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AGREEMENT AND PLAN OF MERGER
dated as of October 31, 1996
by and among
FOOD LION, INC.,
KK ACQUISITION CORP.
and
KASH N' XXXXX FOOD STORES, INC.
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
Page
No.
ARTICLE I
COMPANY AUTHORIZATIONS AND GOVERNANCE
1.01 Company Actions. . . . . . . . . . . . . . . . . . 1
1.02 Company Board Representation; Section 14(f). . . . 2
ARTICLE II
THE MERGER
2.01 The Merger.. . . . . . . . . . . . . . . . . . . . 3
2.02 Closing. . . . . . . . . . . . . . . . . . . . . . 4
2.03 Effective Time . . . . . . . . . . . . . . . . . . 4
2.04 Certificate of Incorporation and Bylaws of the
Surviving Corporation. . . . . . . . . . . . . . . 4
2.05 Directors and Officers of the Surviving
Corporation. . . . . . . . . . . . . . . . . . . . 4
2.06 Effects of the Merger. . . . . . . . . . . . . . . 5
2.07 Further Assurances . . . . . . . . . . . . . . . . 5
ARTICLE III
CONVERSION OF SHARES
3.01 Conversion of Capital Stock. . . . . . . . . . . . 5
3.02 Payment for Company Common Stock.. . . . . . . . . 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.01 Organization and Qualification.. . . . . . . . . . 9
4.02 Capital Stock. . . . . . . . . . . . . . . . . . . 10
4.03 Authority Relative to this Agreement.. . . . . . . 11
4.04 Non-Contravention; Approvals and Consents. . . . . 12
4.05 SEC Reports and Financial Statements.. . . . . . . 13
4.06 Absence of Certain Changes or Events.. . . . . . . 14
4.07 Absence of Undisclosed Liabilities.. . . . . . . . 14
4.08 Legal Proceedings. . . . . . . . . . . . . . . . . 15
4.09 Information Supplied.. . . . . . . . . . . . . . . 15
4.10 Compliance with Laws and Orders. . . . . . . . . . 16
4.11 Compliance with Agreements; Certain Agreements.. . 17
4.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . 17
4.13 Employee Benefit Plans; ERISA. . . . . . . . . . . 18
4.14 Labor Matters. . . . . . . . . . . . . . . . . . . 20
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No.
4.15 Environmental Matters. . . . . . . . . . . . . . . 20
4.16 Intangible Property. . . . . . . . . . . . . . . . 22
4.17 Vote Required. . . . . . . . . . . . . . . . . . . 23
4.18 Opinion of Financial Advisor.. . . . . . . . . . . 23
4.19 Company Rights Agreement.. . . . . . . . . . . . . 23
4.20 Section 203 of the DGCL Not Applicable.. . . . . . 24
4.21 Related Party Transactions . . . . . . . . . . . . 24
4.22 Assets; Real Property. . . . . . . . . . . . . . . 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
5.01 Organization and Qualification.. . . . . . . . . . 25
5.02 Authority Relative to this Agreement.. . . . . . . 25
5.03 Non-Contravention; Approvals and Consents. . . . . 25
5.04 Legal Proceedings. . . . . . . . . . . . . . . . . 27
5.05 Information Supplied.. . . . . . . . . . . . . . . 27
5.06 Ownership of Company Common Stock. . . . . . . . . 28
5.07 Financing. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
COVENANTS OF THE COMPANY
6.01 Covenants of the Company.. . . . . . . . . . . . . 28
6.02 No Solicitations . . . . . . . . . . . . . . . . . 31
6.03 Company Rights Agreement.. . . . . . . . . . . . . 32
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 Access to Information; Confidentiality . . . . . . 32
7.02 Preparation of Proxy Statement.. . . . . . . . . . 33
7.03 Approval of Stockholders.. . . . . . . . . . . . . 33
7.04 Regulatory and Other Approvals . . . . . . . . . . 34
7.05 Intentionally Deleted. . . . . . . . . . . . . . . 34
7.06 Employment and Severance Agreement . . . . . . . . 34
7.07 Directors' and Officers' Indemnification and
Insurance. . . . . . . . . . . . . . . . . . . . . 34
7.08 Fees and Expenses. . . . . . . . . . . . . . . . . 36
7.09 Brokers or Finders.. . . . . . . . . . . . . . . . 36
7.10 Takeover Statutes. . . . . . . . . . . . . . . . . 37
7.11 Conveyance Taxes.. . . . . . . . . . . . . . . . . 37
7.12 Conduct of Business of Sub . . . . . . . . . . . . 37
7.13 Notice . . . . . . . . . . . . . . . . . . . . . . 37
7.14 Fulfillment of Conditions. . . . . . . . . . . . . 38
(ii)
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No.
ARTICLE VIII
CONDITIONS
8.01 Conditions to Parent and Sub's Obligation to
Effect the Merger. . . . . . . . . . . . . . . . . 38
8.02 Conditions to the Company's Obligation to Effect
the Merger.. . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. . . . . . . . . . . . . . . . . . . . 41
9.02 Effect of Termination. . . . . . . . . . . . . . . 42
9.03 Amendment. . . . . . . . . . . . . . . . . . . . . 42
9.04 Waiver.. . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
THE OFFER
10.01 The Offer. . . . . . . . . . . . . . . . . . . . . 43
10.02 Conditions to Each Party's Obligation to Effect
the Merger.. . . . . . . . . . . . . . . . . . . . 45
10.03 Company Actions. . . . . . . . . . . . . . . . . . 45
ARTICLE XI
GENERAL PROVISIONS
11.01 Non-Survival of Representations, Warranties,
Covenants and Agreements.. . . . . . . . . . . . . 47
11.02 Notices. . . . . . . . . . . . . . . . . . . . . . 47
11.03 Entire Agreement; Incorporation of Exhibits. . . . 48
11.05 No Third Party Beneficiary.. . . . . . . . . . . . 49
11.06 No Assignment; Binding Effect. . . . . . . . . . . 49
11.07 Headings.. . . . . . . . . . . . . . . . . . . . . 49
11.08 Invalid Provisions . . . . . . . . . . . . . . . . 49
11.09 Governing Law. . . . . . . . . . . . . . . . . . . 49
11.10 Enforcement of Agreement . . . . . . . . . . . . . 49
11.11 Certain Definitions. . . . . . . . . . . . . . . . 50
11.12 Counterparts.. . . . . . . . . . . . . . . . . . . 51
Exhibit A - Company Rights
Exhibit B - Surviving Corporation Certificate of Incorporation
(iii)
GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the
meanings ascribed to them in the corresponding Sections of this
Agreement listed below:
"affiliate" -- Section 11.11(a)
"Agreement" -- Preamble
"Alternative Proposal" -- Section 6.02
"Antitrust Division" -- Section 7.04
"beneficially" -- Section 11.11(b)
"Board Percentage" -- Section 1.02(a)
"business day" -- Section 11.11(c)
"CERCLA" -- Section 4.15(b)(i)
"Certificate of Merger" -- Section 2.03
"Certificate of Ownership" -- Section 2.03
"Certificates" -- Section 3.02(b)
"Closing" -- Section 2.02
"Closing Date" -- Section 2.02
"Code" -- 3.02(e)
"Company" -- Preamble
"Company Common Stock" -- Preamble
"Company Disclosure Letter" -- Section 4.01
"Company Employee Benefit Plan" -- Section 4.13(b)(i)
"Company Financial Statements" -- Section 4.05
"Company Intangible Property" -- Section 4.16(a)
"Company Intangible Property Licenses" -- Section 4.16(c)
"Company Owned Intangible Property" -- Section 4.16(a)
"Company Permits" -- Section 4.10
"Company Preferred Stock" -- Section 4.02(a)
"Company Rights" -- Section 4.02(a)
"Company Rights Agreement" -- Section 4.02(a)
"Company SEC Reports" -- Section 4.05
"Company Series A Preferred Stock" -- Section 4.02(a)
"Company Stockholders' Approval" -- Section 7.03(a)
"Company Stockholders' Meeting" -- Section 7.03(a)
"Company Voting Debt" -- Section 4.02(a)
"Compensation Options" -- Section 3.01(e)
"Confidentiality Agreement" -- Section 7.01
"Constituent Corporations" -- Section 2.01
"Contracts" -- Section 4.04(a)
"control," "controlling," "controlled
by" and "under common control with" -- Section 11.11(a)
"Control Date" -- Section 1.02(a)
"DGCL" -- Section 1.01(b)
"Dissenting Share" -- Section 3.01(d)(i)
"Effective Time" -- Section 2.03
"Environmental Law" -- Section 4.15(e)(i)
"Environmental Permits" -- Section 4.15(a)
"ERISA" -- Section 4.13(b)(i)
"Exchange Act" -- Section 3.01(e)
(iv)
"FTC" -- Section 7.04
"Governmental or Regulatory Authority" -- Section 4.04(a)
"group" -- Section 11.11(e)
"Hazardous Material" -- Section 4.15(e)(ii)
"HSR Act" -- Section 4.04(b)
"Indemnified Liabilities" -- Section 7.07(a)
"Indemnified Parties" -- Section 7.07(a)
"Indemnifying Party" -- Section 7.07(a)
"Independent Directors" -- Section 1.02(c)
"laws" -- Section 4.04(a)
"Lien" -- Section 4.02(b)
"material", "material adverse
effect" and "materially adverse" -- Section 11.11(d)
"Merger" -- Preamble
"Merger Agreement" -- Annex A
"Merger Price" -- Section 3.01(c)
"Minimum Condition" -- Annex A
"Offer" -- Section 10.01(a)
"Offer Documents" -- Section 10.01(b)
"Offer to Purchase" -- Section 10.01(b)
"Option Consideration" -- Section 3.01(e)
"Options" -- Section 4.02(a)
"orders" -- Section 4.04(a)
"Parent" -- Preamble
"Parent Disclosure Letter" -- Section 5.03(b)
"Parent's Designees -- Section 1.02(a)
"Payment Agent" -- Section 3.02(a)
"Payment Fund" -- Section 3.02(a)
"Permitted Liens" -- Section 4.22(b)
"Per Share Amount" -- Section 10.01(a)
"Person" -- Section 11.11(e)
"Plan" -- Section 4.13(b)(ii)
"Proxy Statement" -- Section 4.09(a)
"Release" -- Section 4.15(iii)
"Remedial Action" -- Section 4.15(iv)
"Representatives" -- Section 11.11(f)
"Schedule 14D-1" -- Section 10.01(b)
"Schedule 14D-9" -- Section 10.03(a)
"SEC" -- Section 4.04(b)
"Secretary of State" -- Section 2.03
"Securities Act" -- Section 4.05
"Stockholders Agreement" -- Preamble
"Stockholders' Shares" -- Preamble
"Stock Option Plans" -- Section 3.01(e)
"Sub" -- Preamble
"Sub Common Stock" -- Section 3.01(a)
"Subsidiary" -- Section 11.11(g)
"Surviving Corporation" -- Section 2.01
"Surviving Corporation Common Stock" -- Section 3.01(a)
"taxes" -- Section 4.12(b)
"Tender Option" -- Section 10.01(d)
"Trigger Event" -- Section 7.08(b)
(v)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated as of October 31, 1996
(this "Agreement") is made and entered into by and among Food Lion,
Inc., a North Carolina corporation ("Parent"), KK Acquisition
Corp., a Delaware corporation indirectly wholly owned by Parent
("Sub"), and Kash n' Xxxxx Food Stores, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Sub and the
Company have each determined that it is advisable and in the best
interests of their respective stockholders to consummate, and have
approved, the business combination transaction provided for herein
in which Sub would merge with and into the Company and the Company
would become a wholly-owned subsidiary of Parent (the "Merger");
WHEREAS, to satisfy a condition to Parent and Sub entering
into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement,
certain stockholders of the Company have entered into a
Stockholders Agreement (the "Stockholders Agreement") with Parent
and Sub pursuant to which such stockholders have agreed, among
other matters, to tender their shares in the Offer (as defined in
Section 10.01(a)), if the Offer is commenced, and to vote the
shares of Common Stock, par value $.01 per share, of the Company
(the "Company Common Stock") held by them (the "Stockholders'
Shares") in favor of the Merger; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the
transactions contemplated by this Agreement and also to prescribe
various conditions to the consummation of such transactions;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
COMPANY AUTHORIZATIONS AND GOVERNANCE
1.01 Company Actions. The Company hereby approves and
consents to the Offer and represents that the Board of Directors of
the Company, at a meeting duly called and held, has unanimously:
(a) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the holders of
shares of Company Common Stock;
(b) approved and adopted this Agreement and the
transactions contemplated hereby which approval is sufficient to
render Section 203 of the Delaware General Corporation Law (the
"DGCL") inapplicable to this Agreement, the Stockholders Agreement
and the transactions contemplated hereby and thereby, including the
Offer and the Merger; and
(c) recommended that the stockholders of the Company
accept the Offer, if commenced, tender their shares of Company
Common Stock thereunder to Sub and, if required by applicable law
in order to consummate the Merger, approve and adopt this Agreement
and the transactions contemplated hereby; and
(d) amended the Company Rights (as defined in Section
4.02) in the manner set forth on Exhibit A hereto. The Company
hereby consents to the inclusion in the Offer Documents (as defined
in Section 10.01(b)) and any other communication to stockholders
relating to the Merger or the transactions contemplated thereby of
the recommendation of the Board described in the immediately
preceding sentence.
1.02 Company Board Representation; Section 14(f).
(a) Subject to compliance with the DGCL, the Company's
Certificate of Incorporation and other applicable law, promptly
upon the payment by Sub for shares of Company Common Stock pursuant
to the Offer or acquisition by Sub of Stockholders' Shares
purchased pursuant to the Stockholders Agreement, and from time to
time thereafter, (i) Parent shall be entitled to designate such
number of directors ("Parent's Designees"), rounded up to the next
whole number as will give Parent representation on the Board of
Directors of the Company equal to the product of (x) the number of
directors on the Board of Directors of the Company (giving effect
to any increase in the number of directors pursuant to this Section
1.02) and (y) the percentage that such number of shares of Company
Common Stock so purchased bears to the aggregate number of shares
of Company Common Stock outstanding (such number being, the "Board
Percentage"), and (ii) the Company shall, upon request by Parent,
promptly satisfy the Board Percentage by (x) increasing the size of
the Board of Directors of the Company or (y) using reasonable
efforts to secure the resignations of, or failing that, to use its
best efforts to remove, such number of directors as is necessary to
enable Parent's Designees to be elected or appointed to the Board
of Directors of the Company and shall use best efforts to cause
Parent's Designees promptly to be so elected or appointed. The
date on which Parent's designees constitute at least a majority of
the Company's Board of Directors is herein referred to as the
"Control Date."
(b) The Company's obligations to appoint Parent's
Designees to the Board of Directors of the Company shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, if applicable. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to
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fulfill its obligations under this Section, and shall include in
the Schedule 14D-9 (as defined in Section 10.01(b)) such
information with respect to the Company and its officers and
directors as is required under such Section and Rule to fulfill
such obligations. Parent or Sub shall supply to the Company and be
solely responsible for any information with respect to either of
them and their designees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1.
(c) Following the election of Designees of Parent
pursuant to this Section and prior to the Effective Time (as
defined in Section 2.03), any amendment of this Agreement or the
Certificate of Incorporation or Bylaws of the Company, any
termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations
or other acts of Parent or Sub or waiver of any of the Company's
rights hereunder shall require the concurrence of a majority of the
directors of the Company then in office who neither were designated
by Parent nor are employees of the Company or any of its
Subsidiaries (as defined in Section 11.11(g)) (the "Independent
Directors"). If the number of Independent Directors shall be
reduced below two for any reason whatsoever, the remaining
Independent Director shall designate a Person to fill such vacancy
who shall be deemed to be an Independent Director for purposes of
this Agreement or, if no Independent Directors then remain, the
other directors shall designate two Persons to fill such vacancies
who shall not be officers or affiliates of the Company or any of
its Subsidiaries, or officers or affiliates of Parent or any of its
Subsidiaries, and such Persons shall be deemed to be Independent
Directors for purposes of this Agreement. The Independent
Directors shall have the authority to retain such counsel and other
advisors at the expense of the Company as are reasonably
appropriate to the exercise of their duties in connection with this
Agreement, subject to approval by the Company of the terms of such
retention, which approval shall not be unreasonably withheld. In
addition, the Independent Directors shall have the authority to
institute any action, on behalf of the Company, to enforce
performance of this Agreement.
ARTICLE II
THE MERGER
2.01 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in
Section 2.03), Sub shall be merged with and into the Company in
accordance with the DGCL. At the Effective Time, the separate
existence of Sub shall cease and the Company shall continue as the
surviving corporation in the Merger (the "Surviving Corporation").
Sub and the Company are sometimes referred to herein as the
"Constituent Corporations". As a result of the Merger, the
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outstanding shares of capital stock of the Constituent Corporations
shall be converted or cancelled in the manner provided in Article
III.
2.02 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 9.01, the closing of the Merger (the
"Closing") will take place at the offices of Akin, Gump, Strauss,
Xxxxx & Xxxx, L.L.P., 0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxx, X.X. 00000, at 10:00 a.m., local time, on a date to be
specified by Parent or Sub, which shall be no later than the second
business day following the earlier of the date on which all the
conditions set forth in: (i) Section 10.02 have been satisfied or
waived, if the Offer has been consummated; or (ii) Article VIII
have been satisfied or waived, unless another date, time or place
is agreed to in writing by the parties hereto (the "Closing Date").
2.03 Effective Time. At the Closing, a certificate of
merger (the "Certificate of Merger") or, if applicable, a
certificate of ownership and merger (the "Certificate of
Ownership") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the Secretary of State of
the State of Delaware (the "Secretary of State") for filing, as
provided in Section 251 or Section 253, as applicable, of the DGCL,
as soon as practicable on the Closing Date. The Merger shall
become effective at the time of the filing of the Certificate of
Merger or Certificate of Ownership, as the case may be, with the
Secretary of State (the date and time of such filing being referred
to herein as the "Effective Time").
2.04 Certificate of Incorporation and Bylaws of the
Surviving Corporation. At the Effective Time, (i) the Certificate
of Incorporation of the Company shall be amended to read in its
entirety as set forth in Exhibit B hereto and as so amended shall
be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such Certificate of
Incorporation, and (ii) the Bylaws of Sub as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
2.05 Directors and Officers of the Surviving Corporation.
The directors and officers of Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the
directors and officers, respectively, of the Surviving Corporation
until their successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
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2.06 Effects of the Merger. Subject to the foregoing, the
effects of the Merger shall be as provided in the applicable
provisions of the DGCL.
2.07 Further Assurances. Each party hereto will, either
prior to or after the Effective Time, execute such further
documents, instruments, deeds, bills of sale, assignments and
assurances and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to
vest the Surviving Corporation with full title to all assets,
properties, rights, approvals, immunities and franchises of either
of the Constituent Corporations or to effect the other purposes of
this Agreement.
ARTICLE III
CONVERSION OF SHARES
3.01 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the
holder thereof:
(a) Capital Stock of Sub. Each issued and outstanding
share of the common stock, par value $0.01 per share, of Sub ("Sub
Common Stock") shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.01 per share,
of the Surviving Corporation ("Surviving Corporation Common
Stock"). Each certificate representing outstanding shares of Sub
Common Stock shall at the Effective Time represent an equal number
of shares of Surviving Corporation Common Stock.
(b) Cancellation of Treasury Stock and Stock Owned by
Parent and Subsidiaries. All shares of Company Common Stock,
together with the associated Company Rights, that are owned by the
Company as treasury stock and any shares of Company Common Stock,
together with the associated Company Rights, owned by Parent, Sub
or any other wholly-owned Subsidiary of Parent shall be canceled
and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Exchange Ratio for Company Common Stock.
(i) Each issued and outstanding share of
Company Common Stock (other than shares to be canceled in
accordance with Section 3.01(b) and other than Dissenting Shares
(as defined in Section 3.01(d))), together with the associated
Company Right, shall be converted into the right to receive $26.00
in cash or any higher price paid per share of Company Common Stock
in the Offer (the "Merger Price").
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(ii) All shares of Company Common Stock
converted in accordance with paragraph (i) of this Section 3.01(c)
and associated Company Rights shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except
the right to receive the Merger Price per share, less any required
withholding taxes, upon the surrender of such certificate in
accordance with Section 3.02, without interest.
(d) Dissenting Shares.
(i) Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Common
Stock the holder of which has not voted in favor of the Merger, has
perfected such holder's right to an appraisal of such holder's
shares in accordance with the applicable provisions of the DGCL and
has not effectively withdrawn or lost such right to appraisal (a
"Dissenting Share"), shall not be converted into or represent a
right to receive the Merger Price pursuant to Section 3.01(c), but
the holder thereof shall be entitled only to such rights as are
granted by the applicable provisions of the DGCL; provided,
however, that any Dissenting Share held by a Person at the
Effective Time who shall, after the Effective Time, withdraw the
demand for appraisal or lose the right of appraisal, in either case
pursuant to the DGCL, shall be deemed to be converted into, as of
the Effective Time, the right to receive the Merger Price pursuant
to Section 3.01(c).
(ii) The Company shall give Parent (x) prompt
notice of any written demands for appraisal, withdrawals of demands
for appraisal and any other instruments served pursuant to the
applicable provisions of the DGCL relating to the appraisal process
received by the Company and (y) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with
the prior written consent of Parent, settle or offer to settle any
such demands.
(e) Stock Options. At the Effective Time, each holder
of a then-outstanding option to purchase Company Common Stock under
the Company's 1995 Key Employee Stock Option Plan, the Company's
1995 Non-Employee Director Stock Option Plan, the Non-Qualified
Stock Option Agreement dated as of January 17, 1995 between the
Company and Green Equity Investors, L.P. and all other agreements
with the Company and its employees and Directors (collectively, the
"Stock Option Plans") (true and correct copies of which have been
delivered by the Company to Parent), whether or not then
exercisable (the "Compensation Options"), shall, in settlement
thereof, receive for each share of Company Common Stock subject to
such Compensation Option an amount (subject to any applicable
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withholding tax) in cash equal to the difference between the Merger
Price and the per share exercise price of such Compensation Option
to the extent such difference is a positive number (such amount
being hereinafter referred to as, the "Option Consideration").
Upon receipt of the Option Consideration, the Compensation Option
shall be canceled. The surrender of a Compensation Option to the
Company in exchange for the Option Consideration shall be deemed a
release of any and all rights the holder had or may have had in
respect of such Compensation Option. Prior to the Effective Time,
the Company shall obtain all necessary consents or releases from
holders of Compensation Options under the Stock Option Plans and
take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 3.01(e)
(except for any such action that may require the approval of the
Company's stockholders). Except as otherwise agreed to by the
parties: (i) the Stock Option Plans shall terminate as of the
Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or, any
Subsidiary thereof, shall be canceled as of the Effective Time; and
(ii) the Company shall assure that following the Effective Time no
participant in the Stock Option Plans or other plans, programs or
arrangements, including but not limited to, the Company's Employee
Stock Purchase Plan, shall have any right thereunder to acquire
equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and to terminate all such plans.
3.02 Payment for Company Common Stock.
(a) Payment Agent. Promptly following the Effective
Time, Parent shall make available to the Surviving Corporation for
deposit with a bank or trust company designated before the Closing
Date by Parent and reasonably acceptable to the Company (the
"Payment Agent"), a cash amount equal to the aggregate Merger Price
to which holders of shares of Company Common Stock shall be
entitled upon consummation of the Merger, to be held for the
benefit of and distributed to such holders in accordance with this
Section. The Payment Agent shall agree to hold such funds (such
funds, together with earnings thereon, being referred to herein as
the "Payment Fund") for delivery as contemplated by this Section
and upon such additional terms as may be agreed upon by the Payment
Agent, the Company and Parent. If for any reason (including
losses) the Payment Fund is inadequate to pay the cash amounts to
which holders of shares of Company Common Stock shall be entitled,
Parent shall in any event remain liable, and shall make available
to the Surviving Corporation additional funds, for the payment
thereof. All interest or other income earned in respect of the
Payment Fund shall inure to the benefit of, and shall be paid to,
the Company. The Payment Fund shall not be used for any purpose
except as expressly provided in this Agreement.
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(b) Payment Procedures. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation
shall cause the Payment Agent to mail to each holder of record of
a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common
Stock and associated Company Rights (the "Certificates") whose
shares and associated Company Rights are converted pursuant to
Section 3.01(c) into the right to receive the Merger Price (i) a
letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Payment Agent
and shall be in such form and have such other provisions as the
Surviving Corporation may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange
for the Merger Price. Upon surrender of a Certificate for
cancellation to the Payment Agent, together with such letter of
transmittal duly executed and completed in accordance with its
terms, the holder of such Certificate shall be entitled to receive
in exchange therefor a check representing the Merger Price per
share of Company Common Stock represented thereby, which such
holder has the right to receive pursuant to the provisions of this
Article III, and the Certificate so surrendered shall forthwith be
canceled. In no event shall the holder of any Certificate be
entitled to receive interest on any funds to be received in the
Merger, including any interest accrued in respect of the Payment
Fund. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the
Company, the Merger Price may be issued to a transferee if the
Certificate representing such Company Common Stock is presented to
the Payment Agent accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated
by this Section 3.02(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to
receive upon such surrender the Merger Price per share of Company
Common Stock represented thereby as contemplated by this Article
III.
(c) No Further Ownership Rights in Company Common
Stock. All cash paid upon the surrender for exchange of
Certificates in accordance with the terms hereof shall be deemed to
have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock and the Company Rights represented
thereby. From and after the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Section.
-8-
(d) Termination of Payment Fund. Any portion of the
Payment Fund which remains undistributed to the stockholders of the
Company for six (6) months after the Effective Time shall be
delivered to the Surviving Corporation, upon demand, and any
stockholders of the Company who have not theretofore complied with
this Article III shall thereafter look only to the Surviving
Corporation (subject to abandoned property, escheat and other
similar laws) as general creditors for payment of their claim for
the Merger Price per share. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company
Common Stock for cash representing the Merger Price delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) Withholding Rights. Parent or Surviving
Corporation shall be entitled to deduct and withhold from the
Merger Price or such other amounts otherwise payable pursuant to
this Agreement to any holder of shares of Company Common Stock such
amounts as Parent or Surviving Corporation is required to deduct
and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or Surviving Corporation, such
withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and
withholding was made by Parent or Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
4.01 Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, each of the
Company's Subsidiaries is a business trust duly created, validly
existing and in good standing under the laws of the State of
Delaware, and each of the Company and its Subsidiaries has full
corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its assets and
properties, except for such failures to be so incorporated,
created, existing and in good standing or to have such power and
authority which, individually or in the aggregate, are not having
and could not be reasonably expected to have a material adverse
effect (as defined in Section 11.11) on the Company and its
Subsidiaries taken as a whole. Each of the Company and its
Subsidiaries is duly qualified, licensed or admitted to do business
and is in good standing in each jurisdiction in which the
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ownership, use or leasing of its assets and properties, or the
conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for such failures to be so
qualified, licensed or admitted and in good standing which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole. Section 4.01 of the
letter dated the date hereof and delivered to Parent and Sub by the
Company concurrently with the execution and delivery of this
Agreement (the "Company Disclosure Letter") sets forth (i) the name
and jurisdiction of creation of each Subsidiary of the Company and
(ii) the record owners of the beneficial interests therein. Except
for beneficial interests in the Subsidiaries of the Company and as
disclosed in Section 4.01 of the Company Disclosure Letter, the
Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture, business trust or other
business association or Person. The Company has previously
delivered to Parent correct and complete copies of the certificate
of incorporation and bylaws (or other comparable charter documents)
of the Company and each of its Subsidiaries.
4.02 Capital Stock.
(a) The authorized capital stock of the Company
consists solely of 5,500,000 shares of Company Common Stock and
1,000,000 shares of preferred stock, par value $.01 per share
("Company Preferred Stock"). As of the date hereof and as of the
Closing (except as otherwise permitted in Section 6.01(b)(C)),
4,674,314 shares of Company Common Stock were, and will be, issued
and outstanding, no shares were held in treasury and no shares were
reserved for issuance except as set forth in Section 4.02 of the
Company Disclosure Letter. Since such date, except as set forth in
Section 4.02 of the Company Disclosure Letter, there has been no
change in the number of issued and outstanding shares of Company
Common Stock or shares of Company Common Stock held in treasury or
reserved for issuance. No shares of Company Preferred Stock are
issued and outstanding and 35,000 shares are designated Series A
Junior Participating Preferred Stock ("Company Series A Preferred
Stock") and are reserved for issuance in accordance with the Rights
Agreement dated as of April 13, 1995, as amended as of June 15,
1995, and as amended as of October 30, 1996, by and between the
Company and Fleet National Bank, as Rights Agent (the "Company
Rights Agreement"), pursuant to which the Company has issued rights
(the "Company Rights") to purchase shares of Company Series A
Preferred Stock. No bonds, debentures, notes or other instruments
or evidence of indebtedness having the right to vote (or
convertible into, or exercisable or exchangeable for, securities
having the right to vote) on any matters on which the Company
stockholders may vote ("Company Voting Debt") are issued or
outstanding. All of the issued and outstanding shares of Company
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Common Stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly
authorized, validly issued, fully paid and nonassessable. Except
pursuant to this Agreement and the Company Rights Agreement and
except as set forth in Section 4.02 of the Company Disclosure
Letter, there are no outstanding subscriptions, options, warrants,
rights (including "phantom" stock rights), preemptive rights or
other contracts, commitments, understandings or arrangements,
including any right of conversion or exchange under any outstanding
security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any Company
Voting Debt or shares of capital stock or other securities of the
Company or to grant, extend or enter into any Option with respect
thereto.
(b) Except as disclosed in Section 4.02 of the Company
Disclosure Letter, all of the outstanding beneficial interests of
each Subsidiary of the Company are owned, beneficially and of
record, by the Company or a Subsidiary wholly owned, directly or
indirectly, by the Company, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities and
charges of any kind (each a "Lien"). Except as disclosed in
Section 4.02 of the Company Disclosure Letter, there are no (i)
outstanding Options obligating the Company or any of its
Subsidiaries to issue or sell any beneficial or other ownership
interest of any Subsidiary of the Company or to grant, extend or
enter into any such Option or (ii) voting trusts, proxies or other
commitments, understandings, restrictions or arrangements in favor
of any Person other than the Company or a Subsidiary wholly owned,
directly or indirectly, by the Company with respect to the voting
of or the right to participate in dividends or other earnings on
any beneficial or other ownership interest of any Subsidiary of the
Company.
(c) Except as disclosed in Section 4.02 of the Company
Disclosure Letter, there are no outstanding contractual obligations
of the Company or any Subsidiary of the Company to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or
any beneficial or other ownership interest of any Subsidiary of the
Company or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any Subsidiary of
the Company or any other Person.
4.03 Authority Relative to this Agreement. The Company has
full corporate power and authority to enter into this Agreement
and, subject, with respect to the Merger, to obtaining the Company
Stockholders' Approval (as defined in Section 7.03), to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly
-11-
approved by the Board of Directors of the Company, the Board of
Directors of the Company has recommended adoption of this Agreement
by the stockholders of the Company and directed that this Agreement
be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of
the Company or its stockholders are necessary to authorize the
execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby, other than, with respect to the Merger,
obtaining the Company Stockholders' Approval if and to the extent
required by applicable law. This Agreement has been duly and
validly executed and delivered by the Company and, subject, with
respect to the Merger, to the obtaining of the Company
Stockholders' Approval, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
4.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by
the Company do not, and the performance by the Company of its
obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time
or both) a default under, result in or give to any Person any right
of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the loss of a
material benefit under, or result in the creation or imposition of
any Lien upon any of the assets or properties of the Company or any
of its Subsidiaries under, any of the terms, conditions or
provisions of (i) the certificates of incorporation or bylaws (or
other comparable charter documents) of the Company or any of its
Subsidiaries, or (ii) subject to the obtaining of the Company
Stockholders' Approval and the taking of the actions described in
paragraph (b) of this Section, (x) any statute, law, rule,
regulation or ordinance (together, "laws"), or any judgment,
decree, order, writ, permit or license (together, "orders"), of any
court, tribunal, arbitrator, authority, agency, commission,
official or other instrumentality of the United States or any
state, county, city or other political subdivision (a "Governmental
or Regulatory Authority") applicable to the Company or any of its
Subsidiaries or any of their respective assets or properties, or
(y) any note, bond, mortgage, security agreement, indenture,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (together,
"Contracts") to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of
-12-
their respective assets or properties is bound, or (z) any Company
Employee Benefit Plan, excluding from the foregoing clauses (x) and
(y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens
which, individually or in the aggregate, could not be reasonably
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole, on Parent and its Subsidiaries taken
as a whole, or on the ability of the Company, Parent or Sub to
consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger
notification report by the Company under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), (ii) for the filing of the
Schedule 14D-9 and the Proxy Statement (as defined in Section 4.09)
with the Securities Exchange Commission (the "SEC") pursuant to the
Securities and Exchange Act of 1934, as amended (such Act and the
rules and regulations promulgated thereunder being referred to
herein as the "Exchange Act"), (iii) for the filing of the
Certificate of Merger or Certificate of Ownership, as applicable,
and other appropriate merger documents required by the DGCL with
the Secretary of State and appropriate documents with the relevant
authorities of other states in which the Constituent Corporations
are qualified to do business and (iv) as disclosed in Section 4.04
of the Company Disclosure Letter, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any
law or order of any Governmental or Regulatory Authority or any
Contract to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound for the execution and
delivery of this Agreement by the Company, the performance by the
Company of its obligations hereunder or the consummation of the
transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make
or obtain, as the case may be, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect
on the Company and its Subsidiaries taken as a whole, on Parent and
its Subsidiaries taken as a whole, or on the ability of the
Company, Parent or Sub to consummate the transactions contemplated
by this Agreement.
4.05 SEC Reports and Financial Statements. The Company
delivered to Parent prior to the execution of this Agreement a true
and complete copy of each form, report, schedule, registration
statement, definitive proxy statement and other document (together
with all amendments thereof and supplements thereto) filed by the
Company or any of its Subsidiaries with the SEC since August 1,
1993 (as such documents have since the time of their filing been
amended or supplemented, the "Company SEC Reports"), which are all
the documents (other than preliminary material) that the Company
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and its Subsidiaries were required to file with the SEC since such
date. As of their respective dates, the Company SEC Reports (i)
complied as to form in all material respects with the requirements
of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), or the Exchange Act,
as the case may be, 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 in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in
each case, the notes, if any, thereto) included in the Company SEC
Reports (the "Company Financial Statements") complied as to form in
all material respects with the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and
fairly and accurately present (subject, in the case of the
unaudited interim financial statements, to normal, recurring
year-end audit adjustments (which are not expected to be,
individually or in the aggregate, materially adverse to the Company
and its Subsidiaries taken as a whole)) the consolidated financial
position of the Company and its consolidated subsidiaries as at the
respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended.
Except as set forth in Section 4.05 of the Company Disclosure
Letter, each Subsidiary of the Company is treated as a consolidated
subsidiary of the Company in the Company Financial Statements for
all periods covered thereby.
4.06 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date of
this Agreement, (a) since July 30, 1995 there has not been any
change, event or development having, or that could be reasonably
expected to have, individually or in the aggregate, a material
adverse effect on the Company and its Subsidiaries taken as a
whole, the Parent and its Subsidiaries taken as a whole or on the
ability of Parent, Sub or the Company to consummate the
transactions contemplated by this Agreement, and (b) except as
disclosed in Section 4.06 of the Company Disclosure Letter, since
such date (i) the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course consistent with
past practice and (ii) neither the Company nor any of its
Subsidiaries has taken any action which, if taken after the date
hereof, would constitute a breach of any provision of clause (ii)
of Section 6.01(b).
4.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period
ended July 30, 1995 included in the Company Financial Statements or
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as disclosed in Section 4.07 of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries had at such date,
or has incurred since that date, any liabilities or obligations
(whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due) of any nature that would be required
by generally accepted accounting principles to be reflected on a
consolidated balance sheet of the Company and its consolidated
subsidiaries (including the notes thereto), except liabilities or
obligations (i) which were incurred in the ordinary course of
business consistent with past practice and (ii) which have not
been, and could not be reasonably expected to be, individually or
in the aggregate, materially adverse to the Company and its
Subsidiaries taken as a whole.
4.08 Legal Proceedings. Except as specifically disclosed in
the Company SEC Reports filed prior to the date of this Agreement
or in Section 4.08 of the Company Disclosure Letter, (i) there are
no actions, suits, arbitrations or proceedings pending or, to the
knowledge of the Company, threatened against, relating to or
affecting, nor to the knowledge of the Company are there any
Governmental or Regulatory Authority investigations or audits
pending or threatened against, relating to or affecting, the
Company or any of its Subsidiaries or any of their respective
assets and properties which, individually or in the aggregate,
could be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole or on the ability
of the Company, Parent or Sub to consummate the transactions
contemplated by this Agreement, and (ii) neither the Company nor
any of its Subsidiaries is subject to any order of any Governmental
or Regulatory Authority which, individually or in the aggregate, is
having or could be reasonably expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole or on
the ability of the Company, Parent or Sub to consummate the
transactions contemplated by this Agreement.
4.09 Information Supplied.
(a) The Schedule 14D-9, any proxy statement or
information statement, as the case may be, relating to the Company
Stockholders' Meeting (as defined in Section 7.03), as amended or
supplemented from time to time (as so amended and supplemented, the
"Proxy Statement"), and any other documents to be filed by the
Company with the SEC or any other Governmental or Regulatory
Authority in connection with the Offer, the Merger or the other
transactions contemplated hereby will not, on the date of its
filing or, with respect to the Schedule 14D-9, at the date it is
filed with the SEC and first published, sent or given to
stockholders, or, in the case of the Proxy Statement or any other
document mailed to the Company's stockholders by the Company, at
the date it is mailed to stockholders of the Company and (with
respect to the Proxy Statement) at the date of the Company
Stockholders' Meeting, contain any untrue statement of a material
-15-
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, except that no representation is made by the Company
with respect to information supplied in writing by or on behalf of
Parent or Sub expressly for inclusion therein and information
incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC. The Schedule 14D-9, Proxy
Statement and any such other documents filed by the Company with
the SEC under the Exchange Act will comply as to form in all
material respects with the requirements of the Exchange Act.
(b) Neither the information supplied or to be supplied
in writing by or on behalf of the Company for inclusion, nor the
information incorporated by reference from documents filed by the
Company or any of its Subsidiaries with the SEC, in the Offer
Documents or any other documents to be filed by Parent or Sub with
the SEC or any other Governmental or Regulatory Authority in
connection with the Offer or the Merger and the other transactions
contemplated hereby will on the date of its filing or, with respect
to the Offer Documents or any other documents published and/or
delivered to the Company's stockholders by the Company, on the date
they are filed with the SEC and first published, sent or given to
stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.10 Compliance with Laws and Orders. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals of all Governmental and Regulatory Authorities
necessary for the lawful conduct of their respective businesses
(the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole. The Company and its
Subsidiaries are in compliance with the terms of the Company
Permits, except failures so to comply which, individually or in the
aggregate, are not having and could not be reasonably expected to
have a material adverse effect on the Company and its Subsidiaries
taken as a whole. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries are in violation of or default under any
law or order of any Governmental or Regulatory Authority, except
for such violations or defaults which, individually or in the
aggregate, are not having and could not be reasonably expected to
have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
-16-
4.11 Compliance with Agreements; Certain Agreements.
(a) Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries nor, to the knowledge of the Company, any
other party thereto is in breach or violation of, or in default in
the performance or observance of any term or provision of, and no
event has occurred which, with notice or lapse of time or both,
could be reasonably expected to result in a default under, (i) the
certificates of incorporation or bylaws (or other comparable
charter documents) of the Company or any of its Subsidiaries or
(ii) any Contract to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or
any of their respective assets or properties is bound, except in
the case of clause (ii) for breaches, violations and defaults
which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(b) Except as disclosed in Section 4.11 of the Company
Disclosure Letter or in the Company SEC Reports filed prior to the
date of this Agreement or as provided for in this Agreement, as of
the date hereof, neither the Company nor any of its Subsidiaries is
a party to any oral or written (i) consulting agreement not
terminable on thirty (30) days' or less notice, (ii) union or
collective bargaining agreement, (iii) agreement with any executive
officer or other key employee of the Company or any of its
Subsidiaries the benefits of which are contingent or vest, or the
terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of the
nature contemplated by this Agreement, (iv) agreement with respect
to any executive officer or other key employee of the Company or
any of its Subsidiaries providing any term of employment or
compensation guarantee, (v) agreement or plan, including any stock
option, stock appreciation right, restricted stock or stock
purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement or (vi) Contract which is material to any of their
operations taken as a whole or could have a material adverse effect
on the ability of the Company, Parent or Sub to consummate the
transactions contemplated hereby or could reasonably be expected to
result in a material adverse effect on the Company after the
consummation of the transactions contemplated hereby.
4.12 Taxes.
(a) Each of the Company and its Subsidiaries has filed
all material tax returns and reports required to be filed by it, or
requests for extensions to file such returns or reports have been
-17-
timely filed or granted and have not expired, and all such tax
returns and reports are complete and accurate in all respects,
except to the extent that such failures to file, have extensions
granted that remain in effect or be complete and accurate in all
respects, as applicable, individually or in the aggregate, would
not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. The Company and each of its
Subsidiaries has paid (or the Company has paid on its behalf) all
taxes shown as due for such tax returns and reports. The most
recent financial statements contained in the Company SEC Reports
filed prior to the date hereof reflect an adequate reserve for all
taxes payable by the Company and its Subsidiaries for all taxable
periods and portions thereof accrued through the date of such
financial statements, and no deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its
Subsidiaries that are not adequately reserved for, except for
inadequately reserved taxes and inadequately reserved deficiencies
that would not, individually or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries taken as a
whole. No requests for waivers of the time to assess any taxes
against the Company or any of its Subsidiaries have been granted or
are pending, except for requests with respect to such taxes that
have been adequately reserved for in the most recent Financial
Statements contained in the Company SEC Reports filed prior to the
date hereof, or, to the extent not adequately reserved, the
assessment of which would not, individually or in the aggregate,
have a material adverse effect on the Company and its Subsidiaries
taken as a whole. There are no material liens for taxes (other
than for current taxes not yet due and payable) on the assets of
the Company or its Subsidiaries. The Company has previously
delivered or made available to Parent true and complete copies of
its federal income tax returns for each of the fiscal years ended
July 30/31, 1991 through July 30/31, 1995. Except as set forth in
Section 4.12 of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries is a party to or bound by any agreement
providing for the allocation or sharing of taxes with any entity
which is not, either directly or indirectly, a wholly-owned
Subsidiary of the Company. Neither the Company nor any of its
Subsidiaries has filed a consent pursuant to or agreed to the
application of Section 341(f) of the Code. The Company is not a
"United States real property holding corporation" as defined in
Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(b) As used in this Section 4.12, "taxes" shall
include all federal, state and local income, franchise, property,
sales, use, excise and other taxes, including obligations for
withholding taxes from payments due or made to any other Person and
any interest, penalties or additions to tax.
4.13 Employee Benefit Plans; ERISA. (a) Except as
described in the Company SEC Reports filed prior to the date of
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this Agreement or as would not have a material adverse effect on
the Company and its Subsidiaries taken as a whole, (i) all Company
Employee Benefit Plans (as defined below) are in compliance with
all applicable requirements of law, including ERISA and the Code,
and (ii) neither the Company nor any of its Subsidiaries has any
liabilities or obligations with respect to any such Company
Employee Benefit Plans, whether accrued, contingent or otherwise,
nor to the knowledge of the Company are any such liabilities or
obligations expected to be incurred. Except as described in
Section 4.13 of the Company Disclosure Letter, the execution of,
and performance of the transactions contemplated in, this Agreement
will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any Company Employee
Benefit 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. The only
severance agreements or severance policies applicable to the
Company or any of its Subsidiaries are the agreements and policies
specifically referred to in Section 4.13 of the Company Disclosure
Letter. All Company Employee Benefit Plans and any amendments
thereto are listed in Section 4.13 of the Company Disclosure Letter
and all documents ancillary to or evidencing such Plans have been
provided to Parent prior to the date hereof.
(b) As used herein:
(i) "Company Employee Benefit Plan" means any
Plan entered into, established, maintained, sponsored, contributed
to or required to be contributed to by the Company or any of its
Subsidiaries for the benefit of the current or former employees or
directors of the Company or any of its Subsidiaries and existing on
the date of this Agreement or at any time subsequent thereto and on
or prior to the Effective Time and, in the case of a Plan which is
subject to Part 3 of Title I of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"), Section 412 of the Code or Title IV of ERISA,
at any time since January 1, 1990; and
(ii) "Plan" means any employment, bonus,
incentive compensation, deferred compensation, pension, profit
sharing, retirement, stock purchase, stock option, stock ownership,
stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life,
health, medical, accident, disability, workmen's compensation or
other insurance, severance, separation, termination, change of
control or other benefit plan, agreement, practice, policy, program
or arrangement of any kind, whether written or oral, including, but
not limited to any "employee benefit plan" within the meaning of
Section 3(3) of ERISA.
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4.14 Labor Matters. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or in
Section 4.14 of the Company Disclosure Letter, there are no
controversies pending or, to the knowledge of the Company,
threatened between the Company or any of its Subsidiaries and any
representatives of its employees, except as would not, individually
or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries taken as a whole, and, to the knowledge of the
Company, there are no material organizational efforts presently
being made involving any of the employees of the Company or any of
its Subsidiaries. Since August 1, 1993, there has been no work
stoppage, strike or other concerted action by employees of the
Company or any of its Subsidiaries except as have not, individually
or in the aggregate, had a material adverse effect on the Company
and its Subsidiaries taken as a whole.
4.15 Environmental Matters.
(a) Each of the Company and its Subsidiaries has
obtained all licenses, permits, authorizations, approvals and
consents from Governmental or Regulatory Authorities which are
required under any applicable Environmental Law (as defined below)
in respect of its business or operations ("Environmental Permits").
Each of such Environmental Permits is in full force and effect and
each of the Company and its Subsidiaries is in compliance with the
terms and conditions of all such Environmental Permits and with any
applicable Environmental Law, except for such failures to be in
compliance which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(b) (i) To the knowledge of the Company, no site
or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries is listed or proposed for
listing on the National Priorities List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder
("CERCLA"), or on any similar state or local list of sites
requiring investigation or remediation.
(ii) Except as set forth in Section 4.15 to the
Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has received any written notice with respect to any of
its facilities of any material violation of any Environmental Law.
(iii) The Company and its Subsidiaries are not
subject to any outstanding orders, decrees, agreements or contracts
with any Governmental or Regulatory Authority or other Person
respecting (A) Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release of a Hazardous Material except as
described in Section 4.15 to the Company Disclosure Letter.
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(c) No Liens have arisen under or pursuant to any
Environmental Law on any site or facility owned, operated or leased
by the Company or any of its Subsidiaries, other than Liens which
do not materially impair the use, marketability or value of any
such site or facility, and no action of any Governmental or
Regulatory Authority has been taken or, to the knowledge of the
Company, is in process which could subject any of such properties
to such Liens, and neither the Company nor any of its Subsidiaries
would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any such site or facility
owned by it in any deed to the real property on which such site or
facility is located.
(d) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or
which are in the possession of, the Company or any of its
Subsidiaries in relation to any site or facility now or previously
owned, operated or leased by the Company or any of its Subsidiaries
which have not been delivered to Parent prior to the execution of
this Agreement.
(e) As used herein:
(i) "Environmental Law" means any law,
regulation or order of any Governmental or Regulatory Authority
relating to the regulation or protection of human health, safety or
the environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or wastes; and
(ii) "Hazardous Material" means (A) any
petroleum or petroleum products, flammable explosives, radioactive
materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing polychlorinated
biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import under any Environmental Law; and (C) any other
chemical or other material or substance, the presence of or
exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority under any
Environmental Law.
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(iii) "Release" means any release, spill,
effluent, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or
outdoor environment, including, without limitation, any property
owned, operated or leased by the Company or any of its
Subsidiaries; and
(iv) "Remedial Action" means all actions,
including, without limitation, any capital expenditures, required
by a Governmental or Regulatory Authority or required under any
Environmental Law, or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way ameliorate or address any
Hazardous Materials or other substance in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material so it does
not endanger or threaten to endanger the public health or welfare
of the indoor or outdoor environment; (iii) perform pre-remedial
studies and investigations or post-remedial monitoring and care
pertaining or relating to a Release; or (iv) bring the applicable
party into compliance with any Environmental Law.
4.16 Intangible Property.
(a) Section 4.16 to the Company Disclosure Letter sets
forth a list of each material trademark, trade name, patent,
service xxxx, service xxxx rights, brand xxxx, brand name, computer
program, database, industrial design and copyright and other
intellectual property rights of the Company and its Subsidiaries as
well as a list of all registrations thereof and pending
applications therefor, and each license or other contract relating
thereto (collectively, the "Company Intangible Property"). Items
identified with an asterisk on Section 4.16 to the Company
Disclosure Letter are owned by the Company (the "Company Owned
Intangible Property"). Except as set forth on Section 4.16 of the
Company Disclosure Letter, all of the Company Owned Intangible
Property is owned by the Company or its Subsidiaries free and clear
of any and all Liens, other than Permitted Liens (as defined in
Section 4.22(b)). Except as set forth on Section 4.16 to the
Company Disclosure Letter, the use of the Company Intangible
Property by the Company or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including,
without limitation, any intellectual property right, trademark,
trade name, patent, service xxxx, brand xxxx, brand name, computer
program, database, industrial design, copyright or any pending
application therefor of any other Person and there have been no
claims made (or, to the knowledge of the Company, threatened) and
neither the Company nor any of its Subsidiaries has received any
notice of any claim that any of the Company Intangible Property is
invalid or unenforceable or conflicts with the asserted rights of
any other Person or has not been used or enforced or has failed to
be used or enforced in a manner that would result in the
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abandonment, cancellation or unenforceability of any of the Company
Intangible Property, except in any such case for matters which
would not be reasonably likely to result in a material adverse
effect with respect to the Company and its Subsidiaries taken as a
whole.
(b) Each of the Company and each of its Subsidiaries
owns, or has a valid right to use, all Company Intangible Property
necessary for the operation of its respective business and has not
forfeited or otherwise relinquished any Company Intangible
Property.
(c) Except as set forth on Section 4.16 to the Company
Disclosure Letter, each of the material licenses or other Contracts
relating to the Company Intangible Property (collectively, the
"Company Intangible Property Licenses") is in full force and effect
and is valid and enforceable in accordance with its terms, and
there is no default under any Company Intangible Property License
either by the Company or any of its Subsidiaries or, to the
knowledge of the Company, by any other party thereto and there has
been no failure to maintain or enforce any Company Intellectual
Property, which failure would have a material adverse effect with
respect to the Company and its Subsidiaries taken as a whole.
4.17 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 5.06, the
affirmative vote of the holders of record of at least a majority of
the outstanding shares of Company Common Stock with respect to the
adoption of this Agreement is the only vote of the holders of any
class or series of the capital stock of the Company required to
adopt this Agreement and approve the Merger and the other
transactions contemplated hereby.
4.18 Opinion of Financial Advisor. The Company has received
the opinion of PaineWebber Incorporated, dated the date hereof, to
the effect that, as of the date hereof, the consideration to be
received in the Offer and the Merger by the stockholders of the
Company is fair from a financial point of view to the stockholders
of the Company, and a true and complete copy of such opinion has
been delivered to Parent prior to the execution of this Agreement.
4.19 Company Rights Agreement. As of the date hereof and
after giving effect to the execution and delivery of this
Agreement, each Company Right is represented by the certificate
representing the associated share of Company Common Stock and is
not exercisable or transferable apart from the associated share of
Company Common Stock, and the Company has taken all necessary
actions so that the execution and delivery of this Agreement and
the Stockholders Agreement and the consummation of the Offer, the
Merger and the other transactions contemplated hereby and the
Stockholders Agreement will not result in a "Distribution Date" (as
defined in the Company Rights Agreement).
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4.20 Section 203 of the DGCL Not Applicable. The Company
has taken all necessary actions so that the provisions of
Section 203 of the DGCL will not apply to this Agreement, the
Stockholders Agreement, the Offer, the Merger or the other
transactions contemplated hereby or thereby, or the acquisition of
Company Common Stock by Sub pursuant thereto or in accordance with
the terms thereof.
4.21 Related Party Transactions. Except as set forth in the
Company SEC Reports filed prior to the date of this Agreement or on
Section 4.21 to the Company Disclosure Letter, no director,
officer, or affiliate thereof (i) has outstanding any indebtedness
or other similar obligations to the Company or any of its
Subsidiaries or (ii) is a party to any legally binding contract,
commitment or obligation to, from or with the Company or any
Subsidiary of the Company.
4.22 Assets; Real Property.
(a) Except as set forth on Section 4.22(a) of the
Company Disclosure Letter, the Company and its Subsidiaries own or
have rights to use all assets (other than real property) necessary
to permit the Company and its Subsidiaries to conduct their
business as it is currently being conducted except where the
failure to own or have the right to use such assets would not,
individually or in the aggregate, have a material adverse effect on
the Company and its Subsidiaries taken as a whole.
(b) Section 4.22(b) of the Company Disclosure Letter
identifies all real property owned or leased by the Company or its
Subsidiaries. Except as set forth on Section 4.22(b) of the
Company Disclosure Letter, the Company has, either directly or
through its Subsidiaries, (i) good, valid and marketable or
indefeasible title to, free and clear of any Liens other than
Permitted Liens (as defined below), or (ii) rights by lease or
other agreements to use, all such real property subject to no Liens
other than Permitted Liens. The term "Permitted Liens" shall mean
(i) Liens for water, sewage and similar charges and current taxes
and assessments not yet due and payable or being contested in good
faith, (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or
incurred in the ordinary course of business, (iii) Liens arising or
resulting from any action taken by Parent or Sub, (iv) Liens which
do not materially impair the use, marketability or value of such
property, and (v) Liens securing indebtedness described in, or
created pursuant to documents filed as exhibits pursuant to,
Company SEC Reports filed prior to the date of this Agreement. All
real property leases of property under which the Company or any of
its Subsidiaries is a lessee or a lessor are valid, binding and
enforceable in all material respects in accordance with their
terms, and there are no existing material defaults thereunder.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
5.01 Organization and Qualification. Each of Parent and Sub
is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its
assets and properties, except for such failures to be so
incorporated, existing and in good standing or to have such power
and authority which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material
adverse effect on Parent and its Subsidiaries taken as a whole.
Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby. Parent has previously delivered to the
Company correct and complete copies of the certificate or articles
of incorporation and bylaws (or other comparable charter documents)
of Parent and Sub.
5.02 Authority Relative to this Agreement. Each of Parent
and Sub has full corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by each of Parent and Sub and the
consummation by each of Parent and Sub of the transactions
contemplated hereby have been duly and validly approved by its
Board of Directors and by Parent in its capacity as the sole
indirect stockholder of Sub, and no other corporate proceedings on
the part of either of Parent or Sub or their stockholders are
necessary to authorize the execution, delivery and performance of
this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by each of Parent and
Sub and constitutes a legal, valid and binding obligation of each
of Parent and Sub enforceable against each of Parent and Sub in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
5.03 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by
each of Parent and Sub do not, and the performance by each of
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Parent and Sub of its obligations hereunder and the consummation of
the transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give
to any Person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or
properties of Parent or any of its Subsidiaries under, any of the
terms, conditions or provisions of (i) the certificates or articles
of incorporation or bylaws (or other comparable charter documents)
of Parent or any of its Subsidiaries, or (ii) subject to the taking
of the actions described in paragraph (b) of this Section, (x) any
laws or orders of any Governmental or Regulatory Authority
applicable to Parent or any of its Subsidiaries or any of their
respective assets or properties, or (y) any Contracts to which
Parent or any of its Subsidiaries is a party or by which Parent or
any of its Subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and
(y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens
which, individually or in the aggregate, could not be reasonably
expected to have a material adverse effect on the ability of Parent
and Sub to consummate the transactions contemplated by this
Agreement.
(b) Except (i) for the filing of a premerger
notification report by Parent under the HSR Act, (ii) for the
filing of the Offer Documents with the SEC, (iii) for the filing of
the Certificate of Merger or Certificate of Ownership, as
applicable, and other appropriate merger documents required by the
DGCL with the Secretary of State and appropriate documents with the
relevant authorities of other states in which the Constituent
Corporations are qualified to do business and (iv) as disclosed
either in Section 4.04 of the Company Disclosure Letter or
Section 5.03 of the letter dated the date hereof and delivered to
the Company by Parent and Sub concurrently with the execution and
delivery of this Agreement (the "Parent Disclosure Letter"), no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or
Regulatory Authority or any Contract to which Parent or any of its
Subsidiaries is a party or by which Parent or any of its
Subsidiaries or any of their respective assets or properties is
bound for the execution and delivery of this Agreement by each of
Parent and Sub, the performance by each of Parent and Sub of its
obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals, actions,
filings and notices which the failure to make or obtain, as the
case may be, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the
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ability of Parent and Sub to consummate the transactions
contemplated by this Agreement.
5.04 Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of Parent,
threatened against, relating to or affecting, nor to the knowledge
of Parent are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to
or affecting, Parent or any of its Subsidiaries or any of their
respective assets and properties which, individually or in the
aggregate, could be reasonably expected to have a material adverse
effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement, and (ii) neither
Parent nor any of its Subsidiaries is subject to any order of any
Governmental or Regulatory Authority which, individually or in the
aggregate, could be reasonably expected to have a material adverse
effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
5.05 Information Supplied.
(a) The Offer Documents and any other documents to be
filed by Parent or Sub with the SEC or any other Governmental or
Regulatory Authority in connection with the Offer or the Merger and
the other transactions contemplated hereby will not, on the date of
its filing or, with respect to the Offer Documents, on the date
they are filed with the SEC and first published, sent or given to
stockholders of the Company, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not misleading, except that no representation is made by
Parent or Sub with respect to information supplied in writing by or
on behalf of the Company expressly for inclusion therein and
information incorporated by reference therein from documents filed
by the Company or any of its Subsidiaries with the SEC. The Offer
Documents and any other such documents filed by Parent or Sub with
the SEC under the Exchange Act in connection with the Merger will
comply as to form in all material respects with the requirements of
the Exchange Act.
(b) Neither the information supplied or to be supplied
in writing by or on behalf of Parent or Sub for inclusion, nor the
information incorporated by reference from documents filed by
Parent or any of its Subsidiaries with the SEC, in the Schedule
14D-9, the Proxy Statement or any other documents to be filed by
Parent, Sub or the Company with the SEC or any other Governmental
or Regulatory Authority in connection with the Offer or the Merger
and the other transactions contemplated hereby will on the date of
its filing or, with respect to the Schedule 14D-9, on the date it
is filed with the SEC and first published, sent or given to
stockholders of the Company, or, in the case of the Proxy
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Statement, at the date it is mailed to stockholders of the Company
and at the date of the Company Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they are made, not misleading.
5.06 Ownership of Company Common Stock. Except pursuant to
the Stockholders Agreement, neither Parent nor any of its
Subsidiaries or other affiliates beneficially owns any shares of
Company Common Stock.
5.07 Financing. Parent has sufficient cash and/or financial
capacity to pay the Per Share Amount for all shares of Company
Common Stock tendered pursuant to the Offer and the aggregate
Merger Price in accordance with this Agreement and to make all
other necessary payments of fees and expenses required to be paid
by Parent and Sub in connection with the transactions contemplated
by this Agreement, and will make such funds available to Sub to
permit it to perform its obligations hereunder.
ARTICLE VI
COVENANTS OF THE COMPANY
6.01 Covenants of the Company. At all times from and after
the date hereof until the Control Date, the Company covenants and
agrees as to itself and its Subsidiaries that (except as expressly
permitted by this Agreement, or to the extent that Parent shall
otherwise previously consent in writing):
(a) Ordinary Course. Subject to the limitations set
forth in Section 6.01(b), the Company and its Subsidiaries shall
conduct their respective businesses only in, and neither the
Company nor any such Subsidiary shall take any action except in,
the ordinary course consistent with past practice.
(b) Without limiting the generality of paragraph (a)
of this Section, (i) the Company and its Subsidiaries shall use all
commercially reasonable efforts to preserve intact in all material
respects their present business organizations and reputation, to
keep available the services of their key officers and employees, to
maintain their assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance
on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with significant customers and suppliers and others
having significant business dealings with them and to comply in all
material respects with all contracts and laws and orders of all
Governmental or Regulatory Authorities applicable to them, and
(ii) the Company shall not, nor shall it permit any of its
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Subsidiaries to, except as otherwise expressly provided for in this
Agreement or in Section 6.01 of the Company Disclosure Letter:
(A) amend or propose to amend its
certificate or articles of incorporation or bylaws (or other
comparable corporate charter documents);
(B) (w) declare, set aside or pay any
dividends on or make other distributions in respect of any of its
capital stock, except for the declaration and payment of dividends
by a wholly-owned Subsidiary of the Company solely to the Company,
(x) split, combine, reclassify or take similar action with respect
to any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (y) adopt a plan of
complete or partial liquidation or resolutions providing for or
authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other
reorganization or (z) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any Option
with respect thereto;
(C) issue, deliver or sell, or authorize
or propose the issuance, delivery or sale of, any shares of its
capital stock or other securities or Company Voting Debt or any
Option with respect thereto (other than (w) the issuance of Company
Common Stock upon the exercise of Compensation Options granted
under the Stock Option Plans and outstanding on the date of this
Agreement and in accordance with their present terms, (x) the
issuance by a wholly-owned Subsidiary of its capital stock to its
parent corporation and (y) the issuance of Company Rights and
reservation of Company Series A Preferred Stock pursuant to the
Company Rights Agreement in accordance with the terms thereof in
connection with the issuance of Company Common Stock otherwise
permitted pursuant hereto, or modify or amend any right of any
holder of outstanding shares of capital stock or Options with
respect thereto);
(D) directly or indirectly acquire (by
merging or consolidating with, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by
any other manner) any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets other than in the
ordinary course of its business consistent with past practice;
(E) other than sales of inventory in the
ordinary course of its business consistent with past practice,
sell, lease, grant any security interest in or otherwise dispose of
or encumber any of its assets or properties;
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(F) except to the extent required by
applicable law, (x) permit any material change in (A) any pricing,
marketing, purchasing, investment, accounting, financial reporting,
inventory, credit, allowance or tax practice, policy or procedure
or (B) any method of calculating any bad debt, contingency or other
reserve for accounting, financial reporting or tax purposes or (y)
make any material tax election or settle or compromise any material
income tax liability with any Governmental or Regulatory Authority;
(G) (x) assume or incur any indebtedness
for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt
securities or guarantee any debt securities of others or enter into
any lease (whether such lease is an operating or capital lease)
other than in the ordinary course of its business consistent with
past practice, (y) voluntarily purchase, cancel, prepay or
otherwise provide for a complete or partial discharge in advance of
a scheduled repayment date with respect to, or waive any right
under, any indebtedness for borrowed money other than in the
ordinary course of its business consistent with past practice, or
(z) enter into any "keep well" or other agreement or arrangement to
maintain the financial condition of another Person;
(H) enter into, adopt, amend in any
material respect (except as may be required by applicable law) or
terminate any Company Employee Benefit Plan, or other agreement,
arrangement, plan or policy between the Company or one of its
Subsidiaries and one or more of its directors, officers or
employees, or, except for normal increases in the ordinary course
of business consistent with past practice that, in the aggregate,
do not result in a material increase in benefits or compensation
expense to the Company and its Subsidiaries taken as a whole,
increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by
any plan or arrangement in effect as of the date hereof;
(I) except as to Contracts or
transactions entered or to be entered into in the ordinary course
of business which do not obligate the Company or any of its
Subsidiaries (either in a single Contract or transaction or a
series of related Contracts or transactions) to pay in excess of
$500,000: (x) enter into any Contract; or (y) amend, waive, modify
or terminate any existing Contract, or (z) engage in any new
transaction outside the ordinary course of business consistent with
past practice or not on an arm's length basis, with any third
party, including but not limited to, any affiliate of the Company
or any of its Subsidiaries;
(J) make any capital expenditures or
commitments for additions to plant, property or equipment
constituting capital assets except in the ordinary course of
business consistent with past practice;
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(K) take or fail to take any action that
results in any of the Company's representations or warranties
hereunder being untrue in any material respect (without reference
to any materiality qualification contained therein) or in any of
the Company's covenants hereunder or any of the conditions to the
Merger not being satisfied in all material respects (without
reference to any materiality qualification contained therein);
(L) make any change in the lines of
business in which it participates or is engaged; or
(M) enter into any Contract, commitment
or arrangement to do or engage in any of the foregoing.
(c) Advice. The Company shall confer on a regular and
frequent basis with Parent with respect to its business and
operations and other matters relevant to the Merger, and shall
promptly advise Parent, orally and in writing, of any change or
event, including, without limitation, any complaint, investigation,
hearing by or notice or communication from any Governmental or
Regulatory Authority or the institution or threat of litigation,
having, or which, insofar as can be reasonably foreseen, could
have, an adverse effect on the Company and its Subsidiaries taken
as a whole or on the ability of the Company to consummate the
transactions contemplated hereby or of any notice or other
communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated by this Agreement; provided that the Company shall not
be required to make any disclosure to the extent such disclosure
would constitute a violation of any applicable law.
6.02 No Solicitations. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries
shall, and it shall use its best efforts to cause their respective
Representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or
offer to its stockholders) with respect to a merger, consolidation
or other business combination including the Company or any of its
Subsidiaries or any acquisition or similar transaction (including,
without limitation, a tender or exchange offer) involving an
Alternative Proposal, or engage in any negotiations concerning, or
provide any confidential information or data to, or have any
discussions with, or enter into any agreement or understanding
with, any Person or group relating to, an Alternative Proposal
(excluding the transactions contemplated by this Agreement), or
otherwise facilitate any effort or attempt to make or implement an
Alternative Proposal; and (b) that it will notify Parent
immediately if any such inquiries, proposals or offers are received
by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued
with, it or any of such Persons or groups and will identify the
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party making such inquiry, proposal, offer or request and, if an
offer has been received, will describe the material terms thereof,
except to the extent such notification would, in the written
opinion of the Company's outside counsel (a copy of which shall be
delivered to Parent), cause the Company or its Board of Directors
to be in violation of any applicable law, regulation or
governmental order; provided, however, that prior to acquisition of
shares of Company Common Stock pursuant to the Offer or the
Stockholders Agreement, nothing contained in this Section 6.02
shall prohibit the Board of Directors of the Company from, to the
extent applicable, complying with Rule 14e-2 promulgated under the
Exchange Act with regard to an Alternative Proposal. "Alternative
Proposal" shall mean any of the following (other than the
transactions between the Company, Parent, Sub and the parties to
the Stockholders Agreement contemplated hereunder or thereunder)
involving the Company or any of its Subsidiaries: (i) any merger,
consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 10% or
more of the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; (iii) any
tender offer or exchange offer for or other purchase of 10% or more
of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing.
6.03 Company Rights Agreement. Prior to the Effective Time,
without the prior written consent of Parent, the Company will not
take any action to amend the Company Rights Agreement or to redeem
or otherwise modify the Company Rights.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 Access to Information; Confidentiality. The Company
shall, and shall cause each of its Subsidiaries to, throughout the
period from the date hereof to the Effective Time, (i) provide
Parent and its Representatives with full access, upon reasonable
prior notice and during normal business hours, to all officers,
employees, agents, attorneys and accountants of the Company and its
Subsidiaries and their respective assets, properties, books and
records, but only to the extent that such access does not
unreasonably interfere with the business and operations of the
Company and its Subsidiaries, and (ii) furnish promptly to such
Persons (x) a copy of each report, statement, schedule and other
document filed or received by the Company or any of its
Subsidiaries pursuant to the requirements of federal or state
securities laws and each material report, statement, schedule and
other document filed with any other Governmental or Regulatory
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Authority, and (y) all other information and data (including,
without limitation, copies of Contracts, Company Employee Benefit
Plans and other books and records) concerning the business and
operations of the Company and its Subsidiaries as Parent or any of
such other Persons reasonably may request. Any such information or
material obtained pursuant to this Section 7.01 that constitutes
"Evaluation Material" (as such term is defined in the letter
agreement dated as of May 20, 1996 between the Company and Parent,
as amended on May 31, 1996 (the "Confidentiality Agreement")) shall
be governed by the terms of the Confidentiality Agreement.
7.02 Preparation of Proxy Statement. If required by Parent,
the Company shall prepare and file with the SEC the Proxy Statement
as soon as reasonably practicable thereafter, and shall use its
best efforts to have the Proxy Statement cleared by the SEC. If at
any time prior to the Effective Time any event shall occur that
should be set forth in an amendment of or a supplement to the Proxy
Statement, the Company shall prepare and file with the SEC such
amendment or supplement as soon thereafter as is reasonably
practicable. Parent, Sub and the Company shall cooperate with each
other in the preparation of the Proxy Statement, and the Company
shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information,
and shall provide to Parent promptly copies of all correspondence
between the Company or any representative of the Company and the
SEC with respect to the Proxy Statement. The Company shall give
Parent and its counsel the opportunity to review the Proxy
Statement and all responses to requests for additional information
by and replies to comments of the SEC before their being filed
with, or sent to, the SEC. Each of the Company, Parent and Sub
agrees to use its best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and
requests by the SEC and to cause the Proxy Statement to be mailed
to the holders of Company Common Stock entitled to vote at the
Company Stockholders' Meeting at the earliest practicable time.
7.03 Approval of Stockholders.
(a) If required by Parent, the Company shall, through
its Board of Directors, duly call, give notice of, convene and hold
a meeting of its stockholders or solicit consents from a sufficient
number of stockholders of the Company to approve the Merger (the
"Company Stockholders' Meeting") for the purpose of approving the
adoption of this Agreement (the "Company Stockholders' Approval")
as soon as reasonably practicable after such request. At such
meeting, Parent shall, and shall cause its Subsidiaries to, cause
all shares of Company Common Stock purchased pursuant to the Offer
of the Stockholders Agreement, if any, and all other shares of
Company Common Stock owned by Parent or any such Subsidiary to be
voted in favor of the adoption of this Agreement.
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(b) Notwithstanding the foregoing, in the event that
Sub shall acquire at least 90 percent of the then outstanding
shares of Company Common Stock, the parties hereto shall, subject
to Article VIII, at the request of Sub take all necessary and
appropriate action to cause the Merger to become effective in
accordance with Section 253 of the DGCL, as soon as reasonably
practicable after such acquisition, without a meeting of the
stockholders of the Company.
7.04 Regulatory and Other Approvals. Subject to the terms
and conditions of this Agreement and without limiting the
provisions of Sections 7.02 and 7.03, each of the Company and
Parent will proceed diligently and in good faith to, as promptly as
practicable, (a) obtain all consents, approvals or actions of, make
all filings with and give all notices to Governmental or Regulatory
Authorities or any other public or private third parties required
of Parent, the Company or any of their Subsidiaries to consummate
the Merger and the other matters contemplated hereby, and (b)
provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private
third parties as the other party or such Governmental or Regulatory
Authorities or other public or private third parties may reasonably
request in connection therewith. In addition to and not in
limitation of the foregoing, each of the parties will (x) take
promptly all actions necessary to make the filings required of
Parent and the Company or their affiliates under the HSR Act, (y)
comply at the earliest practicable date with any request for
additional information received by such party or its affiliates
from the Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division")
pursuant to the HSR Act, and (z) cooperate with the other party in
connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry
concerning the Offer or the Merger or the other matters
contemplated by this Agreement or the Stockholders Agreement
commenced by either the FTC or the Antitrust Division or state
attorneys general.
7.05 Intentionally Deleted.
7.06 Employment and Severance Agreement. From and after the
Effective Time, the Company will honor without modification and in
accordance with their respective terms each of the employment and
severance agreements of the Company and its Subsidiaries listed in
Section 4.11 of the Company Disclosure Letter, as such agreements
are in effect on the date hereof.
7.07 Directors' and Officers' Indemnification and Insurance.
(a) The Company, and from and after the Effective
Time, the Surviving Corporation (each, an "Indemnifying Party"),
shall indemnify, defend and hold harmless each Person who is now,
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or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, a director or officer of the Company
or any of its Subsidiaries (the "Indemnified Parties") against (i)
all losses, claims, damages, costs and expenses (including
attorneys' fees), liabilities, judgments and settlement amounts
that are paid or incurred in connection with any claim, action,
suit, proceeding or investigation (whether civil, criminal,
administrative or investigative and whether asserted or claimed
prior to, at or after the Effective Time) that is based in whole or
in part on, or arises in whole or in part out of, the fact that
such Indemnified Party is or was a director or officer of the
Company or any of its Subsidiaries and relates to or arises out of
any action or omission occurring at or prior to the Effective Time
("Indemnified Liabilities"), and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out
of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation
is permitted under applicable law to indemnify its own directors or
officers, as the case may be; provided that no Indemnifying Party
shall be liable for any settlement of any claim effected without
its written consent, which consent shall not be unreasonably
withheld. Without limiting the foregoing, in the event that any
such claim, action, suit, proceeding or investigation is brought
against any Indemnified Party (whether arising prior to or after
the Effective Time), (w) the Indemnifying Parties will pay expenses
in advance of the final disposition of any such claim, action suit,
proceeding or investigation to each Indemnified Party to the full
extent permitted by applicable law; provided that the Person to
whom expenses are advanced provides any undertaking required by
applicable law to repay such advance if it is ultimately determined
that such Person is not entitled to indemnification; (x) the
Indemnified Parties shall retain counsel reasonably satisfactory to
the Indemnifying Parties; (y) the Indemnifying Parties shall pay
all reasonable fees and expenses of such counsel for the
Indemnified Parties (subject to the final sentence of this
paragraph) promptly as statements therefor are received; and (z)
the Indemnifying Parties shall use all commercially reasonable
efforts to assist in the vigorous defense of any such matter. Any
Indemnified Party wishing to claim indemnification under this
Section, upon learning of any such claim, action, suit, proceeding
or investigation, shall notify the Indemnifying Parties, but the
failure so to notify an Indemnifying Party shall not relieve it
from any liability which it may have under this paragraph except to
the extent such failure irreparably prejudices such party. The
Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more
Indemnified Parties.
(b) Except to the extent required by law, Parent will
not take any action so as to amend, modify or repeal the provisions
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for indemnification of directors or officers contained in the
certificates or articles of incorporation or bylaws (or other
comparable charter documents) of the Surviving Corporation and its
Subsidiaries (which as of the Effective Time shall be no more
favorable to such individuals than those maintained by the Company
and its Subsidiaries on the date hereof) in such a manner as would
adversely affect the rights of any individual who shall have served
as a director or officer of the Company or any of its Subsidiaries
prior to the Effective Time to be indemnified by such corporations
in respect of their serving in such capacities prior to the
Effective Time.
(c) Parent and the Surviving Corporation shall, until
the sixth anniversary of the Effective Time and for so long
thereafter as any claim asserted prior to such date has not been
fully adjudicated by a court of competent jurisdiction, cause to be
maintained in effect, to the extent available, the policies of
directors' and officers' liability insurance maintained by the
Company and its Subsidiaries as of the date hereof (or policies of
at least the same coverage and amounts containing terms that are no
less advantageous to the insured parties) with respect to claims
arising from facts or events that occurred on or prior to the
Effective Time; provided that in no event shall Parent or the
Surviving Corporation be obligated to expend in order to maintain
or procure insurance coverage pursuant to this paragraph any amount
per annum in excess of two hundred percent (200%) of the aggregate
premiums payable by the Company and its Subsidiaries in 1996 (on an
annualized basis) for such purpose.
(d) The provisions of this Section are intended to be
for the benefit of, and shall be enforceable by, each Indemnified
Party and each party entitled to insurance coverage under paragraph
(c) above, respectively, and his or her heirs and legal
representatives, and shall be in addition to any other rights an
Indemnified Party may have under the certificate or articles of
incorporation or bylaws of the Surviving Corporation or any of its
Subsidiaries, under the DGCL or otherwise.
7.08 Fees and Expenses. Whether or not the Offer or the
Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense.
7.09 Brokers or Finders. Each of Parent and the Company
represents, as to itself and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or Person is or
will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the
transactions contemplated by this Agreement except PaineWebber
Incorporated, whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm (a true
and complete copy of which has been delivered by the Company to
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Parent prior to the execution of this Agreement), and Chase
Securities Inc., whose fees and expenses will be paid by Parent in
accordance with Parent's agreement with such firm (a true and
complete copy of which has been delivered by Parent to the Company
prior to the execution of this Agreement), and each of Parent and
the Company shall indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect
to any other such fee or commission or expenses related thereto
asserted by any Person on the basis of any act or statement alleged
to have been made by such party or its affiliate.
7.10 Takeover Statutes. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute
or regulation shall become applicable to the transactions
contemplated hereby, the Company and the members of the Board of
Directors of the Company shall grant such approvals and take such
actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on
the transactions contemplated hereby and thereby.
7.11 Conveyance Taxes. The Company and Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added,
stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before
the Effective Time.
7.12 Conduct of Business of Sub. Prior to the Effective
Time, except as may be required by applicable law and subject to
the other provisions of this Agreement, Parent shall cause Sub to
perform its obligations under this Agreement in accordance with its
terms.
7.13 Notice. Each of Parent and the Company will notify the
other of any event, transaction or circumstance, as soon as
practical after it becomes known to such party, that causes or will
cause any covenant or agreement of Parent or the Company under this
Agreement to be breached or any of the conditions to the
consummation of the transactions contemplated hereby not to be
satisfied or that renders or will render untrue any representation
or warranty of Parent or the Company contained in this Agreement.
Each of Parent and the Company also will notify the other in
writing of any violation or breach, as soon as practical after it
becomes known to such party, of any representation, warranty,
covenant or agreement made by Parent or the Company. No notice
given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in
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this Agreement for purposes of determining satisfaction of any
condition contained herein.
7.14 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will
take or cause to be taken all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to
satisfy each condition to the other's obligations contained in this
Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither Parent nor the Company
will, nor will it permit any of its Subsidiaries to, take or fail
to take any action that could be reasonably expected to result in
the nonfulfillment of any such condition; provided that, neither
the Parent nor any of its Subsidiaries shall be required to take,
or refrain from taking, any action which could reasonably be
expected prior to or after the Effective Time to have a material
adverse effect on either Parent and its Subsidiaries, taken as a
whole, or on the Company and its Subsidiaries, taken as a whole, or
otherwise result in a material diminution of the benefits of the
Merger to Parent.
ARTICLE VIII
CONDITIONS
8.01 Conditions to Parent and Sub's Obligation to Effect the
Merger. Subject to Section 10.02 hereto, the obligations of Parent
and Sub to effect the Merger are subject to the fulfillment, or
waiver (other than conditions set forth in Section 8.01(a) or (b))
by Parent and Sub, at or prior to the Closing, of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have
been adopted by the requisite vote of the stockholders of the
Company under the DGCL unless such approval shall not be required
under the DGCL.
(b) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(c) Governmental and Regulatory and Other Consents and
Approvals. All permits, consents, approvals, waivers and actions
of, filings with and notices to, any Governmental or Regulatory
Authority or any other public or private third parties required of
Parent, the Company or any of their Subsidiaries to consummate the
transactions contemplated hereby, other than those the failure of
which to be obtained or taken could not be reasonably expected to
have a material adverse effect on Parent and its Subsidiaries,
taken as a whole, or on the Company and its Subsidiaries, taken as
a whole, or on the ability of Parent and the Company to consummate
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the transactions contemplated hereby shall have been obtained or
taken; provided that no such permit, consent, approval, waiver or
action shall be subject to any condition which could reasonably be
expected prior to or following the Effective Time to have a
material adverse effect on either Parent and its Subsidiaries taken
as a whole, or on the Company and its Subsidiaries taken as a
whole, or otherwise result in a material diminution of the benefits
of the Merger to Parent.
(d) No Injunctions or Restraints. There shall not
have been any law or order promulgated, entered, enforced, enacted,
issued or deemed applicable to the Merger by any court of competent
jurisdiction or other competent Governmental or Regulatory
Authority which, directly or indirectly, (1) prohibits, or imposes
any material limitations on, Parent's or Sub's ownership or
operation (or that of any of their respective Subsidiaries or
affiliates) of any portion of their or the Company's businesses or
assets which is material to the business of the Company and its
Subsidiaries taken as a whole, or material to the business of
Parent and its Subsidiaries taken as a whole, or compels Parent or
Sub (or their respective Subsidiaries or affiliates) to dispose of
or hold separate any portion of their or the Company's business or
assets which is material to the business of the Company and its
Subsidiaries taken as a whole, or material to the business of
Parent and its Subsidiaries taken as a whole, or otherwise results
in a material diminution of the benefits of the Merger to Parent,
(2) prohibits, restrains or makes illegal the Merger or the
acceptance for payment, payment for or purchase of shares of
Company Common Stock upon consummation of the Merger, (3) imposes
material limitations on the ability of Sub or Parent (or any of
their respective Subsidiaries or affiliates) effectively to acquire
or to hold or to exercise full rights of ownership of the shares of
Company Common Stock including, without limitation, the right to
vote such shares of Company Common Stock on all matters properly
presented to the Company's stockholders, (4) imposes limitations on
the ability of Sub or Parent (or any of their respective
Subsidiaries or affiliates) effectively to control in any material
respect any material portion of the business or assets of the
Company and its Subsidiaries taken as a whole, or any material
portion of the business or assets of the Parent and its
Subsidiaries taken as a whole, or (5) has the effect of making
illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated
by this Agreement.
(e) Litigation. There shall be no instituted or
pending action or proceeding before any Governmental or Regulatory
Authority (or any such action threatened by any Governmental or
Regulatory Authority) which (x) in the case of any such action or
proceeding brought by any Governmental or Regulatory Authority,
seeks any order, decree or injunction having any effect set forth
in (d) above or (y) in the case of any such action or proceeding
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brought by any other Person, could reasonably be expected to result
in any order, decree or injunction having any effect set forth in
(d) above.
(f) Market Conditions. There shall not have occurred
and be continuing (1) any general suspension of trading in, or
limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market, (2) a
declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not
mandatory), (3) any limitation (whether or not mandatory) by any
Governmental or Regulatory Authority on the extension of credit by
banks or other financial institutions, (4) a commencement of a war
or armed hostilities or other national or international crisis
directly or indirectly involving the United States having a
significant adverse effect on the functionality of the financial
markets in the United States or (5) in the case of any of the
foregoing existing on the date of this Agreement, in the good faith
judgment of the Parent a material acceleration or worsening
thereof.
(g) Representations and Warranties. The
representations and warranties made by the Company in this
Agreement that are subject to, or qualified by, "material adverse
effect," "material adverse change" or other materiality
qualification shall be true and correct, and the representations
and warranties made by the Company in this Agreement that are not
so qualified shall be true and correct in any respect which could
reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole, or the Parent and
its Subsidiaries, taken as a whole, in each case when made and on
and as of the Closing Date.
(h) Performance of Obligations of the Company. The
Company shall have performed in all material respects (without any
reference to any materiality qualification contained therein) all
obligations and covenants required to be performed or complied with
by it under this Agreement on or before the earlier of (i) such
time as Parent's or Sub's Designees shall constitute at least a
majority of the Company's Board of Directors pursuant to Section
1.02 of this Agreement and (ii) the Effective Time.
8.02 Conditions to the Company's Obligation to Effect the
Merger. Subject to Section 10.02 hereto, the obligation of the
Company to effect the Merger is subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have
been adopted by the requisite vote of the stockholders of the
Company under the DGCL unless such approval shall not be required
under the DGCL.
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(b) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(c) No Injunctions or Restraints. There shall not
have been any law or order promulgated, entered, enforced, enacted,
issued or deemed applicable to the Merger by any court of competent
jurisdiction or other competent Governmental or Regulatory
Authority which, directly or indirectly, prohibits, restrains or
makes illegal the Merger or the acceptance for payment, payment for
or purchase of shares of Company Common Stock upon consummation of
the Merger.
(d) Litigation. There shall be no threatened,
instituted or pending any action or proceeding by any Governmental
or Regulatory Authority seeking any order, decree or injunction
having any effect set forth in (c) above.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. Subject, in the case of the Company, to
Section 1.02(c), this Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time
prior to the Effective Time, whether prior to or after the Company
Stockholders' Approval:
(a) By mutual written agreement of the parties hereto
duly authorized by action taken by or on behalf of their respective
Boards of Directors;
(b) By either the Company or Parent upon notification
to the non-terminating party by the terminating party:
(i) at any time after February 28, 1997 if
neither the Merger nor the Offer nor the purchase of Company Common
Stock pursuant to the Stockholders Agreement has been consummated
and the failure to consummate any of the foregoing is not caused by
a breach of this Agreement by the terminating party;
(ii) if the Offer is commenced and shall have
terminated or expired in accordance with its terms without Sub
having accepted for payment and paid for any shares of Company
Common Stock pursuant to the Offer; provided, however, that Parent
may not terminate this Agreement pursuant to this Section
9.01(b)(ii) if Sub's termination of, or failure to accept for
payment or pay for any shares of Company Common Stock tendered
pursuant to, the Offer does not follow the occurrence, or failure
to occur, as the case may be, of any condition to the Offer set
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forth in Annex A hereto or if Parent or Sub is otherwise in breach
of the terms of the Offer or this Agreement; or
(iii) if any court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have
issued an order making illegal or otherwise restricting, preventing
or prohibiting the Merger and such order shall have become final
and nonappealable; or
(c) By the Company if (i) there has been a material
breach of any representation, warranty, covenant or agreement on
the part of Parent or Sub set forth in this Agreement, which breach
is not curable or, if curable, has not been cured within thirty
(30) days following receipt by Parent of notice of such breach from
the Company; or (ii) if the Offer has not been timely commenced in
accordance with Section 10.01(a); or
(d) By Parent, prior to the purchase of shares of
Company Common Stock pursuant to the Offer, if (x) there has been
a breach of any of the representations or warranties made by the
Company in this Agreement that are subject to, or qualified by, any
"material adverse effect," "material adverse change" or other
materiality qualification, or there has been a breach of any of the
representations or warranties made by the Company in this Agreement
that are not so qualified in any respect which could reasonably be
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole, or the Parent and its Subsidiaries,
taken as a whole, or (y) there has been a material breach of any
covenant or agreement (without reference to any materiality
qualification contained therein) on the part of the Company set
forth in this Agreement, which breach, in either instance, is not
curable or, if curable, has not been cured within thirty (30) days
following receipt by the Company of notice of such breach from
Parent.
9.02 Effect of Termination. If this Agreement is validly
terminated by either the Company or Parent pursuant to Section
9.01, this Agreement will forthwith become null and void and there
will be no liability or obligation on the part of either the
Company or Parent (or any of their respective Representatives or
affiliates), except (i) that the provisions of Sections 7.08 and
7.09 and this Section 9.02 will continue to apply following any
such termination and (ii) that nothing contained herein shall
relieve any party hereto from liability for wilful breach of its
representations, warranties, covenants or agreements contained in
this Agreement.
9.03 Amendment. Subject, in the case of the Company, to
Section 1.02(c), this Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards
of Directors of the parties hereto at any time prior to the
Effective Time, whether prior to or after the Company Stockholders'
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Approval shall have been obtained, but after such adoption and
approval only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless set
forth in a written instrument duly executed by or on behalf of each
party hereto.
9.04 Waiver. Subject, in the case of the Company, to
Section 1.02(c), at any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors,
may to the extent permitted by applicable law (i) extend the time
for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the covenants, agreements or
conditions of the other parties hereto contained herein. No such
extension or waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party
extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of
this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.
ARTICLE X
THE OFFER
10.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 9.01 and none of the events
set forth in Annex A hereto shall have occurred and be continuing,
no later than five (5) business days after the date of exercise by
the Company of the Tender Option (as defined in Section 10.01(d)),
Parent shall cause Sub to, and Sub shall, commence (within the
meaning of Rule 14d-2 under the Exchange Act), a tender offer (the
"Offer") to acquire all of the issued and outstanding shares of
Company Common Stock, together with the associated Company Rights,
for $26.00 per share (such amount, or any greater amount per share
paid pursuant to the Offer, the "Per Share Amount") net to the
seller in cash. The obligation of Sub to consummate the Offer once
it is commenced and to accept for payment and to pay for shares of
Company Common Stock tendered pursuant to the Offer shall be
subject only to the conditions set forth in Annex A hereto. Sub
expressly reserves the right to waive any such condition (other
than the Minimum Condition (as defined in Annex A hereto) or the
condition relating to the expiration of the HSR Act), to increase
the Per Share Amount and to make any other changes in the terms and
conditions of the Offer. Notwithstanding the foregoing, no change
may be made which (i) decreases the Per Share Amount, (ii) changes
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the form of consideration to be paid in the Offer, (iii) reduces
the number of shares of Company Common Stock sought to be purchased
in the Offer, (iv) imposes conditions to the Offer in addition to
those set forth in Annex A hereto, (v) extends the expiration date
of the Offer or (vi) otherwise alters or amends any term of the
Offer in any manner adverse to the holders of shares of Company
Common Stock; provided, however, that subject to the right of the
parties to terminate this Agreement pursuant to Section 9.01, the
Offer may be extended (1) for any period to the extent required by
law or by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer and (2) for one or
more periods of not more than five (5) business days each, but in
no event for more than a total of twenty (20) business days if,
following the satisfaction or waiver of each of the conditions set
forth in Annex A hereto, less than 90% of the Company Common Stock
has been validly tendered and not properly withdrawn pursuant to
the Offer; provided, that, the closing of the Offer shall occur on
or before December 24, 1996 if all conditions set forth in Annex A
hereto have been satisfied or waived prior to such date. Parent
and Sub agree that, in the event Sub is unable to consummate the
Offer on or prior to the expiration date of the Offer due to the
failure of any condition set forth in Annex A hereto to be
satisfied, Parent shall cause Sub to, and Sub shall extend the
Offer until the earlier of (i) February 28, 1997 or (ii) such time
as such condition is satisfied or waived; provided, that, the Sub
shall be permitted but shall not be obligated to extend the Offer
if either (x) the Company is in breach in any material respect of
its covenants, agreements, representations or warranties contained
in this Agreement (without reference to any materiality
qualifications contained herein) or (y) there is a reasonable
likelihood that one or more of the conditions set forth in Annex A
hereto cannot be satisfied on or before February 28, 1997.
Assuming the prior satisfaction or waiver of the conditions of the
Offer and subject to the foregoing right to extend the Offer, Sub
shall pay for shares of Company Common Stock tendered pursuant to
the Offer as soon as practicable after expiration date thereof.
(b) As soon as practicable on the date of commencement
of the Offer, Sub shall file with the SEC a Tender Offer Statement
on Schedule 14D-1 promulgated under the Exchange Act (together with
all amendments and supplements thereto, the "Schedule 14D-1") with
respect to the Offer, and take such steps as are reasonably
necessary to cause the Offer to Purchase (as defined below) to be
disseminated to the holders of shares of Company Common Stock as
and to the extent required by applicable federal securities laws.
The Schedule 14D-1 shall contain an offer to purchase (the "Offer
to Purchase") and forms of the related letter of transmittal and
any related summary advertisement (the Schedule 14D-1, the Offer to
Purchase and such other documents, together with all amendments and
supplements thereto, the "Offer Documents"). Parent, Sub and the
Company shall correct promptly any information provided by any of
them for use in the Offer Documents which shall have become false
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or misleading, and Parent and Sub shall take all steps necessary to
cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to
holders of shares of Company Common Stock, in each case as and to
the extent required by applicable federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to
review and comment on the Offer Documents prior to their being
filed with the SEC, and Parent and Sub will provide the Company and
its counsel in writing with any comments that Parent or Sub
receives from the SEC or its staff with respect to the Offer
Documents promptly after receipt of any such comments.
(c) Parent shall provide or cause to be provided to
Sub on a timely basis the funds necessary to accept for payment,
and pay for, any shares of Company Common Stock that Sub becomes
obligated to accept for payment, and pay for, pursuant to the
Offer.
(d) Tender Option. At any time after November 7,
1996, and prior to December 2, 1996, the Company shall have the
right to require that Sub commence the Offer (the "Tender Option").
The Tender Option shall be exercised by written notice to Parent.
10.02 Conditions to Each Party's Obligation to Effect the
Merger. Notwithstanding anything to the contrary contained herein,
if the Offer is consummated, the respective obligation of each
party to effect the Merger is subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a) Stockholder Approval. Unless the Merger may be
consummated pursuant to Section 253 of the DGCL as contemplated by
Section 7.03(b), this Agreement shall have been adopted by the
requisite vote of the stockholders of the Company under the DGCL.
(b) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(c) No Injunctions or Restraints. No court of
competent jurisdiction or other competent Governmental or
Regulatory Authority shall have enacted, issued, promulgated,
enforced or entered any law or order (whether temporary,
preliminary or permanent) which is then in effect and has the
effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Offer or the Merger or the other
transactions contemplated by this Agreement or the Stockholders
Agreement.
10.03 Company Actions.
(a) On the date the Offer Documents are filed with the
SEC, the Company shall file with the SEC a
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Solicitation/Recommendation Statement on Schedule 14D-9 promulgated
under the Exchange Act (together with all amendments and
supplements thereto, the "Schedule 14D-9") containing the
recommendation of the Board of Directors of the Company described
in Section 1.01, and shall take such steps as are necessary to
cause the Schedule 14D-9 to be disseminated to the holders of
shares of Company Common Stock as and to the extent required by
applicable federal securities laws. The Company, Parent and Sub
shall correct promptly any information provided by any of them for
use in the Schedule 14D-9 which shall have become false or
misleading, and the Company shall take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of shares of Company Common Stock, in each
case as and to the extent required by applicable federal securities
laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to
its being filed with the SEC, and the Company will provide Parent
and its counsel in writing with any comments that the Company
receives from the SEC or its staff with respect to the Schedule
14D-9 promptly after receipt of any such comments.
(b) In connection with the Offer, the Company shall
cause its transfer agent to furnish Sub promptly with mailing
labels containing the names and addresses of all record holders of
shares of Company Common Stock and with security position listings
of shares of Company Common Stock held in stock depositories, each
as of a recent date, together with all other available listings and
computer files containing names, addresses and security position
listings of record holders and beneficial owners of shares of
Company Common Stock. The Company shall furnish Sub with such
additional information, including, without limitation, updated
listings and files of stockholders, mailing labels and security
position listings and such other assistance as Parent, Sub or their
agents may reasonably request in communicating the Offer to record
and beneficial holders of shares of Company Common Stock. Subject
to the requirements of applicable law, and except for such steps as
are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent
and Sub shall hold in confidence the information contained in such
labels, listings and files, shall use such information only in
connection with the Offer and the Merger, and, if this Agreement
shall be terminated in accordance with Section 9.01, shall deliver
to the Company all copies of, and any extracts or summaries from,
such information then in their possession or control.
(c) In connection with the Offer, the Company will
furnish Parent with such information (which will be treated and
held in confidence by Parent) and assistance as Parent or its
Representatives (as defined in Section 11.11(f)) may reasonably
request in connection with the preparation of the Offer and
communicating the Offer to the record and beneficial holders of
shares of Company Common Stock.
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ARTICLE XI
GENERAL PROVISIONS
11.01 Non-Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and
agreements contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall not survive the Merger
but shall terminate at the Effective Time, except for the
agreements contained in Article II and Article III, in Sections
7.07, 7.08 and 7.09 and this Article XI, which shall survive the
Effective Time.
11.02 Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to
have been duly given only if delivered personally or by facsimile
transmission or mailed (first class postage prepaid) or delivered
by a nationally recognized overnight delivery service to the
parties at the following addresses or facsimile numbers:
If to Parent or Sub, to:
Food Lion, Inc.
X.X. Xxx 0000
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: R. Xxxxxxx XxXxxxxxx
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxxx and
Xxxxxxx X. Xxxxx, Xx., P.C.
If to the Company, to:
Kash n' Xxxxx Food Stores, Inc.
0000 Xxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, President
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with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxxxxxx, Esq.
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be
deemed given upon delivery, (ii) if delivered by facsimile
transmission to the facsimile number as provided in this Section,
be deemed given upon receipt, and (iii) if delivered by mail or
overnight delivery service in the manner described above to the
address as provided in this Section, be deemed given upon receipt
(in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered
pursuant to this Section). Any party from time to time may change
its address, facsimile number or other information for the purpose
of notices to that party by giving notice specifying such change to
the other parties hereto.
11.03 Entire Agreement; Incorporation of Exhibits.
(a) This Agreement supersedes all prior discussions
and agreements among the parties hereto with respect to the subject
matter hereof, other than the Confidentiality Agreement and the
letter agreement dated as of May 21, 1996 between Parent and the
Company, which shall survive the execution and delivery of this
Agreement in accordance with its terms, and contains, together with
the Confidentiality Agreement, the sole and entire agreement among
the parties hereto with respect to the subject matter hereof.
(b) The Company Disclosure Letter, the Parent
Disclosure Letter and any Exhibit attached to this Agreement and
referred to herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
11.04 Public Announcements. Except as otherwise required by
law or the rules of any applicable securities exchange or national
market system, so long as this Agreement is in effect: (i) the
Company will not, and will not permit any of its Representatives
to, issue or cause the publication of any press release or make any
other public announcement with respect to the transactions
contemplated by this Agreement without the consent of Parent, which
shall not be unreasonably withheld or delayed; and (ii) Parent nor
Sub will not, and will not permit any of their respective
Representatives to, issue or cause the publication of any press
release or make any other public announcement with respect to the
transactions contemplated by this Agreement without consulting the
Company prior thereto. Parent and the Company will cooperate with
-48-
each other in the development and distribution of all press
releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will
furnish the other with drafts of any such releases and
announcements as far in advance as practicable.
11.05 No Third Party Beneficiary. The terms and provisions
of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and
except as otherwise expressly provided for herein, it is not the
intention of the parties to confer third-party beneficiary rights
upon any other Person.
11.06 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by
any party hereto without the prior written consent of the other
parties hereto and any attempt to do so will be void, except that
Sub may assign any or all of its rights, interests and obligations
hereunder, including the right to purchase all or any portion of
the shares of Company Common Stock tendered pursuant to the Offer,
to another direct or indirect wholly-owned Subsidiary of Parent,
provided that any such Subsidiary agrees in writing to be bound by
all of the terms, conditions and provisions contained herein and no
such assignment shall be made if it would materially delay or
impede the transactions contemplated thereby. Subject to the
preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
11.07 Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define,
modify or limit the provisions hereof.
11.08 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present
or future law or order, and if the rights or obligations of any
party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
11.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable to a contract executed and performed in such State,
without giving effect to the conflicts of laws principles thereof.
11.10 Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the
-49-
provisions of this Agreement was not performed in accordance with
its specified terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of
competent jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
11.11 Certain Definitions. As used in this Agreement:
(a) the term "affiliate," as applied to any Person,
shall mean any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person; for
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person,
whether through the ownership of voting securities, by contract or
otherwise;
(b) a Person will be deemed to "beneficially" own
securities if such Person would be the beneficial owner of such
securities under Rule 13d-3 under the Exchange Act, including
securities which such Person has the right to acquire (whether such
right is exercisable immediately or only after the passage of
time);
(c) the term "business day" means a day other than
Saturday, Sunday or any day on which banks located in the State of
New York, North Carolina or Florida are authorized or obligated to
close;
(d) any reference to any event, change or effect being
"material" or "materially adverse" or having a "material adverse
effect" on or with respect to an entity (or group of entities taken
as a whole) means such event, change or effect is material or
materially adverse, as the case may be, to the business, financial
condition or results of operations of such entity (or of such group
of entities taken as a whole);
(e) the term "Person" shall include individuals,
corporations, partnerships, trusts, other entities and groups
(which term shall include a "group" as such term is defined in
Section 13(d)(3) of the Exchange Act);
(f) the "Representatives" of any entity means such
entity's directors, officers, employees, legal, investment banking
and financial advisors, accountants and any other agents and
representatives; and
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(g) the term "Subsidiary" means, with respect to any
party, any corporation or other organization, whether incorporated
or unincorporated, of which more than fifty percent (50%) of either
the equity interests in, or the voting control of, such corporation
or other organization is, directly or indirectly through
Subsidiaries or otherwise, beneficially owned by such party.
11.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original,
but all of which together will constitute one and the same
instrument.
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Annex A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A shall have the
meanings ascribed to them in the Agreement and Plan of Merger to
which it is attached, except that the term "Merger Agreement" shall
be deemed to refer to such Agreement and Plan of Merger.
Notwithstanding any other provision of the Offer, Sub shall
not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return
tendered shares of Company Common Stock promptly after termination
or withdrawal of the Offer), pay for, and may (subject to any such
rule or regulation) delay the acceptance for payment of or payment
for any tendered shares of Company Common Stock, and may (except as
provided in the Merger Agreement) amend or terminate the Offer as
to any shares of Company Common Stock not then paid for, if
(i) the condition that shares of Company
Common Stock representing at least a majority of the number of
shares of Company Common Stock outstanding on a fully diluted basis
shall have been validly tendered and not properly withdrawn prior
to the expiration of the Offer shall not have been satisfied (the
"Minimum Condition"),
(ii) (x) any applicable waiting period under
the HSR Act shall not have expired or terminated, prior to the
expiration of the Offer, or (y) all permits, consents, approvals,
waivers and actions of, filings with and notices to any
Governmental or Regulatory Authority or any other public or private
third parties required of Parent, the Company or any of their
Subsidiaries to consummate the transactions contemplated by the
Merger Agreement shall not have been obtained or taken prior to the
expiration of the Offer (other than those the failure of which to
be obtained or taken could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries or the
Company and its Subsidiaries, in each case taken as a whole, or on
the ability of Parent and the Company to consummate the
transactions contemplated by the Merger Agreement) and no such
permit, consent, approval or waiver received or action taken shall
be subject to any condition which could reasonably be expected
prior to or following the consummation of the Offer to have a
material adverse effect on either Parent and its Subsidiaries taken
as a whole, or on the Company and its Subsidiary taken as a whole,
or otherwise result in a material diminution of the benefits of the
Merger to Parent, or
A-1
(iii) at any time on or after the date of the
Merger Agreement and before the time of payment for any such shares
of Company Common Stock (whether or not any shares of Company
Common Stock have theretofore been accepted for payment or paid for
pursuant to the Offer), any of the following events shall have
occurred and remain in effect other than as a result of any action
or inaction of Parent or any of its Subsidiaries that constitutes
a breach of the Merger Agreement:
(a) there shall have been any law or order
promulgated, entered, enforced, enacted, issued or deemed
applicable to the Offer, the Merger or the Stockholders Agreement
by any court of competent jurisdiction or other competent
Governmental or Regulatory Authority which, directly or indirectly,
(1) prohibits, or imposes any material limitations on, Parent's or
Sub's ownership or operation (or that of any of their respective
Subsidiaries or affiliates) of any portion of their or the
Company's businesses or assets which is material to the business of
the Company and its Subsidiaries taken as a whole, or material to
the business or assets of Parent or its Subsidiaries taken as a
whole or compels Parent or Sub (or their respective Subsidiaries or
affiliates) to dispose of or hold separate any portion of their or
the Company's business or assets which is material to the business
of the Company and its Subsidiaries taken as a whole, or material
to the business of Parent and its Subsidiaries taken as a whole (2)
prohibits, restrains or makes illegal the acceptance for payment,
payment for or purchase of shares of Company Common Stock pursuant
to the Offer or the Stockholders Agreement or the consummation of
the Merger, (3) imposes material limitations on the ability of Sub
or Parent (or any of their respective Subsidiaries or affiliates)
effectively to acquire or to hold or to exercise full rights of
ownership of the shares of Company Common Stock purchased pursuant
to the Offer or the Stockholders Agreement including, without
limitation, the right to vote such shares of Company Common Stock
on all matters properly presented to the Company's stockholders,
(4) imposes limitations on the ability of Sub or Parent (or any of
their respective Subsidiaries or affiliates) effectively to control
in any material respect any material portion of the business or
assets of the Company and its Subsidiaries taken as a whole, or any
material portion of the business or assets of Parent and its
Subsidiaries taken as a whole, or (5) has the effect of making
illegal or otherwise restricting, preventing or prohibiting
consummation of the Offer or the other transactions contemplated by
the Merger Agreement;
(b) there shall be no instituted or pending action or
proceeding before any Governmental or Regulatory Authority (or any
such action threatened by any Governmental or Regulatory Authority)
which (x) in the case of any such action or proceeding brought by
any Governmental or Regulatory Authority, seeks any order, decree
or injunction having any effect set forth in (a) above or (y) in
the case of any such action or proceeding brought by any other
A-2
Person, could reasonably be expected to result in any order, decree
or injunction having any effect set forth in (a) above.
(c) there shall have occurred and be continuing (1)
any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in
the over-the-counter market, (2) a decline of at least 35% in
either the Dow Xxxxx Average of Industrial Stock or the Standard &
Poors Index after the date hereof, (3) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory) (4) any limitation
(whether or not mandatory) by any Governmental or Regulatory
Authority on the extension of credit by banks or other financial
institutions; (5) a commencement of a war or armed hostilities or
other national or international crisis directly or indirectly
involving the United States having a significant adverse effect on
the functionality of the financial markets in the United States or
(6) in the case of any of the foregoing existing on the date of the
Merger Agreement, in the good faith judgment of the Parent a
material acceleration or worsening thereof;
(d) the representations and warranties made by the
Company in the Merger Agreement that are subject to, or qualified
by, "material adverse effect," "material adverse change" or other
materiality qualification shall not be true and correct or the
representations and warranties made by the Company in the Merger
Agreement that are not so qualified shall not be true and correct
in any respect which could reasonably be expected to have a
material adverse effect on the Company and its Subsidiaries taken
as a whole, or Parent and its Subsidiaries taken as a whole, in
each case as of the date of the consummation of the Offer as though
made on and as of such date or, in the case of representations and
warranties made as of a specific date earlier than the date of the
consummation of the Offer, on and as of such earlier date;
(e) the Company shall not have performed and complied
with, in all material respects (without reference to any
materiality qualifications contained therein), each agreement and
covenant required by the Merger Agreement to be performed or
complied with by it; or
(f) the Merger Agreement shall have been terminated in
accordance with its terms;
which (in the case of paragraph (a), (b), (c), (d) or (e) above)
makes it inadvisable, as determined by Sub in good faith, to
proceed with the Offer or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Parent
and Sub, may be asserted by Parent and Sub regardless of the
circumstances giving rise to any such condition and, subject to the
A-3
terms and conditions of the Merger Agreement, may be waived by
Parent and Sub, in whole or in part at any time and from time to
time in the sole discretion of Parent and Sub. Any good faith
determination by Sub concerning any of the events described herein
shall be final and binding. The failure by Parent and Sub at any
time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to
time.
A-4
