EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
BADGER RETAIL HOLDING, INC.,
BADGER ACQUISITION CORP.
and
SHOPKO STORES, INC.
Dated as of April 7, 2005
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER
Section 1.1 The Merger .......................................................................... 4
Section 1.2 Closing ............................................................................. 4
Section 1.3 Effective Time ...................................................................... 5
ARTICLE II EFFECTS OF THE MERGER
Section 2.1 Effects of the Merger ............................................................... 5
Section 2.2 Articles of Incorporation ........................................................... 5
Section 2.3 Bylaws .............................................................................. 5
Section 2.4 Officers ............................................................................ 5
Section 2.5 Directors ........................................................................... 6
Section 2.6 Cancellation of Treasury Stock and Parent Owned Stock;
Conversion of Common Stock Owned by the Company's
Subsidiaries ........................................................................ 6
Section 2.7 Conversion of Company Common Stock .................................................. 6
Section 2.8 Conversion of the Capital Stock of Acquisition Sub. ................................. 6
Section 2.9 Option Consideration ................................................................ 6
Section 2.10 Exchange of Certificates ............................................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization ........................................................................ 10
Section 3.2 Authorization ....................................................................... 10
Section 3.3 Consents and Approvals; No Violations ............................................... 11
Section 3.4 Capitalization ...................................................................... 12
Section 3.5 Subsidiaries ........................................................................ 14
Section 3.6 SEC Documents ....................................................................... 14
Section 3.7 Financial Statements; No Undisclosed Liabilities .................................... 15
Section 3.8 Proxy Statement; Schedule 13E-3 ..................................................... 16
Section 3.9 Absence of Material Adverse Changes, etc ............................................ 16
Section 3.10 Taxes ............................................................................... 16
Section 3.11 Employee Benefit Plans .............................................................. 17
Section 3.12 Environmental Matters ............................................................... 18
Section 3.13 Litigation; Compliance with Laws .................................................... 19
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Section 3.14 Intellectual Property ............................................................... 20
Section 3.15 Material Contracts .................................................................. 21
Section 3.16 Insurance ........................................................................... 22
Section 3.17 Real Estate; Assets ................................................................. 22
Section 3.18 Labor and Employment ................................................................ 24
Section 3.19 Opinion of Financial Advisors ....................................................... 25
Section 3.20 Finders' and Other Fees ............................................................. 25
Section 3.21 Rights Amendment .................................................................... 26
Section 3.22 State Takeover Statutes ............................................................. 26
Section 3.23 Title to Assets ..................................................................... 26
Section 3.24 Affiliate Transactions .............................................................. 26
Section 3.25 Letters of Credit, Surety Bonds, Guarantees ......................................... 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Section 4.1 Organization ........................................................................ 27
Section 4.2 Authorization ....................................................................... 27
Section 4.3 Consents and Approvals; No Violations ............................................... 27
Section 4.4 Capitalization ...................................................................... 28
Section 4.5 Proxy Statement; Schedule 13E-3 ..................................................... 28
Section 4.6 Acquiror Entity's Operations ........................................................ 29
Section 4.7 Ownership of Company Common Stock ................................................... 29
Section 4.8 Financing ........................................................................... 29
Section 4.9 Brokers ............................................................................. 30
ARTICLE V COVENANTS OF THE PARTIES
Section 5.1 Conduct of the Business of the Company .............................................. 30
Section 5.2 Shareholders' Meeting; Proxy Material ............................................... 34
Section 5.3 Access to Information ............................................................... 35
Section 5.4 No Solicitation ..................................................................... 36
Section 5.5 Real Estate Transfer Taxes .......................................................... 39
Section 5.6 Director and Officer Liability ...................................................... 39
Section 5.7 Reasonable Best Efforts ............................................................. 40
Section 5.8 Certain Filings ..................................................................... 41
Section 5.9 Public Announcements ................................................................ 42
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Page
Section 5.10 State Takeover Laws ................................................................. 42
Section 5.11 Certain Notifications ............................................................... 42
Section 5.12 Financing ........................................................................... 43
Section 5.13 Solvency Letter ..................................................................... 44
Section 5.14 Shareholder Litigation .............................................................. 45
Section 5.15 Tax Covenants ....................................................................... 45
Section 5.16 Employees and Employee Benefit Plans ................................................ 45
Section 5.17 Delisting ........................................................................... 46
ARTICLE VI CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger ......................... 46
Section 6.2 Conditions to the Company's Obligation to Effect the Merger ......................... 47
Section 6.3 Conditions to Parent's and Acquisition Sub's Obligations to Effect the Merger ....... 48
ARTICLE VII TERMINATION
Section 7.1 Termination ......................................................................... 49
Section 7.2 Effect of Termination ............................................................... 50
Section 7.3 Fees and Expenses ................................................................... 51
ARTICLE VIII MISCELLANEOUS
Section 8.1 Definitions ......................................................................... 53
Section 8.2 Notices ............................................................................. 65
Section 8.3 Survival of Representations, Warranties and Covenants ............................... 66
Section 8.4 Interpretation ...................................................................... 67
Section 8.5 Amendments, Modification and Waiver ................................................. 67
Section 8.6 Successors and Assigns .............................................................. 68
Section 8.7 Specific Performance ................................................................ 68
Section 8.8 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury ..................... 68
Section 8.9 Severability ........................................................................ 69
Section 8.10 Third Party Beneficiaries ........................................................... 69
Section 8.11 Entire Agreement .................................................................... 70
Section 8.12 Counterparts; Fax Signatures; Effectiveness ......................................... 70
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AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 7, 2005 (this
"Agreement"), by and among Badger Retail Holding, Inc., a
Delaware corporation
("Parent"), Badger Acquisition Corp., a Wisconsin corporation ("Acquisition
Sub"), and ShopKo Stores, Inc., a Wisconsin corporation (the "Company")
(Acquisition Sub and the Company being hereinafter collectively referred to as
the "Constituent Corporations").
WITNESSETH:
WHEREAS, the Board of Directors of the Company (the "Company
Board"), based upon the unanimous recommendation of a special committee thereof
consisting solely of disinterested directors (the "Special Committee"), has
approved and adopted this Agreement and the transactions contemplated hereby,
including the merger of Acquisition Sub with and into the Company (the
"Merger"), has determined that this Agreement and the transactions contemplated
hereby, including the Merger, are advisable to, fair to, and in the best
interests of, the holders of Company Common Stock and has resolved (subject to
the terms and conditions of this Agreement) to recommend that the holders of
Company Common Stock vote for approval of this Agreement and the transactions
contemplated hereby, including the Merger;
WHEREAS, the respective Boards of Directors of Parent and
Acquisition Sub have each approved and adopted this Agreement and the Merger;
and
WHEREAS, Parent, concurrently with the execution and delivery
of this Agreement, is approving this Agreement and the transactions contemplated
hereby, including the Merger, as the sole shareholder of Acquisition Sub.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
satisfaction or waiver (subject to Applicable Law) of the conditions set forth
in this Agreement, and in accordance with the Wisconsin Business Corporation Law
(the "WBCL"), Acquisition Sub shall be merged with and into the Company at the
Effective Time and the separate corporate existence of Acquisition Sub shall
thereupon cease. Following the Effective Time, the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
Section 1.2 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., local time, on the second Business Day after
satisfaction or waiver (subject to Applicable Law) of the conditions set forth
in Article VI (other than
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those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver (subject to Applicable Law) of those
conditions), unless this Agreement has been theretofore terminated pursuant to
its terms or unless another time or date is agreed to in writing by the parties
hereto (the actual date of the Closing being referred to herein as the "Closing
Date"). The Closing shall be held at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 000 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, unless
another place is agreed to in writing by the parties hereto.
Section 1.3 Effective Time. The Merger shall become effective
at the close of business on the date when articles of merger relating to the
Merger (the "Articles of Merger"), in such form as required by and executed in
accordance with the relevant provisions of the WBCL, are duly filed with the
Department of Financial Institutions of the State of Wisconsin, or at such other
date and time as the Constituent Corporations shall agree should be specified in
the Articles of Merger. When used in this Agreement, the term "Effective Time"
means the later of the close of business on the date when the Articles of Merger
are duly filed or such later date and time established by the Articles of
Merger. The filing of the Articles of Merger shall be made as soon as
practicable after the satisfaction or waiver (subject to Applicable Law) of the
conditions to the Merger set forth in Article VI.
ARTICLE II
EFFECTS OF THE MERGER
Section 2.1 Effects of the Merger. The Merger shall have the
effects set forth in Section 180.1106 of the WBCL. Without limiting the
generality of the foregoing, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Acquisition Sub shall vest
in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Acquisition Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
Section 2.2 Articles of Incorporation. At the Effective Time,
the articles of incorporation of the Surviving Corporation shall be amended and
restated in their entirety to read as the articles of incorporation of
Acquisition Sub, until thereafter changed or amended as provided therein or by
Applicable Law, except that Article I thereof shall be amended to read as
follows: "The name of the Corporation is ShopKo Stores, Inc."
Section 2.3 Bylaws. At the Effective Time, the bylaws of the
Surviving Corporation shall be amended and restated in their entirety to read as
the bylaws of Acquisition Sub, until thereafter changed or amended as provided
therein, by Applicable Law or the articles of incorporation of the Surviving
Corporation; provided, that the bylaws of the Surviving Corporation shall
contain indemnification provisions consistent with the obligations set forth in
Section 5.6(a).
Section 2.4 Officers. From and after the Effective Time, the
officers of the Company immediately prior to the Effective Time shall be the
officers of the
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Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
Section 2.5 Directors. From and after the Effective Time, the
directors of Acquisition Sub shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 2.6 Cancellation of Treasury Stock and Parent Owned
Stock; Conversion of Common Stock Owned by the Company's Subsidiaries. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof, (i) each share of Common Stock, par value $.01 per share, of
the Company (the "Company Common Stock") that is held by the Company as a
"treasury share" (as defined in Section 180.0103 of the WBCL) shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be paid or delivered in exchange therefor, (ii) each issued
and outstanding share of Company Common Stock that is owned by Parent or
Acquisition Sub shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be
paid or delivered in exchange therefor, and (iii) each issued and outstanding
share of Company Common Stock owned by a Subsidiary of the Company shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation (the
"Surviving Corporation Common Stock").
Section 2.7 Conversion of Company Common Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder thereof, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled or
converted in accordance with Section 2.6) shall be converted into the right to
receive $24.00 in cash (the "Merger Consideration"). As of the Effective Time,
all such shares of Company Common Stock shall no longer remain outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate that immediately prior to the Effective Time represented
such shares of Company Common Stock (a "Certificate") shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration to be paid in consideration therefor upon surrender of such
Certificate in accordance with Section 2.10, without interest or dividends.
Section 2.8 Conversion of the Capital Stock of Acquisition
Sub. At the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, each issued and outstanding share of capital
stock of Acquisition Sub shall be converted into and become one validly issued,
fully paid and nonassessable (to the extent such concepts are applicable, and
except, if applicable, as otherwise provided in Section 180.0622(2)(b) of the
WBCL) share of Surviving Corporation Common Stock.
Section 2.9 Option Consideration. Each Company Stock Option
which is outstanding immediately prior to the Effective Time, whether or not
exercisable, shall be canceled, effective as of the Effective Time, in exchange
for a single lump sum cash payment from the Surviving Corporation (less any
applicable income or employment Tax
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withholding) equal to the product of (i) the number of shares of Company Common
Stock subject to such Company Stock Option immediately prior to the Effective
Time and (ii) the excess, if any, of the Merger Consideration over the exercise
price per share of such Company Stock Option (the "Option Consideration");
provided, that if the exercise price per share of any such Company Stock Option
is equal to or greater than the Merger Consideration, such Company Stock Option
shall be canceled without any cash payment being made in respect thereof. Prior
to the Closing, the Company, in consultation with Parent, shall take or cause to
be taken any and all actions reasonably necessary, including the amendment of
the Company Stock Option Plans, and shall use its reasonable best efforts to
obtain any necessary consent of each holder of a Company Stock Option, to give
effect to the treatment of Company Stock Options pursuant to this Section 2.9,
to the extent such treatment is not expressly provided for by the terms of the
applicable Company Stock Option Plans and related award agreements.
Section 2.10 Exchange of Certificates. (a) Paying Agent. Prior
to the Effective Time, a bank or trust company reasonably acceptable to the
Company, shall be designated by Parent to act as the Paying Agent (the "Paying
Agent") for payment of the Merger Consideration.
(b) Deposit with Paying Agent. At the Effective Time,
Parent shall cause the Surviving Corporation to, and the Surviving Corporation
shall, deposit or cause to be deposited with the Paying Agent, separate and
apart from its other funds, as a trust fund for the benefit of the holders of
issued and outstanding shares of Company Common Stock, other than such shares
held by Parent, Acquisition Sub, or any Subsidiary of the Company (each, a
"Holder"), cash in the amount equal to the aggregate Merger Consideration which
Holders are entitled to receive pursuant to this Article II, with irrevocable
instructions and authority to such Paying Agent to pay to each respective
Holder, as evidenced by a list of such Holders certified by an officer of the
Company or the Company's transfer agent, for each share of Company Common Stock,
the Merger Consideration upon surrender of their respective Certificates as
provided herein. Except as provided in Sections 2.10(c), 2.10(d) and 2.10(e),
any such deposit of funds shall be irrevocable.
(c) Exchange Procedures. As soon as practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of a Certificate or Certificates, (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 proper delivery of the Certificates to the
Paying Agent and which shall be in the form and have such other customary
provisions as Parent and the Surviving Corporation may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the cash (pursuant to Section 2.7) to be received by the holder thereof
pursuant to this Agreement. Upon surrender of a Certificate for cancellation to
the Paying Agent, together with a letter of transmittal duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive promptly in exchange
therefor the Merger Consideration for each share of Company Common Stock
formerly represented by such Certificate, to be mailed within three (3)
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Business Days of receipt thereof, and the Certificate so surrendered shall be
forthwith cancelled. The Paying Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Paying Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. No interest shall be paid or accrued for the benefit of holders of
the Certificates on the Merger Consideration payable upon the surrender of the
Certificates. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter, there shall be no further registration of
transfers of shares of Company Common Stock theretofore outstanding on the
records of the Company. If Certificates are presented to the Company for
transfer following the Effective Time, they shall be canceled against delivery
of the Merger Consideration. All cash paid upon conversion of shares of Company
Common Stock in accordance with the terms of this Article II shall be deemed to
have been paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock.
(d) Termination of Merger Fund. Any portion of the
Merger Consideration deposited with the Paying Agent pursuant to this Section
2.10 and any interest received with respect thereto (the "Merger Fund") that
remains undistributed to the holders of the Certificates for nine (9) months
after the Effective Time shall be delivered to Parent, upon, and in accordance
with, any demand by Parent therefor, and any holders of Certificates who have
not theretofore complied with this Section 2.10 shall thereafter look, as
general creditors thereof, only to Parent for payment of the Merger
Consideration with respect to such Certificates.
(e) No Liability. None of Parent, Acquisition Sub,
the Surviving Corporation, any of their respective Affiliates or the Paying
Agent shall be liable to any Person in respect of any cash held in the Merger
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificate shall not have been
surrendered prior to two (2) years after the Effective Time (or immediately
prior to such earlier date on which any cash in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Entity),
any such cash in respect of such Certificate shall, to the extent permitted by
Applicable Law, become the property of Parent, free and clear of all claims or
interest of any Person previously entitled thereto.
(f) Investment of Merger Fund. The Paying Agent shall
invest the cash included in the Merger Fund as directed by Parent; provided,
that such investments shall be in obligations of or guaranteed by the United
States of America, in commercial paper obligations rated A-1 or P-1 or better by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation, respectively,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1,000,000,000. Any
interest or other income resulting from such investments shall be paid to
Parent; provided, that any such investment or any such payment of interest or
other income may not delay the receipt by Holders of any Merger Consideration.
If for any reason (including losses) the cash in the Merger Fund shall be
insufficient to fully satisfy all of the payment obligations to be made by the
Paying Agent hereunder, Parent shall promptly deposit cash into the Merger Fund
in an amount which
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is equal to the deficiency in the amount of cash required to fully satisfy such
payment obligations.
(g) Transfer Taxes. If any cash is to be remitted to
a Person (other than the Person in whose name the Certificate surrendered in
exchange therefor is registered), it shall be a condition of such exchange that
the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the Person requesting such exchange shall pay
to the Paying Agent any transfer or other Taxes required by reason of the
payment of the Merger Consideration to a Person other than the registered holder
of the Certificate so surrendered, or shall establish to the satisfaction of the
Paying Agent that such Tax either has been paid or is not applicable.
(h) Withholding Rights. Each of the Surviving
Corporation, Parent and the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any Person such amounts as are required to be deducted and withheld with respect
to the making of such payment under the Code or any provisions of applicable
state, local or foreign Tax law. Without limiting the generality of the
foregoing, any amounts payable pursuant to Section 2.9 shall be subject to
reduction for all applicable Tax withholdings and other withholdings required by
Applicable Law. To the extent that amounts are so deducted and withheld and paid
over to the appropriate Taxing authority by the Surviving Corporation, Parent or
the Paying Agent, such deducted and withheld amounts shall be treated for all
purposes of this Agreement as having been paid to such Person in respect of
which such deduction and withholding was made by the Surviving Corporation,
Parent or the Paying Agent.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to which the holder thereof is entitled
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as set forth in the corresponding section of the
Company Disclosure Letter, it being understood that matters disclosed pursuant
to one section of the Company Disclosure Letter shall be deemed disclosed with
respect to any other section of the Company Disclosure Letter where it is
reasonably apparent that the matters so disclosed are applicable to such other
sections, or (ii) solely with respect to actions taken after the date of this
Agreement, expressly required under this Agreement or any agreement contemplated
hereby, the Company hereby represents and warrants to Parent and to Acquisition
Sub as follows:
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Section 3.1 Organization. The Company and each of its
Subsidiaries are duly organized, validly existing and in good standing under the
laws of the jurisdiction of their respective organization and have the requisite
power and authority to own, lease and operate their respective properties and to
carry on their respective businesses as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. The Company and each of its
Subsidiaries are duly qualified or licensed to do business and are in good
standing in each jurisdiction in which the nature of their respective businesses
or the ownership, leasing or operation of their respective properties makes such
qualification or licensing necessary, other than where the failure to be so duly
qualified, licensed and in good standing, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect. The
Company has heretofore made available to Parent and Acquisition Sub true and
complete copies of its articles of incorporation (the "Company Articles") and
by-laws (the "Company Bylaws") and the charter and bylaws (or similar
organizational documents) of each of its Significant Subsidiaries, in each case
as currently in effect.
Section 3.2 Authorization.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and (subject to receipt of the
Company Shareholder Approval), to perform its obligations hereunder. The
execution and delivery of this Agreement and the performance of its obligations
hereunder have been duly and validly authorized by all necessary corporate
action (subject to receipt of the Company Shareholder Approval). This Agreement
has been duly executed and delivered by the Company, and constitutes, assuming
due authorization, execution and delivery of this Agreement by Parent and
Acquisition Sub, a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(b) The Special Committee, at a meeting duly called
and held, has by unanimous vote of all its members duly adopted resolutions (i)
approving and adopting this Agreement and the transactions contemplated hereby,
including the Merger, subject to approval and adoption by the Company Board,
(ii) determining that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable to, fair to and in the best interests of,
the holders of Company Common Stock, (iii) recommending this Agreement to the
Company Board for approval and adoption and (iv) resolving (subject to the terms
and conditions of this Agreement) to recommend that the holders of Company
Common Stock vote for approval of this Agreement and the transactions
contemplated hereby, including the Merger. Such resolutions have not been
subsequently rescinded, modified or amended in any way, subject to Section 5.2
and Section 5.4. The Company Board, at a meeting duly called and held, based
upon the recommendation of the Special Committee, has duly adopted resolutions
(i) approving and adopting this Agreement and the transactions contemplated
hereby, including the
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Merger, and determining that this Agreement and the transactions contemplated
hereby, including the Merger, are advisable to, fair to and in the best
interests of, the holders of Company Common Stock and (ii) resolving (subject to
the terms and conditions of this Agreement) to recommend that the holders of
Company Common Stock vote for the approval of this Agreement and the
transactions contemplated hereby, including the Merger. Such resolutions have
not been subsequently rescinded, modified or amended in any way, subject to
Section 5.2 and Section 5.4.
(c) The affirmative vote of a majority of the votes
represented by the shares of Company Common Stock entitled to vote on the
approval of this Agreement in accordance with Section 180.1103 of the WBCL (the
"Company Shareholder Approval") is the only vote of the Company's shareholders
required to approve this Agreement and the transactions contemplated hereby,
including the Merger.
Section 3.3 Consents and Approvals; No Violations.
(a) Assuming that the Company Shareholder Approval is
obtained and that all consents, approvals, authorizations and permits described
in Section 3.3(b) have been obtained and all filings and notifications described
in Section 3.3(b) have been made and any waiting periods thereunder have
terminated or expired, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Company Articles or the Company Bylaws or of the similar
organizational documents of any Subsidiary of the Company, (ii) result in a
violation or breach of or loss of any benefit under, constitute (with or without
due notice or lapse of time or both) a change of control or default under,
require the consent or approval of or the giving of notice to a Third Party
pursuant to, or give to others any right of termination, vesting, amendment,
cancellation or acceleration or any right to purchase or right of first refusal
with respect to any asset of the Company or any of the Company's Subsidiaries or
impose on the Company or any of the Company's Subsidiaries any obligation to
repurchase, repay, redeem or acquire or any similar right or obligation under,
or result in the creation of a Lien on any property or asset of the Company or
any of the Company's Subsidiaries pursuant to, any of the terms, conditions or
provisions of any Contract to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their assets is bound or any Company
Permit or (iii) conflict with or violate any Applicable Law applicable to the
Company or any Subsidiary of the Company or by which any property or asset of
the Company or any Subsidiary of the Company is bound or affected, except, in
the case of clauses (ii) or (iii), for any such conflicts, violations, breaches,
defaults, losses of benefits, or other occurrences specified in clauses (ii) or
(iii) which would not, individually or in the aggregate, (x) reasonably be
expected to have a Company Material Adverse Effect or (y) reasonably be expected
to prevent or materially delay the performance of this Agreement by the Company
or materially impair the ability of the Company to take any action necessary to
consummate the Merger.
(b) Neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company of the
transactions
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contemplated hereby will require any consent, approval, authorization or permit
of, or filing with, or notification to, any Governmental Entity, except (i)
under the Exchange Act, the Securities Act, any applicable Blue Sky Law and the
rules and regulations of the New York Stock Exchange (the "NYSE"), (ii) under
the HSR Act and any other applicable antitrust and competition laws, (iii) the
filing and recordation of the Articles of Merger as required by the WBCL and
(iv) for such other consents, approvals, authorizations, permits, filings or
notifications, the failure of which to make or obtain, would not, individually
or in the aggregate, (x) reasonably be expected to have a Company Material
Adverse Effect or (y) reasonably be expected to prevent or materially delay the
performance of this Agreement by the Company or materially impair the ability of
the Company to take any action necessary to consummate the Merger.
Section 3.4 Capitalization.
(a) The authorized capital stock of the Company
consists of (i) 75,000,000 shares of Company Common Stock and (ii) 20,000,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
Stock"), of which 100,000 shares have been designated as Series B Junior
Participating Preferred Stock (the "Series B Preferred Stock").
(b) (i) At the close of business on April 7, 2005,
29,842,406 shares of Company Common Stock, together with the associated Rights,
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable (except as otherwise provided in Section 180.0622(2)(b) of the
WBCL) and free of preemptive rights;
(ii) At the close of business on April 7,
2005, no shares of Company Preferred Stock were issued and outstanding,
but 100,000 shares of Series B Preferred Stock have been reserved for
issuance upon the exercise of Rights;
(iii) At the close of business on April 7,
2005, 1,930,077 shares of Company Common Stock were held in the
treasury of the Company or by its Subsidiaries;
(iv) At the close of business on April 7,
2005, 234,515 shares of Company Common Stock, together with the
associated Rights, were reserved for issuance upon the exercise of
outstanding stock options issued under the Company's 1991 Stock Option
Plan (the "Company 1991 Stock Option Plan");
(v) At the close of business on April 7,
2005, 429,108 shares of Company Common Stock, together with the
associated Rights, were reserved for issuance upon the exercise of
outstanding stock options issued under the Company's 1995 Stock Option
Plan (the "Company 1995 Stock Option Plan");
12
(iv) At the close of business on April 7,
2005, 505,463 shares of Company Common Stock, together with the
associated Rights, were reserved for issuance upon the exercise of
outstanding stock options issued under the Company's 1998 Stock
Incentive Plan (the "Company 1998 Stock Incentive Plan");
(vii) At the close of business on April 7,
2005, 474,223 shares of Company Common Stock, together with the
associated Rights, were reserved for issuance upon the exercise of
outstanding stock options issued under the Company's 2001 Stock
Incentive Plan (the "Company 2001 Stock Incentive Plan"); and
(viii) At the close of business on April 7,
2005, 490,500 shares of Company Common Stock, together with the
associated Rights, were reserved for issuance upon the exercise of
outstanding stock options issued under the Company's 2004 Stock
Incentive Plan (the "Company 2004 Stock Incentive Plan").
(c) The Company has delivered to Parent a correct and
complete list as of the date set forth in Section 3.4(c) of the Company
Disclosure Letter of each outstanding option (collectively, the "Company Stock
Options") to purchase shares of Company Common Stock issued under the Company
1991 Stock Option Plan, the Company 1995 Stock Option Plan, the Company 1998
Stock Incentive Plan, the Company 2001 Stock Incentive Plan and the Company 2004
Stock Incentive Plan (collectively, the "Company Stock Option Plans") and each
outstanding share of restricted Company Common Stock that is still subject to
forfeiture conditions (collectively, the "Company Restricted Shares") granted
under the Company 1993 Restricted Stock Plan, the Company 2001 Stock Incentive
Plan and the Company 2004 Stock Incentive Plan, including the holder, date of
grant, exercise price (if applicable), number of shares of Company Common Stock
subject thereto, the Company Stock Plan under which such Company Stock Option or
Company Restricted Share, as the case may be, was granted and, with respect to
any Company Stock Option, whether the option is vested and exercisable.
(d) Except for Company Stock Options, Company
Restricted Shares and the Rights, there are no options, warrants or other rights
to acquire capital stock from the Company, and no preemptive or similar rights,
calls, agreements, commitments, arrangements, subscription or other rights,
convertible or exchangeable securities, agreements or arrangements of any
character, relating to the capital stock of the Company, obligating the Company
to issue, deliver, transfer or sell, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company or obligating the Company to grant, extend or enter
into any such option, warrant, subscription or other right, convertible or
exchangeable security, agreement, arrangement or commitment or outstanding
contractual rights to which the Company or any of its Subsidiaries is a party
the value of which is based on the value of the capital stock or other voting
securities of the Company (each of the foregoing, a "Company Convertible
Security"). Since the close of business on January 29, 2005, the
13
Company has not issued any shares of capital stock or any Company Convertible
Securities other than the issuance of Company Common Stock in connection with
the exercise of Company Stock Options or Company Restricted Shares described
above. Except as required by the terms of any Company Stock Options, there are
no outstanding obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Convertible Securities.
(e) The Company does not have any outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company on any matter ("Company
Voting Debt").
Section 3.5 Subsidiaries. Exhibit 21.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 29, 2005, as filed with
the SEC (the "Company 2004 Form 10-K") sets forth a list of all of the
Subsidiaries of the Company and their respective jurisdictions of incorporation.
All of the issued and outstanding shares of capital stock or other equity
interests of each Subsidiary of the Company are owned by the Company, by one or
more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company, free and clear of all Liens and are validly issued, fully paid
and nonassessable (to the extent such concepts are applicable, and except, if
applicable, as otherwise provided in Section 180.0622(2)(b) of the WBCL), and
there are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants with respect to any such Subsidiary's capital
stock or equity interests, including any right obligating any such Subsidiary to
issue, deliver or sell additional shares of its capital stock or other equity
interests. Except for the capital stock and equity interests of its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, joint
venture, limited liability company or other entity.
Section 3.6 SEC Documents.
(a) The Company has timely filed all reports, proxy
statements, registration statements, forms and other documents required to be
filed by it with the SEC since February 2, 2002, (collectively, including any
exhibits and schedules thereto, and all documents incorporated by reference
therein, the "Company SEC Documents"). No Subsidiary of the Company is required
to file any report, proxy statement, registration statement, form or other
document with the SEC. None of the Company SEC Documents (other than the
financial statements and notes and schedules thereto contained therein, as to
which representations are made in Section 3.7), as of their respective filing
and effective dates and, in the case of proxy statements, mailing dates (or, if
amended prior to the date of this Agreement, as of the respective filing,
effective and mailing dates of such amendments), contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All of such Company
SEC Documents (as amended prior to the date of this Agreement, if amended
14
prior to the date of this Agreement) complied in form and substance, in all
material respects, with the applicable requirements of the Securities Act and
the Exchange Act, each as in effect on the date so filed.
(b) The Company is in compliance with, and has
complied, in all material respects with the applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and the related rules and regulations promulgated
under such act or the Exchange Act (collectively, "Xxxxxxxx-Xxxxx"). The Company
has previously made available to Parent copies of all certificates delivered by
officers and employees of the Company, including the Company's chief executive
officer and chief financial officer, to the Company Board or any committee
thereof pursuant to the certification requirements relating to the Company 2004
Form 10-K. The management of the Company has (i) implemented disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to the Company and its Subsidiaries is made known
to the management of the Company by others within those entities and (ii)
disclosed, based on its most recent evaluation, to the Company's outside
auditors and the audit committee of the Board of Directors of the Company (A)
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) that are reasonably likely to materially affect the Company's
ability to record, process, summarize and report financial data and (B) any
fraud, whether or not material, that involves management or other employees who,
in each case, have a significant role in the Company's internal control over
financial reporting.
Section 3.7 Financial Statements; No Undisclosed Liabilities.
(a) The audited and unaudited consolidated financial
statements of the Company (including any notes and schedules thereto) included
in the Company SEC Documents or incorporated therein by reference (i) complied,
as of their respective dates, as to form, in all material respects with all
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as in effect on the dates of filing and
effectiveness thereof, (ii) were prepared in accordance with GAAP as in effect
on the dates of such financial statements, applied on a consistent basis
throughout the periods involved (except for changes in accounting principles
disclosed in the notes thereto and, in the case of unaudited statements, as
permitted by the rules and regulations of the SEC, including being subject to
normal year-end adjustments which were not, and are not expected to be, material
in amount) and (iii) fairly present, in all material respects, the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods therein indicated (subject, in the case of unaudited statements,
to normal year-end adjustments which were not, and are not expected to be,
material in amount).
(b) Except (i) as set forth, reflected or reserved
against in the consolidated balance sheet (including the notes thereto) of the
Company included in the Company 2004 Form 10-K or (ii) for liabilities and
obligations incurred since January 29, 2005 in the ordinary course of business
consistent with past practice or not otherwise
15
prohibited by this Agreement, neither the Company nor any of its Subsidiaries
has any liabilities or obligations that are of a nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected or
reserved against on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP or in the notes thereto, except
for such liabilities and obligations which would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.8 Proxy Statement; Schedule 13E-3. Each of (i) the
Proxy Statement (and any amendments thereof or supplements thereto), as of the
time of the mailing of the Proxy Statement to the Company's shareholders, as of
the time of the Special Meeting and as of the time of any amendments thereof or
supplements thereto, and (ii) the Schedule 13E-3, as of the date thereof, the
date of any amendment thereto and as of the time of the Special Meeting, will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to statements made or omitted
in the Proxy Statement or the Schedule 13E-3 relating to Parent, Acquisition Sub
or their respective Affiliates based on information supplied by Parent,
Acquisition Sub or their respective Affiliates for inclusion in the Proxy
Statement or the Schedule 13E-3. The Proxy Statement and the Schedule 13E-3 will
comply as to form in all material respects with the provisions of the Exchange
Act, except that no representation is made by the Company with respect to the
statements made or omitted in the Proxy Statement or the Schedule 13E-3 relating
to Parent, Acquisition Sub or their respective Affiliates based on information
supplied by Parent, Acquisition Sub or their respective Affiliates for inclusion
in the Proxy Statement or Schedule 13E-3.
Section 3.9 Absence of Material Adverse Changes, etc.
(a) Except for changes specifically contemplated by
this Agreement, since January 29, 2005, (i) the Company and its Subsidiaries
have conducted their respective businesses in all material respects only in the
ordinary course consistent with past practice, and (ii) there has not been any
event, change, occurrence or development which, individually or in the
aggregate, (x) has had a Company Material Adverse Effect or (y) would reasonably
be expected to prevent or materially delay the performance of this Agreement by
the Company or materially impair the ability of the Company to take any action
necessary to consummate the Merger.
(b) Since January 29, 2005, and through the date of
this Agreement, except as specifically contemplated by this Agreement, or as
disclosed in Section 3.9(b) of the Company Disclosure Letter, neither the
Company nor any Subsidiary of the Company has taken any action that, if taken
during the period of this Agreement through the Effective Time, would constitute
a breach of Section 5.1 if taken without the consent of Parent.
Section 3.10 Taxes. (i) The Company and each of its
Subsidiaries have filed all income and other material Tax Returns required to be
filed and have paid all
16
Taxes shown to be due on such Tax Returns, (ii) all Tax Returns filed by the
Company and each of its Subsidiaries are complete and accurate in all material
respects and disclose all material Taxes required to be paid by the Company and
each of its Subsidiaries for the periods covered thereby, (iii) none of the
Company or any of its Subsidiaries has waived in writing any statute of
limitations in respect of income Taxes which waiver is currently in effect, (iv)
the Tax Returns referred to in clause (i) have been examined by the appropriate
taxing authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (v) there is no material
action, suit, investigation, audit, claim or assessment pending or proposed or,
to the Knowledge of the Company, threatened in writing with respect to Taxes of
the Company or any of its Subsidiaries, (vi) all material deficiencies asserted
or assessments made in writing as a result of any examination of the Tax Returns
referred to in clause (i) have been paid in full, (vii) there are no Liens for
Taxes upon the assets of the Company or any of its Subsidiaries except Liens
relating to current Taxes not yet due, (viii) all material Taxes which the
Company or any of its Subsidiaries are required by Applicable Law to withhold or
to collect for payment have been duly withheld, collected and timely paid to the
appropriate Governmental Entity, (ix) neither the Company nor any of the
Company's Subsidiaries has granted in writing any power of attorney to any Third
Party which is currently in force with respect to any Taxes or Tax Returns, (x)
neither the Company nor any of the Company's Subsidiaries is a party to any
agreement providing for the allocation, sharing or indemnification of Taxes, and
(xi) pursuant to Treasury Regulations section 1.1445-2(c)(2), no transaction
contemplated by this Agreement is subject to withholding under Section 1445 of
the Code (relating to the Foreign Investment in Real Property Tax Act).
Section 3.11 Employee Benefit Plans. (a) The Company has
heretofore delivered or made available to Parent correct and complete copies of
(i) each "employee benefit plan" as such term is defined in section 3(3) of
ERISA, (ii) each employment, consulting, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation or other
equity-based, severance or termination pay, retention, change of control,
collective bargaining, hospitalization or other medical, life or other employee
benefit-related insurance, supplemental unemployment benefits, profit-sharing,
pension, or retirement plan, program, agreement or arrangement sponsored,
maintained or contributed to or required to be contributed to by the Company or
an ERISA Affiliate for the benefit of any employee or former employee of the
Company or any Subsidiary of the Company (collectively, the "Plans"), (iii) if
any Plan is funded through a trust or any third party funding vehicle (including
insurance), copies of such trust or other vehicle and (iv) with respect to each
Plan (as applicable), the most recent actuarial and trust reports, the most
recent Form 5500 and all schedules thereto, the most recent IRS determination
letter and the current summary plan descriptions.
(b) Section 3.11 of the Company Disclosure Letter
contains a correct and complete list of all Plans, including and specifically
identifying all Plans pursuant to which any amounts may become vested or payable
as a result of the consummation of the transactions contemplated hereby (either
alone or in combination with other events). The consummation of the transactions
contemplated hereby will not
17
give rise to any payment or benefit (or acceleration of vesting of any amounts
or benefits) that will be an "excess parachute payment" as defined in section
280G of the Code.
(c) The Company has no legally binding plan or
commitment to create any additional Plan or modify or change any existing Plan
that would be reasonably expected to result in material liabilities to the
Company, except as may be required by Applicable Law.
(d) No Plan is subject to Title IV of ERISA. Neither
the Company nor any ERISA Affiliate has incurred or reasonably expects to incur
(i) any liability under Title IV of ERISA, including any such liability arising
out of proceedings instituted by the PBGC, or (ii) any material liability under
Title I of ERISA. Neither the Company nor any ERISA Affiliate made, or was
required to make, contributions to any plan subject to Title IV of ERISA during
the five (5) year period ending on the last day of the most recent plan year
ended prior to the Closing Date. No Plan is a "multiemployer plan" (as such term
is defined in section 3(37) of ERISA). As of the date of this Agreement, the
Company has no unpaid withdrawal liability with respect to any "multiemployer
plan" to which the Company or any ERISA Affiliate has contributed or been
obligated to contribute.
(e) Each of the Plans has been operated and
administered in all material respects in accordance with the terms of such Plan
and all Applicable Laws, including ERISA and the Code and no governmental
audits, actions, suits or claims are pending (other than routine claims for
benefits) or, to the Knowledge of the Company, threatened.
(f) Each of the Plans which is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified,
and the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS as to its qualification under the Code and to
the effect that each such trust is exempt from taxation under section 501(a) of
the Code, and no event since the date of such determination letter has occurred
that would reasonably be expected to adversely affect such qualification or
tax-exempt status. No Plan is a "multiple employer plan" for purposes of
sections 4063 or 4064 of ERISA.
(g) No employee, director or consultant of the
Company or any Subsidiary of the Company is or will become entitled to death or
medical post-employment benefits by reason of service to the Company or its
Subsidiaries, other than coverage mandated by section 4980B of the Code or
similar state law.
Section 3.12 Environmental Matters. Except for matters that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect (i) the Company and its Subsidiaries are and
have been in compliance with all applicable Environmental Laws and Environmental
Permits, (ii) the operations of the Company and its Subsidiaries have not
resulted in any Release of Hazardous Materials at or from any real property
currently owned or operated by the Company or any of its Subsidiaries that, to
the Knowledge of the Company, requires
18
Cleanup that has not been completed to the satisfaction of the relevant
Governmental Entity or would reasonably be expected to form the basis of any
Environmental Claim against the Company or any Subsidiary, (iii) to the
Knowledge of the Company no real property currently, or formerly, owned or
operated by the Company or any of its Subsidiaries was contaminated by any
Release of Hazardous Materials during or prior to such ownership or operation
which contamination would reasonably be expected to form the basis of any
Environmental Claim against the Company or any Subsidiary, (iv) neither the
Company nor any of its Subsidiaries has arranged for the treatment or disposal
of any Hazardous Materials on any Third Party property that would reasonably be
expected to form the basis of any Environmental Claim against the Company or any
Subsidiary, (v) there is no Environmental Claim pending or, to the Knowledge of
Company, threatened, against the Company or any of its Subsidiaries, (vi)
neither the Company nor any of its Subsidiaries is subject to any written order,
decree, injunction or indemnity with any Governmental Entity or any Third Party
relating to liability under any applicable Environmental Law or relating to
Hazardous Materials, (vii) the Company has made available to Parent complete
copies of any material reports, studies, analyses, tests or monitoring possessed
by the Company or any Subsidiary of the Company as of the date hereof, and
located at the Company's headquarters or the headquarters of Pamida, Inc.,
pertaining to Environmental Claims (except for Environmental Claims that have
been fully resolved), or Hazardous Materials, if any, in, on, beneath or
adjacent to any real property currently or formerly owned or operated by the
Company or any Subsidiary of the Company or regarding the Company's or any of
its Subsidiaries' compliance with applicable Environmental Laws and (viii) to
the Knowledge of the Company, neither the Company Fee Property or the Company
Leased Property contain any (a) underground storage tanks currently or formerly
used by the Company or any Subsidiary, (b) exposed friable asbestos, (c)
equipment using PCBs; or (d) septic tanks in which process wastewater or any
Hazardous Materials have been disposed. This Section 3.12 sets forth the sole
representations and warranties of the Company with respect to environmental
matters, including all matters arising under Environmental Laws.
Section 3.13 Litigation; Compliance with Laws.
(a) There is no action, suit, proceeding or
investigation by or before any Governmental Entity (i) pending against or, to
the Knowledge of the Company, threatened against the Company or any Subsidiary
of the Company or any of their respective properties that, individually or in
the aggregate, would reasonably be expected to have a Company Material Adverse
Effect or (ii) as of the date of this Agreement, pending against or, to the
Knowledge of the Company, threatened against the Company or any Subsidiary of
the Company or any of their respective properties that would reasonably be
expected to involve fines, penalties or damages in excess of $1,000,000. There
is no judgment, decree, injunction, rule, writ or order of any Governmental
Entity or arbitrator outstanding against the Company or any Subsidiary of the
Company which, individually or in the aggregate, (x) would reasonably be
expected to have a Company Material Adverse Effect or (y) would reasonably be
expected to prevent or materially delay the performance of this Agreement by the
Company or materially impair the ability of the Company to take any action
necessary to consummate the Merger.
19
(b) The businesses of the Company and its
Subsidiaries are being conducted in compliance with Applicable Law, except for
possible violations that, individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect. Each of the Company and
its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits (including certificates of occupancy), easements, variances,
exceptions, consents, certificates, approvals and orders of, and has submitted
notices to, any Governmental Entity necessary for the Company or any of its
Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted and in the manner described in the Company
SEC Documents (the "Company Permits"), except where the failure to have any of
the Company Permits, individually or in the aggregate, (x) would not reasonably
be expected to have a Company Material Adverse Effect or (y) would not
reasonably be expected to prevent or materially delay the performance of this
Agreement by the Company or materially impair the ability of the Company to take
any action necessary to consummate the Merger. All such Company Permits are
valid, and in full force and effect, and no suspension or cancellation of any of
the Company Permits is pending or, to the Knowledge of the Company, threatened,
except for such failures to be valid or in full force and effect or for such
suspensions or cancellations that, individually or in the aggregate, (x) would
not reasonably be expected to have a Company Material Adverse Effect or (y)
would not reasonably be expected to prevent or materially delay the performance
of this Agreement by the Company or materially impair the ability of the Company
to take any action necessary to consummate the Merger.
Section 3.14 Intellectual Property.
(a) Section 3.14(a) of the Company Disclosure Letter
sets forth a correct and complete list of all material U.S. and foreign (i)
issued Patents and Patent applications, (ii) Trademark registrations and
applications, (iii) Copyright registrations and applications and (iv) Software,
in each case which is owned by the Company or its Subsidiaries. The Company or
one of its Subsidiaries is the sole and exclusive beneficial and record owner of
all of the Intellectual Property Rights set forth in Section 3.14(a) of the
Company Disclosure Letter, and all such Intellectual Property Rights are
subsisting, valid, and enforceable, except, in each case, as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries own or have a
valid right to use, free and clear of all Liens created by the Company and its
Subsidiaries, all Intellectual Property Rights necessary, or used or held for
use in connection with the business of the Company and its Subsidiaries, taken
as a whole, except where the failure to so own or have a valid right to use such
Intellectual Property Rights, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries
has infringed, misappropriated or violated in any material respect any
Intellectual Property Rights of any Third Party, and, to the Knowledge of the
Company, there has been no such claim asserted or, to the Knowledge of the
Company, threatened since February 2, 2002,
20
against the Company or any of its Subsidiaries, except where such infringements,
misappropriations or violations, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(d) No third Person infringes, misappropriates or
violates any Intellectual Property Rights owned or exclusively licensed by or to
the Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has asserted or threatened such a claim against any Person since
February 2, 2002, except where such infringements, misappropriations or
violations, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect.
Section 3.15 Material Contracts.
(a) Except as filed as exhibits to the Company SEC
Documents filed prior to the date of this Agreement, neither the Company nor any
of its Subsidiaries is a party to or bound by any Contract (i) that is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K promulgated by the SEC), (ii) with any of the twenty largest merchandise
suppliers of the Company and its Subsidiaries, taken as a whole (measured by
dollar volume of purchases by the Company and its Subsidiaries in the Company's
fiscal year ended January 29, 2005), (iii) with any Person (other than any
merchandise supplier of the Company and its Subsidiaries) that involves annual
expenditures in excess of $2,000,000 and is not cancelable within 180 days
without financial penalty to the Company, (iv) that provides for the
indemnification by the Company or any of its Subsidiaries of any Person (except
for indemnification provided for in standard vendor supply contracts or real
property leases, entered into in the ordinary course of business), (v) that
relates to any joint venture or partnership in which the Company or any of its
Subsidiaries owns an interest, (vi) that restricts or limits the conduct of any
line of business by the Company, any Subsidiary of the Company or any of the
Company's current or future Affiliates or the geographic area in which the
Company, any Subsidiary of the Company or any of the Company's current or future
Affiliates may conduct business, except for such limitations or restrictions
that are customary for such Contracts and that only restrict the operation of
individual stores, in each case in any material respect, or (vii) that grants
any right of first refusal, right of first offer, option or similar right with
respect to, or limits or purports to limit the ability of the Company or any of
its Subsidiaries to sell, transfer, pledge or otherwise dispose of, any Company
Real Property or any portion thereof or any other material amount of assets or
business. Each Contract of the type described in the first sentence of this
Section 3.15(a) is referred to herein as a "Company Material Contract."
(b) Each Company Material Contract is a valid and
binding obligation of the Company (or, if a Subsidiary of the Company is a
party, such Subsidiary) and each other party thereto, and is in full force and
effect, except for any such Company Material Contracts that have expired
subsequent to the date of this Agreement in accordance with their terms. Neither
the Company nor any of its Subsidiaries is, and to the Knowledge of the Company,
no Third Party is, in default under any
21
Company Material Contract, nor does any condition exist which with the passage
of time or the giving of notice would cause such a violation of or default under
any Company Material Contract by the Company or any of its Subsidiaries or, to
the Knowledge of the Company, such Third Party, except for defaults that (i)
have not had, individually or in the aggregate, a Company Material Adverse
Effect and (ii) would not, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance of this Agreement by the
Company or materially impair the ability of the Company to take any action
necessary to consummate the Merger. No counterparty to any Company Material
Contract has cancelled or otherwise terminated any Company Material Contract or
provided to the Company written notice or, to the Knowledge of the Company, oral
notice of its intent to do so.
Section 3.16 Insurance. Section 3.16 of the Company Disclosure
Letter sets forth a correct and complete list of, and the Company has delivered
to Parent correct and complete copies of binders for, all material insurance
policies carried by or covering the Company and its Subsidiaries with respect to
their respective businesses, assets and properties, including comprehensive
general liability, fire and casualty, automobile liability, and workers'
compensation insurance (the "Insurance Policies"). The Insurance Policies are in
full force and effect, and no written notice of cancellation has been received
by the Company or any of its Subsidiaries with respect to any such Insurance
Policy which has not been cured by the payment of premiums that are due, other
than as, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect. The Company has not received notice of
any threatened termination of, material premium increase with respect to, or
material alteration of coverage under, any Insurance Policy. The insurance
coverage provided by the Insurance Policies (including as to deductibles and
self-insured retentions and as to risks and losses covered) is reasonable and
customary as compared to similarly situated companies engaged in a similar
business. There are no pending material claims under the Insurance Policies by
the Company or any of its Subsidiaries as to which the insurers have denied
liability.
Section 3.17 Real Estate; Assets.
(a) Section 3.17(a) of the Company Disclosure Letter
sets forth a correct and complete list of each parcel of real property owned in
fee by the Company or any of its Subsidiaries (the "Company Fee Property"),
which list includes the legal address, record owner and the use thereof (i.e.,
ShopKo, Pamida or other use). The Company or one of its Subsidiaries has good,
valid and marketable title to each Company Fee Property. The Company Fee
Property is not subject to any Liens, except for Permitted Encumbrances. Prior
to the date hereof, the Company has made available to Parent correct and
complete copies of all deeds, mortgages, surveys, Company Permits relating to
the Company Fee Property, title insurance commitments or policies (including any
underlying documents relating to Permitted Encumbrances), if any, certificates
of occupancy or equivalent documentation with respect to the Company Real
Property and other material documents relating to or affecting the use,
occupancy or operation of the Company Real Property to the extent the same are
in its possession or control.
(b) Section 3.17(b) of the Company Disclosure Letter
sets forth a true, correct and complete list of (i) all real property leased,
subleased, licensed or
22
otherwise used or occupied by the Company or any of its Subsidiaries (the
"Company Leased Property" and together with the Company Fee Property, the
"Company Real Property"), which list includes the legal address and the use
thereof (i.e., ShopKo, Pamida or other use) and (ii) each lease, sublease,
license or other agreement granting to any Third Party a right to the use,
occupancy or enjoyment of any Company Real Property or any portion thereof (the
"Company Subleases"). The Company or one of its Subsidiaries has a good and
valid leasehold or other interest in the Company Leased Property, free and clear
of all Liens other than Permitted Encumbrances. The Company has made available
to Parent correct and complete copies of all leases, subleases, licenses and
other agreements (including all amendments, modifications, supplements, and
extensions thereof) granting rights of use, occupancy or enjoyment to the
Company and/or any of its Subsidiaries with respect to the Company Leased
Property (the "Company Leases" and together with the Company Subleases, the
"Leases") and copies of all Company Subleases (including all amendments,
modifications, supplements, and extensions thereof).
(c) Each Lease is a valid and binding obligation of
the Company (or, if a Subsidiary of the Company is a party, such Subsidiary) and
is in full force and effect, except for any such Leases that expire subsequent
to the date of this Agreement in accordance with their terms or where the
failure to be in full force and effect, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is in default under any Lease nor does
any condition exist that, with the passage of time or the giving of notice,
would cause such a default under such Lease, except for defaults that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received written notice of any cancellation or termination of any Lease,
except for any such cancellation or termination that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is obligated under, or a
party to, any Contract to purchase any Company Leased Property.
(d) (i) No condemnation proceeding is pending or
threatened with respect to any Company Real Property and (ii) the Company (and
its applicable Subsidiary) and the Company Real Property is in compliance in all
material respects with the terms and provisions of any restrictive covenants,
easements, or agreements affecting the same, except, in each case, as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(e) All components of all material improvements
(other than those which a Third Party is contractually obligated to maintain)
included within the Company Real Property, including the roofs and structural
elements thereof and the heating, ventilation, air conditioning, plumbing,
electrical, mechanical, sewer, waste water, storm water, paving and parking
equipment, systems and facilities included therein, are in good condition
(ordinary wear and tear excepted) and adequate for the use and operation of the
Company Real Property (subject, in the case of Company Leased Property, for the
remainder of the term of the corresponding Lease) to which they relate
23
in the conduct of the business as presently conducted, except, in each case, for
any such failure that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(f) The Company Real Property (i) is served by all
utilities required for the current use thereof, including water, electrical
supply, storm and sanitary sewerage facilities, (ii) has access to public roads
and streets necessary for service of, and access to, such Company Real Property
for the current use thereof (publicly dedicated streets or a validly existing
easement) and the same are physically and legally open for use by the public and
(iii) is free from damage caused by fire or other casualty, which damage has not
previously been restored, except, in the case of clauses (i), (ii) and (iii),
for any such failure that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 3.18 Labor and Employment.
(a) There are no labor agreements, collective
bargaining agreements, work rules or practices, or any other labor-related
agreements or arrangements with any labor union, labor organization, trade union
or works council to which the Company or any of its Subsidiaries is a party or
bound or covering employees of the Company or any of its Subsidiaries. To the
Knowledge of the Company, no union organizing campaign with respect to the
employees of the Company or any of its Subsidiaries is threatened or underway,
no labor union, labor organization, trade union, works council or group of
employees of the Company or any of the Company's Subsidiaries has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened in writing to be brought or filed with the
National Labor Relations Board or any similar state or foreign Governmental
Entity.
(b) (i) There is no unfair labor practice charge or
complaint against the Company or any of its Subsidiaries pending or, to the
Knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign Governmental Entity, (ii) there is no charge
with respect to or relating to the Company or any of its Subsidiaries pending
or, to the Knowledge of the Company, threatened before the Equal Employment
Opportunity Commission or any other Governmental Entity responsible for the
prevention of unlawful employment practices and (iii) neither the Company nor
any of its Subsidiaries has received notice of any complaint, lawsuit or other
proceeding pending or threatened in any forum by or on behalf of any present or
former employee of such entities, any applicant for employment, or classes of
the foregoing, alleging breach of any express or implied contract of employment,
any Applicable Law governing the employment relationship or the termination
thereof, except for such exceptions to the foregoing clauses (i) through (iii)
which, individually or in the aggregate, (x) would not reasonably be expected to
have a Company Material Adverse Effect and (y) would not, individually or in the
aggregate, reasonably be expected to prevent or materially delay the performance
of this Agreement
24
by the Company or materially impair the ability of the Company to take any
action necessary to consummate the Merger.
(c) The Company and its Subsidiaries are in
compliance with all Applicable Laws respecting employment and employment
practices, terms and conditions of employment (including termination of
employment), wages, hours of work, occupational safety and health, and worker
classification, and are not engaged in any unfair labor practices, including the
Fair Labor Standards Act, the Immigration Control and Reform Act, 42 U.S.C. Sec.
1981, 42 U.S.C. Sec. 1985 and Title VII of the Civil Rights Act of 1964, the
Equal Pay Act, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Health Insurance
Portability Protection Act, the whistleblower provisions of Xxxxxxxx-Xxxxx, the
Occupational Safety and Health Act, except for failures to be in compliance or
such practices which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received written notice of the intent of any
Governmental Entity responsible for the enforcement of labor or employment laws
to conduct an investigation with respect to or relating to employees and, to the
Knowledge of the Company, no such investigation is in progress, in each case,
which would reasonably be expected to have a Company Material Adverse Effect.
(d) To the Knowledge of the Company, no officer of
the Company or any of its Subsidiaries is in any material respect in violation
of any term of any employment agreement, nondisclosure agreement, noncompetition
agreement or other written obligation to a former employer of any such officer
relating to (i) the right of any such employee to be employed by the Company or
any of its Subsidiaries, or (ii) the knowledge or use of Trade Secrets or
proprietary information.
(e) As of the date hereof, within the last three (3)
years, the Company and the Company's Subsidiaries have not effectuated (i) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Company or any of the Company's Subsidiaries or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any of the Company's Subsidiaries; nor has the
Company or any of the Company's Subsidiaries been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law.
Section 3.19 Opinion of Financial Advisors. The Special
Committee has received the opinion of Xxxxxxx Xxxxx to the effect that the
Merger Consideration is fair, from a financial point of view, to the
shareholders of the Company (other than Parent, its Affiliates and Eugster).
Section 3.20 Finders' and Other Fees. Except for Xxxxxxx
Xxxxx, whose fees will be paid by the Company, there is no investment banker,
broker, finder or other similar intermediary which has been retained by, or is
authorized to act on behalf of, the Special Committee, the Company or any
Subsidiary of the Company, or any employee or
25
consultant of the Company or any Subsidiary of the Company, that would be
entitled to any fee, commission, sale bonus or similar payment from the Special
Committee, the Company, any Subsidiary of the Company, Parent, Acquisition Sub
or any of Parent's or Acquisition Sub's Affiliates upon consummation of the
transactions contemplated hereby.
Section 3.21 Rights Amendment. The Company and the Company
Board have taken all necessary action to render the Rights Agreement
inapplicable to the transactions contemplated hereby, without any further action
on the part of the holder of Company Common Stock or the Company Board, and
neither the execution and delivery of this Agreement nor the consummation of any
of the transactions contemplated hereby will result in the occurrence of a
Distribution Date (as defined in the Rights Agreement) or otherwise cause the
Rights to become exercisable by the holders thereof.
Section 3.22 State Takeover Statutes. No "fair price," "merger
moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation (including the provisions of Sections 180.1130 to 180.1134 and
Sections 180.1140 to 180.1144 of the WBCL, inclusive) applies or purports to
apply to the Company with respect to this Agreement, the Merger or any other
transaction contemplated hereby. No other state takeover statute or similar
statute or regulation is applicable to or purports to be applicable to this
Agreement, the Merger or any other transaction contemplated by this Agreement.
Section 3.23 Title to Assets. The Company and each Subsidiary
of the Company have good and valid title to all of their personal properties and
assets reflected as being owned by the Company or one of its Subsidiaries on the
Company's audited balance sheet (including in any related notes thereto) as of
January 29, 2005 included in the Company 2004 Form 10-K or acquired after
January 29, 2005 (other than assets disposed of since January 29, 2005 in the
ordinary course of business consistent with past practice), in each case free
and clear of all Liens and title defects, except for such Liens and title
defects which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
Section 3.24 Affiliate Transactions. Except pursuant to any
employment agreement with any officer of the Company, as of the date hereof,
there are no Contracts relating to any transactions of the type that would be
required to be disclosed by the Company under Item 404 of Regulation S-K
promulgated by the SEC.
Section 3.25 Letters of Credit, Surety Bonds, Guarantees.
Section 3.25 of the Company Disclosure Letter sets forth, as of the date hereof,
all standby letters of credit, performance or payment bonds, guarantee
arrangements and surety bonds of any nature involving amounts in excess of
$100,000 relating to the Company or any of its Subsidiaries.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB
Except as set forth in the corresponding section of the Parent
Disclosure Letter, each of Parent and Acquisition Sub (each, an "Acquiror
Entity") hereby jointly and severally represents and warrants to the Company as
follows:
Section 4.1 Organization. Each Acquiror Entity is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and has the requisite power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority,
individually or in the aggregate, would not reasonably be expected to have an
Acquiror Entity Material Adverse Effect. Each Acquiror Entity is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than where the failure to be so
duly qualified, licensed and in good standing, individually or in the aggregate,
would not reasonably be expected to have an Acquiror Entity Material Adverse
Effect.
Section 4.2 Authorization. Each Acquiror Entity has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement and the performance of its obligations hereunder have been duly and
validly authorized, and this Agreement has been approved and adopted by the
Board of Directors of each Acquiror Entity, and no other corporate proceedings
on the part of either Acquiror Entity are necessary to authorize the execution,
delivery and performance of this Agreement. Concurrently with the execution of
this Agreement, Parent, as the sole shareholder of Acquisition Sub, is approving
this Agreement and the transactions contemplated hereby, including the Merger.
This Agreement has been duly executed and delivered by each Acquiror Entity and
constitutes, assuming due authorization, execution and delivery of this
Agreement by the Company, a valid and binding obligation of each Acquiror
Entity, enforceable against each Acquiror Entity in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
Section 4.3 Consents and Approvals; No Violations.
(a) Assuming that the Company Shareholder Approval is
obtained and all consents, approvals, authorizations and permits described in
Section 4.3(b) have been obtained and all filings and notifications described in
Section 4.3(b) have been made and any waiting periods thereunder have terminated
or expired, neither the execution, delivery or performance of this Agreement by
each Acquiror Entity nor the consummation by the Acquiror Entities of the
transactions contemplated hereby will (i) conflict with or result in a breach of
any provision of the certificate of incorporation or bylaws or the similar
organizational documents of either Acquiror Entity, (ii) result in a
27
violation or breach of or loss of any benefit under, constitute (with or without
due notice or lapse of time or both) a change of control or default under,
require the consent or approval of or the giving of notice to a Third Party
pursuant to, or give to others any right of termination, vesting, amendment,
cancellation or acceleration or impose on either of the Acquiror Entities any
obligation to repurchase, repay, redeem or acquire or any similar right or
obligation under, or result in the creation of a Lien on any property or asset
of any Acquiror Entity, pursuant to any of the terms, conditions or provisions
of any Contract to which any Acquiror Entity is a party or by which any of them
or any of their assets is bound or (iii) conflict with or violate any Applicable
Law applicable to any Acquiror Entity or by which any property or asset of any
Acquiror Entity is bound or affected, except for any such conflicts, violations,
breaches, defaults or other occurrences which, individually or in the aggregate,
(1) with respect to clause (ii), would not reasonably be expected to have an
Acquiror Entity Material Adverse Effect and (2) with respect to clauses (ii) and
(iii), would not reasonably be expected to prevent or materially delay the
performance of this Agreement by any Acquiror Entity or materially impair the
ability of any Acquiror Entity to take any action necessary to consummate the
Merger.
(b) Neither the execution, delivery or performance of
this Agreement by the Acquiror Entities nor the consummation by the Acquiror
Entities of the transactions contemplated hereby will require any consent,
approval, authorization or permit of, or filing with, or notification to, any
Governmental Entity, except (i) under the Exchange Act, the Securities Act, any
applicable Blue Sky Law and the rules and regulations of the NYSE, (ii) under
the HSR Act and any other applicable antitrust and competition laws, (iii) the
filing and recordation of the Articles of Merger as required by the WBCL and
(iv) for such other consents, approvals, authorizations, permits, filings or
notifications, the failure of which to make or obtain, individually or in the
aggregate, (x) would not reasonably be expected to have an Acquiror Entity
Material Adverse Effect or (y) would not reasonably be expected to prevent or
materially delay the performance of this Agreement by any Acquiror Entity or
materially impair the ability of any Acquiror Entity to take any action
necessary to consummate the Merger.
Section 4.4 Capitalization. The authorized capital stock of
Parent consists of 1,000 shares of common stock, par value $.01 per share, all
of which are issued and outstanding and are owned by Marathon Fund Limited
Partnership V ("Marathon"), and the authorized capital stock of Acquisition Sub
consists of 1,000 shares of common stock, par value $.01 per share, all of which
are issued and outstanding and owned by Parent. All the issued and outstanding
shares of capital stock of, or other ownership interests in, each Acquiror
Entity have been duly authorized, validly issued and are fully paid and
nonassessable (except, if applicable, as otherwise provided in Section
180.0662(2)(b) of the WBCL) and are owned free and clear of all Liens.
Section 4.5 Proxy Statement; Schedule 13E-3. None of the
information relating to the Acquiror Entities and supplied or to be supplied by
either Acquiror Entity or its respective Affiliates specifically for inclusion
in the Proxy Statement (and any amendments thereof or supplements thereto) and
the Schedule 13E-3 (and any amendments thereto) will, (i) in the case of the
Proxy Statement, as of the time of the mailing of the Proxy Statement to the
Company's shareholders, as of the time of the
28
Special Meeting and as of the time of any amendments thereof or supplements
thereto, and (ii) in the case of the Schedule 13E-3, as of the date thereof, the
date of any amendment thereto and as of the time of the Special Meeting, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, no
representation is made by any Acquiror Entity with respect to statements made in
any of the foregoing documents based upon information supplied by the Company or
its Subsidiaries.
Section 4.6 Acquiror Entity's Operations. Each Acquiror Entity
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement and has not, other than in connection with the transactions
contemplated hereby or thereby and other than those incidental to its
organization and maintenance of corporate existence, (i) engaged in any business
activities, (ii) conducted any operations, (iii) incurred any liabilities or
(iv) owned any assets or property.
Section 4.7 Ownership of Company Common Stock. Neither
Acquiror Entity nor any of its respective "affiliates" or "associates" (as such
terms are defined in Rule 12b-2 of the Exchange Act) is the "beneficial owner"
(as such term is defined in the Company Articles) of any shares of Company
Common Stock.
Section 4.8 Financing. Parent and Acquisition Sub have
previously delivered to the Company the following: (i) (x) a fully executed
commitment letter (the "Real Estate Debt Letter") from Bank of America, N.A.
(the "Real Estate Lender") and accepted by Parent, providing the detailed terms
and conditions upon which the Real Estate Lender has committed to provide Parent
and Acquisition Sub with secured real estate financing in connection with the
Merger in an aggregate amount equal to $700 million and (y) a fully executed
commitment letter (each, a "Senior Debt Letter") from each of Bank of America
Retail Financial Group and Back Bay Capital Funding LLC (each, a "Senior Debt
Lender," and collectively with the Real Estate Lender, the "Lenders") and
accepted by Parent, providing the detailed terms and conditions upon which the
Senior Debt Lenders have committed to provide Parent and Acquisition Sub with
senior debt financing in connection with the Merger in an aggregate amount equal
to $415 million, and (ii) a fully executed letter (the "Equity Commitment
Letter"), accepted by Parent, pursuant to which Marathon has committed to
provide equity financing to Parent and Acquisition Sub in an aggregate amount of
$27 million and Xx. Xxxx X. Xxxxxxx ("Xxxxxxx") has committed to provide equity
financing to Parent and Merger Sub in an aggregate amount of $3 million (the
Equity Commitment Letter, together with the Real Estate Debt Letter and the
Senior Debt Letters, the "Financing Letters"). The financing contemplated by the
Financing Letters (the "Financing"), together with the excess cash and option
proceeds referred to therein, are sufficient to pay the aggregate Merger
Consideration and Option Consideration, any amounts due under the Credit
Facility and any amounts due in connection with the Debt Offer and pay all fees
and expenses to be paid by Parent, Acquisition Sub, the Company or any of their
respective Affiliates related to the transactions contemplated hereby (the sum
total of the foregoing amounts, the "Required Cash Amount"). The Financing
Letters are in full force and effect as of the date hereof. The obligations to
fund the commitments under the
29
Financing Letters are not subject to any condition other than as set forth in
the Financing Letters. Parent is not aware of any fact or occurrence existing on
the date of this Agreement that causes the Financing Letters to be ineffective
with respect to Parent, Acquisition Sub or the Merger, and Parent has no reason,
as of the date hereof, to believe that any of the conditions to the Financing
contemplated by the Financing Letters within Parent's control will not be
satisfied or that the Financing will not be made available to Parent on the
Closing Date.
Section 4.9 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by Marathon or
either Acquiror Entity for which the Company would be liable if the Merger were
not consummated.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1 Conduct of the Business of the Company. During the period
from the date of this Agreement and continuing until the Effective Time, the
Company agrees as to itself and each of its Subsidiaries that (except (i) as
expressly permitted or required by any other provision of this Agreement, (ii)
as set forth in Section 5.1 of the Company Disclosure Letter, (iii) as required
by any Applicable Law, (iv) as required by a Governmental Entity of competent
jurisdiction or (v) to the extent that Parent shall otherwise consent in
writing):
(a) Ordinary Course.
(i) The Company and each of its Subsidiaries shall
(1) carry on their respective businesses in the usual, regular and
ordinary course and consistent with past practice and (2) use
reasonable best efforts to maintain their existence in good standing
under Applicable Law. Without limiting the foregoing, the Company and
its Subsidiaries shall use their reasonable best efforts to preserve
substantially intact their present lines of business, maintain their
rights and franchises and preserve substantially intact their current
relationships with customers, suppliers and others having business
dealings with them and keep available the services of their present
officers, employees and consultants, in each case to the end that their
ongoing businesses shall not be impaired in a manner that would have a
Company Material Adverse Effect at the Effective Time.
(ii) The Company shall not, and shall not permit any
of its Subsidiaries to, incur or commit to any capital expenditures,
except for capital expenditures up to the aggregate amount set forth in
a capital expenditure budget plan delivered to Parent prior to the date
of this Agreement.
(b) Dividends; Changes in Share Capital. The Company shall
not, and shall not permit any of its Subsidiaries to (i) declare, set aside or
pay any
30
dividend or other distribution (whether payable in cash, stock, property or a
combination thereof) with respect to any of its capital stock (except for
dividends or distributions paid by wholly-owned Subsidiaries of the Company to
the Company or to other wholly-owned Subsidiaries of the Company), (ii) split,
combine, subdivide, reclassify or amend the terms of any of its capital stock or
authorize the issuance of or issue any other securities in respect of, in lieu
of or in substitution for, shares of its capital stock, except for any such
transaction by a wholly-owned Subsidiary of the Company which remains a
wholly-owned Subsidiary after consummation of such transaction, or (iii)
repurchase, redeem or otherwise acquire, directly or indirectly, any shares of
its capital stock or any other securities of the Company (other than upon the
exercise of Company Stock Options outstanding as of the date hereof or upon the
lapse of restrictions on Company Restricted Shares outstanding on the date
hereof, in each case, in accordance with the terms of the relevant Company Stock
Plan and the agreement relating to such Company Stock Option or Company
Restricted Shares).
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its Subsidiaries to, issue, pledge, dispose of, grant,
transfer, encumber, deliver or sell, or authorize any of the foregoing actions
with respect to, any shares of its capital stock of any class, any of its equity
interests, any Company Voting Debt or any securities convertible into or
exchangeable or exercisable for, or any rights, warrants or options to acquire,
any such shares of capital stock or Company Voting Debt or convertible,
exchangeable or exercisable securities or any other equity interests, other than
(i) the issuance of shares of Company Common Stock (and associated Rights) upon
the exercise of Company Stock Options outstanding on the date of this Agreement
in accordance with the terms of the Company Stock Option Plans in effect as of
the date of this Agreement and delivery of Company Restricted Shares outstanding
on the date hereof upon the lapse of restrictions, (ii) issuances by a
wholly-owned Subsidiary of the Company of capital stock to such Subsidiary's
parent or another wholly-owned Subsidiary of the Company or (iii) issuances
pursuant to the Rights Agreement.
(d) Governing Documents. The Company shall not amend the
Company Articles or the Company Bylaws and neither the Company nor any
Subsidiary of the Company shall amend the organizational documents of any
Subsidiary of the Company.
(e) No Acquisitions; Material Contracts. The Company shall
not, and shall not permit any of its Subsidiaries to, (i) acquire (including by
merger, consolidation, or acquisition of stock or assets), in a single
transaction or in a series of related transactions, any interest in any Person
or any division thereof or any assets, other than acquisitions of inventory in
the ordinary course of business, or acquisitions of non-inventory assets in the
ordinary course of business consistent with past practice for aggregate
consideration not in excess of $5 million or (ii) enter into, renew, terminate,
cancel or make any material change in, or agree to any material change in, any
Company Material Contract other than in the ordinary course of business
consistent with past practice.
31
(f) No Dispositions. The Company shall not, and shall not
permit any of its Subsidiaries to, (i) sell, dispose of, transfer or divest any
assets (including capital stock of any of its Subsidiaries), businesses or
divisions other than transactions that are in the ordinary course of business or
which involve assets (other than Company Real Property) having a current value
of not in excess of $5 million in the aggregate or (ii) lease, license,
mortgage, hypothecate, pledge, encumber, sell, sell and leaseback, sublease,
grant any material easement affecting and/or transfer any interest in any
Company Fee Property or any improvements thereon or on any Company Leased
Property, or materially amend, extend, terminate or enter into any Lease.
(g) No Liens. Subject, in the case of Company Fee Property and
Company Leased Property, to the restrictions set forth in Section 5.1(f), the
Company shall not, and shall not permit any of its Subsidiaries to, create,
assume or otherwise consensually incur any Lien on any asset other than Liens
(i) pursuant to, or permitted under, the Credit Facility, (ii) incurred in the
ordinary course of business consistent with past practice or (iii) which would
not reasonably be expected to have a Company Material Adverse Effect.
(h) Compensation; Severance. Except (i) as required by
Applicable Law or (ii) to satisfy contractual obligations existing on the date
hereof the Company shall not, and shall not permit any of its Subsidiaries to,
(1) except for payments to individuals other than directors or executive
officers of the Company in the ordinary course of business consistent with past
practice, pay or commit to pay any severance or termination pay other than
severance or termination pay that is required to be paid pursuant to the terms
of an existing Plan, (2) enter into any employment, deferred compensation,
consulting, severance or other similar agreement (or any amendment to any such
existing agreement) with any director or officer or key employee of the Company
or any of its Subsidiaries, (3) except for increases in benefits payable to
individuals other than directors or executive officers of the Company in the
ordinary course of business consistent with past practice, increase or commit to
increase any employee benefits payable to any director, officer or employee of
the Company or any of its Subsidiaries, including wages, salaries, compensation,
pension, severance, termination pay or other benefits or payments (except as
required by an existing Plan or Applicable Law), (4) adopt or make any
commitment to adopt any additional employee benefit plan, (5) make any
contribution to any Plan, other than (A) regularly scheduled contributions and
(B) contributions required pursuant to the terms thereof or Applicable Law, or
(6) amend or extend or make any commitments to amend or extend any Plan in any
material respect, except for amendments required by Applicable Law.
(i) Accounting Methods; Income Tax Elections. The Company
shall not, and shall not permit any of its Subsidiaries to, (i) change its
methods of accounting or accounting practice as in effect at January 29, 2005,
except as required by reason of a change in SEC guidelines or GAAP, (ii) change
its fiscal year, (iii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any election, or
adopt any accounting method that is inconsistent with positions taken, elections
made or accounting methods used in preparing or filing similar Tax Returns in
prior periods (unless required by Applicable Law), (iv) amend any Tax
32
Returns (unless required by Applicable Law), (vi) settle or compromise any claim
or assessment relating to Taxes, enter into any closing agreement relating to
Taxes or consent to any claim or audit relating to Taxes or (vii) make or change
any elections relating to Taxes, other than as required by Applicable Law.
(j) Certain Agreements and Transactions. The Company shall
not, and shall not permit any of its Subsidiaries to, (i) enter into any
Contracts that limit or restrain the Company or any of its Subsidiaries or any
of their respective Affiliates or successors, or that would, after the Effective
Time, limit or restrict Parent, the Surviving Corporation or any of their
respective Affiliates or successors, from engaging or competing in any business
or in any geographic area or location, (ii) amend, modify or terminate, or
permit the amendment, modification or termination of, any Company Lease or
Company Sublease or (iii) engage in any transaction with, or enter into, amend
or terminate (except pursuant to its terms) any agreement, arrangement, or
understanding with, directly or indirectly, any of the Company's Affiliates,
including any transactions, agreements, arrangements or understandings with any
Affiliate of the Company or other Person covered under Item 404 of Regulation
S-K promulgated by the SEC that would be required to be disclosed under such
Item 404.
(k) Rights Agreement. The Company shall not (i) redeem the
Rights, or amend or modify or terminate the Rights Agreement other than to delay
the Distribution Date (as defined therein) or to render the Rights inapplicable
to the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, (ii) permit the Rights to become
non-redeemable at the redemption price currently in effect, except by reason of
clause (iii) below, or (iii) take any action which would allow any Person (as
defined in the Rights Agreement) other than Parent or Acquisition Sub or any of
their respective Affiliates to become the Beneficial Owner (as defined in the
Rights Agreement) of 15% or more of the Company Common Stock without causing a
Distribution Date or a Shares Acquisition Date (as each such term is defined in
the Rights Agreement) to occur or otherwise take any action which would render
the Rights Agreement inapplicable to any transaction contemplated by such
Person.
(l) Corporate Structure. The Company shall not, and shall not
permit any of its Subsidiaries to, alter (through merger, liquidation,
reorganization, restructuring or any other fashion) the corporate structure or
ownership of the Company or any of its Subsidiaries, including through the
adoption of a plan of complete or partial liquidation or resolutions providing
for or authorizing such a liquidation or a dissolution, consolidation,
recapitalization or bankruptcy reorganization.
(m) Indebtedness. The Company shall not, and shall not permit
any of its Subsidiaries to, (i) incur any indebtedness for borrowed money or
issue any debt securities or assume (including in connection with any
recapitalization involving the Company or any of its Subsidiaries), guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person (other than a wholly-owned Subsidiary) for borrowed
money, except for indebtedness (x) incurred under the Company's existing credit
facilities or renewals or refinancings thereof or (y)
33
in an aggregate principal amount not to exceed $2 million at any time
outstanding, (ii) pre-pay any long-term debt, except for purchases of long-term
debt (other than the Senior Notes) in the ordinary course of business in an
amount not to exceed $2 million in the aggregate for the Company and its
Subsidiaries taken as a whole, or (iii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise), except
in the ordinary course of business consistent with past practice and in
accordance with their terms.
(n) Settlements; Compromises. The Company shall not, and shall
not permit any of its Subsidiaries to, waive, release, assign, settle or
compromise any material claims against the Company or any of its Subsidiaries,
or any litigation or arbitration, except (i) where the amount of any claim
waived, released, assigned, settled or compromised, or the amount paid in any
settlement or compromise, does not exceed $100,000, and (ii) the terms of such
settlement or compromise would not prohibit or materially restrict the Company
from operating its business as currently conducted.
(o) Miscellaneous. The Company shall not, and shall not permit
any of its Subsidiaries to (i) terminate any material Insurance Policy other
than in the ordinary course of business and (ii) permit to lapse any
registrations or applications for registration of material Intellectual Property
Rights owned by the Company or any of the Company's Subsidiaries.
(p) Certain Prohibited Actions. The Company shall not, and
shall not permit any of its Subsidiaries to, agree, authorize or enter into any
commitment to take any action (i) that is intended to result in any of the
conditions to the Merger set forth in Article VI not being satisfied or (ii)
that is described in the foregoing subsections (a)-(o) of this Section 5.1,
except as otherwise permitted by this Agreement.
Section 5.2 Shareholders' Meeting; Proxy Material.
(a) Subject to Section 5.4(c), the Company shall, acting
through the Company Board and in accordance with Applicable Law and the Company
Articles and the Company Bylaws, use its reasonable best efforts to duly call,
give notice of, convene and hold a special meeting of its shareholders (the
"Special Meeting") as promptly as practicable after the date hereof for the
purpose of considering and taking action upon this Agreement, including the
Merger, and shall use its reasonable best efforts to solicit proxies in favor of
approval of this Agreement and the transactions contemplated hereby, including
the Merger. Without limiting the generality of the foregoing, the Company's
obligations pursuant to the first sentence of this Section 5.2(a) shall not be
affected by (i) a Change in Recommendation permitted by Section 5.4(c) or (ii)
the commencement, public announcement, disclosure or other communication to the
Special Committee or the Company Board of any Acquisition Proposal or any
intention (whether or not conditional) with respect to any potential or future
Acquisition Proposal, unless, in the case of clause (i), this Agreement is
terminated pursuant to Section 7.1(e), or, in the case of clause (ii), this
Agreement is terminated pursuant to Section 7.1(h).
34
(b) As promptly as practicable following the date of this
Agreement, the Company shall prepare and file with the SEC (i) a proxy statement
(as amended or supplemented and, together with any other required proxy
materials, the "Proxy Statement") relating to the Special Meeting and (ii) a
Rule 13e-3 Transaction Statement on Schedule 13E-3 (as amended or supplemented,
the "Schedule 13E-3"). Prior to filing the Proxy Statement and the Schedule
13E-3, with the SEC, the Company shall consult with Parent and Acquisition Sub
with respect to such filings and shall afford Parent and Acquisition Sub
reasonable opportunity to comment thereon. Parent shall furnish all information
concerning it and Acquisition Sub as the Company may reasonably request in
connection with the preparation of the Proxy Statement and the Schedule 13E-3.
(c) The Company shall as promptly as practicable notify Parent
and Acquisition Sub of the receipt of any oral or written comments from the SEC
relating to the Proxy Statement or the Schedule 13E-3, including any request
from the SEC for amendments of, or supplements to, the Proxy Statement or
Schedule 13E-3 and any request by the SEC for additional information, and
furnish Parent with a copy of any such written comments. Prior to responding to
any such comments, including the filing of any amendment or supplement to the
Proxy Statement or the Schedule 13E-3 with the SEC or the furnishing of
additional information, the Company shall consult with Parent and Acquisition
Sub with respect thereto and shall afford Parent and Acquisition Sub reasonable
opportunity to comment thereon. Subject to the Company's right to terminate this
Agreement pursuant to Section 7.1(h), the Company (in consultation with Parent
and Acquisition Sub) shall use its reasonable best efforts to respond to the
comments of the SEC with respect to the Proxy Statement and the Schedule 13E-3
and to cause the Proxy Statement to be mailed to its shareholders as promptly as
practicable after the Proxy Statement shall have been cleared by the SEC. If at
any time prior to the Effective Time, any information should be discovered by
any party which should be set forth in an amendment or supplement to the Proxy
Statement or the Schedule 13E-3 so that the Proxy Statement or the Schedule
13E-3 would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and,
to the extent required by Applicable Law, an appropriate amendment or supplement
describing such information shall be promptly filed by the Company with the SEC
and disseminated by the Company to the shareholders of the Company; provided,
that prior to such filing, the Company shall consult with Parent and Acquisition
Sub with respect to such filing and shall afford Parent and Acquisition Sub
reasonable opportunity to comment thereon.
Section 5.3 Access to Information.
(a) Upon reasonable advance notice, between the date of this
Agreement and the Closing Date, the Company shall, and shall cause each of its
Subsidiaries and each of their respective Representatives to, (i) give Parent,
Acquisition Sub and their potential financing sources and its and their
respective Representatives (collectively, "Acquiror's Representatives")
reasonable access during normal business hours to the offices, properties, books
and records (including all Tax Returns and other
35
Tax-related information) of the Company and its Subsidiaries, (ii) furnish to
Acquiror's Representatives such financial and operating data and other
information (including all Tax Returns and other Tax-related information)
relating to the Company, its Subsidiaries and their respective operations as
such Persons may reasonably request and (iii) instruct the employees, counsel
and financial advisors of the Company and its Subsidiaries to cooperate with
Parent and Acquisition Sub in their investigation of the business of the Company
and its Subsidiaries; provided, that such access shall only be provided to the
extent that such access would not violate Applicable Laws or the terms of any
Contract to which the Company or any of its Subsidiaries is a party or by which
any of their respective assets are subject; provided, further, that to the
extent that the Company or any of its Subsidiaries is restricted in or
prohibited from providing any such access to any documents or data pursuant to
any such Contract for the benefit of any Third Party, upon the request of
Parent, each of the Company and any such Subsidiary shall use its reasonable
best efforts to obtain any approval, consent or waiver with respect to such
Contract that is necessary to provide such access to Acquiror's Representatives.
Without limiting the foregoing, Parent, Acquisition Sub and the Acquiror's
Representatives shall be allowed to conduct visual inspections, take
measurements, make surveys, conduct a Phase I environmental investigation of the
Company, its Subsidiaries and their properties, but shall not be allowed, absent
the prior written approval of the Company, to perform any environmental sampling
or analysis of the sort commonly referred to as a Phase II environmental
investigation. The Company and its Subsidiaries shall reasonably cooperate with
Parent, Acquisition Sub and the Acquiror's Representatives in connection with
any such environmental investigation, including making available personnel,
outside contractors and outside consultants with knowledge of environmental
matters pertaining to the Company, its Subsidiaries and their properties and
making available relevant documents related to such matters.
(b) In addition to and without limiting the foregoing, from
the date hereof until the Effective Time, the Company shall furnish to Parent,
within fifteen (15) Business Days after the end of each month, the standard
monthly reporting package set forth in Section 5.3(b) of the Company Disclosure
Letter.
(c) Any information relating to the Company or its
Subsidiaries made available pursuant to this Section 5.3, shall be subject to
the provisions of the Confidentiality Agreement. Neither Parent nor Acquisition
Sub shall, and Parent and Acquisition Sub shall cause each of the Acquiror's
Representatives not to, use any information acquired pursuant to this Section
5.3 for any purpose unrelated to the consummation of the transactions
contemplated hereby. No investigation conducted pursuant to this Section 5.3
shall affect or be deemed to modify or limit any representation or warranty made
in this Agreement.
Section 5.4 No Solicitation.
(a) From the date of this Agreement until the Effective Time
or, if earlier, the termination of this Agreement in accordance with its terms,
the Company shall not, (whether directly or indirectly through its
Representatives), and the Company shall direct and use reasonable best efforts
to cause its and its Subsidiaries' respective
36
Representatives not to, directly or indirectly (i) solicit, initiate, knowingly
encourage or knowingly facilitate (including, in each case, by way of furnishing
information) any inquiries or the making or submission of any proposal that
constitutes an Acquisition Proposal, (ii) enter into, continue or otherwise
participate or engage in discussions or negotiations with, or disclose or
provide any non-public information or data relating to the Company or any of its
Subsidiaries to, or afford access to the properties, books or records of the
Company or any of its Subsidiaries to, any Person with respect to an Acquisition
Proposal or (iii) accept an Acquisition Proposal or enter into any agreement or
agreement in principle providing for or relating to an Acquisition Proposal or a
Company Alternative Transaction (other than, in each case, an Acceptable
Confidentiality Agreement) or enter into any agreement or agreement in principle
requiring the Company to abandon, terminate or fail to consummate the
transactions contemplated by this Agreement. Notwithstanding the previous
sentence, if at any time prior to obtaining the Company Shareholder Approval,
(a) the Company has received a bona fide unsolicited written Acquisition
Proposal that did not result from a breach of this Section 5.4(a) and (b) the
Special Committee has reasonably determined in good faith, after consultation
with its outside legal counsel and a financial advisor of nationally recognized
reputation, that such Acquisition Proposal could reasonably be expected to
result in a Superior Proposal, then the Company may take any of the actions
described in clause (ii) of this Section 5.4(a); provided, that the Company (A)
will provide notice to Parent and Acquisition Sub of the receipt of such
Acquisition Proposal within twenty-four (24) hours after the Special Committee
has Knowledge of the receipt thereof, (B) will not disclose any information to
such Person without entering into an Acceptable Confidentiality Agreement and
(C) will promptly provide to Parent and Acquisition Sub any non-public
information concerning the Company provided to such other Person which was not
previously provided to Parent and Acquisition Sub. Upon execution of this
Agreement, the Company shall (whether directly or indirectly through its
Representatives), and the Company shall direct and use reasonable best efforts
to cause its and its Subsidiaries' respective Representatives to, cease
immediately and cause to be terminated any and all existing discussions,
conversations, negotiations and other communications with any Persons conducted
heretofore with respect to, or that could reasonably be expected to lead to, an
Acquisition Proposal and promptly request that all confidential information with
respect thereto furnished by or on behalf of the Company be returned or
destroyed. Without limiting the foregoing, the Company agrees that any violation
of the restrictions set forth in this Section 5.4(a) by any of the Company's
Representatives or its Subsidiaries' Representatives, whether or not purporting
to act on behalf of the Company, shall constitute a breach of this Section
5.4(a) by the Company.
(b) The Company shall, notify Parent promptly (and in any
event within twenty-four (24) hours) of any Acquisition Proposal or of any
request for information or inquiry that could reasonably be expected to lead to
an Acquisition Proposal, the terms and conditions of such Acquisition Proposal,
request or inquiry, and the identity of the Person making such Acquisition
Proposal, request or inquiry. The Company shall inform Parent on a current basis
of the status and terms of any discussions regarding, or relating to, any such
Acquisition Proposal with a Third Party (including amendments and proposed
amendments) and, as promptly as practicable, of any change in the price,
structure or form of the consideration or material terms of and conditions
37
regarding the Acquisition Proposal. In fulfilling its obligations under this
Section 5.4(b), the Company shall provide promptly to Parent copies of all
written proposals. All information provided by the Company to Parent pursuant to
this Section 5.4(b) shall be kept confidential by Parent in accordance with the
terms of the Confidentiality Agreement. Immediately upon determination by the
Special Committee that an Acquisition Proposal constitutes a Superior Proposal,
the Company shall deliver to Parent a written notice ("Notice of Superior
Proposal") advising Parent that the Special Committee has so determined,
specifying the terms and conditions of such Superior Proposal (including the
amount per share that the Company's shareholders will receive per share of
Company Common Stock (valuing any non-cash consideration at what the Special
Committee determines in good faith, after consultation with a financial advisor
of nationally recognized reputation, to be the fair value of the non-cash
consideration)) and including a copy thereof with all accompanying documentation
and the identity of the Person making such Superior Proposal and providing
Parent with a copy of the Superior Proposal and all documents relating thereto.
(c) Each of the Special Committee (subject to approval and
adoption by the Company Board) and the Company Board (as applicable) has adopted
a resolution resolving (subject to the terms and conditions of this Agreement)
to recommend that the holders of shares of Company Common Stock vote for the
approval of this Agreement (the "Company Recommendation"). Neither the Special
Committee nor the Company Board (as applicable) shall (i) withdraw, qualify or
modify, or propose publicly to withdraw, qualify or modify, in each case, in a
manner adverse to Parent, the Company Recommendation or make any statement,
filing or release, in connection with the Special Meeting or otherwise,
inconsistent with the Company Recommendation (it being understood that taking a
neutral position or no position with respect to an Acquisition Proposal shall be
considered an adverse modification of the Company Recommendation), subject to
Section 5.4(d) (any such action, a "Change in Recommendation"), (ii) approve or
recommend, or propose publicly to approve or recommend, any Company Alternative
Transaction and/or (iii) enter into (or cause the Company or any Subsidiary of
the Company to enter into) any letter of intent, agreement in principle,
acquisition agreement or other agreement (A) related to any Company Alternative
Transaction (other than an Acceptable Confidentiality Agreement entered into in
accordance with the provisions of Section 5.4(a)) or (B) requiring the Company
to abandon, terminate or fail to consummate the Merger. Notwithstanding the
foregoing, prior to obtaining the Company Shareholder Approval, (x) the Company
Board may effect a Change in Recommendation if the Special Committee has
determined in good faith, after consultation with its outside legal counsel and
a financial advisor of nationally recognized reputation, that it would be
consistent with its fiduciary duties to the Company's shareholders under
Applicable Law to effect a Change in Recommendation (regardless of the existence
of a Superior Proposal at such time) and (y) (i) the Company Board may approve
or recommend to the shareholders of the Company an Acquisition Proposal that the
Company Board has determined constitutes a Superior Proposal (a "Company
Subsequent Determination"), (ii) terminate this Agreement pursuant to Section
7.1(h) and (iii) enter into any letter of intent, agreement in principle,
acquisition agreement or other agreement related to such Superior Proposal if,
but only if, in each case with respect to clause (y), (A) the Company has fully
complied with its obligations
38
under this Section 5.4(c), and (B) the Company has complied with the terms of
Section 7.1(h) and has paid to Parent the Expenses and the Termination Fee, in
each case, in accordance with Section 7.3.
(d) Nothing contained in this Section 5.4 shall prohibit the
Company, the Special Committee or the Company Board from taking and disclosing
to the Company's shareholders a position with respect to a tender or exchange
offer by a Third Party pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making any disclosure required by Applicable Law or any
disclosure to the Company's shareholders if, in the good faith judgment of the
Special Committee, after consultation with and having considered the advice of
outside legal counsel and a financial advisor of nationally recognized
reputation, such disclosure is necessary in order for the Special Committee to
comply with its fiduciary duties to the Company's shareholders under Applicable
Law.
Section 5.5 Real Estate Transfer Taxes. The Company shall pay all state
or local real property transfer, gains or similar Taxes, if any (collectively,
the "Transfer Taxes"), attributable to the transfer of the beneficial ownership
of the Company's and any of its Subsidiaries' real properties, and any penalties
or interest with respect thereto, payable in connection with the consummation of
the Merger. The Company shall cooperate with Parent in the filing of any returns
with respect to the Transfer Taxes, including supplying in a timely manner a
complete list of all real property interests held by the Company and any of its
Subsidiaries and any information with respect to such properties that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the Company Fee Properties of the Company and any of its
Subsidiaries shall be determined by Parent in its reasonable discretion. The
shareholders of the Company (who are intended third-party beneficiaries of this
Section 5.5) shall be deemed to have agreed to be bound by the allocation
established pursuant to this Section 5.5 in the preparation of any return with
respect to the Transfer Taxes.
Section 5.6 Director and Officer Liability.
(a) Parent shall, or shall cause the Surviving Corporation to,
honor all rights to indemnification and exculpation from liability for acts and
omissions occurring at or prior to the Effective Time and rights to advancements
of expenses relating thereto now existing in favor of the current or former
directors, officers, employees or agents of the Company and its Subsidiaries
(the "Indemnitees") as provided in their respective charters (or similar
constitutive documents) or bylaws or in any indemnification agreement set forth
in Section 5.6 of the Company Disclosure Letter and all such rights shall
survive the Merger and shall not be amended, repealed or otherwise modified in
any manner that would adversely affect the rights thereunder of any such
Indemnitees, unless an alteration or modification of such documents is required
by Applicable Law or the Indemnitee affected thereby otherwise consents in
writing thereto.
(b) For six (6) years after the Effective Time, the Surviving
Corporation shall, and Parent shall cause the Surviving Corporation to, provide
officers' and directors' liability insurance in respect of acts or omissions
occurring at or prior to
39
the Effective Time covering each such Person covered at or prior to the
Effective Time by the Company's officers' and directors' liability insurance
policy maintained by the Company and in effect as of the date hereof on terms
with respect to coverage and amount no less favorable than those of the policy
in effect on the date hereof and described in Section 5.6 of the Company
Disclosure Letter; provided, however, that in no event shall the Surviving
Corporation be required to expend more than an amount per year equal to 300% of
the current annual premium paid by the Company for such insurance (the "Maximum
Amount"), to maintain or procure insurance coverage pursuant hereto; provided,
further, that if the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, the Surviving
Corporation shall maintain or procure, for such six (6) year period, the most
advantageous policy of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount. The provisions of the immediately
preceding sentence shall be deemed to have been satisfied if prepaid policies
have been obtained prior to the Effective Time, which policies provide each such
Person covered at or prior to the Effective Time by the Company's officers' and
directors' liability insurance policy maintained by the Company and in effect as
of the date hereof with coverage, from the Effective Time to the sixth
anniversary of the Effective Time, with respect to claims arising from facts or
events that occurred on or before the Effective Time, including, in respect of
the transactions contemplated by this Agreement, on terms with respect to
coverage and amount no less favorable than the directors' and officers'
liability insurance policy maintained by the Company in effect as of the date
hereof. Section 5.6 of the Company Disclosure Letter sets forth the Maximum
Amount.
(c) This Section 5.6 shall survive the consummation of the
Merger and is intended to be for the benefit of, and shall be enforceable by,
the Indemnitees referred to herein, their heirs and personal representatives and
shall be binding on the Surviving Corporation and its successors and assigns.
(d) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
5.6, and none of the actions described in clause (i) or (ii) of this sentence
shall be taken until such provision is made.
(e) The obligations of the Company and the Surviving
Corporation under this Section 5.6 shall not be terminated or modified in such a
manner as to adversely affect any Indemnitee or insured party to whom this
Section 5.6 applies without the written consent of such affected Indemnitee or
insured party.
Section 5.7 Reasonable Best Efforts. Upon the terms and subject to the
conditions of this Agreement, each party hereto shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary,
40
proper or advisable under Applicable Laws to consummate the transactions
contemplated hereby as promptly as practicable.
Section 5.8 Certain Filings. (a) Parent, Acquisition Sub and the
Company shall cooperate with one another (i) in connection with the preparation
of the Proxy Statement and the Schedule 13E-3, (ii) in determining whether any
action by or in respect of, or filing with, any Governmental Entity is required
(each a "Governmental Consent"), or any actions, consents, approvals or waivers
are required to be obtained from any non-governmental Third Parties (each a
"Third Party Consent") pursuant to any Contract identified on Section 5.8(a) of
the Parent Disclosure Letter and (iii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith or with the Proxy Statement or the Schedule 13E-3 and
seeking timely to obtain any such Governmental or Third Party Consents. In the
event that either party shall fail to obtain any Governmental or Third Party
Consent described in clause (ii) of this Section 5.8(a), such party shall use
reasonable best efforts, and shall take any such actions reasonably requested by
the other party hereto, to minimize any adverse effect upon the Company and
Parent, their respective Subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such Governmental or Third Party Consent.
Without limiting the provisions of this Section 5.8, the Company shall, and
Parent and Acquisition Sub shall, cause its "ultimate parent entity" to file
with the Department of Justice and the Federal Trade Commission a Pre-Merger
Notification and Report Form pursuant to the HSR Act in respect of the
transactions contemplated hereby as promptly as practicable following the
execution of this Agreement, and, subject to Section 5.8(c), each party will use
its reasonable best efforts to take or cause to be taken all actions necessary,
including to comply promptly and fully with any requests for information from
regulatory Governmental Entities, to obtain any clearance, waiver, approval or
authorization relating to the HSR Act that is necessary to enable the parties to
consummate the transactions contemplated hereby.
(b) Subject to Section 5.8(c), (i) the Company, Parent and
Acquisition Sub shall each use its reasonable best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated hereby under any Regulatory Law and (ii) if any administrative,
judicial or legislative action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted) challenging the
transactions contemplated hereby as violative of any Regulatory Law, the
Company, Parent and Acquisition Sub shall each cooperate in all respects and use
its respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits
consummation of the transactions contemplated hereby, including by pursuing all
reasonable avenues of administrative and judicial appeal.
(c) Each of the Company, Parent and Acquisition Sub shall (i)
subject to any restrictions under any Regulatory Law, to the extent practicable,
promptly notify each other of any communication to that party from any
Governmental Entity (including the Federal Trade Commission and the Antitrust
Division of the Department of
41
Justice) with respect to this Agreement and the transactions and other
agreements contemplated hereby and permit the other party to review in advance
any proposed written communication to any Governmental Entity, (ii) unless
required by Applicable Law, not agree to participate in any meeting with any
Governmental Entity in respect of any filings, investigation or other inquiry
with respect to this Agreement and the transactions and other agreements
contemplated hereby unless it consults with the other party in advance and, to
the extent permitted by such Governmental Entity, gives the other party the
opportunity to attend and participate thereat, in each case to the extent
practicable, (iii) subject to any restrictions under any Regulatory Law, furnish
the other party with copies of all correspondence, filings and communications
(and memoranda setting forth the substance thereof) between it and its
Affiliates and their respective representatives on the one hand, and any
Governmental Entity or members of its staff on the other hand, with respect to
this Agreement and the transactions and other agreements contemplated hereby
(excluding documents and communications which are subject to preexisting
confidentiality agreements and to the attorney client privilege or work product
doctrine) and (iv) furnish the other party with such necessary information and
reasonable assistance as such other party and its Affiliates may reasonably
request in connection with their preparation of necessary filings,
registrations, or submissions of information to any Governmental Entities in
connection with this Agreement and the transactions and other agreements
contemplated hereby and thereby, including any filings necessary or appropriate
under the provisions of any Regulatory Law.
Section 5.9 Public Announcements. None of the Company, Parent,
Acquisition Sub, or any of their respective Affiliates shall issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior
approval of the other parties, except to the extent required by law or by any
listing agreement with, or the policies of, the NYSE and after reasonable prior
notice to the other parties hereto.
Section 5.10 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the transactions contemplated hereby,
the Company, Parent and Acquisition Sub shall use reasonable best efforts to
grant such approvals and to take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effect of any such statute or regulation on the transactions contemplated
hereby.
Section 5.11 Certain Notifications. Between the date hereof and the
Effective Time, the Company shall promptly notify Parent and Acquisition Sub of
(i) any notice or other communication from any Person of which the Company has
Knowledge alleging that the consent of such Person is or may be required in
connection with the transactions contemplated hereby, (ii) any notice or
communication from any Governmental Entity in connection with the transactions
contemplated hereby and (iii) any action, suit, charge, complaint, grievance or
proceeding commenced or, to the Company's Knowledge, threatened against the
Company or any Subsidiary which, if pending on the date of this Agreement, would
have been required to have been disclosed
42
pursuant to Section 3.13 or which relates to the consummation of the
transactions contemplated hereby. Between the date hereof and the Effective
Time, Parent and Acquisition Sub shall promptly notify the Company of any
action, suit, charge, complaint, grievance or proceeding commenced or, to the
Knowledge of Parent or Acquisition Sub, threatened against Parent or Acquisition
Sub which, if pending on the date of this Agreement, would reasonably be
expected to materially delay or impair the consummation of the transactions
contemplated hereby. Between the date hereof and the Effective Time, each party
shall promptly notify the other parties hereto in writing after becoming aware
of the occurrence of any event which will, or is reasonably likely to, result in
the failure to satisfy any of the conditions specified in Article VI; provided,
however, that the delivery of any notice pursuant to this Section 5.11 shall not
cure any breach of any representation or warranty requiring disclosure of such
matter prior to the date of this Agreement or otherwise limit or affect the
remedies available hereunder to the party receiving such notice.
Section 5.12 Financing.
(a) Parent and Acquisition Sub shall use their reasonable best
efforts to obtain the Financing as set forth in the Financing Letters; provided,
however, that notwithstanding anything in this Agreement to the contrary, Parent
and Acquisition Sub shall be entitled to obtain, in their sole discretion,
substitute debt financing in place of some or all of the Financing provided
under the Real Estate Debt Letter or one or both of the Senior Debt Letters
("Substitute Debt Financing") with one or more other nationally recognized
financial institutions if, and only if, such Substitute Debt Financing would not
(i) delay the consummation of the Merger past November 1, 2005 and (ii) prevent
the delivery of the solvency letter contemplated by Section 5.13.
(b) Parent shall provide prompt written notice to the Company
of (i) Marathon's or Eugster's refusal or stated intent to refuse to provide the
financing described in the Equity Commitment Letter and (ii) the Lenders'
refusal or stated intent to refuse to provide the financing described in the
Real Estate Debt Letter or any of the Senior Debt Letters, and/or any other
lender's stated intent to refuse to provide the financing contemplated by any
Substitute Debt Financing, and, in each case, the stated reasons therefor. In
any such event, Parent shall use its reasonable best efforts to obtain
alternative financing as promptly as practicable in an amount at least equal to
the Required Cash Amount (it being understood that such reasonable best efforts
would not require Parent to obtain financing that is, (x) with respect to the
economic terms thereof, on terms less favorable to Parent thereunder than those
set forth in the Financing Letters or the financing arrangements relating
thereto, as the case may be, or (y) with respect to the non-economic terms
thereof, on terms that are not substantially similar to those set forth in the
Financing Letters or the financing arrangements relating thereto, as the case
may be).
(c) From the date of this Agreement until the Effective Time,
the Company agrees to provide, and shall cause its Subsidiaries to provide, and
will use its reasonable best efforts to cause their respective Representatives
to provide, all cooperation reasonably requested by Parent in connection with
the arrangement of, and the negotiation of agreements with respect to, the
Financing (and any substitutions,
43
replacements or refinancing thereof), including using reasonable best efforts to
(i) cause appropriate officers and employees to be available, on a customary
basis and upon reasonable notice, to meet with prospective lenders and investors
in presentations, meetings, road shows and due diligence sessions each conducted
at the expense of Parent, (ii) assist with the preparation of disclosure
documents in connection therewith, (iii) execute and deliver any pledge and
security documents or other definitive financing documents as may be reasonably
requested by Parent, (iv) direct (A) its independent accountants and counsel to
provide reasonable assistance to Parent, including requesting that such
accountants provide consent to Parent to use their audit reports and SAS 100
reviews relating to the Company and its Subsidiaries and, at the expense of
Parent, to provide any necessary "comfort letters" in connection with the
Financing and (B) appropriate officers to sign any customary management
representation letters to its independent accountants and (v) solicit and cause
to be delivered such certificates, affidavits and instruments (including
affidavits of title, survey affidavits, estoppel certificates and lien waivers),
legal opinions and other documents, in each case, as may be reasonably requested
by Parent or reasonably required by any Lender or title insurance company and,
in each case, at the expense of Parent.
(d) In addition, in connection with obtaining the Financing,
at such time as requested by Parent and Acquisition Sub, the Company shall (i)
commence a cash tender offer (the "Debt Offer") to purchase any and all of the
Senior Notes and (ii) solicit the consent of the holders of the Senior Notes
regarding certain amendments (the "Indenture Amendments") to the covenants
contained in the Indenture, dated as of March 12, 1992, by and between the
Company and First Trust National Association, as trustee. Such offer to purchase
and consent solicitation shall be made in accordance with the written terms and
conditions provided, from time to time, by Parent to the Company and Applicable
Law; provided, that, in any event, the parties agree that the terms and
conditions of the Debt Offer and Indenture Amendments shall provide that the
closing and effectiveness, respectively, thereof shall be contingent upon the
Closing of the Merger. The Company shall not, without Parent's and Acquisition
Sub's prior consent, waive any condition to the Debt Offer described in the
written terms and conditions provided by Parent to the Company from time to
time.
Section 5.13 Solvency Letter. The parties shall engage, at the expense
of the Company (except that, if the Closing does not occur, the Company and
Acquisition Sub shall share such expense equally), an appraisal firm of national
reputation reasonably acceptable to Parent and the Company to deliver a letter
in a form reasonably acceptable to the Special Committee and addressed to the
Company Board (and on which the Special Committee shall be entitled to rely),
the respective Boards of Directors of Parent and Acquisition Sub and, if
requested by them, the Lenders, supporting the conclusion that immediately after
the Effective Time, and after giving effect to the Merger and the other
transactions contemplated hereby, including the Financing, any Substitute Debt
Financing and the payment of the Required Cash Amount, the Company will be
Solvent (or the equivalent thereof, as determined in the reasonable discretion
of Parent and the Company) (such letter, the "Solvency Letter"). Without
limiting the generality of the foregoing, each of Parent and the Company shall
use their respective reasonable best efforts to (i) make available their
respective officers, agents and other representatives on
44
a customary basis and upon reasonable notice and (ii) provide or make available
such information concerning the business, properties, Contracts, assets and
liabilities of the Company as may reasonably be requested by such appraisal firm
in connection with delivering such Solvency Letter.
Section 5.14 Shareholder Litigation. Without limiting the generality of
Section 5.11, the Company shall promptly advise Parent orally and in writing of
any litigation brought by any shareholder of the Company against the Company
and/or its directors relating to this Agreement, the Merger and/or the
transactions contemplated by this Agreement and shall keep Parent reasonably
informed regarding any such litigation. The Company shall give Parent the
opportunity to consult with the Company regarding the defense or settlement of
any such shareholder litigation, shall give due consideration to Parent's advice
with respect to such shareholder litigation and shall not settle any such
litigation prior to such consultation and consideration without Parent's prior
written consent.
Section 5.15 Tax Covenants.
(a) Immediately prior to the Closing, the Company shall
furnish to Parent and Acquisition Sub a certification in accordance with
Treasury Regulation Section 1.1445-2(c), and otherwise in form and substance
reasonably satisfactory to Parent and Acquisition Sub, certifying that the
Company Common Stock is regularly traded on an established securities market
within the meaning of Treasury Regulations section 1.1445-2(c)(2).
(b) During the period from the date hereof to the Effective
Time, the Company shall and shall cause each of the Company's Subsidiaries to:
(i) timely file all Tax Returns ("Post-Signing Returns") required to be filed by
the Company or such Subsidiary, as the case may be, and all Post-Signing Returns
shall be prepared in a manner consistent with past practice (except as required
by Applicable Law), (ii) timely pay all Taxes due and payable by the Company and
such Subsidiary, respectively, and (iii) promptly notify Parent of any federal
or state income or franchise, or other material claim for Taxes pending against
or with respect to the Company or any such Subsidiary (or any significant
developments with respect to ongoing federal or state income or franchise or
other material claim for Taxes), including material Tax liabilities and material
refund claims.
Section 5.16 Employees and Employee Benefit Plans.
(a) For a period of not less than one (1) year following the
Closing Date, the Surviving Corporation shall provide all individuals who are
employees of the Company and the Subsidiaries (including employees who are not
actively at work on account of illness, disability or leave of absence) on the
Closing Date (the "Affected Employees"), while employed by the Company or the
Subsidiaries, with compensation and benefits (not including equity compensation)
which are substantially comparable in the aggregate to the compensation and
benefits provided to such Affected Employees as of the date of this Agreement.
Nothing contained in this Section 5.16 shall be deemed to
45
grant any Affected Employee any right to continued employment after the Closing
Date. The Surviving Corporation shall continue to provide and recognize all
accrued but unused vacation of Affected Employees as of the Closing Date. Any
preexisting condition clause in any of the welfare plans (including medical,
dental and disability coverage) established or maintained by the Surviving
Corporation after the Closing Date shall be waived for the Affected Employees
(other than pre-existing conditions that are already in effect with respect to
Affected Employees, to the extent permitted by Applicable Law), and Affected
Employees shall be credited with service with the Company for all purposes under
such plans. Parent shall, and shall cause the Surviving Corporation to, assume
and honor all agreements set forth in Section 5.16(a) of the Company Disclosure
Letter to the extent of the respective terms of such agreements. Subject to the
preceding sentence, nothing in this Agreement shall be interpreted as limiting
the power of the Surviving Corporation or Parent to amend or terminate any
particular Plan or any other particular employee benefit plan, program,
agreement or policy or as requiring the Surviving Corporation or Parent to offer
to continue the employment of any employee of the Company or its subsidiaries
for any period of time or to offer to continue (other than as required by its
written terms) any Plan.
(b) The Company shall take all action necessary to amend its
2000 Executive Long Term Incentive Plan effective immediately prior to the
Closing Date to provide that awards under such plan shall be payable only in
cash.
(c) The Surviving Corporation and the Subsidiaries shall be
responsible for all liabilities or obligations under the WARN Act and similar
state and local rules, statutes and ordinances resulting from the Closing or
from the actions of the Surviving Corporation or any Subsidiary following the
Closing. The Surviving Corporation shall be liable for any workers' compensation
or similar workers' protection claims of any Affected Employee incurred prior to
the Closing Date.
Section 5.17 Delisting. Each of the parties agrees to cooperate with
each other in taking, or causing to be taken, all actions necessary to delist
the Company Common Stock from the NYSE and terminate registration under the
Exchange Act; provided, that such delisting and termination shall not be
effective until after the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of the Company, Parent and Acquisition Sub to
effect the Merger are subject to the satisfaction or, to the extent permitted by
Applicable Law, the waiver on or prior to the Effective Time of each of the
following conditions:
(a) The Company Shareholder Approval shall have been obtained
at the Special Meeting.
46
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and, other than
the filing provided for in Section 1.3, all notices, reports and other filings
required to be made prior to the Effective Time by the Company or Parent or any
of their respective Subsidiaries with, and all consents, registrations,
approvals, permits and authorizations required to be obtained prior to the
Effective Time by the Company or Parent or any of their respective Subsidiaries
from, any Governmental Entity in connection with the execution and delivery of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby by the Company, Parent and Acquisition Sub shall have been
made or obtained (as the case may be), except for those the failure to be made
or obtained, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect or an Acquiror Entity Material Adverse
Effect.
(c) No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, law,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and prohibits
the consummation of or disallows the Merger, and no federal or state
Governmental Entity shall have instituted any proceeding that is pending seeking
any such judgment, decree, injunction or other order to prohibit the
consummation of or disallow the Merger.
(d) The Company Board, the respective Boards of Directors of
Parent and Acquisition Sub and, if requested by them, the Lenders, shall have
received the letter referred to in Section 5.13 or Acquisition Sub shall have
provided to the Company Board, the Special Committee, the respective Boards of
Directors of Parent and Acquisition Sub and the Lenders, if requested by them,
from another appraisal firm a comparable letter in form and substance reasonably
satisfactory to the Special Committee and Parent.
Section 6.2 Conditions to the Company's Obligation to Effect the
Merger. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction or, to the extent permitted by Applicable Law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) The representations of Parent and Acquisition Sub
contained in the first sentence of Section 4.1 (Organization), in Section 4.2
(Authorization) and in Section 4.4 (Capitalization) shall be true and correct in
all respects in each case as of the Effective Time (or, to the extent such
representations and warranties speak as of an earlier date, they shall be true
and correct in all respects as of such earlier date). The representations and
warranties of Parent and Acquisition Sub contained in this Agreement (other than
those listed in the preceding sentence) shall be true and correct (without
giving effect to any limitation as to "materiality" or "Acquiror Entity Material
Adverse Effect" set forth therein) at and as of the Effective Time as if made at
and as of such time (except to the extent expressly made as of an earlier date,
in which case as of such earlier date), except where the failure of such
representations and warranties to be true and correct (without giving effect to
any limitation as to "materiality" or "Acquiror
47
Entity Material Adverse Effect" set forth therein) would not, individually or in
the aggregate, reasonably be expected to have an Acquiror Entity Material
Adverse Effect.
(b) Parent and Acquisition Sub shall have performed in all
material respects their respective agreements and covenants contained in or
contemplated by this Agreement that are required to be performed by them at or
prior to the Effective Time pursuant to the terms hereof.
(c) The Company shall have received certificates signed on
behalf of Parent and Acquisition Sub by an executive officer of each of Parent
and Acquisition Sub, dated the Closing Date, to the effect that the conditions
set forth in Sections 6.2(a) and 6.2(b) have been satisfied.
Section 6.3 Conditions to Parent's and Acquisition Sub's Obligations to
Effect the Merger. The obligations of Parent and Acquisition Sub to effect the
Merger shall be further subject to the satisfaction, or to the extent permitted
by Applicable Law, the waiver on or prior to the Closing of each of the
following conditions:
(a) The representations of the Company contained in the first
sentence of Section 3.1 (Organization), in Section 3.2 (Authorization), in
Section 3.4 (Capitalization), in Section 3.9(a)(ii)(x) (No Company Material
Adverse Effect), in Section 3.19 (Opinion of Financial Advisors), in Section
3.20 (Finders' and Other Fees), in Section 3.21 (Rights Amendment) and in
Section 3.22 (State Takeover Statutes) shall be true and correct in all
respects, in each case as of the Effective Time (or, to the extent such
representations and warranties speak as of an earlier date, they shall be true
and correct in all respects as of such earlier date). The representations and
warranties of the Company contained in this Agreement (other than those listed
in the preceding sentence) shall be true and correct (without giving effect to
any limitation as to "materiality" or "Company Material Adverse Effect" set
forth therein) at and as of the Effective Time as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such earlier date), except where the failure of such representations and
warranties to be true and correct (without giving effect to any limitation as to
"materiality" or "Company Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(b) The Company shall have performed in all material respects
each of its agreements and covenants contained in or contemplated by this
Agreement that are required to be performed by it at or prior to the Effective
Time pursuant to the terms hereof.
(c) Parent and Acquisition Sub shall have received
certificates signed on behalf of the Company by an executive officer of the
Company, dated the Closing Date, to the effect that the conditions set forth in
Sections 6.3(a) and 6.3(b) have been satisfied.
48
(d) The Company shall have received the financing proceeds
under the Financing Letters (other than the equity portion of the Financing
under the Equity Commitment Letter), in the amounts and on the terms and
conditions set forth in the Financing Letters, or the financing proceeds of any
Substitute Debt Financing, in the amounts and on the terms and conditions set
forth in the financing arrangements related thereto, or shall have obtained
proceeds from alternative financing as provided in Section 5.12(b); provided,
that this condition shall be inapplicable if, and to the extent that, Parent
and/or Acquisition Sub shall not have performed or complied with their
obligations under Section 5.12.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided below,
whether before or after the Company Shareholder Approval:
(a) by mutual written consent of Parent, Acquisition Sub and
the Company, which consent shall have been approved by action of their
respective Boards of Directors;
(b) by the Company, Parent or Acquisition Sub if the Closing
shall not have occurred on or before November 1, 2005 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation (including such party's obligations under Section 5.8) or other
breach under this Agreement has been the cause of, or resulted in, the failure
of the Merger to occur on or before the Termination Date;
(c) by the Company, Parent or Acquisition Sub if any
Governmental Entity of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger (which order, decree, ruling or other action
the parties shall have used their reasonable best efforts to resist, resolve or
lift, as applicable, subject to Section 5.8), and such order, decree, ruling or
other action shall have become final and nonappealable;
(d) by the Company, Parent or Acquisition Sub if at the
Special Meeting or any adjournment thereof the Company Shareholder Approval
shall not have been obtained;
(e) by Parent or Acquisition Sub, if (i) the Company Board or
any committee thereof shall have effected a Change in Recommendation or (ii) the
Company Board or any committee thereof shall have made, or advised Parent or
Acquisition Sub of its intention to make, a Company Subsequent Determination;
49
(f) by the Company, if there is a breach by Parent or
Acquisition Sub of any representation, warranty, covenant or agreement contained
in this Agreement that would give rise to a failure of a condition set forth in
Section 6.2(a) or 6.2(b) and which has not been cured (or is not capable of
being cured) within 15 days following receipt by Parent or Acquisition Sub, as
the case may be, of written notice from the Company stating the Company's
intention to terminate this Agreement pursuant to this Section 7.1(f) and the
basis for such termination; provided, that at the time of the delivery of such
notice, the Company shall not be in material breach of its obligations under
this Agreement;
(g) by Parent or Acquisition Sub, if there is a breach by the
Company of any representation, warranty, covenant or agreement contained in this
Agreement that would give rise to a failure of a condition set forth in Section
6.3(a) or 6.3(b) which has not been cured (or is not capable of being cured)
within 15 days following receipt by the Company of written notice from Parent
and Acquisition Sub stating Parent's or Acquisition Sub's intention to terminate
this Agreement pursuant to this Section 7.1(g) and the basis for such
termination; provided, that at the time of the delivery of such notice, neither
Parent or Acquisition Sub shall be in material breach of its obligations under
this Agreement; or
(h) by the Company if (A) the Company Board makes a Company
Subsequent Determination in accordance with the terms of Section 5.4(c), (B) the
Company shall have given Parent five (5) Business Days' prior written notice of
its intention to make such Company Subsequent Determination, it being understood
and agreed that any amendment to the financial terms of such Superior Proposal
shall require a new two (2) Business Day period to afford Parent the opportunity
to negotiate with the Company as contemplated below, (C) the Company and the
Special Committee shall have cooperated in good faith with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the Company Recommendation without a Company Subsequent
Determination; provided, however, that any such adjustment to the terms and
conditions of this Agreement shall be at the discretion of Parent at the time,
(D) Parent shall not have, within five (5) Business Days of Parent's receipt of
the notice described clause (B) above (or within such two (2) Business Day
period in the case of such an amendment), made an offer that the Special
Committee determines in good faith, after consultation with and having
considered the advice of outside legal counsel and a financial advisor of
nationally recognized reputation, to be as favorable to the Company's
shareholders as such Superior Proposal, and (E) the Company prior to or
concurrently with such termination pays to Parent in immediately available funds
the Termination Fee.
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
Section 7.2 Effect of Termination. If this Agreement is terminated by
either the Company, Parent or Acquisition Sub as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the Company, Parent or Acquisition Sub or their
respective officers or directors,
50
except with respect to this Section 7.2, Section 7.3 and Article VIII (except
for Section 8.1), which provisions shall survive such termination, and except
that, notwithstanding anything to the contrary contained in this Agreement,
neither the Company nor Parent or Acquisition Sub shall be relieved or released
from any liabilities or damages arising out of any willful or knowing breach of
this Agreement and except that the Confidentiality Agreement shall survive such
termination.
Section 7.3 Fees and Expenses.
(a) The Company agrees to reimburse Parent (or its designees)
for all documented out-of-pocket expenses of Parent and its Affiliates,
including fees and expenses of financial advisors, outside legal counsel,
accountants, experts and consultants, incurred by Parent and its Affiliates or
on their respective behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby (collectively, "Expenses"), up to a maximum
amount of $12 million, if this Agreement is terminated:
(i) by Parent or Acquisition Sub pursuant to Section
7.1(e)(ii);
(ii) by Parent or Acquisition Sub pursuant to Section
7.1(g) (I) as a result of the Company's willful breach of any of its
representations, warranties or covenants contained in this Agreement,
which breach gives rise to the failure of a condition set forth in
Section 6.3(a) or 6.3(b) to be satisfied or (II) as a result of the
Company's material breach of any of its representations or warranties
set forth in Section 3.17, which breach gives rise to the failure of
the condition set forth in Section 6.3(d) to be satisfied; provided,
that in the case of subclause (II) of this clause (ii), the maximum
amount of Expenses to be paid to Parent shall not exceed $8 million;
(iii) by the Company pursuant to Section 7.1(h); or
(iv) by the Company, Parent or Acquisition Sub
pursuant to Section 7.1(b) or Section 7.1(d), and on or before the date
of any such termination described in this clause (iv), an Acquisition
Proposal shall have been publicly announced, disclosed or otherwise
communicated to the Special Committee or the Company Board.
(b) (x) The Company agrees to pay Parent (or its designees) an
amount equal to $27 million (less any amounts paid to Parent (or its designees)
under Section 7.3(a) or Section 7.3(b)(y)) (the "Termination Fee") if this
Agreement is terminated:
(i) by Parent or Acquisition Sub pursuant to Section
7.1(e)(ii);
(ii) by the Company pursuant to Section 7.1(h);
51
(iii) by the Company, Parent or Acquisition Sub
pursuant to Section 7.1(b) or Section 7.1(d), and (I) on or before the
date of any such termination described in this clause (iii), an
Acquisition Proposal shall have been publicly announced, disclosed or
otherwise communicated to the Special Committee or the Company Board,
and, in the case of Section 7.1(d) only, such Acquisition Proposal
shall not have been withdrawn prior to the Special Meeting and (II)
within twelve (12) months of such termination, the Company Board shall
have recommended, the Company shall have entered into a definitive
agreement with respect to, or the Company shall have consummated, a
Company Alternative Transaction or a Company Alternative Transaction
shall have occurred (in each case, with references to "20%" in clauses
(i), (ii) and (iii) of the definition of "Company Alternative
Transaction" deemed to be references to "50.1%"). Notwithstanding the
foregoing, if the Company would have been required to make a payment
under this clause (iii) but for the fact that the Person (or any of its
Affiliates) with whom the Company shall have reached a definitive
agreement to consummate, or shall have consummated, a Company
Alternative Transaction (with references to "20%" in clauses (i), (ii)
and (iii) of the definition of "Company Alternative Transaction" deemed
to be references to "50.1%") within twelve (12) months after
termination of this Agreement withdrew an Acquisition Proposal prior to
the event giving rise to the right of termination of this Agreement
under Section 7.1(d) to avoid payment of the Termination Fee, then the
Company shall upon the earlier of reaching such definitive agreement
and such consummation of a Company Alternative Transaction (with
references to "20%" in clauses (i), (ii) and (iii) of the definition of
"Company Alternative Transaction" deemed to be references to "50.1%")
pay Parent the amount set forth in this clause (iii);
(iv) by Parent or Acquisition Sub pursuant to Section
7.1(g) as a result of the Company's willful breach of any of its
representations, warranties or covenants contained in this Agreement,
which breach gives rise to the failure of a condition set forth in
Section 6.3(a) or 6.3(b) to be satisfied and within twelve (12) months
of such termination, the Company Board shall have recommended, the
Company shall have entered into a definitive agreement with respect to,
or the Company shall have consummated, a Company Alternative
Transaction or a Company Alternative Transaction shall have occurred
(in each case, with references to "20%" in clauses (i), (ii) and (iii)
of the definition of "Company Alternative Transaction" deemed to be
references to "50.1%"); or
(v) by Parent or Acquisition Sub pursuant to Section
7.1(e)(i) and within twelve (12) months of such termination, the
Company Board shall have recommended, the Company shall have entered
into a definitive agreement with respect to, or the Company shall have
consummated, a Company Alternative Transaction or a Company Alternative
Transaction shall have occurred (in each case, with references to "20%"
in clauses (i), (ii) and (iii) of the definition of "Company
Alternative Transaction" deemed to be references to "50.1%").
52
(y) The Company agrees to pay Parent (or its
designees) an amount equal to $15 million if this Agreement is
terminated by Parent or Acquisition Sub pursuant to Section 7.1(e)(i).
(c) Any payment required to be made pursuant to Section 7.3(a)
or Section 7.3(b) shall be made (X) concurrently with a termination by the
Company giving rise to the payments provided for in Section 7.3(a)(iii), Section
7.3(a)(iv) or Section 7.3(b)(ii) and (Y) not more than two (2) Business Days
after any other event giving rise to any payment provided for in Section 7.3(a)
or Section 7.3(b) and not covered under clause (X). All payments under this
Section 7.3 shall be made by wire transfer of immediately available funds to an
account designated by the party entitled to receive payment.
(d) No payment under this Section 7.3 shall limit in any
respect any rights or remedies available to Parent and Acquisition Sub relating
to any willful breach or failure to perform any representation, warranty,
covenant or agreement set forth in this Agreement resulting, directly or
indirectly, in the right to receive any payment under this Section 7.3.
(e) Except as otherwise provided in this Section 7.3, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, that if the Closing does not occur, the Company and
Acquisition Sub shall share equally all fees and expenses (other than attorneys'
and accountants' fees and expenses) incurred by the Company in relation to the
Debt Offer and the printing and filing of the Proxy Statement and Schedule 13E-3
(in each case, including any related preliminary materials, financial statements
and exhibits) and any amendments or supplements thereto and all filing fees
required in connection with the filing of Premerger Notifications under the HSR
Act and any filings under antitrust and competition laws of any other applicable
jurisdiction shall be shared equally by the parties.
(f) The Company acknowledges that the agreements contained in
this Section 7.3 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent would not enter into this
Agreement. Accordingly, if the Company fails promptly to pay any amount due
pursuant to this Section 7.3 and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the amount
set forth in this Section 7.3, the Company shall pay to Parent its reasonable
costs and expenses (including reasonable attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be made.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Definitions. As used in this Agreement, the following terms
have the meanings specified or referred to in this Section 8.1 and shall be
equally
53
applicable to both singular and plural forms. Any agreement referred to
below means such agreement as amended, supplemented or modified from time to
time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"ACCEPTABLE CONFIDENTIALITY AGREEMENT" means a confidentiality
agreement with terms and conditions no less favorable to the Company than the
Confidentiality Agreement, but which exclude standstill provisions.
"ACQUIROR ENTITY" has the meaning set forth in the first
sentence of Article IV.
"ACQUIROR ENTITY MATERIAL ADVERSE EFFECT" means any effect,
change, event, fact, condition, occurrence or development that, individually or
in the aggregate, with other effects, changes, events, facts, conditions,
occurrences or developments, has been or would reasonably be expected to be
materially adverse to the condition (financial or otherwise), assets,
liabilities, properties, business or results of operations of the Acquiror
Entities taken as a whole; provided, however, that to the extent any effect,
change, event, fact, condition, occurrence or development is caused by or
results from any of the following, it shall not be taken into account in
determining whether there has been an "Acquiror Entity Material Adverse Effect":
(i) the execution of this Agreement, the public announcement thereof or any
transaction contemplated hereby or (ii) factors affecting the U.S. economy or
financial markets as a whole and not specifically relating to (or having a
materially disproportionate effect (relative to the effect on other Persons
operating in the same industry as the Acquiror Entities) on) the Acquiror
Entities taken as whole.
"ACQUIROR'S REPRESENTATIVES" has the meaning set forth in
Section 5.3(a).
"ACQUISITION PROPOSAL" means any inquiry, offer or proposal
other than any inquiry offer or proposal by Parent or Acquisition Sub (whether
or not in writing) relating to a Company Alternative Transaction.
"ACQUISITION SUB" has the meaning set forth in the
introductory paragraph of this Agreement.
"AFFECTED EMPLOYEES" has the meaning set forth in Section
5.16(a).
"AFFILIATE" has the meaning as defined in Rule 12b-2 under the
Exchange Act.
"AGREEMENT" means this Agreement and Plan of Merger by and
among Parent, Acquisition Sub and the Company.
"APPLICABLE LAW" means all applicable laws, statutes, orders,
rules, regulations and all applicable legally binding policies or guidelines
promulgated, or judgments, decisions or orders entered, by any Governmental
Entity.
54
"ARTICLES OF MERGER" has the meaning set forth in Section 1.3.
"BENEFICIAL OWNERSHIP" (and related terms such as
"beneficially owned" or "beneficial owner") has the meaning set forth in Rule
13d-3 under the Exchange Act.
"BUSINESS DAY" means any day on which banks are not required
or authorized to close in the City of New York.
"CERTIFICATE" has the meaning set forth in Section 2.7.
"CHANGE IN RECOMMENDATION" has the meaning set forth in
Section 5.4(c).
"CLEANUP" means all actions required under Environmental Laws
to (i) cleanup, remove, treat or remediate Hazardous Materials in the indoor or
outdoor environment, (ii) perform pre-remedial studies and investigations and
post-remedial monitoring and care, (iii) respond to any requests by a
Governmental Entity for information or documents relating to cleanup, removal,
treatment or remediation or potential cleanup, removal, treatment or remediation
of Hazardous Materials in the indoor or outdoor environment or (iv) prevent the
Release of Hazardous Materials so that they do not migrate, endanger, or
threaten to endanger public health or welfare or the indoor or outdoor
environment.
"CLOSING" has the meaning set forth in Section 1.2.
"CLOSING DATE" has the meaning set forth in Section 1.2.
"CODE" means the Internal Revenue Code of 1986.
"COMPANY" has the meaning set forth in the introductory
paragraph of this Agreement.
"COMPANY 1991 STOCK OPTION PLAN" has the meaning set forth in
Section 3.4(b)(iv).
"COMPANY 1993 RESTRICTED STOCK PLAN" means the Company's 1993
Restricted Stock Plan.
"COMPANY 1995 STOCK OPTION PLAN" has the meaning set forth in
Section 3.4(b)(v).
"COMPANY 1998 STOCK INCENTIVE PLAN" has the meaning set forth
in Section 3.4(b)(vi).
"COMPANY 2001 STOCK INCENTIVE PLAN" has the meaning set forth
in Section 3.4(b)(vii).
"COMPANY 2004 FORM 10-K" has the meaning set forth in Section
3.5.
55
"COMPANY 2004 STOCK INCENTIVE PLAN" has the meaning set forth
in Section 3.4(b)(viii).
"COMPANY ALTERNATIVE TRANSACTION" means any (i) transaction or
series of transactions pursuant to which any Third Party acquires or would
acquire, directly or indirectly, beneficial ownership of more than 20% of the
outstanding voting power of the Company, whether from the Company or its
shareholders pursuant to a tender offer, exchange offer or otherwise, (ii) any
acquisition or proposed acquisition of the Company or any of its Significant
Subsidiaries (at the 20% level) by a merger, consolidation, recapitalization,
business combination, share exchange, liquidation, dissolution or similar
transaction (including any so-called "merger of equals" and whether or not
Company or any of its Significant Subsidiaries (at the 20% level) is the entity
surviving any such merger or business combination), (iii) any other transaction
(including any recapitalization) pursuant to which any Third Party acquires or
would acquire, directly or indirectly, assets or control of assets (including
for this purpose the outstanding equity securities of the Subsidiaries of the
Company and any entity surviving any merger or business combination involving
any of them) of the Company and/or any of the Subsidiaries of the Company, as
appropriate, for consideration with a fair market value equal to 20% or more of
the aggregate market value of all of the outstanding shares of Company Common
Stock on the date prior to the date hereof or (iv) any dividend on, or
repurchase of, capital stock of the Company (x) involving payments to holders of
such capital stock in an aggregate amount greater than 20% of the value of the
Company's total consolidated assets and (y) financed substantially through the
sale of, or incurrence of indebtedness secured by, any Company Real Property.
"COMPANY ARTICLES" has the meaning set forth in Section 3.1.
"COMPANY BYLAWS" has the meaning set forth in Section 3.1.
"COMPANY BOARD" has the meaning set forth in the first recital
of this Agreement.
"COMPANY COMMON STOCK" has the meaning set forth in Section
2.6.
"COMPANY CONVERTIBLE SECURITY" has the meaning set forth in
Section 3.4(d).
"COMPANY DISCLOSURE LETTER" means the disclosure letter
delivered by the Company to Parent dated the date hereof, which disclosure
letter relates to this Agreement and is designated therein as the Company
Disclosure Letter.
"COMPANY FEE PROPERTY" has the meaning set forth in Section
3.17(a).
"COMPANY LEASED PROPERTY" has the meaning set forth in Section
3.17(b).
"COMPANY LEASES" has the meaning set forth in Section 3.17(b).
56
"COMPANY MATERIAL ADVERSE EFFECT" means any effect, change,
event, fact, condition, occurrence or development that, individually or in the
aggregate, with other effects, changes, events, facts, conditions, occurrences
or developments, has been or would reasonably be expected to be materially
adverse to the condition (financial or otherwise), assets, liabilities,
properties, business or results of operations of the Company and its
Subsidiaries, taken as a whole; provided, however, that to the extent any
effect, change, event, fact, condition, occurrence or development is caused by
or results from any of the following, it shall not be taken into account in
determining whether there has been a "Company Material Adverse Effect": (i)
changes in general economic conditions, (ii) the announcement of this Agreement
and the transactions contemplated hereby, (iii) general changes or developments
in the industries in which the Company and the Company Subsidiaries operate or
(iv) changes in GAAP which the Company is required to adopt, unless, in the case
of the foregoing clauses (i) and (iii), such changes or developments referred to
therein would reasonably be expected to have a materially disproportionate
impact on the condition (financial or otherwise), assets, liabilities,
properties, business or results of operations of the Company and its
Subsidiaries taken as a whole relative to other industry participants.
"COMPANY MATERIAL CONTRACT" has the meaning set forth in
Section 3.15(a).
"COMPANY PERMITS" has the meaning set forth in Section
3.13(b).
"COMPANY PREFERRED STOCK" has the meaning set forth in Section
3.4(a).
"COMPANY REAL PROPERTY" has the meaning set forth in Section
3.17(b).
"COMPANY RECOMMENDATION" has the meaning set forth in Section
5.4(c).
"COMPANY RESTRICTED SHARES" has the meaning set forth in
Section 3.4(c).
"COMPANY SEC DOCUMENTS" has the meaning set forth in Section
3.6(a).
"COMPANY SHAREHOLDER APPROVAL" has the meaning set forth in
Section 3.2(c).
"COMPANY STOCK OPTION PLANS" has the meaning set forth in
Section 3.4(c).
"COMPANY STOCK OPTIONS" has the meaning set forth in Section
3.4(c).
"COMPANY STOCK PLANS" means the Company Stock Option Plans,
the Company 1993 Restricted Stock Plan, the Company's 2000 Executive Long-Term
Incentive Plan and the Company's Employee Stock Purchase Plan.
"COMPANY SUBLEASES" has the meaning set forth in Section
3.17(b).
57
"COMPANY SUBSEQUENT DETERMINATION" has the meaning set forth
in Section 5.4(c).
"COMPANY VOTING DEBT" has the meaning set forth in Section
3.4(e).
"CONFIDENTIALITY AGREEMENT" means the Confidentiality
Agreement dated as of April 5, 2004 by and between Xxxxxxx Xxxx Xxxxxxx &
Xxxxxxxx Incorporated and Xxxxxxx Xxxxx, on behalf of the Company.
"CONSTITUENT CORPORATIONS" has the meaning set forth in the
introductory paragraph of this Agreement.
"CONTRACT" means any agreement, contract, lease, note, loan,
evidence of indebtedness, purchase order, letter of credit, settlement
agreement, franchise agreement, undertaking, covenant, license, instrument,
obligation or commitment.
"COPYRIGHT" has the meaning set forth in the definition of
"Intellectual Property Rights."
"CREDIT FACILITY" means the Amended and Restated Loan and
Security Agreement dated as of August 19, 2003 by and among the Company, certain
of its Subsidiaries, Fleet Retail Finance Inc. and each of the lenders,
guarantors and financial institutions party thereto.
"DEBT OFFER" has the meaning set forth in Section 5.12(d).
"EFFECTIVE TIME" has the meaning set forth in Section 1.3.
"ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation or written notice by any Person or Governmental Entity
alleging potential liability on the part of the Company or any of its
Subsidiaries (including, requests for information and any notices pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, ("CERCLA") or any similar Environmental Law, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned or
operated by the Company or any of its Subsidiaries, (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law by
the Company or any of its Subsidiaries or (iii) any contractual liabilities
asserted against the Company or any of its Subsidiaries.
"ENVIRONMENTAL LAWS" means all federal, interstate, state,
local and foreign laws and regulations relating to pollution or protection of
the environment, including laws relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, transport or handling of Hazardous
Materials.
58
"ENVIRONMENTAL PERMIT" means any permit, approval,
identification number, license and other authorization required under any
applicable Environmental Law.
"EQUITY COMMITMENT LETTER" has the meaning set forth in
Section 4.8.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" means any Person that, together with the
Company and its Subsidiaries, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
"EUGSTER" has the meaning set forth in Section 4.8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXPENSES" has the meaning set forth in Section 7.3(a).
"FINANCING" has the meaning set forth in Section 4.8.
"FINANCING LETTERS" has the meaning set forth in Section 4.8.
"GAAP" means United States generally accepted accounting
principles.
"GOVERNMENTAL CONSENT" has the meaning set forth in Section
5.8(a).
"GOVERNMENTAL ENTITY" means any federal, state or local
government or any court, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic, foreign or
supranational.
"HAZARDOUS MATERIALS" means all substances, wastes or
materials defined or regulated as hazardous substances, oils, pollutants or
contaminants in the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. Section 300.5, or any other Environmental Law, and including
toxic mold and friable asbestos.
"HOLDER" has the meaning set forth in Section 2.10(b).
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"INDEMNITEES" has the meaning set forth in Section 5.6(a).
"INDENTURE AMENDMENTS" has the meaning set forth in Section
5.12(d).
"INSURANCE POLICIES" has the meaning set forth in Section
3.16.
"INTELLECTUAL PROPERTY RIGHTS" means all U.S. and foreign (i)
patents, patent applications, patent disclosures, and all related continuations,
continuations-in-part, divisionals, reissues, re-examinations, substitutions,
and extensions thereof
59
("Patents"), (ii) trademarks, service marks, trade names, domain names, logos,
slogans, trade dress, and other similar designations of source or origin,
together with the goodwill symbolized by any of the foregoing ("Trademarks"),
(iii) copyrights and copyrightable subject matter ("Copyrights"), (iv) rights of
publicity, (v) moral rights and rights of attribution and integrity, (vi)
computer programs (whether in source code, object code, or other form),
databases, compilations and data, technology supporting the foregoing, and all
documentation, including user manuals and training materials, related to any of
the foregoing ("Software"), (vii) trade secrets and all confidential
information, know-how, inventions, proprietary processes, formulae, models, and
methodologies ("Trade Secrets"), (viii) all rights in the foregoing and in other
similar intangible assets, (ix) all applications and registrations for the
foregoing and (x) all rights and remedies against infringement,
misappropriation, or other violation thereof.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" of any Person which is not an individual means,
with respect to any specific matter, the actual knowledge, after due inquiry, of
such Person's executive officers and any other officer having primary
responsibility for such matter.
"LEASES" has the meaning set forth in Section 3.17(b).
"LENDERS" has the meaning set forth in Section 4.8.
"LIENS" means any mortgages, pledges, claims, liens, charges,
encumbrances, easements, servitudes, restrictive covenants, options, rights of
first refusal, transfer restrictions and security interests of any kind or
nature whatsoever, except, in the case of securities, for limitations on
transfer imposed by federal or state securities laws.
"MARATHON" has the meaning set forth in Section 4.4.
"MAXIMUM AMOUNT" has the meaning set forth in Section 5.6(b).
"MERGER" has the meaning set forth in the first recital of
this Agreement.
"MERGER CONSIDERATION" has the meaning set forth in Section
2.7.
"MERGER FUND" has the meaning set forth in Section 2.10(d).
"XXXXXXX XXXXX" means Xxxxxxx Xxxxx & Co.
"NOTICE OF SUPERIOR PROPOSAL" has the meaning set forth in
Section 5.4(b).
"NYSE" has the meaning set forth in Section 3.3(b).
"OPTION CONSIDERATION" has the meaning set forth in Section
2.9.
60
"PARENT" has the meaning set forth in the introductory
paragraph of this Agreement.
"PARENT DISCLOSURE LETTER" means the disclosure letter
delivered by Parent to the Company dated the date hereof, which disclosure
letter relates to this Agreement and is designated therein as the Parent
Disclosure Letter.
"PATENTS" has the meaning set forth in the definition of
"Intellectual Property Rights."
"PAYING AGENT" has the meaning set forth in Section 2.10(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED ENCUMBRANCES" means (i) Liens for Taxes,
assessments and other governmental charges not yet due and payable, or, if due,
not delinquent or being contested in good faith by appropriate proceedings
during which collection or enforcement against the relevant Company Real
Property is stayed and provided, that adequate reserves have been set aside for
the payment thereof and; (ii) zoning and building laws and covenants,
conditions, rights-of-way and other similar encumbrances of public record;
provided, that individually and in the aggregate, such laws and encumbrances are
not violated by the as-built improvements located on the relevant Company Real
Property or the occupancy and use of the relevant Company Real Property on the
date hereof and do not materially or adversely impair the current use, occupancy
or value of such properties nor materially impair the ability of the owner or
lessee of such Company Real Property to obtain financing by using such assets as
collateral.
"PERSON" means any person, employee, individual, corporation,
limited liability company, partnership, trust, joint venture, or any other
non-governmental entity or any governmental or regulatory authority or body.
"PLANS" has the meaning set forth in Section 3.11(a).
"POST-SIGNING RETURNS" has the meaning set forth in Section
5.15(b).
"PROXY STATEMENT" has the meaning set forth in Section 5.2(b).
"REAL ESTATE DEBT LETTER" has the meaning set forth in Section
4.8.
"REAL ESTATE LENDER" has the meaning set forth in Section 4.8.
"REGULATORY LAW" means the Xxxxxxx Act, the Xxxxxxx Act, the
HSR Act, the Federal Trade Commission Act and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate (i) foreign investment, (ii) foreign exchange or currency
controls or (iii) actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition.
61
"RELEASE" means any actual or threatened release, spill,
emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the indoor or outdoor environment (including ambient
air, surface water, groundwater and surface or subsurface strata or the
abandonment or disposal of any barrels, containers or other closed receptacles
containing Hazardous Materials) of Hazardous Materials, including the movement
of Hazardous Materials through or in the air, soil, surface water, groundwater
or real property.
"REPRESENTATIVE" means, with respect to any Person, such
Person's officers, directors, employees, attorneys, accountants, advisers,
representatives, Affiliates and agents.
"REQUIRED CASH AMOUNT" has the meaning set forth in Section
4.8.
"RIGHTS" has the meaning specified in the Rights Agreement.
"RIGHTS AGREEMENT" means the Rights Agreement dated as of July
3, 1992 between the Company and Xxxxx Fargo Bank, N.A.(as successor to Norwest
Bank Minnesota, National Association), as amended and restated as of September
24, 1997 and further amended by Amendment to Rights Agreement dated as of May
22, 1998.
"XXXXXXXX-XXXXX" has the meaning set forth in Section 3.6(b).
"SCHEDULE 13E-3" has the meaning set forth in Section 5.2(b).
"SEC" means the Securities and Exchange Commission.
"SECTION 180.0622(2)(b) OF THE WBCL" means Section
180.0622(2)(b) of the WBCL, including judicial interpretations thereof and
Section 180.40(6), its predecessor statute.
"SECURITIES ACT" means the Securities Act of 1933.
"SENIOR DEBT LENDER" has the meaning set forth in Section 4.8.
"SENIOR DEBT LETTER" has the meaning set forth in Section 4.8.
"SENIOR NOTES" means the 9.25% Senior Unsecured Notes of the
Company due March 15, 2022 issued pursuant to the Indenture dated as of March
12, 1992 between the Company and First Trust National Association, as trustee,
as supplemented by the First Supplemental Indenture dated as of May 22, 1998
between the Company and First Trust National Association, as trustee.
"SERIES B PREFERRED STOCK" has the meaning set forth in
Section 3.4(a).
"SIGNIFICANT SUBSIDIARY" of any Person means a Subsidiary of
such Person that would constitute a "significant subsidiary" of such Person
within the meaning of Rule 1.02(v) of Regulation S-X as promulgated by the SEC.
62
"SOFTWARE" has the meaning set forth in the definition of
"Intellectual Property Rights."
"SOLVENCY LETTER" has the meaning set forth in Section 5.13.
"SOLVENT" when used with respect to any Person means that, as
of any date of determination, (i) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are generally determined in accordance with applicable federal
laws governing determinations of the insolvency of debtors, (ii) the present
fair saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (iii) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business and (iv) such Person will be able to pay its debts
as they mature. For purposes of this definition, (i) "debt" means liability on a
"claim," and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
"SPECIAL COMMITTEE" has the meaning set forth in the first
recital of this Agreement.
"SPECIAL MEETING" has the meaning set forth in Section 5.2(a).
"SUBSIDIARY" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"SUBSTITUTE DEBT FINANCING" has the meaning set forth in
Section 5.12(a).
"SUPERIOR PROPOSAL" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by a Third Party to
enter into a Company Alternative Transaction (with references to "20%" in the
definition of "Company Alternative Transaction" deemed to be references to
"50.1%") on terms that the Special Committee determines in its good faith
judgment, after consultation with and having considered the advice of outside
legal counsel and a financial advisor of nationally recognized reputation, (i)
would result in a transaction that is more favorable to the Company's
shareholders (in their capacities as shareholders) from a financial point of
view than the Merger and the transactions contemplated by this Agreement and
(ii) is reasonably capable of being completed on the terms proposed, in each
case taking into
63
account all legal, financial, regulatory, fiduciary and other aspects of the
proposal, including the likelihood that such transaction will be consummated.
"SURVIVING CORPORATION" has the meaning set forth in Section
1.1.
"SURVIVING CORPORATION COMMON STOCK" has the meaning set forth
in Section 2.6.
"TAX" and "TAXES" means any and all taxes, customs, duties,
tariffs, imposts, deficiencies, levies or other like assessments, charges or
fees (including estimated taxes, charges and fees), including income,
corporation, advance corporation, gross receipts, transfer, excise, real or
personal property, sales, use, net worth, recording, alternative minimum, stamp,
occupation, value-added, license, payroll, withholding, social security and
franchise or other governmental taxes or charges, imposed by the United States
or any state, county, local or foreign Governmental Entity, and including any
liability for any of the foregoing items of another Person pursuant to Treasury
Regulation Section 1.1502-6 or any similar or analogous provision of Applicable
Law (as transferor or successor) and such term shall include any interest,
fines, penalties or additions to tax attributable to such taxes.
"TAX RETURN" means any report, return, document, statement,
declaration or other written information or filing required to be supplied to
any taxing or other Governmental Entity (foreign or domestic) in connection with
Taxes, including information returns and any documents with respect to or
accompanying payments of estimated Taxes or requests for the extension of time
in which to file any such report, return, document, declaration or other
information.
"TERMINATION DATE" has the meaning set forth in Section
7.1(b).
"TERMINATION FEE" has the meaning set forth in Section 7.3(b).
"THIRD PARTY" means any Person or group of Persons (other than
the Company and its Affiliates or Parent and its Affiliates).
"THIRD PARTY CONSENT" has the meaning set forth in Section
5.8(a).
"TRADEMARK" has the meaning set forth in the definition of
"Intellectual Property Rights."
"TRADE SECRETS" has the meaning set forth in the definition of
"Intellectual Property Rights."
"TREASURY REGULATIONS" means the United States Treasury
regulations promulgated under the Code.
"TRANSFER TAXES" has the meaning set forth in Section 5.5.
00
"XXXX XXX" means the Worker Adjustment and Retraining
Notification Act of 1988.
"WBCL" has the meaning set forth in Section 1.1.
Section 8.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement to any
party hereunder shall be in writing and deemed given if addressed as provided
below (or at such other address as the addressee shall have specified by notice
actually received by the addressor) and if either (i) actually delivered in
fully legible form, to such address, (ii) in the case of any nationally
recognized express mail service, one (1) Business Day shall have elapsed after
the same shall have been deposited with such service or (iii) if by fax, on the
day on which such fax was sent; provided, that a copy is sent the same day by
overnight courier or express mail service.
If to the Company, to:
ShopKo Stores, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx, Xxxxxxxxx 00000
Attention: President and Chief Executive Officer
General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Xxxxxxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Special Committee, to:
Hillcrest Capital Partners
Suite 2150
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
65
Sidley Xxxxxx Xxxxx & Xxxx LLP
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Parent or Acquisition Sub, to:
Badger Retail Holding, Inc.
c/o Goldner Xxxx Xxxxxxx & Xxxxxxxx Incorporated
3700 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Israel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx & Xxxxxx, P.A.
5500 Xxxxx Fargo Center
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 8.3 Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
other covenants and agreements contained herein which by their terms are to be
performed in
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whole or in part, or which prohibit actions, subsequent to the Effective Time,
shall survive the Effective Time in accordance with their terms.
Section 8.4 Interpretation. For purposes of this Agreement, (i) the
words "include," "includes" and "including" shall be deemed to be followed by
the words "without limitation," (ii) the word "or" is not exclusive and (iii)
the words "herein," "hereof," "hereby," "hereto" and "hereunder" refer to this
Agreement as a whole. Unless the context otherwise requires, a reference herein
(i) to an Article or Section means an Article and Section of this Agreement,
(ii) to an agreement, instrument or other document means such agreement,
instrument or other document as amended, supplemented and modified from time to
time to the extent permitted by the provisions thereof and by this Agreement and
(iii) to a statute means such statute as amended from time to time and includes
any successor legislation thereto and any rules or regulations promulgated
thereunder. Titles to Articles and headings of Sections are inserted for
convenience of reference only and shall not be deemed a part of or to affect the
meaning or interpretation of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted. The Company Disclosure Letter and the Parent
Disclosure Letter are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. Any capitalized term used in the Company
Disclosure Letter or the Parent Disclosure Letter shall have the same meaning
assigned to such term herein. The description or listing of a matter, event or
thing within the Company Disclosure Letter or the Parent Disclosure Letter
(whether in response for a description or listing of material items or
otherwise) shall not be deemed an admission or acknowledgment that such matter,
event or thing is "material." Matters reflected in the Company Disclosure Letter
or the Parent Disclosure Letter are not necessarily limited to matters required
by this Agreement to be reflected in the Company Disclosure Letter or the Parent
Disclosure Letter, as the case may be. Such additional matters are set forth for
informational purposes only and do not necessarily include other matters of a
similar nature.
Section 8.5 Amendments, Modification and Waiver.
(a) Except as may otherwise be provided herein, any provision
of this Agreement may be amended, modified or waived by the parties hereto, by
action taken by or authorized by their respective Boards of Directors, prior to
the Closing Date if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company, Parent and Acquisition Sub
or, in the case of a waiver, by the party against whom the waiver is to be
effective; provided, that no such amendment, modification or waiver by the
Company shall be effective unless it is authorized by the Special Committee; and
provided, further, that after the Company Shareholder Approval has been
obtained, there shall not be made any amendment that by Applicable Law or rule
of the NYSE requires further approval by the Company's shareholders without such
further approval.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of
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any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law
or in equity.
Section 8.6 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, that none of the Company, Parent or
Acquisition Sub may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement, in whole or in part (whether by operation of
law or otherwise) without the consent of the other parties hereto and, in the
case of the Company, the Special Committee. Notwithstanding anything to the
contrary herein, Acquisition Sub may assign any of its rights hereunder to any
Affiliate of Acquisition Sub.
Section 8.7 Specific Performance. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as
a remedy.
Section 8.8 Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury.
(a) Except to the extent that the laws of the State of
Wisconsin are mandatorily applicable to the Merger, this Agreement and the
transactions contemplated hereby, and all disputes between the parties under or
related to the Agreement or the facts and circumstances leading to its
execution, whether in contract, tort or otherwise, shall be governed by and
construed in accordance with the laws of the State of
Delaware, applicable to
contracts executed in and to be performed entirely within the State.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Court of Chancery of the State of
Delaware in any action or
proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating thereto, and
each of the parties hereby irrevocably and unconditionally (i) agrees not to
commence any such action or proceeding except in such court, (ii) agrees that
any claim in respect of any such action or proceeding may be heard and
determined in such court, (iii) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in such court, and (iv) waives,
to the fullest extent permitted by Applicable Law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in such
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Applicable Law. Each party to this Agreement irrevocably consents to service of
process in the manner provided for
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notices in Section 8.2. Nothing in this Agreement shall affect the right of any
party to this Agreement to serve process in any other manner permitted by
Applicable Law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.8(c).
Section 8.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic substance
of the transactions contemplated herein are not affected in any manner
materially adverse to any party hereto. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
Section 8.10 Third Party Beneficiaries. Except as provided in Section
5.5, this Agreement is solely for the benefit of the Company and its successors
and permitted assigns, with respect to the obligations of Parent and Acquisition
Sub under this Agreement, and for the benefit of Parent and Acquisition Sub, and
their respective successors and permitted assigns, with respect to the
obligations of the Company under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right; provided, that the
Indemnitees and insured parties referred to in Section 5.6 shall be third party
beneficiaries entitled to enforce the provisions of Section 5.6 of this
Agreement; and provided, further, that the Affected Employees referred to in
Section 5.16(a) and the individuals party to the agreements set forth in Section
5.16(a) of the Company Disclosure Letter shall each be third party beneficiaries
entitled to enforce the provisions of Section 5.16(a).
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Section 8.11 Entire Agreement. This Agreement, together with any
exhibits or schedules hereto, the Company and Parent Disclosure Letters and the
Confidentiality Agreement, constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all other prior
agreements or understandings, both written and oral, between the parties or any
of them with respect to the subject matter hereof.
Section 8.12 Counterparts; Fax Signatures; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
deemed an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. Each of the parties hereto (i) has agreed to
permit the use, from time to time and where appropriate, of faxed signatures in
order to expedite the Closing, (ii) intends to be bound by its respective faxed
signature, (iii) is aware that the other parties hereto will rely on the faxed
signature and (iv) acknowledges such reliance and waives any defenses to the
enforcement of the documents effecting the transactions contemplated hereby
contemplated by this Agreement based on the fact that a signature was sent by
fax. This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BADGER RETAIL HOLDING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
BADGER ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
SHOPKO STORES, INC.
By: /s/ Xxxxxx X Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
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