1
AGREEMENT AND PLAN OF MERGER
dated as of
August 17, 1999
among
FOOD LION, INC.,
HANNAFORD BROS. CO.
AND
FL ACQUISITION SUB, INC.
2
TABLE OF CONTENTS
Page
Article 1 The Merger.....................................................2
Section 1.01 The Merger...............................................2
Section 1.02 Articles of Incorporation................................2
Section 1.03 Bylaws...................................................2
Section 1.04 Directors and Officers...................................2
Article 2 Conversion of Securities.......................................3
Section 2.01 Conversion of Securities.................................3
Section 2.02 Surrender of Certificates................................6
Section 2.03 No Further Ownership Rights in Company Common Stock......8
Section 2.04 Lost, Stolen or Destroyed Certificates...................8
Section 2.05 Withholding Rights.......................................8
Section 2.06 Dissenting Shares........................................9
Section 2.07 Stock Option and Other Stock Plans.......................9
Article 3 Representations and Warranties of Company.....................11
Section 3.01 Organization and Power..................................11
Section 3.02 Corporate Authorization.................................12
Section 3.03 Governmental Authorization..............................12
Section 3.04 Non-Contravention.......................................13
Section 3.05 Capitalization of Company...............................13
Section 3.06 Capitalization of Subsidiaries..........................14
Section 3.07 SEC Filings.............................................14
Section 3.08 Financial Statements....................................15
Section 3.09 Disclosure Documents....................................15
Section 3.10 Information Supplied....................................15
Section 3.11 Absence of Certain Changes..............................16
Section 3.12 No Undisclosed Material Liabilities.....................17
Section 3.13 Litigation..............................................17
Section 3.14 Taxes...................................................18
Section 3.15 Employee Benefit Plans; ERISA...........................19
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TABLE OF CONTENTS
(continued)
Page
Section 3.16 Compliance with Laws; No Default........................21
Section 3.17 No Default..............................................21
Section 3.18 Finders' Fees...........................................22
Section 3.19 Environmental Matters...................................22
Section 3.20 Opinion of Financial Advisor............................23
Section 3.21 [Intentionally deleted].................................23
Section 3.22 Takeover Statutes.......................................23
Section 3.23 Affiliates..............................................23
Section 3.24 Company's Articles of Incorporation.....................23
Section 3.25 Company Rights Agreement................................24
Article 4 Representations and Warranties of Parent......................24
Section 4.01 Organization and Power..................................24
Section 4.02 Corporate Authorization.................................24
Section 4.03 Governmental Authorization..............................25
Section 4.04 Non-Contravention.......................................25
Section 4.05 Capitalization of Parent................................25
Section 4.06 Capitalization of Subsidiaries..........................26
Section 4.07 SEC Filings.............................................27
Section 4.08 Financial Statements....................................27
Section 4.09 Disclosure Documents....................................27
Section 4.10 Information Supplied....................................28
Section 4.11 Absence of Certain Changes..............................28
Section 4.12 No Undisclosed Material Liabilities.....................29
Section 4.13 Litigation..............................................29
Section 4.14 Taxes...................................................30
Section 4.15 Employee Benefits, ERISA................................30
Section 4.16 Compliance with Laws....................................32
Section 4.17 No Default..............................................32
Section 4.18 Finders' Fees...........................................32
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TABLE OF CONTENTS
(continued)
Page
Section 4.19 Environmental Matters...................................32
Section 4.20 [Intentionally Deleted].................................33
Section 4.21 Takeover Statutes.......................................33
Section 4.22 Affiliates..............................................33
Section 4.23 Merger Subsidiary.......................................33
Section 4.24 Financing...............................................33
Article 5 Covenants.....................................................34
Section 5.01 Conduct of Company......................................34
Section 5.02 Conduct of Parent.......................................36
Section 5.03 Shareholder Meeting; Proxy Materials; Form S-4..........38
Section 5.04 Access to Information...................................39
Section 5.05 No Solicitation.........................................40
Section 5.06 Notice of Certain Events................................41
Section 5.07 Reasonable Best Efforts.................................42
Section 5.08 Cooperation.............................................43
Section 5.09 Public Announcements....................................43
Section 5.10 Further Assurances......................................44
Section 5.11 Affiliates..............................................44
Section 5.12 Director and Officer Liability..........................44
Section 5.13 Obligations of Merger Subsidiary........................45
Section 5.14 Listing of Stock........................................45
Section 5.15 Antitakeover Statutes...................................45
Section 5.16 Parent Board............................................45
Section 5.17 Employee Benefits.......................................45
Section 5.18 Stock Exchange Agreement................................46
Section 5.19 Definitive Financing Documents..........................46
Article 6 Conditions to the Merger......................................47
Section 6.01 Conditions to the Obligations of Each Party.............47
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TABLE OF CONTENTS
(continued)
Page
Section 6.02 Conditions to the Obligations of Parent and Merger
Subsidiary....................................................47
Section 6.03 Conditions to the Obligations of Company................48
Article 7 Termination...................................................48
Section 7.01 Termination.............................................48
Section 7.02 Effect of Termination...................................49
Section 7.03 Payments................................................50
Article 8 Miscellaneous.................................................50
Section 8.01 Certain Definitions.....................................50
Section 8.02 Notices.................................................51
Section 8.03 Entire Agreement; Non-Survival of Representations and
Warranties; Third Party Beneficiaries.........................51
Section 8.04 Amendments; No Waivers..................................52
Section 8.05 Successors and Assigns..................................52
Section 8.06 Governing Law...........................................52
Section 8.07 Jurisdiction............................................52
Section 8.08 Counterparts; Effectiveness.............................53
Section 8.09 Interpretation..........................................53
Section 8.10 Severability............................................53
Section 8.11 Specific Performance....................................53
Section 8.12 Joint and Several Liability.............................53
Schedules
Exhibit A Form of Company Voting Agreement
Exhibit B Stock Exchange Agreement
Exhibit C Registration Rights Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 17, 1999,
among FOOD LION, INC., a North Carolina corporation ("Parent"), HANNAFORD BROS.
CO., a Maine corporation ("Company"), and FL ACQUISITION SUB, INC., a Maine
corporation and a wholly-owned subsidiary of Parent ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of Parent and
Company have approved, and deem it advisable and in the best interests of their
respective shareholders to consummate, the merger of Merger Subsidiary with and
into Company on the terms and conditions set forth herein;
WHEREAS, pursuant to the Merger, among other things, each
issued and outstanding share of Company Common Stock, including Company Rights
(each as defined in Section 2.01(a)), issued and outstanding immediately prior
to the effective time, other than shares held directly by Parent or shares held
by Dissenting Holders (as defined in Section 2.06) will be converted into the
right to receive Merger Consideration (as defined in Section 2.02(b));
WHEREAS, as a condition and inducement to Parent's willingness
to enter into this Agreement, concurrently with the execution and delivery of
this Agreement, Parent and certain stockholders of Company (the "Voting
Stockholders") are entering into a voting agreement dated as of the date of this
Agreement (the "Company Voting Agreement"), a form of which is attached hereto
as Exhibit A, pursuant to which such stockholders agree to vote their shares of
Company Common Stock (as hereinafter defined) in favor of the proposal to
approve and adopt the Merger and this Agreement;
WHEREAS, simultaneously with the execution of this Agreement,
Parent and the Voting Stockholders are entering into a Stock Exchange Agreement
(the "Stock Exchange Agreement"), a form of which is attached hereto as Exhibit
B, whereby the Voting Stockholders agree to sell shares of Company Common Stock
to Parent in exchange for shares of Parent Common Stock (as defined herein) and
cash as set forth therein, such transaction to be consummated immediately prior
to the consummation of the Merger; and
WHEREAS, simultaneously with the execution of this Agreement,
Parent and certain stockholders are entering into a Registration Rights
Agreement, a form of which is attached hereto as Exhibit C, whereby Company has
agreed to register the resale of the shares of Parent Common Stock that such
stockholders will receive in connection with the Merger and the Stock Exchange
Agreement.
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, and agreements set forth
herein, the parties hereto agree as follows:
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ARTICLE 1
The Merger
Section 1.01 The Merger. (a) Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as hereinafter
defined), Merger Subsidiary shall be merged (the "Merger") with and into Company
in accordance with the Maine Business Corporation Act (the "Maine Law"),
whereupon the separate existence of Merger Subsidiary shall cease, and Company
shall continue as the surviving corporation (the "Surviving Corporation").
(a) Upon the terms and subject to the conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a date
(the "Closing Date") which shall be the second business day after satisfaction
or waiver of the conditions set forth in Article 6, other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions, at the offices of Weil, Gotshal &
Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time,
date or place as agreed to in writing by the parties hereto.
(b) Upon the Closing, Company and Merger Subsidiary will file articles
of merger, with an attached plan of merger in a form to be agreed upon by the
parties in accordance with the terms of this Agreement, with the Secretary of
State of the State of Maine and make all other filings or recordings required by
the Maine Law in connection with the Merger. The Merger shall become effective
at such time as the articles of merger are duly filed with the Secretary of
State of the State of Maine or at such later time as is agreed by Parent and
Company and specified in the articles of merger (the "Effective Time").
(c) The Merger shall have the effects set forth in Section 905 of the
Maine Law.
Section 1.02 Articles of Incorporation. The articles of incorporation
of Company shall be the articles of incorporation of the Surviving Corporation,
except that, at the Effective Time, certain amendments thereto as agreed to by
Parent and Company shall be effected in the articles of merger filed pursuant to
Section 1.01(c).
Section 1.03 Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.04 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
the Maine Law and the articles of incorporation and bylaws of the Surviving
Corporation, (a) the directors of Merger Subsidiary at the Effective Time shall
be the directors of the
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Surviving Corporation, and (b) the officers of Company at the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE 2
Conversion of Securities
Section 2.01 Conversion of Securities. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
capital stock of Parent, Merger Subsidiary or Company:
(a) Company Common Stock. Each share of common stock, par value $0.75
per share, of Company ("Company Common Stock"), including the associated right
(the "Company Rights") to purchase shares of Series A Junior Participating
Preferred Stock, no par value, of Company, pursuant to the terms of the Rights
Agreement, dated as of December 16, 1997, between Company and Continental Stock
Transfer and Trust Company (the "Company Rights Agreement"), issued and
outstanding immediately prior to the Effective Time (other than any shares of
Company Common Stock held directly by Parent, all of which shares shall be
cancelled and extinguished, or shares held by Dissenting Holders (as defined in
Section 2.06)) automatically will be converted into the right to receive,
pursuant to the provisions of this Section 2.01:
(i) (A) $79.00 in cash, without interest (the "Per Share Cash
Amount") or (B) the number of fully paid and non-assessable shares of Class A
common stock ("Parent Common Stock"), of Parent equal to $79.00 divided by (i)
the average of the per share last sales prices, regular way (rounded to 4
decimal points, the "Average Parent Price") of Parent as reported on the New
York Stock Exchange, Inc. (the "NYSE") composite transactions reporting system
as reported in the New York City edition of The Wall Street Journal, or, if not
reported therein, another authoritative source) for the ten consecutive trading
days (the "Average Period") prior to (but not including) the Closing Date or
(ii) $ 9.00, whichever is higher (the "Exchange Ratio") or (C) a combination of
cash and shares of Parent Common Stock, all as determined in accordance with
this Section 2.01.
(ii) The aggregate number of shares of Company Common Stock to
be converted into the right to receive cash in the Merger (the "Cash Election
Number") shall be 27,316,686 shares plus 86% of any shares of Company Common
Stock issued after the date hereof pursuant to the exercise of Company Stock
Options outstanding at the date hereof. The remaining number of shares of
Company Common Stock outstanding immediately prior to the Effective Time (the
"Stock Election Number"), will be converted into the right to receive Parent
Common Stock in the Merger.
(iii) Subject to the allocation and election procedures set
forth in this Section 2.01, each record holder of shares of Company Common Stock
immediately prior to the Effective Time will be entitled in respect of each such
share to
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(i) elect to receive cash for such share (a "Cash Election"), (ii) elect to
receive Parent Common Stock for such share (a "Stock Election"), or (iii)
indicate that such record holder has no preference as to the receipt of cash or
Parent Common Stock for such share (a "Non-Election"). All such elections will
be made on a form designated for that purpose (a "Form of Election").
(iv) If the aggregate number of shares covered by Cash
Elections (the "Cash Election Shares") exceeds the Cash Election Number, all
shares of Company Common Stock covered by Stock Elections (the "Stock Election
Shares") and all shares of Company Common Stock covered by Non-Elections or as
to which no election is made (the "Non-Election Shares") will be converted into
the right to receive Parent Common Stock, and the Cash Election Shares (which,
for the purposes of the calculation below, shall include Dissenting Shares, if
any) will be converted into the right to receive cash and Parent Common Stock in
the following manner:
Each Cash Election Share will be converted into the
right to receive (A) an amount of cash, without
interest, equal to the product of (x) the Per Share
Cash Amount and (y) a fraction (the "Cash Fraction"),
the numerator of which is the Cash Election Number
and the denominator of which will be the total number
of Cash Election Shares, and (B) a number of shares
of Parent Common Stock equal to the product of (x)
the Exchange Ratio and (y) a fraction equal to one
minus the Cash Fraction.
(v) If the aggregate number of Stock Election Shares exceeds
the Stock Election Number, all Cash Election Shares and all Non-Election Shares
will be converted into the right to receive cash, and all Stock Election Shares
will be converted into the right to receive Parent Common Stock and cash in the
following manner:
Each Stock Election Share will be converted into the
right to receive (A) an amount of shares of Parent
Common Stock equal to the product of (x) the Exchange
Ratio and (y) a fraction (the "Stock Fraction"), the
numerator of which will be the Stock Election Number
and the denominator of which will be the total number
of Stock Election Shares, and (B) an amount in cash,
without interest, equal to the product of (x) the Per
Share Cash Amount and (y) a fraction equal to one
minus the Stock Fraction.
(vi) In the event that neither subparagraph (iv) or
subparagraph (v) above is applicable, all Cash Election Shares will be converted
into the right to receive cash, all Stock Election Shares will be converted into
the right to receive Parent Common Stock, and all Non-Election Shares will be
converted into the right to receive (A) an amount in cash equal to the product
of (x) the Per Share Cash Amount and
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(y) a fraction, the numerator of which is the Cash Election Number less the Cash
Election Shares (which, for the purposes of this calculation, shall include
Dissenting Shares, if any) and the denominator of which is the Non-Election
Shares and (B) a number of shares of Parent Common Stock equal to the product of
(x) the Exchange Ratio and (y) a fraction, the numerator of which is the Stock
Election Number less the Stock Election Shares and the denominator of which is
the Non-Election Shares.
(b) Election Procedure.
(i) Parent and Company each will use its reasonable best
efforts to cause a Form of Election to be mailed not less than thirty (30) days
prior to the anticipated Effective Time to all holders of record of shares of
Company Common Stock and to make the Form of Election available to all persons
who become record holders of Company Common Stock subsequent to such time.
Elections will be made by record holders of Company Common Stock by mailing to
the Exchange Agent a Form of Election. Holders of record of shares of Company
Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Stock Representative") may submit multiple Forms
of Election, provided that such Stock Representative certifies that each such
Form of Election covers all the shares of Company Common Stock held by each
Stock Representative for a particular beneficial owner. To be effective, a Form
of Election must be properly completed, signed and submitted to the Exchange
Agent. Parent will have the discretion, which it may delegate in whole or in
part to the Exchange Agent, to determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election. The decision of Parent (or the Exchange Agent) in
such matters, if reasonably reached, will be conclusive and binding. Neither
Parent nor the Exchange Agent will be under any obligation to notify any person
of any defect in a Form of Election submitted to the Exchange Agent. The
Exchange Agent will make all computations contemplated by this Section 2.01 and
all such computations will be conclusive and binding on the holders of Company
Common Stock.
(ii) For the purposes hereof, a record holder of Company
Common Stock who does not submit a Form of Election that is received by the
Exchange Agent prior to the Election Deadline (as defined herein) will be deemed
to have made a Non-Election. If Parent or the Exchange Agent determine that any
purported Cash Election or Stock Election was not properly made (and any such
defect is not subsequently cured), such purported Cash Election or Stock
Election will be deemed to be of no force and effect and the shareholder making
such purported election will for purposes hereof be deemed to have made a
Non-Election.
(iii) A Form of Election must be received by the Exchange
Agent by the close of business on the last business day prior to the day during
which the Effective Time occurs (the "Election Deadline") in order to be
effective. All elections may be revoked by record holders submitting the Forms
of Election if such revocation is in writing and received by the Exchange Agent
prior to the Election Deadline.
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(c) Cancellation of Certain Shares. Each share of Company Common Stock
held in the treasury of Company or owned by Parent or Merger Subsidiary
immediately prior to the Effective Time shall be cancelled and extinguished, and
no consideration shall be delivered therefor.
(d) Capital Stock of Merger Subsidiary. Each share of Common Stock,
$0.75 par value, of Merger Subsidiary issued and outstanding immediately prior
to the Effective Time shall automatically be converted into one validly issued,
fully paid and non-assessable share of common stock, $0.75 par value, of the
Surviving Corporation.
(e) Adjustment. The Exchange Ratio shall be adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock occurring after the date hereof and having a record or effective
date prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock to be received by such holder) shall receive from Parent an
amount of cash (rounded down to the nearest whole cent), without interest
thereon, equal to the product of (i) such fraction and (ii) the Closing Date
Price.
For purposes hereof, the "Closing Date Price" of a share of Parent
Common Stock shall be the closing sales price of a share of Parent Common Stock
as reported on the NYSE for the trading day immediately prior to the day during
which the Effective Time occurs.
Section 2.02 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
reasonably acceptable to Company, which may be Parent's existing transfer agent,
to act as the exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Merger Consideration. At the Closing, Parent
shall make available to the Exchange Agent for exchange in accordance with this
Article 2 certificates for the shares of Parent Common Stock issuable, and cash
payable, pursuant to Section 2.01(a) in exchange for outstanding shares of
Company Common Stock and cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 2.01(f) and any dividends or distributions
to which holders of shares of Company Common Stock may be entitled pursuant to
Section 2.02(d). The shares of Parent Common Stock issuable pursuant to Section
2.01(a) and the cash payable pursuant to Sections 2.01(a) and (f) and Section
2.02(d) are referred to collectively as the "Merger Consideration."
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(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record as of the
Effective Time a certificate or certificates (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive a pro
rata portion of the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent shall
reasonably specify) and (ii) instructions for effecting the exchange of the
Certificates for a pro rata portion of the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Parent, together with such letter of
transmittal duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a pro rata portion of the Merger Consideration in
accordance with Section 2.01, and the Certificate so surrendered shall forthwith
be cancelled. Until so surrendered, each outstanding Certificate will be deemed
from and after the Effective Time, for all corporate purposes, subject to
Section 2.02(d) as to the payment of dividends, to evidence only the ownership
of the number of full shares of Parent Common Stock and the aggregate Per Share
Cash Amount into which the shares of Company Common Stock evidenced by such
Certificate shall have been so converted and the right to receive an amount in
cash in lieu of the issuance of any fractional shares in accordance with Section
2.01(f) and any dividends or distributions payable pursuant to Section 2.02(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to the effect of
applicable abandoned property, escheat or similar laws, following surrender of
any such Certificate, there shall be delivered to the record holder thereof, (i)
a certificate representing whole shares of Parent Common Stock and the aggregate
Per Share Cash Amount issuable and payable in exchange for such Certificate,
without interest, (ii) payments of the amount of dividends or other
distributions with a record date after the Effective Time then payable with
respect to such whole shares of Parent Common Stock and (iii) cash in lieu of
any fractional shares in accordance with Section 2.01(f).
(e) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered or if any other portion of the
Merger Consideration is to be payable to a person other than the person to whom
such Certificate is registered, it will be a condition of the issuance and
payment thereof that the Certificate so surrendered will be properly endorsed,
accompanied by any documents required to evidence and effect such transfer and
otherwise be in proper form for transfer and that the
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person requesting such exchange will have paid to Parent or any agent designated
by it any applicable transfer taxes required by reason of the issuance of a
certificate for shares of Parent Common Stock in any name, or the payment of any
other portion of the Merger Consideration to any person, other than that of the
registered holder of the Certificate surrendered, or shall provide evidence that
any applicable transfer taxes have been paid.
(f) No Liability. Notwithstanding anything to the contrary in this
Section 2.02, none of the Exchange Agent, Parent, the Surviving Corporation nor
any other party hereto shall be liable to any person in respect of any Merger
Consideration for any amount properly delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(g) Termination of Exchange Agent. Any Merger Consideration made
available to the Exchange Agent pursuant to Section 2.02(b) and not exchanged
within twelve months after the Effective Time pursuant to this Section 2.02
shall be returned by the Exchange Agent to Parent, which shall thereafter act as
Exchange Agent, and thereafter any holder of unsurrendered Certificates shall
look as a general creditor only to Parent for payment of any funds to which such
holder may be due, subject to applicable law.
Section 2.03 No Further Ownership Rights in Company Common Stock. The
Merger Consideration issued and paid in exchange of shares of Company Common
Stock in accordance with the terms hereof shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, and there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article 2.
Section 2.04 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration; provided, however, that Parent may, in its discretion and as a
condition precedent to such delivery, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
Section 2.05 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled, or shall be entitled to cause the Exchange Agent, to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of shares of Company Common Stock such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code and the rules and regulations promulgated thereunder, or any
provision of a Tax
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law. To the extent that amounts are so withheld by the Surviving Corporation,
Parent or the Exchange Agent, as the case may be, such amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect to which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
Section 2.06 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any issued and outstanding shares of Company Common Stock held by a person who
has demanded appraisal of such shares in accordance with Section 909 of the
Maine Law ("Dissenting Holder") and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal ("Dissenting
Shares"), shall not be converted into or represent a right to receive cash
and/or Parent Common Stock pursuant to Section 2.01(a) but such Dissenting
Holder thereof shall be entitled to only such rights in respect thereof as are
granted by Section 909 of the Maine Law.
(b) Notwithstanding the provision of subsection (a) of this Section, if
any Dissenting Holder who demands appraisal of his shares of Company Common
Stock under the Maine Law shall effectively withdraw or lose his right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such shares automatically shall be converted into and
represent only the right to receive cash and/or Parent Common Stock as provided
in Section 2.01(a), without interest thereon, upon surrender of the certificate
or certificates representing such shares.
(c) Company shall give Parent (i) prompt notice of any written demands
for appraisal or payment of the fair value of any shares of Company Common
Stock, withdrawals of such demands and any other related instruments served
pursuant to the Maine Law received by Company and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under the
Maine Law. Company shall not voluntarily make any payment with respect to any
demands for appraisal and shall not, except with the prior written consent of
Parent and Merger Subsidiary, settle or offer to settle any such demands.
Section 2.07 Stock Option and Other Stock Plans.
(a) As soon as practicable following the date of this Agreement, Parent
and Company shall take such action with respect to Company's 1998 Stock Option
Plan, Employee Stock Purchase Plan, 1988 Stock Plan and Stock Ownership Plan for
Outside Directors (collectively, the "Company Option Plans") as may be required
to effect the following provisions of this Section 2.07(a). At the Effective
Time, each option to purchase shares of Company Common Stock pursuant to the
Company Option Plans that is then outstanding, whether vested or unvested (each
a "Company Stock Option"), shall be, at the option of each holder, to be made
within 30 days of the receipt of the notices and election forms specified in
subsection (b) below, (i) converted into the right to receive cash in an amount
equal to the excess of the "blended value" of the Merger
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Consideration over the per share exercise price of the option multiplied by the
number of shares subject to such option, (ii) assumed by Parent and converted
into an immediately exercisable option (or a new substitute option shall be
granted) (each, as so adjusted, an "Adjusted Option") to purchase the number of
shares of Parent Common Stock (rounded up to the nearest whole share) equal to
(x) the number of shares of Company Common Stock subject to such option
multiplied by (y) the Exchange Ratio, at an exercise price per share of Parent
Common Stock (rounded down to the nearest xxxxx) equal to (A) the former
exercise price per share of Company Common Stock under such option immediately
prior to the Effective Time divided by (B) the Exchange Ratio or (iii) if the
Average Parent Price is less than $9.00, assumed by Parent and converted into an
Adjusted Option to purchase the number of shares of Parent Common Stock (rounded
up to the nearest whole share) equal to (x) the number of shares of Company
Common Stock subject to such option multiplied by (y) $79 divided by the Average
Parent Price, at an exercise price per share of Parent Common Stock (rounded
down to the nearest xxxxx) equal to (A) the former exercise price per share of
Company Common Stock under such option immediately prior to the Effective Time
divided by (B) $79 divided by the Average Parent Price; provided, however, that
any such exchanged Company Stock Option pursuant to this clause (iii) may not be
exercised earlier than one year following the Effective Time; provided, further,
however, that in the case of any Company Stock Option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of the Code,
the conversion formula in clauses (ii) and (iii) shall be adjusted, if
necessary, to comply with Section 424(a) of the Code. Except as provided above,
the Adjusted Options shall be subject to the same terms and conditions as were
applicable to the converted option immediately prior to the Effective Time. For
purposes hereof, "blended value" means (x) divided by (y), with (x) being (i)
the Cash Election Number multiplied by $79 plus (ii) the number of shares of
Parent Common Stock issued in the Merger multiplied by the Average Parent Price,
and (y) being the Cash Election Number plus the Stock Election Number.
(b) As soon as practicable after the Effective Time (but in no event
more than 30 days thereafter), Parent shall deliver to the holders of Company
Stock Options appropriate notices and election forms setting forth such holders'
rights pursuant to the respective Company Option Plans and the agreements
evidencing the grants of such Company Stock Options and stating that, to the
extent the cash election is not exercised, such Company Stock Options and
agreements shall be assumed by Parent and shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section 2.07
after giving effect to the Merger). Parent shall comply with the terms of the
Company Option Plans and ensure that the Company Stock Options that qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
(c) Parent shall take such actions as are reasonably necessary for the
assumption of the Company Option Plans pursuant to this Section 2.07, including
the reservation, issuance and listing of Parent Common Stock as is necessary to
effectuate the transactions contemplated by this Section 2.07. Parent shall
prepare and file with the
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SEC (as hereinafter defined) a registration statement on Form S-8 or other
appropriate form with respect to shares of Parent Common Stock subject to
Adjusted Options issued under such Company Option Plans and shall use its
reasonable best efforts to have such registration statement declared effective
immediately following the Effective Time and to maintain the effectiveness of
such registration statement or registration statements covering such Adjusted
Options (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Adjusted Options remain outstanding.
ARTICLE 3
Representations and Warranties of Company
Company represents and warrants to Parent that:
Section 3.01 Organization and Power. (a) Each of Company and its
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Company.
For purposes of this Agreement, a "Material Adverse Effect" with
respect to Company or Parent, as the case may be, means a material adverse
effect (i) on the financial condition, business, properties, or results of
operations of such person and its Subsidiaries, taken as a whole, or (ii) on the
ability of such person to perform its obligations under or to consummate the
transactions contemplated by this Agreement, provided that none of the following
shall constitute a Material Adverse Effect: (i) occurrences affecting Company's
or Parent's or any of their respective Subsidiaries' businesses as a result of
the announcement of the execution of this Agreement; (ii) general economic
conditions; (iii) any changes generally affecting the industries in which
Company and its Subsidiaries or Parent and its Subsidiaries operate; or (iv)
changes in Company's business after the date hereof attributable solely to
actions taken by Parent.
(a) Section 3.01 of the disclosure schedule delivered by Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule") sets forth a complete list of Company's Subsidiaries that are
"significant subsidiaries", as such term is defined in Section 1-02 of
Regulation S-X under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "1934 Act") (each, a
"Significant Subsidiary"). Company has heretofore delivered to Parent true and
complete copies of Company's articles of incorporation and bylaws as currently
in effect.
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Section 3.02 Corporate Authorization. (a) The execution, delivery and
performance by Company of this Agreement and the consummation by Company of the
transactions contemplated hereby are within Company's corporate powers and,
except as set forth in the next succeeding sentence of this Section 3.02, have
been duly authorized by all necessary corporate action. The affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock
entitled to vote on this Agreement (the "Company Requisite Vote") is the only
vote of any class or series of Company's capital stock necessary to approve and
adopt this Agreement and the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Company and constitutes a
valid and binding agreement of Company, enforceable against Company in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether in a proceeding at equity or at
law).
(a) The Board of Directors of Company (the "Company Board") has, by
unanimous vote of those present, duly and validly authorized the execution and
delivery of this Agreement and approved the consummation of the transactions
contemplated hereby, and taken all corporate actions required to be taken by the
Company Board for the consummation of the transactions, including the Merger,
contemplated hereby and has resolved to (i) deem this Agreement and the
transactions contemplated hereby, including the Merger, taken together,
advisable and fair to, and in the best interests of, Company and its
shareholders and (ii) recommend that the shareholders of Company approve and
adopt this Agreement. The Company Board has directed that this Agreement be
submitted to the shareholders of Company for their approval.
Section 3.03 Governmental Authorization. The execution, delivery and
performance by Company of this Agreement, and the consummation by Company of the
transactions contemplated hereby, require no action by or in respect of, or
filing with, any federal, state or local government or any court, administrative
agency or commission or other governmental agency or authority (a "Governmental
Authority") other than: (a) the filing of articles of merger with respect to the
Merger with the Secretary of State of the State of Maine and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business; (b) compliance with any applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and similar state antitrust statutes; (c) compliance with any applicable
requirements of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "1933 Act"); (d) compliance with any
applicable requirements of the 1934 Act; (e) compliance with any other
applicable securities laws; (f) those that may be required solely by reason of
Parent's or Merger Subsidiary's (as opposed to any other third party's)
participation in the transactions contemplated by this Agreement; (g) actions or
filings which, if not taken or made, would not, individually or in the
aggregate, have a Material Adverse Effect on Company; and (h) filings and
notices not required to be made or given until after the Effective Time.
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Section 3.04 Non-Contravention. Except as set forth on Section 3.04 of
the Company Disclosure Schedule, the execution, delivery and performance by
Company of this Agreement do not, and the consummation by Company of the
transactions contemplated hereby will not: (a) assuming receipt of the approval
of shareholders referred to in Section 3.02, contravene or conflict with the
articles of incorporation, bylaws or similar organizational documents of Company
or any of its Significant Subsidiaries; (b) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Company or its Subsidiaries; (c)
constitute a default (or an event which with notice, the lapse of time or both
would become a default) under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Company or any of its
Subsidiaries or to a loss of any benefit to which Company or any of its
Subsidiaries is entitled under any provision of any agreement, contract or other
instrument binding upon Company or any of its Subsidiaries and which either has
a term of more than one year or involves the payment or receipt of money in
excess of $1,000,000 (a "Company Agreement") or any license, franchise, permit
or other similar authorization held by Company or any of its Subsidiaries; or
(d) result in the creation or imposition of any Lien on any asset of Company or
any of its Subsidiaries, except for such contraventions, conflicts or violations
referred to in clause (b) or defaults, rights of termination, cancellation or
acceleration, losses or Liens referred to in clause (c) or (d) that would not,
individually or in the aggregate, have a Material Adverse Effect on Company. For
purposes of this Agreement, "Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
Section 3.05 Capitalization of Company. (a) The authorized capital
stock of Company consists of 110,000,000 shares of Company Common Stock,
2,000,000 shares of preferred stock, no par value (the "Class A Serial Preferred
Stock") and 28,000,000 shares of preferred stock, par value $.01 per share (the
"Class B Serial Preferred Stock"). As of the close of business on August 16,
1999, 42,182,153 shares of Company Common Stock were issued and outstanding,
625,000 shares of Company Common Stock were reserved for issuance under
Company's Employee Stock Purchase Plan, 200,000 shares of Company Common Stock
were reserved for issuance under Company's 1998 Restricted Stock Plan (the
"Restricted Stock Plan"), 2,487,981 shares of Company Common Stock were reserved
for issuance pursuant to options previously granted pursuant to the Company
Stock Option Plans and no shares of Class A Serial Preferred Stock or Class B
Serial Preferred Stock were issued and outstanding. 2,000,000 shares of Series A
Junior Participating Preferred Stock have been designated from the Class A
Serial Preferred Stock and reserved for issuance pursuant to the Company Rights
Agreement. All the outstanding shares of Company's capital stock are, and all
shares which may be issued pursuant to the Company Stock Option Plans and the
Restricted Stock Plan will be, when issued in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and non-assessable.
Except (i) as set forth in this Section 3.05 or in Section 5.01 of the Company
Disclosure Schedule, (ii) for the transactions contemplated by this Agreement,
including those permitted in
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accordance with Section 5.01(f), (iii) for changes since August 16, 1999
resulting from the exercise of employee and director stock options outstanding
on such date and (iv) for rights to purchase shares of Series A Junior
Participating Preferred Stock issuable pursuant to the Company Rights Agreement,
there are outstanding (x) no shares of capital stock or other voting securities
of Company, (y) no securities of Company convertible into or exchangeable for
shares of capital stock or voting securities of Company, and (z) no options,
warrants or other rights to acquire from Company, and no preemptive or similar
rights, subscriptions or other rights, convertible securities, agreements,
arrangements or commitments of any character, relating to the capital stock of
Company, obligating Company to issue, transfer or sell, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Company or obligating Company to grant, extend or
enter into any such option, warrant, subscription or other right, convertible
security, agreement, arrangement or commitment (the items in clauses (x), (y)
and (z) being referred to collectively as the "Company Securities"). None of
Company or its Subsidiaries has any contractual obligation to redeem, repurchase
or otherwise acquire any Company Securities or any Company Subsidiary Securities
(as hereinafter defined), including as a result of the transactions contemplated
by this Agreement.
(a) Except as set forth in Section 3.05 of the Company Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which Company or any of its Subsidiaries is a party with respect to the voting
of the capital stock of Company or any of its Subsidiaries.
Section 3.06 Capitalization of Subsidiaries. Except as set forth in
Section 3.06 of the Company Disclosure Schedule, all of the outstanding shares
of capital stock of, or other ownership interests in, each Subsidiary of
Company, is owned by Company, directly or indirectly, free and clear of any
consensual Lien (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests). There are
no outstanding (i) securities of Company or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of Company, or (ii) options or other
rights to acquire from Company or any of its Subsidiaries, and no other
obligation of Company or any of its Subsidiaries to issue, any capital stock,
voting securities or other ownership interests in, or any securities convertible
into or exchangeable for, any capital stock, voting securities or ownership
interests in, any Subsidiary of Company (the items in clauses (i) and (ii) being
referred to collectively as the "Company Subsidiary Securities").
Section 3.07 SEC Filings. (a) Company has filed all required reports,
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the "SEC") since June 30, 1997 (the "Company SEC
Documents").
(a) As of its filing date, each Company SEC Document filed pursuant to
the 1934 Act did 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
the light of the
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circumstances under which they were made, not misleading, except to the extent
that such statements have been modified or superseded by a later filed Company
SEC Document.
(b) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act as of the
date such registration statement or amendment became effective did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent that such statements have been modified or
superseded by a later filed Company SEC Document.
Section 3.08 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Company
included in Company's Annual Report on Form 10-K for the fiscal year ended
January 2, 1999 and its Quarterly Report on Form 10-Q for the fiscal quarter
ended July 3, 1999 (the "Company 10-Q") have been prepared in accordance with
GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the consolidated
financial position of Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of the
unaudited interim financial statements). For purposes of this Agreement,
"Company Balance Sheet" means the consolidated balance sheet of Company as of
July 3, 1999 set forth in the Company 10-Q and "Company Balance Sheet Date"
means July 3, 1999.
Section 3.09 Disclosure Documents. Insofar as the information contained
therein relates solely to Company, neither the proxy statement of Company (the
"Company Proxy Statement") to be filed with the SEC in connection with the
Merger, nor any amendment or supplement thereto, will, at the date the Company
Proxy Statement or any such amendment or supplement is first mailed to
shareholders of Company or at the time such shareholders vote on the adoption
and approval of this Agreement, 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. The Company Proxy Statement will, when filed, comply as to form in
all material respects with the requirements of the 1934 Act. No representation
or warranty is made by Company in this Section 3.09 with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Merger Subsidiary for inclusion or incorporation by reference in the
Company Proxy Statement.
Section 3.10 Information Supplied. None of the information supplied or
to be supplied by Company for inclusion or incorporation by reference in the
Form S-4 (as hereinafter defined) or any amendment or supplement thereto will,
at the time the Form S-4 or any such amendment or supplement becomes effective
under the 1933 Act or at the Effective Time, contain any untrue statement of a
material fact or omit to state a
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material fact required to be stated therein or necessary to make the statements
therein not misleading.
Section 3.11 Absence of Certain Changes. Except as disclosed in the
Company SEC Documents filed prior to the date of this Agreement or as disclosed
in Section 3.11 of the Company Disclosure Schedule, since July 3, 1999, Company
and its Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development which, individually or in the
aggregate, has had a Material Adverse Effect on Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Company, or any
repurchase, redemption or other acquisition by Company or any of its
Subsidiaries of any amount of outstanding shares of capital stock or other
equity securities of, or other ownership interests in, Company or any of its
Subsidiaries;
(c) any amendment of any term of any outstanding security of Company or
any of its Subsidiaries that would materially increase the obligations of
Company or such Subsidiary under such security;
(d) (x) any incurrence or assumption by Company or any of its
Subsidiaries of any indebtedness for borrowed money other than under existing
credit facilities (or any renewals, replacements or extensions that do not
increase the aggregate commitments thereunder) (A) in the ordinary course of
business consistent with past practice (it being understood that any
indebtedness incurred prior to the date hereof in respect of capital
expenditures shall be considered to have been in the ordinary course of business
consistent with past practice) or (B) in connection with any acquisition or
capital expenditure permitted by Section 5.01 or (y) any guarantee, endorsement
or other incurrence or assumption of liability (whether directly, contingently
or otherwise) by Company or any of its Subsidiaries for the obligations of any
other person (other than any wholly owned Subsidiary of Company), other than in
the ordinary course of business consistent with past practice;
(e) any creation or assumption by Company or any of its Subsidiaries of
any consensual Lien on any material asset of Company or any of its Subsidiaries
other than in the ordinary course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by Company or any of its Subsidiaries other than (i)
any acquisition permitted by Section 5.01, (ii) loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries of Company or (iii)
loans or advances to employees of Company or any of its Subsidiaries made in the
ordinary course of business consistent with past practice;
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(g) (i) any contract or agreement entered into by Company or any of its
Subsidiaries on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by Company or any of its Subsidiaries
of any contract, license or other right (including any insurance policy naming
it as a beneficiary or a loss payable payee) that, individually or in the
aggregate, would have a Material Adverse Effect on Company, other than, in the
case of (i) and (ii), transactions, commitments, contracts or agreements in the
ordinary course of business consistent with past practice and those contemplated
by this Agreement;
(h) any material change in any method of accounting or accounting
principles or practice by Company or any of its Subsidiaries, except for any
such change required by reason of a change in GAAP; or
(i) except for items permitted by Section 5.17, any (i) grant of any
severance or termination pay to any director, officer or employee of Company or
any of its Subsidiaries, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of Company or any of its
Subsidiaries, (iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of Company or any of its Subsidiaries other than, in the case of
clause (iv) only, increases prior to the date hereof in compensation, bonus or
other benefits payable to employees of Company or any of its Subsidiaries in the
ordinary course of business consistent with past practice or merit increases in
salaries of employees at regularly scheduled times in customary amounts
consistent with past practices.
Section 3.12 No Undisclosed Material Liabilities. There have been no
liabilities or obligations (whether pursuant to contracts or otherwise) of any
kind whatsoever incurred by Company or any of its Subsidiaries since July 3,
1999, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities or obligations disclosed or provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof;
(b) liabilities or obligations which, individually and in the
aggregate, have not had and would not have a Material Adverse Effect on Company;
or
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
Section 3.13 Litigation. Except as disclosed in the Company SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of Company,
threatened against or
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affecting, Company or any of its Subsidiaries or any of their respective
properties which, individually or in the aggregate, would have a Material
Adverse Effect on Company.
Section 3.14 Taxes. Except as set forth on Section 3.14 of the Company
Disclosure Schedule:
(a) Company and each of its Subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) of which Company or any of its
Subsidiaries is or has been a member, has timely filed (or has had timely filed
on its behalf) or will file or cause to be timely filed, all material Tax
Returns required by applicable law to be filed by it prior to or as of the
Effective Time, and all such material Tax Returns are, or will be at the time of
filing, true, correct and complete in all material respects;
(b) Company and each of its Subsidiaries has paid (or has had paid on
its behalf) all Taxes shown due with respect to Tax Returns for periods ending
prior to or as of the Effective Time;
(c) The federal income Tax Returns of Company have been examined and
settled with the Internal Revenue Service (the "Service") (or the applicable
statutes of limitation for the assessment of federal income Taxes for such
periods have expired) for all years through 1996;
(d) There are no material Liens or encumbrances for Taxes on any of the
assets of Company or its Subsidiaries (other than for current Taxes not yet due
and payable);
(e) Company and its Subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes;
(f) None of Company or its Subsidiaries is a party to any tax
allocation, tax sharing, tax indemnity or similar agreement (whether or not in
writing), arrangement or practice with respect to Taxes (including any adverse
pricing agreement, closing agreement or other agreement relating to Taxes with
any taxing authority), except among themselves;
(g) No federal, state, local or foreign audits or administrative
proceedings are presently pending with regard to a material amount of Taxes or a
material Tax Return of Company or its Subsidiaries and none of them has received
a written notice or has any knowledge (including the knowledge of any employees
responsible for Tax matters), of any proposed audit or proceeding;
(h) The Company Balance Sheet reflects an adequate reserve for all
Taxes payable by the Company and its Subsidiaries for all taxable periods
through the date of the Company Balance Sheet; and
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(i) No payment which Company or its Subsidiaries is obligated to pay to
any director, officer, employee or independent contractor pursuant to the terms
of an employment agreement, severance agreement or otherwise will constitute an
excess parachute payment as defined in Section 280G of the Code.
(j) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, franchise, transfer and recording taxes, fees and
charges, and any other taxes, assessment or similar charges imposed by the
Service or any other taxing authority (whether domestic or foreign including any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)) (a "Taxing Authority"), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest whether paid or received, fines, penalties
or additional amounts, and any joint, several and/or transferee liabilities,
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments. "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including information returns, any documents with respect to or
accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
Section 3.15 Employee Benefit Plans; ERISA. (a) Except as set forth in
Section 3.15(a) of the Company Disclosure Schedule, there are no material
employee benefit plans (including any plans for the benefit of directors or
former directors), arrangements, practices, contracts or agreements (including
employment agreements and severance agreements, incentive compensation, bonus,
stock option, stock appreciation rights and stock purchase plans) of any type
(including plans described in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained by Company, any of its
Subsidiaries or any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with Company would be deemed a "controlled group"
within the meaning of Section 4001(a)(14) of ERISA, or with respect to which
Company or any of its Subsidiaries has or may have a liability (the "Company
Benefit Plans"). Except as disclosed in Section 3.15(a) of the Company
Disclosure Schedule (or as otherwise permitted by this Agreement): (1) neither
Company nor any ERISA Affiliate has any formal plan or commitment, whether
legally binding or not, to create any additional Company Benefit Plan or modify
or change any existing Company Benefit Plan that would affect any employee or
terminated employee of Company or any ERISA Affiliate; and (2) since July 3,
1999, there has been no change, amendment, modification to, or adoption of, any
Company Benefit Plan, in each case, that has had, or would have, a Material
Adverse Effect on Company. Company has provided, or has caused to be provided,
to Parent (i) current, accurate and complete copies of all documents embodying
each Company Benefit Plan, including all amendments thereto,
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written interpretations thereof and trust or funding agreements with respect
thereto; (ii) the two most recent annual actuarial valuations, if any, prepared
for each Company Benefit Plan; (iii) the two most recent annual reports (Series
5500 and all schedules thereto), if any, required under ERISA in connection with
each Company Benefit Plan or related trust; (iv) a statement of alternative form
of compliance pursuant to Department of Labor Regulation ss.2520.104-23, if any,
filed for each Company Benefit Plan that is an "employee pension benefit plan"
as defined in Section 3(2) of ERISA for a select group of management or highly
compensated employees; (v) the most recent determination letter received from
the IRS, if any, for each Company Benefit Plan and related trust which is
intended to satisfy the requirements of Section 401(a) of the Code; (vi) if the
Company Benefit Plan is funded, the most recent annual and periodic accounting
of such Company Benefit Plan assets; and (vii) the most recent summary plan
description together with the most recent summary of material modifications, if
any, required under ERISA with respect to each Company Benefit Plan.
(a) With respect to each Company Benefit Plan, except as disclosed in
Section 3.15(b) of the Company Disclosure Schedule or as would not, individually
or in the aggregate, have a Material Adverse Effect on Company: (i) if intended
to qualify under Section 401(a), 401(k) or 403(a) of the Code, such plan so
qualifies, and its trust is exempt from taxation under Section 501(a) of the
Code; (ii) such plan has been administered in accordance with its terms and
applicable law; (iii) no breaches of fiduciary duty have occurred; (iv) no
non-exempt prohibited transaction within the meaning of Section 406 of ERISA has
occurred; (v) as of the date of this Agreement, no lien imposed under the Code
or ERISA exists; (vi) all contributions and premiums due (including any
extensions for such contributions and premiums) have been made in full; and
(vii) there are no actions, proceedings, arbitrations, suits or claims pending,
or to the knowledge of Company threatened (other than routine claims for
benefits), against Company or any ERISA Affiliate or any administrator, trustee
or other fiduciary of any Company Benefit Plan.
(b) None of the Company Benefit Plans has incurred any "accumulated
funding deficiency", as such term is defined in Section 412 of the Code, whether
or not waived.
(c) Except as disclosed in Section 3.15(d) of the Company Disclosure
Schedule, neither Company nor any ERISA Affiliate has incurred any liability
under Title IV of ERISA (including Sections 4063-4064 and 4069 of ERISA) that
has not been satisfied in full except as, individually or in the aggregate,
would not have a Material Adverse Effect on Company or that has not been
reflected on Company's consolidated financial statements.
(d) With respect to each Company Benefit Plan that is a "welfare plan"
(as defined in Section 3(1) of ERISA), except as specifically disclosed in
Section 3.15(e) of the Company Disclosure Schedule, no such plan provides
medical or death benefits with respect to current or former employees of Company
or any of its Subsidiaries beyond their termination of employment, other than as
may be required under Part 6 of Title I of
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ERISA and at the expense of the participant or the participant's beneficiary and
except as would not, individually or in the aggregate, have a Material Adverse
Effect on Company.
(e) Except with respect to payments under the Agreements and programs
specified in Section 3.15(f) of the Company Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not entitle
any individual to severance pay or any tax "gross-up" payments with respect to
the imposition of any tax pursuant to Section 4999 of the Code or accelerate the
time of payment or vesting, or increase the amount, of compensation or benefits
due to any individual with respect to any Company Benefit Plan.
(f) Except as disclosed in Section 3.15(a) of the Company Disclosure
Schedule, there is no Company Benefit Plan that is a "multiemployer plan", as
such term is defined in Section 3(37) of ERISA, or which is covered by Section
4063 or 4064 of ERISA.
(g) Section 3.15(h) of the Company Disclosure Schedule identifies each
collective bargaining agreement to which Company or any of its Significant
Subsidiaries is a party and copies of each such agreement have been furnished to
or made available to Parent. Except as set forth on Section 3.15(h) of the
Company Disclosure Schedule, or except as would not, individually or in the
aggregate, have a Material Adverse Effect on Company, (i) there is no labor
strike, slowdown or work stoppage or lockout against Company or any of its
Significant Subsidiaries and (ii) there is no unfair labor practice charge or
complaint against or pending before the National Labor Relations Board. As of
the date of this Agreement, there is no representation, claim or petition
pending before the National Labor Relations Board and, to the knowledge of
Company, no material concerted effort relating to representation exists with
respect to the employees of Company or any of its Significant Subsidiaries.
Section 3.16 Compliance with Laws; No Default. Neither Company nor any
of its Subsidiaries is in violation of any statute, law, ordinance, regulation,
rule, judgment, decree, order, writ, injunction, permit or license or other
authorization or approval of any Governmental Authority applicable to its
business or operations, except for violations and failures to comply that have
not had and would not, individually or in the aggregate, result in a Material
Adverse Effect on Company.
Section 3.17 No Default. Each Company Agreement is a valid, binding and
enforceable obligation of Company and in full force and effect, except where the
failure to be valid, binding and enforceable and in full force and effect would
not, individually or in the aggregate, have a Material Adverse Effect on
Company. None of Company or any of its Subsidiaries is in default or violation
of any term, condition or provision of (i) its respective articles of
incorporation or by-laws or similar organizational documents or (ii) except as
disclosed in Section 3.17 of the Company Disclosure Schedule, any Company
Agreement, except, in the case of clause (i) (with respect to organizational
documents that are partnership, joint venture or similar documents) and (ii),
for defaults or violations that, individually or in the aggregate, have not had
and
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would not have a Material Adverse Effect on Company. Company has all permits and
licenses necessary to carry on the business conducted by it as of the date
hereof, except where the failure to have such permit or license would not,
individually or in the aggregate, have a Material Adverse Effect on Company.
Section 3.18 Finders' Fees. Except for Xxxxxx Xxxxxxx & Co.
Incorporated, a copy of whose engagement agreement has been provided to Parent,
no investment banker, broker, finder, other intermediary or other person is
entitled to any fee or commission from Company or any of its Subsidiaries upon
consummation of the transactions contemplated by this Agreement.
Section 3.19 Environmental Matters. (a) Except as disclosed in the
Company SEC Documents filed prior to the date hereof, to the knowledge of
Company:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received by, no complaint has been filed
against, no penalty has been assessed against, and no investigation, action,
claim, suit, proceeding or review is pending or threatened by any person or
Governmental Authority against, Company or any of its Subsidiaries with respect
to any matters relating to or arising out of any Environmental Law which,
individually or in the aggregate, would have a Material Adverse Effect on
Company;
(ii) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or released at, on
or under any property now or, to the knowledge of Company, previously owned,
leased or operated by Company or any of its Subsidiaries, or any adjacent
properties, which circumstance, individually or in the aggregate, would have a
Material Adverse Effect on Company; and
(iii) there are no Environmental Liabilities that,
individually or in the aggregate, have had or would have a Material Adverse
Effect on Company.
(b) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Company" and its "Subsidiaries" shall include any entity
which is, in whole or in part, a predecessor of Company or any of its
Subsidiaries;
(ii) "Environmental Laws" means any and all federal, state,
local and foreign law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, or governmental
restrictions or any agreement with any governmental authority or other third
party, relating to human health and safety, the environment or to pollutants,
contaminants, wastes or chemicals or toxic, radioactive, ignitable, corrosive,
reactive or otherwise hazardous substances, wastes or materials;
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(iii) "Environmental Liabilities" means any and all
liabilities of or relating to Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, which (A) arise under or relate to matters covered by Environmental
Laws and (B) arise from actions occurring or conditions existing on or prior to
the Effective Time; and
(iv) "Hazardous Substances" means any pollutant, contaminant,
waste or chemical or any toxic, radioactive, corrosive, reactive or otherwise
hazardous substance, waste or material, or any substance having any constituent
elements displaying any of the foregoing characteristics, including, without
limitation, petroleum, its derivatives, by-products and other hydrocarbons, or
any substance, waste or material regulated under any Environmental Laws.
Section 3.20 Opinion of Financial Advisor. Company has received the
opinion of Xxxxxx Xxxxxxx & Co. Incorporated to the effect that, as of the date
of such opinion, the Merger Consideration to be received by the holders of
shares of Company Common Stock in connection with the Merger is fair to such
holders from a financial point of view.
Section 3.21 [Intentionally deleted]
Section 3.22 Takeover Statutes. The Company Board has approved the
Merger and this Agreement, and such approval is sufficient to render
inapplicable to the Merger, this Agreement, and the transactions contemplated by
this Agreement, the shareholder voting requirements of Section 611-A of the
Maine Law, assuming however that neither Parent nor Merger Subsidiary has ever
been a beneficial owner of 25% or more of the outstanding voting stock of
Company within the meaning of Section 611-A. To the best of Company's knowledge,
no other "fair price", "moratorium", "control share acquisition" or other
similar antitakeover statute or regulation enacted under state or federal laws
in the United States (each, a "Takeover Statute") applicable to Company or any
of its Subsidiaries is applicable to the Merger or the other transactions
contemplated hereby. The stock purchase requirements of Section 910 of the Maine
Law will not be applicable to Parent or Merger Subsidiary so long as neither
corporation acquires (other than by reason of the Merger) voting power over 25%
or more of the outstanding voting stock of Company (or becomes a member of a
group that has such voting power).
Section 3.23 Affiliates. Section 3.23 of the Company Disclosure
Schedule sets forth each person who, as of the date hereof, is, to the best of
Company's knowledge, deemed to be an Affiliate of Company.
Section 3.24 Company's Articles of Incorporation. The provisions of
Company's Articles of Incorporation regarding transactions with controlling
persons will not, prior to the termination of this Agreement, apply to this
Agreement, the Merger or to the transactions contemplated hereby.
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Section 3.25 Company Rights Agreement. Prior hereto, Company has
delivered to Parent a true and complete copy of the Company Rights Agreement in
effect on the date hereof, and the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not result in a
"Distribution Date" as defined in the Company Rights Agreement or the triggering
of any other right or entitlement of the Company's shareholders under the
Company Rights Agreement.
ARTICLE 4
Representations and Warranties of Parent
Parent represents and warrants to Company that:
Section 4.01 Organization and Power. (a) Each of Parent and its
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and is in good standing under the laws of the jurisdiction of
its incorporation or organization, and has the requisite corporate or other
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Parent and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
(a) Section 4.01 of the disclosure schedule delivered by Parent to
Company prior to the execution of the Agreement (the "Parent Disclosure
Schedule") sets forth a complete list of Parent's Significant Subsidiaries.
Parent has delivered to Company true and complete copies of Parent's and Merger
Subsidiary's articles of incorporation and bylaws as currently in effect.
Section 4.02 Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action, including by resolution
of the Board of Directors of Parent. No vote of any class or series of Parent's
capital stock is necessary in connection with the execution of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Parent and Merger Subsidiary and
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary, enforceable against Parent and Merger Subsidiary, as applicable, in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether in a proceeding at equity or at
law). The shares of Parent Common Stock to be issued pursuant to the Merger,
when issued in accordance with the terms hereof, will be duly
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authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
Section 4.03 Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement, and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby, require no action, by or in respect of, or filing with, any Governmental
Authority other than: (a) the filing of articles of merger with respect to the
Merger with the Secretary of State of the State of Maine and appropriate
documents with the relevant authorities of other states in which Merger
Subsidiary is qualified to do business; (b) compliance with any applicable
requirements of the HSR Act and similar state antitrust statutes; (c) compliance
with any applicable requirements of the 1933 Act; (d) compliance with any
applicable requirements of the 1934 Act; (e) compliance with any other
applicable securities laws; (f) those that may be required solely by reason of
Company's (as opposed to any other third party's) participation in the
transactions contemplated by this Agreement; (g) actions or filings which, if
not taken or made, would not, individually or in the aggregate, have a Material
Adverse Effect on Parent; and (h) filings and notices not required to be made or
given until after the Effective Time.
Section 4.04 Non-Contravention. Except as set forth on Section 4.04 of
the Parent Disclosure Schedule, the execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement do not, and the consummation by
Parent and Merger Subsidiary of the transactions contemplated hereby will not:
(a) contravene or conflict with the articles of incorporation, bylaws or similar
organizational documents of Parent or any of its Subsidiaries; (b) assuming
compliance with the matters referred to in Section 4.03, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Parent or
Merger Subsidiary; (c) constitute a default (or an event which with notice, the
lapse of time or both would become a default) under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Parent
or Merger Subsidiary or to a loss of any benefit to which Parent or Merger
Subsidiary is entitled under any provision of any agreement, contract or other
instrument binding upon Parent or Merger Subsidiary and which either has a term
of more than one year or involves the payment or receipt of money in excess of
$1,000,000 (a "Parent Agreement") or any license, franchise, permit or other
similar authorization held by Parent or Merger Subsidiary; or (d) result in the
creation or imposition of any Lien on any asset of Parent or Merger Subsidiary,
except for such contraventions, conflicts or violations referred to in clause
(b) or defaults, rights of termination, cancellation or acceleration, losses or
Liens referred to in clause (c) or (d) that would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
Section 4.05 Capitalization of Parent. (a) The authorized capital stock
of Parent consists of 1,500,000,000 shares of Parent Common Stock and
1,500,000,000 shares of Class B common stock, par value $0.50 per share ("Parent
Class B Common Stock"), and no shares of preferred stock. As of the close of
business on August 16, 1999, 239,853,031 shares of Parent Common Stock are
issued and outstanding, 4,048,781
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shares of Parent Common Stock are reserved for additional grants under option
and other stock-based plans and 4,083, 203 shares of Parent Common Stock are
reserved for issuance pursuant to options previously granted pursuant to Parent
option plans. As of the close of business on August 16, 1999, 225,922,064 shares
of Parent Class B Common Stock are issued and outstanding, no shares are
reserved for additional grants under option and other stock-based plans and no
shares of Parent Class B Common Stock are reserved for issuance pursuant to
options previously granted pursuant to Parent option plans. All the outstanding
shares of Parent's capital stock are, and all shares which may be issued
pursuant to Parent option plans will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable. Except as set forth in this Section 4.05, except for the
transactions contemplated by this Agreement (including those permitted in
Section 5.02(d)), and except for changes since August 16, 1999 resulting from
the exercise of employee and director stock options outstanding on such date, as
of the date hereof, there are outstanding (x) no shares of capital stock or
other voting securities of Parent, (y) no securities of Parent convertible into
or exchangeable for shares of capital stock or voting securities of Parent, and
(z) no options, warrants or other rights to acquire from Parent, and no
preemptive or similar rights, subscriptions or other rights, convertible
securities, agreements, arrangements or commitments of any character, relating
to the capital stock of Parent, obligating Parent to issue, transfer or sell,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Parent or obligating
Parent to grant, extend or enter into any such option, warrant, subscription or
other right, convertible security, agreement, arrangement or commitment (the
items in clauses (x), (y) and (z) being referred to collectively as the "Parent
Securities"). None of Parent or its Subsidiaries has any contractual obligation
to redeem, repurchase or otherwise acquire any Parent Securities or any Parent
Subsidiary Securities, including as a result of the transactions contemplated by
this Agreement.
(a) Except as set forth in Section 4.05 of the Parent Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which Parent or any of its Subsidiaries is a party with respect to the voting of
the capital stock of Parent or any of its Subsidiaries.
Section 4.06 Capitalization of Subsidiaries. Except as set forth in
Section 4.06 of the Parent Disclosure Schedule, all of the outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary of Parent, is
owned by Parent, directly or indirectly, free and clear of any consensual Lien
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests). There are no outstanding (i)
securities of Parent or any of its Subsidiaries convertible into or exchangeable
for shares of capital stock or other voting securities or ownership interests in
any of its Subsidiaries, or (ii) options or other rights to acquire from Parent
or any of its Subsidiaries, and no other obligation of Parent or any of its
Subsidiaries to issue, any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable for, any
capital stock, voting securities
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or ownership interests in, any of its Subsidiaries (the items in clauses (i) and
(ii) being referred to collectively as the "Parent Subsidiary Securities").
Section 4.07 SEC Filings. (a) Parent has filed all required reports,
schedules, forms, statements and other documents with the SEC since June 30,
1997 (the "Parent SEC Documents").
(a) As of its filing date, each Parent SEC Document filed pursuant to
the 1934 Act did 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
the light of the circumstances under which they were made, not misleading.
(b) Each Parent SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act as of the
date such registration statement or amendment became effective did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent that such statements have been modified or
superseded by a later filed Parent SEC Document.
Section 4.08 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
included in Parent's Annual Report on Form 10-K for the fiscal year ended
January 2, 1999 (the "Parent 10-K") and its Quarterly Report on Form 10-Q for
the fiscal quarter ended June 19, 1999 (the "Parent 10-Q") have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of Parent and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end adjustments in the
case of the unaudited interim financial statements). For purposes of this
Agreement, "Parent Balance Sheet" means the consolidated balance sheet of Parent
as of June 19, 1999 set forth in the Parent 10-Q and "Parent Balance Sheet Date"
means June 19, 1999.
Section 4.09 Disclosure Documents. (a) The Registration Statement on
Form S-4 of Parent (the "Form S-4") to be filed under the 1933 Act relating to
the issuance of Parent Common Stock in the Merger required to be filed with the
SEC in connection with the issuance of shares of Parent Common Stock pursuant to
the Merger and any amendments or supplements thereto, will, when filed, subject
to the last sentence of Section 4.09(b), comply as to form in all material
respects with the applicable requirements of the 1933 Act and the 1934 Act.
(a) Insofar as the information contained therein relates solely to
Parent, neither the Form S-4 nor any amendment or supplement thereto will at the
time it becomes effective under the 1933 Act or at the Effective Time contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or
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necessary to make the statements therein not misleading. No representation or
warranty is made by Parent in this Section 4.09 with respect to statements made
or incorporated by reference therein based on information supplied by Company
for inclusion or incorporation by reference in any Parent Disclosure Document.
Section 4.10 Information Supplied. None of the information supplied or
to be supplied by Parent for inclusion or incorporation by reference in the
Company Proxy Statement or any amendment or supplement thereto will, at the date
the Company Proxy Statement or any amendment or supplement thereto is first
mailed to shareholders of Company and at the time such shareholders vote on the
adoption and approval of this Agreement and the transactions contemplated
hereby, 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.
Section 4.11 Absence of Certain Changes. Except as disclosed in the
Parent SEC Documents filed prior to the date of this Agreement or as disclosed
in Section 4.11 of the Parent Disclosure Schedule, since June 19, 1999, Parent
and its Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development which, individually or in the
aggregate, has had or would have a Material Adverse Effect on Parent;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent (other than
payment of Parent' regular quarterly cash dividend on Parent Common Stock) or
any repurchase, redemption or other acquisition by Parent or any of its
Subsidiaries of any amount of outstanding shares of capital stock or other
equity securities of, or other ownership interests in, Parent or any of its
Subsidiaries;
(c) any amendment of any term of any outstanding security of Parent or
any of its Subsidiaries that would materially increase the obligations of Parent
or such Subsidiary under such security;
(d) (x) any incurrence or assumption by Parent or any of its
Subsidiaries of any indebtedness for borrowed money other than under existing
credit facilities (or any renewals, replacements or extensions thereof that do
not materially increase the commitments thereunder except to the extent of the
amount required to refinance any indebtedness for borrowed money of Parent and
its Subsidiaries as of the Closing Date) (A) in the ordinary course of business
consistent with past practices (it being understood that any indebtedness
incurred prior to the date hereof in respect of capital expenditures shall be
considered to have been in the ordinary course of business consistent with past
practice) or (B) in connection with any acquisition or capital expenditure
permitted by Section 5.02, or (y) any guarantee, endorsement or other incurrence
or assumption of liability (whether directly, contingently or otherwise) by
Parent or any of its Subsidiaries for the obligations of any other person (other
than any Subsidiary of Parent), other than in
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the ordinary course of business consistent with past practice or in connection
with obligations of Parent and its Subsidiaries assumed at the Effective Time;
(e) any creation or assumption by Parent or any of its Subsidiaries of
any consensual Lien on any material asset of Parent or any of its Subsidiaries
other than in the ordinary course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
material investment in any person by Parent or any of its Subsidiaries other
than (i) loans, advances or capital contributions to or investments in
wholly-owned Subsidiaries of Parent or (ii) loans or advances to employees of
Parent or any of its Subsidiaries made in the ordinary course of business
consistent with past practice;
(g) (i) any contract or agreement entered into by Parent or any of its
Subsidiaries on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by Parent or any of its Subsidiaries
of any contract, license or other right (including any insurance policy naming
it as a beneficiary or a loss payable payee) that, individually or in the
aggregate, would have a Material Adverse Effect on Parent, other than, in the
case of (i) and (ii), transactions, commitments, contracts or agreements in the
ordinary course of business consistent with past practice and those contemplated
by this Agreement; or
(h) any material change in any method of accounting or accounting
principles or practice by Parent or any of its Subsidiaries, except for any such
change required by reason of a change in GAAP.
Section 4.12 No Undisclosed Material Liabilities. There have been no
liabilities or obligations (whether pursuant to contracts or otherwise) of any
kind whatsoever incurred by Parent or any of its Subsidiaries since June 19,
1999, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities or obligations (i) disclosed or provided for in the
Parent Balance Sheet or in the notes thereto, (ii) disclosed in the Parent SEC
Documents filed prior to the date hereof or (iii) disclosed in Section 4.12 of
the Parent Disclosure Schedule;
(b) liabilities or obligations which, individually and in the
aggregate, have not had and would not have a Material Adverse Effect on Parent;
or
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
Section 4.13 Litigation. Except as disclosed in the Parent SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of Parent,
threatened against or
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affecting, Parent or any of its Subsidiaries or any of their respective
properties which, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
Section 4.14 Taxes. Except as set forth on Section 4.14 of the Parent
Disclosure Schedule:
(a) Parent and each of its Subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) of which Parent or any of its
Subsidiaries is or has been a member, has timely filed (or has had timely filed
on its behalf) or will file or cause to be timely filed, all material Tax
Returns required by applicable law to be filed by it prior to or as of the
Effective Time, and all such material Tax Returns are, or will be at the time of
filing, true, correct and complete in all material respects;
(b) Parent and each of its Subsidiaries has paid (or has had paid on
its behalf) all Taxes shown due with respect to Tax Returns for periods ending
prior to or as of the Effective Time;
(c) The federal income Tax Returns of Parent have been examined by and
settled with the Service (or the applicable statutes of limitation for the
assessment of federal income Taxes for such periods have expired) for all years
through 1994;
(d) There are no material Liens or encumbrances for Taxes on any of the
assets of Parent or its Subsidiaries (other than for current Taxes not yet due
and payable);
(e) Parent and its Subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes;
(f) None of Parent or its Subsidiaries is a party to any tax
allocation, tax sharing, tax indemnity or similar agreement (whether or not in
writing), arrangement or practice with respect to Taxes (including any adverse
pricing agreement, closing agreement or other agreement relating to Taxes with
any taxing authority), except among themselves;
(g) No federal, state, local or foreign audits or administrative
proceedings are presently pending with regard to a material amount of Taxes or a
material Tax Return of Parent or its Subsidiaries and none of them has received
a written notice or has any knowledge (including the knowledge of any employee
responsible for Tax matters) of any proposed audit or proceeding; and
(h) The Parent Balance Sheet reflects an adequate reserve for all Taxes
payable by Parent and its Subsidiaries for all taxable periods through the date
of the Parent Balance Sheet.
Section 4.15 Employee Benefits, ERISA. (a) Except as set forth in
Section 4.15 of the Parent Disclosure Schedule, there are no material employee
benefit
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plans (including any plans for the benefit of directors or former directors),
arrangements, practices, contracts or agreements (including employment
agreements and severance agreements, incentive compensation, bonus, stock
option, stock appreciation rights and stock purchase plans) of any type
(including plans described in Section 3(3) of ERISA), maintained by Parent, any
of its Subsidiaries or any ERISA Affiliate, that together with Parent would be
deemed a "controlled group" within the meaning of Section 4001(a)(14) of ERISA,
or with respect to which Parent or any of its Subsidiaries has or may have a
liability (the "Parent Benefit Plans"). Since June 19,1999, there has been no
change, amendment, modification to, or adoption of, any Parent Benefit Plan, in
each case, that has had, or would have, a Material Adverse Effect on Parent.
(a) With respect to each Parent Benefit Plan, except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent: (i)
if intended to qualify under Section 401(a), 401(k) or 403(a) of the Code, such
plan so qualifies, and its trust is exempt from taxation under Section 501(a) of
the Code; (ii) such plan has been administered in accordance with its terms and
applicable law; (iii) no breaches of fiduciary duty have occurred; (iv) no
non-exempt prohibited transaction within the meaning of Section 406 of ERISA has
occurred; (v) as of the date of this Agreement, no Lien imposed under the Code
or ERISA exists; (vi) all contributions and premiums due (including any
extensions for such contributions and premiums) have been made in full; and
(vii) there are no actions, proceedings, arbitrations, suits or claims pending,
or to the knowledge of Parent threatened (other than routine claims for
benefits), against Parent or any ERISA Affiliate or any administrator, trustee
or other fiduciary of any Parent Benefit Plan.
(b) None of the Parent Benefit Plans has incurred any "accumulated
funding deficiency", as such term is defined in Section 412 of the Code, whether
or not waived.
(c) Neither Parent nor any ERISA Affiliate has incurred any liability
under Title IV of ERISA (including Sections 4063-4064 and 4069 of ERISA) that
has not been satisfied in full except as, individually or in the aggregate,
would not have a Material Adverse Effect on Parent or that has not been
reflected on Parent's consolidated financial statements.
(d) With respect to each Parent Benefit Plan that is a "welfare plan"
(as defined in Section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of Parent or any of its
Subsidiaries beyond their termination of employment, other than as may be
required under Part 6 of Title I of ERISA and at the expense of the participant
or the participant's beneficiary and except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(e) The consummation of the transactions contemplated by this Agreement
will not entitle any individual to severance pay or any tax "gross-up" payments
with respect to the imposition of any tax pursuant to Section 4999 of the Code
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or accelerate the time of payment or vesting, or increase the amount, of
compensation or benefits due to any individual with respect to any Parent
Benefit Plan.
(f) There is no Parent Benefit Plan that is a "multiemployer plan", as
such term is defined in Section 3(37) of ERISA, or which is covered by Section
4063 or 4064 of ERISA.
(g) Neither Parent nor any of its Significant Subsidiaries is a party
to any collective bargaining agreement. Except as would not, individually or in
the aggregate, have a Material Adverse Effect on Parent, (i) there is no labor
strike, slowdown or work stoppage or lockout against Parent or any of its
Significant Subsidiaries and (ii) there is no unfair labor practice charge or
complaint against or pending before the National Labor Relations Board. As of
the date of this Agreement, there is no representation claim or petition pending
before the National Labor Relations Board and, to the knowledge of Parent, no
material concerted effort relating to representation exists with respect to the
employees of Parent or any of its Significant Subsidiaries.
Section 4.16 Compliance with Laws. Neither Parent nor any of its
Subsidiaries is in violation of any statute, law, ordinance, regulation, rule,
judgment, decree, order, writ, injunction, permit or license or other
authorization or approval of any Governmental Authority applicable to its
business or operations, except for violations and failures to comply that would
not, individually or in the aggregate, result in a Material Adverse Effect on
Parent.
Section 4.17 No Default. Each Parent Agreement is a valid, binding and
enforceable obligation of Parent and in full force and effect, except where the
failure to be valid, binding and enforceable and in full force and effect would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
None of Parent or any of its Subsidiaries is in default or violation of any
term, condition or provision of (i) its respective articles of incorporation or
by-laws or similar organizational documents or (ii) any Parent Agreement,
except, in the case of clauses (i) (with respect to organizational documents
that are partnership, joint venture or similar documents) and (ii), for defaults
or violations that, individually or in the aggregate, have not had and would not
have a Material Adverse Effect on Parent. Parent has all permits and licenses
necessary to carry on the business conducted by it as of the date hereof, except
where the failure to have such permit or license would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
Section 4.18 Finders' Fees. Except for XX Xxxxxx & Co. Incorporated, a
copy of whose engagement agreement has been provided to Company, no investment
banker, broker, finder, other intermediary or other person is entitled to any
fee or commission from Parent or any of its Subsidiaries upon consummation of
the transactions contemplated by this Agreement.
Section 4.19 Environmental Matters. (a) Except as set forth in the
Parent 10-K, to the knowledge of Parent:
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(i) no notice, notification, demand, request for information,
citation, summons or order has been received by, no complaint has been filed
against, no penalty has been assessed against, and no investigation, action,
claim, suit, proceeding or review is pending or, to the knowledge of Parent or
any of its Subsidiaries, is threatened by any person or Governmental Authority,
against Parent or any of its Subsidiaries with respect to any matters relating
to or arising out of any Environmental Law which, individually or in the
aggregate, would have a Material Adverse Effect on Parent;
(ii) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or released at, on
or under any property now or, to the knowledge of Parent, previously owned,
leased or operated by Parent or any of its Subsidiaries, or any adjacent
properties, which circumstance, individually or in the aggregate, would have a
Material Adverse Effect on Parent; and
(iii) to the knowledge of Parent, there are no Environmental
Liabilities that, individually or in the aggregate, have had or would have a
Material Adverse Effect on Parent.
(b) For purposes of this Section, capitalized terms used shall have the
meanings assigned to them in Section 3.19(b), except that in all cases the word
"Parent" shall be substituted for the word "Company".
Section 4.20 [Intentionally Deleted]
Section 4.21 Takeover Statutes. To the best of Parent's knowledge, no
Takeover Statute applicable to Parent or any of its Subsidiaries, is applicable
to the Merger or the other transactions contemplated hereby. Neither Parent nor
Merger Subsidiary has ever been a beneficial owner of 25% or more of the
outstanding Company Common Stock, within the meaning of Section 611-A of the
Maine Law.
Section 4.22 Affiliates. Section 4.22 of the Parent Disclosure Schedule
sets forth each person who, as of the date hereof, is, to the best of Parent's
knowledge, deemed to be an Affiliate of Parent.
Section 4.23 Merger Subsidiary. Merger Subsidiary is a newly-formed
direct wholly-owned Subsidiary of Parent that has engaged in no business
activities other than as specifically contemplated by this Agreement.
Section 4.24 Financing. Parent has, as of the date hereof, and will
have as of the Effective Time, sufficient funds to make the cash payments
required pursuant to this Agreement. Parent has delivered to Company true,
complete and correct copies of the commitment letter of X.X. Xxxxxx Securities
Inc. and Xxxxxx Guaranty Trust Company of New York dated the date hereof to
provide Parent with the debt financing necessary to enable Parent to consummate
the transactions contemplated hereby (the "Commitment Letter"). Parent agrees to
promptly notify Company if at any time prior to
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the Closing Date it no longer believes in good faith that it will be able to
obtain financing substantially on the terms described in the Commitment Letter.
ARTICLE 5
Covenants
Section 5.01 Conduct of Company. Company covenants and agrees that,
from the date hereof until the Effective Time, except as expressly provided
otherwise in this Agreement, including Sections 3.11 and 5.01 of the Company
Disclosure Schedule hereto, or as reasonably necessary for Company to fulfill
its obligations hereunder, Company and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business organizations
and relationships with customers, suppliers, creditors and business partners and
shall use their reasonable efforts to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, without the prior
written approval of Parent (which approval shall not be unreasonably withheld):
(a) Company will not adopt or propose any change in its articles of
incorporation or any material change in its bylaws, other than changes effected
to facilitate the Merger;
(b) Company will not, and will not permit any of its Subsidiaries to,
adopt a plan or agreement of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other material
reorganization of Company or any of its Subsidiaries (other than a liquidation
or dissolution of any Subsidiary or a merger or consolidation between wholly
owned Subsidiaries);
(c) Company will not, and will not permit any of its Subsidiaries to,
make any investment in or acquisition of any business of any person or any
material amount of assets (other than inventory), except for (i) acquisitions
for cash not to exceed $1,000,000 per acquisition and $10,000,000 in the
aggregate for all acquisitions and (ii) without duplication, any capital
expenditure permitted by Section 5.01(j);
(d) Company will not, and will not permit any of its Subsidiaries to,
sell, lease, license, close, shut down or otherwise dispose of any assets (other
than inventory), except (i) pursuant to existing contracts or commitments listed
on Section 5.01 of the Company Disclosure Schedule or (ii) sales, leases,
licenses, closings, shutdowns or other dispositions of assets in the ordinary
course of business consistent with past practice;
(e) Company will not, and will not permit any of its Subsidiaries to,
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock other than (i) cash
dividends payable by Company in an aggregate amount not in excess of $.165 per
share per calendar quarter
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and (ii) dividends paid by any wholly owned Subsidiary of Company to Company or
any other Subsidiary of Company;
(f) Company will not, and will not permit any of its Subsidiaries to,
issue, sell, transfer, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class or series of Company or its Subsidiaries, other than (i) issuances
pursuant to the exercise of stock-based awards or options (including under the
plans described in Section 3.05(a)) outstanding on the date hereof, (ii)
issuances by any Subsidiary of Company to Company or any other Subsidiary of
Company and (iii) shares of Common Stock issuable pursuant to options granted to
newly hired management level employees in accordance with Company's past
practice;
(g) Company will not, and will not permit any of its Subsidiaries to,
redeem, purchase or otherwise acquire directly or indirectly any of Company's
capital stock;
(h) Company will not, and will not permit any of its Subsidiaries to,
move the location, close, shut down or otherwise eliminate Company's
headquarters or distribution centers or effect a general staff reduction at such
headquarters or distribution centers;
(i) Except in connection with investments or acquisitions permitted by
Section 5.01(c) or investments or acquisitions in the ordinary course of
business consistent with past practice, Company will not, and will not permit
any of its Subsidiaries to, (i) enter into (or commit to enter into) any new
lease (except pursuant to commitments for such lease entered into as of the date
hereof) or (ii) purchase or acquire or enter into any agreement to purchase or
acquire any real estate (except pursuant to commitments existing as of the date
hereof);
(j) Company will not, and will not permit any of its Subsidiaries to,
make or commit to make any capital expenditure (including for store remodelings,
store signage and information systems) except for individual capital expenditure
projects or items not exceeding $1,000,000 per project or item or $10,000,000 in
the aggregate for all projects and items and those projects or items committed
to or budgeted for prior to the date of this Agreement (all of which projects
and items are set forth in Section 5.01(j) of the Company Disclosure Schedule);
(k) Company will not, and will not permit any of its Subsidiaries to,
change any tax election, change any annual tax accounting period, change any
method of tax accounting, file any amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right to claim a
Tax refund or consent to any extension or waiver (other than a reasonable
extension or waiver) of the limitations period applicable to any Tax claim or
assessment, if any such action in this clause (k) would have the effect of
materially increasing the aggregate Tax liability or materially reducing the
aggregate tax assets of Company and its Subsidiaries, taken as a whole;
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(l) Company will not, and will not permit any of its Subsidiaries to,
increase the compensation or benefits of any director, officer or employee,
except for normal increases in the ordinary course of business consistent with
past practice (which increases shall not exceed, on an annual basis, 6% in the
aggregate for all directors, officers and employees) or as required under
applicable law or existing agreement or commitment;
(m) Company will not, and will not permit any of its Subsidiaries to,
accelerate any income, postpone any expense or reverse any reserve, except on a
basis consistent with past practice or as otherwise required by law;
(n) Company will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing; and
(o) Company will not, and will not permit any of its Subsidiaries to,
take or agree or commit to take any action that would make any representation
and warranty of Company hereunder inaccurate in any material respect at, or as
of any time prior to, the Effective Time.
Section 5.02 Conduct of Parent. From the date hereof until the
Effective Time, except as expressly provided otherwise in this Agreement,
including Section 5.02 of the Parent Disclosure Schedule or as reasonably
necessary for Parent to fulfill its obligations hereunder, Parent and its
Subsidiaries shall conduct their business in the ordinary course consistent with
past practice and shall use their reasonable best efforts to preserve intact
their business organizations and relationships with customers, suppliers,
creditors and business partners and shall use their reasonable efforts to keep
available the services of their present officers and employees. Without limiting
the generality of the foregoing but subject to the preceding sentence, from the
date hereof until the Effective Time, without the prior written approval of
Company (which approval shall not be unreasonably withheld):
(a) Parent will not adopt or propose any material change in its
articles of incorporation or any material change in its bylaws;
(b) Parent will not, and will not permit any of its Subsidiaries to,
(i) adopt a plan or agreement of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other material
reorganization of Parent or any of its Subsidiaries (other than a liquidation or
dissolution of any wholly owned Subsidiary or a merger or consolidation between
wholly owned Subsidiaries) or (ii) make any material acquisition of the business
of any person (other than a wholly owned Subsidiary);
(c) Parent will not, and will not permit any of its Subsidiaries to,
make any investment in or acquisition of any business of any person or any
material amount of assets (other than inventory), except for (i) acquisitions
not to exceed $100,000,000 in the aggregate for all acquisitions and (ii)
without duplication, any capital expenditure permitted by Section 5.02(j);
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(d) Parent will not, and will not permit any of its Subsidiaries to,
sell, lease, license, close, shut down or otherwise dispose of any assets (other
than inventory) in an amount that would be material to Parent and its
Subsidiaries, taken as a whole, except (i) pursuant to existing contracts or
commitments or (ii) sales, leases, licenses, closings, shutdowns or other
dispositions of assets in the ordinary course of business consistent with past
practice;
(e) Parent will not, and will not permit any of its Subsidiaries to,
issue, sell, transfer, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class or series of Parent or its Subsidiaries, other than (x) issuances by any
Subsidiary of Parent to Parent or any other Subsidiary of Parent, (y) issuances
pursuant to the exercise of stock-based awards or options, including under the
plans described in Section 4.05(a), outstanding on the date hereof or granted as
contemplated in clause (z) below, and (z) any grant of options or other stock
based awards in respect of Parent Common Stock to employees or directors of
Parent or any of its Subsidiaries that could result in the issuance of not more
than 125% of the aggregate amount of shares of Parent Common Stock issuable
under all grants of options or other stock based awards during the fiscal year
ended January 2, 1999;
(f) Parent will not, and will not permit any of its Subsidiaries to,
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock other than (i) cash
dividends payable by Parent in an aggregate amount not in excess of $0.0504 per
share per calendar quarter, and (ii) dividends paid by any Subsidiary of Parent
to Parent or any other Subsidiary of Parent;
(g) Parent will not, and will not permit any of its Subsidiaries to,
redeem, purchase or otherwise acquire directly or indirectly any of Parent's
capital stock;
(h) Parent will not, and will not permit any of its Subsidiaries to,
move the location, close, shut down or otherwise eliminate Parent's headquarters
or distribution centers or effect a general staff reduction at such headquarters
or distribution centers;
(i) except in connection with investments or acquisitions permitted by
Section 5.02(c) or investments or acquisitions in the ordinary course of
business consistent with past practice, Parent will not, and will not permit any
of its Subsidiaries to, (i) enter into (or commit to enter into) any new lease
(except pursuant to commitments for such lease entered into as of the date
hereof) or (ii) purchase or acquire or enter into any agreement to purchase or
acquire any real estate (except pursuant to commitments existing as of the date
hereof);
(j) Parent will not, and will not permit any of its Subsidiaries to,
make or commit to make any capital expenditure (including for store remodelings,
store signage and information systems) except for individual capital expenditure
projects or items not exceeding $15,000,000 per project or item or $100,000,000
in the aggregate for all projects and items and those projects or items
committed to or budgeted for prior to the
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date of this Agreement (all of which projects and items are set forth in Section
5.02(j) of the Parent Disclosure Schedule);
(k) Parent will not, and will not permit any of its Subsidiaries to,
change any tax election, change any annual tax accounting period, change any
method of tax accounting, file any amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right to claim a
Tax refund or consent to any extension or waiver (other than a reasonable
extension or waiver) of the limitations period applicable to any Tax claim or
assessment, if any such action in this clause (l) would have the effect of
materially increasing the aggregate Tax liability or materially reducing the
aggregate tax assets of Parent and its Subsidiaries, taken as a whole;
(l) Parent will not, and will not permit any of its Subsidiaries to,
increase the compensation or benefits of any director, officer or employee,
except for normal increases in the ordinary course of business consistent with
past practice or as required under applicable law or existing agreement or
commitment;
(m) Parent will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing; and
(n) Parent will not, and will not permit any of its Subsidiaries to
take or agree or commit to take any action that would make any representation
and warranty of Parent hereunder inaccurate in any material respect at, or as of
any time prior to, the Effective Time.
Section 5.03 Shareholder Meeting; Proxy Materials; Form S-4.
(a) Company shall cause a meeting of its shareholders (the "Company
Shareholder Meeting") to be duly called and held as soon as reasonably
practicable (subject to the receipt of all necessary approvals and subject to
the other transactions contemplated by this Agreement) after the date of this
Agreement for the purpose of voting on the approval and adoption of this
Agreement (the "Company Shareholder Approval"). Except as provided in the next
sentence, the Company Board shall recommend approval and adoption of this
Agreement by Company's shareholders. The Company Board shall be permitted to (i)
not recommend to Company's shareholders that they give the Company Shareholder
Approval or (ii) withdraw or modify in a manner adverse to Parent its
recommendation to Company's shareholders that they give the Company Shareholder
Approval, only if and to the extent that the Company Board, upon receipt of a
Superior Proposal (as hereinafter defined), and after consultation with and
based upon the advice of independent legal counsel, by a majority vote
determines in its good faith judgment that such action is necessary for the
Company Board to comply with its fiduciary duties to Company's shareholders
under applicable law. In connection with the Company Shareholder Meeting,
Company will (x) promptly prepare and file with the SEC, will use its reasonable
best efforts to have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (y) use its reasonable best efforts,
subject to the
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immediately preceding sentence, to obtain the Company Shareholder Approval and
(z) otherwise comply with all legal requirements applicable to such meetings.
(b) Parent shall promptly prepare and file with the SEC the Form S-4
with respect to the Parent Common Stock issuable in connection with the Merger
and take any action required to be taken in connection with such issuance of
Parent Common Stock. Subject to the terms and conditions of this Agreement,
Parent shall use its reasonable best efforts to have the Form S-4 declared
effective under the 1933 Act as promptly as practicable after the Form S-4 is
filed.
(c) Company and Parent shall each use their reasonable best efforts to
cause to be delivered to each other letters from their respective independent
accountants, dated a date within two business days before the effective date of
the Form S-4, in form reasonably satisfactory to the recipient and customary in
scope for comfort letters delivered by independent accountants in connection
with registration statements on Form S-4 under the Securities Act.
Section 5.04 Access to Information. (a) To the extent permitted by
applicable law, from the date hereof until the Effective Time, Company will give
Parent, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the offices,
properties, books and records of Company and its Subsidiaries, will furnish to
Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons may reasonably request and will instruct Company's employees, auditors,
counsel and financial advisors to cooperate with Parent in its investigation of
the business of Company and its Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given by
Company to Parent hereunder. The foregoing information shall be held in
confidence to the extent required by, and in accordance with, the provisions of
the letter agreement executed by Parent and Company as to confidentiality and
other matters (the "Parent Confidentiality Agreement").
(a) To the extent permitted by applicable law, from the date hereof
until the Effective Time, Parent will give Company, its counsel, financial
advisors, auditors and other authorized representatives reasonable access during
normal business hours to the offices, properties, books and records of Parent
and its Subsidiaries, will furnish to Company, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such persons may reasonably request and will instruct
Parent's employees, auditors, counsel and financial advisors to cooperate with
Company in its investigation of the business of Parent and its Subsidiaries;
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by Parent to Company hereunder. Such
information shall be held in confidence to the extent required by, and in
accordance with, the provisions of the letter agreement executed by Company and
Parent as to confidentiality and other matters (the "Company Confidentiality
Agreement").
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Section 5.05 No Solicitation. From the date hereof until the
termination hereof, Company will not and will cause its Subsidiaries and the
officers, directors, employees, investment bankers, consultants and other agents
of Company and its Subsidiaries not to, directly or indirectly, take any action
to solicit, initiate, encourage or facilitate the making of any Acquisition
Proposal or any inquiry with respect thereto or engage in discussions or
negotiations with any person with respect thereto, or disclose any non-public
information relating to Company or any of its Subsidiaries or afford access to
the properties, books or records of Company or any of its Subsidiaries to, any
person that has made any Acquisition Proposal; provided that nothing contained
in this Section 5.05 shall prevent Company from furnishing non-public
information to, or entering into discussions or negotiations with, any person in
connection with an unsolicited bona fide Acquisition Proposal received from such
person that the Company Board determines in good faith is reasonably likely to
lead to a Superior Proposal, so long as prior to furnishing non-public
information to, or entering into discussions or negotiations with, such person,
Company receives from such person an executed confidentiality agreement with
terms no less favorable to Company than those contained in the Parent
Confidentiality Agreement; provided, further that nothing contained in this
Agreement shall prevent the Company Board from complying with Rule 14e-2 or
14d-9 under the 1934 Act with regard to an Acquisition Proposal. Company will
promptly notify (which notice shall be provided orally and in writing and shall
identify the person making such Acquisition Proposal and set forth the material
terms thereof) Parent, within 24 hours after receipt of any Acquisition Proposal
or any request for nonpublic information relating to Company or any of its
Subsidiaries or for access to the properties, books or records of Company or any
of its Subsidiaries by any person that may be considering making, or has made,
an Acquisition Proposal if Company is prepared to provide such person with
access to such nonpublic information or properties, books or records. Company
shall give Parent two business days' advance notice (which notice shall include
the terms and conditions of such proposal with respect to an Acquisition
Proposal) of any definitive agreement providing for an Acquisition Proposal to
be entered into with any person or entity making any such inquiry, offer or
proposal. Company shall not be permitted to terminate this Agreement pursuant to
Section 7.01(d)(1) unless it shall have satisfied the obligations of this
Section 5.05 and prior to any such termination, Company shall, and shall cause
its financial and legal advisors to, during the two business day period
referenced in the preceding sentence, negotiate in good faith with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable Company to proceed with the transactions contemplated herein. Company
will, and will cause the other persons listed in the first sentence of this
Section 5.05 to, immediately cease and cause to be terminated all discussions
and negotiations, if any, that have taken place prior to the date hereof with
any parties with respect to any Acquisition Proposal. Subject to compliance with
their fiduciary duties, as determined in good faith by the Company Board, and
subject to the exceptions set forth in this Section 5.05, the Company Board
shall not authorize Company to waive any standstill or confidentiality
provisions contained in agreements to which Company is a party or to which
Company is subject, other than the Parent Confidentiality Agreement.
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For purposes of this Agreement, "Acquisition Proposal" means any bona
fide inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of more than 25% of the aggregate assets of
Company and its Subsidiaries, taken as a whole, or more than 25% of the voting
power of the shares of Company Common Stock then outstanding or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company, other than the transactions
contemplated by this Agreement or the Stock Exchange Agreement. For purposes of
this Agreement, "Superior Proposal" means any bona fide Acquisition Proposal on
terms that the Company Board determines in its good faith judgment (based on the
advice of a financial advisor of nationally recognized reputation, taking into
account all the terms and conditions of the Acquisition Proposal, including any
break-up fees, expense reimbursement provisions and conditions to consummation)
are more favorable to Company's shareholders than this Agreement and the Merger
taken as a whole, and for which financing, to the extent required, is then fully
committed or reasonably determined to be available by the Company Board.
Section 5.06 Notice of Certain Events. (a) Company and Parent shall
promptly notify each other of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and
(iii) any notice of, or other communications relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement, under any Company Agreement.
(b) Company shall promptly notify Parent of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting Company or any of its
Subsidiaries which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.13 or which relate to the
consummation of the transactions contemplated by this Agreement.
(c) Parent shall promptly notify Company of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting Parent or any Subsidiary of
Parent which, if pending on the date of this Agreement, would have been required
to have been disclosed pursuant to Section 4.13 or which relate to the
consummation of the transactions contemplated by this Agreement.
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Section 5.07 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will 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, proper or advisable under applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement.
In furtherance and not in limitation of the foregoing, each party hereto agrees
to make an appropriate filing of a Notification and Report Form pursuant to the
HSR Act with respect to the transactions contemplated hereby as promptly as
practicable and in any event within ten business days of the date hereof and to
supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and to take all other
actions reasonably necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(a) Each of Parent and Company shall, in connection with the efforts
referenced in Section 5.07(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust Law (as defined below), use its reasonable best
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party; (ii) keep the other party
informed in all material respects of any material communication received by such
party from, or given by such party to, the Federal Trade Commission (the "FTC"),
the Antitrust Division of the Department of Justice (the "DOJ") or any other
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby; and (iii) permit the other party to review
any material communication given by it to, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any such other
Governmental Authority or, in connection with any proceeding by a private party,
with any other person, and to the extent permitted by the FTC, the DOJ or such
other applicable Governmental Authority or other person, give the other party
the opportunity to attend and participate in such meetings and conferences. For
purposes of this Agreement, "Antitrust Law" means the Xxxxxxx Act, as amended,
the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, 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 actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
(b) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.07(a) and (b), each of Parent and Company shall
use its reasonable best efforts to resolve such objections if any, as may be
asserted with respect to the transactions contemplated hereby under any
Antitrust Law. In connection with the foregoing, if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of
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Parent and Company shall cooperate in all respects with each other 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 prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.07 shall limit a party's right to terminate this Agreement pursuant to Section
7.01(b)(i) or 7.01(c) so long as such party has up to then complied in all
material respects with its obligations under this Section 5.07.
(c) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or if any suit is instituted by any
Governmental Authority or any private party challenging any of the transactions
contemplated hereby as violative of any Antitrust Law, each of Parent and
Company shall use its reasonable best efforts to resolve any such objections or
challenge as such Governmental Authority or private party may have to such
transactions under such Antitrust Law so as to permit consummation of the
transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each of Parent and Company (and, to the extent
required by any Governmental Authority, its respective Subsidiaries and
Affiliates over which it exercises control) shall be required to enter into a
settlement, undertaking, consent decree, stipulation or other agreement (each, a
"Settlement") with a Governmental Authority regarding antitrust matters in
connection with the transactions contemplated by this Agreement, including,
without limitation, any Settlement that requires Parent and/or Surviving
Corporation to hold separate (including by establishing a trust or otherwise) or
to sell or otherwise dispose of stores of Parent (and its Subsidiaries) and/or
Surviving Corporation (and its Subsidiaries).
Section 5.08 Cooperation. Without limiting the generality of Section
5.07, Parent and Company shall together, or pursuant to an allocation of
responsibility to be agreed between them, coordinate and cooperate (i) in
connection with the preparation of the Company Proxy Statement and the Form S-4,
(ii) in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement, 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 Company Proxy Statement or the Form S-4 and seeking timely
to obtain any such actions, consents, approvals or waivers.
Section 5.09 Public Announcements. So long as this Agreement is in
effect, Parent and Company will consult with each other before issuing any press
release or making any SEC filing or other public statement with respect to this
Agreement or the transactions contemplated hereby and, except as may be required
by applicable law, will not issue any such press release or make any such SEC
filing or other public statement prior to such consultation and providing the
other party with a reasonable opportunity to comment thereon.
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Section 5.10 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Company or Merger Subsidiary,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of Company or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
Section 5.11 Affiliates. Prior to the Closing Date, Company shall cause
to be delivered to Parent a letter identifying, to the best of Company's
knowledge, all persons who are, at the time of the Company Shareholder Meeting
described in Section 5.03(a), deemed to be "affiliates" of Company for purposes
of Rule 145 under the 1933 Act (the "1933 Act Affiliates"). Company shall use
its reasonable best efforts to cause each person who is so identified as a 1933
Act Affiliate to deliver to Parent on or prior to the Closing Date a letter
agreement substantially in the form of Exhibit B-2 to this Agreement.
Section 5.12 Director and Officer Liability. Parent agrees that at all
times after the Effective Time, it shall, or shall cause the Surviving
Corporation and its Subsidiaries to indemnify each person who is now, or has
been at any time prior to the date hereof, an employee, agent, director or
officer of Company or of any of its Subsidiaries, its successors and assigns
(individually an "Indemnified Party" and collectively the "Indemnified
Parties"), with respect to any claim, liability, loss, damage, judgment, fine,
penalty, amount paid in settlement or compromise, cost or expense (including
reasonable fees and expenses of legal counsel), against any Indemnified Party in
his or her capacity as an employee, agent, officer or director of Company or its
Subsidiaries, whenever asserted or claimed, based in whole or in part on, or
arising in whole or in part out of, any facts or circumstances occurring at or
prior to the Effective Time whether commenced, asserted or claimed before or
after the Effective Time, including liability arising under the 1933 Act, the
1934 Act or state law. In the event of any claim, liability, loss, damage,
judgment, fine, penalty, amount paid in settlement or compromise, cost or
expense described in the preceding sentence, Parent shall pay the reasonable
fees and expenses of counsel selected by the Indemnified Parties promptly after
statements are received and otherwise advance to such Indemnified Party upon
request reimbursement of documented expenses reasonably incurred.
Parent shall, or shall cause the Surviving Corporation to, maintain in
effect for not less than six years after the Effective Time the current policies
of directors' and officers' liability insurance maintained by Company and its
Subsidiaries on the date hereof (provided that Parent may substitute therefor
policies with reputable and financially sound carriers having at least the same
coverage and amounts thereof and containing terms and conditions which are no
less advantageous to the persons currently covered by such policies as insured)
with respect to facts or circumstances occurring at or prior to the Effective
Time; provided that if the aggregate annual premiums for such insurance during
such six-year period shall exceed 300% of the per annum rate of the
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aggregate premium currently paid by Company and its Subsidiaries for such
insurance on the date of this Agreement, then Parent shall cause the Surviving
Corporation to, and the Surviving Corporation shall, provide the most
advantageous coverage that shall then be available at an annual premium equal to
300% of such rate. Parent agrees to pay all expenses (including fees and
expenses of counsel) that may be incurred by any Indemnified Party in
successfully enforcing the indemnity or other obligations under this Section
5.12. The rights under this Section 5.12 are in addition to rights that an
Indemnified Party may have under the articles of incorporation, bylaws, or other
similar organizational documents of Company or any of its Subsidiaries or the
Maine Law. The rights under this Section 5.12 shall survive consummation of the
Merger and are expressly intended to benefit each Indemnified Party. Parent
agrees to cause the Surviving Corporation and any of its Subsidiaries (or their
successors) to maintain in effect for a period of six years the provisions of
its articles of incorporation or bylaws or similar organizational documents
providing for indemnification of Indemnified Parties, with respect to facts or
circumstances occurring at or prior to the Effective Time, to the fullest extent
provided by law.
Section 5.13 Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 5.14 Listing of Stock. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Merger to be approved for listing on the NYSE on or prior to the
Closing Date, subject to official notice of issuance.
Section 5.15 Antitakeover Statutes. If any Takeover Statute is or may
become applicable to the Merger, each of Parent and Company shall take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of any Takeover Statute
on the Merger.
Section 5.16 Parent Board. Parent will take all necessary action
(including, without limitation, amending the stockholders' agreement between
Parent and Etablissements Delhaize Freres et Cie "Le Lion" S.A.) to cause Xxxx
X. Xxxxxxxxxx, from and after the date the Merger is consummated, to be
appointed (a) Vice Chairman of Parent, (b) a member of Parent's Executive
Committee and (c) a member of the Board of Directors of Parent.
Section 5.17 Employee Benefits. (a) Following the Effective Time,
Parent shall, or shall cause the Surviving Corporation to (i) honor all
obligations under employment or severance agreements of Company or its
Subsidiaries and (ii) pay all benefits accrued through the Effective Time under
employee benefit plans, programs, policies and arrangements of Company or its
Subsidiaries in accordance with the terms thereof. In furtherance and not in
limitation of the foregoing, Parent agrees to provide, or
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cause the Surviving Corporation to provide, employees of Company who continue to
be employed by the Surviving Corporation or its Subsidiaries as of the Effective
Time ("Continuing Employees") for a period of not less than two years following
the Effective Time with (A) annual compensation not less favorable than the
annual compensation which they were receiving immediately prior to the Effective
Time, and (B) benefits which, in the aggregate, are no less favorable than the
benefits provided to such employees immediately prior to the Effective Time.
Nothing herein shall require the continuation of employment of any of the
Continuing Employees for any period of time following the Effective Time. In
addition to the foregoing, for a period of two years following the Effective
Time, Parent shall, or shall cause the Surviving Corporation or its Subsidiaries
to, establish and maintain a plan to provide severance and termination benefits
to all non-union employees of Company and its Subsidiaries which are no less
favorable than the severance and termination benefits provided under Company's
plans and arrangements in effect as of the date of this Agreement. If Continuing
Employees are included in any benefit plan (including without limitation,
provision for vacation) of Parent or its Subsidiaries, the Continuing Employees
shall receive credit as employees of Company and its Subsidiaries for service
prior to the Effective Time with Company and its Subsidiaries to the same extent
such service was counted under similar Company Benefit Plans for purposes of
eligibility, vesting, eligibility for retirement and benefit accrual. If
Continuing Employees are included in any medical, dental or health plan other
than the plan or plans they participated in as of the Effective Time, any such
plans shall not include pre-existing condition exclusions, except to the extent
such exclusions were applicable under the similar Company Benefit Plan as of the
Effective Time, and shall provide credit for any deductibles and co-payments
applied or made with respect to each Continuing Employee in the calendar year of
the change. The rights under this Section 5.17 shall survive consummation of the
Merger and are expressly intended to benefit each Continuing Employee.
(a) Upon the Effective Time, Company's Employee Stock Purchase Plan
shall be terminated with the effect that the then current offering period under
such plan will be terminated effective as of the Effective Time.
Section 5.18 Stock Exchange Agreement. Parent has provided Company with
a true and complete copy of the Stock Exchange Agreement, a copy of which is
attached hereto as Exhibit B. Parent agrees that it will not amend or waive any
provision of the Stock Exchange Agreement without the prior written consent of
Company. Parent agrees that it will not issue consideration per share to the
Voting Shareholders under the Stock Exchange Agreement that (i) is greater than
the blended value of the Merger Consideration or (ii) consists of more than 86%
in cash.
Section 5.19 Definitive Financing Documents. On or prior to the later
of (i) 10 days prior to the Company Shareholder Meeting or (ii) 120 days after
the date of this Agreement, Parent shall provide Company with substantially
final documentation relating to the debt financing described in the Commitment
Letter (the "Financing Documents") together with a written confirmation from
Parent and the lenders thereunder
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to the effect that they are prepared to enter into such documentation upon the
satisfaction or waiver of the conditions to the Merger.
ARTICLE 6
Conditions to the Merger
Section 6.01 Conditions to the Obligations of Each Party. The
obligations of Company, Parent and Merger Subsidiary to consummate the Merger
are subject to the satisfaction (or waiver by the party for whose benefit the
applicable condition exists) of the following conditions:
(a) this Agreement and the transactions contemplated hereby shall have
been approved and adopted by the shareholders of Company by the Company
Requisite Vote;
(b) any applicable waiting period under the HSR Act relating to the
transactions contemplated by this Agreement shall have expired;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit or enjoin the consummation of the
Merger;
(d) the Form S-4 shall have been declared effective under the 1933 Act
and no stop order suspending the effectiveness of the Form S-4 shall be in
effect and no proceedings for such purpose shall be pending before or threatened
by the SEC; and
(e) the shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
Section 6.02 Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction (or waiver by Parent) of the following
further condition:
(a) Company shall have performed in all material respects all of its
obligations and complied in all material respects with all of its covenants
hereunder required to be performed or complied with by it at or prior to the
Effective Time and (b) the representations and warranties of Company contained
in this Agreement (without considering any qualification as to materiality)
shall be true and correct at and as of the Effective Time, as if made at and as
of such time (other than representations and warranties that address matters
only as of a particular date, which shall be true and correct as of such date),
with only such exceptions as, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on Company; and Parent shall have
received a certificate signed by an executive officer of Company to the effect
set forth in clauses (a) and (b).
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Section 6.03 Conditions to the Obligations of Company. The obligations
of Company to consummate the Merger are subject to the satisfaction (or waiver
by Company) of the following further condition:
(a) Parent shall have performed in all material respects all of its
obligations and complied in all material respects with all of its covenants
hereunder required to be performed or complied with by it at or prior to the
Effective Time and (b) the representations and warranties of Parent contained in
this Agreement (without considering any qualification as to materiality) shall
be true and correct at and as of the Effective Time, as if made at and as of
such time (other than representations and warranties that address matters only
as of a particular date which shall be true and correct as of such date), with
only such exceptions as, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on Parent; and Company shall have
received a certificate signed by an executive officer of Parent to the effect
set forth in clauses (a) and (b).
ARTICLE 7
Termination
Section 7.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the shareholders of Company):
(a) by mutual written consent of Company and Parent;
(b) by either Company or Parent,
(i) if the Merger has not been consummated by August 17, 2000
(the "End Date"); or
(ii) if the Company Shareholder Approval shall not have been
obtained by reason of the failure to obtain the Company Requisite Vote at a duly
held meeting of shareholders or any adjournment thereof;
(c) by either Company or Parent (so long as such party has complied in
all material respects with its obligations under Section 5.07), if consummation
of the Merger would be prohibited by any law or regulation or if any injunction,
judgment, order or decree enjoining Company or Parent from consummating the
Merger is entered and such injunction, judgment, order or decree shall become
final and nonappealable;
(d) by Company:
(i) if the Company Board shall have received an Acquisition
Proposal which the Company Board has determined in good faith is a Superior
Proposal; provided that Company shall have given Parent at least forty-eight
hours advance actual
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notice of any termination pursuant to this Section 7.01(d)(i) and shall have
made the payment referred to in Section 7.03(b) hereof;
(ii) upon a breach of any representation, warranty, covenant
or agreement of Parent, or if any representation or warranty of Parent shall
become untrue, in either case which breach or misrepresentation or warranty
shall not have been cured within 30 days following written notice from Company
such that the conditions set forth in Section 6.03(a) would be incapable of
being satisfied by the End Date; or
(iii) if Parent shall have failed to deliver to Company the
Financing Documents within the period described in Section 5.19.
(e) by Parent:
(i) if (x) the Company Board shall have failed to recommend or
withdrawn, or modified or changed in a manner adverse to Parent its approval or
recommendation of this Agreement or the Merger or shall have recommended a
Superior Proposal or (y) Company shall have entered into a definitive agreement
providing for a Superior Proposal with a person other than Parent or its
Subsidiaries (or the Company Board resolves to do any of the foregoing); or
(ii) upon a breach of any representation, warranty, covenant
or agreement of Company, or if any representation or warranty of Company shall
become untrue, in either case which breach or misrepresentation or warranty
shall not have been cured within a reasonable period of time following written
notice from Parent such that the conditions set forth in Section 6.02(a) would
be incapable of being satisfied by the End Date (a "Company Breach").
The party desiring to terminate this Agreement pursuant to clauses (b),
(c), (d) or (e) of this Section 7.01 shall give written notice of such
termination to the other party in accordance with Section 8.02, specifying the
provision hereof pursuant to which such termination is effected. Notwithstanding
anything else contained in this Agreement, (A) the right to terminate this
Agreement under this Section 7.01 shall not be available to any party whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement in all material respects has been the cause of, or resulted in, the
failure to satisfy any condition to the obligations of either party hereunder,
and (B) no party that is in material breach of its obligations hereunder shall
be entitled to any payment of any amount from the other party pursuant to
Section 7.03(b).
Section 7.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that (a) the agreements
contained in this Section 7.02 and in Section 7.03 and in the Parent
Confidentiality Agreement and Company Confidentiality Agreement shall survive
the termination hereof and (b) no such termination shall relieve any party of
any liability or damages resulting from any willful material breach by that
party of this Agreement.
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Section 7.03 Payments. (a) Except as otherwise specified in this
Section 7.03 or agreed in writing by the parties, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such cost or expense.
(a) If (x) Company shall terminate this Agreement pursuant to Section
7.01(d)(i) hereof, or (y) Parent shall terminate this Agreement pursuant to
Section 7.01(e)(i) hereof (each such case of termination being referred to as a
"Trigger Event"), Company shall pay to Parent (by wire transfer of immediately
available funds not later than the date of termination of this Agreement) an
amount equal to $90,000,000 (the "Termination Fee"). Additionally, if Parent
terminates this Agreement pursuant to Section 7.01(e)(ii), and an Acquisition
Proposal has been made to Company after the date hereof, but prior to such
termination, and within twelve months after the termination of this Agreement
(A) a transaction constituting an Acquisition Proposal is consummated, or (B) a
definitive agreement for such a transaction is entered into by Company, then
Company shall pay to Parent the Termination Fee upon the consummation of any
such transaction or the execution of any such definitive agreement. Acceptance
by Parent of the Termination Fee shall constitute conclusive evidence that this
Agreement has been validly terminated and upon payment of such amount Company
shall be fully released and discharged from any liability or obligation
resulting from or under this Agreement.
ARTICLE 8
Miscellaneous
Section 8.01 Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings specified in this Section 8.01:
(a) "know" or "knowledge" means, with respect to any party, the actual
knowledge of such party's executive officers, except as specified in Section
3.14(g) and 4.14(g).
(b) "person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(c) "Subsidiary" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of
which, having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries.
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Section 8.02 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given:
if to Parent, to:
Food Lion, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxx Xxxx
if to Company, to:
Hannaford Bros. Co.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
General Counsel
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 8.02
and the appropriate telecopy confirmation is received or (b) if given by any
other means, when delivered at the address specified in this Section 8.02.
Section 8.03 Entire Agreement; Non-Survival of Representations and
Warranties; Third Party Beneficiaries. (a) This Agreement (including any
exhibits hereto), the other agreements referred to in this Agreement and the
Parent Confidentiality Agreement and the Company Confidentiality Agreement
constitute the entire Agreement
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among the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to such subject matter. None of this
Agreement, the Parent Confidentiality Agreement, the Company Confidentially
Agreement or any other agreement contemplated hereby or thereby (or any
provision hereof or thereof) is intended to confer on any person other than the
parties hereto or thereto any rights or remedies (except that Article 1 and
Sections 5.12, and 5.17 are intended to confer rights and remedies on the
persons specified therein).
(a) The representations and warranties contained herein or in any
schedule, instrument or other writing delivered pursuant hereto shall not
survive the Effective Time.
Section 8.04 Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by Company and Parent or, in the case of a waiver, by the party against whom the
waiver is to be effective; provided that after the adoption of this Agreement by
the shareholders of Company, there shall be made no amendment that by law
requires further approval by shareholders without the further approval of such
shareholders.
(a) 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 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.
Section 8.05 Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the written consent of the other parties hereto.
Section 8.06 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Maine (without regard to
principles of conflict of laws).
Section 8.07 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated by this Agreement may be
brought against any of the parties in any Federal court located in the State of
Maine, or any Maine state court located in Cumberland County, and each of the
parties hereto hereby consents to the exclusive jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and waives any objection to venue laid therein. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the State of Maine. Without limiting
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the generality of the foregoing, each party hereto agrees that service of
process upon such party at the address referred to in Section 8.01, together
with written notice of such service to such party, shall be deemed effective
service of process upon such party.
Section 8.08 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 8.09 Interpretation. When a reference is made in this Agreement
to a Section or Disclosure Schedule, such reference shall be to a Section of
this Agreement or to the Company Disclosure Schedule or Parent Disclosure
Schedule as applicable, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation". The phrases
"the date of this Agreement", "the date hereof", and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to August 17,
1999.
Section 8.10 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. Upon such determination that any term,
provision, covenant or restriction of this Agreement is invalid, void,
unenforceable or against regulatory policy, 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 an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 8.11 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Maine or any Maine state court, in
addition to any other remedy to which they are entitled at law or in equity.
Section 8.12 Joint and Several Liability. Parent and Merger Subsidiary
hereby agree that they will be jointly and severally liable for all covenants,
agreements, obligations and representations and warranties made by either of
them in this Agreement.
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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.
FOOD LION, INC.
By: /s/ R. Xxxxxxx XxXxxxxxx
------------------------------------
Name: R. Xxxxxxx XxXxxxxxx
Title: President and Chief Executive
Officer
HANNAFORD BROS. CO.
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President and Chief Executive
Officer
FL ACQUISITION SUB, INC.
By: /s/ R. Xxxxxxx XxXxxxxxx
------------------------------------
Name: R. Xxxxxxx XxXxxxxxx
Title: President and Chief Executive
Officer
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