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