EXHIBIT 10.17
AGREEMENT
AND
PLAN OF MERGER
by and among
KONINKLIJKE AHOLD N.V.,
AHOLD U.S.A. HOLDINGS, INC.,
BEAN ACQUISITION CORP.
and
PEAPOD, INC.
dated as of July 16, 2001
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TABLE OF CONTENTS
Page
ARTICLE 1 THE OFFER.........................................................2
SECTION 1.01 The Tender Offer......................................2
SECTION 1.02 Company Action........................................4
SECTION 1.03 Stockholder Lists.....................................5
ARTICLE 2 THE MERGER........................................................5
SECTION 2.01 The Merger............................................5
SECTION 2.02 Effective Time; Closing...............................5
SECTION 2.03 Effect of the Merger..................................5
SECTION 2.04 Certificate of Incorporation; By-laws; Directors
and Officers........................................6
ARTICLE 3 CONVERSION OF COMMON STOCK;
EXCHANGE OF CERTIFICATES.......................................6
SECTION 3.01 Conversion............................................6
SECTION 3.02 Exchange of Certificates..............................7
SECTION 3.03 Stock Transfer Books..................................8
SECTION 3.04 Appraisal.............................................8
SECTION 3.05 Treatment of Company Options..........................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................10
SECTION 4.01 Organization.........................................10
SECTION 4.02 Authority Relative to this Agreement.................10
SECTION 4.03 Vote Required........................................11
SECTION 4.04 State Takeover Statutes; Rights Agreement............11
SECTION 4.05 Capitalization.......................................11
SECTION 4.06 Investments..........................................12
SECTION 4.07 No Conflict; Required Filings and Consents...........12
SECTION 4.08 SEC Documents and Financial Statements...............13
SECTION 4.09 Absence of Certain Changes...........................14
SECTION 4.10 Litigation...........................................14
SECTION 4.11 Taxes............................................... 14
SECTION 4.12 Employee Benefit Plans...............................15
SECTION 4.13 Compliance with Applicable Laws......................16
SECTION 4.14 Material Contracts...................................17
SECTION 4.15 Environmental Laws...................................18
SECTION 4.16 Intellectual Property................................19
(i)
Page
SECTION 4.17 Labor Matters........................................20
SECTION 4.18 Brokers or Finders...................................21
SECTION 4.19 Opinion of Financial Advisor.........................21
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER...........................................21
SECTION 5.01 Organization.........................................21
SECTION 5.02 Authority Relative to this Agreement.................21
SECTION 5.03 No Conflict; Required Filings and Consents...........22
SECTION 5.04 Financing............................................22
SECTION 5.05 Brokers or Finders...................................22
ARTICLE 6 COVENANTS........................................................23
SECTION 6.01 Conduct of Business by the Company Pending
the Merger.....................................................23
SECTION 6.02 No Solicitation of Other Offers......................25
SECTION 6.03 Access to Information................................25
SECTION 6.04 Consents; Approvals..................................26
SECTION 6.05 Indemnification and Insurance........................26
SECTION 6.06 Notification of Certain Matters......................28
SECTION 6.07 Further Action.......................................28
SECTION 6.08 Public Announcements.................................28
ARTICLE 7 ADDITIONAL AGREEMENTS............................................29
SECTION 7.01 Merger Without Stockholders' Meeting.................29
SECTION 7.02 Stockholder Approval Required........................29
SECTION 7.03 Covenants Relating to Information Statement..........29
ARTICLE 8 CONDITIONS TO THE MERGER.........................................31
SECTION 8.01 Conditions to the Obligations of Each Party..........31
ARTICLE 9 TERMINATION, AMENDMENT AND WAIVER................................31
SECTION 9.01 Termination..........................................31
SECTION 9.02 Effect of Termination................................33
SECTION 9.03 Amendment............................................33
SECTION 9.04 Waiver...............................................33
SECTION 9.05 Fees and Expenses....................................33
ARTICLE 10 GENERAL PROVISIONS..............................................34
SECTION 10.01 Nonsurvival of Representations,
Warranties and Agreements.......................................34
SECTION 10.02 Notices.............................................34
SECTION 10.03 Assignment; Binding Effect..........................35
(ii)
SECTION 10.04 Entire Agreement....................................36
SECTION 10.05 Governing Law; Consent to Jurisdiction..............36
SECTION 10.06 Counterparts........................................36
SECTION 10.07 Headings............................................36
SECTION 10.08 Interpretation......................................36
SECTION 10.09 Waivers.............................................37
SECTION 10.10 Certain Definitions.................................37
SECTION 10.11 Severability........................................37
SECTION 10.12 Enforcement of Agreement............................38
SECTION 10.13 Waiver of Jury Trial................................38
SECTION 10.14 Execution...........................................38
SECTION 10.15 Date for any Action.................................38
SECTION 10.16 Guarantee...........................................38
(iii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July
16, 2001, is by and among Koninklijke Ahold N.V., a public company with limited
liability organized and existing under the laws of The Netherlands ("Royal
Ahold"), Ahold U.S.A. Holdings, Inc., a Delaware corporation and an indirect
wholly owned subsidiary of Royal Ahold ("Parent"), Bean Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
Peapod, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, Royal Ahold owns (i) 726,371 shares of Series C Convertible
Preferred Stock, par value $0.01 per share (the "Series C Preferred Stock"), of
the Company which were initially convertible into 19,369,873 shares of common
stock, par value $0.01 per share (including the preferred stock purchase rights
(the "Rights") issued pursuant to the Amended and Restated Stockholders Rights
Agreement (the "Rights Agreement"), amended and restated as of October 12, 2000
between the Company and First Chicago Trust Company of New York, a division of
Equiserve, as Rights Agent, "Common Stock"), of the Company, (ii) a warrant to
purchase 100,000 shares of Common Stock, (iii) a warrant to purchase 3,566,667
shares of Common Stock, (iv) a warrant to purchase 32,894,270 shares of Common
Stock (each of (ii), (iii) and (iv) above, a "Warrant" and collectively, the
"Warrants"), and (v) 2,331,917 shares of Common Stock;
WHEREAS, the board of directors of the Company (the "Board") has
established a special committee of the Board (the "Special Committee") to
consider various alternatives in light of the Company's financial condition and
the Special Committee, following consideration of various alternatives,
requested that Royal Ahold make a proposal to purchase all of the outstanding
Common Stock not owned by Royal Ahold;
WHEREAS, in response to the Special Committee's request, Parent has
proposed that Parent or an Affiliate acquire the remaining Common Stock not
owned by Royal Ahold (the "Proposal");
WHEREAS, it is proposed that Parent shall cause Purchaser to commence
a tender offer (the "Tender Offer") to acquire any and all of the outstanding
shares of Common Stock, for an amount equal to $2.15 per share (such amount, or
any greater amount per share of Common Stock paid pursuant to the Tender Offer,
being hereinafter referred to as the "Offer Price"), net to the seller in cash,
upon the terms and subject to the condition provided herein;
WHEREAS, the Special Committee has received the opinion of Xxxxxxx
Xxxxx & Company, L.L.C. ("Xxxxxxx Xxxxx"), financial advisor to the Special
Committee, that, as of the date hereof, the consideration to be received by the
holders of shares of Common Stock (other than Royal Ahold and its Affiliates)
pursuant to the Tender Offer and Merger (as defined below) is fair to such
holders from a financial point of view;
WHEREAS, the Special Committee (i) has determined that it is fair to
and in the best interests of the Company and its stockholders (other than Royal
Ahold and its Affiliates) to consummate the Tender Offer and the merger of
Purchaser with and into the Company, with the Company being the surviving
corporation (the "Merger"), upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), (ii) has determined that the Tender Offer, the Merger
and this Agreement should be approved and declared advisable by the Board and
(iii) has resolved to recommend that the Company's stockholders accept the
Tender Offer, tender their shares of Common Stock pursuant thereto and approve
and adopt this Agreement and the Merger if submitted for their approval;
WHEREAS, based on the unanimous recommendation of the Special
Committee, the Board (i) has determined that it is fair to and in the best
interests of the Company and its stockholders (other than Royal Ahold and its
Affiliates) to consummate the Tender Offer and the Merger upon the terms and
subject to the conditions of this Agreement and in accordance with Delaware Law,
(ii) has approved and declared advisable the Tender Offer, the Merger and this
Agreement, and (iii) has resolved to recommend that the Company's stockholders
accept the Tender Offer, tender their shares of Common Stock pursuant thereto
and approve and adopt this Agreement and the Merger if submitted for their
approval; and
WHEREAS, (i) each of the Executive Board and the Supervisory Board of
Royal Ahold and each of the board of directors of Parent and Purchaser have
approved this Agreement and (ii) the board of directors of Purchaser has
declared this Agreement advisable.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.01 The Tender Offer. (a) Provided that none of the events
set forth in Annex A hereto shall have occurred or be existing and provided that
this Agreement shall not have been terminated in accordance with Article 9
hereof , as soon as reasonably practicable (but in no event later than fifteen
Business Days from the public announcement of the terms of this Agreement),
Parent shall cause Purchaser to commence the Tender Offer. The initial
expiration date of the Tender Offer shall be the twentieth Business Day from and
after the date the Tender Offer is commenced (the "Initial Expiration Date").
The obligation of Parent to cause Purchaser to commence the Tender Offer and to
accept for payment and pay for shares of Common Stock tendered pursuant to the
Tender Offer shall be subject only to the conditions set forth in Annex A
hereto, any of which conditions may be waived by Purchaser in its sole
discretion. The conditions to the Tender Offer set forth in Annex A are for the
sole benefit of Parent and Purchaser and may be asserted by Parent and Purchaser
regardless of the circumstances giving rise to any such condition. Purchaser
expressly reserves the right to amend or make changes to the terms and
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conditions of the Tender Offer; provided, however, that, without the prior
written consent of the Company (expressed in a resolution adopted by both the
Special Committee and the Board), Purchaser shall not (i) decrease the Offer
Price or change the form of consideration to be paid in the Tender Offer, (ii)
impose any additional conditions to the Tender Offer from those set forth in
Annex A hereto, or (iii) otherwise amend the Tender Offer in a manner that would
adversely affect the holders of shares of Common Stock. The Company agrees that
no shares of Common Stock held by the Company will be tendered pursuant to the
Tender Offer. Notwithstanding anything in this Agreement to the contrary,
without the consent of the Company, Purchaser shall have the right to extend the
Tender Offer beyond the Initial Expiration Date in the following events: (i)
from time to time if, at the Initial Expiration Date (or extended expiration
date of the Tender Offer, if applicable), any of the conditions to the Tender
Offer shall not have been satisfied or waived; (ii) for any period required by
applicable law or regulation including, without limitation, by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof; (iii) for an aggregate period not to exceed
twenty Business Days (for all such extensions), if all of the conditions to the
Tender Offer are satisfied or waived but the number of shares of Common Stock
validly tendered and not withdrawn is insufficient to result in Purchaser owning
at least ninety percent of the then outstanding number of shares of Common Stock
on a fully-diluted basis (without giving effect to the exercise of the
Warrants); or (iv) pursuant to an amendment to the Tender Offer providing for a
"subsequent offering period" not to exceed twenty Business Days to the extent
permitted under, and in compliance with, Rule 14d-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Following the
satisfaction or waiver of the conditions to the Tender Offer, Parent shall cause
Purchaser to accept for payment, in accordance with the terms of the Tender
Offer, all shares of Common Stock validly tendered pursuant to the Tender Offer
and not withdrawn as soon as it is permitted to do so pursuant to applicable
law.
(b) Parent shall cause Purchaser to file with the SEC on the date that
the Tender Offer is commenced (i) a Tender Offer Statement on Schedule TO
(together with any supplements or amendments thereto, the "Schedule TO") which
will contain, among other things, the offer to purchase, form of the related
letter of transmittal and summary advertisement (together with any supplements
or amendments thereto, the "Tender Offer Documents"), and (ii) together with
Royal Ahold, Parent and the Company, a Rule 13e-3 Transaction Statement on
Schedule 13E-3 with respect to the Tender Offer which shall be filed as a part
of the Schedule TO. The Tender Offer Documents shall comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Parent or Purchaser with respect to information supplied by the Company
in writing for inclusion in the Tender Offer Documents. Each of Parent and
Purchaser further agrees to take all steps necessary to cause the Tender Offer
Documents to be filed with the SEC and to be disseminated to holders of shares
of Common Stock, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and Purchaser, on the one hand, and the
Company, on the other hand, agrees promptly to correct any information provided
by it for use in the Tender Offer Documents if and to the extent
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that it shall have become false and misleading in any material respect and
Parent further agrees to cause Purchaser to take all steps necessary to cause
the Tender Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Common Stock, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the initial Schedule TO before
it is filed with the SEC. In addition, Parent and Purchaser agree to provide the
Company and its counsel with any comments or other communications that Parent,
Purchaser or their counsel may receive from time to time from the SEC or its
staff with respect to the Tender Offer Documents promptly after the receipt of
such comments or other communications.
SECTION 1.02 Company Action. The Company hereby approves of and
consents to the Tender Offer. Concurrently with the filing of the Schedule TO,
the Company shall file with the SEC and mail to the holders of shares of Common
Stock a Solicitation/ Recommendation Statement on Schedule 14D-9 (together with
any supplements or amendments thereto, the "Schedule 14D-9"). The Schedule 14D-9
will set forth, and the Company hereby represents to Parent and Purchaser, that
(a) the Special Committee, at a meeting thereof duly called and held, has (i)
determined that this Agreement, the Tender Offer and the Merger are fair to and
in the best interests of the Company and its stockholders (other than Royal
Ahold and its Affiliates); (ii) determined that this Agreement, the Tender Offer
and the Merger should be approved and declared advisable by the Board; and (iii)
resolved to recommend that the Company's stockholders accept the Tender Offer,
tender their shares of Common Stock pursuant thereto and approve and adopt this
Agreement and the Merger if submitted for their approval; (b) the Board, at a
meeting duly called and held, has (i) determined that this Agreement, the Tender
Offer and the Merger are fair to and in the best interests of the Company's
stockholders (other than Royal Ahold and its Affiliates); (ii) approved and
declared advisable this Agreement and the transactions contemplated hereby,
including, without limitation the Tender Offer and the Merger; and (iii)
resolved to recommend that the Company's stockholders accept the Tender Offer,
tender their shares of Common Stock pursuant thereto and approve and adopt this
Agreement and the Merger if submitted for their approval; provided, however,
that such recommendation of the Special Committee or the Board, as described in
clauses (a) and (b) of this section, may be withdrawn, modified or changed to
the extent that the Special Committee or the Board, based on the recommendation
of the Special Committee (in each case after receiving the advice of outside
nationally recognized legal counsel) reasonably determines in good faith that
its fiduciary duties under applicable law require it to take such actions; and
(c) Xxxxxxx Xxxxx, the financial advisor to the Special Committee, has delivered
to the Special Committee and the Board its written opinion that the
consideration to be received by the stockholders of the Company (other than
Royal Ahold and its Affiliates) pursuant to each of the Tender Offer and the
Merger is fair to such stockholders from a financial point of view. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Purchaser in writing for inclusion in the
Schedule 14D-9. The Company further agrees to take all steps necessary to cause
the Schedule 14D-9 to be filed with
4
the SEC and to be disseminated to holders of shares of Common Stock, in each
case as and to the extent required by applicable federal securities laws. Each
of the Company, on the one hand, and Parent and Purchaser, on the other hand,
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of the shares of Common Stock, in each
case as and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given the opportunity to review the initial Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, Purchaser and their counsel with any comments or other
communications that the Company or its counsel may receive from time to time
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments or other communications.
SECTION 1.03 Stockholder Lists. In connection with the Tender Offer,
the Company shall promptly furnish Parent with mailing labels, security position
listings of shares of Common Stock held in stock depositories and any available
listing or computer file containing the names and addresses of the record
holders of shares of Common Stock, each as of the most recent practicable date,
and shall promptly furnish Parent with such additional information, including
updated lists of stockholders, mailing labels and lists of securities positions
and such other information and assistance as Parent or its agents may reasonably
request in connection with communicating to the record and beneficial holders of
shares of Common Stock with respect to the Tender Offer and the Merger.
ARTICLE 2
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
conditions set forth in Article 8, and in accordance with Delaware Law, at the
Effective Time (as defined below), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 2.02 Effective Time; Closing. As promptly as practicable and
in no event later than the third Business Day following the satisfaction or, if
permissible, waiver of the conditions set forth in Article 8 (or such other date
as may be agreed in writing by the parties hereto), the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger or a
certificate of ownership and merger, as appropriate (either, the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form as
is required by, and executed in accordance with, the relevant provisions of
Delaware Law. The term "Effective Time" means the date and time of the filing
with the Secretary of State of the State of Delaware of the Certificate of
Merger (or such later time as may be agreed upon in writing by the parties
hereto and specified in the Certificate of Merger). Immediately prior to the
filing of the Certificate of Merger, a closing (the "Closing") will be held at
the principal office of Parent's
5
counsel located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 (or such
other place as the parties hereto may agree).
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Purchaser and the Company shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of
Purchaser and the Company shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; By-laws; Directors and
Officers. (a) At the Effective Time, the Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with Delaware Law and such Certificate of Incorporation.
(b) At the Effective Time, the By-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended in accordance with Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such By-laws.
(c) From and after the Effective Time, until successors are duly
elected or appointed and qualified in accordance with applicable law, (i) the
directors of the Company at the Effective Time shall be the directors of the
Surviving Corporation and (ii) the officers of the Company at the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE 3
CONVERSION OF COMMON STOCK;
EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion. At the Effective Time, by virtue of the
Merger and without any action on the part of any party hereto or the holders of
capital stock of the Company or the Warrants:
(a) each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than any Dissenting Shares, as
defined in Section 3.04, and any shares to be canceled pursuant to
Section 3.01(b)) shall be converted into the right to receive the
Offer Price in cash (the "Merger Consideration"); and
(b) each share of Common Stock and preferred stock and each of
the Warrants of the Company held in the treasury of the Company or
owned by Royal Ahold or any direct or indirect wholly-owned subsidiary
of Royal Ahold or the Company immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof and
no payment or distribution shall be made with respect thereto; and
6
(c) each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into one share of common stock of the
Surviving Corporation.
SECTION 3.02 Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company to act as paying
agent in the Merger (the "Paying Agent") and shall deposit or cause Purchaser to
deposit with the Paying Agent immediately available funds in an amount
sufficient for the payment of the aggregate Merger Consideration upon surrender
of Certificates (as hereinafter defined) representing shares of Common Stock
converted pursuant to Section 3.01(a) (such funds being hereinafter referred to
as the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Paying Agent to mail to each holder of record (other than Royal
Ahold or any direct or indirect wholly-owned subsidiary of Royal Ahold) of a
certificate or certificates that immediately prior to the Effective Time
represented shares of Common Stock (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor, and the Paying Agent shall pay, the
Merger Consideration for each share of Common Stock formerly evidenced by such
Certificate, and such Certificate shall thereupon be canceled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered on the stock transfer books of
the Company, it shall be a condition of payment to the holder of a Certificate
that it be endorsed properly or otherwise be in proper form for transfer and
that the person requesting such payment shall have paid all transfer and other
taxes required by reason of the payment of the Merger Consideration to a person
other than the registered holder thereof or shall have established to the
satisfaction of the Surviving Corporation that such taxes are not applicable.
Until surrendered as contemplated by this Section 3.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration into which the shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01(a). No interest will be paid or will accrue on the cash payable
upon the surrender of any Certificate.
(c) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed for six (6) months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of shares of Common Stock who
have not theretofore complied with this Article 3 shall thereafter look only to
Parent for payment of the Merger Consideration to which they are entitled,
without any interest thereon. Any portion of the Exchange Fund remaining
unclaimed as of a date which is immediately prior to such time as such amounts
would otherwise escheat to or become property of any government entity shall, to
the extent permitted
7
by applicable law, become the property of Parent free and clear of any claims or
interest of any person previously entitled thereto.
(d) No Liability. Neither Parent nor the Surviving Corporation shall
be liable to any holder of shares of Common Stock for any amounts delivered to a
public official pursuant to any abandoned property, escheat or similar law.
(e) Withholding Rights. Each of the Surviving Corporation, Parent and
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of any payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state or local tax law. To the extent that amounts
are so withheld by the Surviving Corporation, Parent or the Paying Agent, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation, Parent or the Paying Agent, as the case may be.
(f) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as Parent or the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration, without any interest thereon.
(g) Investment of Funds. The Paying Agent shall invest the funds
constituting the Exchange Fund as directed by Parent. Any interest or other
income resulting from such investment shall be paid to Parent.
SECTION 3.03 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed with respect to shares of Common
Stock outstanding immediately prior to the Effective Time and there shall be no
further registration of transfers of such shares thereafter on the records of
the Company. From and after the Effective Time, the holders of shares of Common
Stock outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such shares, except as otherwise provided in this
Agreement or by law.
SECTION 3.04 Appraisal. Notwithstanding anything in this Agreement to
the contrary, each share of Common Stock issued and outstanding immediately
prior to the Effective Time and held by a person (a "Dissenting Stockholder")
who has not voted in favor of the Merger and who complies with all the
requirements of Delaware Law concerning the right of stockholders to seek
appraisal of their shares ("Dissenting Shares") shall not be converted as
described in this Article 3 but shall instead become the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to Section 262 of Delaware Law. If, after the Effective Time, such
Dissenting Stockholder withdraws his or her demand for appraisal or fails to
8
perfect or otherwise loses his or her right of appraisal, in any case pursuant
to Delaware Law, each share of Common Stock of such Dissenting Stockholder shall
be deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration (without any interest thereon). The Company shall give
Parent prompt notice of any demands received by the Company for appraisal of any
shares of Common Stock, and Parent shall have the right to participate in and
direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
SECTION 3.05 Treatment of Company Options. Except as set forth in
Section 3.05 of the Company Disclosure Letter, prior to the date which is two
Business Days prior to the Initial Expiration Date, the Board (or, if
appropriate, any committee thereof) shall take all actions and shall obtain all
necessary consents and releases from all of the holders of all the outstanding
stock options and other rights to purchase Common Stock (the "Options")
heretofore granted under any stock option plan of the Company or otherwise (the
"Stock Plans"), to (i) provide for the cancellation, effective at the Effective
Time, subject to the Cash Payment (as defined below), if any, being made, of all
Options; (ii) provide for the cancellation, effective at the Effective Time,
subject to the cash payments provided for in this Section 3.05 being made, of
all rights under the Company's Employee Stock Purchase Plan; (iii) terminate, as
of the Effective Time, the Stock Plans, the Company's Employee Stock Purchase
Plan and any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the Company or
any Affiliate thereof (collectively with the Stock Plans, referred to as the
"Stock Incentive Plans") and (iv) amend, as of the Effective Time, the
provisions of any Plan (as defined in Section 4.12(a) hereof) providing for the
issuance, transfer or grant of any capital stock of the Company or any such
Affiliate, or any interest in respect of any capital stock of the Company or any
such Affiliate, to provide no continuing rights to acquire, hold, transfer or
grant any capital stock of the Company or any such Affiliate or any interest in
the capital stock of the Company or any such Affiliate. Immediately prior to the
Effective Time, each Option, whether or not then vested or exercisable, shall no
longer be exercisable for the purchase of shares of Common Stock but shall
entitle each holder thereof, in cancellation and settlement therefor, to
payments by the Company in cash (subject to any applicable withholding taxes,
the "Cash Payment") equal to the product of (x) the total number of shares of
Common Stock subject to such Option immediately prior to the Effective Time,
whether or not then vested or exercisable, and (y) the excess, if any, of the
Merger Consideration over the per share exercise price of such Option, each such
Cash Payment to be paid by the Surviving Corporation to each holder of an
outstanding Option promptly following the Effective Time. Any then outstanding
stock appreciation rights or limited stock appreciation rights issued by the
Company or any Affiliate of the Company shall be canceled immediately prior to
the Effective Time without any payment therefor. All payroll deductions under
the Company's Employee Stock Purchase Plan shall cease and such plan shall
terminate at the end of the next "Purchase Period" (as such term is defined in
the Company's Employee Stock Purchase Plan), whether such Purchase Period ends
subsequent to the date hereof, due to a "Change in Control" (as such term is
defined in such plan) or otherwise in accordance with the terms of such plan,
and each participant in such plan shall receive from the Company, promptly
following the Effective Time and in lieu of any right to purchase shares of
Common Stock under such plan at the end of such Purchase Period, an
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amount, in cash, subject to applicable withholding taxes, equal to the product
of the (1) number of shares of Common Stock that could have been purchased under
such plan at the end of such Purchase Period, and (2) the Merger Consideration.
The Company shall take all steps to ensure that neither it nor any of its
Affiliates is or will be bound by any Options, other options, warrants, rights
or agreements which would entitle any Person, other than Royal Ahold or its
Affiliates, to own any capital stock of the Company or to receive any payment in
respect thereof. Notwithstanding any other provision of this Section 3.05 to the
contrary, payment of the Cash Payment may be withheld with respect to any Option
or right until all necessary consents and releases are obtained.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
SECTION 4.01 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Company is duly qualified or licensed
and in good standing to do business 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 where the failure to be so duly
qualified or licensed or in good standing could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect (as
defined below). As used herein, the term "Material Adverse Effect" means a
material adverse change in, or effect on, the business, condition (financial or
otherwise), results of operations, assets, liabilities, revenues or earnings of
the Company, but shall not include any change, event, effect, occurrence or
circumstance arising in connection with or as a result of (i) the announcement
or performance of the transactions contemplated by this Agreement, in and of
themselves, or (ii) any announcement or other communication of Parent or any
Affiliate thereof of the plans or intentions of Parent with respect to any
conduct of any business of the Company.
SECTION 4.02 Authority Relative to this Agreement. (a) The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company, and the consummation of the
transactions contemplated hereby, have been duly authorized by the Board and no
other corporate or stockholder proceedings on the part of the Company are
required to authorize this Agreement or to consummate the transactions
contemplated hereby, other than, with respect to the Merger and to the extent
required by Delaware Law, (i) the adoption of this Agreement by the affirmative
vote of the holders entitled to cast a majority of the votes represented by the
outstanding Common Stock and Series C Preferred Stock and (ii) the filing and
recordation of the Certificate of Merger in accordance with Delaware Law. This
Agreement has been duly executed and delivered by the Company and (assuming due
authorization, execution and delivery hereof by Royal Ahold, Parent and
Purchaser) constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to
10
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, relating to creditors' rights generally and
(ii) equitable remedies of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(b) (i) The Special Committee has been duly authorized and
constituted, (ii) the Special Committee, at a meeting thereof duly called and
held on July 13, 2001, (A) determined that this Agreement, the Tender Offer and
the Merger are fair to and in the best interests of the Company and its
stockholders (other than Royal Ahold and its Affiliates), (B) determined that
this Agreement, the Tender Offer and the Merger should be approved and declared
advisable by the Board and (C) resolved to recommend that the Company's
stockholders accept the Tender Offer, tender their shares of Common Stock
pursuant thereto and approve and adopt this Agreement and the Merger if
submitted for their approval, and (iii) the Board, at a meeting thereof duly
called and held on July 16, 2001, (A) determined that this Agreement and the
Merger are fair to and in the best interests of the Company and its stockholders
(other than Royal Ahold and its Affiliates), (B) approved and declared advisable
this Agreement, the Tender Offer and the Merger and (C) resolved to recommend
that the Company's stockholders accept the Tender Offer, tender their shares of
Common Stock pursuant thereto and approve and adopt this Agreement and the
Merger if submitted for their approval.
SECTION 4.03 Vote Required. The affirmative vote of the holders
entitled to cast a majority of the votes represented by the outstanding shares
of Common Stock and Series C Preferred Stock is the only vote of holders of any
class or series of the Company's capital stock required to approve the Merger
and adopt this Agreement under Delaware Law, the Company's Certificate of
Incorporation and the Company's By-Laws.
SECTION 4.04 State Takeover Statutes; Rights Agreement. The
restrictions on business combinations contained in Section 203 of Delaware Law
are inapplicable to the Tender Offer, the Merger, this Agreement and the other
transactions contemplated by this Agreement. Except as described in the
immediately preceding sentence, no other takeover statute or similar statute or
regulation of any state is applicable to the Tender Offer, the Merger or this
Agreement (including all of the transactions contemplated hereby). Each of the
Company and the Board has taken or, prior to commencement of the Tender Offer,
will take all actions necessary to render the Rights Agreement inapplicable to
the Tender Offer, the Merger, this Agreement and the other transactions
contemplated by this Agreement.
SECTION 4.05 Capitalization. The authorized capital stock of the
Company consists solely of (a) 100,000,000 shares of Common Stock and (b)
10,000,000 shares of preferred stock. As of the date hereof, of the 100,000,000
shares of Common Stock authorized, (i) 18,054,262 shares of Common Stock are
issued and outstanding, (ii) 6,378,443 shares are reserved for issuance pursuant
to outstanding options and warrants and existing employee stock plans, (iii)
19,369,873 shares are reserved for issuance upon conversion of the shares of
Series C preferred stock and (iv) 36,560,937 shares are reserved for issuance
upon exercise of the Warrants. As of the date hereof, of the 10,000,000 shares
of preferred stock authorized, (i) 1,000,000 shares have been designated Series
A preferred stock, none of which will be issued or outstanding but all of which
have been reserved for issuance upon the exercise of rights under the
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Rights Agreement (ii) 726,371 shares have been designated Series B preferred
stock, none of which are issued and outstanding and (iii) 726,371 shares have
been designated Series C preferred stock, 726,371 of which are issued and
outstanding. Each share of capital stock of the Company that is issued and
outstanding has been and each share of capital stock of the Company issuable
upon exercise of Options or warrants or upon conversion of the preferred stock
of the Company will be when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable, and is
not subject to nor issued in violation of, any preemptive rights. Except for the
Warrants and as set forth on Section 4.05 of the Company Disclosure Letter,
there are (a) no outstanding or authorized options, warrants, agreements,
conversion rights, preemptive rights, other rights, subscriptions, claims of any
character, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to shares of capital stock of the
Company or pursuant to which the Company is or may become obligated to issue
shares of its capital stock or any securities convertible into, exchangeable
for, or evidencing the right to subscribe for, purchase or acquire, any shares
of the capital stock of the Company, (b) no restrictions upon the dividends,
voting or transfer of any shares of capital stock of the Company pursuant to its
Certificate of Incorporation, Bylaws or other governing documents or any
agreement or other instruments (other than pursuant to agreements with Royal
Ahold or its Affiliates) to which it is a party or by which it is bound
(provided that no representation is made with respect to capital stock held by
Royal Ahold or its Affiliates), and (c) no shares of Common Stock or Preferred
Stock held by the Company in its treasury. The Company has no authorized or
outstanding bonds, debentures, notes or other indebtedness the holders of which
have the right to vote (or convertible or exercisable for or exchangeable into
securities the holders of which have the right to vote) on any matter. There are
no outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Common Stock or any other capital stock of the
Company. These are no voting trusts or other agreements or understandings to
which the Company is party with respect to the voting of the capital stock or
other equity interest of the Company.
SECTION 4.06 Investments. Except as set forth in Section 4.06 of the
Company Disclosure Letter, the Company owns, directly or indirectly, no capital
stock of, or other equity, ownership, proprietary or voting interest in, and has
no made no loans or other advances or extensions of credit to, any Person.
SECTION 4.07 No Conflict; Required Filings and Consents. (a) Except
for (i) applicable requirements of (A) the Exchange Act, (B) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any similar foreign competition laws applicable hereto, (C) any state
securities or blue sky laws applicable hereto, (ii) the filing and recordation
of the Certificate of Merger, as required by Delaware Law and (D) the Nasdaq
National Market, (iii) consents required by Royal Ahold or its Affiliates and
(iv) as set forth in Section 4.07(a) of the Company Disclosure Letter, neither
the execution and delivery of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby shall require on the part
of the Company any filing with, or obtaining of, any permit, authorization,
consent or approval of, or any notice to, any court, tribunal, legislative,
executive or regulatory authority or agency (a "Governmental Entity"), except
for such filings, permits, authorizations, consents, approvals or notices the
failure of which to receive, obtain or make could not, individually or in the
aggregate, reasonably be expected to have a Material
12
Adverse Effect and could not, individually or in the aggregate, reasonably be
expected to prevent or materially delay the consummation of the Merger.
(b) Except as set forth in Section 4.07(b) of the Company Disclosure
Letter, neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation of the Company or the By-laws of the Company, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default under, or give rise to any right of termination,
cancellation, suspension, modification or acceleration of any obligation under,
or result in the creation of a lien under, any of the terms, conditions or
provisions of, or otherwise require the consent or waiver of, or notice to, any
other party under, any bond, note, mortgage, indenture, other evidence of
indebtedness, guarantee, license, agreement or other contract or instrument
("Contract") to which the Company is a party or by which it or any of its
properties or assets is bound, (iii) violate any law, statute, rule, regulation,
order, writ, injunction or decree ("Law") applicable to the Company or any of
its properties or assets, or (iv) require the Company to repay any existing
indebtedness except, in the case of clauses (ii), (iii) and (iv), for any
thereof that could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect and could not, individually or in the
aggregate, reasonably be expected to prevent or materially delay the
consummation of the Merger.
SECTION 4.08 SEC Documents and Financial Statements. (a) The Company
has provided to Purchaser copies of (i) the audited balance sheet of the Company
as of December 31, 1999 (the "1999 Financials") and December 31, 2000 (the "2000
Financials") together with the related audited statements of operations,
stockholders' equity and cash flows for the fiscal years ended December 31, 1999
and 2000, and the notes thereto, accompanied with respect to the 1999 Financials
by the opinion of KPMG and with respect to the 2000 Financials by the
unqualified opinion of KPMG (collectively, the "Audited Financial Statements")
and (ii) the unaudited balance sheet of the Company as of March 31, 2001
together with the related statements of operations, comprehensive loss and cash
flows for the period then ended, and the notes thereto (the "2001 Financials"
and collectively with the Audited Financial Statements, the "Financial
Statements"). The Financial Statements (including the notes thereto) were
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP") and present fairly in all material respects, the
financial position and results of operation of the Company as of December 31,
1999, December 31, 2000 and March 31, 2001 and for the periods then ended.
(b) Except as set forth in Section 4.08(b) of the Company Disclosure
Letter, the Company has no material claims, liabilities or indebtedness,
contingent or otherwise, of any kind whatsoever (whether accrued, absolute,
contingent or otherwise and whether or not required to be reflected in the
Company's financial statements in accordance with GAAP), except (i) as set forth
in the Financial Statements and (ii) liabilities to trade creditors incurred
subsequent to March 31, 2001 in the ordinary course of business consistent with
past practices not involving borrowings by the Company.
13
(c) Since January 1, 1999, the Company has filed all forms, reports
and documents with the SEC (including all exhibits thereto) required under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act or
the rules and regulations promulgated thereunder (collectively, the "SEC
Documents"), each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act as in effect on the
dates so filed. None of the SEC Documents (as of their respective filing dates)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. Any forms, reports and documents filed by the Company with the SEC
subsequent to the date hereof and prior to the Effective Time (collectively, the
"Subsequent Filings") will comply in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 4.09 Absence of Certain Changes. Except as set forth in
Section 4.09 of the Company Disclosure Letter since December 31, 2000, (a) the
businesses of the Company have been conducted in the ordinary course of
business, consistent with past practice, (b) the Company has taken no action
which, if taken after the date hereof, would violate Section 6.01 hereof if
taken without the approval of Parent and (c) there has not occurred any event,
circumstance or condition which, individually or together with all such events,
circumstances or conditions, has resulted or could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.10 Litigation. Except as specifically disclosed in the SEC
Documents or set forth in Section 4.10 of the Company Disclosure Letter, there
is no action, suit, proceeding, inquiry or investigation pending or, to the
knowledge of the Company, threatened against or involving the Company, at law or
in equity, by or before any Governmental Entity which (i), as of the date
hereof, questions or challenges the validity of this Agreement or which (ii), if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect or could reasonably be expected to materially impair or delay the
ability of the Company to consummate the transactions contemplated hereby.
SECTION 4.11 Taxes. Except as set forth in Section 4.11 of the Company
Disclosure Letter:
(a) The Company has (i) duly and timely filed (or there has been
filed on its behalf) with the appropriate Governmental Entities all
material Tax Returns (as defined below) required to be filed by it and
all such material Tax Returns are true, correct and complete; (ii)
duly paid in full (or there has been duly paid on its behalf) all
Taxes (as defined below) shown on such Tax Returns that are due and
payable; and (iii) made adequate provision, in accordance with GAAP
(or adequate provision has been made on its behalf), for the payment
of all current Taxes not yet due.
(b) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has, within the
14
time and the manner prescribed by law, withheld and paid over to the
proper Governmental Entities all material amounts required to be so
withheld and paid over.
(c) The Company has not requested an extension of time within
which to file any material Tax Return in respect of a taxable year
which has not since been filed and no outstanding waivers or
comparable consents regarding the application of the statute of
limitations with respect to material Taxes or material Tax Returns has
been given by or on behalf of the Company.
(d) No material federal, state, local or foreign audits,
examinations or other administrative court proceedings have been
commenced or, to the Company's knowledge, are threatened with regard
to any material Taxes or material Tax Returns of the Company. No
written notification has been received by the Company that such an
audit, examination or other proceeding is pending or threatened with
respect to any material Taxes due from or with respect to or
attributable to the Company or any material Tax Return filed by or
with respect to the Company.
(e) The Company is not a party to any agreement, plan, contract
or arrangement that could result, separately or in the aggregate, in a
payment of any amount that would not be deductible under Section
162(m) of the Code.
(f) The Company is not a party to any tax sharing, tax indemnity
or other such agreement or arrangement.
(g) There are no liens for Taxes upon the assets of the Company
except liens for Taxes not yet due and payable.
(h) For purposes of this Agreement, "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, occupation, use, service, service use,
value added, license, net worth, payroll, franchise, transfer and
recording taxes, fees and charges, imposed by the United States
Internal Revenue Service (the "IRS") or any taxing authority (whether
domestic or foreign including any state, local or foreign government
or any subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
penalties or additional amounts attributable to, or imposed upon, or
with respect to, any such taxes, charges, fees, levies or other
assessments. For purposes of this Agreement, "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.
SECTION 4.12 Employee Benefit Plans. (a) Each employee benefit plan,
program, arrangement or agreement, including each "employee benefit plan,"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and each stock option, stock appreciation
right, restricted stock, stock purchase or incentive or bonus plan, program or
agreement (other than any stock option agreement under a
15
stock option or stock incentive plan, forms of which have been delivered to
Parent), and each employment or severance agreement, in each case, maintained by
the Company, or to which the Company contributes or is required to contribute or
is a party is listed in Section 4.12(a) of the Company Disclosure Letter (each,
along with any stock option agreement under a stock option or stock incentive
plan, a "Plan"; collectively, "Plans"). Except as set forth in Section 4.12(a)
of the Company Disclosure Letter, the Company has no commitment, intention or
understanding to create any additional employee benefit plan or modify or change
any existing Plan (except as required to maintain the tax-qualified status of
any Plan intended to qualify under Section 401(a) of the Code).
(b) Except as disclosed in the SEC Documents or Section 4.12(b) of the
Company Disclosure Letter (i) each Plan is in substantial compliance with
applicable law and has been administered and operated in all material respects
in accordance with its terms; (ii) each Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code, has received a favorable
determination letter regarding its tax-qualified status from the IRS and the
Company is not aware of any circumstances that could reasonably be expected to
result in the revocation of such letter; (iii) no Plan is covered by Title IV of
ERISA or subject to Section 412 of the Code or Section 302 of ERISA, and neither
the Company nor any entity that, together with the Company, would be treated as
a single employer under Section 414 of the Code, has ever contributed to, or
borne any obligation or liability with respect to, any Plan covered or formerly
covered by Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA
(iv) no Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company for periods extending beyond their retirement or other termination of
service, except to the extent required by Part 6 of Sub-title B of Title I of
ERISA or Section 4980B of the Code (v) neither the Company nor, to the knowledge
of the Company, any other "disqualified person" or "party in interest" (as
defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Plan that
would reasonably be expected to result in the imposition of a penalty pursuant
to Section 502 of ERISA, a tax pursuant to Section 4975 of the Code or damages
pursuant to Section 409 of ERISA; (vi) there has been no failure of a Plan that
is a group health plan (as defined in Section 5000(b)(1) of the Code) to meet
the requirements of Section 4980B(f) of the Code with respect to a qualified
beneficiary (as defined in Section 4980B(g) of the Code); (vii) there are not
pending or, to the Company's knowledge, threatened, claims by or on behalf of
any Plan, by any employee or beneficiary covered under any such Plan or
otherwise involving any such Plan (other than routine claims for benefits
payable in the ordinary course, and appeals of denied claims); and (viii) except
as required to maintain the tax-qualified status of any Plan intended to qualify
under Section 401(a) of the Code, no condition or circumstance exists that would
prevent the amendment or termination of any Plan (other than any agreement or
any term of such Plan requiring the consent of any individual party to such
agreement or Plan to an amendment or termination thereof).
(c) The Company has heretofore delivered to Parent true and complete
copies of each Plan and any amendments thereto, any related trust or other
funding vehicle, any summaries required under ERISA or the Code, the most recent
annual reports filed with the IRS, and the most recent determination letter
received from the IRS with respect to each Plan intended to qualify under
Section 401(a) of the Code.
16
(d) Except as set forth in Section 4.12(d) of the Company Disclosure
Letter, the consummation of the transactions contemplated hereby shall not,
either alone or in combination with another event, (i) entitle any current or
former employee or officer of the Company to severance pay, unemployment
compensation or any other payment or benefit or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer.
SECTION 4.13 Compliance with Applicable Laws. Except as set forth in
Section 4.13 of the Company Disclosure Letter, the Company, and its properties,
assets and operations, are in compliance in all respects with all applicable
statutes, laws, rules, regulations, judgments, decrees, orders, arbitration
awards, franchises, permits or licenses or other governmental authorizations or
approvals which are applicable to the business and operations of the Company
except where the failure to be in such compliance could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect and
could not, individually or in the aggregate, reasonably be expected to prevent
or materially delay the consummation of the Merger. Except as set forth in
Section 4.13 of the Company Disclosure Letter, the Company holds all licenses,
franchises, ordinances, authorizations, permits, certificates, variances,
exemptions, concessions, leases, rights of way, easements, instruments, orders
and approvals, domestic or foreign ("Permits"), required for the ownership of
the assets and operation of the businesses of the Company where the failure of
which to hold could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as set forth in Section 4.13 of the
Company Disclosure Letter, all Permits of the Company required under any
statute, law, rule or regulation of any Governmental Entity are in full force
and effect where the failure to be in full force and effect could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.14 Material Contracts. (a) Except as set forth in the SEC
Documents, the Company is not a party to, or bound by, any Contract which is
material to the Company (a "Company Material Contract"). Notwithstanding the
foregoing, each of the following Contracts shall be a Company Material Contract
and shall be set forth in Section 4.14 of the Company Disclosure Letter:
(i) any contracts or agreements under which the Company has
any outstanding indebtedness, obligation or liability for borrowed
money or the deferred purchase price of property or has the right or
obligation to incur any such indebtedness, obligation or liability in
excess of $50,000;
(ii) any bonds or agreements of guarantee or indemnification
in which the Company acts as surety, guarantor or indemnitor with
respect to any obligation (fixed or contingent) in excess of $50,000;
(iii) any noncompete agreements to which the Company or any
Affiliate thereof is a party;
(iv) any partnership and joint venture agreements;
17
(v) any Contract that provides for the payment of any amount
or entitles any Person to receive any other benefit or exercise any
other right as a result of the execution, delivery or performance of
this Agreement, or the consummation of the transactions contemplated
hereby; and
(vi) any Contract with an officer or director of the Company
or an Affiliate thereof (other than Royal Ahold and its Affiliates).
(b) Except as set forth in Section 4.14(b) of the Company Disclosure
Letter, (i) the Company is not in breach of or default under the terms of any
Company Material Contract where such breach or default could reasonably be
expected to have a Material Adverse Effect and (ii) to the knowledge of the
Company, no other party to any Company Material Contract is in breach of or
default under the terms of any Company Material Contract where such breach or
default could reasonably be expected to have a Material Adverse Effect. Each
Company Material Contract is a valid and binding obligation of the Company and,
to the knowledge of the Company, of each other party thereto, and is in full
force and effect, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, relating to creditors' rights generally and (ii) equitable
remedies of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 4.15 Environmental Laws. (a) Except as set forth in Section
4.15(a) of the Company Disclosure Letter, the Company is (i) in compliance in
all material respects with all applicable Environmental Laws (as defined below),
which compliance includes the possession by the Company of all Permits and other
governmental authorizations required under applicable Environmental Laws, and
(ii) in compliance with the terms and conditions of such Permits where the
failure to be in compliance would result in a material liability or obligation
of the Company of any nature, whether or not accrued, contingent or otherwise.
Except as set forth in Section 4.15(a) of the Company Disclosure Letter, the
Company has not received any communication or written notice, whether from a
Governmental Entity, citizens group, employee or otherwise, that alleges that
the Company is not in compliance with applicable Environmental Laws, where the
failure to be in compliance would result in a material liability or obligation
of the Company of any nature, whether or not accrued, contingent or otherwise
and, to the best knowledge of the Company after due inquiry, there are no
circumstances that may prevent or interfere with such compliance in the future,
where the failure to be in compliance would result in a material liability or
obligation of the Company of any nature, whether or not accrued, contingent or
otherwise.
(b) Except as set forth in Section 4.15(b) of the Company Disclosure
Letter, there is no Environmental Claim (as defined below) which, if adversely
determined, could reasonably be expected to result in a material liability or
obligation of the Company, whether or not accrued, contingent or otherwise
pending or threatened against the Company or, to the best knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company has or may have retained or assumed either contractually or by
operation of law which, if adversely determined, could reasonably be expected to
result in a material liability or obligation of the Company, whether or not
accrued, contingent or otherwise.
18
(c) Except as set forth in Section 4.15(c) of the Company Disclosure
Letter, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including the Release (as defined below) of any
Hazardous Materials (as defined below), that could form the basis of any
material Environmental Claim (as defined below) against the Company or, to the
best knowledge of the Company, against any Person or entity whose liability for
any material Environmental Claim the Company has or may have retained or assumed
either contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing,
except as set forth in Section 4.15(d) of the Company Disclosure Letter, all
underground storage tanks owned, operated, or leased by the Company and which
are subject to regulation under the federal Resource Conservation and Recovery
Act (or equivalent state or local law regulating underground storage tanks) meet
the technical standards prescribed at Title 40 Code of Federal Regulations Part
280 which became effective December 22, 1998 (or any applicable state or local
law requirements which are more stringent than such technical standards or which
became effective before such date) where the failure to meet such standards or
requirements could reasonably be expected to result in a material liability or
obligation of the Company, whether or not accrued, contingent or otherwise.
(e) The Company has provided to Parent true and correct copies of all
material assessments, reports and investigations or audits in the possession of
the Company regarding environmental matters pertaining to, or the environmental
condition of, any property currently or formerly owned, operated or leased by
the Company, or the compliance (or noncompliance) by the Company with any
Environmental Laws.
(f) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or
entity alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (a) the
presence, or Release into the environment, of any Hazardous Materials
at any location, whether or not owned or operated by the Company or
any of its Subsidiaries or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all federal, interstate,
state, local and foreign laws and regulations relating to pollution or
protection of human health, safety, or the environment (including
ambient air, surface water, ground water, land surface or subsurface
strata), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials.
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(iii) "Hazardous Materials" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
radioactive materials, asbestos, petroleum and petroleum products.
(iv) "Release" shall mean releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, escaping, leaching,
disposing or dumping.
SECTION 4.16 Intellectual Property. The Company owns, or is licensed
or otherwise possesses legally enforceable rights to use, all Intellectual
Property (as defined below) used in its businesses, free and clear of any liens,
security interests, encumbrances and other adverse claims and without obligation
to pay any royalty or other fees with respect thereto, where the failure to own,
license or otherwise possess such Intellectual Property could reasonably be
expected to result in a Material Adverse Effect and the consummation of the
transactions contemplated hereby shall not alter or impair such rights in any
material respect. No Intellectual Property has been abandoned, canceled or
otherwise compromised which abandonment, cancellation or compromise could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Section 4.16 of the Company Disclosure Letter, there are no pending or, to the
knowledge of the Company, threatened claims by any Person challenging the use by
the Company of any trademarks, trade names, trade dress, service marks, service
names, xxxx registrations, logos, domain names, assumed names, registered and
unregistered copyrights, computer programs, software, trade secrets, processes,
methods, patents or applications and registrations therefor (together with any
goodwill associated with any of the foregoing, collectively, the "Intellectual
Property") in their respective operations as currently conducted which, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect. The conduct of the business of the Company does not infringe,
upon any intellectual property rights or any other proprietary right of any
Person, and the Company has not received any written notice from any other
Person pertaining to or challenging the Company's right, title or interest in
any of the Intellectual Property and to the Company's knowledge there is no
valid basis for any such claim. Except as set forth in Section 4.16 of the
Company Disclosure Letter, the Company has not made any claim of a violation or
infringement by others of its rights to or in connection with the Intellectual
Property used in their respective businesses which violation or infringement
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.17 Labor Matters. (a) Except as set forth in Section 4.17(a)
of the Company Disclosure Letter, there are no labor or collective bargaining
agreements to which the Company is a party. To the knowledge of the Company,
there is no union organizing effort pending or threatened against the Company.
Except as set forth in Section 4.17(a) of the Company Disclosure Letter, there
is no labor strike, labor dispute, work slowdown, stoppage or lockout pending
or, to the knowledge of the Company, threatened against or affecting the
Company, which has had or could reasonably be expected to result in a Material
Adverse Effect. Except as set forth in Section 4.17(a) of the Company Disclosure
Letter, there is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against the Company,
that has had or could reasonably be expected to result in a Material Adverse
Effect. The Company is in compliance in all material respects with all
applicable laws respecting (i) employment and employment practices, (ii) terms
and conditions of employment and wages and hours, and (iii) unfair labor
practice. Except as set forth in Section 4.17(a) of the Company
20
Disclosure Letter or specifically disclosed in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation pending or, to the knowledge
of the Company, threatened against or involving the Company, at law or in
equity, alleging a violation of applicable laws, rules or regulations respecting
employment and employment practices, terms and conditions of employment and
wages and hours, or unfair labor practice that has had or could reasonably be
expected to result in a Material Adverse Effect.
(b) Except as set forth in Section 4.17(b) of the Company Disclosure
Letter, no grievance or any arbitration proceeding arising out of or under
collective bargaining agreements which could reasonably be expected to have a
Material Adverse Effect is pending and no claim therefor exists.
(c) As of the date of this Agreement, the Company has no liabilities
under the Worker Adjustment and Retraining Notification Act (the "WARN Act")
that has had or could reasonably be expected to result in a Material Adverse
Effect.
SECTION 4.18 Brokers or Finders. None of the Company or any of its
Affiliates has entered into any agreement or arrangement entitling any agent,
broker, investment banker, financial advisor or other firm or Person to any
brokers' or finders' fee or any other commission or similar fee in connection
with any of the transactions contemplated hereby, except Xxxxxxx Xxxxx, whose
fees and expenses shall be paid by the Company in accordance with the Company's
agreement with such firm. A true and correct copy of the engagement letter
between the Company and Xxxxxxx Xxxxx has been provided to Parent.
SECTION 4.19 Opinion of Financial Advisor. The Special Committee has
received the written opinion of Xxxxxxx Xxxxx dated the date of this Agreement
to the effect that, as of the date of this Agreement, the consideration to be
received by the stockholders of the Company (other than Royal Ahold and its
Affiliates) pursuant to each of the Tender Offer and the Merger is fair to such
stockholders from a financial point of view and such opinion has not been
withdrawn. A copy of such opinion has been delivered to Parent and Purchaser.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Each of Royal Ahold, Parent and Purchaser severally represents and
warrants to the Company as follows:
SECTION 5.01 Organization. Royal Ahold is a public company with
limited liability duly organized and validly existing under the laws of the
Netherlands. Each of Parent and Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of Royal Ahold, Parent and Purchaser has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted.
21
SECTION 5.02 Authority Relative to this Agreement. Each of Royal
Ahold, Parent and Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereunder. The execution and delivery of this Agreement by Royal
Ahold, Parent and Purchaser, and the consummation of the transactions
contemplated hereby, have been duly authorized by the Executive Board and
Supervisory Board of Royal Ahold and by the respective boards of directors of
each of Parent and Purchaser, and by Parent as the sole stockholder of
Purchaser, and no other corporate proceeding on the part of Royal Ahold, Parent
or Purchaser is required to authorize this Agreement or to consummate the
transactions contemplated hereunder, other than the filing and the recordation
of the Certificate of Merger in accordance with Delaware Law. This Agreement has
been duly executed and delivered by each of Royal Ahold, Parent and Purchaser
and (assuming due and valid authorization, execution and delivery hereof by the
Company) constitutes a valid and binding agreement of each of Royal Ahold,
Parent and Purchaser, enforceable against each of Royal Ahold, Parent and
Purchaser in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, relating to creditor's rights
generally and (ii) equitable remedies of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
SECTION 5.03 No Conflict; Required Filings and Consents. (a) Except
(i) for applicable requirements of (A) the Exchange Act, (B) the HSR Act and any
similar foreign competition laws, and (C) any state securities and blue sky
filings applicable hereto, and (ii) for the filing and recordation of the
Certificate of Merger, as required by Delaware Law, neither the execution and
delivery of this Agreement by Royal Ahold, Parent and Purchaser, nor the
consummation by Royal Ahold, Parent and Purchaser of the transactions
contemplated hereby, shall require, on the part of Royal Ahold, Parent or
Purchaser, any filing with, or obtaining of, any permit, authorization, consent
or approval of, any Governmental Entity, except for such filings, permits,
authorizations, consents or approvals the failure of which to make or obtain
could not reasonably be expected to materially impair the ability of Royal
Ahold, Parent or Purchaser to consummate the transactions contemplated
hereunder.
(b) Neither the execution and delivery of this Agreement by Royal
Ahold, Parent or Purchaser, nor the consummation by Royal Ahold, Parent or
Purchaser of the transactions contemplated hereunder, shall (i) conflict with or
result in a breach of the certificate of incorporation or by-laws of Parent or
Purchaser or the comparable governing documents of Royal Ahold, (ii) result in a
violation or breach of or constitute (with or without due notice or lapse of
time, or both) a default under, or give rise to any right of termination,
cancellation, suspension, modification or acceleration under, or result in the
creation of a lien under, any of the terms, conditions or provisions of, or
otherwise require the consent or waiver of, or notice to, any other party under,
any material bond note, mortgage, indenture, other evidence of indebtedness,
guarantee, license, agreement or other contract or instrument to which Royal
Ahold, Parent or Purchaser is a party or by which any of them or any of their
respective properties or assets is bound, or (iii) violate any law, statute,
rule, regulation, order, writ, injunction or decree applicable to Royal Ahold,
Parent or Purchaser, or any of their respective properties or assets except, in
the case of clauses (ii) and (iii), for such violations, breaches, defaults or
rights which could not
22
reasonably be expected to materially impair the ability of Parent or Purchaser
to consummate the transactions contemplated hereby.
SECTION 5.04 Financing. Parent and Purchaser have or shall have
sufficient cash on hand and shall provide, or cause to be provided, at such time
or times as such funds are required, to Purchaser or, as the case may be, the
Surviving Corporation, sufficient funds to pay the aggregate Tender Offer
consideration and the Merger Consideration and to pay any fees and expenses in
connection with the transactions contemplated hereby.
SECTION 5.05 Brokers or Finders. None of Parent, Purchaser or any of
their respective Affiliates has entered into any agreement or arrangement
entitling any agent, broker, investment banker, financial advisor or other firm
or Person to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the transactions contemplated hereby.
ARTICLE 6
COVENANTS
SECTION 6.01 Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier to occur of the termination of this
Agreement or the Effective Time, except as contemplated by this Agreement,
unless Parent shall otherwise agree in writing, and except as set forth in
Section 6.01 of the Company Disclosure Letter:
(a) the Company shall conduct its business only in, and the
Company shall not take any action except in, the ordinary course of
business, consistent with past practice; and the Company shall use its
reasonable best efforts to preserve intact the business organization
of the Company, and to maintain (i) the services of the present
officers, employees and consultants of the Company and (ii) its
existing relations with suppliers, creditors, customers, business
associates and others having business dealings with it; and
(b) without limiting the generality of the foregoing, the Company
shall not take any of the following actions:
(i) amend its Certificate of Incorporation or By-Laws;
(ii) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance
of, any shares of capital stock of any class or any other equity
interest, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock,
or any other equity interest in the Company (except for the
issuance of shares of Common Stock pursuant to the exercise of
Options outstanding on the date hereof);
(iii) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock or
any other equity interest, including any constructive or
23
deemed distributions, and any distribution in connection with the
adoption of a shareholders rights plan, or make any other
payments to stockholders in their capacity as such;
(iv) split, combine or reclassify any of its capital stock
or any other equity interest or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or any other equity
interest;
(v) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock or any other equity
interests;
(vi) (A) purchase, acquire, sell, transfer, lease, license,
mortgage, encumber or dispose of any material assets; (B) acquire
(by merger, consolidation or acquisition of stock or assets or
otherwise) any corporation, partnership or other business
organization or division thereof; (C) incur or assume any
indebtedness for borrowed money or other liability; (D) modify,
amend or terminate any confidentiality agreements, standstill
agreements or Company Material Contracts to which the Company is
a party or by which it is bound, or waive, release or assign any
material rights or claims, other than in the ordinary course of
business, consistent with past practice; (E) assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any
other Person, other than in the ordinary course of business,
consistent with past practice; (F) make any loans, advances or
capital contributions to, or investments in, any other Person; or
(G) other than in the ordinary course of business, consistent
with past practice, enter into any material commitment,
transaction, contract or agreement, including any of the
following entered into outside the ordinary course of business
(i) any material capital expenditure, (ii) any material contract
or agreement outside the ordinary course of business, (iii) any
contracts or agreements that cannot be canceled on notice of
thirty (30) days or less and (iv) any noncompete agreements or
other agreements that limit the ability of the Company to conduct
any line of business;
(vii) increase the compensation, severance or other benefits
payable or to become payable to its directors, officers or
employees, other than increases in salary or wages of employees
of the Company in accordance with past practice or pursuant to
binding commitments made prior to the date hereof, or grant any
severance or termination pay (except payments required to be made
under the Plans or other obligations existing on the date hereof
in accordance with the terms of such obligations) to, or enter
into any employment or severance agreement with, any employee of
the Company, or establish, adopt, enter into or amend any
collective bargaining agreement, Plan, trust, fund, policy or
arrangement for the benefit of any current or former directors,
officers or employees or any of their beneficiaries, except, in
each case, as may be required by law;
00
(xxxx) xxx, xxxxxxxxxx, discharge or satisfy any of its
material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
business, consistent with past practice, or pursuant to
contractual requirements existing on the date hereof, of claims,
liabilities or obligations reflected or reserved against, in, or
contemplated by, the financial statements (or the notes thereto)
of the Company;
(ix) take any action to change accounting policies or
procedures or any of its methods of reporting income, deductions
or other items for income tax purposes, except as required by a
change in GAAP, SEC position or applicable law occurring after
the date hereof;
(x) approve or authorize any action to be submitted to the
stockholders of the Company for approval other than pursuant to
this Agreement;
(xi) make or change any material election with respect to
Taxes, agree or settle any material claim or assessment in
respect of Taxes, or agree to an extension or waiver of the
limitation period to any material claim or assessment in respect
of Taxes;
(xii) voluntarily take, or commit to take, any action that
would or is reasonably likely to result in any of the conditions
to the Tender Offer set forth on Annex A or the conditions to the
Merger set forth in Article 8 not being satisfied or make any
representation or warranty of the Company contained herein that
is not qualified as to materiality inaccurate in any material
respect, or any representation or warranty that is qualified as
to materiality untrue in any respect at, or as of any time prior
to, the Effective Time, or that would materially impair the
ability of the Company, Parent or Purchaser to consummate the
transactions contemplated hereunder, in accordance with the terms
hereof or materially delay such consummation;
(xiii) wind-up or otherwise eliminate the Special Committee;
or
(xiv) agree, authorize or announce to take any of the
actions described in subsections (i) through (xiii) above.
SECTION 6.02 No Solicitation of Other Offers. During the period
commencing on the date of this Agreement and concluding on the earlier of (a)
the Effective Time and (b) the date this Agreement is terminated in accordance
with its terms, the Company shall not take (and the Company shall not authorize
or permit any of its Affiliates, officers, directors, employees, agents,
representatives, consultants, financial advisors, attorneys, accountants, or
other agents to so take) any action to, directly or indirectly, encourage,
solicit, initiate or engage in discussions or negotiations with, or provide any
information to, any Person, other than the Purchaser (and its Affiliates and
representatives), concerning any acquisition of the Company or any purchase of
all or any part of the capital stock of the Company (except in satisfaction of
the obligations contained
25
in Section 3.05 hereof) or any merger, sale of substantial assets or similar
transaction involving the Company; provided, however, that prior to the
Effective Time, the Company, in response to an unsolicited proposal from a
third-party that did not result from a breach of this Section 6.02 may
participate in discussions or negotiations with or furnish information to such
third party to the extent that the Special Committee or the Board, based on the
recommendation of the Special Committee (in each case after receiving the advice
of outside nationally recognized legal counsel), reasonably determines in good
faith that its fiduciary duties under applicable law require it to take such
actions.
SECTION 6.03 Access to Information. Until the Effective Time, the
Company shall afford to the officers, employees, accountants, counsel and other
representatives of Parent, reasonable access during normal business hours to its
properties, books, contracts, commitments and records; furnish to Parent all
information concerning its business, properties, and personnel as Parent may
reasonably request or has reasonably requested; and use reasonable best efforts
to make available during normal business hours to the officers, employees,
accountants, counsel and other representatives of Parent the appropriate
individuals (including management personnel, attorneys, accountants and other
professionals) for discussion of the Company's business, properties, prospects
and personnel as Parent may reasonably request. Parent agrees to and shall cause
its representatives to treat and hold as confidential all information relating
to the Company; provided, however, that this sentence shall not apply to (i) any
information that, at the time of disclosure, is available publicly and was not
disclosed in breach of this Agreement and (ii) any information that, in Parent's
sole discretion, is required to be disclosed pursuant to any applicable Law.
SECTION 6.04 Consents; Approvals. The Company, Parent and Purchaser
shall each use its commercially reasonable efforts, and cooperate with each
other, to obtain as promptly as practicable all consents, waivers, approvals,
authorizations or orders and the Company, Parent and Purchaser shall make all
filings required in connection with the authorization, execution and delivery of
this Agreement by the Company, Parent and Purchaser and the consummation by them
of the transactions contemplated hereby.
SECTION 6.05 Indemnification and Insurance. (a) From and after the
Effective Time, the Surviving Corporation shall indemnify, defend and hold
harmless each Person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director of the
Company (the "Covered Parties") against all losses, claims, damages, costs,
expenses (including reasonable attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party incurred in connection with any threatened or actual action,
suit or proceeding based in whole or in part on or arising in whole or in part
out of the fact that such person is or was a director or officer of the Company
("Indemnified Liabilities"), including all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, this Agreement or
the transactions contemplated hereby, in each case to the fullest extent that a
corporation is permitted by law to indemnify its own directors or officers, as
the case may be. In the event any such claim, action, suit, proceeding or
investigation is brought against any Covered Party, the indemnifying parties
shall assume and direct all aspects of the defense thereof, including
settlement, and the Covered Party shall cooperate in the defense of any such
matter. The Covered Party shall have a right to participate in
26
(but not control) the defense of any such matter with its own counsel and at its
own expense. Notwithstanding the right of the indemnifying parties to assume and
control the defense of such litigation, claim or proceeding, such Covered Party
shall have the right to employ separate counsel and to participate in the
defense of such litigation, claim or proceeding, and the indemnifying parties
shall bear the fees, costs and expenses of such separate counsel and shall pay
such fees, costs and expenses promptly after receipt of an invoice from such
Covered Party if (i) the use of counsel chosen by the indemnifying parties to
represent such Covered Party would present such counsel with a conflict of
interest, (ii) the defendants in, or targets of, any such litigation, claim or
proceeding shall have been advised by counsel that there may be legal defenses
available to it or to other Covered Parties which are different from or in
addition to those available to the indemnifying parties or (iii) the
indemnifying parties shall not have employed counsel satisfactory to such
Covered Party, in the exercise of the Covered Party's reasonable judgment, to
represent such Covered Party within a reasonable time after notice of the
institution of such litigation, claim or proceeding. The Covered Parties as a
group shall be represented by a single law firm (plus no more than one local
counsel in any jurisdiction) with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Covered Parties. Any
Covered Party wishing to claim indemnification under this Section 6.05, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent and the Surviving Corporation (but the failure so to
notify shall not relieve the indemnifying party from any liability which it may
have under this Section 6.05, except to the extent such failure materially
prejudices the indemnifying parties). Each Covered Party shall be entitled to
the advancement of expenses to the full extent permitted by law in connection
with any such action (subject to tendering any undertaking to repay such
expenses, to the extent required by applicable law). Notwithstanding the
foregoing, in the event that there is any conflict between this Section 6.05(a)
and the terms of the Certificate of Incorporation or By-Laws of the Company, the
Certificate of Incorporation and/or By-laws, as the case may be, shall prevail.
(b) All rights to indemnification, all limitations on liability and
all rights to advancement of expenses existing in favor of a Covered Party as
provided herein or in the Company's Certificate of Incorporation or By-Laws as
in effect as of the date hereof shall survive the Merger and shall continue in
full force and effect, without any amendment thereto, for a period of six years
from the Effective Time to the extent such rights are consistent with applicable
law; provided that in the event any claim or claims are asserted or made within
such six-year period, all rights to indemnification in respect of any such claim
or claims shall continue until disposition of any and all such claims; provided
further, that any determination required to be made with respect to whether a
Covered Party's conduct complies with the standards set forth under applicable
law or the Company's Certificate of Incorporation, or By-Laws, as the case may
be, shall be made by independent legal counsel selected by the Covered Party and
reasonably acceptable to the Surviving Corporation.
(c) In the event that the Surviving Corporation (i) consolidates with
or merges into any other Person and shall not be the surviving corporation or
entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary to effectuate the purposes of this Section
6.05, proper provision shall be made so that such successors, assigns and
transferees, as the case
28
may be, assume the obligations set forth in this Section 6.05, and none of the
actions described in the foregoing clauses (i) or (ii) shall be taken until such
provision is made.
(d) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain in effect, without any lapses in coverage, policies
of directors' and officers' liability insurance (or a "tail" policy) for the
benefit of those Persons who are covered by the Company's directors' and
officers' liability insurance policies as of the date hereof, providing coverage
with respect to matters occurring prior to the Effective Time that is at least
equal to the coverage provided under the Company's current directors' and
officers' liability insurance policies (provided that the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
which are not materially less favorable including, without limitation, policies
held by Parent or Royal Ahold) to the extent that such liability insurance can
be maintained at an annual cost to the Surviving Corporation of not greater than
200 percent of the premium for the current Company directors' and officers'
liability insurance; provided that if such insurance (or "tail" policy) cannot
be so maintained at such cost, the Surviving Corporation shall maintain as much
of such insurance as can be so maintained at a cost equal to 200 percent of the
current annual premiums of the Company for such insurance. The Company
represents that the premium for the current Company directors' and officers'
liability policy is $75,000.
SECTION 6.06 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent (on behalf of itself and Purchaser) shall
give prompt notice to the Company, of (i) the occurrence or non-occurrence of
any event known to it, the occurrence or non-occurrence of which is reasonably
likely to cause any representation or warranty of such party contained in this
Agreement to be materially untrue or inaccurate, (ii) any failure of the Company
or Parent or Purchaser, as the case may be, to comply with or satisfy, or the
occurrence or non-occurrence of any event known to it, the occurrence or
non-occurrence of which is reasonably likely to cause the failure by such party
materially to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; (iii) the occurrence of any other
event known to it which would be reasonably likely (A) to have a Material
Adverse Effect or (B) to cause any condition set forth in Annex A or Article 8
to be unsatisfied in any material respect at any time prior to the closing of
the Tender Offer or the Effective Time, as the case may be; or (iv) any action,
suit, proceeding, inquiry or investigation pending or, to the knowledge of the
Company, threatened which questions or challenges the validity of this
Agreement; provided, however, that the delivery of any notice pursuant to this
Section 6.06 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.07 Further Action. Upon the terms and subject to the
conditions hereof each of the parties hereto shall use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.
28
SECTION 6.08 Public Announcements. Parent, Purchaser and the Company
shall consult with each other before issuing any press release or making any
public statement with respect to this Agreement, the Tender Offer, the Merger or
the other transactions contemplated hereunder and shall not issue any such press
release or make any such public statement without the prior consent of the other
parties, which shall not be unreasonably withheld; provided, however, that any
party may, without the prior consent of the others, issue such press release or
make such public statement as may, upon the advice of counsel, be required by
law or the rules and regulations of the Nasdaq National Market or other
securities exchange, in advance of obtaining such prior consent, in which case,
the parties shall cooperate to reach mutual agreement as to the language of any
such report, statement or press release. Immediately following the execution and
delivery of this Agreement, Parent, Purchaser and the Company are each issuing
press releases to be mutually agreed upon with respect to this Agreement, the
Tender Offer, the Merger and the other transactions contemplated hereunder.
SECTION 6.09 Rights Agreement. Prior to July 20, 2001, the Company
shall render the Rights Agreement inapplicable to the Tender Offer, the Merger,
this Agreement and the other transactions contemplated by this Agreement.
ARTICLE 7
ADDITIONAL AGREEMENTS
SECTION 7.01 Merger Without Stockholders' Meeting. If, as a result of
the purchase of shares of Common Stock pursuant to the Tender Offer and
compliance with the terms of this Section 7.01, Purchaser owns in the aggregate
at least 90% of the shares of Common Stock outstanding upon completion of the
Tender Offer, the parties hereto agree to take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
satisfaction or waiver of the conditions to the Merger set forth in Article 8
without a meeting of stockholders of the Company, in accordance with Section 253
of Delaware Law (a "Short-Form Merger").
SECTION 7.02 Stockholder Approval Required. If required by applicable
law in order to consummate the Merger: (a) the Company (acting through the Board
in accordance with its Certificate of Incorporation and By-laws and acting as
soon as practicable following the acceptance for payment and purchase of shares
of Common Stock by Purchaser pursuant to the Tender Offer) shall take all action
necessary to seek approval of the Merger and adoption of this Agreement at a
duly called and noticed meeting of the stockholders of the Company, which
meeting shall be held as promptly as practicable following the consummation of
the Tender Offer and the preparation of the Information Statement (as defined in
Section 7.02(b)), or by written consent of the stockholders of the Company in
lieu of such a meeting. Each of Parent and Purchaser shall vote or grant its
consent, as the case may be, with respect to all shares of Common Stock owned by
it, to the approval of the Merger and adoption of this Agreement.
(b) If required by applicable law in order to consummate the Merger,
as promptly as practicable after the acceptance for payment and purchase of
shares of Common Stock by Purchaser pursuant to the Tender Offer, (i) Parent,
Purchaser and the Company shall
29
cooperate in preparing, and the Company shall cause to be filed with the SEC, a
consent solicitation statement or information statement that meets the
requirements of the Exchange Act and the regulations promulgated thereunder,
including without limitation, Schedules 14C and 13E-3 (together with any
amendments thereof or supplements thereto, the "Information Statement") to seek
the approval and adoption of this Agreement by the stockholders of the Company.
Each of Parent, Purchaser and the Company shall furnish all information as the
other parties may reasonably request in connection with such actions and the
preparation of the Information Statement.
SECTION 7.03 Covenants Relating to Information Statement. If an
Information Statement is required pursuant to Section 7.02 hereof:
(a) The Information Statement shall include the
recommendations of the Special Committee and the Board to the
stockholders of the Company to approve and adopt this Agreement;
provided, however, that the Special Committee and the Board may, at
any time prior to the Effective Time, withdraw, modify or change any
such recommendation to the extent that the Special Committee or the
Board based on the recommendation of the Special Committee (in each
case after receiving the advice of outside nationally recognized legal
counsel) reasonably determined in good faith that its fiduciary duties
under applicable law require it to take such actions; provided further
that nothing in this section shall affect the Company's obligation to
duly call and notice a meeting of the Company's stockholders as
contemplated by Section 7.02(a) and to take all actions contemplated
by Section 7.02(b) (regardless of whether the recommendation of the
Special Committee or the Board shall have been withdrawn, modified or
changed).
(b) No amendment or supplement to the Information Statement
will be made by the Company, Parent or Purchaser without the approval
of the other parties (such approval not to be unreasonably withheld or
delayed). Each of Parent, Purchaser and the Company will advise the
other, promptly after it receives notice thereof, of any request by
the SEC for amendment of the Information Statement or comments thereon
and responses thereto or requests by the SEC for additional
information.
(c) The information supplied by the Company for inclusion in
the Information Statement or any other documents to be filed with the
SEC in connection with the Merger shall not, at the time the
Information Statement is first mailed to the stockholders of the
Company or at the Effective Time, contain any untrue statement of a
material fact or fail to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
If, at any time prior to the Effective Time, any event or circumstance
relating to the Company or any of its subsidiaries, or their
respective officers or directors, should be discovered by the Company
which, pursuant to the Securities Act or the Exchange Act, should be
set forth in an amendment or a supplement to the Information
Statement, the Company shall promptly inform Parent and Purchaser
thereof. All documents that the Company is responsible for filing with
the SEC in connection with the Merger will comply as to form and
substance in all material respects with the applicable requirements of
the Securities Act and the Exchange Act.
30
(d) The information supplied in writing by Parent and
Purchaser for inclusion in the Information Statement or any other
documents to be filed with the SEC in connection with the Merger shall
not, at the time the Information Statement is first mailed to the
stockholders of the Company or at the Effective Time, contain any
untrue statement of a material fact or fail to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If, at any time prior to the Effective
Time, any event or circumstance relating to Parent or Purchaser, or
their respective officers or directors, should be discovered by Parent
or Purchaser which, pursuant to the Securities Act or the Exchange
Act, should be set forth in an amendment or a supplement to the
Information Statement, Parent or Purchaser shall promptly inform the
Company thereof. All documents that Parent or Purchaser is responsible
for filing with the SEC in connection with the Merger will comply as
to form and substance in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party. The
obligations of Parent, Purchaser and the Company to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) Stockholder Approval. If required by Delaware law, this
Agreement shall have been approved and adopted by the requisite
affirmative vote of the stockholders of the Company in accordance with
Delaware Law and the Company's Certificate of Incorporation.
(b) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law or executive order or
award (whether temporary, preliminary or permanent) (an "Order") that
is then in effect and has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(c) Purchase of Shares. Purchaser shall have purchased
shares of Common Stock pursuant to the Tender Offer.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Tender Offer and the Merger may be abandoned at any time prior to the Effective
Time, notwithstanding any requisite approval and adoption of this Agreement by
the stockholders of the Company, as follows:
31
(a) by mutual written consent duly authorized by the Boards
of Directors of each of Parent, Purchaser and the Company (provided
that such consent of the Board is approved by the Special Committee);
(b) by Parent, Purchaser or the Company if any Governmental
Entity shall have enacted, issued, promulgated, enforced or entered
any Law or Order or taken any other action restraining, enjoining or
otherwise prohibiting the consummation of the Tender Offer or the
Merger and such Law, Order or other action shall have become final and
nonappealable;
(c) by Parent at any time prior to the purchase of shares
pursuant to the Tender Offer, if the Special Committee or the Board
based on the recommendation of the Special Committee shall have (i)
withdrawn, modified or changed, or proposed to withdraw, modify or
change, its approval or recommendation of this Agreement, the Tender
Offer, the Merger or the other transactions contemplated hereby in any
manner which Parent determines to be adverse to Parent, (ii) approved
or recommended, or proposed to approve or recommend, the approval or
acceptance of, or announced, or proposed to announce, a neutral
position with respect to, a proposal from a Person other than Parent
or Purchaser with respect to any acquisition of the Company or any
purchase of all or any part of the capital stock of the Company
(except in satisfaction of the obligations contained in Section 3.05
hereof) or any merger, sale of substantial assets or similar
transaction involving the Company or (iii) failed to reaffirm its
approval or recommendation of this Agreement, the Tender Offer, the
Merger or the other transactions contemplated hereby upon the request
of Parent;
(d) prior to the purchase of shares pursuant to the Tender
Offer, by Parent upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue ("Terminating Company Breach"); provided that, if
such Terminating Company Breach is curable by the Company through the
exercise of its commercially reasonable efforts and for as long as the
Company continues to exercise such commercially reasonable efforts,
Parent and Purchaser may not terminate this Agreement under this
Section 9.01(d);
(e) prior to the purchase of shares pursuant to the Tender
Offer, by the Company (as agreed to by the Special Committee) upon a
breach of any representation, warranty, covenant or agreement on the
part of Parent or Purchaser set forth in this Agreement, or if any
representation or warranty of Parent or Purchaser shall have become
untrue ("Terminating Parent Breach"); provided that, if such
Terminating Parent Breach is curable by Parent or Purchaser as the
case may be, through the exercise of its commercially reasonable
efforts and for as long as Parent or Purchaser, as the case may be,
continues to exercise such commercially reasonable efforts, the
Company may not terminate this Agreement under this Section 9.01(e);
(f) by the Company (as agreed to by the Special Committee)
if due to an occurrence or circumstance, not involving a breach by the
Company of its obligations
32
hereunder, which would result in a failure to satisfy any of the
conditions set forth in Annex A hereto or otherwise, Parent shall have
failed to commence the Tender Offer within fifteen Business Days
following the date of this Agreement, terminated the Tender Offer or
permitted the Tender Offer to expire without the purchase of shares of
Common Stock thereunder; or
(g) by Parent or Purchaser after ninety (90) days after the
date hereof, if Parent shall not have theretofore purchased shares of
Common Stock pursuant to the Tender Offer solely as a result of a
failure of any of the conditions set forth in Annex A hereto.
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 9.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 9.01 by Parent or Purchaser, on the one hand,
or the Company, on the other hand, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent, Sub or
the Company, except that Sections 4.18, 5.05, 9.05 and Article 10 and this
Section 9.02 shall survive any termination of this Agreement. Nothing in this
Section 9.02 shall relieve any party to this Agreement of liability for willful
breach of this Agreement.
SECTION 9.03 Amendment. To the fullest extent permitted by Delaware
Law, this Agreement may be amended by the parties hereto by action taken by or
on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that any such amendment must also be approved
by the Special Committee. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 9.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of another party hereto, (b) waive any inaccuracy in the
representations and warranties of another party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of another party or condition to its own obligations contained herein; provided,
however, that, if the Company seeks to make such extension or waiver as provided
in clause (a), (b) or (c) above, it must first obtain the approval of the
Special Committee. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
SECTION 9.05 Fees and Expenses. (a) Except as provided in paragraph
(b) below, all Expenses (as defined below) incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Tender Offer, the Merger
or any other transaction is consummated. "Expenses" as used in this Agreement
shall include all out-of-pocket expenses (including, without limitation, all
fees and expenses of counsel, accountants, investment bankers, experts and
33
consultants to a party hereto and its Affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Information Statement, the solicitation of
stockholder approvals and all other matters related to the Tender Offer, the
Merger and the other transactions contemplated by this Agreement.
(b) If this Agreement is terminated by (i) Parent in accordance with
Section 9.01(c) and at such time there is no Terminating Parent Breach, then the
Company shall on the day next succeeding the date of such termination or, if
earlier, immediately prior to the Company entering into an agreement with
respect to an Acquisition Proposal (I) reimburse Parent in immediately available
funds for all Expenses of Royal Ahold, Parent and Purchaser and (II) pay to
Parent $500,000 in immediately available funds.
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.01 Nonsurvival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Effective Time of the Merger; provided, that this section shall not limit any
agreement which by its terms contemplates performance after the Effective Time
or after termination of this Agreement.
SECTION 10.02 Notices. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission (provided that
any notice received by facsimile transmission or otherwise at the addressee's
location on any Business Day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
Business Day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
If to Royal Ahold, Parent or Purchaser:
Koninklijke Ahold NV
Xxxxxx Heijnweg I
1507 EH Zaandam, The Netherlands
Attention: Ton van Tielraden, Esq.
Facsimile: (00-00) 000-0000
with copies to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
34
Attention: Xxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: 000-000-0000
If to the Company:
Peapod, Inc.
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
with copies to:
Sidley Xxxxxx Xxxxx & Xxxx
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx
Facsimile: 312-853-7036
and
Morris, Nichols, Arsht & Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: X. Xxxxxxxxx Sparks, III, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
and to the Special Committee at:
Xxxx XxxXxxxxxxxxxxx
0000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: 706-467-2771
and
Xxxxxx X. Xxxxxx
Xxxxxx Media, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: 000-000-0000
35
with copies to:
Morris, Nichols, Arsht & Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: X. Xxxxxxxxx Sparks, III, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph; provided that such notification shall only
be effective on the date specified in such notice or five (5) Business Days
after the notice is given, whichever is later. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
SECTION 10.03 Assignment; Binding Effect. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign any of its rights
and obligations hereunder to one or more of its Affiliates; provided, however,
that no such assignment shall relieve Purchaser of its obligations hereunder.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. Notwithstanding anything contained in this Agreement to the
contrary, except for the provisions of Section 6.05, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
SECTION 10.04 Entire Agreement. This Agreement, the Company Disclosure
Letter and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter of this Agreement and supersede all prior representations, warranties,
agreements and understandings among the parties, both written and oral, with
respect thereto.
SECTION 10.05 Governing Law; Consent to Jurisdiction. (a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York (except that the statutory and fiduciary duty law of the State
of Delaware shall apply to the extent otherwise applicable to the transactions
contemplated by this Agreement) without regard to the principles of conflicts of
laws thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
exclusive personal jurisdiction of any New York state court or any federal court
located in the State of New York in the event any dispute arises out of this
Agreement or any of the transactions
36
contemplated by this Agreement and (ii) agrees that it shall not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court.
SECTION 10.06 Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies of
this Agreement each signed by less than all, but together signed by all of the
parties hereto. This Agreement shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties.
SECTION 10.07 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
SECTION 10.08 Interpretation. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. The table of contents to
this Agreement is 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 words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
thereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement. The inclusion of any
matters in the Company Disclosure Letter in connection with any representation,
warranty, covenant or agreement that is qualified as to materiality or "Material
Adverse Effect" shall not be an admission by the Company that such matters is
material or would have a Material Adverse Effect.
SECTION 10.09 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. Any term, covenant or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only by a
written notice signed by such party expressly waiving such term or condition.
The waiver by any party hereto of a
37
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
SECTION 10.10 Certain Definitions. As used in this Agreement:
(a) The term "Affiliate," as applied to any Person, shall
mean any other Person directly or indirectly controlling, controlled
by, or under common control with, that Person; for purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," "under common control with"), as
applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) A Person shall be deemed to "beneficially" own
securities if such Person would be the beneficial owner of such
securities under Rule 13d-3 under the Exchange Act, including
securities which such Person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time).
(c) The term "Business Day" means any day on which
commercial banks are open for business in each of New York, New York
and Zaandam, The Netherlands other than a Saturday, a Sunday or a day
observed as a holiday in New York, New York under the laws of the
State of New York or the federal laws of the United States or in
Zaandam, The Netherlands under the laws of the Netherlands.
(d) The term "Person" shall include individuals,
corporations, partnerships, trusts, limited liability companies,
associations, unincorporated organizations, joint ventures, other
entities, groups (which term shall include a "group" as such term is
defined in Section 13(d)(3) of the Exchange Act), labor unions or
Governmental Entity.
SECTION 10.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent (and only to the extent) of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 10.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement was
not performed in accordance with its specific terms or as otherwise breached and
that money damages would not be an adequate remedy for any breach of this
Agreement. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
38
enforce specifically the terms and provisions of this Agreement in any court
referred to in Section 10.05, this being in addition to any other remedy to
which they are entitled at law or in equity or pursuant to this Agreement. In
any such action for specific performance, each of the parties shall waive (i)
the defense of adequacy of a remedy at law and (ii) any requirement for the
securing and posting of any bond.
SECTION 10.13 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
SECTION 10.14 Execution. This Agreement may be executed by facsimile
signatures by any party and such signature shall be deemed binding for all
purposes hereof, without delivery of an original signature being thereafter
required.
SECTION 10.15 Date for any Action. In the event that any date on which
any action is required to be taken hereunder by any of the Parties hereto is not
a Business Day, such action shall be required to be taken on the next succeeding
day which is a Business Day.
SECTION 10.16 Guarantee. Royal Ahold unconditionally guarantees the
full payment and performance of the obligations of Parent and Purchaser under
this Agreement
[SIGNATURE PAGE FOLLOWS]
39
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
KONINKLIJKE AHOLD N.V.
(But solely for purposes of Section 5.01, 5.02,
5.03 and 10.16)
By: /s/ A. M. Meurs
Name: A. M. Meurs
Title: Executive Vice President
AHOLD U.S.A. HOLDINGS, INC.
By: /s/ A. M. Meurs
Name: A. M. Meurs
Title: Director
BEAN ACQUISITION CORP.
By: /s/ A. M. Meurs
Name: A. M. Meurs
Title: Vice President
PEAPOD, INC.
By: /s/ Xxxx xxx Xxxxxx
Name: Xxxx xxx Xxxxxx
Title: Chief Executive Officer
40
Annex A
ANNEX A TO MERGER AGREEMENT
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provision of the Tender Offer, and in
addition to (and not in limitation of) Parent's rights to extend and amend the
Tender Offer at any time in its sole discretion in accordance with the terms of
this Agreement, Parent shall not be required to accept for payment, purchase or
pay for, subject to any applicable regulations of the SEC, including Rule
14e-1(c) under the Exchange Act, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for, any tendered
shares of Common Stock (whether or not any shares of Common Stock theretofore
have been accepted for payment or paid for pursuant to the Tender Offer), and
may terminate the Tender Offer as to any Shares not then paid for, if at any
time on or after the date hereof and prior to the time of payment for any such
shares of Common Stock, any of the following events shall occur:
(a) there shall be threatened, instituted or pending (i) any action or
proceeding by any Governmental Entity, domestic or foreign, or (ii) any action
or proceeding (other than any action or proceeding which in the good faith
judgment of Parent would not have a reasonable prospect of withstanding a
summary proceeding to dismiss such action or proceeding) by any other Person, in
each case before any Governmental Entity, domestic or foreign, (u) challenging
or seeking to, or which could reasonably be expected to, make illegal, impede,
delay or otherwise directly or indirectly restrain, prohibit or make materially
more costly, in relation to the expected cost thereof, the Tender Offer or the
Merger or seeking to obtain damages that are material in relation to the
currently expected cost of the Tender Offer and the Merger, (v) seeking to
prohibit or materially limit the ownership or operation by Parent or Purchaser
of all or any material portion of the business or assets of the Company or to
compel Parent or Purchaser to dispose of or hold separately all or any material
portion of the business or assets of Parent and its subsidiaries taken as a
whole or the Company, or seeking to impose any limitation on the ability of
Parent or Purchaser to conduct its business or own such assets, (w) seeking to
impose limitations on the ability of Parent or Purchaser effectively to exercise
full rights of ownership of the shares of Common Stock, including, without
limitation, the right to vote any shares acquired or owned by Parent or
Purchaser on all matters properly presented to the Company's stockholders, (x)
seeking to require divestiture by Parent or Purchaser of any shares of Common
Stock, (y) seeking any material diminution in the benefits expected to be
derived by Parent or Purchaser as a result of the transactions contemplated by
the Tender Offer or the Merger or (z) otherwise directly or indirectly relating
to the Tender Offer or the Merger and which has had or could reasonably be
expected to have a Material Adverse Effect or a material adverse effect on
Parent or the value of the Common Stock;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed, enacted,
enforced, promulgated, amended or issued and applicable to or deemed applicable
to (i) Parent, Purchaser, the Company or any subsidiary of any of them or (ii)
the Tender Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency, domestic or
foreign which could reasonably be expected to directly or indirectly, result in
any of the consequences referred to in clauses (u) through (z) of paragraph (a)
above;
Annex A
Page 2
(c) any of the representations or warranties made by the Company in
this Agreement that are qualified as to materiality shall be untrue or incorrect
in any respect or any such representations and warranties that are not so
qualified shall be untrue or incorrect in any material respect, except (i) for
changes specifically permitted by this Agreement and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date;
(d) the Company shall have breached or failed in any respect to
perform or comply with any obligation, agreement or covenant required by this
Agreement to be performed or complied with by it;
(e) the Special Committee or the Board shall (i) have withdrawn,
modified or changed, or proposed to withdraw, modify or change, its approval or
recommendation of this Agreement, the Tender Offer, the Merger or the other
transactions contemplated hereby in any manner which Parent determines to be
adverse to Parent, (ii) have approved or recommended, or proposed to approve or
recommend, the approval or acceptance of, or announced, or proposed to announce,
a neutral position with respect to, a proposal from a Person other than Parent
or Purchaser with respect to any acquisition of the Company or any purchase of
all or any part of the capital stock of the Company or any merger, sale of
substantial assets or similar transaction involving the Company or (iii) have
failed to reaffirm its approval or recommendation of this Agreement, the Tender
Offer, the Merger or the other transactions contemplated hereby upon the request
of Parent;
(f) the Company, acting through the Board (as agreed to by the Special
Committee), Parent and Purchaser shall have agreed that Parent shall terminate
the Tender Offer or postpone the acceptance for payment of or payment for shares
of Common Stock thereunder;
(g) the Agreement shall have been terminated in accordance with its
terms; or
(h) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any U.S. securities exchange, in
any U.S. over-the-counter market or the NASDAQ National Market System, the New
York Stock Exchange, Inc. or Euronext (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index), (ii)
any decline in any of the Dow Xxxxx Industrial Average, the Standard & Poor's
Index of 500 Industrial Companies, the New York Stock Exchange Composite Index
or the Euronext 100 Index in excess of 20% measured from the close of business
on the trading day next preceding the date of the this Agreement (iii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or the Netherlands, (iv) any material limitation
(whether or not mandatory) by any Federal, state or foreign governmental
authority or agency on, the extension of credit by banks or other leading
institutions, or (v) in the case of any of the foregoing existing at the time of
the commencement of the Tender Offer, an acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of Parent, Purchaser
and their respective Affiliates and may be asserted by Parent or Purchaser, in
whole or in part, at any time and from time to time in the sole discretion of
Parent or Purchaser.
Annex A
Page 3
The failure by Parent or Purchaser at any time to exercise its rights
under any of the foregoing conditions shall not be deemed a waiver of any such
rights and each such right shall be deemed an ongoing right which may be
asserted at any time or from time to time. Should the Tender Offer be terminated
pursuant to any of the foregoing provisions, all tendered shares of Common Stock
not theretofore accepted for payment shall forthwith be returned to the
tendering stockholders.
