”) is made and entered into as of September 28, 2015 between Span-America Medical Systems, Inc., a South Carolina corporation (the “Company”), Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased (the “Zucker Trustee”), Robert B. Johnston, a natural person residing on The Isle of Palms, South Carolina (“Johnston”) and The InterTech Group, Inc., a South Carolina corporation (“InterTech” and collectively with the Zucker Trustee and Johnston, the “InterTech Parties”) and amends and restates in its entirety that certain Standstill Agreement dated March 1, 2013 between the Company and the InterTech Parties (the “Original Standstill Agreement”).  The Company and the InterTech Parties are referred to herein as the “Parties” and each a “Party.”

 

WITNESSETH

 

WHEREAS, Mr. Johnston has resigned from the Company’s Board of Directors (the “Board”) pursuant to the resignation letter attached hereto as Exhibit A, as of the date hereof, the Zucker Trustee is selling to the Company an aggregate of 249,310 shares of Company’s no par value common stock (the “Company Common Stock”) and Johnston is selling to the Company 12,000 shares of Company Common Stock, which constitute all of the Company Common Stock Beneficially Owned by the Zucker Trustee and Johnston, all pursuant to a Stock Purchase Agreement of even date herewith by and among the Company, the Zucker Trustee and Johnston (the “Stock Purchase Agreement”), and no InterTech Party or any of their Affiliates or Associates Beneficially Owns any other shares of Company Common Stock; and

 

WHEREAS, the Company would not enter into the Stock Purchase Agreement unless the InterTech Parties amend and restate the Original Standstill Agreement as set forth herein;

 

NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein and in the Stock Purchase Agreement, the Parties hereto hereby agree to amend and restate the Original Standstill Agreement in its entirety to read in its entirety as set forth herein above and as follows:

 

ARTICLE 1: DEFINITIONS

 

1.1           Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

 

(a)     “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as such rule may be amended from time to time or any replacement rule.

 

(b)     A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to have “Beneficial Ownership” of and to “Beneficially Own” any securities:

 

(i)     which such Person or any of such Person’s Affiliates or Associates is considered to be a “beneficial owner” under Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as amended from time to time or any replacement rule (the “Exchange Act Regulations”); provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “Beneficially Own,” any securities under this subparagraph (i) as a result of an agreement, arrangement, or understanding to vote such securities if such agreement, arrangement, or understanding (A) arises solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act and the Exchange Act Regulations, and (B) is not reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report);

 

 

(ii)     which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate of such other Person) with which such Person (or any of such Person’s Affiliates or Associates) has any agreement, arrangement, or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or consent as described in the proviso to subparagraph (i) of this paragraph (b)) or disposing of such securities; or

 

(iii) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the satisfaction of conditions) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that under this paragraph (b) a Person shall not be deemed the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “Beneficially Own,” securities that may be issued upon exercise of the Rights or otherwise issued pursuant to the Rights Agreement; and further provided, however, that no decision reached, or action taken, by the Board or any committee thereof shall cause any Person (or any Affiliate or Associate of such Person) who is a member of the Board or such committee to be deemed, for the purposes of this Agreement, to be a Beneficial Owner of any securities Beneficially Owned by any other Person (or any Affiliate or Associate of such Person) who is a member of the Board or any committee thereof solely by reason of such membership on the Board or any committee thereof or participation in the decisions or actions thereof on the part of either or both of such Persons.

 

Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase, “then outstanding,” when used with reference to a Person’s Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed the Beneficial Owner hereunder.

 

(c)     “Company Acquisition Transaction” shall mean (i) the commencement (within the meaning of Rule 14d-2 of the General Rules and Regulations under the Exchange Act) of any tender offer or exchange offer involving any securities of the Company or any direct or indirect Subsidiary of the Company, (ii) the commencement by any party of a proxy contest with respect to the election of any directors of the Company, (iii) any purchase, sale, license, lease, exchange, transfer, disposition, or acquisition of any material portion of the business or assets of the Company or any direct or indirect Subsidiary of the Company (other than in the ordinary course of business), or (iv) any merger, consolidation, business combination, share exchange, reorganization, recapitalization, restructuring, liquidation, dissolution, winding-up or similar transaction or series of related transactions involving the Company or any direct or indirect Subsidiary of the Company.

 

(d)     “Group” shall have the meaning set forth in Section 13(d)(3) of the Exchange Act and Rule 13d-5 of the Exchange Act Regulations.

 

(e)     “InterTech Director” means Robert B. Johnston.

 

(f)     “Person” shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, trust, association, unincorporated organization, group or other entity, and shall include any successor (by merger or otherwise) of such entity.

 

(g)     “Standstill Period” shall mean the period from the date of this Agreement until the first anniversary of the date of this Agreement.

 

 

(h)     “Subsidiary” of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.

 

ARTICLE 2: STANDSTILL

 

2.1           Standstill Provisions.  Subject to Section 2.2, the InterTech Parties agree, on behalf of themselves and their respective Affiliates and Associates, that until the Standstill Period has expired, none of the Persons comprising the InterTech Parties will, or will permit or suffer any of their Affiliates or Associates to, in any manner, directly or indirectly:

 

(a)     subject to Section 2.2, acquire or retain any Beneficial Ownership of any securities of the Company or any securities of any Subsidiary or other Affiliate or Associate of the Company if such acquisition would result in the InterTech Parties and their respective Affiliates and Associates collectively Beneficially Owning 5.0% or more of the then outstanding Company Common Stock;

 

(b)      subject to Section 2.2, make, effect, initiate, cause or participate in, any Company Acquisition Transaction (other than one that has been approved by the Board);

 

(c)      make, effect, initiate, cause or participate in, any “solicitation” of “proxies” (as those terms are defined in Rule 14a-1 of the Exchange Act Regulations) or consents with respect to any securities of the Company; communicate with or seek to advise or influence any Person with respect to the voting of any Company Common Stock or other securities of the Company; or become a participant in any election contest with respect to the Company;

 

(d)     make, encourage or induce any other shareholder to make, or intentionally or significantly assist in any way any other shareholder in making, any shareholder proposal in respect of the Company, support or seek to advise or influence any other shareholder with respect to any shareholder proposal;

 

(e)     form or join in a partnership, limited partnership, syndicate or other Group with respect to the Company Common Stock or otherwise support or participate in any effort by a third party, with respect to the matters set forth in any of Sections 2.1(a), (b), (c) or (d) above, or deposit any Company Common Stock in a voting trust or subject any Company Common Stock to any voting agreement;

 

(f)     nominate or seek to nominate any person to the Board or seek to have called any meeting of the shareholders of the Company for any purpose or otherwise act, alone or in concert with others, to seek to control or influence the management, Board, or policies of the Company;

 

(g)     commence, prosecute or intentionally or significantly assist, or seek to cause others to commence, prosecute or intentionally or significantly assist, any legal action against the Board or the Company, either directly or derivatively, arising out of or in any way relating to the ownership or voting of Company Common Stock, governance of the Company and/or control of the Company;

 

(h)     initiate any communication with any customer or supplier of the Company or any of its Subsidiaries regarding matters relating to the Company or any of its Subsidiaries with a view towards interfering with or otherwise adversely affecting the relationship between the Company or any of its Subsidiaries and any such supplier or customer;

 

 

(i)     take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in this Section 2.1;

 

(j)      request or propose that the Company (or its directors, officers, employees or agents), directly or indirectly, amend or waive any provision of this Section 2.1, including this subsection (j);

 

(k)     agree or offer to take, or encourage or propose (publicly or otherwise) the taking of, any action referred to in any of subsections (a) through (j) of this Section 2.1 (where for the avoidance of doubt, for purposes of this Section 2.1, references to “subjections (a) through (j)” includes subsection (a) and subsection (j) and all subsections in between them);

 

(l)     assist, induce or encourage any other Person to take any action referred to in any of subsections (a) through (j) of this Section 2.1; or

 

(m)     enter into any discussions or arrangements with any third party with respect to the taking of any action referred to in any of subsections (a) through (j) of this Section 2.1.

 

2.2           Permitted Tender Offers.

 

(a)      For purposes of this Section 2.2, “Offer” means a bona fide tender offer or exchange offer to acquire at least 50.01% of the outstanding shares of the Company Common Stock.

 

(b)     Notwithstanding any of the provisions of Section 2.1 above to the contrary, in the event that any Person or Group commences an Offer, then one or more of the InterTech Parties may commence and consummate a tender offer or exchange offer to acquire no less than the amount of shares subject to the Offer and up to 100% of the outstanding shares of the Company Common Stock (not already held by InterTech Parties).

 

 

ARTICLE 3: CONFIDENTIALITY

 

3.1          Definition of Confidential Information. For purposes hereof, “Confidential Information” means any non-public, confidential or proprietary information that the Company or its agents provides or has provided to the InterTech Director or Mrs. Zucker, including without limitation, any non-public, confidential or proprietary information that the InterTech Director obtained in his capacity as a director of the Company, whether oral, in writing or in any other medium and shall include both tangible and intangible information; provided, however, that Confidential Information shall not include information which (i) at the time of disclosure, is generally available to the public, (ii) after disclosure by the Company, becomes published or generally available to the public, other than through any act or omission on the part of Mrs. Zucker, the InterTech Director or any of their Affiliates or Associates, or (iii) was rightfully acquired by Mrs. Zucker, the InterTech Director or any of their Affiliates or Associates from third parties who themselves rightfully acquired such information and who did not themselves obtain the information under a confidentiality agreement or relationship of confidence with the Company.

 

  

3.2          Confidentiality Covenant. Mrs. Zucker and The InterTech Director each agree not to, and agree to cause their Affiliates and Associate not to (a) disclose any Confidential Information to any Person (other than each other) or (b) use any Confidential Information for any purpose other than in connection with the InterTech Director fulfilling his duties as a member of the Board prior to the date hereof. Mrs. Zucker and the InterTech Director will be liable for any breach of this Article 3 by any of their Affiliates and Associates.

 

ARTICLE 4: REPRESENTATIONS, WARRANTIES & OTHER COVENANTS

 

4.1           Of Each Party. Each Party hereto represents and warrants to the other as follows:

 

(a)     Authorization.  Such Party has the requisite power, authority and legal capacity to execute, deliver and perform and to consummate the transactions contemplated by this Agreement.  Such Party, if not a natural person, has taken all actions necessary for this Agreement to be duly authorized and executed and delivered on its behalf by its duly authorized officer. This Agreement constitutes the legal, valid and binding obligation of such Party enforceable against such Party in accordance with its terms, except to the extent enforcement thereof may be limited by (i) applicable bankruptcy, reorganization, insolvency or moratorium laws, or other laws affecting the enforcement of creditors’ rights, (ii) general principles of equity or (iii) the discretion of any tribunal before with a dispute regarding enforcement may be arbitrated or adjudicated.

 

 (b)     No Consents.  No consent of any United States (federal, state, local) or foreign court or tribunal, or administrative, governmental or regulatory body, agency or authority or any other Person is required to be obtained by such Party in connection with the execution and delivery by such Party of this Agreement.

 

4.2           Of the InterTech Parties.

 

(a)     The InterTech Parties represent and warrant to the Company that as of the date hereof, prior to the effectiveness of the Stock Purchase Agreement, the Zucker Trustee is the holder of record of 249,310 shares of Company Common Stock, Johnston is the holder of record of 12,000 shares of Company Common Stock, and no InterTech Party or any of their Affiliates or Associates Beneficially Owns any other shares of Company Common Stock.

 

(b)     The InterTech Parties acknowledge and agree that the Company is entering into the Stock Purchase Agreement in reliance upon the InterTech Parties’ entry into this Agreement and that the Company would not have entered into the Stock Purchase Agreement but for the amendment and restatement of the Original Standstill Agreement as set forth herein.

 

ARTICLE 5: MISCELLANEOUS

 

5.1           Specific Enforcement.  Each Party hereto hereby acknowledges and agrees that irreparable harm would occur in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached or threatened to be breached. It is accordingly agreed that the Parties shall be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin any breach or threatened breach of any of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they may be entitled at law or in equity. Each Party hereby in advance agrees that the other Parties shall be entitled, upon a breach or threatened breach of this Agreement to the granting of injunctive relief without proof of actual damages. Each Party hereto further agrees to waive any requirement for the security or posting of any bond in connection with any request for specific performance, injunctive relief or any other equitable remedy.

 

 

5.2           Further Assurances.  The InterTech Parties shall use their reasonable efforts to cause their respective Affiliates and Associates to comply in all respects with the provisions of this Agreement applicable to the InterTech Parties to the same extent as if such Affiliates and Associates were original parties hereto.

 

5.3          Notices.  Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) when personally delivered at the address designated below, (b) when transmitted by facsimile or other electronic means, such as electronic mail, on a business day during normal business hours where such notice is to be received at the number or Email address designated below (with a confirming copy sent by overnight courier), (c) on the business day of delivery when sent by fully paid overnight courier, or (d) on the business day that is three (3) business days following the date of mailing by certified mail, postage prepaid, addressed to such address, whichever shall first occur.  The addresses for such communications shall be:

 

If to the Company:

Span-America Medical Systems, Inc.

P.O. Box 5231 (zip code 29606)

70 Commerce Center

Greenville, SC 29615

Attention: James D. Ferguson, President & CEO

Fax: (864) 288-8692

jferguson@spanamerica.com

 

With a copy to:

Wyche, P.A.

44 E. Camperdown Way

Greenville, SC 29601

Attention: Eric K. Graben, Esq.

Fax: (864) 235-8900

egraben@wyche.com

 

If to an InterTech Party:

Anita G. Zucker, Trustee of The Jerry Zucker Irrevocable Trust

The InterTech Group, Inc.

P.O. Box 5205

4838 Jenkins Avenue

North Charleston, SC 29405

Attention: Robert B. Johnston

Fax: (843) 747-4092

johnstonr@intertechsc.com

 

With a copy to:

The InterTech Group, Inc.

P.O. Box 5205

4838 Jenkins Avenue

North Charleston, SC 29405

Attention: Michael Bender, Esq., Corporate Counsel

Fax: (843) 747-4092

benderm@intertechsc.com

  

Any Party hereto may from time to time change its address for notices under this Section 5.3 by giving written notice of such changed address to the other Parties hereto.

 

 

5.4           Entire Agreement; Amendments.  This Agreement and the Stock Purchase Agreement contain the entire understanding of the Parties with respect to the matters covered hereby.  This Agreement may be amended only in writing executed by the Parties hereto.  The Parties hereto may amend this Agreement without notice to or the consent of any third party, including any Affiliate or Associate of the InterTech Parties.

 

5.5           Severability.  If any term, proviso, covenant, or restriction of this Agreement is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Agreement shall remain in full force and effect.

 

5.6          Waivers.  No waiver by any Party of any default with respect to any provision, condition, or requirement of this Agreement shall be deemed to be a continuing waiver in the future thereof or a waiver of any other provision, condition or requirement of this Agreement; nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

5.7           Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions of this Agreement.

 

5.8         Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and legal representatives.  No Party shall assign this Agreement or any rights hereunder without the prior written consent of the other Parties (which consent may be withheld for any reason in the sole discretion of the Party from whom consent is sought).

 

5.9           No Third Party Beneficiaries.  This Agreement is intended for the benefit of the Parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision of this Agreement be enforced by, any other person.

 

5.10        Governing Law; Venue. All disputes, claims, or controversies arising out of or relating to this Agreement shall be governed by and construed in accordance with the laws of the State of South Carolina without regard to its rules of conflict of laws. Each of the Parties hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of the state and federal courts sitting in the County of Richland, State of South Carolina, for any litigation arising out of or relating to this Agreement (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in such courts and agrees not to plead or claim in any such court that such litigation brought therein has been brought in any inconvenient forum.

 

5.11        Termination of Prior Agreement. The Parties hereto hereby agree that the Agreement dated December 17, 2003 by and between Jerry Zucker (deceased), the predecessor of the Zucker Trustee, Johnston and the Company was terminated by the Original Agreement and is of no further force or effect. The Zucker Trustee, by her signature below, hereby represents and warrants that she is the successor-in-interest to Jerry Zucker and had full power and authority to terminate the Prior Agreement on his behalf.

 

5.11         Counterparts.  This Agreement may be executed in multiple counterparts (including by facsimile or electronic transmission), each of which may bear the signature(s) of one or more of the Parties and each of which shall constitute an original but all of which together shall constitute one and the same instrument.  A copy of this Agreement bearing a photostatic, facsimile, PDF or other copy of the signature of a Party shall be as valid for all purposes as a copy bearing that Party’s original signature.

 

Signatures on following page.

 

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement or caused this Agreement to be duly executed by their respective authorized officers as of the date first written above.

 

	Span-America Medical Systems, Inc.
	By:	/s/ James D. Ferguson
		James D. Ferguson
		President & Chief Executive Officer

 

 

	/s/ Anita G. Zucker
	Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007

 

 

	The InterTech Group, Inc.
	By:	/s/ Anita G. Zucker
		Anita G. Zucker
		Chairperson & Chief Executive Officer

 

 

	/s/ Robert B. Johnston
	Robert B. Johnston

 

 

Signature page to A&R Standstill Agreement.

 

  

Exhibit A

 

Robert B. Johnston Resignation Letter

 

 

 

September 28, 2015

 

 

The Board of Directors

Span-America Medical Systems, Inc.

70 Commerce Center

Greenville, SC 29615

 

 

 

Gentlemen,

 

I hereby resign from all positions I hold with Span-America Medical Systems, Inc. and any of its subsidiaries, including without limitation my position as a director of Span-America Medical Systems, Inc., effective as of the date set forth above.

 

                              Sincerely,

 

                              /s/ Robert B. Johnston          

 

                             Robert B. Johnston

 

 

Page 9 of 9

Exhibit 10.1

 

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (the “Agreement”) is entered into as of September 28, 2015 by and between Span-America Medical Systems, Inc., a South Carolina corporation (“Buyer”), and Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007 and as successor-in-interest to Jerry Zucker, deceased (the “Zucker Trustee”), and Robert B. Johnston, a natural person residing on The Isle of Palms, South Carolina (“Johnston” and collectively with the Zucker Trustee, the “Sellers” and each a “Seller”).

 

WHEREAS, Mr. Johnston has resigned from the Buyer’s Board of Directors pursuant to a resignation letter of even date herewith, the Zucker Trustee owns 249,310 shares (the “Zucker Shares”) of the Buyer’s no par value common stock (the “Common Stock”), Johnston owns 12,000 shares (the “Johnston Shares,” and collectively with the Zucker Shares, the “Transfer Shares”) of the Common Stock, and Sellers desire to sell to Buyer and Buyer desires to purchase from Sellers all such shares at a purchase price of US$17.49 per share;

 

NOW THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement and in the A&R Standstill Agreement (as defined below), the Buyer and Sellers hereby agree as follows:

 

1.       Purchase and Sale of Stock. Effective as of the date hereof, (a) the Zucker Trustee hereby sells, assigns and transfers unto Buyer the Zucker Shares at a price of US$17.49 per share or an aggregate of US$4,360,431.90 for all of the Zucker Shares (the “Zucker Purchase Price”) and (b) Johnston hereby sells, assigns and transfers unto Buyer the Johnston Shares, at a price of US$17.49 per share or an aggregate of US$209,880 for all of the Johnston Shares (the “Johnston Purchase Price”).

 

2.     Delivery of Certificates; Stock Power. Promptly after the full and complete execution and delivery of this Agreement, Sellers will take all actions reasonably necessary to initiate the prompt transfer of the Transfer Shares to Buyer (including delivering to Buyer any stock certificates, if any exist, issued in the name of either Seller representing any of the Transfer Shares along with stock powers duly endorsed by Sellers) for retirement. Sellers, as evidenced by their signatures below, do hereby irrevocably authorize the Buyer’s registrar and transfer agent, American Stock Transfer & Trust Co., LLC, to transfer the Transfer Shares to the Buyer on the books of the Buyer. Upon Buyer’s receipt of confirmation that all of the Transfer Shares have been transferred to Buyer on the books of the Buyer for retirement, Buyer will pay the Zucker Purchase Price to the Zucker Trustee and the Johnston Purchase Price to Johnston, in each case by wire transfer of immediately available funds pursuant to wire transfer instructions provided to the Buyer by the Zucker Trustee and Johnston, respectively.

 

3.     Simultaneous Entry into Amended & Restated Standstill Agreement. In order to induce the Buyer to purchase the Transfer Shares as contemplated herein, Buyer, Sellers and The InterTech Group, Inc., a South Carolina corporation, are simultaneously entering into an Amended & Restated Standstill Agreement of even date herewith (the “A&R Standstill Agreement”). Sellers acknowledge and agree that the Buyer is entering into this Agreement in reliance upon the InterTech Parties’ entry into the A&R Standstill Agreement and that the Buyer would not have entered into this Agreement without the entry of the Sellers and The InterTech Group into the A&R Standstill Agreement. Capitalized terms used in this Agreement and not otherwise defined in this Agreement have the meaning ascribed to such terms in the A&R Standstill Agreement.

 

 

4.    Representations and Warranties of Sellers. In order to induce Buyer to enter into this Agreement and the transactions contemplated herein, Sellers hereby jointly and severally represent and warrant to Buyer as follows:

 

4.1.     Beneficial Ownership. Prior to giving effect to the transactions contemplated in this Agreement, the Zucker Trustee is the holder of record of the Zucker Shares, Johnston is the holder of record of the Johnston Shares, and no InterTech Party or any of their Affiliates or Associates Beneficially Owns any other shares of the Common Stock. After giving effect to the transactions contemplated in this Agreement, no InterTech Party nor any of their Affiliates or Associates will Beneficially Own any shares of the Common Stock.

 

4.2.     Authorization. Each Seller has full power, authority and capacity to execute, deliver, and perform her or his obligations under this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all requisite action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes the legal, valid, and binding obligation of each Seller, enforceable against each Seller in accordance with its terms except to the extent enforcement thereof may be limited (i) by applicable bankruptcy, reorganization or insolvency laws, or other laws affecting the enforcement of creditors’ rights, and (ii) to the extent that equitable remedies are only available in the discretion of the court from which they are sought. Neither Seller is insolvent, and neither Seller will become insolvent as a result of the transactions contemplated herein.

 

4.3.     No Conflicts or Proceedings. Each Seller’s execution and delivery of this Agreement and consummation of the transactions contemplated by this Agreement will not conflict with or result in any violation of or default under or require any consent under any provision of (i) any document creating or governing The Jerry Zucker Revocable Trust dated March 20, 2007, (ii) any agreement, contract, license, permit, or instrument to which either Seller is a party or by which either Seller may be bound, or (iii) any judgment, order, decree, law, statute, rule, or regulation applicable to either Seller. There is no legal proceeding in progress, pending, or, to the knowledge of either Seller, threatened against or affecting either Seller or either Seller’s title to any of the Transfer Shares at law or in equity. There are no grounds on which any such legal proceeding might be commenced and there is no order outstanding against or affecting either Seller which, in any such case, affects adversely or might affect adversely the ability of either Seller to enter into this Agreement or to perform her or his obligations hereunder.

 

4.4.     Good Title to the Shares. Each Seller hereby represents and warrants to the Buyer that each Seller has good and marketable title to and owns her or his Transfer Shares free and clear of any and all liens, security interests, mortgages, pledges, claims, restrictions and encumbrances of any nature (“Liens”), and the Buyer is acquiring the Transfer Shares free and clear of any and all Liens.

 

5.    Non-disparagement. For the period from the date of this Agreement to and including the first anniversary of the date of this Agreement, each Seller agrees not to, and to not suffer or permit any of its Affiliates or Associates to, make any statements, written or verbal, or cause or encourage others to make any statements, written or verbal, including but not limited to any statements made via social media, on websites or blogs, that defame or disparage the personal or business reputation, practices, or conduct of the Buyer or any of its directors, officers or employees. For the period from the date of this Agreement to and including the first anniversary of the date of this Agreement, Buyer agrees not to, and to not suffer or permit any of its directors or officers to, make any statements, written or verbal, or cause or encourage others to make any statements, written or verbal, including but not limited to any statements made via social media, on websites or blogs, that defame or disparage the personal or business reputation, practices, or conduct of either of the Sellers or of The InterTech Group.

 

 

6.     Miscellaneous Provisions.

 

6.1.     Entire Agreement; Binding Nature. This Agreement and the A&R Standstill Agreement contain the entire agreement of the parties with respect to the subject matter hereof and there are no agreements, warranties, covenants or undertakings other than those expressly set forth herein or therein. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.2.     Interpretation. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any person.

 

6.3.    Governing Law; Venue. All disputes, claims, or controversies arising out of or relating to this Agreement shall be governed by and construed in accordance with the laws of the State of South Carolina without regard to its rules of conflict of laws. Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of the state and federal courts sitting in the County of Richland, State of South Carolina, for any litigation arising out of or relating to this Agreement (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in such courts and agrees not to plead or claim in any such court that such litigation brought therein has been brought in any inconvenient forum.

 

6.4.     Amendment; Waiver. This Agreement may not be amended except by an instrument in writing signed by all of the parties hereto. No waiver of any provision of this Agreement, and no consent to any departure by any party therefrom, shall be effective unless it is in writing and signed by the party from whom such waiver is sought, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

 

6.5.    Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.

 

6.6.     Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and each of which may bear the signature(s) of one or more of the parties hereto, but all of which together shall constitute one and the same instrument. A copy of this Agreement bearing the facsimile, photostatic, PDF or other copy of the signature of a party hereto shall be as valid for all purposes as a copy of this Agreement bearing that party’s original signature.

 

Signatures on following page.

 

 

IN WITNESS WHEREOF, the parties hereto have set their signatures below on this Stock Purchase Agreement as of the date first set forth above.

 

 

	Span-America Medical Systems, Inc.
	By:	/s/ James D. Ferguson
		James D. Ferguson
		President & Chief Executive Officer

 

 

	/s/ Anita G. Zucker
	Anita G. Zucker, as Trustee of The Jerry Zucker Revocable Trust dated March 20, 2007

 

 

	/s/ Robert B. Johnston
	Robert B. Johnston

  

 

Signature page to Stock Purchase Agreement.

 

 

 Page 4 of 4 

Exhibit 99.1

 

 

Contact:       Jim Ferguson

President and Chief Executive Officer

(864) 288-8877, ext. 6912

 

 

SPAN-AMERICA REPURCHASES 261,310 SHARES
FROM FORMER DIRECTOR ROBERT B. JOHNSTON

AND THE JERRY ZUCKER REVOCABLE TRUST

---

 

GREENVILLE, S.C. (October 2, 2015) – Span-America Medical Systems, Inc. (NASDAQ:SPAN) announced today that it has repurchased 261,310 shares of its common stock (approximately 9% of the outstanding shares) from Robert B. Johnston and his affiliate, The Jerry Zucker Revocable Trust, for $4.6 million. The repurchase includes 12,000 shares owned by Mr. Johnston and 249,310 shares owned by The Jerry Zucker Revocable Trust. The Company also announced that Mr. Johnston resigned from the Company’s Board of Directors following the sale of the stock to the Company. Mr. Johnston was first elected as a Span-America director in 2004 pursuant to an Agreement between the Company, Jerry Zucker and Mr. Johnston. Mr. Johnston advised the Company that he was resigning because he and his affiliates ceased to own any Span-America stock.

 

“We believe the purchase of approximately 9% of Span-America’s stock highlights our Board’s confidence in our Company’s future,” stated Jim Ferguson, President and Chief Executive Officer of Span-America. “We used $4.6 million of cash-on-hand to repurchase the stock. We expect to use our existing line of credit in the near future to fund an increase in inventory in anticipation of our ramp up for a major seasonal promotion of consumer bedding products scheduled to ship in November of 2015, which will be in the first quarter of our 2016 fiscal year.

 

“Our outlook for fiscal 2016 is positive based on expected growth in both our medical and custom products segments. We also expect the repurchase of these shares to be accretive to our fiscal 2016 earnings per share based on the continued successful execution of our growth strategy.

 

“We want to thank Robert Johnston for his many years of service and valuable contributions during his tenure on our Board of Directors. The Board expects to fill Mr. Johnston’s unexpired term in the near future,” concluded Ferguson.

 

About Span-America Medical Systems, Inc.

 

Span-America manufactures and markets a comprehensive selection of pressure management products for the medical market, including Geo-Matt^®, PressureGuard^®, Geo-Mattress^®, Custom Care^®, Span+Aids^®, Isch-Dish^®, Risk Manager^® and Selan^® products. We also supply custom foam and packaging products to the consumer and industrial markets. Through our wholly-owned subsidiary Span Medical Products Canada Inc., we manufacture and market the M.C. Healthcare Products brands of Encore™, Maxxum, Advantage and Rexx bed frames as well as related case goods, tables and seating products for the long-term care market. Span-America’s stock is traded on The NASDAQ Global Market under the symbol “SPAN.” For more information, visit www.spanamerica.com and www.mchealthcare.com.

 

 

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SPAN-AMERICA REPURCHASES 261,310 SHARES FROM FORMER DIRECTOR

ROBERT B. JOHNSTON AND JERRY ZUCKER REVOCABLE TRUST

Page 2

October 2, 2015

 

Forward-Looking Statements

 

We have made forward-looking statements in this release regarding, among other things, our expectations for future sales and earnings performance. We wish to caution the reader that these statements are only predictions. These forward-looking statements may be generally identified by the use of forward-looking words and phrases such as “will,” “intends,” “may,” “believes,” “anticipates,” “should” and “expects,” and are based on the company’s current expectations or beliefs concerning future events that involve risks and uncertainties. Actual events or results may differ materially as a result of risks and uncertainties facing the company, including: (a) the inability to achieve anticipated sales growth in the medical and custom products segments, (b) the possibility of a loss of a key customer or distributor for our products, (c) risks related to international operations and foreign currency exchange associated with our Canadian subsidiary, (d) the possibility of having material uncollectible receivables from one or more key customers or distributors, (e) the potential for volatile pricing conditions in the market for polyurethane foam, (f) raw material cost increases, (g) the possibility that some or all of our medical products could be determined to be subject to the 2.3% medical device excise tax imposed by the Affordable Care Act, (h) the potential for lost sales due to competition from low-cost foreign imports, (i) changes in relationships with large customers or key suppliers, (j) uncertainty about whether or not we will continue to be awarded one-time seasonal promotions with major retailers, which can have a large impact on annual revenues and earnings, (k) the impact of competitive products and pricing, (l) government reimbursement changes in the medical market, (m) FDA and Health Canada regulation of medical device manufacturing and (n) other risks referenced from time to time in our Securities and Exchange Commission filings. We disclaim any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. We are not responsible for changes made to this document by wire services or Internet services.

 

 

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