EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
by and among
SHOPKO STORES, INC.,
SHOPKO MERGER CORP.
and
PAMIDA HOLDINGS CORPORATION
Dated as of May 10, 1999
TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER
SECTION 1.01 The Offer............................................... -2-
SECTION 1.02 Company Action.......................................... -4-
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.............................................. -6-
SECTION 2.02 Effective Time; Closing................................. -6-
SECTION 2.03 Effect of the Merger.................................... -6-
SECTION 2.04 Certificate of Incorporation; Bylaws.................... -6-
SECTION 2.05 Directors and Officers.................................. -6-
SECTION 2.06 Conversion of Securities................................ -7-
SECTION 2.07 Stock Options........................................... -7-
SECTION 2.08 Surrender of Shares; Stock Transfer Books............... -8-
SECTION 2.09 Dissenting Shares....................................... -10-
SECTION 2.10 Withholding Taxes....................................... -10-
SECTION 2.11 Merger Without Meeting of Shareholders.................. -11-
SECTION 2.12 Further Assurances...................................... -11-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries............ -11-
SECTION 3.02 Certificate of Incorporation and Bylaws................. -12-
SECTION 3.03 Capitalization.......................................... -12-
SECTION 3.04 Authority Relative to this Agreement.................... -14-
SECTION 3.05 No Conflict; Required Filings and Consents.............. -14-
SECTION 3.06 Compliance.............................................. -15-
SECTION 3.07 SEC Filings; Financial Statements....................... -16-
SECTION 3.08 Absence of Certain Changes or Events.................... -17-
SECTION 3.09 Absence of Litigation................................... -17-
SECTION 3.10 Employee Benefit Plans.................................. -17-
SECTION 3.11 Labor Matters........................................... -20-
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement........ -20-
SECTION 3.13 Real Properties......................................... -21-
SECTION 3.14 Personal Property....................................... -23-
SECTION 3.15 Trademarks, Patents and Copyrights...................... -23-
i
SECTION 3.16 Taxes................................................... -24-
SECTION 3.17 Environmental Matters................................... -25-
SECTION 3.18 Contracts............................................... -26-
SECTION 3.19 Insurance; Workers' Compensation........................ -27-
SECTION 3.20 Certain Payments; Absence of Certain Business Practices. -28-
SECTION 3.21 Licenses and Permits.................................... -28-
SECTION 3.22 Letters of Credit, Surety Bonds, Guarantees............. -28-
SECTION 3.23 Brokers................................................. -28-
SECTION 3.24 Opinion of Financial Advisor............................ -29-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01 Corporate Organization.................................. -29-
SECTION 4.02 Authority Relative to this Agreement.................... -29-
SECTION 4.03 No Conflict; Required Filings and Consents.............. -30-
SECTION 4.04 Offer Documents; Proxy Statement........................ -30-
SECTION 4.05 Brokers................................................. -31-
SECTION 4.06 Financing............................................... -31-
SECTION 4.07 Operations of Purchaser................................. -31-
ARTICLE V
CONDUCT OF BUSINESS PENDING THE PURCHASER'S ELECTION DATE
SECTION 5.01 Conduct of Business by the Company Pending the
Purchaser's Election Date............................... -31-
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting........................... -34-
SECTION 6.02 Proxy Statement......................................... -34-
SECTION 6.03 Company Board Representation; Section 14(f)............. -35-
SECTION 6.04 Access to Information; Confidentiality.................. -36-
SECTION 6.05 No Solicitation......................................... -36-
SECTION 6.06 Third Party Standstill Agreements....................... -37-
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.. -38-
SECTION 6.08 Notification of Certain Matters......................... -39-
SECTION 6.09 Further Action; Reasonable Efforts...................... -39-
SECTION 6.10 Public Announcements.................................... -40-
SECTION 6.11 Confidentiality Agreement............................... -40-
SECTION 6.12 State Takeover Laws..................................... -40-
SECTION 6.13 Employment Covenant..................................... -41-
SECTION 6.14 Real Estate Transfer and Gains Tax...................... -41-
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SECTION 6.15 Retirement of Certain Outstanding Indebtedness............... -41-
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger..................................... -42-
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.................................................. -43-
SECTION 8.02 Effect of Termination........................................ -45-
SECTION 8.03 Fees and Expenses............................................ -45-
SECTION 8.04 Amendment.................................................... -46-
SECTION 8.05 Waiver....................................................... -46-
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements... -46-
SECTION 9.02 Notices...................................................... -46-
SECTION 9.03 Certain Definitions.......................................... -47-
SECTION 9.04 Severability................................................. -50-
SECTION 9.05 Entire Agreement, Assignment................................. -51-
SECTION 9.06 Parties in Interest.......................................... -51-
SECTION 9.07 Specific Performance......................................... -51-
SECTION 9.08 Waiver of Jury Trial......................................... -51-
SECTION 9.09 Governing Law................................................ -51-
SECTION 9.10 Headings..................................................... -51-
SECTION 9.11 Counterparts................................................. -51-
SECTION 9.12 Certain Undertakings by Parent............................... -51-
iii
Exhibit A -- Form of Stockholder Agreement
Exhibit B -- Form of Stockholder and Purchase Agreement
Disclosure Schedule
Section 3.01 -- Subsidiaries of the Company
Section 3.03 -- Capitalization and Stock Option Plans
Section 3.05 -- Certain Effects of the Offer and the Merger
Section 3.06 -- Compliance
Section 3.07 -- SEC Filings; Financial Statements
Section 3.08 -- Certain Developments
Section 3.09 -- Legal Proceedings
Section 3.10 -- Employee Benefit Plans
Section 3.11 -- Labor Matters
Section 3.13 -- Real Properties
Section 3.14 -- Personal Property
Section 3.15 -- Trademarks, Patents and Copyrights
Section 3.16 -- Taxes
Section 3.17 -- Environmental Matters
Section 3.18 -- Material Contracts
Section 3.19 -- Insurance Policies and Workers' Compensation
Section 3.22 -- Letters of Credit, Surety Bonds, Guaranties
Section 5.01 -- Conduct of Business
Annex A -- Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of May 10, 1999 (this
"Agreement"), by and among ShopKo Stores, Inc., a Wisconsin corporation
("Parent"), ShopKo Merger Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and Pamida Holdings Corporation, a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent and Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all of the
issued and outstanding shares of Common Stock, par value $0.01 per share, of the
Company (the "Shares") for $11.50 per Share (such amount being hereinafter
referred to as the "Offer Price") net to the seller in cash, subject to
withholding of taxes, if applicable, upon the terms and subject to the
conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of the Company (the "Board") has
unanimously approved the making of the Offer and resolved and agreed to
recommend that holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each approved the merger (the "Merger") of Purchaser with and into the
Company in accordance with the General Corporation Law of the State of Delaware
("Delaware Law") following the consummation of the Offer and upon the terms and
subject to the conditions set forth herein; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's and Purchaser's willingness to enter
into this Agreement (i) Parent and certain holders of Shares have entered into
Stockholder Agreements (the "Share Stockholder Agreements") in the form attached
as Exhibit A and (ii) Parent and the sole holder of shares of Nonvoting Common
Stock, par value $0.01 per share, of the Company (the "Nonvoting Shares") have
entered into a Stockholder and Purchase Agreement (together with the Share
Stockholder Agreements, the "Stockholder Agreements") in the form attached as
Exhibit B;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events or
circumstances set forth in Annex A hereto shall have occurred or be existing,
Purchaser agrees to, and Parent agrees to cause Purchaser to, commence, within
the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five business days after the first public
announcement of the execution hereof. Parent and Purchaser agree that the right
and obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the conditions (the "Offer
Conditions") that (i) the number of Shares validly tendered and not withdrawn
prior to the expiration of the Offer, combined with the Shares already owned by
Parent, Purchaser or any of their affiliates, constitute at least 51% of the
then outstanding Shares determined on a fully diluted basis (assuming the
exercise of all options to purchase Shares and the conversion or exchange of all
securities convertible or exchangeable into Shares but not assuming the
conversion of the Nonvoting Shares into Shares) at the expiration of the Offer
(the "Minimum Condition") and (ii) the other conditions set forth in Annex A
shall have been satisfied. Purchaser expressly reserves the right to waive any
such condition, to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that Parent and Purchaser agree that no change may be made without the
consent of the Company which decreases the Offer Price, which changes the form
of consideration to be paid in the Offer, which reduces the maximum number of
Shares to be purchased in the Offer, which alters the terms of the Minimum
Condition, which waives the Minimum Condition, which otherwise modifies or
amends the conditions to the Offer or any other term of the Offer in a manner
that is adverse to the holders of the Shares or Nonvoting Shares, which imposes
conditions to the Offer in addition to those set forth in Annex A hereto or,
except as provided in the next sentence, which extends the expiration date of
the Offer. Notwithstanding the foregoing, Purchaser may, without the consent of
the Company, so long as this Agreement has not been terminated in accordance
with its terms, (i) extend the Offer, if at the scheduled or extended expiration
date of the Offer any of the Offer Conditions shall not be satisfied or waived,
until such time as such conditions are satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, (iii) if all Offer Conditions are satisfied or
waived but the number of Shares tendered is at least equal to 85%, but less than
90%, of the then outstanding number of Shares, extend the Offer for any reason
on one or more occasions for an aggregate period of not more than five business
days beyond the latest expiration date that would otherwise be permitted under
clause (i) or (ii) of this sentence and (iv) extend the Offer until July 2, 1999
unless (A) the event of default which would arise under Section 8.1(j) of the
Loan Agreement (as defined below) because of Purchaser's purchase of Shares
pursuant to the Offer has been waived or (B) the
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termination fee under Section 10.2(e) of the Loan Agreement has been reduced to
$1.25 million or less (provided, that if Purchaser extends the Offer pursuant to
this clause (iv), Purchaser shall be deemed to have irrevocably waived the
condition set forth in paragraph (d) of Annex A, insofar as such paragraph
relates to representations and warranties of the Company, and the condition set
forth in paragraph (e) of Annex A), in the case of each of clauses (i) through
(iv), subject in each case to the right of Parent, Purchaser or the Company to
terminate this Agreement pursuant to the terms hereof. Parent and Purchaser
agree that if at any scheduled expiration date of the Offer, the Minimum
Condition, the HSR Condition (as defined in Annex A) or the condition set forth
in paragraph (d) of Annex A shall not have been satisfied, but at such scheduled
expiration date all the conditions set forth in paragraphs (a), (b), (c), (e),
(f), (g) and (h) shall then be satisfied, at the request of the Company
(confirmed in writing), Purchaser shall extend the Offer from time to time,
subject to the right of Parent, Purchaser or the Company to terminate this
Agreement pursuant to the terms hereof. Subject to the terms and conditions of
the Offer and this Agreement, Purchaser shall, and Parent shall cause Purchaser
to, accept for payment, and pay for, all Shares validly tendered and not
withdrawn pursuant to the Offer that Purchaser becomes obligated to accept for
payment and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer, and in any event in compliance with the obligations
respecting prompt payment pursuant to Rule 14e-1(c) under the Exchange Act. The
Offer Price shall, subject to applicable withholding of taxes, be net to the
seller in cash, upon the terms and subject to the conditions of the Offer. The
obligations of Purchaser to commence the Offer and to accept for payment and to
pay for Shares validly tendered on or prior to the expiration of the Offer and
not withdrawn shall be subject only to the Offer Conditions. Parent shall not,
and shall cause Purchaser not to, cause the Offer to expire unless Parent
terminates this Agreement prior to or on the date of the expiration of the
Offer.
(b) Parent and Purchaser agree, subject to the terms and conditions
set forth herein, that, as soon as reasonably practicable on the date of
commencement of the Offer, Parent and Purchaser will file with the SEC a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. Parent and Purchaser
agree that the Schedule 14D-1 will contain or will incorporate by reference an
offer to purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent and Purchaser will take all steps necessary to ensure that
the Offer Documents (i) will comply in all material respects with the provisions
of applicable federal and state securities laws and (ii) will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they are made, not misleading. Parent,
Purchaser and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which shall have become false or
misleading, and Parent and Purchaser further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
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The Company and its counsel shall be given a reasonable opportunity to review
and comment upon the Offer Documents prior to their filing with the SEC or
dissemination to stockholders of the Company. Each of Parent and Purchaser
agrees to provide the Company and its counsel with copies of any written
comments that Parent, Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents and written statements describing
telephone conversations with the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments or such conversations and
to cooperate with the Company and its counsel in responding to any such
comments. Parent and Purchaser agree to use their reasonable best efforts to
respond promptly to the SEC.
SECTION 1.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that (i) the Board, at a
meeting duly called and held on May 10, 1999, has unanimously (A) determined
that this Agreement and the transactions contemplated by this Agreement,
including each of the Offer and the Merger, are fair to and in the best
interests of the stockholders of the Company and has declared this Agreement and
the transactions contemplated by this Agreement to be advisable, (B) approved
this Agreement and the transactions contemplated by this Agreement, including
the Merger, and (C) recommended that the holders of Shares accept the Offer and
that the stockholders of the Company approve and adopt this Agreement and the
transactions contemplated by this Agreement, including the Merger, and (ii)
Xxxxxxx Xxxx & Company, L.L.C. has delivered to the Board a written opinion to
the effect that, as of the date of such opinion, the consideration to be
received by the holders of Shares (other than Parent, Purchaser and their
affiliates) pursuant to each of the Offer and the Merger and the holders of
Nonvoting Shares (other than Parent, Purchaser and their affiliates) pursuant to
the Merger is fair to such holders of Shares and Nonvoting Shares from a
financial point of view. The Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Board described in the immediately
preceding sentence; provided, however, that such recommendation and the
resolutions with respect thereto may be withdrawn, modified or amended to the
extent the Board determines in good faith, after receiving the advice of
independent legal counsel, that such action is required in the exercise of the
Board's fiduciary duties under applicable law. Any such withdrawal, modification
or amendment shall not constitute a breach of this Agreement but shall not
otherwise affect any of the rights of Parent or Purchaser under this Agreement.
(b) The Company agrees, subject to the terms and conditions set forth
herein, that it will file, as soon as reasonably practicable on the date of
commencement of the Offer, with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing, subject only to the right to withdraw, modify or
amend such recommendation as and to the extent provided in Section 1.02(a), the
recommendation of the Board described in Section 1.02(a) and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable federal securities laws. The Company will
take all steps necessary to ensure that the Schedule 14D-9 (i) will comply in
all material respects with the provisions of applicable federal and state
securities laws and (ii) will not contain any untrue statement of a material
fact or
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omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The Company, Parent and Purchaser agree to correct
promptly any information provided by any of them for use in the Schedule 14D-9
which shall have become false or misleading, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
14D-9 and all amendments and supplements thereto prior to their filing with the
SEC or dissemination to stockholders of the Company. The Company agrees to
provide Parent and its counsel with copies of any written comments that the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 and written statements describing telephone conversations with
the SEC or its staff with respect to the 14D-9 promptly after the receipt of
such comments or such conversations and to cooperate with Parent, Purchaser and
their counsel in responding to any such comments. The Company agrees to use its
reasonable best efforts to respond promptly to the SEC.
(c) The Company shall cause its transfer agent to promptly furnish
Purchaser with mailing labels containing the names and addresses of all record
holders of Shares and with security position listings of Shares held in stock
depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and beneficial owners of Shares and securities
convertible into Shares. The Company shall cause its transfer agent to furnish
Purchaser with such additional information (including updated listings and
computer files of stockholders, mailing labels and security position listings)
and such other assistance as Parent, Purchaser or their agents may reasonably
request in communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer or the Merger, Parent and Purchaser shall hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated in accordance with Section 8.01, will promptly
deliver to the Company the original and all copies of such information then in
their possession.
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ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Delaware Law, at the Effective
Time (as hereinafter defined), 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") and shall continue to be
governed by the laws of the State of Delaware.
SECTION 2.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (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 Merger shall
become effective upon such filing or at such time thereafter as is provided in
the Certificate of Merger as the Company and Parent shall agree (the "Effective
Time"). Prior to such filing, a closing shall be held at the offices of Sidley &
Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other place
as the parties shall agree, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VII.
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
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. (a) The Restated
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 as provided by applicable law and such
Certificate of Incorporation.
(b) The Bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
SECTION 2.05 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving
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Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified,
or until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
SECTION 2.06 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the Shares:
(a) Each Share and each Nonvoting Share issued and outstanding
immediately prior to the Effective Time (other than any Shares and Nonvoting
Shares to be canceled pursuant to Section 2.06(b) and Dissenting Shares (as
defined in Section 2.09)) shall be canceled and shall be converted automatically
into the right to receive from the Surviving Corporation an amount in cash equal
to the price paid in the Offer (the "Merger Consideration"), payable, without
interest, to the holder of such Share or Nonvoting Share, upon surrender, in the
manner provided in Section 2.08, of the certificate that formerly evidenced such
Share or such Nonvoting Share (the "Certificates");
(b) Each Share and each Nonvoting Share owned by Parent, Purchaser,
the Company or any direct or indirect wholly owned subsidiary of Parent or of
the Company (other than Shares in trust accounts, custodial accounts and the
like that are beneficially owned by third parties) immediately prior to the
Effective Time shall be canceled and retired without any conversion thereof, and
no payment or distribution shall be made with respect thereto; and
(c) Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one fully-paid and non-assessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
SECTION 2.07 Stock Options. (a) The Company shall take all actions
necessary and appropriate to cause all options to purchase any shares of capital
stock of the Company (in each case, an "Option") that are outstanding
immediately prior to the Effective Time, whether or not then exercisable, to
become fully exercisable immediately prior to the Effective Time. Prior to the
Effective Time, the Company shall make all reasonable efforts to cause each
Option outstanding at the Effective Time to be canceled at the Effective Time,
in consideration for which the holder thereof shall be entitled to receive an
amount equal to (i) the product of (x) the number of shares of capital stock of
the Company subject to such Option and (y) the excess, if any, of the Merger
Consideration over the exercise price per share for the purchase of the shares
of capital stock of the Company subject to such Option, minus (ii) all
applicable federal, state and local taxes required to be withheld in respect of
such Option. Parent shall pay or cause the Company to pay the amounts payable
pursuant to this Section 2.07(a) as soon as reasonably practicable following the
Effective Time with funds provided by Parent. The cancellation of each Option in
exchange for the consideration contemplated by this Section 2.07(a) shall be
deemed a release of any and all rights the holder of an Option had or may have
had in respect thereof.
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(b) The Company shall take all actions necessary and appropriate so
that all stock option or other equity-based plans maintained with respect to the
Shares, including the plans listed in Section 3.03 of the Disclosure Schedule
("Stock Option Plans"), shall terminate as of the Effective Time and the
provisions in any other Plan providing for the issuance, transfer or grant of
any capital stock of the Company or any interest in respect of any capital stock
of the Company shall be deleted as of the Effective Time, and the Company shall
take all actions necessary and appropriate to ensure that following the
Effective Time no holder of an Option or any participant in any Stock Option
Plan shall have any right thereunder to acquire any capital stock of the
Company, Parent, Purchaser or the Surviving Corporation.
(c) Prior to the Effective Time, the Company shall (i) use its
commercially reasonable efforts (but not including any payment to holders of
Options) to obtain all necessary consents from, and provide (in a form
acceptable to Parent) any required notices to, holders of Options, and (ii)
amend the terms of the applicable Stock Option Plan and any then outstanding
Options, in each case as is necessary to give effect to the provisions of
Sections 2.07(a) and (b).
SECTION 2.08 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Parent shall designate American Stock Transfer & Trust
Company or such other bank or trust company as shall be reasonably acceptable to
the Company to act as agent (the "Paying Agent") for the holders of Shares and
Nonvoting Shares in connection with the Merger to receive the funds to which
holders of Shares and Nonvoting Shares shall become entitled pursuant to Section
2.06(a), and Parent shall deposit with such Paying Agent an amount sufficient to
pay the aggregate Merger Consideration. The Paying Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration out of the amount so
deposited by Parent to holders of Shares entitled thereto. The amount deposited
by Parent with the Paying Agent shall not be used for any other purpose. Such
funds shall be invested by the Paying Agent as directed by the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America or of any agency thereof and backed
by the full faith and credit of the United States of America or in commercial
paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc.
or Standard & Poor's Ratings Group, respectively. Any and all amounts earned on
such funds shall be paid over to the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares or Nonvoting Shares entitled to receive the Merger
Consideration pursuant to Section 2.06(a) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal (or, if such Shares or
Nonvoting Shares are uncertificated, such other form of evidence of record
ownership as is required by the Paying Agent). Upon surrender to the Paying
Agent of a Certificate (or, with respect to uncertificated Shares or Nonvoting
Shares, such other evidence of record ownership as is required by the Paying
Agent), together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other
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documents as may be required pursuant to such instructions, the holder of such
Certificate (or uncertificated Share or Nonvoting Share, as the case may be)
shall be entitled to receive in exchange therefor the Merger Consideration
(subject to withholding of taxes, if applicable) for each Share and Nonvoting
Share formerly evidenced by such Certificate (or uncertificated Share and
Nonvoting Share, as the case may be), and such Certificate (or uncertificated
Share or Nonvoting Share, as the case may be) shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate (or uncertificated Share or Nonvoting Share, as the
case may be) for the benefit of the holder of such Certificate (or
uncertificated Share or Nonvoting Share, as the case may be). If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate (or uncertificated Share or Nonvoting Share, as
the case may be) 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, with respect to Certificates and uncertificated Shares and
Nonvoting Shares, otherwise be in proper form for transfer and that, with
respect to Certificates and uncertificated Shares and Nonvoting Shares, 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 either have been paid or are not
applicable.
(c) At any time following 90 days after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to holders of Shares or Nonvoting Shares (including all interest and
other income received by the Paying Agent in respect of all funds made available
to it) and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them (or, if such
Shares or Nonvoting Shares are uncertificated, such other form of evidence of
record ownership as is required by the Paying Agent), without any interest
thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor
the Paying Agent shall be liable to any holder of a Share or a Nonvoting Share
for any Merger Consideration delivered in respect of such Share or Nonvoting
Share to a public official pursuant to any abandoned property, escheat or other
similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares or Nonvoting Shares on the
records of the Company. From and after the Effective Time, the holders of Shares
and Nonvoting Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares and Nonvoting Shares except
as otherwise provided herein or by applicable law.
(e) If any Certificate shall have been lost, stolen or destroyed,
then, upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or
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destroyed and, if reasonably required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall pay in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration pursuant to this
Agreement.
SECTION 2.09 Dissenting Shares. Notwithstanding any other provision of
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and which are held by stockholders who shall have not voted
in favor of the Merger or consented thereto in writing and who properly shall
have demanded appraisal for such shares in accordance with Delaware Law
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration. Such stockholders instead shall
be entitled to receive payment of the appraised value of such Shares held by
them in accordance with the provisions of Delaware Law, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their rights to appraisal of
such Shares under Delaware Law shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.08, of the Certificate or Certificates (or,
if such Shares are uncertificated, such other form of evidence of record
ownership as is required by the Paying Agent) that, immediately prior to the
Effective Time, evidenced such Shares. The Company shall give Parent (i) prompt
notice of any written demands for appraisal of any Shares, attempted withdrawals
of such demands and any other instruments served pursuant to Delaware Law and
received by the Company relating to stockholders' rights of appraisal, and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Parent, voluntarily make any payment with respect to,
or settle or offer to settle, any such demand for payment.
SECTION 2.10 Withholding Taxes. Parent and Purchaser shall be entitled
to deduct and withhold, or cause the Paying Agent to deduct and withhold, from
the Merger Consideration payable to a holder of Shares or Nonvoting Shares
pursuant to the Merger any withholding and stock transfer Taxes and such amounts
as are required under the Internal Revenue Code of 1986, as amended (the
"Code"), or any applicable provision of state, local or foreign Tax law. To the
extent that amounts are so withheld by Parent or Purchaser, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares or Nonvoting Shares in respect of which such
deduction and withholding was made by Parent or Purchaser and Parent shall
provide, or cause the Paying Agent to provide, to the holders of such Shares and
Nonvoting Shares written notice of the amounts so deducted or withheld.
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SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
the foregoing, if Purchaser, or any other direct or indirect subsidiary of
Parent, shall acquire at least 90 percent of the outstanding Shares and at least
90 percent of the outstanding Nonvoting Shares, then the parties hereto agree to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after expiration of the Offer without a meeting
of shareholders of the Company, in accordance with Section 253 of the Delaware
Law.
SECTION 2.12 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Company or Purchaser, or (b) otherwise to carry out the purposes
of this Agreement, then the Surviving Corporation and its proper officers and
directors or their designees hereby are authorized to execute and deliver, in
the name and on behalf of either of the Company or Purchaser, all such deeds,
bills of sale, assignments and assurances and to do, in the name and on behalf
of either the Company or Purchaser, all such other acts and things as may be
necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of the Company or
Purchaser, respectively, and otherwise to carry out the purposes of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and Pamida, Inc., a Delaware corporation ("Pamida" and, together with
the other subsidiaries of the Company and Pamida, the "Subsidiaries" and each a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary, other than Pamida, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
except where the failure to be so organized, existing and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined below). Each of the Company and each Subsidiary (a) has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being conducted
and (b) is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where the failure to have such
power, authority or approvals or to be so qualified or licensed and in good
standing would not, individually or in the aggregate, have a
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Material Adverse Effect. When used in connection with the Company or any
Subsidiary, the term "Material Adverse Effect" means any effect that is or is
reasonably likely to be materially adverse to the business, results of
operations, financial condition, assets or liabilities (including contingent
liabilities), employee relationships or customer or supplier relationships of
the Company and the Subsidiaries taken as a whole; provided, that any such
effect that is the result of general industry or economic changes, is the result
of a "change of control" under the Loan Agreement that arises upon the
consummation of the Offer or is the result of a "change of control" or an event
of default pursuant to Section 6.1(a)(v) under the Notes (as defined below) that
arises upon the consummation of the Offer shall not constitute a Material
Adverse Effect. A true and complete list of all the Subsidiaries, together with
the jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary and the name of any person other than the Company or a Subsidiary
that owns capital stock of any Subsidiary, is set forth in Section 3.01 of the
Disclosure Schedule dated the date hereof, which has been delivered on the date
of this Agreement by the Company to Parent (the "Disclosure Schedule"). Except
as disclosed in such Section 3.01, the Company does not directly or indirectly
beneficially own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has
heretofore furnished or made available to Parent a complete and correct copy of
the Certificate of Incorporation and the Bylaws or equivalent organizational
documents, each as amended to date (the "Constituent Documents"), of the Company
and each Subsidiary. The Constituent Documents of the Company and the
Subsidiaries are in full force and effect. Neither the Company nor any
Subsidiary is in violation of any provision of its Constituent Documents. The
Constituent Documents of the Subsidiaries of the Company do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such Subsidiaries.
SECTION 3.03 Capitalization. (a) The authorized capital stock of the
Company consists of:
(i) 25,000,000 Shares;
(ii) 4,000,000 Nonvoting Shares;
(iii) 514 shares of 16.25% Senior Cumulative Preferred Stock, par
value $1.00 per share, of the Company ("Senior Preferred
Shares"); and
(iv) 1,627 shares of 14.25% Junior Cumulative Preferred Stock, par
value $1.00 per share, of the Company ("Junior Preferred
Shares").
(b) As of the date hereof:
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(i) 6,026,495 Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable;
(ii) 3,050,473 Nonvoting Shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable and
owned of record by 399 Venture Partners, Inc.;
(iii) no Shares are held in the Company's treasury;
(iv) no Nonvoting Shares are held in the Company's treasury;
(v) no Senior Preferred Shares or Junior Preferred Shares are
issued and outstanding or held in the Company's treasury;
(vi) no Shares or Nonvoting Shares are held by the Subsidiaries;
(vii) 179,997 Shares are reserved for issuance pursuant to
outstanding grants or awards under the Stock Option Plans that
are vested and exercisable;
(viii) 265,280 Shares are reserved for issuance pursuant to
outstanding grants or awards under the Stock Option Plans that
are not vested and exercisable; and
(ix) 3,050,473 Shares are reserved for issuance upon conversion of
the Nonvoting Shares.
Except as set forth in this Section 3.03 or in Section 3.03 of the Disclosure
Schedule, as of the date of this Agreement: (i) no shares of capital stock or
other voting securities of the Company are issued, reserved for issuance or
outstanding; (ii) there are no stock appreciation rights, phantom stock units,
restricted stock grants, contingent stock grants or Plans which grant awards of
any of the foregoing, and there are no other outstanding contractual rights to
which the Company is a party the value of which is based on the value of Shares;
and (iii) all outstanding Shares which may be issued upon grants or awards under
the Stock Option Plans or upon conversion of the Nonvoting Shares will be, when
so issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights.
(c) Section 3.03 of the Disclosure Schedule sets forth a list, as of
the date hereof, of the names of each person holding options under the Stock
Option Plans, and the number of shares purchasable under such options, the
exercise price of such options, the date such options were granted and the date
on which such options expire. Following the Effective Time, no holder of Options
will have any right to receive shares of common stock of the Surviving
Corporation upon the exercise of Options.
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(d) Each outstanding share of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable, and, except as
set forth in Section 3.03 of the Disclosure Schedule, each such share owned by
the Company or another Subsidiary is owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever.
(e) Except as set forth in this Section 3.03 or Section 3.03 of the
Disclosure Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of capital stock of, or other equity interests
in, the Company or any Subsidiary or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Subsidiary or
any other person.
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated by this Agreement, including all actions required to be taken by
the Company hereunder in connection with the Merger and the Offer. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated by this Agreement (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding Shares and the
filing of the Certificate of Merger). The affirmative vote of the holders of
Nonvoting Shares is not required for the approval and adoption of this
Agreement. The Company has elected, pursuant to Article Eleventh of its Restated
Certificate of Incorporation, not to be governed by Section 203 of the Delaware
Law; accordingly, none of the Offer, the Merger or the other transactions
contemplated by this Agreement are subject to such Section 203. This Agreement
and has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) the remedy of specific performance and injunctive relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 3.05 No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 3.05 of the Disclosure Schedule, assuming the Merger is
duly approved by the holders of a majority of the outstanding Shares, the
execution, delivery and performance of this
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Agreement by the Company does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof by the
Company will not, (i) conflict with or violate the Constituent Documents of the
Company or any Subsidiary, (ii) assuming that the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
3.05 of the Disclosure Schedule are duly and timely obtained or made, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) conflict with, result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the loss
of a material benefit under, or result in the creation of a lien or other
encumbrance of any nature on any property or asset of the Company or any
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound or
affected, except, in cases of (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or registration, declaration or
filing with, or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and state
takeover laws, the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), and filing of the Certificate of Merger
pursuant to Delaware Law, and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Offer or the Merger, or otherwise
prevent the Company from performing its obligations under this Agreement, and
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the
Disclosure Schedule, neither the Company nor any Subsidiary is in default or
violation of (i) any law, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or subject, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any property or asset of the Company or
any Subsidiary is bound or affected, except for any such defaults or violations
that would not, individually or in the aggregate, (x) have a Material Adverse
Effect, or (y) prevent or delay consummation of the Offer or the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement.
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SECTION 3.07 SEC Filings; Financial Statements. (a) Each of the
Company and Pamida has filed all forms, reports and documents required to be
filed by it with the SEC since December 31, 1996, and the Company has heretofore
delivered or made available to Parent, in the form filed with the SEC, (i) the
Company's and Pamida's Annual Reports on Form 10-K for the fiscal years ended
February 2, 1997, February 1, 1998 and January 31, 1999, (ii) all proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) held since December 31, 1996, and (iii) all other forms, reports and
other registration statements (other than Quarterly Reports on Form 10-Q with
respect to fiscal quarters ending prior to February 1, 1999 and Registration
Statements on Form S-8) filed by the Company or Pamida with the SEC since
December 31, 1995 (the forms, reports and other documents referred to in clauses
(i), (ii) and (iii) above being referred to herein, collectively, as the "SEC
Reports"). The SEC Reports (i) were prepared in accordance with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder and, at the time they were filed (or at the effective date thereof
with respect to registration statements under the Securities Act), complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder applicable to such SEC Reports, and (ii) did not, at the time they
were filed (or at the effective date thereof with respect to registration
statements under the Securities Act), 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 the light of the circumstances
under which they were made, not misleading. No Subsidiary other than Pamida is
required to file any form, report or other document with the SEC.
(b) The financial statements of the Company and Pamida, as
applicable, included in the SEC Reports as of the dates of such SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") in the United States applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
consolidated Subsidiaries and Pamida and its consolidated subsidiaries,
respectively, as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at January 31, 1999
including the notes thereto, in Section 3.07 of the Disclosure Schedule or in
any SEC Report filed by the Company or Pamida after January 31, 1999, neither
the Company nor any Subsidiary has any material liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except for (i) liabilities and obligations incurred in
the ordinary course of business consistent with past practice since January 31,
1999 and (ii) liabilities incurred in connection with or by reason of the
transactions contemplated by this Agreement.
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(d) The Company has heretofore furnished or made available to Parent
complete and correct copies of all amendments and modifications (if any) that
have not been filed by the Company or Pamida with the SEC to all agreements,
documents and other instruments that previously had been filed by the Company or
Pamida with the SEC and are currently in effect.
SECTION 3.08 Absence of Certain Changes or Events. Since January 31,
1999, except as set forth in Section 3.08 of the Disclosure Schedule or as
contemplated by this Agreement or disclosed in any SEC Report filed since
January 31, 1999 and prior to the date of this Agreement, the Company and the
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and there has not been (i) any Material
Adverse Effect on the Company, (ii) any material change by the Company in its
accounting methods, principles or practices, (iii) any declaration, setting
aside or payment of any dividend or other distribution with respect to the
Company's capital stock or any redemption, purchase or other acquisition of any
of its securities, (iv) any material increase in or establishment of any
material bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other material
increase in the compensation payable or to become payable to any officers or key
employees of the Company or any Subsidiary, except in the ordinary course of
business consistent with past practice, or (v) any preparation or filing of any
Tax Return (as defined below) materially inconsistent with past practice or, on
any such Tax Return, the taking of any position, making of any election, or
adopting of any method that is inconsistent with positions taken, elections made
or methods used in preparing or filing similar Tax Returns in prior periods.
SECTION 3.09 Absence of Litigation. Except as set forth in Section
3.09 of the Disclosure Schedule or in the SEC Reports filed prior to the date
hereof, (a) there is no claim, suit, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary, or any property or asset of the Company or any Subsidiary, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect and (b) neither the Company
nor any Subsidiary nor any property or asset of the Company or any Subsidiary is
subject to any order, writ, judgment, injunction, decree, determination or award
having, individually or in the aggregate, a Material Adverse Effect. As of the
date hereof there is no claim, suit, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary, or any property or asset of the Company or any Subsidiary, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, which seeks to, or is reasonably likely to, prevent
or delay the consummation of the Offer or the Merger or otherwise prevent the
Company from performing its obligations under this Agreement.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10(a) of the
Disclosure Schedule contains a true and complete list of all employee benefit
plans (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"))
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and all other material employee benefit arrangements or payroll practices,
including bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement or severance plans, programs or policies, and all employment,
termination or severance contracts to which the Company or any Subsidiary is a
party, with respect to which the Company or any Subsidiary has any material
obligation or which are maintained, contributed to or sponsored by the Company
or any Subsidiary for the benefit of any current or former employee, officer or
director of the Company or any Subsidiary (collectively, the "Plans"). Except as
set forth in Section 3.10(a) of the Disclosure Schedule, neither the Company,
nor any Subsidiary nor any trade or business (whether or not incorporated) which
is or has ever been under common control, or which is or has ever been treated
as a single employer, with the Company or any Subsidiary under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate") has within the last six years
contributed or been obligated to contribute to an "employee pension plan", as
defined in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of
the Code, or a multiemployer plan, as defined in Section 3(37) of ERISA
("Multiemployer Plan"). The Company has previously furnished or made available
to Parent a true and complete copy of each Plan (and all amendments thereto) and
a true and complete copy of each material document prepared in connection with
each Plan, including to the extent applicable (i) a copy of each trust or other
funding arrangement (and all amendments thereto), (ii) each summary plan
description and summary of material modifications, (iii) the three most recently
filed Internal Revenue Service ("IRS") Forms 5500 and all schedules and
attachments thereto, (iv) the most recently received IRS determination letter
for each such Plan, and (v) the most recently prepared actuarial valuation
report and financial statement in connection with each such Plan.
(b) Except as set forth in Section 3.10(b) of the Disclosure
Schedule, any Plan intended to qualify under Section 401 of the Code is the
subject of a favorable IRS determination letter, and nothing has occurred with
respect to the operation of any such Plan which is reasonably likely to cause
the loss of such qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code which liability, penalty or tax would
have a Material Adverse Effect, individually or in the aggregate.
(c) Except as set forth in Section 3.10(c) of the Disclosure
Schedule, (i) the Plans have been maintained in accordance with their terms and
in material compliance with all provisions of ERISA and the Code (including
rules and regulations thereunder) and other applicable federal and state laws
and regulations; (ii) neither the Company nor any Subsidiary nor, to the
Company's knowledge, any "party in interest" or "disqualified person" with
respect to the Plans has engaged in a non-exempt "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA; (iii) to the
Company's knowledge, no fiduciary has any liability for breach of fiduciary duty
or any other failure to act or comply in connection with the administration or
investment of the assets of any Plan; (iv) there are no pending actions, claims
or lawsuits which have been asserted or instituted against the Plans, the assets
of any of the trusts under such plans or the plan sponsor or the plan
administrator, or, to the Company's knowledge, against any fiduciary of the
Plans with respect to the operation of such plans (other than routine
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benefit claims), nor does the Company or any Subsidiary have knowledge of facts
which could reasonably be expected to form the basis for any such claim or
lawsuit which, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect; and (v) all amendments and actions required to bring
the Plans into conformity in all material respects with all of the applicable
provisions of the Code, ERISA and other applicable laws have been made or taken
except to the extent that such amendments or actions are not required by law to
be made or taken until a date after the Effective Time.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Plans or by law (without regard to any waivers granted under Section 412 of
the Code) to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extension), except where the failure to make such contributions by such date
would not, individually or in the aggregate, have a Material Adverse Effect, and
all contributions for any period ending on or before the Effective Time which
are not yet due will have been paid or accrued on the Company's financial
statements filed with the SEC Reports on or prior to the Effective Time.
(e) Except as set forth in Section 3.10(e) of the Disclosure
Schedule, none of the Plans provide for post-employment life or health insurance
benefits or coverage for any participant or any beneficiary of a participant,
except as may be required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA") and at the expense of the participant or the
participant's beneficiary. Each of the Company, any Subsidiary and any ERISA
Affiliate which maintains a "group health plan" within the meaning of Section
5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
(f) Except as set forth in Section 3.10(f) of the Disclosure
Schedule, no stock or other security issued by the Company or any Subsidiary
forms or has formed a material part of the assets of any Plan.
(g) Except as set forth in Section 3.10(g) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, on account
of any plan, agreement or arrangement in effect prior to the Effective Time (i)
result in any payment of severance, unemployment compensation or any other
payment becoming due to any director or any employee of the Company or any of
the Subsidiaries under any Plan or otherwise from the Company or any of the
Subsidiaries, (ii) increase any benefits otherwise payable under any Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
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(h) Except as disclosed in Section 3.10(h) of the Disclosure
Schedule, the Company and the Subsidiaries do not have any unfunded liabilities
under pension, retirement or other employee benefit plans, programs or
arrangements maintained outside the United States by the Company or any of the
Subsidiaries for the employees thereof.
SECTION 3.11 Labor Matters. None of the employees of the Company or
any Subsidiary the ("Employees") is represented in his or her capacity as an
employee of the Company or any Subsidiary by any labor organization, and neither
the Company nor any Subsidiary has entered into any collective bargaining
agreement or union contract recognizing any labor organization as the bargaining
agent of any Employees. To the knowledge of the Company, there is no union
organization activity involving any of the Employees, pending or threatened.
Since December 31, 1995, or except as set forth in Section 3.11 of the
Disclosure Schedule, there has never been union representation involving any of
the Employees and there are no picketing, strikes, slowdowns, work stoppages,
other job actions, lockouts, arbitrations, grievances or other labor disputes
involving any of the Employees, pending or threatened. Except as disclosed in
Section 3.11 of the Disclosure Schedule, there are no material complaints,
charges or claims against the Company or any Subsidiary pending or, to any of
their knowledge, threatened which could be brought or filed with any public or
governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment or failure to employ by the Company or any Subsidiary of any
individual. Except as set forth in Section 3.11 of the Disclosure Schedule, the
Company and the Subsidiaries are in material compliance with all laws,
regulations and orders relating to the employment of labor, including all such
laws, regulations and orders relating to wages, hours, the Worker Adjustment and
Retraining Notification Act and any similar state or local "mass layoff" or
"plant closing" law ("WARN"), collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and payment
of withholding and/or social security taxes. There has been no "mass layoff" or
"plant closing" as defined by WARN with respect to the Company and any
Subsidiary within the six months prior to the Effective Time.
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement. None of
the Schedule 14D-9, the information supplied by the Company specifically for
inclusion in the Offer Documents or the information to be filed by the Company
in connection with the Offer pursuant to Rule 14f-1 promulgated under the
Exchange Act (the "Information Statement") shall, at the respective times the
Schedule 14D-9, the Offer Documents, the Information Statement or any amendments
or supplements thereto are filed with the SEC or are first published, sent or
given to stockholders of the Company, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading. The proxy
statement to be sent to the stockholders of the Company in connection with the
Special Stockholders' Meeting (as defined in Section 6.01) (such proxy
statement, as amended or supplemented, being referred to herein as the "Proxy
Statement") shall not, at the date the Proxy Statement is first mailed to
stockholders of the Company or at the time of the Special Stockholders' Meeting
and the Effective Time, and, with respect to the Information
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Statement at the time Shares are accepted for payment in the Offer, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading or, with respect to the Proxy Statement, necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Special Stockholders' Meeting which shall have become false or
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent, Purchaser or any
of their representatives which is contained in any of the foregoing documents or
the Offer Documents. The Schedule 14D-9, the Information Statement and the Proxy
Statement shall comply in all material respects as to form with the requirements
of the Exchange Act.
SECTION 3.13 Real Properties. (a) The Company or the Subsidiaries own
(i) fee simple title to each of the real properties identified in Section
3.13(a) of the Disclosure Schedule (the "Fee Properties") and (ii) a leasehold
estate that is created under the real property leases (including all amendments,
supplements and modifications thereto) identified in Section 3.13(c) of the
Disclosure Schedule (the "Real Property Leases") and all of the buildings,
structures and other improvements located thereon, if so indicated, which are
all of the real estate properties owned, leased, used or occupied by them
(collectively, the "Company Properties").
(b) Except as set forth in Section 3.13(b) of the Disclosure
Schedule, no other Person has any ownership interest in any of the Fee
Properties and/or Real Property Leases, and there are no encumbrances,
easements, liens, rights, mortgages or deeds of trust, options, leases,
subleases, licenses, claims against title, charges which are liens, security
interests or other encumbrances on title ("Encumbrances") which, with respect to
each Company Property, would materially interfere with or prohibit the present
use thereof. To the knowledge of the Company, none of the Company Properties are
located within a flood plain, any designated wetlands or similar areas. To the
knowledge of the Company, none of the buildings, structures or other
improvements (including parking lots and roadways) comprising the Company
Properties encroach on any public or private lands or easements and rights-of-
way or violate any building lines or setback requirements.
(c) Section 3.13(c) of the Disclosure Schedule sets forth a true,
accurate and complete list of all of the Real Property Leases and the parties
thereto, annual rental, expiration date, renewal options and location of the
Company Properties governed by such Real Property Leases. True, accurate and
complete copies of the Real Property Leases (including all riders, schedules and
exhibits thereto and amendments thereof), together with the Company's complete
file pertaining to each of such Real Property Leases, have been made available
to Parent. Each of the Real Property Leases is valid, binding, enforceable and
in full force and effect and has not been modified or supplemented orally except
as disclosed in Section 3.13(c) of the Disclosure Schedule. Except as set forth
in Schedule 3.13(c) of the Disclosure Schedule, there exists no default under
any Real Property Lease by the Company or any Subsidiary, nor any event which
with notice or lapse of time or both would constitute a default thereunder by
the Company, any
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Subsidiary or any landlord thereunder except as would not materially and
adversely affect the use of the property by the Company or the Subsidiary, as
the case may be.
(d) Except as provided in Section 3.13(d) of the Disclosure Schedule,
to the knowledge of Company (i) no condemnation or rezoning proceedings are
pending or threatened with respect to any of the Company Properties and (ii) no
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated by the continued maintenance, operation or use of any buildings or
other improvements on any of the Company Properties in the manner such Company
Properties, buildings and improvements are currently maintained, operated and
used or by the continued maintenance, operation or use of the parking areas
except for violations, with respect to each Company Property, which would not
materially interfere with or prohibit the present use of such Company Property.
The Company Properties are not subject to any rights of way, written agreements,
laws, ordinances and regulations affecting building use or occupancy, or
reservations of an interest in title (collectively "Property Restrictions") or
Encumbrances, except for (i) Property Restrictions and Encumbrances set forth in
Section 3.13(d) of the Disclosure Schedule and (ii) Property Restrictions
imposed or promulgated by law or any governmental body or authority with respect
to real property, including zoning regulations, which do not materially
adversely affect the current use of any Company Property and which permit the
use of the Company Properties for their current uses and would permit the
operation of a retail pharmacy thereon.
(e) Except as provided in Section 3.13(e) of the Disclosure Schedule,
the Company has no knowledge (i) that any certificate, permit or license from
any governmental authority having jurisdiction over any of the Company
Properties or any agreement, easement or other right which is necessary to
permit the lawful use and operation of the buildings and improvements on any of
the Company Properties in the manner such Company Properties, buildings and
improvements are currently maintained, operated and used has not been obtained
and is not in full force and effect, or of any pending threat of modification or
cancellation of any of same which would have a material adverse effect on such
Company Property, (ii) of any written notice of any violation of any federal,
state or municipal law, ordinance, order, regulation or requirement materially
and adversely affecting any of the Company Properties issued by any governmental
authority, (iii) of any material defects relating to any Company Property which,
if known to a potential buyer, would have a material adverse effect on the
market value of such Company Property, (iv) of any Company Property whose
building systems are not in working order so as to have a material adverse
effect on such Company Property, or (v) of any physical damage to any Company
Property which would have a material adverse effect on such Company Property for
which there is no insurance in effect covering the cost of the restoration. To
the knowledge of the Company, all public utilities, including water, sewer, gas,
electric, telephone and drainage facilities, give adequate service to each of
the Company Properties to support the current use and operations thereon and all
such utilities are located either within the boundaries of the Company
Properties, lands dedicated to public use or within a recorded perpetual
easement for such purpose. To the knowledge of the Company, each of the Company
Properties has direct legal vehicular access to and from publicly dedicated
streets.
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(f) Except as set forth in Section 3.13(f) of the Disclosure
Schedule, neither the execution, delivery and performance by the Company or the
Subsidiaries of this Agreement or any other agreements executed by the Company
or the Subsidiaries in connection with the transactions contemplated by this
Agreement nor the consummation of such transactions will (i) violate, conflict
with, result in a breach of, result in a default under or noncompliance with,
create rights of acceleration, termination or cancellation, or cause any
forfeiture or impairment of any rights under, the Real Property Leases or under
any agreement relating to the Real Property Leases or any of the Company
Properties or (ii) require the consent, approval or act of, or the making of any
filing with, any Person under the Real Property Leases or any agreement relating
to the Real Property Leases or any of the Company Properties. Except as set
forth in Section 3.13(f) of the Disclosure Schedule, none of the Company
Properties is subject to any restriction on the sale, disposition, transfer,
change in control or financing thereof or release of financing thereon.
SECTION 3.14 Personal Property. (a) The Company and the Subsidiaries
have good and marketable title to, or valid leasehold interests in, all their
personal properties and assets reasonably required to conduct their respective
businesses as currently conducted or as contemplated to be conducted, except as
set forth in Section 3.14(a) of the Disclosure Schedule and except where the
failure to have such title or leasehold interest would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) Section 3.14(b) of the Disclosure Schedule lists all personal
property leases (including all amendments and modifications thereto) pursuant to
which the Company or any of the Subsidiaries leases personal property, the lease
payments for which are more than $100,000 annually, true, correct and complete
copies of which have previously been delivered or made available to Parent. All
leases of personal property leased for the use or benefit of the Company or any
Subsidiary to which the Company or any Subsidiary is a party and all amendments
and modifications thereto are in full force and effect and have not been
modified or amended, and there exists no default under any such lease by the
Company or any Subsidiary, nor any event which with notice or lapse of time or
both would constitute a default thereunder by the Company or any Subsidiary,
except as would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.15 Trademarks, Patents and Copyrights. Except as set forth
in Section 3.15(a) of the Disclosure Schedule, the Company and the Subsidiaries
own all right, title and interest (free and clear of any liens or encumbrances)
to, or possess valid licenses (including the right to use, license, sublicense,
sell, manufacture, have made, transfer or distribute) as necessary under, the
material Patent Rights, Trademarks, Copyrights, Trade Secrets, Software and
other proprietary rights and information used or held for use in connection with
the business of the Company and the Subsidiaries as currently conducted, and
there are no assertions or claims, or threatened assertions or claims,
challenging the validity of, or the Company's or the Subsidiaries' right to use,
any of the foregoing which, individually or in the aggregate, would have a
Material Adverse Effect. Section 3.15(b) of the Disclosure Schedule lists all
the material
-23-
Intellectual Property owned or used by the Company or any Subsidiary and
specifies the number and date of each applicable registration, or application to
register, and identifies any licensees, assignees or users, other than the
Company, of any of such Intellectual Property. Section 3.15(c) of the Disclosure
Schedule lists each agreement pursuant to which any material Patent Rights,
Trademarks, Copyrights, Trade Secrets or Software is licensed to the Company or
any Subsidiary as licensee for use in the business of the Company and the
Subsidiaries as currently conducted. To the knowledge of the Company, the
conduct of the business of the Company and the Subsidiaries as currently
conducted does not conflict with, infringe upon, or violate, in any way any
Patent Rights, license, Trademarks, Trade Secrets, Copyright, Software or any
other intellectual property right of any third party except for conflicts that,
individually or in the aggregate, would not have a Material Adverse Effect.
SECTION 3.16 Taxes. Except as set forth in Section 3.16 of the
Disclosure Schedule:
(a) The Company and the Subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) or combined or unitary group of
which the Company or any Subsidiary is a member, has timely filed all material
Tax Returns required to be filed by them and paid all Taxes shown to be due on
such Tax Returns. All such Tax Returns are true, correct and complete in all
material respects. The Company and the Subsidiaries have given or otherwise made
available to the Purchaser or Parent all federal and state income tax returns
for periods ending, or transactions consummated, on or after December 31, 1995;
provided, however, that with respect to certain returns for the fiscal year
ended January 31, 1999, the Company provided the most current drafts, if any.
Except to the extent adequately reserved for in accordance with GAAP, all
material Taxes due and payable by the Company and the Subsidiaries have been
timely paid. Since January 31, 1999, neither the Company nor the Subsidiaries
have incurred any liability for Taxes other than in the ordinary course of
business for which adequate reserves have been or will be established on
subsequent unaudited financial statements.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of the Subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and the Subsidiaries, and no issue has been raised in
any examination which, by application of similar principles, could be expected
to result in the proposal or assertion of a material Tax deficiency for any
other year not so examined, except to the extent adequate reserves have been
established therefor. No waivers or comparable consents of the time to assess
any Taxes are outstanding, and no power of attorney granted by the Company or
any Subsidiary with respect to any Taxes is currently in force. No material
issues relating to Taxes have been raised in writing by any governmental
authority during any presently pending audit or examination.
(c) There are no liens or encumbrances for Taxes on any of the assets
of the Company or the Subsidiaries (other than for current taxes not yet due and
payable).
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(d) To the knowledge of the Company, the Company and the Subsidiaries
have complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes.
(e) None of the Company or the Subsidiaries has filed a consent under
Section 341(f) of the Code.
(f) No payment or other benefit, and no acceleration of the vesting
of any options, payments or other benefits, will be, as a direct or indirect
result of the transactions contemplated by this Agreement, an "excess parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the regulations thereunder, and none of the Company or the
Subsidiaries is a party to any agreement that could obligate it to make any
payments that would not be deductible by reason of Section 280G or Section
162(m) of the Code.
(g) Neither the Company nor, since the date of its acquisition by the
Company, any Subsidiary is a party to any tax allocation or tax sharing
agreement or any closing agreement or similar agreement relating to Taxes with
any taxing authority.
(h) To the knowledge of the Company, no federal, state, local or
foreign audits or other administrative proceedings or court proceedings are
presently pending with regard to any federal, state, local or foreign Taxes or
Tax Returns of the Company or any of the Subsidiaries, and neither the Company
nor any of the Subsidiaries has received a written notice of any pending or
threatened audit or proceeding.
(i) To the knowledge of the Company, the Company has not been (and
will not be) a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the 5-year period ending on the
consummation of the Offer.
(j) Neither the Company nor the Subsidiaries have ever been a member
of any affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company), and the Company and
the Subsidiaries have no liability for Taxes of any other person under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state, local or foreign law)
other than as a member of a group the common parent of which was the Company.
SECTION 3.17 Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "Hazardous
Substances" means any substance, material or waste which is regulated,
classified or otherwise characterized as hazardous, toxic, a pollutant,
contaminant or words of similar meaning or effect by any governmental authority
of the United States, including petroleum or petroleum products, asbestos, urea
formaldehyde and polychlorinated biphenyls; (ii) "Environmental Law" means any
applicable federal, state, local, or foreign law (including common law),
statute, code, ordinance, rule, regulation or other requirement relating to the
protection of the environment, natural
-25-
resources, or public or employee health and safety and includes the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 33 U.S.C.
ss. 2601 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.,
the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et
seq., the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., as such laws have
been amended or supplemented, and the regulations promulgated pursuant thereto,
and all analogous state or local statutes.
(b) Except as described in the SEC Reports filed prior to the date
hereof or Section 3.17 of the Disclosure Schedule or as, individually or in the
aggregate, would not have a Material Adverse Effect: (i) to the knowledge of the
Company, the Company and each Subsidiary is in material compliance with all
applicable Environmental Laws; (ii) no judicial or administrative proceedings
are pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary alleging the violation of or seeking to impose liability
pursuant to any Environmental Law and, there are no investigations pending or,
to the knowledge of Company, threatened against the Company or any Subsidiary or
any real property owned, operated or leased by or for the Company or any
Subsidiary, which in any case could reasonably be expected to give rise to
liabilities under Environmental Laws; (iii) to the knowledge of the Company
there are no facts, circumstances or conditions relating to, arising from or
attributable to the Company or any Subsidiary or any real property currently or
formerly owned, operated or leased by or for the Company or the Subsidiary
(including the Company Properties) that are reasonably likely to result in the
Company or any Subsidiary incurring material liabilities under Environmental
Laws; and (iv) the Company has provided Parent with or made available to Parent
copies of all environmentally related audits, assessments, studies, reports,
analyses, and results of investigations of the any real property currently or
formerly owned, operated or leased by the Company or any of the Subsidiaries
(including the Company Properties) that are in the possession, custody or
control of the Company. Except as described in Section 3.17 of the Disclosure
Schedule, to the knowledge of the Company there are no underground storage tanks
under the control of the Company or the Subsidiaries or any friable asbestos-
containing materials at any real property owned, operated or leased by or for
the Company or the Subsidiaries (including the Company Properties), the presence
of which are reasonably likely to result in the Company or the Subsidiaries
incurring material liabilities under Environmental Laws.
SECTION 3.18 Contracts. (a) Except as set forth in the SEC Reports
filed prior to the date of this Agreement or Section 3.18 of the Disclosure
Schedule, neither the Company nor any of the Subsidiaries is a party to or bound
by any (i) "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the SEC), (ii) non-competition agreement or any
other agreement or obligation which purports to limit in any respect the manner
in which, or the localities in which, all or any material portion of the
business of the Company and the Subsidiaries, taken as a whole, may be
conducted, (iii) transaction, agreement, arrangement or understanding with any
affiliate of the Company or such Subsidiary that would be required to be
-26-
disclosed under Item 404 of Regulation S-K promulgated by the SEC, (iv) voting
or other agreement governing how any Shares shall be voted, (v) acquisition,
merger, asset purchase or sale agreement, (vi) agreement which provides for, or
relates to, the incurrence by the Company or any Subsidiary of indebtedness for
borrowed money (including any interest rate or foreign currency swap, cap,
collar, hedge or insurance agreements, or options or forwards on such
agreements, or other similar agreements for the purpose of managing the interest
rate or foreign exchange risk associated with its financing), or (vii) contract
or other agreement which would prohibit or materially delay the consummation of
the Merger or any of the transactions contemplated by this Agreement (all
contracts of the type described in clauses (i) through (vii) being referred to
herein as "Material Contracts"). Each Material Contract is valid and binding on
the Company (or, to the extent a Subsidiary of the Company is a party, such
Subsidiary) and is in full force and effect, and the Company and each Subsidiary
have performed all obligations required to be performed by them to date under
each Material Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. Except as
set forth in Section 3.18 of the Disclosure Schedule, neither the Company nor
any Subsidiary of the Company is in default or knows of, or has received notice
of, any violation or default under (nor, to the knowledge of the Company, does
there exist any condition which with the passage of time or the giving of notice
or both would result in such a violation or default under) any Material
Contract, except any such default or violation that, individually or in the
aggregate, would not have a Material Adverse Effect.
(b) Except as disclosed in the SEC Reports filed prior to the date of
this Agreement or in Section 3.18 of the Disclosure Schedule or as provided for
in this Agreement, neither the Company nor any of the Subsidiaries is a party to
any oral or written (i) employment, severance, retention or termination
agreements or consulting agreements not terminable on 30 days' or less notice,
(ii) union or collective bargaining agreement, (iii) agreement with any
executive officer or other key employee of the Company or any of the
Subsidiaries the benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any of the Subsidiaries of the nature contemplated by this Agreement,
(iv) agreement with respect to any executive officer or other key employee of
the Company or any of the Subsidiaries providing any term of employment or
compensation guarantee or (v) agreement or plan, including any stock option,
stock appreciation right, restricted stock or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.19 Insurance; Workers' Compensation. (a) Section 3.19 of the
Disclosure Schedule sets forth a list of each currently effective material
insurance policy issued in favor of the Company and each Subsidiary, the
identity of the respective insurance carriers and a description of the policy
type. All premiums due and payable in respect of such policies have been paid,
and such policies are in full force and effect and free from any right granted
by the Company or a Subsidiary of termination on the part of the insurance
carriers, except as provided in the
-27-
respective policies, except for any failure to be in full force and effect or
free from such rights that would not, individually or in the aggregate, have a
Material Adverse Effect. The Company has provided or made available to Parent
information requested by Parent with respect to the workers' compensation
experience as of January 31, 1999 of the Company and each Subsidiary since
December 31, 1995.
(b) Neither the Company nor any Subsidiary has received any notice of
cancellation with respect to any of its insurance policies, and, since December
31, 1995, neither the Company nor any Subsidiary has been refused any insurance
coverage sought or applied for, in each case where such cancellation or refusal,
individually or in the aggregate, would have a Material Adverse Effect.
SECTION 3.20 Certain Payments; Absence of Certain Business Practices.
No director, officer, employee or agent of the Company or any Subsidiary, nor
any other person acting on behalf of Company or any Subsidiary, has made or
caused to be made any payments to government officials in violation of the laws
of the United States or any other jurisdiction; and, as of the date hereof, no
federal, state, local or foreign government agency or entity has notified the
Company or any Subsidiary of any pending or threatened investigation of any
payment made by or on behalf of the Company or any Subsidiary of, or alleged to
be of, the type described in the immediately preceding sentence, except for any
such payments or investigations that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.21 Licenses and Permits. The Company and each Subsidiary
have obtained all governmental licenses and permits necessary to conduct their
respective businesses in accordance with past practice, except for failures
that, individually or in the aggregate, would not have a Material Adverse
Effect, and there are no appeals nor any other actions pending to revoke any
such licenses or permits. To the knowledge of the Company, such licenses and
permits are valid and in full force and effect, and no such licenses or permits
will be terminated or materially impaired or become terminable as a result of
the transactions contemplated by this Agreement, except for those that,
individually or in the aggregate, would not have a Material Adverse Effect.
SECTION 3.22 Letters of Credit, Surety Bonds, Guarantees. Section 3.22
of the Disclosure Schedule and attachment 3.13(b)(A) to the Disclosure Schedule
list, as of the date hereof, all standby letters of credit, performance or
payment bonds, guaranty arrangements and surety bonds of any nature involving
amounts in excess of $25,000 relating to the Company or any Subsidiary.
SECTION 3.23 Brokers. No broker, finder or investment banker (other
than Xxxxxxx Xxxx & Company, L.L.C.) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Xxxxxxx Rice &
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Company, L.L.C. pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated by this Agreement.
SECTION 3.24 Opinion of Financial Advisor. The Company has received
the opinion of Xxxxxxx Xxxx & Company, L.L.C. to the effect that, as of the date
of this Agreement, the consideration to be received in the Offer and the Merger
by the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be, delivered to Parent. The
Company has been authorized by Xxxxxxx Rice & Company, L.L.C. to permit the
inclusion of such opinion in its entirety in the Offer Documents and the
Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form and
substance reasonably satisfactory to Xxxxxxx Xxxx & Company, L.L.C. and its
counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the Company that:
SECTION 4.01 Corporate Organization. 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 and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business, operations,
financial condition, assets or liabilities (including contingent liabilities),
employee relationships or customer or supplier relationships of Parent and its
subsidiaries, taken as a whole.
SECTION 4.02 Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and the Stockholder Agreements, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the Stockholder
Agreements by Parent and Purchaser and the consummation by Parent and Purchaser
of the transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize this Agreement or
the Stockholder Agreements or to consummate the transactions contemplated by
this Agreement (other than with respect to the Merger, the filing of the
Certificate of Merger). Each of this Agreement and the Stockholder Agreements
has been duly and validly executed and delivered by Parent and Purchaser and,
assuming the due authorization, execution and delivery by the other parties
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thereto, constitutes a legal, valid and binding obligation of each of Parent and
Purchaser enforceable against each of Parent and Purchaser in accordance with
its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement and the Stockholder
Agreements by Parent and Purchaser do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement by Parent and Purchaser will not, (i) conflict with or violate
the Articles or Certificate of Incorporation or Bylaws of either Parent or
Purchaser, (ii) assuming that required filings under the HSR Act are made by the
appropriate parties, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) conflict with, result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except, in cases of (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a material
adverse effect on the business, operations, financial condition, assets or
liabilities (including contingent liabilities) of Parent and its subsidiaries,
taken as a whole.
(b) The execution and delivery of each of this Agreement and the
Stockholder Agreements by Parent and Purchaser do not, and the performance of
this Agreement by Parent and Purchaser will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act, and the filing of the Certificate of Merger as required by
Delaware Law, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Offer or the Merger, or otherwise prevent
Purchaser from performing its obligations under this Agreement.
SECTION 4.04 Offer Documents; Proxy Statement. Neither the Offer
Documents nor any other document filed or to be filed by or on behalf of Parent
or Purchaser with the SEC in connection with the transactions contemplated by
this Agreement, will not, at the time such documents are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading. The
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information supplied by Parent specifically for inclusion in the Schedule 14D-9,
the Information Statement or the Proxy Statement will not, on the date such
document (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, with respect to the Information Statement, at the
time Shares are accepted for payment in the Offer, and with respect to the Proxy
Statement at the time of the Special Stockholders' Meeting and at the Effective
Time, contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Stockholders' Meeting which shall
have become false or misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in any
of the foregoing documents or the Offer Documents. The Offer Documents shall
comply in all material respects as to form with the requirements of the Exchange
Act.
SECTION 4.05 Brokers. No broker, finder or investment banker (other
xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Purchaser.
SECTION 4.06 Financing. Parent and Purchaser will have available to
them, upon consummation of the Offer and at the Effective Time, immediately
available funds necessary to consummate all of the transactions contemplated by
this Agreement and will use such funds for such purpose subject to the
conditions of this Agreement.
SECTION 4.07 Operations of Purchaser. Purchaser has been formed solely
for the purpose of engaging in the transactions contemplated hereby and prior to
the Effective Time will have engaged in no other business activities and will
have incurred no liabilities or obligations other than as contemplated herein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE PURCHASER'S ELECTION DATE
SECTION 5.01 Conduct of Business by the Company Pending the
Purchaser's Election Date. The Company covenants and agrees that, between the
date of this Agreement and the election or appointment of Parent's designees to
the Board pursuant to Section 6.03 upon the purchase by Purchaser of any Shares
pursuant to the Offer (the "Purchaser's Election Date"), unless Parent shall
otherwise agree in writing, the Company shall, and shall cause the Subsidiaries
to, use all commercially reasonable efforts to conduct their
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respective businesses in all material respects only in the ordinary course of
business consistent with past practice, and the Company shall use all
commercially reasonable efforts consistent with good business judgment under the
current circumstances to preserve intact the business organization of the
Company and the Subsidiaries, to keep available the services of the current
officers, employees and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with
customers, suppliers, vendors, distributors and other persons with which the
Company or any Subsidiary has business relations to the end that their goodwill
and ongoing businesses shall be unimpaired in all material respects at the
Effective Time. By way of amplification and not limitation, except as otherwise
required by applicable law or as contemplated by this Agreement or by Section
5.01 of the Disclosure Schedule, the Company agrees that neither the Company nor
any Subsidiary shall, between the date of this Agreement and the Purchaser's
Election Date, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent (provided that with respect to
clauses (e)(iii) and (f) below, such consent shall not be unreasonably withheld
or delayed):
(a) amend or otherwise change, directly or indirectly, its
Constituent Documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of the Company or any Subsidiary (other than the
issuance of Shares upon the conversion of Nonvoting Shares or upon exercise of
Options outstanding on the date of this Agreement in accordance with their
current terms), or any options, warrants, convertible securities or other rights
of any kind to acquire any shares of such capital stock, or any other ownership
interest (including any phantom interest), of the Company or any Subsidiary, or
(ii) any assets of the Company or any Subsidiary (including the Company
Properties or any interest therein), except for sales in the ordinary course of
business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except for such declarations, set asides, dividends and
other distributions made by any Subsidiary to the Company;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock (excluding,
however, redemptions or purchases of shares of capital stock of the Subsidiaries
pursuant to contractual commitments entered into before the date of this
Agreement and disclosed in Schedule 3.03 of the Disclosure Schedule);
(e) (i) acquire (including by merger, consolidation, or acquisition
of stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof or any material
amount of assets other than in the ordinary course of business consistent with
past practice; (ii) incur or modify any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, pledge in respect of or
otherwise as an accommodation become responsible for the obligations of any
person, or make any loans, advances or capital contributions, except in the
ordinary course of business
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consistent with past practice for the purchase of goods for resale; (iii) enter
into any contract or agreement requiring annual payments in excess of $50,000 or
payments in excess of $100,000 in the aggregate, other than any contract or
agreement with a term of less than one year entered into in the ordinary course
of business consistent with past practice; (iv) terminate, cancel, extend or
request any material change in, or agree to any material change in, any Real
Property Lease or Material Contract, except in the ordinary course of business
consistent with past practice, or waive, release or assign any material rights
or claims; or (v) authorize capital commitments, except in accordance with a
capital expenditure plan which is reasonably acceptable to Parent;
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past practices in
salaries or wages of employees of the Company or any Subsidiary who are not
officers of the Company, or grant or modify any severance or termination pay to,
or enter into any employment or severance agreement with, any director, officer
or other employee of the Company or any Subsidiary (other than in connection
with hiring and terminating employees in the ordinary course of the Company's
business or pursuant to a Plan, policy or agreement existing as of the date
hereof and disclosed in Section 3.10 of the Disclosure Schedule), or establish,
adopt, enter into or amend any collective bargaining agreement, any material
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, retention, termination
or severance plan, benefit, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee or circulate to any employee
any details of any proposal to adopt or amend any such plan or make, authorize
or approve the payment of any extraordinary amount to any outside advisor,
attorney or consultant in all cases, except as required by law, including any
obligation to maintain tax-qualified status or as may be required by any Plan as
of the date hereof;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect to
accounting policies or procedures (including procedures with respect to the
payment of accounts payable and collection of accounts receivable), except for a
planned change from retail accounting to cost accounting or as may be required
by law or GAAP;
(h) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods, except as may be
required by the change referred to in (g) above, or settle or compromise any
federal, state, local or foreign income Tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(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, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries, or subsequently incurred in the ordinary course of business
consistent with past practice;
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(j) settle or compromise any pending or threatened suit, action or
claim that is material or which relates to any of the transactions contemplated
by this Agreement; or
(k) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting. The Company, acting
through the Board, shall, in accordance with applicable law and its Constituent
Documents, unless not required under applicable "short-form" merger provisions
of Delaware Law (i) duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following consummation of the
Offer for the purpose of considering and taking action on this Agreement and the
transactions contemplated by this Agreement (the "Special Stockholders'
Meeting") and (ii) (A) include in the Proxy Statement the [unanimous]
recommendation of the Board that the stockholders of the Company approve and
adopt this Agreement and the transactions contemplated by this Agreement,
including the Merger; provided, that such recommendation may be withdrawn,
modified or amended to the extent the Board determines in good faith, after
receiving the advice of independent legal counsel, that such action is required
in the exercise of the Board's fiduciary duties under applicable law (any such
withdrawal, modification or amendment shall not constitute a breach of this
Agreement but shall not otherwise affect any of the rights of Parent or
Purchaser under this Agreement), and (B) unless the recommendation of the Board
has been withdrawn pursuant to the preceding clause, use all reasonable efforts
to obtain such approval and adoption. At the Special Stockholders' Meeting (or
by consent if a stockholders meeting is not required), Parent and Purchaser
shall cause all Shares then owned by them and their subsidiaries to be voted in
favor of the approval and adoption of this Agreement and the transactions
contemplated by this Agreement, including the Merger.
SECTION 6.02 Proxy Statement. As soon as practicable following
consummation of the Offer, the Company shall file the Proxy Statement with the
SEC under the Exchange Act, unless the Special Stockholders' Meeting is not
required under applicable "short-form" merger provisions of Delaware Law, and
shall use its best efforts to have the Proxy Statement cleared by the SEC.
Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC or its staff with respect to the Proxy
Statement and of any requests by the SEC or its staff for any amendment or
supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC or its staff and written statements describing
telephone conversations with the SEC or its staff. The Company shall give
Parent and
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its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all responses
to requests for additional information and replies to comments and conversations
prior to their being filed with, or sent to, the SEC. Each of the Company,
Parent and Purchaser agrees to use all reasonable efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of,
requests by and conversations with the SEC or its staff and to cause the Proxy
Statement and all required amendments and supplements thereto to be mailed to
the holders of Shares entitled to vote at the Special Stockholders' Meeting at
the earliest practicable time.
SECTION 6.03 Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Parent shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board as shall
give Parent representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding, and the Company shall, at such
time, subject to the applicable provisions of the Constituent Documents,
promptly take all actions necessary to cause Parent's designees to be elected as
directors of the Company, including increasing the size of the Board or securing
the resignations of incumbent directors or both. At such times, the Company
shall use all reasonable efforts to cause persons designated by Parent to
constitute the same percentage as persons designated by Parent shall constitute
of the Board with respect to (i) each committee of the Board (some of whom may
be required to be independent as required by applicable law or requirements of
the American Stock Exchange), (ii) each board of directors of each Subsidiary,
and (iii) each committee of each such board, in each case only to the extent
permitted by applicable law.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03, including, if requested by
Parent, mailing to its stockholders the Information Statement containing the
information required under Section 14(f) and Rule 14f-1 as an annex to the
Schedule 14D-9 to fulfill such obligations. Parent or Purchaser shall supply to
the Company and be solely responsible for any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 6.03 are in
addition to, and shall not limit, any rights which Purchaser, Parent or any of
their affiliates may have as a holder or beneficial owner of Shares as a matter
of applicable law with respect to the election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 6.03, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the Effective
Time, be Continuing Directors. From and after the time, if any, that Parent's
designees constitute a majority of the Board and prior to the Effective Time,
any amendment or modification of this Agreement, any amendment to the Company's
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Constituent Documents inconsistent with this Agreement, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder, any waiver of any condition to the
Company's obligations hereunder or any of the Company's rights hereunder or
other action by the Company hereunder may be effected only by the action of a
majority of the Continuing Directors of the Company, which action shall be
deemed to constitute the action of any committee specifically designated by the
Board to approve the actions contemplated by this Agreement and the transactions
contemplated by this Agreement and the full Board; provided, that, if there
shall be no Continuing Directors, such actions may be effected by majority vote
of the entire Board. The Continuing Directors together shall have the right to
retain, at the Company's expense, one law firm and a financial advisor if they,
in their reasonable discretion, deem it necessary. Any Continuing Director
shall have the authority to initiate or act on behalf of the Company to carry
out any of the provisions of this Section 6.03(c).
SECTION 6.04 Access to Information; Confidentiality. (a) The Company
shall (and shall cause each of the Subsidiaries to) afford to the
Representatives of Parent reasonable access on reasonable prior notice to the
Company's Chief Executive Officer, Chief Financial Officer or Chief Operating
Officer during normal business hours, throughout the period prior to the earlier
of the Effective Time or the termination of this Agreement, to all of its
properties, offices, employees, contracts, commitments, books and records
(including Tax Returns) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities laws
and shall (and shall cause each of the Subsidiaries to) furnish promptly to
Parent such additional financial and operating data and other information as to
its and the Subsidiaries' respective businesses and properties as Parent may
from time to time reasonably request. Parent and Purchaser will make all
reasonable efforts to minimize any disruption to the businesses of the Company
and the Subsidiaries which may result from the requests for access to properties
and employees and for data and information hereunder.
(b) Parent agrees that all information obtained by Parent or
Purchaser pursuant to this Section 6.04 shall be kept confidential, by
Purchaser, by Parent and by any other party which is to be afforded access
pursuant to Section 6.04(a), in accordance with the confidentiality agreement,
dated February 22, 1999 (the "Confidentiality Agreement"), between Parent and
the Company, and Parent shall comply with its obligation under the
Confidentiality Agreement to return all documents, work papers and other written
materials and any copies thereof obtained or made by Parent or its
representatives in the event of the termination of this Agreement without the
purchase of any Shares in the Offer.
SECTION 6.05 No Solicitation. (a) The Company shall not, nor shall
it permit any of the Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of the Subsidiaries to (i)
solicit or initiate, or encourage, directly or indirectly, any inquiries
relating to, or the submission of, any Takeover Proposal, (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
information or data with respect to or access to the properties of, or take any
other action to knowingly facilitate the making of any proposal that
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constitutes, or may reasonably be expected to lead to, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal or approve
or recommend or resolve to approve or recommend any Takeover Proposal; provided,
however, that nothing contained in this Section 6.05(a) shall prohibit the
Company or its directors from (i) complying with Rule 14e-2 and Rule 14d-9
promulgated under the Exchange Act with regard to a tender or exchange offer or
(ii) referring a third party to this Section 6.05(a) or making a copy of this
Section 6.05(a) available to any third party; and provided, further, that prior
to the acceptance for payment of Shares pursuant to the Offer, if the Board
reasonably determines that a Takeover Proposal from a Person (including any
Person with whom the Company or its representatives have had discussions prior
to April 28, 1999) constitutes a Superior Proposal or may reasonably be expected
to lead to a Superior Proposal from such Person, then the Company may, in
response to an unsolicited request therefor and subject to compliance with
Section 6.05(b), (1) furnish information with respect to the Company and the
Subsidiaries to, and participate in discussions and negotiations directly or
through its representatives with, such Person, subject to a customary
confidentiality agreement (as determined by the Company's independent legal
counsel) with such Person and (2) make such public disclosures as shall be
required under applicable law, if and to the extent the Board determines in good
faith, after receiving the advice of independent legal counsel, that such action
is required in the exercise of the Board's fiduciary duties under applicable
law. Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer or director of
the Company or any of the Subsidiaries or any financial advisor, attorney or
other advisor or representative of the Company or any of the Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or any
of the Subsidiaries or otherwise, shall be deemed to be a breach of this Section
6.05(a) by the Company.
(b) The Company shall advise Parent orally and in writing of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal received by any officer or director of the Company or, to the
knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal or inquiry no later than one full business day
following receipt of such Takeover Proposal or inquiry. The Company will keep
Parent informed of the status and details of any such Takeover Proposal or
inquiry.
SECTION 6.06 Third Party Standstill Agreements. During the period
from the date of this Agreement through the Effective Time, the Company shall
not terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of the Subsidiaries is a party
(other than any involving Parent) without the written consent of Parent. During
such period, the Company agrees to enforce, to the fullest extent permitted
under applicable law, the provisions of any such agreements, including obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction.
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SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
Constituent Documents on the date hereof, which provisions shall not be amended,
repealed or otherwise modified in any manner that would adversely affect the
rights thereunder of the individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement).
(b) The Company shall, and from and after the Effective Time, the
Surviving Corporation shall, indemnify and hold harmless each present and former
director, officer or employee of the Company or any of the Subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees and disbursements), judgments, losses,
claims, damages and liabilities incurred in connection with, and amounts paid in
settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted, brought
or filed (x) arising out of or pertaining to the transactions contemplated by
this Agreement or (y) otherwise with respect to any acts or omissions or alleged
acts or omissions occurring at or prior to the Effective Time to the same extent
as such persons are entitled to indemnification as of the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent permitted under applicable law and the Constituent Documents or
indemnification agreements in effect on the date hereof and listed in Section
3.10 of the Disclosure Schedule, including provisions relating to the
advancement of expenses incurred in the defense of any claim, action, suit,
proceeding or investigation. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time must be reasonably satisfactory to the Surviving Corporation,
and (ii) the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld). The Indemnified Parties as a group may retain only
one law firm to represent them with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
The indemnity agreements of the Surviving Corporation in this Section 6.07 shall
extend, on the same terms to, and shall inure to the benefit of and shall be
enforceable by, each person or entity who controls, or in the past controlled,
any present or former director, officer or employee of the Company or any of the
Subsidiaries.
(c) Not later than 30 days after the consummation of the Offer, the
Surviving Corporation shall procure, at no expense to the beneficiaries,
directors' and officers' liability insurance policies (the "New Insurance")
covering for a period of six years after the Effective Time those persons who
are currently covered by the Company's directors' and officers' liability
insurance policies (the "Current Insurance") and providing coverage (including
amounts of coverage, amounts of deductibles, employment practices liability and
other terms) that are no less
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favorable than the terms contained in the Current Insurance; provided, however,
that the Surviving Corporation shall not be required to expend annually for the
New Insurance amounts in excess of 200% of the per annum premiums paid by the
Company for the Current Insurance for the policy year that includes the date of
this Agreement, and provided further, that if the annual premiums for the New
Insurance exceed such 200% amount, then the Surviving Corporation shall be
obligated to obtain a policy with the greatest amount of coverage available for
a cost not exceeding such 200% amount. The Surviving Corporation will maintain
the New Insurance continuously in effect for such six year period and will not
cancel the Current Insurance unless and until the New Insurance has been
procured. If the New Insurance is provided under any insurance policies other
than a "run-off" of the Company's existing insurance policies, then such new
policies shall be in form and substance and with insurance carriers reasonably
satisfactory to the Continuing Directors.
(d) This Section 6.07 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
(e) If the Surviving Corporation or Parent or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in 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 6.07, proper and
sufficient provision shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall succeed to the obligations set forth in
this Section 6.07, and none of the actions described in clauses (i) or (ii) of
this sentence shall be taken until such provision is made.
SECTION 6.08 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which causes any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.09 Further Action; Reasonable Efforts. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the transactions contemplated by
this Agreement, (ii) use all reasonable efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
commercially reasonable efforts
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to obtain all licenses, permits (including environmental permits), consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company and the Subsidiaries as are necessary
for the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger and including the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the transactions
contemplated by this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other governmental entity vacated or
reversed, and (iii) except as contemplated by this Agreement, use all
commercially reasonable efforts not to take any action, or enter into any
transaction, which would cause any of its representations or warranties
contained in this Agreement to be untrue or result in a breach of any covenant
made by it in this Agreement. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Parent and the Company shall use
all reasonable efforts to take all such action. Notwithstanding the foregoing,
in no event shall Parent, Purchaser, the Company or the Surviving Corporation be
required to hold separate or divest any of their respective assets or agree to
any restrictions in their businesses as currently or proposed to be conducted.
(b) Without in any way limiting the provisions of Section 6.09(a),
the Company and the Subsidiaries shall, if and to the extent requested by
Parent, reasonably cooperate with Parent (including by executing and delivering
such documents and instruments, and by taking such other actions as may be
reasonably requested by Parent) in connection with the Parent obtaining title
insurance, surveys and/or estoppel letters or otherwise in connection with the
transactions contemplated by this Agreement (including the issuance of any non-
imputation endorsement).
SECTION 6.10 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction and shall
not issue any such press release or make any such public statement without the
prior approval of the Chief Executive Officer of both Parent and the Company,
except as may be required by law or any listing agreement with a national
securities exchange to which Parent or the Company is a party, in which case
reasonable advance notice shall be given to the other party where practicable.
SECTION 6.11 Confidentiality Agreement. Assuming the Minimum
Condition has been satisfied, upon the acceptance for payment of Shares pursuant
to the Offer, the Confidentiality Agreement shall be deemed to have terminated
without further action by the parties thereto.
SECTION 6.12 State Takeover Laws. If any state takeover statute
becomes or is deemed to become applicable to the Offer, the Stockholder
Agreements, the acquisition of Shares pursuant to the Offer or the Merger, the
Company shall take all action necessary to render such statute inapplicable to
all of the foregoing to the extent that the Company is able to do so.
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SECTION 6.13 Employment Covenant. (a) Parent shall provide each
employee of the Company with credit for all service with or credited by the
Company under each of Parent's employee benefit plans, programs and arrangements
for purposes of eligibility, vesting and, to the extent not prohibited by
applicable regulation, calculation of benefits (except to the extent crediting
such service would result in the duplication of benefits). Nothing herein
obligates Parent to maintain any Plan, program or arrangement which it otherwise
has the ability to terminate.
(b) Parent, at its discretion, shall cause the Surviving Corporation
to either (i) provide for a period of one year after the Effective Time health
and other welfare benefits that are substantially equivalent to those benefits
provided to employees of the Company and its Subsidiaries on the date hereof; or
(ii) provide health and other welfare benefits that are substantially equivalent
to those provided to other employees of Parent and on the same terms and
conditions as are applicable to other employees of Parent. Parent shall cause
the Surviving Corporation to honor the terms of those employment, severance pay,
retention bonus and long-term incentive award agreements of the Company and its
Subsidiaries and the Deferred Compensation Plan of Pamida which are disclosed in
Section 3.10 of the Disclosure Schedule.
SECTION 6.14 Real Estate Transfer and Gains Tax. Parent and the
Company agree that either the Company or the Surviving Corporation will pay any
foreign, state or local tax which is attributable to the transfer of the
beneficial ownership of the Company's or the Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any Tax
Returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and the
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and the Subsidiaries shall be
determined by Parent in its reasonable discretion. Parent shall timely provide
the Company or the Surviving Corporation with sufficient funds for the payment
of such Gains Taxes.
SECTION 6.15 Retirement of Certain Outstanding Indebtedness. (a) At
any time after the purchase by Purchaser of Shares pursuant to the Offer and
prior to the Effective Time, Parent shall be entitled to require the Company to
(i) terminate, or cause the applicable Subsidiary or Subsidiaries to terminate,
the Amended and Restated Loan and Security Agreement dated July 2, 1998 by and
among Congress Financial Corporation (Southwest) and BankAmerica Business
Credit, Inc., as Lenders, Congress Financial Corporation (Southwest), as Agent
for the Lenders, and Pamida and Seaway Importing Company, as Borrowers (the
"Loan Agreement") and (ii) redeem or discharge, or cause Pamida to redeem or
discharge, the 11 3/4% Senior Subordinated Notes due 2003 of Pamida and the
related Indenture dated as of March 15, 1993 (the "Indenture") by and among
Pamida, as Issuer, the Company as Guarantor, and State Street Bank and Trust
Company, as Trustee (collectively the "Notes"). If Parent requires any such
termination, redemption or discharge, Parent shall deposit or cause to be
deposited with the Company or with any wholly owned Subsidiary of the Company,
as directed by the Company, the
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amount of money and/or U.S. Government Obligations (as defined in the Notes)
that is reasonably necessary to enable the Company to comply with such request.
Parent shall have the opportunity to participate in all aspects of any such
termination, redemption or discharge.
(b) If, after the purchase by Purchaser of Shares pursuant to the
Offer and prior to the Effective Time, the obligations of the Company and Pamida
under the Loan Agreement are declared to be immediately due and payable under
Section 8.2(a) thereof on account of the occurrence of an event of default under
Section 8.1(j) thereof, then Parent shall deposit or cause to be deposited with
the Company or Pamida (i) the amount of money necessary to pay all amounts owing
by the Company or Pamida under the Loan Agreement and, if the Notes are declared
immediately due and payable under Section 6.2 of the Indenture on account of the
occurrence of an event of default under Section 6.1(a)(v) of the Indenture, (ii)
the amount of money necessary to pay all amounts owing by Pamida under the Notes
and the Indenture. Any money so deposited shall be used to pay all the amounts
so owing under the Loan Agreement, the Notes or the Indenture.
(c) If, after the purchase by Purchaser of Shares pursuant to the
Offer and prior to the Effective Time, the holders of any Notes elect to have
Pamida purchase their Notes under Section 4.15 of the Indenture, then Parent
shall deposit or cause to be deposited with Pamida the amount of money necessary
to effect such purchases.
(d) Any money or U.S. Government Obligations deposited by Parent
pursuant to Section 6.15(a), (b) or (c) shall be made available to the Company
or the applicable Subsidiary or Subsidiaries either (i) on terms no less
favorable to the Company as provided in the Loan Agreement or the Notes, as
applicable, or (ii) on terms approved by the Board, if prior to the Purchaser's
Election Date, or the Continuing Directors, if after the Purchaser's Election
Date.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement, including the Merger,
shall have been approved and adopted by the affirmative vote of the stockholders
of the Company (unless the vote of the stockholders is not required by Delaware
Law) as required under the Constituent Documents or Delaware Law;
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(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
(which order or other action the parties hereto shall use their reasonable
efforts to vacate or lift) and has the effect of making the consummation of the
Merger illegal under applicable law; and
(d) Offer. Purchaser or its permitted assignee shall have accepted
for payment and purchased all Shares validly tendered and not withdrawn pursuant
to the Offer, provided that this condition will be deemed to have been satisfied
if Purchaser fails to accept for payment or pay for Shares pursuant to the Offer
in breach of the terms hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Purchaser's having accepted for payment any
Shares pursuant to the Offer or (y) Purchaser shall not have accepted
for payment any Shares pursuant to the Offer prior to August 31, 1999;
provided, however, that the right to terminate this Agreement pursuant
to this Section 8.01(b)(i) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results
in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute a breach
of any representation or warranty under this Agreement by such party;
or
(ii) if any governmental entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise
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prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer and such order, decree or ruling or other action
shall have become final and nonappealable; provided, that the party
seeking to terminate this Agreement pursuant to this clause (ii) shall
have used all commercially reasonable efforts to remove such order,
decree, ruling, judgment or injunction, it being understood that in no
event shall Parent, Purchaser, the Company or the Surviving
Corporation be required to hold separate or divest any of their
respective assets or agree to any restrictions in their businesses as
currently or proposed to be conducted.
(c) by Parent or Purchaser prior to the purchase of Shares pursuant
to the Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement (unless such
breach was directly caused by an act or omission of Parent or Purchaser) which
(i) would give rise to the failure of a condition set forth in paragraph (d) of
Annex A to this Agreement and (ii) cannot be or has not been cured within 20
days after the giving of written notice thereof to the Company by Parent or
Purchaser;
(d) by Parent or Purchaser prior to the purchase of Shares pursuant
to the Offer if either Parent or Purchaser is entitled to terminate the Offer as
a result of the occurrence of any event set forth in paragraph (f) of Annex A to
this Agreement;
(e) by the Company if the Board determines in good faith that a
Takeover Proposal constitutes a Superior Proposal and the Board determines in
good faith, after receiving the advice of independent legal counsel, that the
failure to approve such Takeover Proposal and to terminate this Agreement would
constitute a breach of the Board's fiduciary duties under applicable law;
provided that the Company has complied with all provisions of Section 6.05,
including the notice provisions therein, and that it has complied with the
requirements of Section 8.03 relating to the payment (including the timing of
any payment) of the Expenses and the Termination Fee to the extent required by
Section 8.03; and provided, further, that the Company may not terminate this
Agreement pursuant to this Section 8.01(e) unless and until 72 hours have
elapsed following delivery to Parent of a written notice of such determination
by the Board.
(f) by the Company prior to the purchase of Shares pursuant to the
Offer if (i) any of the representations or warranties of Parent or Purchaser set
forth in this Agreement that are qualified as to materiality shall not be true
and correct in any respect or any such representations or warranties that are
not so qualified shall not be true and correct in any material respect, or (ii)
Parent or Purchaser shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of Parent or Purchaser to be performed or complied with by
it under this Agreement and such untruth, incorrectness or failure cannot be or
has not been cured within 20 days after the Company's giving of written notice
to Parent or Purchaser, as applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.01.
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The right of any party hereto to terminate this Agreement pursuant to
this Section 8.01 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 8.02 Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 8.01,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Purchaser or any of their
respective affiliates, officers or directors (except for Section 6.04(b),
Section 6.10, Section 8.03 and Article IX, which shall survive the termination);
provided, however, that nothing contained in this Section 8.02 shall relieve any
party hereto from any liability for any willful breach of a representation or
warranty contained in this Agreement or the breach of any covenant or agreement
contained in this Agreement.
SECTION 8.03 Fees and Expenses. (a) Except as provided in this
Section 8.03, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement, including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses.
(b) Provided that neither Parent nor Purchaser shall be in breach of
any of their material obligations under this Agreement, the Company shall pay,
or cause to be paid, in same day funds to Parent (x) the Expenses and (y) the
Termination Fee under the circumstances and at the times set forth as follows:
(i) if Parent or Purchaser terminates this Agreement under Section
8.01(d) and, if such termination is because of the withdrawal, modification
or change in the Board's recommendation of the Offer, the Merger or this
Agreement, and if prior to the time of such withdrawal, modification or
change, a Takeover Proposal shall have been made (other than a Takeover
Proposal made prior to the date hereof), the Company shall pay the Expenses
and the Termination Fee upon demand;
(ii) if the Company terminates this Agreement under Section 8.01(e),
the Company shall pay the Termination Fee concurrently with such
termination and the Expenses upon demand;
(iii) if Parent or Purchaser terminates this Agreement under Section
8.01(c) and at the time of any such termination, a Takeover Proposal shall
have been made (other than a Takeover Proposal made prior to the date
hereof), (x) the Company shall pay the Expenses upon demand, and (y) if
concurrently therewith or within nine months thereafter (A) the Company
enters into a merger agreement, acquisition agreement or similar agreement
with respect to a Takeover Proposal, or a Takeover Proposal is consummated,
involving any party (1) with whom the Company had any discussions with
respect to a
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Takeover Proposal, (2) to whom the Company furnished information with
respect to or with a view to a Takeover Proposal or (3) who had submitted a
proposal or expressed any interest publicly in a Takeover Proposal, in the
case of each of clauses (1), (2) and (3), after April 28, 1999 and prior to
such termination, or (B) the Company enters into a merger agreement,
acquisition agreement or similar agreement with respect to a Superior
Proposal, or a Superior Proposal is consummated, then, in the case of
either (A) or (B) above, the Company shall pay the Termination Fee upon the
earlier of the execution of such agreement or upon consummation of such
Takeover Proposal or Superior Proposal.
SECTION 8.04 Amendment. Subject to applicable 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, after the approval and adoption of this Agreement and
the transactions contemplated by this Agreement by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share or Nonvoting Share shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time, subject
to Section 6.03(c), any party hereto may (i) extend the time for the performance
of any obligation or other act of any other party hereto, (ii) waive any
inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any agreement
or condition contained herein which may be legally waived. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and Section 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(b), 6.10, 8.02, 8.03 and
Article IX shall survive termination indefinitely.
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SECTION 9.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt or refusal by the addressee
thereof) by delivery in person, by a recognized overnight courier, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
if to Parent or Purchaser:
ShopKo Stores, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
if to the Company:
Pamida Holdings Corporation
0000 X Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
and
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx
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SECTION 9.03 Certain Definitions; Interpretation. (a) For purposes
of this Agreement, the following terms have the meaning specified in this
Section 9.03 and shall be equally applicable to both the singular and plural
forms:
"affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner" with respect to any Shares or Nonvoting Shares
means a person who shall be deemed to be the beneficial owner of such Shares or
Nonvoting Shares (i) that such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) that such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) that are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
or person with whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any Shares or Nonvoting Shares.
"business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining
a date when any payment is due, any day on which banks are not required or
authorized to close in the City of New York.
"Continuing Director" means (i) any member of the Board of Directors
of the Company as of the date hereof, or (ii) any successor of a Continuing
Director who is (A) unaffiliated with, and not a designee or nominee, of Parent
or Purchaser, and (B) recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board of Directors of the Company, and
in each case under clauses (i) and (ii), who is not an employee of the Company.
"control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
"Copyrights" means United States and foreign copyrights, copyrightable
works, and mask works, whether registered or unregistered, and pending
applications to register the same.
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"Expenses" means documented reasonable out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all reasonable fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to Parent.
"Intellectual Property" means Copyrights, Patent Rights, Trademarks
and Trade Secrets.
"Patent Rights" means United States and foreign patents, patent
applications, patent or invention disclosures, and improvements thereto,
continuations, continuations-in-part, divisions and reissues.
"person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or government,
political subdivision, agency or instrumentality of a government.
"Representative" means, with respect to any person, such person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such person or its
subsidiaries).
"Software" means computer software programs and software systems,
including all databases, compilations, tool sets, compilers, higher level or
"proprietary" languages, related documentation and materials and all updates,
enhancements, modifications and derivative works thereto, including in source
code and object code form.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent, Purchaser or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more intermediaries.
"Superior Proposal" means a bona fide proposal by a Third Party that
was not solicited or initiated, or encouraged, directly or indirectly, by the
Company, any of the Subsidiaries or any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of the Subsidiaries, except as and to the extent permitted by Section
6.05, to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than a majority of the Shares then outstanding or all or
substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Board determines in good faith to be more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger (after
receiving advice from the Company's independent financial advisor that the value
of the consideration provided for in such proposal is fair from a financial
point of view to the holders
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of Shares and Nonvoting Shares), for which financing, to the extent required, is
then committed or which, in the good faith judgment of the Board, based on
advice from the Company's independent financial advisor, is reasonably capable
of being financed by such third party and which, in the good faith judgment of
the Board is reasonably likely to be consummated within a period of time not
materially longer in duration than the period of time reasonably believed to be
necessary to consummate the Offer and Merger, it being understood that a tender
offer with terms and conditions substantially similar to those set forth herein
will satisfy the requirement above with respect to the time period within which
such tender offer must be consummated.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any person other than Parent, Purchaser or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as defined
under Rule 13(d) of the Exchange Act) of all or a material portion of the assets
of the Company or any of its material Subsidiaries or 30% or more of any class
of equity securities of the Company or any of its material Subsidiaries pursuant
to a merger, consolidation or other business combination, sale of shares of
capital stock, sale of assets, tender offer, exchange offer or similar
transaction with respect to either the Company or any of its material
Subsidiaries, including any single or multi-step transaction or series of
related transactions contemplated by this Agreement, which is structured to
permit such Third Party to acquire beneficial ownership of any material portion
of the assets of or 30% or more of the equity interest in either the Company or
any of its material Subsidiaries.
"Tax" means all federal, state, local or foreign taxes, fees, duties,
tariffs, levies, imposts, or other charges of any kind (together with any
interest, penalties, additions to tax or additional amounts imposed by any
taxing authority with respect thereto), including (i) taxes or other charges on
or with respect to income, franchise, gross receipts, property, sales, use,
profits, capital stock, payroll, employment, social security, workers
compensation, unemployment compensation or net worth, taxes or charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added or gains
taxes; license registration and documentation fees; and customs duties, tariffs
and similar charges of any kind whatsoever, and (ii) any joint, consolidated,
combined, unitary or transferee liability in respect of taxes or any liability
for taxes imposed by tax sharing, tax indemnity or similar agreement, contract
or arrangement.
"Tax Return" means any report, return, document, declaration or any
other information or filing required to be supplied to any taxing authority with
respect to Taxes.
"Termination Fee" means $5 million.
"Trademarks" means United States, state and foreign trademarks,
service marks, logos, designs, slogans, symbols, trade dress, trade names and
Internet domain names, and other source-identifying designations or devices, and
any combinations or variations thereof, whether registered or unregistered, and
pending applications to register any of the foregoing.
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"Trade Secrets" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, discoveries, inventions, formulae, reports, data,
customer lists, mailing lists, business plans, or other proprietary information.
(b) Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, then all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05 Entire Agreement, Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes, except for the Stockholder Agreements and as set forth in
Section 6.04(b), all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Purchaser may assign all or any of its rights and obligations hereunder to
any wholly owned subsidiary of Parent provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations.
SECTION 9.06 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.07 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity. Any proceeding to seek specific performance shall be
brought exclusively in the Delaware Chancery Court, such remedy being in
addition to any other remedy to which any party is entitled at law or in equity.
Each party hereto waives any right to a trial by jury in connection with any
such action, suit or proceeding and waives any objection based on forum non
conveniens or any other objection to venue thereof.
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SECTION 9.08 Waiver of Jury Trial. To the extent permitted by
applicable law, the parties hereby irrevocably waive any and all rights to trial
by jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
SECTION 9.09 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 9.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.12 Certain Undertakings by Parent. Parent shall be
responsible for the performance of, and, if necessary, shall perform, or cause
to be performed each obligation of Purchaser or the Surviving Corporation, or
either of their permitted successors and assigns, under this Agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SHOPKO STORES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
SHOPKO MERGER CORP.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
PAMIDA HOLDINGS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board and Chief
Executive Officer
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ANNEX A
CONDITIONS OF THE OFFER
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Merger (the "Agreement") of which this
Annex A is a part. Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any Shares tendered pursuant to the Offer, and may amend the
Offer consistent with the terms of the Agreement or terminate the Offer and not
accept for payment any tendered Shares, if (i) the Minimum Condition shall not
have been satisfied, (ii) any applicable waiting period under the HSR Act has
not expired or been terminated (the "HSR Condition"), or (iii) at any time on or
after the date of the Agreement and prior to the acceptance for payment of
Shares, any of the following events shall occur and be continuing:
(a) there shall be threatened or pending any suit, action or
proceeding by a federal, state, or foreign governmental entity (i) seeking to
prohibit or impose any material limitations on the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material portion of
the businesses or assets of the Company and its subsidiaries taken as a whole,
or Parent and its subsidiaries, taken as a whole, (ii) seeking to compel the
Company or Parent to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, (iii) challenging the acquisition
by Parent or Purchaser of any Shares pursuant to the Offer or the Stockholder
Agreements, (iv) seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Agreement or the Stockholder Agreements (including the
voting provisions thereunder), (v) seeking to obtain from the Company or any
Subsidiary any damages that would be reasonably likely to have a Material
Adverse Effect, (vi) seeking to impose material limitations on the ability of
Purchaser or Parent, or rendering Purchaser unable, to accept for payment, pay
for or purchase some or all of the Shares pursuant to the Offer or the
Stockholder Agreements and the Merger, (vii) seeking to impose material
limitations on the ability of Purchaser effectively to exercise full rights of
ownership of the Shares, including the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, or (viii) which
otherwise would have a Material Adverse Effect on the Company or, as a result of
the Offer or the Merger, a material adverse effect on Parent and its
subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any governmental
entity, other than the application to the Offer or
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the Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (viii) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or in the Nasdaq National Market System, for a period in
excess of three hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iii) any limitation by any United States governmental authority or agency that
has a material adverse effect generally on the extension of credit by banks or
other financial institutions, or (iv) in the case of any of the situations in
clauses (i) through (iii) inclusive, existing on the date hereof, a material
acceleration or worsening thereof; or
(d) the representations and warranties of the Company set forth in
the Agreement shall not be true and accurate as of the date of consummation of
the Offer as though made on or as of such date (except for those representations
and warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period) or the Company shall have breached or
failed to perform or comply with any obligation, agreement or covenant required
by the Agreement to be performed or complied with by it except, in each case
where the failure of such representations and warranties to be true and
accurate, or the failure to perform or comply with such obligations, agreements
or covenants, do not, individually or in the aggregate, have a Material Adverse
Effect on the Company or a materially adverse effect on the ability to
consummate the Offer or the Merger; or
(e) there shall have occurred any events or changes which have had or
would reasonably be expected to have or constitute, individually or in the
aggregate, a Material Adverse Effect on the Company; or
(f) the Board (i) shall have withdrawn, or modified or changed in a
manner adverse to Parent or Purchaser (including by amendment of the Schedule
14D-9) its recommendation of the Offer, the Merger or the Agreement, (ii) shall
have recommended a Takeover Proposal or (iii) shall have adopted any resolution
to effect any of the foregoing; or
(g) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or announced its intention to
acquire beneficial ownership (as determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of the Shares, or 399 Venture Partners,
Inc. or its affiliates or any group of which any of them is a member shall have
increased or announced its intention to increase its beneficial ownership of
Shares by more
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than 1%; provided that the conversion of Nonvoting Shares into Shares shall not
be an increase in the beneficial ownership of Shares.
(h) any party to any of the Stockholder Agreements other than Parent
or Purchaser shall have breached or failed to perform any of its agreements
under such agreement or breached any of its representations and warranties in
such agreements or any such agreements shall not be valid, binding and
enforceable, except for such breaches or failures or failures to be valid,
binding and enforceable that do not materially and adversely affect the benefits
expected to be received by Parent or Purchaser under the Stockholder Agreements;
or
(i) the Agreement shall have been terminated in accordance with its
terms; which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser not otherwise in breach of the Agreement) giving rise to such
condition makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived 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. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
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