EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FEDERATED DEPARTMENT STORES, INC.,
MILAN ACQUISITION CORP.
AND
THE MAY DEPARTMENT STORES COMPANY
DATED AS OF FEBRUARY 27, 2005
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER....................................................... 1
Section 1.1 The Merger.................................................. 1
Section 1.2 Closing..................................................... 2
Section 1.3 Effective Time.............................................. 2
Section 1.4 Effects of the Merger....................................... 2
Section 1.5 Certificate of Incorporation and By-laws.................... 2
Section 1.6 Directors and Officers of the Surviving Corporation......... 2
Section 1.7 Tax Consequences............................................ 3
Section 1.8 Adjustments to Preserve Tax Consequences.................... 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF
CERTIFICATES AND PAYMENT......................................... 3
Section 2.1 Effect on Capital Stock..................................... 3
Section 2.2 Exchange of Certificates.................................... 4
Section 2.3 Certain Adjustments......................................... 7
Section 2.4 Dissenters' Rights.......................................... 8
Section 2.5 Further Assurances.......................................... 8
Section 2.6 Withholding Rights.......................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES................................... 9
Section 3.1 Organization, Standing and Corporate Power.................. 9
Section 3.2 Subsidiaries................................................ 9
Section 3.3 Capital Structure........................................... 10
Section 3.4 Authority................................................... 11
Section 3.5 Non-Contravention; Consents and Approvals................... 12
Section 3.6 SEC Reports and Financial Statements........................ 13
Section 3.7 Information Supplied........................................ 13
Section 3.8 Absence of Certain Changes or Events........................ 14
Section 3.9 Compliance with Applicable Laws............................. 14
Section 3.10 Employee Benefit Plans...................................... 14
Section 3.11 Taxes....................................................... 16
Section 3.12 Environmental Matters....................................... 17
-i-
TABLE OF CONTENTS
(continued)
PAGE
----
Section 3.13 Voting Requirements......................................... 19
Section 3.14 State Takeover Statutes..................................... 19
Section 3.15 Opinion of Financial Advisors............................... 19
Section 3.16 Brokers..................................................... 20
Section 3.17 The Company Rights Agreement................................ 20
Section 3.18 Financing................................................... 20
Section 3.19 Merger Sub.................................................. 20
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS........................ 20
Section 4.1 Conduct of Business......................................... 20
Section 4.2 No Solicitation by the Company.............................. 25
ARTICLE V ADDITIONAL AGREEMENTS............................................ 28
Section 5.1 Preparation of the Form S-4 and the Joint Proxy Statement;
Stockholders Meetings....................................... 28
Section 5.2 Letters of the Company's Accountants........................ 30
Section 5.3 Letters of Parent's Accountants............................. 30
Section 5.4 Access to Information; Confidentiality...................... 30
Section 5.5 Reasonable Best Efforts..................................... 30
Section 5.6 Company Stock Options; Stock Plans.......................... 32
Section 5.7 Indemnification............................................. 34
Section 5.8 Public Announcements........................................ 35
Section 5.9 Affiliates.................................................. 35
Section 5.10 NYSE Listing................................................ 35
Section 5.11 Stockholder Litigation...................................... 36
Section 5.12 Tax Treatment............................................... 36
Section 5.13 Section 16(b)............................................... 36
Section 5.14 Employee Benefit Matters.................................... 36
Section 5.15 Parent Board................................................ 38
Section 5.16 Dividends................................................... 38
Section 5.17 St. Louis Operations and Community Involvement.............. 38
ARTICLE VI CONDITIONS PRECEDENT............................................. 38
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.. 38
-ii-
TABLE OF CONTENTS
(continued)
PAGE
----
Section 6.2 Conditions to Obligations of Parent and Merger Sub.......... 39
Section 6.3 Conditions to Obligations of the Company.................... 40
Section 6.4 Frustration of Closing Conditions........................... 40
ARTICLE VII TERMINATION...................................................... 40
Section 7.1 Termination................................................. 40
Section 7.2 Effect of Termination....................................... 42
Section 7.3 Fees and Expenses........................................... 42
ARTICLE VIII GENERAL PROVISIONS............................................... 43
Section 8.1 Nonsurvival of Representations and Warranties............... 43
Section 8.2 Notices..................................................... 43
Section 8.3 Interpretation.............................................. 44
Section 8.4 Counterparts................................................ 46
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.............. 46
Section 8.6 Governing Law............................................... 47
Section 8.7 Assignment.................................................. 47
Section 8.8 Consent to Jurisdiction; Waiver of Jury Trial............... 47
Section 8.9 Specific Enforcement........................................ 47
Section 8.10 Amendment................................................... 48
Section 8.11 Extension; Waiver........................................... 48
Section 8.12 Severability................................................ 48
-iii-
EXHIBITS
EXHIBIT A FORM OF COMPANY AFFILIATE LETTER......................... A-1
TABLE OF DEFINED TERMS
TERM PAGE
---- ----
"ENVIRONMENTAL CONDITION"......................................................... 20
"knowledge"....................................................................... 47
"MATERIAL......................................................................... 48
"material adverse effect"......................................................... 48
"PARENT ADVERSE RECOMMENDATION CHANGE"............................................ 30
"PARENT STOCK OPTIONS"............................................................ 12
"PARENT STOCK PLANS".............................................................. 12
"PARENT TAKEOVER PROPOSAL"........................................................ 31
"PCBS"............................................................................ 20
1992 EEIP......................................................................... 11
1995 EEIP......................................................................... 11
ADJUSTED OPTION................................................................... 34
ADJUSTMENT EVENT.................................................................. 8
AFFILIATE......................................................................... 47
AGREEMENT......................................................................... 1
ANTITRUST DIVISION................................................................ 32
ANTITRUST FILINGS................................................................. 32
AVERAGE CLOSING PRICE............................................................. 7
BENEFIT PLANS..................................................................... 16
BENEFITS MAINTENANCE PERIOD....................................................... 38
BUSINESS DAY...................................................................... 2
CASH CONSIDERATION................................................................ 4
CERTIFICATE OF MERGER............................................................. 2
CLOSING........................................................................... 2
CLOSING DATE...................................................................... 2
CODE.............................................................................. 1
COMPANY........................................................................... 1
COMPANY ADVERSE RECOMMENDATION CHANGE............................................. 27
COMPANY CERTIFICATE............................................................... 4
COMPANY COMMON STOCK.............................................................. 1
COMPANY DISCLOSURE LETTER......................................................... 9
COMPANY EMPLOYEES................................................................. 38
COMPANY REPRESENTATIVES........................................................... 26
COMPANY RIGHTS.................................................................... 11
COMPANY RIGHTS AGREEMENT.......................................................... 11
COMPANY STOCK OPTIONS............................................................. 11
COMPANY STOCK PLANS............................................................... 11
-iv-
TERM PAGE
---- ----
COMPANY STOCKHOLDER APPROVAL...................................................... 20
COMPANY STOCKHOLDERS MEETING...................................................... 30
COMPANY SUBSIDIARY................................................................ 22
COMPANY TAKEOVER PROPOSAL......................................................... 27
CONFIDENTIALITY AGREEMENT......................................................... 31
DCP............................................................................... 11
DGCL.............................................................................. 1
DIRECTORS DCP..................................................................... 11
DISSENTING SHARES................................................................. 8
DISSENTING STOCKHOLDER............................................................ 8
EDCP.............................................................................. 11
EFFECTIVE TIME.................................................................... 2
ENVIRONMENT....................................................................... 19
ENVIRONMENTAL CLAIM............................................................... 19
ENVIRONMENTAL LAWS................................................................ 19
ENVIRONMENTAL PERMIT.............................................................. 20
ERISA............................................................................. 15
ESOP PREFERENCE SHARES............................................................ 11
EXCHANGE ACT...................................................................... 13
EXCHANGE AGENT.................................................................... 5
EXCHANGE FUND..................................................................... 5
EXPENSES.......................................................................... 44
FOREIGN PLAN...................................................................... 16
FORM S-4.......................................................................... 14
FTC............................................................................... 32
GAAP.............................................................................. 14
GOVERNMENTAL ENTITY............................................................... 13
HAZARDOUS SUBSTANCE............................................................... 19
HSR ACT........................................................................... 14
HSR FILING........................................................................ 32
IBP............................................................................... 11
INDEMNIFIED PARTIES............................................................... 36
JOINT PROXY STATEMENT............................................................. 13
JUNIOR PREFERENCE SHARES.......................................................... 11
LAW............................................................................... 47
LEASES............................................................................ 47
LIENS............................................................................. 47
MAXIMUM PREMIUM................................................................... 36
MERGER............................................................................ 1
MERGER CONSIDERATION.............................................................. 4
MERGER SUB........................................................................ 1
MULTIEMPLOYER PLAN................................................................ 15
NOTICE OF ADVERSE RECOMMENDATION.................................................. 28,30
OUTSIDE DATE...................................................................... 43
PARENT............................................................................ 1
PARENT COMMON STOCK............................................................... 1
-v-
TERM PAGE
---- ----
PARENT DISCLOSURE LETTER.......................................................... 9
PARENT STOCKHOLDER APPROVAL....................................................... 20
PARENT STOCKHOLDERS MEETING....................................................... 30
PERMITS........................................................................... 15
PERMITTED LIENS................................................................... 48
PERSON............................................................................ 48
PRIOR PLAN........................................................................ 39
RELEASE........................................................................... 20
REPRESENTING PARTY................................................................ 9,48
REPRESENTING PARTY DISCLOSURE LETTER.............................................. 9
REPRESENTING PARTY ENTITIES....................................................... 10
REPRESENTING PARTY SUBSIDIARIES................................................... 10
SEC............................................................................... 13
SEC DOCUMENTS..................................................................... 14
SECURITIES ACT.................................................................... 14
SERIES A PREFERRED STOCK.......................................................... 11
SERP.............................................................................. 11
SIP............................................................................... 11
STOCK CONSIDERATION............................................................... 3,4
SUBSIDIARY........................................................................ 48
SUCCESSOR PLAN.................................................................... 39
SUPERIOR PROPOSAL................................................................. 27
SURVIVING CORPORATION............................................................. 2
TAKEOVER STATUTE.................................................................. 20
TAX CERTIFICATES.................................................................. 34
TAX RETURN........................................................................ 18
TAXES............................................................................. 18
TERMINATION FEE................................................................... 45
TRANSFEREE........................................................................ 5
-vi-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
February 27, 2005, by and among Federated Department Stores, Inc., a Delaware
corporation ("PARENT"), Milan Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Parent ("MERGER SUB"), and The May Department
Stores Company, a Delaware corporation (the "COMPANY").
WITNESSETH:
WHEREAS, the respective Boards of Directors of the Company and
Parent have each determined that a business combination between Parent and the
Company is in the best interests of their respective companies and stockholders
and accordingly have agreed to effect the merger of the Company with and into
Merger Sub (the "MERGER"), upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), whereby the separate corporate existence of
the Company shall cease and each issued and outstanding share of common stock,
par value $0.50 per share, of the Company (together with any associated Company
Rights (as defined below), "COMPANY COMMON STOCK"), other than Dissenting Shares
and any shares of Company Common Stock owned by Parent or any direct or indirect
subsidiary of Parent or held in the treasury of the Company, will be converted
into the right to receive shares of common stock, par value $0.01 per share, of
Parent ("PARENT COMMON STOCK") and cash as provided in Section 2.1;
WHEREAS, the Board of Directors of each of the Company, Parent and
Merger Sub has determined that the Merger is advisable and fair to and in the
best interests of their respective companies and stockholders;
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon the terms and subject to the conditions set forth herein,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, the Company will
be merged with and into
-1-
Merger Sub at the Effective Time and the separate corporate existence of the
Company will thereupon cease. Following the Effective Time, Merger Sub will be
the surviving corporation (the "SURVIVING CORPORATION").
Section 1.2 Closing. The closing of the Merger (the "CLOSING") will
take place at a time and on a date to be specified by the parties, which is to
be no later than the second Business Day after satisfaction or waiver (to the
extent permitted by applicable Law) of the conditions (excluding conditions
that, by their terms, cannot be satisfied until the Closing Date, but subject to
the fulfillment or (to the extent permitted by applicable Law) waiver of those
conditions) set forth in Article VI, unless another time or date is agreed to by
the parties to this Agreement. The Closing will be held at the offices of Xxxxx
Day, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other location to
which the parties to this Agreement agree in writing. The date on which the
Closing occurs is hereinafter referred to as the "CLOSING DATE." "BUSINESS DAY"
means any day other than Saturday, Sunday or any day on which banking and
savings and loan institutions are authorized or required by Law to be closed.
Section 1.3 Effective Time. On the terms and subject to the
conditions set forth in this Agreement, (i) as soon as practicable on the
Closing Date, the parties shall file a certificate of merger (the "CERTIFICATE
OF MERGER") in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL and the terms of this Agreement and (ii) as soon
as practicable on or after the Closing Date, the parties shall make all other
filings or recordings required under the DGCL. The Merger will become effective
at such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware on the Closing Date, or at such subsequent date
or time as the Company, Parent and Merger Sub agree and specify in the
Certificate of Merger (the date and time the Merger becomes effective is
hereinafter referred to as the "EFFECTIVE TIME").
Section 1.4 Effects of the Merger. The Merger will have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub will be vested in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Merger Sub will become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5 Certificate of Incorporation and By-laws. The
certificate of incorporation and by-laws of Merger Sub as in effect immediately
before the Effective Time will be the certificate of incorporation and by-laws,
respectively, of the Surviving Corporation, until thereafter changed or amended
as provided therein or by applicable Law, except that Article I of the
certificate of incorporation of the Surviving Corporation shall state "The name
of the corporation is The May Department Stores Company."
Section 1.6 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time will be the
directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company immediately prior to
the Effective Time will be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.7 Tax Consequences. It is intended by the parties hereto
that the Merger shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code. The parties hereto adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 354 and 361 of the Code and
Sections 1.368-2(g) and 1.368-3(a) of the Treasury Regulations, and for all
relevant tax purposes.
Section 1.8 Adjustments to Preserve Tax Consequences.
(a) If the value of the Stock Consideration on the Closing Date
declines to a level that prevents the satisfaction of the condition expressed in
either or both of Section 6.2(d) and Section 6.3(d), then Parent shall have the
option, exercisable in its sole discretion, to increase the number of shares (or
fraction of a number of shares) of Parent Common Stock comprising the Stock
Consideration such that the conditions expressed in both Section 6.2(d) and
Section 6.3(d) are satisfied. If Parent exercises the option provided in this
Section 1.8(a), then for all purposes in this Agreement the term "STOCK
CONSIDERATION" shall mean the number (or fraction of a number) of fully paid,
nonassessable shares of Parent Common Stock as so increased.
(b) If Parent declines or fails to exercise the option provided in
Section 1.8(a) within three Business Days of the putative Closing Date, the
Company shall have the option to require that the Company and not Merger Sub be
the Surviving Corporation in the Merger for all purposes in this Agreement and
that the Cash Consideration be increased by $1.00 per share of Company Common
Stock. In such event, all parties to this Agreement shall be deemed to have
waived the conditions expressed in Section 6.2(d) and Section 6.3(d). If the
Company exercises the option provided in this Section 1.8(b), then for all
purposes in this Agreement:
(i) the Merger shall be the merger of Merger Sub with and into
the Company;
(ii) the Company will be the Surviving Corporation; and
(iii) the Cash Consideration shall be $18.75.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES AND PAYMENT
Section 2.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, Parent or Merger Sub:
(a) Merger Sub's Common Stock. Each share of Merger Sub's common
stock, par value $0.01 per share, outstanding immediately prior to the Effective
Time will be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of Company Common Stock that is owned by the Company, Parent or any direct
or indirect majority owned subsidiary of the Company or Parent immediately prior
to the Effective Time will automatically be canceled and retired and will cease
to exist, and no consideration will be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.2(e),
each issued and outstanding share of Company Common Stock, other than shares of
Company Common Stock to be canceled in accordance with Section 2.1(b) and
Dissenting Shares, will be converted into the right to receive (i) $17.75 in
cash (the "CASH CONSIDERATION") without interest and (ii) 0.3115 fully paid,
nonassessable shares of Parent Common Stock (the "STOCK CONSIDERATION" and,
together with the Cash Consideration, the "MERGER CONSIDERATION").
(d) ESOP Preference Shares. Each issued and outstanding ESOP
Preference Share will be converted into the Merger Consideration on an as
converted basis in the same manner as shares of Company Common Stock under
Section 2.1(c). The Company shall use its reasonable best efforts to comply with
the terms of the Certificate of Designation, Preferences and Rights governing
the ESOP Preference Shares in order to effect the foregoing.
(e) Cancellation of Shares of Company Common Stock. As of the
Effective Time, all shares of Company Common Stock shall no longer be
outstanding and will automatically be canceled and retired and shall cease to
exist, and each holder of a certificate which immediately prior to the Effective
Time represented any shares of Company Common Stock (a "COMPANY CERTIFICATE")
shall cease to have any rights with respect thereto, except either (i) the
rights of Dissenting Shares contemplated in Section 2.4 or (ii) the right to
receive the Merger Consideration, certain dividends or other distributions, if
any, and cash in lieu of fractional shares of Parent Common Stock to be issued
or paid in consideration therefor upon surrender of such Company Certificate, in
each case, in accordance with this Article II, without interest.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. As soon as practicable following the date of
this Agreement and in any event not less than 15 Business Days prior to the
Closing Date, Parent will designate a national bank or trust company reasonably
satisfactory to the Company to act as agent of Parent for purposes of, among
other things, mailing and receiving transmittal letters and distributing the
Merger Consideration to the Company stockholders (the "EXCHANGE AGENT"). The
Exchange Agent shall also act as the agent for the Company's stockholders for
the purpose of receiving and holding their Company Certificates and shall obtain
no rights or interests in the shares represented by such Company Certificates.
As of the Effective Time, Parent and the Exchange Agent shall enter into an
agreement which will provide that Parent shall have deposited with the Exchange
Agent as of the Effective Time, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II, through
the Exchange Agent, cash and certificates representing the shares of Parent
Common Stock (such cash and such shares of Parent Common Stock, together with
any dividends or distributions with respect thereto with a record date after the
Effective Time and any cash payable in lieu of any fractional shares of Parent
Common Stock, being hereinafter referred to as the "EXCHANGE
FUND") issuable pursuant to Section 2.1 in exchange for outstanding shares of
Company Common Stock.
(b) Exchange Procedures.
(i) As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to each holder of record of a Company
Certificate whose shares of Company Common Stock were converted into the
right to receive the Merger Consideration (A) a letter of transmittal
(which will specify that delivery will be effected, and risk of loss and
title to the Company Certificates will pass, only upon proper delivery of
the Company Certificates to the Exchange Agent and will be in such form
and have such other provisions as Parent may specify consistent with this
Agreement) and (B) instructions for use in effecting the surrender of the
Company Certificates in exchange for the Merger Consideration.
(ii) After the Effective Time, upon surrender of a Company
Certificate for cancellation to the Exchange Agent, together with the
letter of transmittal contemplated in Section 2.2(b)(i), duly executed,
and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Company Certificate will be entitled to receive
in exchange therefor the Merger Consideration that such holder has the
right to receive pursuant to the provisions of this Article II, certain
dividends or other distributions, if any, in accordance with Section
2.2(c) and cash in lieu of any fractional share of Parent Common Stock in
accordance with Section 2.2(e), and the Company Certificate so surrendered
will forthwith be canceled. In the event of a transfer of ownership of
shares of Company Common Stock that are not registered in the transfer
records of the Company, payment may be issued to a person other than the
person in whose name the Company Certificate so surrendered is registered
(the "TRANSFEREE"), if such Company Certificate is properly endorsed or
otherwise in proper form for transfer and the Transferee pays any transfer
or other Taxes required by reason of such payment to a person other than
the registered holder of such Company Certificate or establishes to the
satisfaction of the Exchange Agent that such Tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2(b), each
Company Certificate will be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration that the holder thereof has the right to receive in respect
of such Company Certificate pursuant to the provisions of this Article II,
certain dividends or other distributions, if any, in accordance with
Section 2.2(c) and cash in lieu of any fractional share of Parent Common
Stock in accordance with Section 2.2(e). No interest will be paid or will
accrue on any cash payable to holders of Company Certificates pursuant to
the provisions of this Article II.
(c) Dividends; Other Distributions. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered Company
Certificate with respect to the shares of Parent Common Stock represented
thereby and no cash payment in lieu of fractional shares will be paid to any
such holder pursuant to Section 2.2(e), and all such dividends, other
distributions and cash in lieu of fractional shares of Parent Common Stock will
be paid by Parent to the Exchange Agent and will be included in the Exchange
Fund, in each case until the surrender of such Company
Certificate in accordance with this Article II. Subject to the effect of
applicable escheat or similar Laws, following surrender of any such Company
Certificate in accordance herewith, there will be paid to the holder of the
certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and
the amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued and all Cash Consideration paid upon the surrender
for exchange of Company Certificates in accordance with the terms of this
Article II (including any cash paid pursuant to Section 2.2(c) and Section
2.2(e)) will be deemed to have been issued or paid, as the case may be, in full
satisfaction of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Company Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions, in each case with a record date (i) prior to the Effective Time
that may have been declared or made by the Company on such shares of Company
Common Stock in accordance with the terms of this Agreement or (ii) prior to the
date of this Agreement and in each case which remain unpaid at the Effective
Time, and there will be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Company Certificates are presented to Parent, the Surviving
Corporation or the Exchange Agent for any reason, they will be canceled and
exchanged as provided in this Article II.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of
Parent Common Stock will be issued upon the surrender for exchange of
Company Certificates, no dividend or distribution of Parent will relate to
such fractional share interests and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock converted pursuant to the
Merger who would otherwise be entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all shares of Company
Common Stock held at the Effective Time by such holder) shall receive, in
lieu thereof, an amount in cash (without interest), rounded to the nearest
cent, equal to the product obtained by multiplying (A) the fractional
share interest to which such former holder would otherwise be entitled by
(B) the average of the closing prices for a share of Parent Common Stock
as reported on the NYSE Composite Transactions Reports (as reported in the
Wall Street Journal, or, if not reported thereby, any other authoritative
source) for the ten trading days prior to, but not including, the Closing
Date (the "AVERAGE CLOSING PRICE").
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Certificates
formerly representing shares of Company Common Stock with respect to any
fractional share interests, the Exchange Agent shall make available such
amounts to such holders of Company Certificates formerly representing
shares of Company Common Stock subject to and in accordance with the terms
of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Company Certificates for six
months after the Effective Time will be delivered to Parent, upon demand, and
any holders of Company Certificates who have not theretofore complied with this
Article II may thereafter look only to Parent for payment of their claim for
Stock Consideration, Cash Consideration and any dividends or distributions, if
any, with respect to Parent Common Stock and any cash in lieu of fractional
shares of Parent Common Stock.
(g) No Liability. None of Parent, the Surviving Corporation or the
Exchange Agent will be liable to any person in respect of any shares of Parent
Common Stock, any dividends or distributions with respect thereto, any cash in
lieu of fractional shares of Parent Common Stock or any cash from the Exchange
Fund, in each case, delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by Parent in direct obligations
of the U.S. Treasury, on a daily basis. Any interest and other income resulting
from such investments will be paid to Parent. If for any reason (including
losses) the cash in the Exchange Fund shall be insufficient to fully satisfy all
of the payment obligations to be made in cash by the Exchange Agent hereunder,
Parent shall promptly deposit cash into the Exchange Fund in an amount which is
equal to the deficiency in the amount of cash required to fully satisfy such
cash payment obligations.
(i) Lost Certificates. If any Company Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed and, if
required by Parent or the Surviving Corporation, as the case may be, the posting
by such person of a bond in such reasonable amount as Parent or the Surviving
Corporation, as the case may be, may direct as indemnity against any claim that
may be made against it with respect to such Company Certificate, the Exchange
Agent shall issue, in exchange for such lost, stolen or destroyed Company
Certificate, the Merger Consideration and, if applicable, any unpaid dividends
and distributions on shares of Parent Common Stock deliverable in respect
thereof and any cash in lieu of fractional shares, in each case, due to such
person pursuant to this Agreement.
Section 2.3 Certain Adjustments. If, after the date of this
Agreement and at or prior to the Effective Time, the outstanding shares of
Parent Common Stock or Company Common Stock are changed into a different number
of shares by reason of any reclassification, recapitalization, split-up, stock
split, subdivision, combination or exchange of shares or readjustment, or any
dividend payable in stock or other securities is declared thereon or rights
issued in respect thereof with a record date within such period, or any similar
event occurs (any
such action, an "ADJUSTMENT EVENT"), the Merger Consideration will be
proportionately and appropriately adjusted to reflect such Adjustment Event.
Section 2.4 Dissenters' Rights. Shares of Company Common Stock that
have not been voted for adoption of this Agreement and with respect to which
appraisal has been properly demanded in accordance with Section 262 of the DGCL
("DISSENTING SHARES") will not be converted into the right to receive the Merger
Consideration at or after the Effective Time unless and until the holder of such
shares (a "DISSENTING STOCKHOLDER") withdraws such demand for such appraisal (in
accordance with Section 262(k) of the DGCL) or becomes ineligible for such
appraisal. If a holder of Dissenting Shares withdraws such demand for appraisal
(in accordance with Section 262(k) of the DGCL) or becomes ineligible for such
appraisal, then, as of the Effective Time or the occurrence of such event,
whichever last occurs, each of such holder's Dissenting Shares will cease to be
a Dissenting Share and will be converted as of the Effective Time into and
represent the right to receive the Merger Consideration, without interest
thereon. The Company shall give Parent prompt notice of any demands for
appraisal, attempted withdrawals of such demands and any other instruments
received by the Company relating to stockholders' rights of appraisal, and
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands except as required by applicable Law. The Company
shall not, except with prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands, unless and to the
extent required to do so under applicable Law. Only the Company shall be
entitled to make any payment with respect to any demands for appraisal of
Dissenting Shares, and Parent shall not reimburse the Company, directly or
indirectly, for any such payment made by the Company.
Section 2.5 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
Section 2.6 Withholding Rights. The Surviving Corporation, Parent or
the Exchange Agent, as the case may be, shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
person such amounts, if any, as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax Law. To the extent that amounts are so withheld and paid
over to the appropriate taxing authority by the Surviving Corporation, Parent or
the Exchange Agent, as the case may be, such amounts withheld shall be treated
for purposes of this Agreement as having been paid to such person in respect of
which such deduction and withholding was made by the Surviving Corporation,
Parent or the Exchange Agent, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Except as set forth in the disclosure letter delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE LETTER"), and except as set forth in the Company's SEC Documents
filed prior to the date of this Agreement, the Company hereby represents and
warrants to Parent and Merger Sub, and, except as set forth in the disclosure
letter delivered by Parent and Merger Sub to the Company prior to the execution
of this Agreement (the "PARENT DISCLOSURE LETTER"), and except as set forth in
Parent's SEC Documents filed prior to the date of this Agreement, each of Parent
and Merger Sub hereby represents and warrants to the Company, in each case, as
set forth in this Article III, with the party making such representations and
warranties being referred to as the "REPRESENTING PARTY" and such Representing
Party's Disclosure Letter as the "REPRESENTING PARTY DISCLOSURE LETTER."
Notwithstanding the foregoing, any representation or warranty which expressly
refers to the Company, Parent or Merger Sub is being made solely by the Company,
Parent or Merger Sub, as the case may be.
Section 3.1 Organization, Standing and Corporate Power. The
Representing Party and each of its subsidiaries is a corporation or other legal
entity duly organized, validly existing and in good standing (with respect to
jurisdictions that recognize such concept) under the laws of the jurisdiction in
which it is organized and has the requisite corporate or other power, as the
case may be, and authority to carry on its business as now being conducted,
except for such failures of such organization, existence, good standing and
power which would not, individually or in the aggregate, reasonably be expected
to have or result in a material adverse effect on the Representing Party. The
Representing Party and each of its subsidiaries is duly qualified or licensed to
do business in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified or licensed would not, individually or in the aggregate, reasonably be
expected to have or result in a material adverse effect on the Representing
Party. The Representing Party has made available to the other Representing Party
prior to the execution of this Agreement complete and correct copies of its
certificate of incorporation and by-laws, each as amended to the date of this
Agreement.
Section 3.2 Subsidiaries. All outstanding shares of capital stock
of, or other equity interests in, each subsidiary of the Representing Party
(collectively, the "REPRESENTING PARTY SUBSIDIARIES" and, together with the
Representing Party, the "REPRESENTING PARTY ENTITIES") (i) have been validly
issued and are fully paid and nonassessable and (ii) are free and clear of all
Liens other than Permitted Liens. All outstanding shares of capital stock (or
equivalent equity interests of entities other than corporations) of each of the
Representing Party Subsidiaries are beneficially owned, directly or indirectly,
by the Representing Party. The Representing Party does not, directly or
indirectly, own more than 20% but less than 100% of the capital stock or other
equity interest in any person.
Section 3.3 Capital Structure.
(a) The Company represents and warrants that the authorized capital
stock of the Company consists entirely of (i) 1,000,000,000 shares of Company
Common Stock and (ii) 25,000,000 shares of preference stock, par value $0.50 per
share, of the Company, of which (A) 1,000,000 shares have been designated as
Junior Participating Preference Shares, par value $0.50 per share (the "JUNIOR
PREFERENCE SHARES"), and (B) 800,000 shares have been designated ESOP Preference
Shares, par value $0.50 per share (the "ESOP PREFERENCE SHARES"). Each share of
Company Common Stock carries with it an associated share purchase right issued
pursuant to the Amended and Restated Rights Agreement between the Company and
The Bank of New York, as rights agent, dated as of August 31, 2004 (as amended
from time to time, the "COMPANY RIGHTS AGREEMENT"), which entitles the holder
thereof to purchase, on the occurrence of certain events, Junior Preference
Shares (the "COMPANY RIGHTS"). At the close of business on February 25, 2005:
(i) 293,834,196 shares of Company Common Stock were issued and outstanding
(including 1,550,298 shares of restricted stock); (ii) 26,621,298 shares of
Company Common Stock were held by the Company in its treasury; (iii) 1,000,000
Junior Preference Shares were reserved for issuance in connection with the
Company Rights; (iv) 26,559,937 shares of Company Common Stock were subject to
issued and outstanding options to purchase Company Common Stock granted under
the Company's 1994 Stock Incentive Plan, as amended (the "SIP"); (v) 2,199,589
shares of Company Common Stock were subject to issuance under the Company's
Deferred Compensation Plan (the "DCP"); (vi) 171,285 shares of Company Common
Stock were subject to issuance under the Company's Deferred Compensation Plan
for Non-Management Directors (the "DIRECTORS DCP" and, together with the SIP and
the DCP, the "COMPANY STOCK PLANS" and, such stock options collectively, the
"COMPANY STOCK OPTIONS"); and (vii) 415,451 ESOP Preference Shares were issued
and outstanding. All outstanding shares of capital stock of the Company are, and
all shares that may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of preemptive rights.
(b) Parent and Merger Sub represent and warrant that the authorized
capital stock of Parent consists entirely of (i) 500,000,000 shares of Parent
Common Stock and (ii) 125,000,000 shares of preferred stock, par value $0.01 per
share, of Parent, of which 5,000,000 shares have been designated as Series A
Junior Participating Preferred Stock, par value $0.01 per share (the "SERIES A
PREFERRED STOCK"). At the close of business on February 25, 2005: (i)
167,417,349 shares of Parent Common Stock were issued and outstanding (including
272,278 shares of restricted stock); (ii) 31,242,770 shares of Parent Common
Stock were held by Parent in its treasury; (iii) no shares of Parent Common
Stock were subject to issued and outstanding Parent Series D Warrants; and (iv)
19,585,374 shares of Parent Common Stock were subject to issued and outstanding
options to purchase Parent Common Stock granted under Parent's 1992 Executive
Equity Incentive Plan (the "1992 EEIP"), Parent's 1995 Executive Equity
Incentive Plan, as amended (the "1995 EEIP"), Parent's 1992 Incentive Bonus
Plan, as amended (the "IBP"), Parent's Supplementary Executive Retirement Plan,
as amended (the "SERP"), and Parent's Executive Deferred Compensation Plan, as
amended (the "EDCP" and, together with the 1992 EEIP, the 1995 EEIP, the IBP and
the SERP, the "PARENT STOCK PLANS") (collectively, the "PARENT STOCK OPTIONS").
All outstanding shares of capital stock of Parent are, and all shares that may
be issued will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to or issued in violation of preemptive rights.
(c) Except as set forth in Section 3.3(a) or 3.3(b), as the case may
be, as of February 25, 2005, (1) there are not issued, reserved for issuance or
outstanding (i) any shares of capital stock or other voting securities of the
Representing Party, (ii) any securities convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Representing
Party, or (iii) any warrants, calls, options or other rights to acquire from the
Representing Party or any Representing Party Subsidiary any capital stock,
voting securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of the Representing Party or any
Representing Party Subsidiary and (2) there are no outstanding obligations of
the Representing Party or any Representing Party Subsidiary to (i) issue,
deliver or sell, or cause to be issued, delivered or sold, any capital stock,
voting securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of the Representing Party or any
Representing Party Subsidiary or (ii) repurchase, redeem or otherwise acquire
any such securities.
Section 3.4 Authority.
(a) The Company represents and warrants that it has all requisite
corporate power and authority to enter into this Agreement and, subject to the
Company Stockholder Approval, to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of the Merger, to receipt of the Company
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar Laws generally
affecting the rights of creditors and subject to general equity principles. The
Board of Directors of the Company has (i) duly and validly approved this
Agreement, (ii) determined that the transactions contemplated by this Agreement
are advisable and in the best interests of the Company and its stockholders and
(iii) resolved to recommend to such stockholders that they vote in favor of the
Merger.
(b) Parent and Merger Sub represent and warrant that each of Parent
and Merger Sub has all requisite corporate power and authority to enter into
this Agreement and, subject to the Parent Stockholder Approval, to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Parent and Merger Sub,
respectively, subject, in the case of the Merger, to receipt of the Parent
Stockholder Approval. This Agreement has been duly executed and delivered by
each of Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes the legal, valid and binding obligation of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar Laws generally affecting the rights of creditors and subject to general
equity principles. The Board of Directors of Parent has (i) duly and validly
approved this Agreement, (ii) determined that the
transactions contemplated by this Agreement are advisable and in the best
interests of Parent and its stockholders and (iii) resolved to recommend to such
stockholders that they vote in favor of the issuance of Parent Common Stock
pursuant to this Agreement.
Section 3.5 Non-Contravention; Consents and Approvals.
(a) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, (i) conflict with the
certificate of incorporation or by-laws (or comparable organizational documents)
of any of the Representing Party Entities, (ii) except in connection with the
Leases, result in any breach, violation or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or creation or acceleration of any obligation or right of a third
party or loss of a benefit under, or result in the creation of any Lien upon any
of the properties or assets of any of the Representing Party Entities under, any
loan or credit agreement, note, bond, mortgage, indenture or other agreement,
instrument, permit, concession, franchise, license or other authorization
applicable to any of the Representing Party Entities or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in Section 3.5(b), conflict with or violate any judgment,
order, decree or Law applicable to any of the Representing Party Entities or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, breaches, violations, defaults, rights, losses or
Liens that, individually or in the aggregate, would not reasonably be expected
to have or result in a material adverse effect on the Representing Party and
that would not prevent or materially delay consummation of the Merger.
(b) No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any federal, state or
local or foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental United
States or foreign self-regulatory agency, commission or authority or any
arbitral tribunal (each, a "GOVERNMENTAL ENTITY") or any third party is required
by the Representing Party in connection with the execution and delivery of this
Agreement by the Representing Party or the consummation by the Representing
Party of the transactions contemplated hereby, except for: (i) the filing with
the Securities and Exchange Commission (the "SEC") of (A) a joint proxy
statement relating to the Company Stockholders Meeting and the Parent
Stockholders Meeting (such proxy statement, as amended or supplemented from time
to time, the "JOINT PROXY STATEMENT") and, in the case of Parent and Merger Sub,
the Form S-4 and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a) or
such other applicable sections of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), as may be required in connection with this
Agreement and the transactions contemplated hereby; (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(iii) the filing of a premerger notification and report form by the Representing
Party under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"); (iv) notifications to the NYSE and, in the case of Parent,
filings with and approvals of the NYSE to permit the shares of Parent Common
Stock that are to be issued in the Merger to be listed on the NYSE; and (v) such
consents, approvals, orders or authorizations the failure of which to be made or
obtained, individually or in the aggregate, would not reasonably be expected to
have or result in a material adverse effect on the Representing Party and that
would not prevent or materially delay consummation of the Merger.
Section 3.6 SEC Reports and Financial Statements.
(a) The Representing Party has filed all required reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the Exchange Act with the SEC since January
31, 2003 (as such reports, schedules, forms, statements and documents have been
amended since the time of their filing, collectively, the "SEC DOCUMENTS"). As
of their respective dates, or if amended prior to the date of this Agreement, as
of the date of the last such amendment, the Representing Party's SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the
Representing Party's SEC Documents when filed, or as so amended, contained any
untrue statement of a material fact or omitted 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.
(b) The consolidated financial statements of the Representing Party
included in its SEC Documents comply as to form, as of their respective date of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto), and fairly
present in all material respects the consolidated financial position of the
Representing Party and its consolidated subsidiaries as of the dates thereof and
the consolidated statements of income, cash flows and stockholders' equity for
the periods then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments). No Representing Party Subsidiary is
required to make any filings with the SEC.
Section 3.7 Information Supplied. None of the information supplied
or to be supplied by the Representing Party specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "FORM S-4") will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading or (ii) the Joint Proxy Statement will, at
the date it is first mailed to the Company's stockholders and Parent's
stockholders or at the time of the Company Stockholders Meeting or the Parent
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. The Joint Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Representing Party with respect to statements made or incorporated by reference
therein based on information supplied by the other party specifically for
inclusion or incorporation by reference in the Joint Proxy Statement.
Section 3.8 Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, since January 31, 2004, (i) each of the Representing Party
Entities has conducted its respective operations only in the ordinary course
consistent with past practice and (ii) there has not been a material adverse
change in the Representing Party.
Section 3.9 Compliance with Applicable Laws.
(a) The operations of the Representing Party Entities have not been
and are not being conducted in violation of any Law (including the
Xxxxxxxx-Xxxxx Act of 2002, including Section 404 thereof, and the USA PATRIOT
Act of 2001) or any Permit necessary for the conduct of their respective
businesses as currently conducted, except where any such violations,
individually or in the aggregate, would not reasonably be expected to have or
result in a material adverse effect on the Representing Party.
(b) The Representing Party Entities hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of Governmental Entities or
other persons ("PERMITS") necessary for the conduct of their respective
businesses as currently conducted, except where the failure to hold such
Permits, individually or in the aggregate, would not reasonably be expected to
have or result in a material adverse effect on the Representing Party.
Section 3.10 Employee Benefit Plans.
(a) The Representing Party has made available to the other
Representing Party a true and complete list of (i) each material United States
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, employment, consulting, disability, death benefit, hospitalization,
medical insurance, life insurance, welfare, severance or other employee benefit
plan, agreement, arrangement or understanding maintained by the Representing
Party or any Representing Party Subsidiary or to which the Representing Party or
any Representing Party Subsidiary contributes or is obligated to contribute or
with respect to which the Representing Party or any Representing Party
Subsidiary has any liability, including each multiemployer plan (as defined in
Section 4001(a)(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (a "MULTIEMPLOYER PLAN") and (ii) each change of control
agreement providing benefits to any current or former employee, officer or
director of the Representing Party or any Representing Party Subsidiary, to
which the Representing Party or any Representing Party Subsidiary is a party or
by which the Representing Party or any Representing Party Subsidiary is bound
(collectively, the "BENEFIT PLANS"). For purposes of this Agreement, the term
"FOREIGN PLAN" refers to each plan, agreement, arrangement or understanding that
is subject to or governed by the Laws of any jurisdiction other than the United
States other than any such plan, the establishment or maintenance of which is
mandated by applicable Law, and that would have been treated as a Benefit Plan
had it been a United States plan, agreement, arrangement or understanding. The
Representing Party has made available or shall, as soon as practicable after the
date of this Agreement, make available to the other Representing Party a true
and correct list of the Foreign Plans. With respect to each Benefit Plan and
Foreign Plan, no event has occurred and there exists no condition or set of
circumstances in connection with which the Representing
Party or any Representing Party Subsidiary would reasonably be expected to be
subject to any liability that, individually or in the aggregate, would
reasonably be expected to have or result in a material adverse effect on the
Representing Party.
(b) Each Benefit Plan (other than a Multiemployer Plan) is in
compliance with, and has been administered in accordance with, its terms, all
applicable Laws, including ERISA and the Code, and the terms of all applicable
collective bargaining agreements, except for any failures so to administer any
Benefit Plan that, individually or in the aggregate, would not reasonably be
expected to have or result in a material adverse effect on the Representing
Party. Each Benefit Plan (other than a Multiemployer Plan) that is intended to
be qualified under Section 401(a), 401(k) or 4975(e)(7) of the Code has received
a favorable determination letter from the IRS as to its qualified status and, to
the knowledge of the Representing Party, no fact or event has occurred which is
reasonably likely to affect adversely the qualified status of any such Benefit
Plan or the exempt status of any related trust, except for any occurrence that,
individually or in the aggregate, would not reasonably be expected to have or
result in a material adverse effect on the Representing Party. All trusts
providing funding for Benefit Plans that are intended to comply with Section
501(c)(9) of the Code are exempt from federal income taxation and, together with
any other welfare benefit funds (as defined in Section 419(e)(1) of the Code)
maintained in connection with any of the Benefit Plans, have been operated and
administered in compliance with all applicable requirements, except where a
failure to comply with such requirements would not reasonably be expected to
have or result in a material adverse effect on the Representing Party. Each
Foreign Plan is in compliance with, and has been administered in accordance
with, its terms and applicable Laws, except for any failures so to administer
any Foreign Plan that, individually or in the aggregate, would not reasonably be
expected to have or result in a material adverse effect on the Representing
Party.
(c) No Benefit Plan (other than a Multiemployer Plan) provides
medical or life insurance benefits (whether or not insured) with respect to
current or former employees or officers or directors after retirement or other
termination of service, other than any such coverage required by Law, and,
except as provided in the Benefit Plans, the Representing Party and the
Representing Party Subsidiaries have reserved all rights necessary to amend or
terminate each of the Benefit Plans without the consent of any other person.
(d) Except as provided in the Benefit Plans, the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another event, entitle any current or former employee, officer
or director of the Representing Party or the Representing Party Subsidiaries to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement.
(e) Neither the Representing Party nor any Representing Party
Subsidiary is a party to any agreement, contract or arrangement (including this
Agreement) that would reasonably be likely to result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code as a result of the consummation of the transactions
contemplated by this Agreement (either alone or in combination with other
events). No Benefit Plan provides for the reimbursement of excise taxes under
Section 4999 of the Code or any income taxes under the Code.
(f) With respect to each Benefit Plan (other than a Multiemployer
Plan), the Representing Party has delivered or made available to the other
Representing Party or shall, as soon as practicable following the date of this
Agreement, deliver or make available a true and complete copy of: (i) each
writing constituting a part of such Benefit Plan, including all Benefit Plan
documents and trust agreements; (ii) the three most recent Annual Reports (Form
5500 Series) and accompanying schedules, if any; (iii) the most recent annual
financial report, if any; (iv) the most recent actuarial report, if any; and (v)
the most recent determination letter from the Internal Revenue Service, if any.
(g) There are no pending or, to the knowledge of the Representing
Party, threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations that have been asserted or instituted against
the Benefit Plans, any fiduciaries thereof with respect to their duties to the
Benefit Plans or the assets of any of the trusts under any of the Benefit Plans
that would reasonably be expected to have or result in a material adverse effect
on the Representing Party.
Section 3.11 Taxes. (i) The Representing Party and each Representing
Party Subsidiary has filed all Tax Returns required to be filed, and all such
returns are materially complete and accurate, other than such Tax Returns, the
failure of which to file has not had or would not reasonably be expected to have
a material adverse effect on the Representing Party; (ii) the Representing Party
and each Representing Party Subsidiary has paid all Taxes due except for those
Taxes being disputed in good faith through appropriate proceedings; (iii) there
are no Liens for Taxes upon the assets of the Representing Party or any of the
Representing Party Subsidiaries, other than Liens for Taxes not yet due and
Liens for Taxes that are being contested in good faith by appropriate
proceedings; (iv) neither the Representing Party nor any of the Representing
Party Subsidiaries has any liability for Taxes of any person (other than the
Representing Party and the Representing Party Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any comparable provision of Law as a transferee
or successor, by contract, or otherwise); (v) neither the Representing Party nor
any Representing Party Subsidiary is a party to any agreement relating to the
allocation or sharing of Taxes; (vi) neither the Representing Party nor any
Representing Party Subsidiary has taken any action or knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code; (vii) no deficiencies for any Taxes have been proposed, asserted or
assessed against the Representing Party or any Representing Party Subsidiary for
which adequate reserves in accordance with GAAP have not been created; (viii)
the financial statements included in the Representing Party's SEC Documents
reflect an adequate reserve in accordance with GAAP for all Taxes for which the
Representing Party or any Representing Party Subsidiary may be liable for all
taxable periods and portions thereof through the date hereof; (ix) the
Representing Party and each Representing Party Subsidiary has withheld and paid
all material Taxes required to have been withheld and paid in connection with
any amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party; (x) since January 1, 2003, neither the
Representing Party nor any Representing Party Subsidiary has distributed stock
of another person or has had its stock distributed by another person, in a
transaction that was purported or intended to be governed in whole or in part by
Section 355 or Section 361 of the Code; (xi) neither the Representing Party nor
any Representing Party Subsidiary has participated in any listed transaction
within the meaning of Treasury Regulation Section 1.6011-4; and (xii) the
consolidated federal income Tax Returns of the Representing Party have been
examined and such examinations have been completed with respect to all taxable
years through and including 2000. As used in this Agreement, "TAXES" includes
all federal, state or local or foreign net and gross income, alternative or
add-on minimum, environmental, gross receipts, ad valorem, value added, goods
and services, capital stock, profits, license, single business, employment,
severance, stamp, unemployment, customs, property, sales, excise, use,
occupation, service, transfer, payroll, franchise, withholding and other taxes
or similar governmental duties, charges, fees, levies or other assessments,
including any interest, penalties or additions with respect thereto. As used
herein, "TAX RETURN" shall mean any return, report, statement or information
required to be filed with any Governmental Entity with respect to Taxes.
Section 3.12 Environmental Matters.
(a) Except where noncompliance, individually or in the aggregate,
would not reasonably be expected to have or result in a material adverse effect
on the Representing Party, the Representing Party Entities are and have been for
the past five years in compliance with all applicable Environmental Laws and
Environmental Permits.
(b) There are no written Environmental Claims pending against the
Representing Party or any Representing Party Subsidiary, except for matters
that, individually or in the aggregate, would not reasonably be expected to have
or result in a material adverse effect on the Representing Party.
(c) The Representing Party has made available to other Representing
Party all material information, including such studies, reports, correspondence,
notices of violation, requests for information, audits, analyses and test
results in the possession, custody or control of the Representing Party Entities
relating to (i) the Representing Party Entities' present compliance or
noncompliance within the past five years with Environmental Laws and
Environmental Permits, and (ii) Environmental Conditions on, under or about any
of the properties owned, leased or operated by any of the Representing Party
Entities for which any of the Representing Party Entities may be responsible or
liable as a result of a written Environmental Claim, which, in the case of both
clause (i) and clause (ii) above, would reasonably be expected to have or result
in a material adverse effect on the Representing Party Entities, taken as a
whole.
(d) Within the past five years, there have been no Releases of any
Hazardous Substance in, on, under, from or affecting any currently or, to the
knowledge of the Representing Party, previously owned, leased or operated
properties that, individually or in the aggregate, would reasonably be expected
to have or result in a material adverse effect on the Representing Party.
(e) Within the past five years, none of the Representing Party or
the Representing Party Subsidiaries has received from any Governmental Entity or
other third party any written notice that any of them or any of their
predecessors is or may be a potentially responsible party in respect of, or may
otherwise bear liability for, any actual or threatened Release of any Hazardous
Substance at any site or facility that is or has been listed on the National
Priorities List, the Comprehensive Environmental Response, Compensation and
Liability Information System, the National Corrective Action Priority System or
any similar or
analogous federal, state, provincial, territorial, municipal, county, local or
other domestic or foreign list, schedule, inventory or database of Hazardous
Substance sites or facilities, except as would not reasonably be expected to
have or result in a material adverse effect on the Representing Party Entities,
taken as a whole.
(f) None of the Representing Party or the Representing Party
Subsidiaries has assumed, undertaken or otherwise become subject to any
liability of any other person relating to or arising from Environmental Laws,
except for such liabilities that would not, individually or in the aggregate,
reasonably be expected to have or result in a material adverse effect on the
Representing Party.
(g) As used in this Agreement:
(i) the term "ENVIRONMENT" means soil, surface waters, ground
water, land, stream sediment, surface and subsurface strata, ambient air,
indoor air or indoor air quality;
(ii) the term "ENVIRONMENTAL CLAIM" means any written demand,
suit, action, proceeding, order, investigation or notice to any of the
Representing Party Entities by any person alleging any potential liability
(including potential liability for investigatory costs, risk assessment
costs, cleanup costs, removal costs, remedial costs, operation and
maintenance costs, governmental response costs, natural resource damages,
or penalties) under any Environmental Law;
(iii) the term "ENVIRONMENTAL LAWS" means all Laws relating to
(A) pollution or protection of the Environment, (B) emissions, discharges,
Releases or threatened Releases of Hazardous Substances, (C) threats to
human health or ecological resources arising from exposure to Hazardous
Substances, or (D) the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances;
(iv) the term "HAZARDOUS SUBSTANCE" means any chemical,
substance or waste that is regulated under any Environmental Law as toxic,
hazardous or radioactive or as a pollutant or a contaminant and any
substance that is or contains asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls ("PCBS"), petroleum or petroleum-derived
substances or wastes, leaded paints or radon gas;
(v) the term "RELEASE" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting,
escaping, emptying, migration, placing and the like, or otherwise entering
into the Environment (including the abandonment or discarding of barrels,
containers, and other closed receptacles containing any Hazardous
Substances);
(vi) the term "ENVIRONMENTAL CONDITION" means any
contamination, damage, injury or other condition related to Hazardous
Substances and includes any present or former Hazardous Substance
treatment, storage, or disposal or recycling units, underground storage
tanks, wastewater treatment or management systems, wetlands,
sumps, lagoons, impoundments, landfills, ponds, incinerators, xxxxx,
asbestos-containing materials, lead paint or PCB-containing materials.
(vii) the term "ENVIRONMENTAL PERMIT" means all Permits and
the timely submission of applications for Permits, as required under
Environmental Laws.
Section 3.13 Voting Requirements.
(a) The Company represents and warrants that the affirmative vote at
the Company Stockholders Meeting of at least a majority of the votes entitled to
be cast by the holders of outstanding shares of Company Common Stock and ESOP
Preference Shares, voting together as one class, is the only vote of the holders
of any class or series of the Company's capital stock necessary to adopt and
approve this Agreement and the Merger and the transactions contemplated hereby
(collectively, the "COMPANY STOCKHOLDER APPROVAL").
(b) Parent and Merger Sub represent and warrant that the affirmative
vote at the Parent Stockholders Meeting of at least a majority of the votes cast
by the holders of outstanding shares of Parent Common Stock present (in person
or by proxy) at the Parent Stockholders Meeting, where the holders of at least a
majority of all outstanding shares of Parent Common Stock vote on the proposal
to approve the issuance of Parent Common Stock pursuant to this Agreement (which
will constitute a quorum), is the only vote of the holders of any class or
series of Parent's capital stock necessary to authorize the issuance of the
shares of Parent Common Stock to be issued in connection with the Merger (the
"PARENT STOCKHOLDER APPROVAL").
Section 3.14 State Takeover Statutes. The Company represents and
warrants that the Board of Directors of the Company has taken all necessary
action so that no "fair price," "moratorium," "control share acquisition" or
other anti-takeover Law (each, a "TAKEOVER STATUTE") (including the interested
stockholder provisions codified in Section 203 of the DGCL) or any anti-takeover
provision in the Company's Amended and Restated Certificate of Incorporation
(including Article 12 thereof) or by-laws is applicable to this Agreement, the
Merger and the transactions contemplated by this Agreement.
Section 3.15 Opinion of Financial Advisors.
(a) The Company represents and warrants that the Company has
received the opinions of Xxxxxx Xxxxxxx & Co Incorporated and Xxxxx X. Xxxxxxx
Company, each dated the date of this Agreement, to the effect that, as of such
date and subject to the considerations set forth therein, the Merger
Consideration is fair from a financial point of view to holders of shares of
Company Common Stock.
(b) Parent and Merger Sub represent and warrant that Parent has
received the opinion of Xxxxxxx Xxxxx, dated the date of this Agreement, to the
effect that, as of such date and subject to the considerations set forth
therein, the Merger Consideration is fair from a financial point of view to
Parent, without taking into account any adjustments made pursuant to Section
1.8.
Section 3.16 Brokers.
(a) The Company represents and warrants that, except for Xxxxxx
Xxxxxxx & Co Incorporated and Xxxxx X. Xxxxxxx Company, no broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
(b) Parent and Merger Sub represent and warrant that, except for
Xxxxxxx Xxxxx, no broker, investment banker, financial advisor or other person
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent.
Section 3.17 The Company Rights Agreement. The Company represents
and warrants that the Company has taken all corporate action on behalf of the
Company required to authorize an amendment to the Company Rights Agreement so as
to render the Company Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement.
Section 3.18 Financing. Parent and Merger Sub represent and warrant
that Parent will have at the Effective Time, sufficient funds available to pay
the Cash Consideration and all other cash amounts payable to holders of Company
Common Stock pursuant to this Agreement.
Section 3.19 Merger Sub. Parent and Merger Sub represent and warrant
that Merger Sub is a duly incorporated, validly existing direct, wholly owned
Delaware subsidiary of Parent, was formed for the purpose of engaging in the
transactions contemplated by this Agreement, and does not have any subsidiaries
and has not undertaken any business or other activities other than in connection
with entering into this Agreement and engaging in the transactions contemplated
hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business.
(a) Conduct of Business by the Company. Except as set forth on
Section 4.1(a) of the Company Disclosure Letter, except as otherwise required,
permitted or contemplated by this Agreement or except as consented to in writing
by Parent, which consent shall not be unreasonably withheld or delayed, during
the period from the date of this Agreement to the Effective Time, the Company
shall, and shall cause the Company Subsidiaries to, carry on their respective
businesses in the ordinary course. Without limiting the generality of the
foregoing, except as set forth on Section 4.1(a) of the Company Disclosure
Letter, except as otherwise required, permitted or contemplated by this
Agreement or except as consented to in writing by Parent, which consent shall
not be unreasonably withheld or delayed, during the period from the date of this
Agreement to the Effective Time, the Company shall not and shall not permit any
subsidiary of the Company (each, a "COMPANY SUBSIDIARY") to:
(i) (A) other than (x) dividends and distributions by a direct or
indirect wholly owned Company Subsidiary to its parent, (y) regular quarterly
cash dividends with respect to Company Common Stock not in excess of $0.245 per
share of Company Common Stock and (z) as required under the terms of the ESOP
Preference Shares, declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (B) split, combine or
reclassify any of its capital stock or (C) except as required under the terms of
the ESOP Preference Shares or pursuant to agreements entered into with respect
to the Company Stock Plans that are in effect as of the close of business on the
date of this Agreement, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of the Company Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities;
(ii) issue or authorize the issuance of, deliver or sell any shares
of its capital stock (or any other securities in respect of, in lieu of, or in
substitution for, shares of its capital stock), any other voting securities or
any securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities, other than the
issuance of shares of Company Common Stock and associated Company Rights (A)
upon the exercise of the Company Stock Options under the Company Stock Plans or
in connection with other awards or issuances of Company Common Stock under the
Company Stock Plans or (B) upon the conversion of shares of ESOP Preference
Shares, in any such case, outstanding as of the date of this Agreement (or
granted hereafter as permitted under this Agreement) and in accordance with
their terms as in effect on the date of this Agreement (or, in the case of
grants made subsequent to the date of this Agreement, in accordance with their
terms as in effect on the date of grant, which terms shall be consistent with
past practice);
(iii) amend its certificate of incorporation or by-laws (or other
comparable organizational documents), other than amendments or changes to any
such documents of the Company Subsidiaries in the ordinary course of business;
(iv) other than in the ordinary course of business, sell, lease,
license, mortgage or otherwise encumber or subject to any Lien (other than
Permitted Liens) or otherwise dispose of any of its material properties or
material assets;
(v) incur any material long-term indebtedness (whether evidenced by
a note or other instrument, pursuant to a financing lease, sale-leaseback
transaction, or otherwise) or incur material short-term indebtedness other than
indebtedness incurred in the ordinary course of business or under lines of
credit existing on the date of this Agreement (or any refinancing thereof not to
exceed the amount borrowable thereunder);
(vi) other than in the ordinary course of business: (A) grant any
increase in the compensation or benefits payable or to become payable by the
Company or any Company Subsidiary to any current or former director or
consultant of the Company or any Company Subsidiary; (B) grant any increase in
the compensation or benefits payable or to become payable by the Company or any
Company Subsidiary to any officer or employee of the Company or any Company
Subsidiary; (C) adopt, enter
into, amend or otherwise increase, reprice or accelerate the payment or vesting
of the amounts, benefits or rights payable or accrued or to become payable or
accrued under any Benefit Plan or Foreign Plan of the Company; (D) enter into or
amend any employment, bonus, severance, change in control, retention agreement
or any similar agreement or any collective bargaining agreement or, grant any
severance, bonus, termination, or retention pay to any officer, director,
consultant or employee of the Company or any Company Subsidiaries; or (E) pay or
award any pension, retirement, allowance or other non-equity incentive awards,
or other employee or director benefit not required by any outstanding Benefit
Plan or Foreign Plan of the Company; provided, however, that nothing in this
Agreement, including this Section 4.1(a)(vi) or Section 4.1(a)(ii) shall be
construed as preventing the Company from taking any of the actions described in
Schedule 5.14(d);
(vii) change the accounting principles used by it unless required by
GAAP (or, if applicable with respect to foreign subsidiaries, the relevant
foreign generally accepted accounting principles) or any Governmental Entity;
(viii) acquire by merging or consolidating with, by purchasing any
substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any significant business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire any assets that are material, individually or in the aggregate, to the
Company Entities, taken as a whole, except for (A) the purchase of assets from
suppliers or vendors in the ordinary course of business, (B) items reflected in
the capital plan of the Company previously made available to Parent and (C)
acquisitions of businesses or assets not contemplated in clause (A) or (B)
involving consideration up to an aggregate amount not to exceed $50,000,000;
(ix) except in the ordinary course of business, make or rescind any
material express or deemed election or settle or compromise any material claim
or action relating to Taxes, or change any of its methods of accounting or of
reporting income or deductions for Tax purposes in any material respect;
(x) satisfy any material claims or liabilities, other than in the
ordinary course of business or in accordance with their terms;
(xi) make any loans, advances or capital contributions to, or
investments in, any other person in excess of $25,000,000 in the aggregate,
except for (A) loans, advances, capital contributions or investments between any
wholly owned Company Subsidiary and the Company or another wholly owned Company
Subsidiary, (B) employee advances for expenses in the ordinary course of
business or (C) ordinary course proprietary credit card transactions;
(xii) other than in the ordinary course of business, (A) terminate
or adversely modify or amend any contract having a duration of more than one
year and total payment obligations of the Company in excess of $25,000,000
(other than (1) contracts terminable within one year or (2) the renewal, on
substantially similar terms, of any contract existing on the date of this
Agreement), (B) waive, release, relinquish or
assign any right or claim of material value to the Company, or (C) cancel or
forgive any material indebtedness owed to the Company or any Company Subsidiary;
or
(xiii) authorize, commit or agree to take any of the foregoing
actions.
(b) Conduct of Business by Parent. Except as set forth on Section
4.1(b) of the Parent Disclosure Letter, except as otherwise required, permitted
or contemplated by this Agreement or except as consented to in writing by the
Company, which consent shall not be unreasonably withheld or delayed, during the
period from the date of this Agreement to the Effective Time, Parent shall, and
shall cause the Parent Subsidiaries to, carry on their respective businesses in
the ordinary course. Without limiting the generality of the foregoing, except as
set forth on Section 4.1(b) of the Parent Disclosure Letter, except as otherwise
required, permitted or contemplated by this Agreement or except as consented to
in writing by the Company, which consent shall not be unreasonably withheld or
delayed, during the period from the date of this Agreement to the Effective
Time, Parent shall not and shall not permit any Parent Subsidiary to:
(i) (A) other than (1) dividends and distributions by a direct
or indirect wholly owned Parent Subsidiary to its parent and (2) regular
quarterly cash dividends with respect to Parent Common Stock, which shall
be $0.14 per share of Parent Common Stock, declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its
capital stock or (B) split, combine or reclassify any of its capital stock
or (C) except pursuant to agreements entered into with respect to the
Parent Stock Plans that are in effect as of the close of business on the
date of this Agreement, purchase, redeem or otherwise acquire any shares
of capital stock of Parent or any of the Parent Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue or authorize the issuance of, deliver or sell any
shares of its capital stock (or any other securities in respect of, in
lieu of, or in substitution for, shares of its capital stock), any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities, other than the issuance of shares of Parent Common
Stock upon the exercise of the Parent Stock Options under the Parent Stock
Plans or in connection with other awards or issuance of Parent Common
Stock under the Parent Stock Plans, in any such case, outstanding as of
the date of this Agreement (or granted hereafter as permitted under this
Agreement) and in accordance with their terms as in effect on the date of
this Agreement (or, in the case of grants made subsequent to the date of
this Agreement, in accordance with their terms as in effect on the date of
grant, which terms shall be consistent with past practice);
(iii) amend its certificate of incorporation or by-laws (or
other comparable organizational documents), other than amendments or
changes to any such documents of the Parent Subsidiaries in the ordinary
course of business;
(iv) other than in the ordinary course of business, sell,
lease, license, mortgage or otherwise encumber or subject to any Lien
(other than Parent Permitted Liens) or otherwise dispose of any of its
material properties or material assets;
(v) change the accounting principles used by it unless
required by GAAP (or, if applicable with respect to foreign subsidiaries,
the relevant foreign generally accepted accounting principles); or any
Governmental Entity;
(vi) acquire by merging or consolidating with, by purchasing
any substantial equity interest in or a substantial portion of the assets
of, or by any other manner, any significant business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire any assets that are material, individually
or in the aggregate, to Parent and the Parent Subsidiaries, taken as a
whole, except for (A) the purchase of assets from suppliers or vendors in
the ordinary course of business, (B) items reflected in the capital plan
of Parent previously provided to the Company or (C) acquisitions of
businesses or assets not contemplated in clause (A) or (B) involving
consideration up to an aggregate amount not to exceed $50,000,000;
(vii) except in the ordinary course of business, make or
rescind any material express or deemed election or settle or compromise
any material claim or action relating to Taxes, or change any of its
methods of accounting or of reporting income or deductions for Tax
purposes in any material respect;
(viii) satisfy any material claims or liabilities, other than
in the ordinary course of business or in accordance with their terms;
(ix) other than in the ordinary course of business, (A)
terminate or adversely modify or amend any contract having a duration of
more than one year and total payment obligations of Parent in excess of
$25,000,000 (other than (1) contracts terminable within one year or (2)
the renewal, on substantially similar terms, of any contract existing on
the date of this Agreement), (B) waive, release, relinquish or assign any
right or claim of material value to Parent, or (C) cancel or forgive any
material indebtedness owed to Parent or any Parent Subsidiary; or
(x) authorize, commit or agree to take any of the foregoing
actions.
(c) Conduct of Business by Merger Sub. During the period from the
date of this Agreement to the Effective Time, Merger Sub shall not engage in any
activities of any nature except as provided in or contemplated by this
Agreement.
(d) Advice of Changes. Each of the Company, Parent and Merger Sub
shall promptly advise the other parties to this Agreement orally and in writing
to the extent it has knowledge of any change or event having, or which, insofar
as can reasonably be foreseen, would reasonably be expected to have, a material
adverse effect on such party or the ability of the conditions set forth in
Article VI to be satisfied; provided, however, that no such notification will
affect the representations, warranties, covenants or agreements of the parties
(or remedies with respect thereto) or the conditions to the obligations of the
parties under this Agreement.
Section 4.2 No Solicitation by the Company.
(a) Company Takeover Proposal. From and after the date of this
Agreement, the Company shall, and shall cause the Company Subsidiaries to, and
it shall use its reasonable
best efforts to cause any of its and their officers, directors, employees,
financial advisors, attorneys, accountants and other advisors, investment
bankers, representatives and agents retained by the Company or any of the
Company Subsidiaries (collectively, "COMPANY REPRESENTATIVES") to, immediately
cease and cause to be terminated immediately all existing activities,
discussions and negotiations with any parties conducted heretofore with respect
to, or that would reasonably be expected to lead to, any Company Takeover
Proposal. From and after the date of this Agreement, the Company shall not, nor
shall it permit any of the Company Subsidiaries to, and it shall use its
reasonable best efforts to cause any of the Company Representatives not to,
directly or indirectly, (i) solicit, initiate or knowingly encourage the making
of a Company Takeover Proposal, (ii) enter into any agreement, arrangement or
understanding with respect to any Company Takeover Proposal (other than a
confidentiality agreement entered into in accordance with the provisions of this
Section 4.2(a)) or (iii) other than informing persons of the existence of the
provisions contained in this Section 4.2, participate in any discussions or
negotiations regarding, or furnish or disclose to any person (other than a party
to this Agreement) any non-public information with respect to the Company in
connection with any inquiries or the making of any proposal that constitutes, or
would reasonably be expected to lead to, any Company Takeover Proposal;
provided, however, that, at any time prior to obtaining the Company Stockholder
Approval, in response to an unsolicited Company Takeover Proposal that the Board
of Directors of the Company determines in good faith (after consultation with
outside counsel and a financial advisor of nationally recognized reputation)
constitutes or would reasonably be expected to lead to a Superior Proposal, and
which Company Takeover Proposal was made after the date hereof and did not
otherwise result from a breach of this Section 4.2, the Company may, subject to
compliance with Section 4.2(a), (i) furnish information with respect to the
Company Entities to the person making such Company Takeover Proposal (and its
representatives) pursuant to a customary confidentiality agreement not less
restrictive of such person than the Confidentiality Agreement; provided,
however, that all such information is, in substance, provided to Parent
contemporaneously as it is provided to such person, and (ii) participate in
discussions or negotiations with the person making such Company Takeover
Proposal (and its representatives) regarding such Company Takeover Proposal.
(b) Definitions. As used herein, (i) "SUPERIOR PROPOSAL" means a
Company Takeover Proposal from any person to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, all of the combined
voting power of the Company then outstanding or all or substantially all of the
assets of the Company that the Board of Directors of the Company determines in
its good faith judgment (after consulting with a nationally recognized
investment banking firm), taking into account all legal, financial and
regulatory and other aspects of the proposal and the person making the proposal
(including any break-up fees, expense reimbursement provisions and conditions to
consummation), (A) would be more favorable from a financial point of view to the
stockholders of the Company than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions proposed by Parent in
response to such Company Takeover Proposal) and (B) for which financing, to the
extent required, is then committed or may reasonably be expected to be committed
and (ii) "COMPANY TAKEOVER PROPOSAL" means any bona fide written proposal or
offer from any person relating to any (A) direct or indirect acquisition or
purchase of a business that constitutes 50% or more of the net revenues, net
income or the assets of the Company and the Company Subsidiaries, taken as a
whole, (B) direct or indirect acquisition or purchase of equity securities of
the Company representing 50% or more of the combined voting power of the
Company, (C) any tender offer or
exchange offer that if consummated would result in any person beneficially
owning equity securities of the Company representing 50% or more of the combined
voting power of the Company, or (D) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement.
(c) Actions by the Company. Neither the Board of Directors of the
Company nor any committee thereof shall (i) (A) withdraw (or modify in a manner
adverse to Parent), or publicly propose to withdraw (or modify in a manner
adverse to Parent), the approval recommendation or declaration of advisability
by such Board of Directors or any such committee thereof of this Agreement, the
Merger or the other transactions contemplated by this Agreement or (B)
recommend, adopt or approve, or propose publicly to recommend, adopt or approve,
any Company Takeover Proposal (any action described in this clause (i) being
referred to as a "COMPANY ADVERSE RECOMMENDATION CHANGE") or (ii) approve or
recommend, or allow the Company or any of the Company Subsidiaries to execute or
enter into, any letter of intent, memorandum of understanding, agreement in
principle, merger agreement, acquisition agreement, option agreement, joint
venture agreement, partnership agreement or other similar agreement constituting
or related to any Company Takeover Proposal (other than a confidentiality
agreement referred to in Section 4.2(a)). Notwithstanding the foregoing, if,
prior to obtaining the Company Stockholder Approval, (v) the Company receives a
Company Takeover Proposal, (w) the Board of Directors of the Company shall have
determined in good faith, after consultation with outside counsel, that it is
necessary for the proper discharge of its fiduciary duties under applicable Law,
(x) the Company provides written notice (a "NOTICE OF ADVERSE RECOMMENDATION")
advising Parent that the Board of Directors of the Company has made the
determination described in clause (w) above, (y) for a period of three calendar
days (at least one of which shall be a Business Day) following Parent's receipt
of a Notice of Adverse Recommendation, the Company negotiates with Parent in
good faith to make such adjustments to the terms and conditions of this
Agreement as would enable the Company to proceed with its recommendation of this
Agreement and the Merger and not make such Company Adverse Recommendation Change
and (z) at the end of such three-day period the Board of Directors of the
Company maintains its determination described in clause (w) above (after taking
into account such proposed adjustments to the terms and conditions of this
Agreement), then the Board of Directors of the Company may (A) make a Company
Adverse Recommendation Change and/or (B) upon termination of this Agreement in
accordance with Section 7.1(d)(ii) and concurrent payment of the Termination Fee
in accordance with Section 7.3(b), approve and enter into an agreement relating
to a Company Takeover Proposal that constitutes a Superior Proposal. No Company
Adverse Recommendation Change shall change the approval of the Board of
Directors of the Company for purposes of causing Article 12 of the Company's
Amended and Restated Certificate of Incorporation, any state takeover Law
(including Section 203 of the DGCL) or other state Law to be inapplicable to the
Merger and the other transactions contemplated by this Agreement.
(d) Notice of Company Takeover Proposal. From and after the date
of this Agreement, unless the Board of Directors of the Company shall have
determined in good faith, after consultation with outside counsel, that taking
such action would result in a reasonable probability that the Board of Directors
of the Company would breach its fiduciary duties under applicable Law, the
Company shall promptly (but in any event within one Business Day) advise
Parent and Merger Sub of the receipt, directly or indirectly, of any inquiries,
requests, discussions, negotiations or proposals relating to a Company Takeover
Proposal, or any request for nonpublic information relating to any of the
Company Entities by any person that informs the Company or any Company
Representative that such person is considering making, or has made, a Company
Takeover Proposal, or an inquiry from a person seeking to have discussions or
negotiations relating to a possible Company Takeover Proposal. Any such notice
shall be made orally and confirmed in writing, and shall indicate the material
terms and conditions thereof and the identity of the other party or parties
involved and promptly furnish to Parent and Merger Sub a copy of any such
written inquiry, request or proposal and copies of any material information
provided to or by any third party relating thereto.
(e) Rule 14e-2(a), Rule 14d-9 and Other Applicable Law. Nothing
contained in this Section 4.2 shall prohibit the Company from (i) taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a) or Rule
14d-9 promulgated under the Exchange Act or (ii) making any disclosure to the
stockholders of the Company if, in the good faith judgment of the Board of
Directors (after consultation with outside counsel), failure so to disclose
would be inconsistent with the fulfillment of its fiduciary duties or any other
obligations under applicable Law; provided, however, that compliance with such
rules and Laws shall not in any way limit or modify the effect that any action
taken pursuant to such rules and Laws has under any other provision of this
Agreement, including that such compliance could result in a Company Adverse
Recommendation Change.
(f) Return or Destruction of Confidential Information. The Company
agrees that immediately following the execution of this Agreement it shall
request each person (other than Parent) which has heretofore executed a
confidentiality agreement within the past two years in connection with such
person's consideration of acquiring the Company to return or destroy all
confidential information heretofore furnished to such person by or on the
Company's behalf.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of the Form S-4 and the Joint Proxy
Statement; Stockholders Meetings.
(a) Form S-4 Proxy Statement. As soon as practicable following the
date of this Agreement, the Company and Parent shall prepare and file with the
SEC the Joint Proxy Statement and Parent shall prepare and file with the SEC the
Form S-4, in which the Joint Proxy Statement will be included as a prospectus.
Each of the Company and Parent shall use reasonable best efforts to have the
Form S-4 declared effective under the Securities Act as promptly as practicable
after such filing and to maintain the effectiveness of the Form S-4 through the
Effective Time and to ensure that it complies in all material respects with the
applicable provisions of the Exchange Act or Securities Act. The Company shall
use all reasonable best efforts to cause the Joint Proxy Statement to be mailed
to the Company's stockholders, and Parent shall use all reasonable best efforts
to cause the Joint Proxy Statement to be mailed to Parent's stockholders, in
each case as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Parent Common Stock in the Merger and the Company shall furnish all
information concerning the Company and the holders of the Company Common Stock
as may be reasonably requested in connection with any such action. The Company,
in connection with a Company Adverse Recommendation Change, may amend or
supplement the Form S-4 or Joint Proxy Statement (including by incorporation by
reference) to effect such a Company Adverse Recommendation Change. No filing of,
or amendment or supplement to, the Form S-4 will be made by Parent, and no
filing of, or amendment or supplement to the Joint Proxy Statement will be made
by the Company or Parent, in each case, without providing the other party and
its respective counsel the reasonable opportunity to review and comment thereon.
The parties shall notify each other promptly of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Joint Proxy Statement or the Form S-4 or for additional
information and shall supply each other with copies of all correspondence
between such party or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Joint Proxy Statement, the
Form S-4 or the Merger. Parent will advise the Company, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective, the
issuance of any stop order or the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction. If at any time prior to the Effective Time any information
relating to the Company or Parent, or any of their respective affiliates,
officers or directors, should be discovered by the Company or Parent which
should be set forth in an amendment or supplement to the Form S-4 or the Joint
Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and the parties shall cooperate in the prompt
filing with the SEC of an appropriate amendment or supplement describing such
information and, to the extent required by Law, in the disseminating the
information contained in such amendment or supplement to the stockholders of
each of the Company and Parent.
(b) Stockholders Meetings.
(i) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "COMPANY STOCKHOLDERS MEETING") in
accordance with applicable Law, the Company's Amended and Restated
Certificate of Incorporation and by-laws for the purpose of obtaining the
Company Stockholder Approval and shall, subject to Section 4.2(c), (A)
through the Board of Directors of the Company, recommend to its
stockholders the approval and adoption of this Agreement, the Merger and
the other transactions contemplated hereby and include in the Joint Proxy
Statement such recommendation and (B) use its reasonable best efforts to
solicit and obtain such approval and adoption.
(ii) Parent shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting
of its stockholders (the "PARENT STOCKHOLDERS MEETING") in accordance with
applicable Law, Parent's Second
Restated Certificate of Incorporation and by-laws for the purpose of
obtaining the Parent Stockholder Approval and shall (A) through the Board
of Directors of Parent, recommend to its stockholders the approval of the
issuance of Parent Common Stock pursuant to this Agreement and include in
the Joint Proxy Statement such recommendation and (B) use its reasonable
best efforts to solicit and obtain such approval and (C) not withdraw or
modify, or publicly propose to withdraw or modify, the recommendation
contemplated by clause (A) (any such action being referred to as a "PARENT
ADVERSE RECOMMENDATION CHANGE"); provided, however, that, notwithstanding
the foregoing, Parent may make a Parent Adverse Recommendation Change if,
prior to obtaining the Parent Stockholder Approval, (v) Parent receives a
Parent Takeover Proposal, (w) the Board of Directors of Parent shall have
determined in good faith, after consultation with outside counsel, that it
is necessary for the proper discharge of its fiduciary duties under
applicable Law, (x) Parent provides written notice advising the Company
that the Board of Directors of Parent has made the determination described
in clause (w) above, (y) for a period of three calendar days (at least one
of which shall be a Business Day) following the Company's receipt of such
notice, Parent negotiates with the Company in good faith to make such
adjustments to the terms and conditions of this Agreement as would enable
Parent to proceed with its recommendation of this Agreement and the Merger
and not withdraw or modify such recommendation and (z) at the end of such
three-day period the Board of Directors of Parent maintains its
determination described in clause (w) above (after taking into account
such proposed adjustments to the terms and conditions of this Agreement).
For purposes of this Agreement "PARENT TAKEOVER PROPOSAL" means any bona
fide written proposal or offer from any person relating to any (A) direct
or indirect acquisition or purchase of a business that constitutes 50% or
more of the net revenues, net income or the assets of Parent and the
Parent Subsidiaries, taken as a whole, (B) direct or indirect acquisition
or purchase of equity securities of Parent representing 50% or more of the
combined voting power of Parent, (C) any tender offer or exchange offer
that if consummated would result in any person beneficially owning equity
securities of Parent representing 50% or more of the combined voting power
of Parent, or (D) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Parent.
(iii) Each of Parent and the Company agrees to use its
reasonable best efforts to hold the Parent Stockholders Meeting and the
Company Stockholders Meeting on the same day.
Section 5.2 Letters of the Company's Accountants. The Company shall
request to be delivered to Parent two letters from the Company's independent
accountants, one dated a date within two Business Days before the date on which
the Form S-4 will become effective and one dated a date within two Business Days
before the Closing Date, each addressed to Parent customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4. The Company
shall be deemed to have fully discharged its obligations under this Section 5.2
if it mails or hand delivers a letter of request stating the terms of this
Section 5.2 to its client account partner at Deloitte & Touche, regardless of
whether Deloitte & Touche delivers the letters contemplated by this Section 5.2.
Section 5.3 Letters of Parent's Accountants. Parent shall request
to be delivered to the Company two letters from Parent's independent
accountants, one dated a date within two Business Days before the date on which
the Form S-4 will become effective and one dated a date within two Business Days
before the Closing Date, each addressed to the Company customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4. Parent shall be
deemed to have fully discharged its obligations under this Section 5.3 if it
mails or hand delivers a letter of request stating the terms of this Section 5.3
to its client account partner at KPMG, regardless of whether KPMG delivers the
letters contemplated by this Section 5.3.
Section 5.4 Access to Information; Confidentiality. To the extent
permitted by applicable Law and subject to the Confidentiality Agreement, dated
February 4, 2005, between the Company and Parent (the "CONFIDENTIALITY
AGREEMENT"), each of the Company and Parent shall, and shall cause each of its
respective subsidiaries to, afford to the other party and its respective
representatives reasonable access, during normal business hours and after
reasonable prior notice, during the period prior to the Effective Time, to such
other party's and its subsidiaries' properties, books, contracts, commitments,
personnel and records and all other information concerning their business,
properties and personnel as such party may reasonably request. Parent and the
Company shall hold, and shall cause their respective affiliates and
representatives to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement. Notwithstanding the foregoing or Section 5.5,
neither party shall be required to provide any information which it reasonably
believes it may not provide to the other party by reason of contractual or legal
restrictions, including applicable Law, or which it believes is competitively
sensitive information. In addition, either party may designate any competitively
sensitive information provided to the other under this Agreement as "outside
counsel only." Such information shall be given only to outside counsel of the
recipient. Each party will use reasonable best efforts to minimize any
disruption to the businesses of the other party and its subsidiaries which may
result from the requests for access, data and information hereunder.
Section 5.5 Reasonable Best Efforts.
(a) Reasonable Best Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, as promptly as practicable, but in no event later than the Outside
Date, the Merger and the other transactions to be performed or consummated by
such party in accordance with the terms of this Agreement, including (i) the
taking of all acts necessary to cause the conditions to Closing to be satisfied
as promptly as practicable, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all steps as may be necessary
to obtain an approval or waiver from, or to avoid an action or proceeding by,
any Governmental Entity, (iii) the avoidance of each and every impediment under
any antitrust, merger control, competition or trade regulation Law that may be
asserted by any Governmental Entity with respect to the Merger so as to enable
the Closing to occur as soon as reasonably possible, (iv) the obtaining of all
necessary consents, approvals or waivers from third parties, including any such
consents, approvals or waivers required in connection with any
divestiture, (v) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (vi) the execution and delivery of
any additional instruments necessary to consummate the Merger and other
transactions contemplated hereby and to fully carry out the purposes of this
Agreement. In connection with and without limiting the foregoing, the Company
and Parent shall (A) duly file with the United States Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice (the "ANTITRUST DIVISION") the notification and report form (the "HSR
FILING") required under the HSR Act and (B) duly make all notifications and
other filings required (together with the HSR Filing, the "ANTITRUST FILINGS")
under any other applicable competition, merger control, antitrust or similar Law
that the Company and Parent deem advisable or appropriate, in each case with
respect to the transactions contemplated by this Agreement and as promptly as
practicable. The Antitrust Filings shall be in substantial compliance with the
requirements of the HSR Act or other Laws, as applicable. For the avoidance of
doubt and notwithstanding anything to the contrary contained in this Agreement,
Parent and its subsidiaries shall commit to any and all divestitures, licenses
or hold separate or similar arrangements with respect to assets or conduct of
business arrangements as a condition to obtaining any and all approvals from any
Governmental Entity for any reason in order to consummate and make effective, as
promptly as practicable, but in no event later than the Outside Date, the Merger
and the other transactions to be performed or consummated by Parent and its
subsidiaries, including, without limitation, taking any and all actions
necessary in order to ensure that (x) no requirement for non-action, a waiver,
consent or approval of the FTC, the Antitrust Division, any State Attorney
General or other Governmental Entity, (y) no decree, judgment, injunction,
temporary restraining order or any other order in any suit or proceeding, and
(z) no other matter relating to any antitrust or competition Law or regulation,
would preclude consummation of the Merger by the Outside Date; provided,
however, that in no event shall Parent or Merger Sub be required to dispose of
or hold separate assets of the Company, Parent or their respective subsidiaries
which, in the aggregate, accounted for annual net sales for the most recently
completed fiscal year exceeding $4,000,000,000. Neither party shall, nor shall
it permit any of its subsidiaries to, acquire or agree to acquire any business,
person or division thereof, or otherwise acquire or agree to acquire any assets
if the entering into of a definitive agreement relating to or the consummation
of such acquisition, would reasonably be expected to materially increase the
risk of not obtaining the applicable clearance, approval or waiver from any
Governmental Entity with respect to the transactions contemplated by this
Agreement.
(b) Cooperation. Each party shall, subject to applicable Law and
except as prohibited by any applicable representative of any applicable
Governmental Entity: (i) promptly notify the other party of any written
communication to that party from the FTC, the Antitrust Division, any State
Attorney General or any other Governmental Entity relating to this Agreement or
the Merger, and permit the other Party to review in advance any proposed written
communication to any of the foregoing; (ii) not agree to participate in any
substantive meeting or discussion with any Governmental Entity in respect of any
filings, investigation or inquiry concerning this Agreement or the Merger unless
it consults with the other party in advance and, to the extent permitted by such
Governmental Entity, gives the other party the opportunity to attend and
participate thereat; and (iii) furnish the other party with copies of all
correspondence, filings, and written communications (and memoranda setting forth
the substance thereof)
between them and its affiliates and their respective representatives, on the one
hand, and any Governmental Entity or members or their respective staffs, on the
other hand, with respect to this Agreement and the Merger. Each party shall (y)
respond as promptly as practicable under the circumstances to any inquiries
received from the FTC or the Antitrust Division for additional information or
documentation and to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters
relating to this Agreement or the Merger and (z) not extend any waiting period
under the HSR Act or enter into any agreement with the FTC or the Antitrust
Division not to consummate the transactions contemplated by this Agreement.
(c) No Takeover Statutes Apply. In connection with and without
limiting the foregoing, the Company, Parent and Merger Sub shall (i) take all
action reasonably necessary to ensure that no Takeover Statute or similar Law is
or becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby and (ii) if any Takeover Statute or similar Law
becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby, take all action reasonably necessary to ensure
that the Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on the Merger and the
other transactions contemplated by this Agreement.
(d) Opinions Regarding Tax Treatment. Parent and the Company shall
cooperate with each other in obtaining the opinions of Xxxxx Day, counsel to
Parent, for the benefit of Parent, and Skadden, Arps, Slate, Meagher, & Xxxx
LLP, counsel to the Company, for the benefit of the Company's stockholders,
respectively, dated as of the Closing Date, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code. In
connection therewith, each of Parent and the Company shall deliver to Xxxxx Day
and Skadden, Arps, Slate, Meagher, & Xxxx LLP customary representation letters
in form and substance reasonably satisfactory to such counsel, and at such time
or times that may be reasonably requested by such law firms (the representation
letters referred to in this sentence are collectively referred to as the "TAX
CERTIFICATES").
Section 5.6 Company Stock Options; Stock Plans.
(a) Assumption of Company Stock Options. At the Effective Time,
(i) each outstanding Company Stock Option, whether vested or unvested
immediately prior to the Effective Time, to purchase shares of Company Common
Stock, and (ii) each of the Company Stock Plans and all agreements thereunder,
shall be assumed by Parent. To the extent provided under the terms of the
Company Stock Plans, all such outstanding options shall accelerate and become
immediately exercisable in connection with the Merger in accordance with their
existing terms (or, in the case of grants made after the date hereof as
permitted by this Agreement, in accordance with their terms as in effect on the
date of grant). Except for the acceleration of the Company Stock Options in
accordance with the terms of the Company Stock Plans and any agreements
thereunder, prior to or at the Effective Time, each Company Stock Option so
assumed by Parent under this Agreement (an "ADJUSTED OPTION") shall continue to
have, and be subject to, the same terms and conditions as were applicable under
the Company Stock Plans and the documents governing the Company Stock Options
immediately before the Effective Time, except that (x) each Company Stock Option
will be exercisable for that number of shares
(rounded up or down to the nearest share) of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such option immediately prior to the Effective Time multiplied by
the sum of (1) the Stock Consideration plus (2) the Cash Consideration divided
by the Average Closing Price and (y) the per share exercise price for the shares
of Parent Common Stock issuable upon exercise of such Company Stock Option will
be equal to the quotient (rounded up or down to the nearest cent) determined by
dividing the per share exercise price of the Company Stock Option by the sum of
(1) the Stock Consideration plus (2) the Cash Consideration divided by the
Average Closing Price. The date of grant of each Adjusted Option will be the
date on which the corresponding Company Stock Option was granted.
Notwithstanding the foregoing, with respect to each Company Stock Option that is
an incentive stock option (within the meaning of Section 422(b) of the Code), no
adjustment will be made that would be a modification (within the meaning of
Section 424(h) of the Code) to such option.
(b) Stock Plans. The Company and Parent agree that each of the
Company Stock Plans and all relevant Parent Stock Plans will be amended, to the
extent necessary, to reflect the transactions contemplated by this Agreement,
including conversion of shares of the Company Common Stock held or to be awarded
or paid pursuant to such benefit plans, programs or arrangements into shares of
Parent Common Stock on a basis consistent with the transactions contemplated by
this Agreement. The Company and Parent agree to submit the amendments to the
Parent stock plans or the Company Stock Plans to their respective stockholders
if such submission is determined to be necessary by counsel to the Company or
Parent after consultation with one another; provided, however, that such
approval will not be a condition to the consummation of the Merger.
(c) Reservation of Shares. Parent will (i) reserve for issuance
the number of shares of Parent Common Stock that will become subject to the
benefit plans, programs and arrangements referred to in this Section 5.6 and
(ii) issue or cause to be issued the appropriate number of shares of Parent
Common Stock, pursuant to applicable plans, programs and arrangements, upon the
exercise or maturation of rights existing thereunder on the Effective Time or
thereafter granted or awarded. Promptly after the Effective Time, Parent will
prepare and file with the SEC a registration statement on Form S-8 (or other
appropriate form) registering a number of shares of Parent Common Stock
necessary to fulfill Parent's obligations under this Section 5.6. Such
registration statement will be kept effective (and the current status of the
prospectus required thereby will be maintained) for at least as long as awards
granted under the Company Stock Plans remain outstanding.
(d) Notices. As soon as practicable after the Effective Time,
Parent will deliver to the holders of the Company Stock Options appropriate
notices setting forth such holders' rights pursuant to the Company Stock Plans
and the agreements evidencing the grants of such Company Stock Options and that
such Company Stock Options and the related agreements will be assumed by Parent
and will continue in effect on the same terms and conditions (subject to the
adjustment required by this Section 5.6 after giving effect to the Merger).
Section 5.7 Indemnification.
(a) Rights Assumed by Surviving Corporation. The Surviving
Corporation shall, and Parent shall cause the Surviving Corporation to,
indemnify and hold harmless, and provide advancement of expenses to, all current
and former directors, officers and employees of the Company and the Company
Subsidiaries (in all of their capacities) (i) to the same extent such persons
are indemnified or have the right to advancement of expenses as of the date of
this Agreement by the Company or a Company Subsidiary pursuant to the Company's
or such Company Subsidiary's certificates of incorporation, by-laws (or
comparable organizational documents) and indemnification agreements, if any, in
existence on the date hereof with any current or former directors, officers and
employees of the Company and the Company Subsidiaries and (ii) without
limitation to clause (i), to the fullest extent permitted by Law, in each case
for acts or omissions occurring at or prior to the Effective Time (including for
acts or omissions occurring in connection with the approval of this Agreement
and the consummation of the transactions contemplated hereby). Without limiting
the foregoing, Parent agrees that all rights to indemnification (including any
obligations to advance funds for expenses) and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time now existing in
favor of the current or former directors, officers or employees of the Company
and the Company Subsidiaries as provided in their respective certificates of
incorporation or by-laws (or comparable organizational documents),
indemnification agreements or otherwise will be assumed by the Surviving
Corporation without further action, as of the Effective Time, and will survive
the Merger and will continue in full force and effect in accordance with their
terms and such rights will not be amended, or otherwise modified in any manner
that would adversely affect the rights of individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by Law.
(b) Successors and Assigns of Surviving Corporation. In the event
that Parent or the Surviving Corporation or any of their respective successors
or assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, Parent shall cause proper provisions
to be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, assume the obligations set forth in this
Section 5.7.
(c) Continuing Coverage. For six years after the Effective Time,
Parent shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies with reputable and financially sound
carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) covering acts or omissions occurring
at or prior to the Effective Time with respect to those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been heretofore made available to Parent) (the
"INDEMNIFIED PARTIES"); provided, however, that in no event will Parent or the
Surviving Corporation be required to expend in any one year an amount in excess
of 300% of the annual premiums currently paid by the Company for such insurance
(the "MAXIMUM PREMIUM"); and provided further, however, that, if the annual
premiums of such insurance coverage exceed such amount, Parent will be obligated
to obtain a policy with the greatest coverage available for a cost not exceeding
the Maximum Premium; and provided further, however, that, if the Company in its
sole discretion elects, by giving written notice to Parent at least 30 days
prior to the Effective Time, then, in lieu of the foregoing insurance, effective
as of
the Effective Time, the Company shall purchase a directors' and officers'
liability insurance "tail" or "runoff" insurance program for a period of six
years after the Effective Time with respect to wrongful acts and/or omissions
committed or allegedly committed at or prior to the Effective Time (such
coverage shall have an aggregate coverage limit over the term of such policy in
an amount not to exceed the annual aggregate coverage limit under the Company's
existing directors and officers liability policy, and in all other respects
shall be comparable to such existing coverage), provided that the premium for
such "tail" or "runoff" coverage shall not exceed an amount equal to the Maximum
Premium.
(d) Intended Beneficiaries. The obligations of Parent and the
Surviving Corporation under this Section 5.7 shall not be terminated or modified
after the Effective Time in such a manner as to adversely affect any Indemnified
Party without the express written consent of such Indemnified Party. The
provisions of this Section 5.7 are (i) intended to be for the benefit of, and
will be enforceable by, each Indemnified Party, his or her heirs and his or her
representatives and (ii) in addition to, and not in substitution for, any other
rights to indemnification or contribution that any such person may have by
contract or otherwise.
Section 5.8 Public Announcements. Parent and the Company shall
consult with each other before holding any press conferences and before issuing
any press release or other public announcements with respect to the transactions
contemplated by this Agreement, including the Merger. The parties will provide
each other the opportunity to review and comment upon any press release or other
public announcement or statement with respect to the transactions contemplated
by this Agreement, including the Merger, and shall not issue any such press
release or other public announcement or statement prior to such consultation,
except as, in the reasonable judgment of the relevant party, may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release or releases to be issued with respect to the transactions
contemplated by this Agreement shall be mutually agreed upon prior to the
issuance thereof.
Section 5.9 Affiliates. The Company shall deliver to Parent prior
to the Closing Date a letter identifying all persons who are, at the time this
Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 of the rules and
regulations promulgated under the Securities Act. The Company shall use
reasonable best efforts to cause each such person to deliver to Parent on or
prior to the Closing Date a written agreement substantially in the form attached
as Exhibit A hereto.
Section 5.10 NYSE Listing. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock issuable to the Company's
stockholders as contemplated by this Agreement to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as practicable after
the date of this Agreement, and in any event prior to the Closing Date.
Section 5.11 Stockholder Litigation. The parties to this Agreement
shall cooperate and consult with one another in connection with any stockholder
litigation against any of them or any of their respective directors or officers
with respect to the transactions contemplated by this Agreement. In furtherance
of and without in any way limiting the foregoing, each of the parties shall use
its respective reasonable best efforts to prevail in such
litigation so as to permit the consummation of the transactions contemplated by
this Agreement in the manner contemplated by this Agreement. Notwithstanding the
foregoing, the Company agrees that it will not compromise or settle (other than
compromises or settlements involving solely monetary damages) any litigation
commenced against it or its directors and officers relating to this Agreement or
the transactions contemplated hereby (including the Merger) without Parent's
prior written consent, not to be unreasonably withheld or delayed, it being
understood and agreed that the Company may compromise or settle any such
litigation without Parent's consent solely for monetary damages.
Section 5.12 Tax Treatment. Each of Parent, Merger Sub and the
Company shall use its reasonable best efforts to cause the Merger to qualify as
a reorganization under the provisions of Section 368(a) of the Code and to
obtain the opinions of counsel referred to in Sections 6.2(d) and 6.3(d),
including forbearing from taking any action that would cause the Merger not to
qualify as a reorganization under the provisions of Section 368(a) of the Code.
Section 5.13 Section 16(b). Parent and the Company shall take all
steps reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who is a
director or officer of the Company to be exempt under Rule 16b-3 under the
Exchange Act.
Section 5.14 Employee Benefit Matters.
(a) Company Obligations. The Company shall adopt such amendments
to the Benefit Plans or Foreign Plans of the Company as may reasonably be
requested by Parent and as may be necessary to ensure that Benefit Plans and
Foreign Plans of the Company cover only employees and former employees (and
their dependents and beneficiaries) of the Company and the Company Subsidiaries
following the consummation of the transactions contemplated by this Agreement.
(b) Parent Obligations. Parent shall and shall cause the Parent
Subsidiaries (including the Surviving Corporation) to:
(i) assume the terms of all Benefit Plans and Foreign Plans
of the Company and honor and pay or provide the benefits required
thereunder in accordance with their terms, recognizing that the
consummation of the transactions contemplated hereby or approval of this
Agreement by the Company's stockholders, as the case may be, will
constitute a "change in control" for purposes of such Benefit Plans that
include a definition of "change in control";
(ii) until the first anniversary of the Effective Time,
except as may be required by applicable Law, continue the terms of all
Benefit Plans and Foreign Plans of the Company in accordance with their
terms in effect as of immediately prior to the Effective Time; and
(iii) from the first anniversary of the Effective Time until
the third anniversary of the Effective Time (the "BENEFITS MAINTENANCE
PERIOD"), with respect to
employees of the Company and the Company Subsidiaries as of the Effective
Time (collectively, the "COMPANY EMPLOYEES") (other than those subject to
collective bargaining obligations or agreements), (x) provide a level of
aggregate employee benefits and compensation (excluding equity based
awards), taking into account all Benefit Plans of the Company and other
programs sponsored or maintained by the Company and the Company
Subsidiaries (other than equity based plans) immediately prior to the
Effective Time (including amendments thereto that are permitted or
contemplated by this Agreement, including those described on Schedule
5.14(d)), that is substantially comparable in the aggregate to the
aggregate employee benefits and compensation provided, with respect to
service to the Company or any of the Company Subsidiaries, to Company
Employees immediately prior to the Effective Time and (y) consider Company
Employees for equity based award grants on the same basis that similarly
situated employees of Parent are considered for such grants.
(c) Credit for Service of Company Employees. If Company Employees
are included in any benefit plan maintained by Parent or any subsidiary of
Parent following the Effective Time, such Company Employees shall receive credit
for service with the Company and the Company Subsidiaries and their predecessors
prior to the Effective Time to the same extent and for the same purposes
thereunder as such service was counted under similar Benefit Plans of the
Company for all purposes (except that, with respect to benefit accrual, such
service shall not be counted to the extent that it would result in a duplication
of benefits and shall not be counted for purposes of benefit accrual under any
defined benefit plan, provided that such service shall be taken into account for
purposes of determining the applicable credit rate in effect under the Parent's
qualified cash balance pension plan); provided, however, that service of Company
Employees subject to collective bargaining agreements or obligations shall be
determined under such collective bargaining agreements or obligations. If
Company Employees or their dependents are included in any medical, dental or
health plan (a "SUCCESSOR PLAN") other than the plan or plans in which they
participated immediately prior to the Effective Time (a "PRIOR PLAN"), any such
Successor Plan shall not include any restrictions or limitations with respect to
pre-existing condition exclusions or any actively-at-work requirements (except
to the extent such exclusions were applicable under any similar Prior Plan at
the Effective Time) and any eligible expenses incurred by any Company Employee
and his or her covered dependents during the portion of the plan year of such
Prior Plan ending on the date such Company Employee's participation in such
Successor Plan begins shall be taken into account under such Successor Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Company Employee and his or her covered
dependents for the applicable plan year as if such amounts had been paid in
accordance with such Successor Plan. Without limiting the generality of the
foregoing, for purposes of determining severance pay and benefits under any
applicable Benefit Plan of the Company covering a Company Employee at or after
the Effective Time other than a Company Employee subject to collective
bargaining agreements or obligations, each such Company Employee shall receive
credit for service prior to the Effective Time with the Company and the Company
Subsidiaries and their predecessors to the same extent and for the same purposes
as such service was counted under the applicable Benefit Plan of the Company as
in effect before the Effective Time, as well as for service from and after the
Effective Time with Parent and any Parent Subsidiary (including the Surviving
Corporation).
(d) Additional Matters. Parent agrees to the additional
compensation and benefits matters set forth on Schedule 5.14(d) to this
Agreement.
(e) No Third-Party Beneficiaries. Nothing in this Section 5.14
shall (i) except as provided in Schedule 5.14(d), confer any rights upon any
person, including any Company Employee or former employees of the Company, other
than the parties hereto and their respective successors and permitted assigns or
(ii) constitute or create an employment agreement.
Section 5.15 Parent Board. Parent shall select two individuals who
are directors of the Company as of the date of this Agreement and who are
recommended by the nominating committee of the Board of Directors of Parent and,
if such individuals are willing to serve, Parent shall use its reasonable best
efforts to appoint such individuals, as of the Effective Time, to the Board of
Directors of Parent.
Section 5.16 Dividends. Parent shall increase its quarterly dividend
on the Parent Common Stock to $0.25 per share beginning with the first quarterly
dividend with a record date on or after the Effective Time. It is Parent's
intention to continue its quarterly dividend at this amount for the foreseeable
future.
Section 5.17 St. Louis Operations and Community Involvement.
(a) Parent will maintain in St. Louis, Missouri a major divisional
headquarters, as well as certain regional corporate support functions.
(b) After the Effective Time, Parent will honor any charitable
contribution obligations of the Company that exist as of the date of this
Agreement. For one year following the Effective Time, Parent shall not reduce
the total aggregate amount of funding for charitable causes by the Company from
the total amount of such funding in the twelve month period immediately
preceding the Closing Date. Between the first and second anniversary of the
Closing Date, Parent shall not reduce the total aggregate amount of funding for
charitable causes by the Company by more than 50% from the total amount of such
funding in the prior twelve month period. Between the second and third
anniversary of the Closing Date, Parent shall not reduce the total aggregate
amount of funding for charitable causes by the Company by more than 75% from the
total amount of such finding in the prior twelve month period. For the avoidance
of doubt and notwithstanding anything to the contrary contained in the preceding
sentence, Parent's obligations as set forth in this Section 5.17(b) shall be
reduced by the total aggregate amount of funding for charitable causes by the
May Department Stores Company Foundation during the same time period.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. Each of the Company Stockholder
Approval and the Parent Stockholder Approval shall have been obtained.
(b) No Orders or Injunctions. None of the parties hereto shall be
subject to any order or injunction of any Governmental Entity of competent
jurisdiction that prohibits the consummation of the Merger; provided, however,
that prior to asserting this condition, each of the parties shall have used its
reasonable best efforts to prevent the entry of any such order or injunction and
to appeal as promptly as possible any such order or injunction that may be
entered.
(c) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(d) HSR. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(e) NYSE Listing. The shares of Parent Common Stock issuable to
the Company's stockholders as contemplated by this Agreement must shall have
been approved for listing on the NYSE, subject to official notice of issuance.
Section 6.2 Conditions to Obligations of Parent and Merger Sub.
The obligation of Parent and Merger Sub to effect the Merger is
further subject to satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth herein shall be true and correct in all
respects (without giving effect to any materiality or material adverse effect
qualifications contained therein) both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct would not
reasonably be expected to have or result in, individually or in the aggregate, a
material adverse effect on the Company.
(b) Performance of Obligations of the Company. The Company shall
have performed (i) in all material respects all of its obligations (other than
pursuant to Section 4.1(a)) required to be performed by it under this Agreement
at or prior to the Closing Date and (ii) in all respects all of its obligations
required to be performed by it under Section 4.1(a) at or prior to the Closing
Date, except where the failure to perform such obligations would not reasonably
be expected to have or result in, individually or in the aggregate, a material
adverse effect on the Company. Notwithstanding the foregoing, the delivery of
the comfort letters by Deloitte & Touche contemplated by Section 5.2 is not a
condition to Parent's obligation to effect the Merger.
(c) Officer's Certificate. The Company shall have furnished Parent
with a certificate dated the Closing Date signed on its behalf by an executive
officer to the effect that the conditions set forth in Sections 6.2(a) and
6.2(b) have been satisfied.
(d) Tax Opinion. Parent shall have received from Xxxxx Day,
counsel to Parent, an opinion dated as of the Closing Date, to the effect that
the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and Parent
and the Company will each be a party to such reorganization within the meaning
of Section 368(b) of the Code. In rendering such opinion, counsel for Parent may
require delivery of, and rely upon, the Tax Certificates.
Section 6.3 Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth herein shall be true and correct
in all respects (without giving effect to any materiality or material adverse
effect qualifications contained therein) both when made and at and as of the
Closing Date, as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and correct would
not reasonably be expected to have or result in, individually or in the
aggregate, a material adverse effect on Parent and Merger Sub.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed (i) in all material respects all
obligations (other than pursuant to Section 4.1(b)) required to be performed by
it under this Agreement at or prior to the Closing Date and (ii) in all respects
all of its obligations required to be performed by it under Section 4.1(b) at or
prior to the Closing Date, except where the failure to perform such obligations
would not reasonably be expected to have or result in, individually or in the
aggregate, a material adverse effect on Parent. Notwithstanding the foregoing,
the delivery of the comfort letters by KPMG contemplated by Section 5.3 is not a
condition to the Company's obligation to effect the Merger.
(c) Officer's Certificate. Each of Parent and Merger Sub shall
have furnished the Company with a certificate dated the Closing Date signed on
its behalf by an executive officer to the effect that the conditions set forth
in Sections 6.3(a) and 6.3(b) have been satisfied.
(d) Tax Opinion. The Company shall have received from Skadden,
Arps, Slate, Meagher, & Xxxx LLP, counsel to the Company, an opinion dated as of
the Closing Date, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and Parent
and the Company will each be a party to such reorganization within the meaning
of Section 368(b) of the Code. In rendering such opinion, counsel for the
Company may require delivery of, and rely upon, the Tax Certificates.
Section 6.4 Frustration of Closing Conditions. Neither Parent nor
Merger Sub nor the Company may rely on the failure of any condition set forth in
Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was
caused by such party's failure to comply with its obligations to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.5.
ARTICLE VII
TERMINATION
Section 7.1 Termination.
(a) Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after the
Company Stockholder Approval or the Parent Stockholder Approval, by mutual
written consent of Parent, Merger Sub and the Company.
(b) Termination by Parent or the Company. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after the
Company Stockholder Approval or the Parent Stockholder Approval, by written
notice of either Parent or the Company:
(i) if the Merger has not been consummated by October 3,
2005, or such later date, if any, as Parent and the Company agree upon in
writing (as such date may be extended, the "OUTSIDE DATE"); provided,
however, that the right to terminate this Agreement pursuant to this
Section 7.1(b)(i) is not available to any party whose breach of any
provision of this Agreement results in or causes the failure of the Merger
to be consummated by such time; provided further, however, that if on the
Outside Date the conditions to the Closing set forth in Sections 6.1(b) or
6.1(d) shall not have been fulfilled (and Section 7.1(b)(iv) is not
applicable) but all other conditions to the Closing either have been
fulfilled or are then capable of being fulfilled, then the Outside Date
shall, without any action on the part of the parties hereto, be extended
to August 31, 2006, and such date shall become the Outside Date for
purposes of this Agreement;
(ii) if the Company Stockholders Meeting (including any
adjournment or postponement thereof) has concluded, the Company's
stockholders have voted and the Company Stockholder Approval was not
obtained; or
(iii) if the Parent Stockholders Meeting (including any
adjournment or postponement thereof) has concluded, Parent's stockholders
have voted and the Parent Stockholder Approval was not obtained; or
(iv) if any Governmental Entity of competent jurisdiction
issues an order or injunction that permanently prohibits the Merger and
such order or injunction has become final and non-appealable; provided,
however, that the right to terminate this Agreement pursuant to this
Section 7.1(b)(iv) is not available to any party whose breach of any
provision of this Agreement results in or causes such order or injunction
or who has not used its reasonable best efforts to prevent the entry of
such order or injunction or to appeal or lift such order or injunction.
(c) Termination by Parent. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval or the Parent Stockholder Approval, by written notice of
Parent:
(i) if the Company (A) has breached or failed to perform any
of its covenants or other agreements contained in this Agreement to be
complied with by the Company such that the closing condition set forth in
Section 6.2(b) would not be satisfied or (B) there exists a breach of any
representation or warranty of the Company contained in this Agreement such
that the closing condition set forth in Section 6.2(a) would not be
satisfied and, in the case of both (A) and (B), such breach or failure to
perform (1) is not cured within 60 days after receipt of written notice
thereof or (2) is incapable of being cured by the Company by the Outside
Date; or
(ii) if the Board of Directors of the Company or any
committee thereof has made a Company Adverse Recommendation Change.
(d) Termination by the Company. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after the Company
Stockholder Approval or the Parent Stockholder Approval, by written notice of
the Company.
(i) if either Parent or Merger Sub (A) has breached or
failed to perform any of its covenants or other agreements contained in
this Agreement to be complied with by Parent or Merger Sub such that the
closing condition set forth in Section 6.3(b) would not be satisfied, or
(B) there exists a breach of any representation or warranty of Parent or
Merger Sub contained in this Agreement such that the closing condition set
forth in Section 6.3(a) would not be satisfied and, in the case of both
(A) and (B), such breach or failure to perform (1) is not cured within 60
days after receipt of written notice thereof or (2) is incapable of being
cured by Parent by the Outside Date;
(ii) if, prior to receipt of the Company Stockholder
Approval, the Company (A) receives a Superior Proposal, (B) shall have
given Parent a Notice of Adverse Recommendation, and (C) shall have
thereafter satisfied the conditions for making a Company Adverse
Recommendation Change in accordance with Section 4.2(c); provided,
however, that such termination shall not be effective until such time as
payment of the Termination Fee required by Section 7.3(b) shall have been
made by the Company; provided further, however, that the Company's right
to terminate this Agreement under this Section 7.1(d)(ii) shall not be
available if the Company is then in material breach of Section 4.2;
(iii) if the Board of Directors of Parent or any committee
thereof has made a Parent Adverse Recommendation Change.
Section 7.2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement will forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Sub or the Company, other than the
provisions of the Confidentiality Agreement, this Section 7.2, Section 7.3 and
Article VIII, which provisions shall survive such termination; provided,
however, that nothing herein will relieve any party from any liability for any
willful and material breach by such party of this Agreement.
Section 7.3 Fees and Expenses.
(a) Division of Fees and Expenses. Except as provided in this
Section 7.3, all Expenses incurred in connection with the Merger, this Agreement
and the transactions contemplated hereby will be paid by the party incurring
such Expenses, whether or not the Merger is consummated, except that (i) each of
Parent and the Company will bear and pay one-half of the costs and expenses
incurred in connection with the filing, printing and mailing of the Form S-4 and
the Joint Proxy Statement (including SEC filing fees) and (ii) any real estate
transfer, gain or other similar Taxes to the Company or any of the Company
Subsidiaries resulting from the transactions contemplated by this Agreement
shall be borne by the Company. Parent shall not reimburse the Company, directly
or indirectly, for any payment made by the Company pursuant to this Section
7.3(a). As used in this Agreement, "EXPENSES" includes all out-of-pocket fees
and expenses (including all fees and expenses of accountants, investment
bankers, counsel, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby.
(b) Termination Fee Payable By Company. In the event that this
Agreement (i) is terminated pursuant to Section 7.1(c)(ii), (ii) is terminated
pursuant to Section 7.1(d)(ii), or (iii) is terminated pursuant to Section
7.1(b)(i), Section 7.1(b)(ii) or Section 7.1(c)(i) and at such time of
termination Parent is not in breach in any material respect of any of its
representations, warranties or covenants contained in this Agreement and (A)
prior to such termination, any person publicly announces a Company Takeover
Proposal which shall not have been withdrawn and (B) within 12 months of such
termination the Company or any of the Company Subsidiaries enters into a
definitive agreement with respect to, or consummates, any Company Takeover
Proposal, then the Company shall (1) in the case of termination pursuant to
clause (i) or (ii) of this Section 7.3(b), promptly, but in no event later than
two Business Days after the date of such termination, or (2) in the case of
termination pursuant to clause (iii) of this Section 7.3(b), upon the earlier to
occur of the execution of such definitive agreement and such consummation, pay
Parent a non-refundable fee equal to $350,000,000 (the "TERMINATION FEE"),
payable by wire transfer of same day funds to an account designated in writing
to the Company by Parent.
(c) Termination Fees Payable By Parent. In the event that this
Agreement is terminated pursuant to Section 7.1(d)(iii), then Parent shall,
promptly, but in no event later than two Business Days after the date of such
termination, pay the Company a non-refundable fee equal to the Termination Fee,
payable by wire transfer of same day funds to an account designated in writing
to Parent by the Company. In the event that this Agreement is terminated
pursuant to Section 7.1(b)(i) and at the time of any such termination all of the
conditions set forth in Article VI have been satisfied or waived except for (1)
any of the conditions set forth in Sections 6.1(b) and 6.1(d), (2) any of the
conditions set forth in Sections 6.1(e) or 6.2(d) if, at the time of such
termination, such conditions are capable of being satisfied, and (3) such other
conditions that are capable of being satisfied on the date of termination but,
by their terms, cannot be satisfied until the Closing Date, then Parent shall
promptly, but in no event later than two Business Days after the date of such
termination, pay the Company a non-refundable fee equal to $350,000,000, payable
by wire transfer of same day funds to an account designated in writing to Parent
by the Company. In the event that this Agreement is terminated pursuant to
Section 7.1(b)(iv) and at the time of any such termination all of the conditions
set forth in Article VI have been satisfied or waived except for (1) any of the
conditions set forth in Sections 6.1(b) and 6.1(d), (2) any of the conditions
set forth in Sections 6.1(e) or 6.2(d), if at the time of such
termination, such conditions are capable of being satisfied, and (3) such other
conditions that are capable of being satisfied on the date of termination but,
by their terms, cannot be satisfied until the Closing Date, then the Parent
shall promptly, but in no event later than two Business Days after the date of
such termination, pay the Company a non-refundable fee equal to the product of
(x) $20,000,000 and (y) the quotient (rounded to the fourth decimal point)
determined by dividing (1) the number of calendar days between the date hereof
and the date of such termination by (2) 30, provided that the amount of such fee
shall not be less than $150,000,000 or more than $350,000,000. The
non-refundable fee referred to in the previous sentence shall be payable by wire
transfer of same day funds to an account designated in writing to Parent by the
Company.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement will survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
Section 8.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement must be in writing and will be deemed
given if delivered personally, telecopied (which is confirmed by telephone) or
sent by a nationally recognized overnight courier service (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as is specified by like notice):
if to the Company, to:
The May Department Stores Company
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
with a copy to:
Skadden, Arps, Slate, Meagher, & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
if to Parent or Merger Sub, to:
Federated Departments Stores, Inc.
0 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx
with a copy to:
Xxxxx Day
Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
Section 8.3 Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference is to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents, table of defined terms and headings contained in this
Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they will be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement will have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes. The
parties hereto have participated jointly in the negotiating and drafting of this
Agreement and, in the event an ambiguity or question of intent arises, this
Agreement shall be construed as jointly drafted by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement. For purposes of
this Agreement:
(a) "AFFILIATE" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract or otherwise;
(b) "KNOWLEDGE" of any person that is not a natural person means
the actual knowledge of such person's executive officers;
(c) "LAW" means any foreign, federal, state or local law, statute,
code, ordinance, regulation, legally binding rule or other legally enforceable
obligation imposed by a court or other Governmental Entity;
(d) "LEASES" means all leases of real property leased by the
Company or any of its subsidiaries;
(e) "LIENS" means all pledges, claims, liens, options, charges,
mortgages, easements, restrictions, covenants, conditions of record,
encroachments, encumbrances and security interests of any kind or nature
whatsoever;
(f) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
when used in connection with the Company or Parent (including references to the
"Representing Party"), as the case may be, any change, effect, event, occurrence
or state of facts that is, or would reasonably be expected to be, materially
adverse to the business, financial condition, or results of operations of such
party and its subsidiaries taken as a whole, other than any changes, effects,
events, occurrences or state of facts relating to (i) the economy or financial
markets in general, (ii) the industry in which such party and its subsidiaries
operate in general, (iii) negotiation and entry into this Agreement, the
announcement of this Agreement or the undertaking and performance or observance
of the obligations contemplated by this Agreement or necessary to consummate the
transactions contemplated hereby (including adverse effects on results of
operations attributable to the uncertainties associated with the period between
the date hereof and the Closing Date), (iv) the effect of incurring and paying
Expenses in connection with negotiating, entering into, performing and
consummating the transactions contemplated by this Agreement, (v) changes in
applicable Laws after the date hereof and (vi) changes in GAAP after the date
hereof; provided, that with respect to clauses (i) and (ii) such changes,
effects, events, occurrences or state of facts do not disproportionately affect
such persons relative to the other participants in the industries in which such
persons operate; provided, further, that, for the avoidance of doubt, compliance
with (and the consequences thereof) the terms of this Agreement (including
Section 5.5) shall not be taken into account in determining whether a material
adverse change or material adverse effect shall have occurred or shall be
expected to occur for any and all purposes of this Agreement; and provided,
further, that it is understood and agreed that the terms "material" and
"materially" have correlative meanings;
(g) "PERMITTED LIENS" means (i) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business relating to obligations that are not delinquent or that are being
contested in good faith by the relevant party or any subsidiary of it and for
which the relevant party or a subsidiary of it has established adequate
reserves, (ii) Liens for Taxes that are not due and payable, that are being
contested in good faith by appropriate proceedings or that may thereafter be
paid without interest or penalty, (iii) Liens that are reflected as liabilities
on the balance sheet of the relevant party and its consolidated subsidiaries as
of October 30, 2004, contained in its SEC Documents or the existence of which is
referred to in the notes to such balance sheet and (iv) Liens that, individually
or in the aggregate, do not materially impair, and would not reasonably be
expected materially to impair, the value or the continued use and operation of
the assets to which they relate;
(h) "PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, Governmental Entity or other entity (including its permitted
successors and assigns); and
(i) a "SUBSIDIARY" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interest of which) is owned directly or indirectly by such first
person.
Section 8.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which will be considered one and the same agreement
and will become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments relating to the Merger
referred to herein) and the Confidentiality Agreement, taken together with the
Company Disclosure Letter and Parent Disclosure Letter, (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Section 5.7, Section 5.14 and the
applicable provisions of Schedule 5.14(d), are not intended to confer upon any
person other than the parties any rights or remedies. Notwithstanding clause (b)
of the immediately preceding sentence, following the Effective Time the
provisions of Article II shall be enforceable by holders of Company
Certificates.
Section 8.6 Governing Law. This Agreement is to be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Section 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned, in whole
or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties. Any assignment in
violation of this Section 8.7 will be void and of no effect. Subject to the
preceding two sentences, this Agreement is binding upon, inures to the benefit
of, and is enforceable by, the parties and their respective successors and
assigns.
Section 8.8 Consent to Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereto (i) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the state of Delaware or a Delaware state court.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8.8(b).
Section 8.9 Specific Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. The parties accordingly agree that the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
federal court located in the State of Delaware or a Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 8.10 Amendment. This Agreement may be amended by the parties
at any time before or after the Company Stockholder Approval or the Parent
Stockholder Approval; provided, however, that, after such approval, there is not
to be made any amendment that by Law or stock exchange regulation requires
further approval by the stockholders of the Company or the stockholders of
Parent, as applicable, without further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
Section 8.11 Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.10, waive compliance by the other parties with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
will not constitute a waiver of such rights.
Section 8.12 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to
the extent possible.
(SIGNATURES ARE ON THE FOLLOWING PAGE.)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
THE MAY DEPARTMENT STORES COMPANY
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Acting Chairman and
Chief Executive Officer
FEDERATED DEPARTMENT STORES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board, President and
Chief Executive Officer
MILAN ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President and Secretary
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
_____________ , 200_
FEDERATED DEPARTMENT STORES, INC.
0 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
***Pursuant to the terms of the Agreement and Plan of Merger, dated as of
February 27, 2005 (the "MERGER AGREEMENT"), by and among THE MAY DEPARTMENT
STORES COMPANY, a Delaware corporation (the "COMPANY"), MILAN ACQUISITION CORP.,
a Delaware corporation ("MERGER SUB"), and FEDERATED DEPARTMENT STORES, INC., a
Delaware corporation ("PARENT"), the Company will merge with and into Merger Sub
(the "MERGER"), with Merger Sub as the surviving corporation. As a result of the
Merger, the undersigned may receive shares of common stock, par value $0.01 per
share, of Parent ("PARENT COMMON STOCK") in exchange for shares owned by the
undersigned of common stock, par value $0.50 per share, of the Company (the
"COMPANY COMMON STOCK").
The undersigned has been advised that the undersigned may be deemed an
"AFFILIATE" of the Company, as such the term is defined for purposes of
paragraphs (c) and (d) of Rule 145 ("RULE 145") promulgated under the Securities
Act of 1933 (the "SECURITIES ACT") by the Securities and Exchange Commission
(the "SEC"). However, it is understood and agreed that the execution and
delivery of this letter agreement by the undersigned shall not be deemed an
admission that the undersigned is an "affiliate" of the Company or as a waiver
of any rights the undersigned may have to object to any claim that the
undersigned is such an affiliate on or after the date of this letter. If in fact
the undersigned is an affiliate of the Company under the Securities Act, the
undersigned's ability to sell, assign or transfer Parent Common Stock received
by the undersigned in exchange for any shares of the Company Common Stock in
connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d) promulgated
under the Securities Act. The undersigned understands that Parent is under no
obligation to register the sale, assignment, transfer or other disposition of
Parent Common Stock to be received by the undersigned in the Merger or to take
any other action necessary in order to make compliance with an exemption from
such registration available.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign, transfer or otherwise dispose of any Parent
Common Stock received by the undersigned in exchange for shares of the Company
Common Stock in connection with the Merger except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 promulgated under the Securities Act or
(iii) in a transaction which, in the opinion of counsel, or as described in a
"no-action" or interpretive letter from the Staff of the SEC specifically issued
with respect to a transaction to be engaged in by the undersigned, is not
required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of the
shares of Parent Common Stock pursuant to Rule 145, the undersigned will supply
Parent with evidence of compliance with such Rule, in the form of a letter in
the form of Annex I hereto or the opinion of counsel or no-action letter
referred to above. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any shares of Parent Common Stock
disposed of by the undersigned, but that (provided such transfer is not
prohibited by any other provision of this letter agreement) upon receipt of such
evidence of compliance, the transfer agent shall effectuate the transfer of such
shares indicated as sold, transferred or otherwise disposed of in such letter.
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the sale, assignment, transfer or other disposition of Parent Common Stock
and (ii) the receipt by Parent of this letter is an inducement to Parent's
obligations to consummate the Merger.
Very truly yours,
________________________________
[Name]
Agreed to and accepted
FEDERATED DEPARTMENT STORES, INC.
By: ___________________________________
Name:
Title:
-2-
Annex I
_____________ , 200_
FEDERATED DEPARTMENT STORES, INC.
0 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
On ____________, the undersigned sold ___________ shares of common stock
("Common Stock") of FEDERATED DEPARTMENT STORES, INC., a Delaware corporation
(the "Company"), received by it in connection with the merger of THE MAY
DEPARTMENT STORES COMPANY, a Delaware corporation, and MILAN ACQUISITION CORP.,
a Delaware corporation and a wholly-owned subsidiary of the Company.
The undersigned represents that the Common Stock has been sold in
conformity with Rule 145 and the undersigned has complied with its covenants in
the affiliate letter between the Company and the undersigned dated ___________,
200_. Based upon the most recent report or statement filed by the Company with
the Securities and Exchange Commission, the shares of Common Stock sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933 (the "Act").
The undersigned hereby represents that the above-described shares of
Common Stock were sold in "brokers' transactions" within the meaning of Section
4(4) of the Act or in transactions directly with a "market maker" as the term is
defined in Section (3)(a)(38) of the Securities Exchange Act of 1934. The
undersigned further represents that it has not solicited or arranged for the
solicitation of orders to buy the above-described shares of Common Stock, and
that the undersigned has not made any payment in connection with the offer or
sale of such shares to any person other than to the broker who executed the
order in respect of such sale.
Very truly yours,
________________________________
[Name]
A-1
