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EXHIBIT 99(d)(1)
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
THE MAY DEPARTMENT STORES COMPANY
ALPHA OMEGA ACQUISITION, INC.
AND
DAVID'S BRIDAL, INC.
JULY 3, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I
THE OFFER
Section 1.1 The Offer................................................... 1
Section 1.2 Company Actions............................................. 3
Section 1.3 Directors of the Company.................................... 3
ARTICLE II
THE MERGER
Section 2.1 The Merger.................................................. 4
Section 2.2 Closing..................................................... 4
Section 2.3 Effective Time.............................................. 4
Section 2.4 Articles of Incorporation; Bylaws........................... 4
Section 2.5 Directors and Officers of the Surviving Corporation......... 5
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Shares........................................ 5
Section 3.2 Exchange of Certificates.................................... 5
Section 3.3 Dissenters' Rights.......................................... 6
Section 3.4 Shareholders' Meeting....................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization................................................ 8
Section 4.2 Capitalization.............................................. 9
Section 4.3 Authorization; Validity of Agreement........................ 9
Section 4.4 No Violations; Consents and Approvals....................... 10
Section 4.5 SEC Reports and Financial Statements........................ 10
Section 4.6 Absence of Certain Changes.................................. 11
Section 4.7 [Reserved].................................................. 11
Section 4.8 [Reserved].................................................. 11
Section 4.9 Employee Benefit Plans; ERISA............................... 11
Section 4.10 Litigation; Compliance with Law............................. 12
Section 4.11 Intellectual Property....................................... 13
Section 4.12 Company Agreements.......................................... 13
Section 4.13 Taxes....................................................... 13
Section 4.14 Environmental Matters....................................... 14
Section 4.15 No Default.................................................. 15
Section 4.16 Opinion of Financial Advisor................................ 15
Section 4.17 Brokers..................................................... 15
Section 4.18 Personal Property........................................... 16
Section 4.19 Board Recommendations....................................... 16
Section 4.20 Labor Matters............................................... 16
Section 4.21 Personal Property Leases.................................... 16
Section 4.22 Insurance................................................... 16
Section 4.23 Accounts Receivable; Inventory.............................. 16
Section 4.24 Real Estate Matters......................................... 16
Section 4.25 Schedule 14D-9; Offer Documents; and Proxy Statement........ 17
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PAGE
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Section 5.1 Organization................................................ 18
Section 5.2 Authorization; Validity of Agreement........................ 18
Section 5.3 Consents and Approvals; No Violations....................... 18
Section 5.4 Schedule TO, Offer Documents, Registration Statement and
Proxy Statement............................................. 18
Section 5.5 Financing................................................... 19
Section 5.6 Litigation; Compliance with Law............................. 19
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company........................... 19
Section 6.2 No Solicitations............................................ 22
Section 6.3 Access to Information....................................... 23
Section 6.4 Further Action; Reasonable Best Efforts..................... 24
Section 6.5 Employee Benefits........................................... 25
Section 6.6 Notification of Certain Matters............................. 25
Section 6.7 Directors' and Officers' Insurance and Indemnification...... 26
Section 6.8 Parent Undertaking.......................................... 26
Section 6.9 Takeover Statute............................................ 26
Section 6.10 Disclosure Schedule Supplements............................. 27
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation To Effect the
Merger...................................................... 27
ARTICLE VIII
TERMINATION
Section 8.1 Termination................................................. 27
Section 8.2 Effect of Termination....................................... 28
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses........................................... 28
Section 9.2 Amendment; Waiver........................................... 29
Section 9.3 Survival.................................................... 29
Section 9.4 Notices..................................................... 29
Section 9.5 Interpretation.............................................. 30
Section 9.6 Section Headings; Section References........................ 30
Section 9.7 Counterparts................................................ 30
Section 9.8 Entire Agreement............................................ 30
Section 9.9 Severability................................................ 30
Section 9.10 Governing Law; Waiver of Jury Trial; Enforcement............ 30
Section 9.11 Assignment; Binding Effect.................................. 30
Section 9.12 Enforcement of Agreement.................................... 31
Section 9.13 Continuation of Attorney-Client Privilege................... 31
Section 9.14 Finders or Brokers.......................................... 31
Section 9.15 Publicity................................................... 31
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TABLE OF DEFINED TERMS
TERM PAGE
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1934 Act.................................................... 7
1934 Act Rules.............................................. 7
Acquisition................................................. 1
Acquisition Agreement....................................... 23
Acquisition Proposal........................................ 22
Affiliates.................................................. 30
Agreement................................................... 1
Annex A..................................................... 1
Articles of Merger.......................................... 4
Asset Transaction........................................... 22
Associates.................................................. 30
Audit....................................................... 13
beneficial ownership........................................ 30
Business Combination Transaction............................ 22
Certificate................................................. 5
Certificates................................................ 5
Closing..................................................... 4
Closing Date................................................ 4
Code........................................................ 6
Company..................................................... 1
Company Agreements.......................................... 10
Company Common Stock........................................ 1
Company Representatives..................................... 22
Company SEC Documents....................................... 10
Company Subsidiaries........................................ 8
Company Subsidiary.......................................... 8
Confidentiality Agreement................................... 24
Disclosure Schedule......................................... 1
Dissenting Shareholder...................................... 6
Dissenting Shares........................................... 6
Drop Dead Date.............................................. 27
Effective Time.............................................. 4
Environmental Claim......................................... 15
Environmental Law........................................... 15
ERISA....................................................... 11
ERISA Affiliate............................................. 11
ERISA Plans................................................. 11
Exchange Act................................................ 7
FBCA........................................................ 1
Florida Department of State................................. 4
GAAP........................................................ 10
Government Antitrust Entity................................. 24
Governmental Entity......................................... 10
Hazardous Substance......................................... 15
Home Office................................................. 17
HSR Act..................................................... 10
Incipient Superior Proposal................................. 22
Indemnified Parties......................................... 26
Intellectual Property....................................... 13
Key Executive............................................... 19
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TERM PAGE
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Key Executives.............................................. 19
knowledge of the Company.................................... 11
Lease....................................................... 17
Leased Properties........................................... 16
Leased Property............................................. 16
Leases...................................................... 17
Liens....................................................... 10
made available.............................................. 30
Main Warehouse.............................................. 17
Material Adverse Effect..................................... 8
Material Company Agreements................................. 13
Merger...................................................... 4
Merger Communications....................................... 31
Merger Consideration........................................ 5
Minimum Condition........................................... 2
Non-Key Employees........................................... 20
Offer....................................................... 1
Offer Documents............................................. 2
Offer Price................................................. 1
Owned Property.............................................. 16
Parent...................................................... 1
Parties..................................................... 1
Party....................................................... 1
Paying Agent................................................ 5
Person...................................................... 8
Plans....................................................... 11
Policies.................................................... 26
Preliminary Statement....................................... 7
Proxy Statement............................................. 7
Real Properties............................................. 16
Real Property............................................... 16
Release..................................................... 15
Schedule 14d-9.............................................. 3
Schedule TO................................................. 2
SEC......................................................... 2
Securities Act.............................................. 10
Shareholders................................................ 1
Shareowner Agreement........................................ 1
Shareowner Agreements....................................... 1
Shares...................................................... 1
Special Meeting............................................. 7
Subsidiary.................................................. 8
Superior Proposal........................................... 23
Surviving Corporation....................................... 4
Tax Return.................................................. 14
Taxes....................................................... 14
Termination Fee............................................. 28
Voting Debt................................................. 9
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 3, 2000,
by and among THE MAY DEPARTMENT STORES COMPANY, a Delaware corporation
("Parent"), ALPHA OMEGA ACQUISITION, INC., a Florida corporation and a
wholly-owned subsidiary of Parent ("Acquisition"), and DAVID'S BRIDAL, INC., a
Florida corporation (the "Company"). Parent, Acquisition and the Company are
later in this Agreement sometimes referred to individually as a "Party" or
collectively as the "Parties."
RECITALS
This Agreement is entered into with reference to the following facts,
objectives, and definitions:
A. The Boards of Directors of Parent, Acquisition and the Company have each
approved, and, if required by law, have determined to recommend to their
respective shareholders, the acquisition of the Company by Parent upon the terms
and subject to the conditions set forth in this Agreement.
B. It is contemplated that the acquisition be accomplished by Acquisition's
commencing a cash tender offer (as it may be amended from time to time as
permitted by this Agreement, the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value $.01 per share, of the Company
(the "Company Common Stock"; the shares of Company Common Stock are referred to
herein as "Shares"; record owners of the Shares are referred to herein as
"Shareholders"), for $20.00 per Share (such amount or any greater amount per
Share paid pursuant to the Offer being hereinafter referred to as the "Offer
Price"), subject to applicable withholding Taxes, net to the seller of the
Shares in cash, upon the terms and subject to the conditions set forth in this
Agreement.
C. In furtherance of such acquisition, the Boards of Directors of Parent,
Acquisition and the Company have each approved this Agreement and the merger of
Acquisition with and into the Company in accordance with the terms of this
Agreement and the Florida Business Corporation Act (the "FBCA"). The Board of
Directors of the Company has resolved to recommend that holders of Shares tender
their Shares pursuant to the Offer and, if required by law, approve and adopt
this Agreement and the Merger.
D. Following the approvals in paragraph C above and concurrently with the
execution and delivery of this Agreement, and as a condition and inducement to
the willingness of Parent and Acquisition to enter into this Agreement, Parent
has entered into separate Shareholder Agreements each dated as of the date
hereof with each Person (as defined in Section 4.1(a)) expressly disclosed in
Section D of the Disclosure Schedule attached hereto and incorporated herein
(the "Disclosure Schedule") (collectively, the "Shareholder Agreements" and,
individually, a "Shareholder Agreement"). Pursuant to the Shareholder
Agreements, certain shareholders have granted an option in favor of Parent or
its designee to purchase 90% of the Shares held by each, respectively, and has
granted Parent an irrevocable proxy to vote 90% of the Shares held by each,
respectively, in favor of the Merger (as hereafter defined).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the Parties agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated and none of
the events set forth in Section (a) through (i) of Annex A attached hereto and
made a part hereof ("Annex A") shall have occurred or be existing (and shall not
have been waived by Acquisition), Acquisition shall commence (within the
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meaning of Rule 14d-2 of the Exchange Act as defined in Section 3.4(a)) the
Offer as promptly as reasonably practicable after the date hereof, but in no
event later than five business days after the public announcement of the
execution of this Agreement. The obligation of Acquisition to accept for payment
and pay for Shares tendered pursuant to the Offer shall be subject only to the
satisfaction of the condition that there be validly tendered and not withdrawn
prior to the expiration of the Offer that number of Shares which represents at
least a majority of the then outstanding Shares on a fully diluted basis (the
"Minimum Condition") and to the satisfaction or waiver by Acquisition of the
other conditions set forth in Annex A. The Company agrees that no Shares held by
the Company or any of its Subsidiaries will be tendered to Acquisition pursuant
to the Offer. Acquisition expressly reserves the right to waive any of such
conditions (other than the Minimum Condition), to increase the price per Share
payable in the Offer and to make any other changes in the terms of the Offer;
provided, however, that no change may be made without the prior written consent
of the Company which decreases the price per Share payable in the Offer, reduces
the maximum number of Shares to be purchased in the Offer, changes the form of
consideration to be paid in the Offer, modifies or amends any of the conditions
set forth in Annex A, imposes conditions to the Offer in addition to the
conditions set forth in Annex A, waives the Minimum Condition or makes other
changes in the terms and conditions of the Offer that are in any manner adverse
to the holders of Shares or, except as provided below, extends the Offer.
Subject to the terms of the Offer and this Agreement and the satisfaction or
earlier waiver of all the conditions of the Offer set forth in Annex A as of any
expiration date of the Offer, Acquisition will accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer as soon as
it is permitted to do so under applicable law. Notwithstanding the foregoing,
Acquisition may, without the consent of the Company, (i) extend the Offer beyond
the scheduled expiration date, which shall be 20 business days following the
date of commencement of the Offer, if, at the scheduled expiration of the Offer,
any of the conditions to Acquisition's obligation to accept for payment and to
pay for the Shares shall not be satisfied or, to the extent permitted by this
Agreement, waived or (ii) extend the Offer for any period required by any rule,
regulation or interpretation of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer, other than Rule 14e-5
promulgated under the Exchange Act. Unless the Company advises Acquisition that
it does not wish Acquisition to extend the Offer, Acquisition shall extend the
Offer from time to time until the earlier of (A) the date that is 30 days after
the date on which any applicable waiting period under the HSR Act (as defined in
Section 4.4) shall have expired or been terminated and (B) the Outside Date (as
defined in Section 8.1), in the event that, at the then-scheduled expiration
date, all of the conditions of the Offer set forth in Annex A have not been
satisfied or waived as permitted by this Agreement. Any extension of the Offer
pursuant to the preceding sentence or pursuant to clause (i) of the second
preceding sentence of this Section 1.1 shall not exceed the lesser of ten
business days or such fewer number of days that Acquisition reasonably believes
are necessary to cause the conditions of the Offer set forth in Annex A to be
satisfied. Acquisition shall provide a "subsequent offering period" (as
contemplated by Rule 14d-11 under the Exchange Act) of not less than three
business days following its acceptance for payment of Shares in the Offer. On or
prior to the dates that Acquisition becomes obligated to accept for payment and
pay for Shares pursuant to the Offer, Parent shall provide or cause to be
provided to Acquisition the funds necessary to pay for all Shares that
Acquisition becomes so obligated to accept for payment and pay for pursuant to
the Offer. The Offer Price shall, subject to any required withholding of Taxes,
be net to the seller in cash, upon the terms and subject to the conditions of
the Offer.
(b) On the date of the commencement of the Offer, Acquisition shall file
with the SEC a Tender Offer Statement on Schedule TO (together with all
amendments and supplements thereto, the "Schedule TO") with respect to the
Offer. The Schedule TO shall contain or incorporate by reference an offer to
purchase and forms of the related letter of transmittal and all other ancillary
Offer documents (collectively, together with all amendments and supplements
thereto, the "Offer Documents"). Parent and Acquisition shall cause the Offer
Documents to be disseminated to the holders of the Shares as and to the extent
required by applicable federal securities laws. Parent and Acquisition, on the
one hand, and the Company, on the other hand, will promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and
Acquisition will cause the Offer Documents as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable
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opportunity to review and comment upon the Schedule TO before it is filed with
the SEC. In addition, Parent and Acquisition agree to provide the Company and
its counsel with any comments, whether written or oral, that Parent or
Acquisition or either of their counsel may receive from time to time from the
SEC or its staff with respect to the Schedule TO promptly after the receipt of
such comments and to consult with the Company and its counsel prior to
responding to any such comments.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and represents
and warrants that the Company's Board of Directors, at a meeting duly called and
held, has (i) determined that the terms of the Offer and the Merger are fair to
and in the best interests of the Shareholders, (ii) approved and adopted this
Agreement and approved and adopted the transactions contemplated hereby,
including the Offer and the Merger and (iii) subject to Section 6.2, resolved to
recommend that the Shareholders accept the Offer, tender their Shares to
Acquisition thereunder and, if required by law, approve and adopt this Agreement
and the Merger. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Company's Board of Directors described in
this Section 1.2(a), subject to Section 6.2.
(b) As promptly as practicable after the commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") which, subject to Section 6.2, shall contain the
recommendation referred to in clause (iii) of Section 1.2(a) hereof. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of the Shares as and to the extent required by
applicable federal securities laws. The Company, on the one hand, and each of
Parent and Acquisition, on the other hand, will promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect, and the Company will
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the 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
before it is filed with the SEC. In addition, the Company agrees to provide
Parent, Acquisition and their counsel with any comments, whether written or
oral, that the Company or its counsel may receive from time to time from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and to consult with Parent, Acquisition and their counsel prior to
responding to any such comments.
(c) The Company shall promptly furnish Acquisition 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
non-objecting beneficial owners of Shares. The Company shall furnish Acquisition
with such additional information, including updated listings and computer files
of Shareholders, mailing labels and security position listings, and such other
assistance as Parent, Acquisition or their agents may reasonably require in
communicating the Offer to the record and beneficial holders of Shares. 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 Acquisition shall hold in
confidence the information contained in such labels, listings and files, shall
use such information solely in connection with the Offer and the Merger, and, if
this Agreement is terminated or if the Offer is otherwise terminated, shall
promptly deliver or cause to be delivered to the Company all copies of such
information, labels, listings and files then in their possession or in the
possession of their agents or representatives.
Section 1.3 Directors of the Company.
(a) Promptly upon the purchase of and payment for a number of Shares that
satisfies the Minimum Condition by Acquisition or any of its affiliates pursuant
to the Offer, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
is equal to the product obtained by multiplying the total number of directors on
such Board (giving effect to the directors designated by Parent pursuant to this
sentence) by the percentage that the number of Shares so purchased and paid for
bears to the total number of Shares then outstanding. In furtherance thereof,
the
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Company shall, upon request of Acquisition, promptly increase the size of its
Board of Directors or exercise its reasonable best efforts to secure the
resignations of such number of directors, or both, as is necessary to enable
Parent's designees to be so elected or appointed to the Company's Board and,
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, shall cause Parent's designees to be so elected or appointed. At
such time, the Company shall, if requested by Parent, also cause directors
designated by Parent and Acquisition to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company's Board of Directors
of each committee of the Company's Board of Directors. Notwithstanding the
foregoing, if Shares are purchased pursuant to the Offer, until the Effective
Time, Parent and Acquisition shall take no action which would cause the
Company's Board of Directors to include fewer than two members who are directors
on the date hereof and are not employees of the Company.
(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 Section 1.3(a), including mailing to
Shareholders together with the Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company's Board of Directors. Parent and Acquisition will supply
the Company and be solely responsible for any information with respect to them
and their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees to the
Company's Board of Directors pursuant to this Section 1.3, prior to the
Effective Time (i) any amendment or termination of this Agreement by the
Company, (ii) any extension or waiver by the Company of the time for the
performance of any of the obligations or other acts of Parent or Acquisition
under this Agreement, or (iii) any waiver of any of the Company's rights
hereunder shall, in any such case, require the concurrence of a majority of the
directors of the Company then in office who neither were designated by Parent
nor are employees of the Company, if any.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the FBCA, at the Effective Time (as
defined in Section 2.3), Acquisition shall be merged (the "Merger") with and
into the Company and the separate corporate existence of Acquisition shall
cease. After the Merger, the Company shall continue as the surviving corporation
(sometimes later in this Agreement referred to as the "Surviving Corporation").
The Merger shall have the effects set forth in the FBCA.
Section 2.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., New York time, on a date to be specified by the Parties,
which shall be no later than the second business day after satisfaction or
waiver of all of the conditions set forth in Article VII, (the "Closing Date"),
at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in writing by the
Parties.
Section 2.3 Effective Time. On or as promptly as practicable following
the Closing, the Company will cause appropriate Articles of Merger (the
"Articles of Merger") to be filed with the Department of State of the State of
Florida (the "Florida Department of State") in such form and executed as
provided in the FBCA. The Merger shall become effective at such time as the
Articles of Merger have been duly filed with the Florida Department of State or
such later time as is agreed upon by the Parties and specified in the Articles
of Merger in accordance with the FBCA, and such time is referred to in this
Agreement as the "Effective Time."
Section 2.4 Articles of Incorporation; Bylaws. The Articles of
Incorporation of the Company in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law. The Bylaws of the Company
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation or such Bylaws.
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Section 2.5 Directors and Officers of the Surviving Corporation.
(a) The directors of Acquisition immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors shall have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the FBCA, and the Surviving Corporation's Articles of Incorporation and
Bylaws.
(b) The officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation and shall hold office
until their respective successors are duly appointed and qualified, or until
their earlier death, resignation or removal.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Shares. As of the Effective Time, by virtue of
the Merger and without any action on the part of the Parties or the holders of
any Shares of the Company:
(a) Each issued and outstanding Share (other than Shares to be canceled in
accordance with Section 3.1(c) and Dissenting Shares (as defined in Section
3.3)) automatically shall be converted into the right to receive the Offer Price
in cash (the "Merger Consideration"), payable, without interest, to the holder
of such Share, upon surrender, in the manner provided in Section 3.2, of the
certificate that formerly evidenced such Share. All such Shares, when so
converted, shall no longer be outstanding and automatically shall be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 3.2. Any payment made
pursuant to this Section 3.1(a) shall be made net of applicable withholding
taxes in accordance with Section 3.2(f) to the extent that such withholding is
required by law.
(b) Each issued and outstanding share of common stock, par value $1.00 per
share, of Acquisition shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
(c) All Shares that are owned at the Effective Time by the Company, Parent,
Acquisition or any other direct or indirect wholly-owned Subsidiary (as defined
in Section 4.1) of the Company, Parent or Acquisition shall be canceled and
retired and no Merger Consideration shall be delivered in exchange therefor.
Section 3.2 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate an agent reasonably
satisfactory to the Company to act as agent for the holders of the Shares (other
than the Shares held by Parent, Acquisition, the Company or any of their
Subsidiaries, and Dissenting Shares) in connection with the Merger (the "Paying
Agent") to receive in trust, the aggregate Merger Consideration to which holders
of Shares shall become entitled pursuant to Section 3.1(a). At the Effective
Time, Parent shall deposit the Merger Consideration with the Paying Agent. The
Merger Consideration shall be invested by the Paying Agent as directed by Parent
or the Surviving Corporation. If for any reason (including losses) the funds
held by the Paying Agent are inadequate to pay the amounts to which the
Shareholders shall be entitled under Section 3.1(a), Parent and the Surviving
Corporation shall be liable for the payment thereof.
(b) As promptly as practicable after the Effective Time, Parent and the
Surviving Corporation shall cause to be mailed to each record holder, as of the
Effective Time, of an outstanding certificate or certificates which immediately
prior to the Effective Time represented Shares (the "Certificates" or
individually, a "Certificate"), whose Shares were converted pursuant to Section
3.1(a) into the right to receive the Merger Consideration, a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to a Certificate shall pass, only upon proper delivery of the
Certificate to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and instructions for effecting the
surrender of a Certificate in exchange for the Merger Consideration for the
Shares. Upon surrender of a Certificate for cancellation to the Paying Agent or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal duly executed and completed in accordance with the
instructions thereto, and any other required documents, the holder of such
Certificate shall receive promptly in
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exchange therefor the Merger Consideration for each Share formerly evidenced
thereby, and such Certificate shall forthwith be canceled. No interest will be
paid or accrued on the cash payable upon the surrender of a Certificate. If
payment of the Merger Consideration is to be made to a Person other than the
Person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall (i) have paid any transfer and other Taxes required by reason of
the payment to a Person other than the registered holder of the Certificate
surrendered or (ii) have established to the satisfaction of the Surviving
Corporation that such Taxes have been paid or that payment of Taxes is not
applicable. Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration for each Share in cash as
contemplated by Section 3.1.
(c) At the Effective Time, the stock transfer books of the Company shall be
closed, and there shall be no transfers on the stock transfer books of the
Company of the Shares which were outstanding immediately prior to the Effective
Time. From and after the Effective Time, the holders of Certificates evidencing
ownership of the Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Paying Agent or the Surviving Corporation,
they shall be canceled and exchanged for the Merger Consideration in accordance
with the procedures set forth in this Article III.
(d) At any time following the first anniversary of the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been made available to the Paying Agent, and holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates without any
interest thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article
III, provided, that the Person to whom the Merger Consideration is paid shall,
as a condition precedent to the payment thereof, give the Surviving Corporation
a bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Shares represented by the
Certificate claimed to have been lost, stolen or destroyed.
(f) Parent, Acquisition and the Surviving Corporation shall be entitled to
deduct and withhold, or cause the Paying Agent to deduct and withhold, from the
Offer Price or the Merger Consideration payable to a holder of Shares pursuant
to the Offer or the Merger any or all such amounts as are required to be
deducted and withheld under the Internal Revenue Code of 1986, as amended (the
"Code"), and/or any applicable provision of state, local or foreign tax law. To
the extent that amounts are so deducted and withheld by Parent, Acquisition or
the Surviving Corporation, such deducted and withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made by Parent,
Acquisition or the Surviving Corporation.
Section 3.3 Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary, Shares ("Dissenting Shares") that are outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has delivered a
written demand for payment of such shares in accordance with Sections
607.1301-607.1302 and 607.1320 of the FBCA ("Dissenting Shareholder"), shall not
be converted into the right to receive the Merger Consideration unless and until
such holder fails to perfect or effectively withdraws or otherwise loses its
right to payment as a dissenting shareholder under the FBCA. If any Dissenting
Shareholder shall have failed to perfect or shall have effectively withdrawn or
otherwise lost its right to payment as a Dissenting Shareholder, such Dissenting
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Shares shall thereupon be converted into and become exchangeable for the rights
to receive, as of the Effective Time, the Merger Consideration pursuant to
Section 3.1 for each Share without interest or dividends thereon. The Company
shall give Parent (i) prompt notice of any demands received by the Company for
payment of Shares, written demands for appraisal of any Shares, attempted
withdrawals of such demands and any other instruments served pursuant to the
FBCA and received by the Company relating to shareholders' rights of appraisal,
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the FBCA. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of Parent, voluntarily
make any payment with respect to, or settle or offer to settle, any such
demands.
Section 3.4 Shareholders' Meeting.
(a) Following the purchase of the Shares pursuant to the Offer, if required
by applicable law in order to consummate the Merger,
(i) the Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, give notice of, convene and hold
a special meeting (the "Special Meeting") of its Shareholders and submit
this Agreement to a vote of the Company's Shareholders;
(ii) the Company shall prepare a preliminary proxy statement (the
"Preliminary Statement") relating to the Merger and this Agreement which
shall comply as to form with all applicable laws and which shall include
all information concerning the Company, Parent and Acquisition required to
be set forth therein pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the applicable rules and regulations
thereunder (the "1934 Act Rules", the 1934 Act Rules together with the 1934
Act, the "Exchange Act");
(iii) the Company shall, subject to review of the Preliminary
Statement by the SEC and notification (either orally or in writing) to the
Company that the SEC has no further comments relating to such Preliminary
Statement, distribute to the Shareholders a letter to Shareholders, notice
of meeting, proxy statement and form of proxy in connection with the Merger
(collectively, including any amendments or supplements thereto, the "Proxy
Statement");
(iv) the Company shall file a definitive form of the Proxy Statement,
which shall reflect compliance with or resolution of the comments and
requests in accordance with the Exchange Act from the SEC as the Company
and Parent shall deem appropriate;
(v) the Company shall distribute the definitive Proxy Statement to the
Shareholders in accordance with applicable law; and
(vi) the Company shall take all such other reasonable action necessary
or appropriate to obtain the lawful approval of this Agreement by the
Shareholders.
(b) The Company and Parent shall each pay one-half ( 1/2) of the expenses
related to the printing, preparation, filing and mailing of the Proxy Statement.
Parent shall pay the Preliminary Statement fee to the SEC.
(c) Parent and Acquisition shall furnish to the Company all information
concerning Parent, Acquisition and their Affiliates (as defined in Section 9.5)
required by the Exchange Act or as otherwise required by the SEC to be set forth
in the Proxy Statement.
(d) Each of the Company and Parent shall consult and confer with the other
and the other's counsel regarding the Preliminary Statement and the Proxy
Statement and each shall have the opportunity to comment on the Preliminary
Statement and the Proxy Statement and any amendments and supplements thereto
before the Preliminary Statement and the Proxy Statement, and any amendments or
supplements thereto, are filed with the SEC or mailed to the Shareholders. Each
of the Company and Parent will provide to the other copies of all correspondence
between it (or its advisors) and the SEC relating to the Preliminary Statement
and the Proxy Statement.
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(e) Parent will vote, or cause to be voted, all Shares acquired by Parent,
Acquisition or any other Subsidiary of Parent in favor of the Merger and the
approval of this Agreement.
(f) Notwithstanding the provisions of Sections 3.4 (a) and (b), in the
event that Parent, Acquisition and any other Subsidiaries of Parent shall
acquire in the aggregate at least 80% of the outstanding shares of each class of
capital stock of the Company pursuant to the Offer or otherwise, the parties
hereto shall, subject to Article VII hereof, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of Shareholders of the Company, in accordance
with Section 607.0704 of the FBCA.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition that, except
as expressly set forth in the Disclosure Schedule or expressly disclosed in the
Company SEC Documents (as later defined):
Section 4.1 Organization.
(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Florida, has all requisite
corporate power and corporate authority and all necessary governmental approvals
to own, lease and operate its properties and other assets and to conduct its
business as it is now being conducted, and is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so organized, existing and in good standing or to
have such power, authority or governmental approvals, or to be so qualified
would not have a Material Adverse Effect (as defined below) on the Company and
the Company Subsidiaries, taken as a whole, or would not materially impair or
delay the consummation of the transactions contemplated by this Agreement.
Included in the SEC Documents are a complete and correct copy of each of the
Company's Articles of Incorporation, as amended, and its Bylaws, as currently in
effect. For purposes of this Agreement, (i) any reference to any event, change,
effect or violation of a representation or warranty hereunder having a "Material
Adverse Effect" on or with respect to any Person (or group of Persons taken as a
whole) means an event, change, effect or violation of a representation or
warranty hereunder that is materially adverse to the financial condition,
business, or results of operations of such Person (or, if used with respect
thereto, of such group of Persons taken as a whole), provided that a Material
Adverse Effect shall not include any adverse effect resulting from changes in
general economic conditions or conditions generally affecting the industries in
which Parent and the Company operate; (ii) "Subsidiary" shall mean with respect
to any Person, any corporation or other entity of which 50% or more of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such entity is directly or indirectly owned by such
Person; and (iii) "Person" shall mean an individual, partnership, joint venture,
limited liability company, trust, corporation, unincorporated entity or
Governmental Entity (as defined in Section 4.4). All subsidiaries of the Company
are listed in Section 4.1(b) of the Disclosure Schedule.
(b) Each of the Company's Subsidiaries (individually, a "Company
Subsidiary," and, collectively, "Company Subsidiaries") is listed in Section
4.1(b) of the Disclosure Schedule, and is a corporation or other business entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Company Subsidiaries
(i) has the corporate or other organizational power and authority required for
it to own its properties and assets and to carry on its business as it is now
being conducted, (ii) is duly qualified to do business as a foreign corporation
or other foreign business entity and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing would not have a Material Adverse Effect on the
Company and the Company Subsidiaries, taken as a whole and (iii) is 100% owned
by the Company, provided however, that Fillberg Limited is 50% owned by the
Company and 50% owned by Addwood Limited, and Wingreat Limited is 50% owned by
the Company and 50% owned by Elemax, a Hong Kong corporation. All the
outstanding shares of capital stock of, or other
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ownership interests in, the Company Subsidiaries are duly authorized, validly
issued, fully paid and non-assessable and, with respect to such shares or
ownership interests that are owned by the Company or the Company Subsidiaries,
are free and clear of all Liens (as defined in Section 4.4). Other than the
Subsidiaries listed in Section 4.1(b) of the Disclosure Schedule, there are no
Persons in which the Company owns, of record or beneficially, any direct or
indirect equity or similar interest, or any right (contingent or otherwise) to
acquire the same.
Section 4.2 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock, par value $.01 per share. As of the date of this
Agreement, (i) 19,469,276 Shares are issued and outstanding and (ii) Company
Options to acquire 2,322,952 Shares are outstanding under the option plans
listed in the Disclosure Schedule. All the outstanding shares of the Company's
capital stock are duly authorized, validly issued, fully paid and
non-assessable, and all Shares, when issued in accordance with the terms of such
option plans, will be duly authorized, validly issued, fully paid and
non-assessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company issued and outstanding. Except as set forth
above, (i) there are no shares of the capital stock of the Company authorized,
issued or outstanding and (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, convertible securities,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company obligating the Company (i) to issue,
transfer or sell or cause to be issued, transferred or sold any shares of its
capital stock or Voting Debt of, or other equity interest in, the Company or
securities convertible into or exchangeable for such shares or equity interests,
or obligations of the Company or (ii) to grant, extend or enter into any such
option, warrant, call, subscription or other right, convertible security,
agreement, arrangement or commitment. There are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any Shares
of the capital stock of the Company or any Affiliate of the Company or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any other Person and following the Merger, the
Company will not have any obligation to issue, transfer or sell any shares of
its capital stock.
(b) There are no voting trusts or other agreements or understandings to
which the Company is a party with respect to the voting of the capital stock of
the Company. The Company is not required to redeem, repurchase or otherwise
acquire shares of the capital stock of the Company as a result of the
transactions contemplated by this Agreement.
(c) At the Effective Time, the number of shares of Company Common Stock
outstanding (assuming all Company Options outstanding on the date hereof are
exercised) shall not exceed 21,792,228.
Section 4.3 Authorization; Validity of Agreement.
(a) The Company has the requisite corporate power and corporate authority
to execute and deliver this Agreement and, subject to approval of its
Shareholders as contemplated by Section 3.4, to consummate the transactions
contemplated by this Agreement. The execution and delivery by the Company of
this Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by the Board of Directors of the Company
and, except for obtaining the Shareholder approval, if required by law, and
making filings contemplated by Section 3.4 of this Agreement, no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Parent and
Acquisition, this Agreement is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium or similar laws affecting the rights and
remedies of creditors generally and by equitable principles of general
application (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
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(b) The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by it for the consummation by
the Company of the transactions contemplated by this Agreement. The affirmative
vote of the holders of a majority of all of the Shares entitled to vote is the
only vote of the holders of the capital stock of the Company necessary to
approve this Agreement and the Merger.
Section 4.4 No Violations; Consents and Approvals. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the FBCA, if
required by law, for the approval of this Agreement and the Merger by the
Shareholders and the filing of the Articles of Merger required by the FBCA,
neither the execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated by this Agreement
will (i) conflict with or violate any provision of the Articles of Incorporation
or ByLaws of the Company, (ii) require any filing with, or any permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority, agency or official (a "Governmental Entity"), (iii) assuming the
accuracy of the representations and warranties of, and performance of the
covenants by Parent and Acquisition as set forth in this Agreement, result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) or require any consent under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, guarantee,
other evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of the Company Subsidiaries
is a party or by which the Company or any of the Company Subsidiaries or any of
its or their assets may be bound (except for any Lease, as defined in Section
4.24) (collectively, the "Company Agreements") or result in the imposition or
creation of any lien, charge, security interest, option, claim or encumbrance of
any nature whatsoever (collectively, "Liens") on the assets of the Company or
any of the Company Subsidiaries or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of the
Company Subsidiaries or any of its or their properties or assets; except in the
case of clauses (ii), (iii) or (iv), (A) where the failure to obtain any such
permit, authorization, consent or approval or to make any such filing would not
have a Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole, or (B) any such violation, breach or default which would not
have a Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole, or would not prevent or materially delay the consummation of
the transactions contemplated hereby.
Section 4.5 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC, and has made available to Parent,
true and complete copies of all forms and documents required to be filed by it
since January 1, 2000, under the Exchange Act or the Securities Act of 1933, as
amended (the "Securities Act") (as such documents have been amended since the
time of their filing, collectively, the "Company SEC Documents"). As of their
respective dates (or, if amended, as of the date of the last such amendment),
the Company SEC Documents, including any financial statements or schedules
included therein (i) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (ii) complied as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder.
(b) The consolidated financial statements included in the Company SEC
Documents (i) have been prepared from, and are in accordance with, the books and
records of the Company, (ii) have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as otherwise noted therein and except that
the quarterly financial statements are subject to normal recurring year end
adjustment and do not contain all footnote disclosures required by GAAP), and
(iii) fairly present in all material respects the financial position and the
results of operations and cash flows of the Company and the Company Subsidiaries
as at the dates thereof or for the periods presented therein. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC.
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Section 4.6 Absence of Certain Changes. Since January 1, 2000, the Company
and the Company Subsidiaries have conducted their businesses and operations only
in the ordinary course and consistent with past practice, and there have not
occurred (i) any events or changes (including the incurrence of any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise)
having or which would have a Material Adverse Effect on the Company and the
Company Subsidiaries, taken as a whole; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of the Company; or (iii) any
change by the Company in accounting principles or methods, except insofar as was
or may be required by a change in GAAP. Since January 1, 2000, the Company has
not taken any of the actions prohibited by Section 6.1. For purposes of this
Agreement, "knowledge of the Company" shall mean the actual knowledge of the
individuals specified in Section 4.6 of the Disclosure Schedule.
Section 4.7 [Reserved]
Section 4.8 [Reserved]
Section 4.9 Employee Benefit Plans; ERISA.
(a) Section 4.9(a) of the Disclosure Schedule contains a true and complete
list of each bonus, incentive compensation, stock option, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, program, agreement, fund,
policy, practice or arrangement, including all employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), sponsored, maintained or contributed to by the Company (or
for which the Company makes payroll deductions) or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning of section 4001
of ERISA, for the benefit of any employee or former employee of the Company and
their dependents, or any ERISA Affiliate (collectively, the "Plans"). Section
4.9(a) of the Disclosure Schedule identifies each of the Plans that is an
"employee benefit plan," as defined in section 3(3) of ERISA (collectively, the
"ERISA Plans"). Neither the Company nor any Company Subsidiary has, or has had,
any deferred compensation, stock purchase, pension or retirement plan (other
than a 401(k) plan) or any "defined benefit plan" as defined in Section 3(35) of
ERISA.
(b) With respect to each Plan, the Company has heretofore delivered or made
available to Parent true and complete copies of each of the following documents:
(i) the Plan document, including all amendments thereto;
(ii) the annual report for the most recent three plan years, if
required under ERISA;
(iii) the most recent Summary Plan Description (as defined in ERISA)
required under ERISA with respect thereto, including all summaries of
material modifications;
(iv) if the Plan is funded through a trust or any third party funding
vehicle, the trust or other funding agreement and the latest financial
statements thereof; and
(v) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan intended to qualify under section
401(a) of the Code or copies of any pending determination letter requests.
(c) No Lien imposed under the Code or ERISA exists or is to the knowledge
of the Company likely to be imposed on account of any ERISA Plan. The form of
each ERISA Plan intended to be "qualified" within the meaning of section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified (or timely application has been made therefor); no event has occurred
since the date of such determination that would adversely affect such
qualification for which the cost of correction would have a Material Adverse
Effect on the Company; and each trust maintained thereunder has been determined
by the Internal Revenue Service to be exempt from taxation under section 501(a)
of the Code. Except as expressly disclosed in Section 4.10(b) of the Disclosure
Schedule, each Plan has been operated and administered in
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accordance with its terms, except for such non-compliance that would not have a
Material Adverse Effect on the Company.
(d) There are no pending, scheduled or, to the knowledge of the Company,
anticipated audits or investigations with respect to the Plans by any
governmental agency or authority.
(e) Neither the Company, nor, to the knowledge of the Company, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, any trustee or
administrator or any other person or entity acting as a fiduciary thereof has
engaged in a transaction or has taken or failed to take any action in connection
with which the Company, any ERISA Affiliate, any of the ERISA Plans, any such
trust, any trustee or administrator thereof, or any party dealing with the ERISA
Plans or any such trust could be subject to either a civil penalty assessed
pursuant to section 409 or 502(i) of ERISA or a tax imposed pursuant to section
4975, 4976 or 4980B of the Code which would have a Material Adverse Effect on
the Company and the Company Subsidiaries, taken as a whole.
(f) No Plan provides benefits, including death, medical, dental or life
insurance benefits (whether or not insured), with respect to current or former
employees after retirement or other termination of employment, other than (i)
coverage mandated by applicable law, (ii) disability, death or retirement
benefits under any "employee pension plan," as that term is defined in section
3(2) of ERISA, (iii) deferred compensation benefits or severance benefits
accrued as liabilities on the books of the Company or an ERISA Affiliate, (iv)
severance pay, disability benefits and benefit claims under ERISA Plans incurred
on or prior to a termination of employment but not reported or paid until after
such termination, or (v) benefits, the full cost of which is borne by the
current or former employee (or his or her beneficiary).
(g) Neither the Company nor any Company Subsidiary has employment
agreements or severance agreements with any officer, director or other employee
as of the date of this Agreement. There are no such agreements whose terms have
expired but pursuant to which the Company has any continuing liability to any
officer, director or employees or any former officer, director or employee of
the Company.
Section 4.10 Litigation; Compliance with Law.
(a) There is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened, against or affecting the
Company or any Company Subsidiary or any of its or their properties which, if
determined adversely to the Company or such Company Subsidiary, would have a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole, or would prevent or materially delay the Offer or prevent or materially
delay the Company from consummating the Merger or the other transactions
contemplated by this Agreement.
(b) The Company and each Company Subsidiary is in compliance in all
material respects with all laws, statutes, regulations, rules, ordinances,
judgments, decrees, orders, writs and injunctions, of any court or Governmental
Entity relating to any of the property owned or leased by it, or applicable to
its business, including employment and employment practices, labor relations,
occupational safety and health, interstate commerce and antitrust laws, except
for such non-compliance that would not have a Material Adverse Effect on the
Company and the Company Subsidiaries, taken as a whole. Neither the Company nor
any Company Subsidiary nor any of its or their properties is subject to any
judgment, decree, order, writ or injunction having, or which would have, a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole, or which would prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(c) The Company and each Company Subsidiary holds all licenses, permits,
variances and approvals of Governmental Entities necessary for the lawful
conduct of its businesses as currently conducted except where the failure to
hold such licenses, permits, variances or approvals would not have a Material
Adverse Effect on the Company and the Company Subsidiaries, taken as a whole.
(d) This Section 4.10 does not apply to any ERISA, tax, environmental or
real property matter specifically covered by Sections 4.9, 4.13, 4.14 or 4.24.
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Section 4.11 Intellectual Property. Section 4.11 of the Disclosure
Schedule is a complete list of all registered trademarks, trade names and
service marks and trademarks, trade names and service marks for which
registration has been applied (collectively, the "Intellectual Property") owned
or filed by or licensed to the Company or to any Company Subsidiary, and with
respect to registered trademarks and service marks, contains a list of all
jurisdictions in which such trademarks and service marks are registered or
applied for and all registration and application numbers. There are no
unregistered trademarks, trade names or service marks used by the Company or any
Subsidiary which are material to the business of the Company and the Company
Subsidiaries, taken as a whole. The Intellectual Property that is owned by the
Company or any Company Subsidiary is not subject to any Liens and, to the
knowledge of the Company, there are no infringements or other violations or
conflicts with the rights of others with respect to the (i) use of or other
conduct by the Company or any Company Subsidiary within the scope of, (ii)
ownership of, (iii) validity of, or (iv) enforceability of, any Intellectual
Property owned by the Company or any Company Subsidiary that has or would have a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole.
Section 4.12 Company Agreements. Each of the Company Agreements that, in
the judgment of the individuals specified in the Disclosure Schedule whose
actual knowledge constitutes knowledge of the Company, is material to the
business and operations of the Company as currently conducted is listed in the
SEC Documents or in Section 4.12 of the Disclosure Schedule (collectively, the
"Material Company Agreements"), and is a valid, binding and enforceable
obligation of the Company, and there are no defaults thereunder on the part of
the Company or, to the knowledge of the Company, on the part of any other party
thereto. Except as expressly disclosed in Section 4.12-1 of the Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
license agreement or sales agency or distributorship agreement that limits in
any material manner the ability of the Company or any Company Subsidiary to
compete in or conduct any significant line of business or compete with any
Person or in any geographic area or during any period of time, which is material
in the judgment of the individuals specified in the Disclosure Schedule whose
actual knowledge constitutes knowledge of the Company. Except as expressly
disclosed in Section 4.12-2 of the Disclosure Schedule, neither the Company nor
any Company Subsidiary is bound by any agreement or contract for consulting,
advisory, professional or other similar services which is material in the
judgment of the individuals specified in the Disclosure Schedule whose actual
knowledge constitutes knowledge of the Company.
Section 4.13 Taxes.
(a) The Company has (i) filed (or there have been filed on its behalf) with
the appropriate Governmental Entity all Tax Returns (as later defined) required
to be filed by it and each of the Company Subsidiaries and such Tax Returns are
true, correct and complete in all material respects, (ii) maintained in all
material respects all required records with respect to all Tax Returns, (iii)
withheld or paid, as appropriate, in full (or there has been paid on its behalf)
all Taxes (as later defined) that are due and payable for all taxable periods
and portions thereof and (iv) made provision, in accordance with GAAP, for all
future material Tax liabilities (including reserves for deferred Taxes
established in accordance with GAAP and for all material contingent Tax
liabilities) for all taxable periods and portions thereof.
(b) No material federal, state, local or foreign audit or other
administrative proceeding ("Audit") or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary, and the Company has not received written or, to the knowledge of the
Company, oral notice of either the commencement of any such Audit or of the
intention on the part of any Governmental Entity to commence any such Audit, and
the Company has not received written notice that it or any Company Subsidiary
has not filed a (i) Tax Return or (ii) paid material Taxes required to be filed
or paid by it.
(c) No Governmental Entity has asserted in writing against the Company or
any Company Subsidiary any material deficiency for any Taxes which have not been
satisfied in full or adequately reserved for in accordance with GAAP on the
financial statements included in the Company SEC Documents.
(d) There are no Liens for Taxes upon any property or assets of the Company
or any Company Subsidiary (except for current Taxes that are not yet due and
payable).
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(e) [Reserved]
(f) The Company has not waived any statute of limitation with respect to
Taxes (which waiver is currently in effect) or agreed to any extension of time
with respect to a Tax assessment or deficiency (which has not yet been paid) or
extended the time to file any income or other material Tax Return (which Tax
Return has not subsequently been filed).
(g) Neither the Company nor any Company Subsidiary is a party to any income
tax allocation, tax indemnity or tax sharing agreement or arrangement, and
neither the Company nor any Company Subsidiary has ever joined in the filing of
a consolidated, combined, unitary or other group Tax Return with any corporation
other than the affiliated group of which the Company is the common parent. The
Company and Company Subsidiaries have no liability for Taxes of any other
corporation, person or entity other than members of the affiliated group of
which the Company is the common parent under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) by contract,
or otherwise that would have a Material Adverse Effect on the Company.
(h) The Company and the Company Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and has, within the time and manner prescribed by law,
withheld and paid over to the proper Governmental Entity all amounts required to
be withheld and paid over under all applicable laws.
(i) The Company has never been a member of an affiliated group other than
the group for which it is currently the common parent.
(j) For purposes of this Agreement: "Taxes" shall mean any and all federal,
state, local, foreign and other taxes, charges, fees, levies and other
assessments, including all net income, gross income, gross receipts, excise,
stamp, real and personal property, ad valorem, withholding, workers'
compensation, estimated, social security, unemployment, occupation, sales, use,
service, service use, license, net worth, payroll, franchise, severance,
transfer, recording and other taxes, assessments and charges imposed by any
Governmental Entity and any interest, penalties, and additions to tax
attributable thereto; and "Tax Return" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including any information return, including any information return
or report with respect to backup withholding and other payments to third
parties, claim for refund, amended return or declaration of estimated Tax.
Section 4.14 Environmental Matters.
(a) The Company and all Company Subsidiaries are in compliance with all
applicable Environmental Laws (as later defined) which compliance includes (i)
the possession of permits, licenses, registrations, variances, exemptions and
other governmental authorizations and financial assurances required under
applicable Environmental Laws for the Company and the Company Subsidiaries to
operate their businesses as currently conducted, and (ii) compliance with the
terms and conditions thereof, except in all cases above where such
non-compliance would not have a Material Adverse Effect on the Company and the
Company Subsidiaries, taken as a whole.
(b) To the knowledge of the Company, (i) there are no Environmental Claims
(as later defined) pending or threatened in writing against the Company or any
current or former Company Subsidiary; (ii) neither the Company nor any current
or former Company Subsidiary has received any written request for information
under any Environmental Law (as later defined) from any Governmental Entity with
respect to any actual or alleged environmental contamination which has not been
remediated or otherwise resolved; (iii) neither the Company nor any current or
former Company Subsidiary is conducting or has conducted any environmental
remediation or investigation under any Environmental Law; and (iv) neither the
Company nor any current or former Company Subsidiary is subject to the order of
any Governmental Entity under any Environmental Law or relating to the
remediation of any Hazardous Substance (as later defined) contamination.
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(c) To the knowledge of the Company, there have been no Releases (as later
defined) of any Hazardous Substance at any of the property currently or formerly
owned or leased by the Company or any current or former Company Subsidiary, or
of any Hazardous Substance which was generated, stored, disposed of or
transported by the Company or any current or former Company Subsidiary, which
could form the basis of any Environmental Claim against the Company or any
current or former Company Subsidiary or against any person or entity whose
liability for any Releases the Company or any current or former Company
Subsidiary has or may have retained or assumed either contractually or by
operation of law, except, in all such cases above, where such Releases would not
have a Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole.
(d) As used in this Agreement:
(i) the term "Environmental Claim" means any claim, action,
investigation or written notice to the Company or to any Company Subsidiary
by any person or entity alleging potential liability or responsibility of
the Company or any Company Subsidiary (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, personal injuries, or penalties)
arising out of, based on, or resulting from (a) the presence or Release of
any Hazardous Substance at any location, whether or not currently or
formerly owned or leased by the Company or any Company Subsidiary or (b)
circumstances forming the basis of any violation or alleged violation of
any applicable Environmental Law;
(ii) the term "Environmental Law" means all federal, state, local and
foreign laws, rules, regulations, ordinances, decrees, orders and other
binding legal requirements, as in effect as of the date of this Agreement,
relating to pollution or protection of the environment or human health in
any manner applicable to the Company or to any Company Subsidiary,
including laws and regulations relating to Releases or threatened Releases
of Hazardous Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances;
(iii) the term "Hazardous Substance" means any materials, chemicals,
pollutants, contaminants, hazardous wastes, toxic substances or radioactive
materials regulated under any Environmental Law, and oil and petroleum
products; and
(iv) the term "Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or
migration into the indoor or outdoor environment (including ambient air,
surface water, groundwater and surface or subsurface strata).
Section 4.15 No Default. The business of the Company (including that of
the Company Subsidiaries) is not being conducted in default or violation of any
term, condition or provision of (a) its applicable Articles of Incorporation or
Bylaws, or (b) any federal, state, local or foreign law, statute, regulation,
rule, ordinance, judgment, decree, writ, injunction, franchise, permit or
license or other governmental authorization or approval applicable to the
Company or any Company Subsidiary, which, in either case, would materially
impair the ability of the Company to consummate the Merger or the other
transactions contemplated by this Agreement.
Section 4.16 Opinion of Financial Advisor. The Board of Directors of the
Company has received an opinion from Credit Suisse First Boston Corporation to
the effect that, as of the date of this Agreement, the cash consideration to be
received in the Offer and Merger is fair to the Shareholders (other than Parent
and its Affiliates) from a financial point of view, and a true and correct copy
of such opinion will be delivered to Parent.
Section 4.17 Brokers. Except for the fees payable by the Company to
Credit Suisse First Boston Corporation (a true and complete copy of whose
engagement letter has been provided to Parent), no broker, finder or investment
banker 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.
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Section 4.18 Personal Property. The Company and each Company Subsidiary
has (i) good and valid title to, or in the case of leased property, has valid
leasehold interests in, all personal, whether tangible or intangible, properties
and assets, and (ii) all rights, licenses and other contractual rights, in the
case of each of clause (i) and (ii) above, as necessary to conduct the business
of the Company and each Company Subsidiary as currently conducted, except to the
extent the failure of this representation and warranty to be true would not have
a Material Adverse Effect on the Company and the Company Subsidiaries, taken as
a whole.
Section 4.19 Board Recommendations. The Board of Directors of the
Company, at a meeting duly called and held prior to the date hereof, has by a
majority vote of those directors present (i) determined that this Agreement and
the transactions contemplated by this Agreement are fair to and in the best
interests of the Shareholders of the Company and has approved the same, and (ii)
resolved to recommend that the holders of the shares of Company Common Stock
approve this Agreement and the transactions contemplated in this Agreement,
subject to Section 6.2.
Section 4.20 Labor Matters. Neither the Company nor any Company
Subsidiary is a party to or bound by any collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or any
Company Subsidiary nor, to the knowledge of the Company, as of the date of this
Agreement, are there any activities or proceedings of any labor union to
organize any such employees. As of the date of this Agreement, (i) there are no
current union representation questions involving employees of the Company or any
Company Subsidiary which have, had or would have a Material Adverse Effect on
the Company, (ii) there are no unfair labor practice charges or complaints
pending against the Company or any Company Subsidiary before the National Labor
Relations Board and (iii) there is no labor strike, lockout, organized slowdown
or organized work stoppage in effect or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary.
Section 4.21 Personal Property Leases. The Disclosure Schedule describes,
to the knowledge of the Company, all material personal property leases of the
Company and the Subsidiaries.
Section 4.22 Insurance. Each insurance policy to which the Company is a
party is in full force and effect and is listed on Section 4.22 of the
Disclosure Schedule. The Company has not received any written notice from the
insurer disclaiming coverage or reserving rights with respect to any material
claim or any such policy in general.
Section 4.23 Accounts Receivable; Inventory.
(a) All accounts receivable of the Company arising after the date of the
Company Balance Sheet through the date of this Agreement arose in the ordinary
course of business.
(b) All items of inventories disclosed in the Company SEC Documents were
acquired by the Company in the ordinary course of business and, as of the date
of this Agreement, have been replenished by the Company in all material aspects
in the ordinary course of business consistent with past practices.
Section 4.24 Real Estate Matters.
(a) The Company (or the Company Subsidiaries as specified in Section
4.24(a)(i) or Section 4.24 (a)(ii) of the Disclosure Schedule, as the case may
be) (i) has good, valid and insurable title (subject to all matters disclosed in
the title policies referenced in Section 4.24(f) below) to the fee interest in
the real property listed in Section 4.24(a)(i) of the Disclosure Schedule (the
"Owned Property"), and (ii) to the knowledge of the Company, has good and valid
title to all of the leasehold estates in all real properties listed in Section
4.24(a)(ii) of the Disclosure Schedule (collectively, the "Leased Properties" or
individually, a "Leased Property"; the Owned Property and Leased Properties
being sometimes collectively referred to in this Agreement as the "Real
Properties" or individually as a "Real Property"), in each case, to the
knowledge of the Company as to the Leased Properties, free and clear of all
Liens. Neither the Company nor any Company Subsidiary owns, leases, licenses,
uses, occupies or otherwise holds any interest in any real estate other than the
Real Properties. No Person listed in Section D of the Disclosure Schedule owns,
leases, licenses, uses, occupies or otherwise holds any interest in any of the
Real Properties.
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(b) Except to the extent that the inaccuracy of any of the following (or
the circumstances giving rise to such inaccuracy) are not reasonably likely to
have a Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole: (i) to the knowledge of the Company, each of the agreements by
which the Company or a Company Subsidiary has obtained a leasehold interest in a
Leased Property (individually, a "Lease" and collectively, the "Leases") is in
full force and effect in accordance with its respective terms and the Company or
the respective Company Subsidiary shown as the tenant on Section 4.24(a)(ii) is
the holder of the lessee's or tenant's interest thereunder; to the knowledge of
the Company, there exists no default under any Lease and no circumstance exists
(except for the Merger) which, with the giving of notice, the passage of time or
both, is reasonably likely to result in such a default; (ii) there are no
leases, subleases, licenses, concessions or any other contracts or agreements
granting to any person or entity other than the Company or the applicable
Company Subsidiary any right to the possession, use, occupancy or enjoyment of
any Real Property or any portion thereof; (iii) to the knowledge of the Company,
the current operation and use of the Real Properties does not violate any
statute, law, regulation, rule, ordinance, permit, requirement, order or decree
now in effect; the use being made of each Real Property at present is in
conformity with the certificate of occupancy, if any, issued for such Real
Property; and (iv) there are no existing, or to the knowledge of the Company,
threatened, condemnation or eminent domain proceedings (or proceedings in lieu
thereof) affecting the Real Properties or any portion thereof.
(c) Neither the Company nor any Company Subsidiary is obligated under or
bound by any option, right of first refusal, purchase contract, or other
contractual right or obligation to acquire, use or operate any real property nor
to sell or dispose of any Real Property or any portions thereof or interests
therein.
(d) Neither the Company nor any Company Subsidiary has transferred, sold,
terminated or otherwise disposed of any real property interests for which the
Company has any continuing liability with respect to such real property. This
Section 4.24(d) does not apply to any environmental matters.
(e) Any error, misstatement, omission or inaccuracy with respect to the
representations set forth in this Section 4.24, viewed as if it were
individually made without reference to Material Adverse Effect, and, with
respect to Sections 4.24(a)(ii), 4.24(b)(i) and 4.24(b)(iii), viewed as if made
without qualification as to the knowledge of the Company, which either
individually or collectively would result in a material ongoing impairment in
the use of, operation of, or material adverse financial arrangements with
respect to (i) the Main Warehouse described in Section 4.24(a)(ii) of the
Disclosure Schedule ("Main Warehouse"), (ii) the Home Office ("Home Office")
described in Section 4.24(a)(i) of the Disclosure Schedule or (iii), when
combined with any Leases that are terminated by the landlords thereunder
pursuant to provisions in such Leases permitting the landlords to do so based
upon the Merger, any 10 or more of the other properties listed in Section
4.24(a)(i) or 4.24(a)(ii) of the Disclosure Schedule shall constitute a breach
of representations and warranties of the Company in a manner having a Material
Adverse Effect on the Company and the Company Subsidiaries, taken as a whole,
under Paragraph (f) of Annex A. Material Adverse Effect on the Company and the
Company Subsidiaries, taken as a whole, for all purposes of this Agreement. In
addition, the determination of Material Adverse Effect under Section (f) of
Annex A shall be made without the "knowledge of the Company" qualification in
Sections 4.24(a)(ii), 4.24(b)(i) and 4.24(b)(iii).
(f) The Company has provided to Parent prior to the execution of this
Agreement historical title commitments and title policies obtained by the
Company or any Company Subsidiary for the Real Properties listed in Section
4.24(a)(i) of the Disclosure Schedule.
(g) Neither the Company nor any Company Subsidiary is in the process of
committing to purchase, lease any, license, use, occupy or otherwise hold any
interest in any real property.
Section 4.25 Schedule 14D-9; Offer Documents; and Proxy
Statement. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents will, at the respective times the
Schedule 14D-9, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to Shareholders, 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 Schedule 14D-9, will, when filed by the Company
with the SEC, comply as to form in all material respects
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with the applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to information supplied by or on behalf of Parent or
Acquisition which is contained in any of the foregoing documents, or which
Parent or Acquisition failed to supply.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition, jointly and severally, represent and warrant to the
Company as follows:
Section 5.1 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Each of Parent and Acquisition has all requisite
corporate power and corporate authority and necessary governmental approvals to
own, lease and operate its respective properties and to carry on its respective
business as now being conducted except where the failure to have such power or
authority would not have a Material Adverse Effect on Parent or Acquisition, or
materially impair or materially delay the consummation of the transactions
contemplated by this Agreement.
Section 5.2 Authorization; Validity of Agreement. Each of Parent and
Acquisition has the requisite corporate power and corporate authority to execute
and deliver this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery by Parent and Acquisition of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by the respective Boards of Directors of
Parent and Acquisition and no other corporate proceedings on the part of Parent
or Acquisition are necessary to authorize the execution and delivery of this
Agreement by Parent and Acquisition and the consummation by Parent and
Acquisition of the transactions contemplated by this Agreement. This Agreement
has been duly executed and delivered by Parent and Acquisition. Assuming due
authorization, execution and delivery of this Agreement by the Company, this
Agreement is a valid and binding obligation of Parent and Acquisition,
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium or similar laws affecting the rights and
remedies of creditors generally and by equitable principles of general
application (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
Section 5.3 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act and the HSR Act and the
filing and recordation of the Articles of Merger as required by the FBCA, no
filing with, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the consummation by Parent or Acquisition
of the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by Parent or Acquisition nor the consummation by
Parent or Acquisition of the transactions contemplated by this Agreement nor
compliance by Parent or Acquisition with any of the provisions of this Agreement
will (i) conflict with or violate any provision of the Articles of Incorporation
or Certificate of Incorporation, as the case may be, or Bylaws, of Parent or
Acquisition or (ii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Parent or Acquisition or any of their respective
properties or assets, except in the case of clause (ii) where such violations
would not have a Material Adverse Effect on Parent and Acquisition, taken as a
whole.
Section 5.4 Schedule TO, Offer Documents, Registration Statement and Proxy
Statement.
(a) None of the information supplied by Parent or Acquisition for inclusion
in the Preliminary Statement or the Proxy Statement will, at the date mailed to
Shareholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated in the Preliminary Statement and the Proxy Statement or necessary in
order to make the statements in the Preliminary Statement and the Proxy
Statement, in light of the circumstances under which they are made, not
misleading.
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(b) The Schedule TO, the Offer Documents and any information supplied by
Parent or Acquisition for inclusion in the Schedule 14D-9 will not, at the
respective times the Schedule TO, the Offer Documents, the Schedule 14D-9 or any
amendments or supplements thereto are filed with the SEC or are first published,
sent or given to Shareholders, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The Schedule TO
will, when filed by Parent with the SEC, comply as to form in all material
aspects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder. Not withstanding the foregoing, Parent makes no
representation or warranty with respect to information supplied by or on behalf
of the Company, which is contained in any of the foregoing documents, or which
the Company failed to supply.
Section 5.5 Financing. Parent and Acquisition will have sufficient cash
available to pay for the Shares that Acquisition becomes obligated to accept for
payment and pay for pursuant to the Offer and to pay the aggregate Merger
Consideration pursuant to the Merger.
Section 5.6 Litigation; Compliance with Law. There is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of Parent,
threatened against Parent or any Subsidiary of Parent which if determined
adversely to Parent or such Subsidiary would prevent or materially delay the
Offer or prevent or materially delay the Company from consummating the Merger or
the other transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company.
(1)
The Company covenants and agrees that, except as (i) expressly provided to
the contrary in this Agreement, (ii) expressly disclosed in Section 6.1 of the
Disclosure Schedule or (iii) approved in writing by Parent (which consent Parent
agrees it shall not unreasonably withhold; requests for which consent may be
made, at the option of the Company, pursuant to the provisions of Section 9.4 or
by telephonic request to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, telephone number ▇▇▇-▇▇▇-▇▇▇▇, or to
such other person and telephone number as ▇▇. ▇▇▇▇▇▇ may designate from time to
time, from and after the date of this Agreement and prior to the Effective Time
or the date, if any, on which this Agreement is earlier terminated:
(a) the business of the Company and of each Company Subsidiary shall be
conducted only in the ordinary course consistent with the requirements of law
and past practice and, to the extent consistent therewith, the Company shall use
its commercially reasonable efforts to preserve its and each Company
Subsidiary's business organization intact and maintain its and their existing
relations with customers, suppliers, employees, creditors and business partners,
and the Company shall use its reasonable efforts to cause the key executive
employees of the Company and the Company Subsidiaries (such individuals being
later collectively referred to as the "Key Executives" or individually as a "Key
Executive" (which Key Executives have been identified previously in writing by
Parent and the Company)) to continue to perform their duties as currently
performed for the Company and the Company Subsidiaries;
(b) the Company shall not, and shall not permit any Company Subsidiary to,
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
material assets other than in the ordinary and usual course of business;
(c) the Company shall not, and shall not permit any Company Subsidiary to,
except as required by law or as otherwise expressly provided elsewhere in this
Agreement: (i) grant any increase in the compensation payable or to become
payable to any of the Key Executives, key employees or directors, (ii) enter
into any, or amend any existing, employment or severance agreement with or,
except in accordance with the existing written policies of the Company, grant
any severance or termination pay to any officer, director or employee of the
Company; provided, however, that the Company may, in the ordinary course of
business, consistent with
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past practice, enter into termination agreements or arrangements with employees
other than any Key Executive (collectively, the "Non-Key Employees"), if the
aggregate value of such agreements and arrangements does not exceed $250,000 and
with respect to any individual Non-Key Employee does not have a value not in
excess of $25,000, or (iii) hire any employee or obligate itself to hire any
employee having a title or the responsibility of vice president or above.
(d) the Company shall not, and shall not permit any Company Subsidiary to,
modify, amend or terminate any of the Material Company Agreements or waive,
release or assign any material rights or claims with respect to such Material
Company Agreements, except in the ordinary course of business and consistent
with past practice;
(e) the Company shall not permit any material insurance policy naming it or
any Company Subsidiary as a beneficiary or a loss payable payee to be canceled
or terminated without notice to and consent of Parent, unless equivalent
replacement policies, without lapse of coverage, shall be put in place;
(f) the Company shall not settle, compromise, pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligations, (x) to the extent reflected or
reserved against in, or contemplated by, the Company Balance Sheet (or the notes
thereto), (y) incurred in the ordinary course of business and consistent with
past practice or (z) which are legally required to be paid, discharged or
satisfied (provided that if such claims, liabilities or obligations referred to
in this clause (z) are legally required to be paid and are also not otherwise
payable in accordance with clauses (x) or (y) above, the Company will notify
Parent in writing if such claims, liabilities or obligations exceed,
individually or in the aggregate, $200,000 in value, reasonably in advance of
their payment), provided that notwithstanding anything to the contrary set forth
in this Section 6.1(1)(f), the Company shall not settle or compromise any claim
or litigation brought by any Shareholder of the Company making such claim or
bringing such litigation as such a Shareholder, either individually or on behalf
of any class;
(g) the Company shall take all reasonable steps in defense of any claim
asserted against the Company in any proceedings before any Governmental Entity;
(h) the Company shall not make, or commit to make, any capital expenditures
in excess of $100,000 for each such individual expenditure or $300,000 in the
aggregate unless it is expressly disclosed in the Company's capital expenditure
plan shown on Section 6.1(1)(h) of the Disclosure Schedule ("Company's Capital
Expenditure Plan") or is paid out of or is planned to be paid out of any
unallocated capital item expressly disclosed in the Company's Capital
Expenditure Plan; and
(i) (A) except in the ordinary course of the Company's business consistent
with past practice, the Company shall not, and shall not permit any Company
Subsidiary to, amend, modify, supplement or terminate any agreement listed in
Sections 4.24(a)(i) and 4.24(a)(ii) of the Disclosure Schedule with respect to
any Real Property or enter into any new agreement or arrangement with respect to
real property except as expressly listed in Section 6.1(1)(i)(A) of the
Disclosure Schedule; and (B) neither the Company nor any Company Subsidiary may
enter into or execute subordination non-disturbance agreements, estoppel
certificates or similar instruments required to be executed pursuant to the
terms of the agreements listed in Section 4.24(a)(ii) with respect to the
Leases, provided, however, that the Company and the Company Subsidiaries may
enter into and execute such subordination non-disturbance agreements, estoppel
certificates and similar instruments if the applicable Lease prescribes the
content thereof and such instrument conforms thereto in all material respects.
(j) the Company shall not, and shall not permit any Company Subsidiary to,
except as required by law or as otherwise expressly provided elsewhere in this
Agreement, adopt any new or amend or otherwise change any benefit agreement with
any individual employee.
(k) the Company shall not, and shall not permit any Company Subsidiary to,
except in the ordinary course of business (i) make any loans, advances or
capital contributions to, or investments in, any other Person; (ii) except as
described in Section 6.1(2)(d) of the Disclosure Schedule, incur, assume, or
prepay any indebtedness for borrowed money or enter into any capital leases or
other arrangements with similar
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economic effects or issue any debt securities; or (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person.
(2)
The Company covenants and agrees that, except as (i) expressly provided to
the contrary in this Agreement, (ii) expressly disclosed in Section 6.1 of the
Disclosure Schedule or (iii) approved in writing by Parent (requests for which
approvals may be made, at the option of the Company, pursuant to the provisions
of Section 9.4 or by telephonic request to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, telephone number
▇▇▇-▇▇▇-▇▇▇▇ or to such other person and telephone number as ▇▇. ▇▇▇▇▇▇ may
designate from time to time), from and after the date of this Agreement and
prior to the Effective Time or the date, if any, on which this Agreement is
earlier terminated:
(a) the Company shall not, directly or indirectly, split, combine,
reclassify, purchase or redeem any shares of its capital stock or purchase or
redeem any rights, warrants or options to acquire any such shares;
(b) the Company shall not, and shall not permit any Company Subsidiary to:
(i) amend its Articles of Incorporation or Bylaws; (ii) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property with
respect to its capital stock; (iii) issue, sell, transfer, pledge, dispose of or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of the capital stock of any class of the Company or of
any Company Subsidiary, other than issuances pursuant to the exercise of Company
Options and Company benefit plan obligations disclosed in Section 4.9(a) or
Section 4.2 of the Disclosure Schedule, in each case which are outstanding on
the date hereof; or (iv) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock;
(c) the Company shall not, and shall not permit any Company Subsidiary to,
except as required by law or as otherwise expressly provided in Section
6.1(1)(j) or elsewhere in this Agreement: (i) adopt any new, or (ii) amend or
otherwise increase, or accelerate the payment or vesting of the amounts payable
or to become payable under, any existing, bonus, incentive compensation,
deferred compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan agreement,
program, fund, policy, practice or arrangement which applies to more than one
employee;
(d) the Company shall not, and shall not permit any Company Subsidiary to,
except in the ordinary course of business or except as described in Section
6.1(2)(d) of the Disclosure Schedule, enter into any material commitment or
transaction (including any borrowing, capital expenditure or purchase, sale or
lease of assets);
(e) the Company shall not adopt or authorize a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company (other than with respect to the Merger);
(f) the Company shall not change any method of accounting or any accounting
principle or practice, except for changes required by a concurrent change in
GAAP or by SEC requirements or staff interpretations;
(g) as to all Intellectual Property relating to the name "David's Bridal,"
"David's Bridal Warehouse", "David's Bridal Wearhouse" and other related uses of
such names and/or marks, the Company shall (i) use diligent efforts to maintain
or otherwise preserve its rights in all such Intellectual Property owned by the
Company and the Company Subsidiaries and use diligent efforts not to permit any
of such Intellectual Property to lapse, expire or go abandoned by any action or
inaction on its part; (ii) diligently and responsively prosecute all
applications or registrations with respect to such Intellectual Property before
whichever Governmental Entity the same may be pending; and (iii) not allow any
rights with respect to such Intellectual Property to go abandoned for failure to
timely file new applications for registrations corresponding to the subject
matter thereof;
(h) the Company shall not voluntarily make or agree to make any material
change in any Tax accounting method, waive or consent to the extension of any
statute of limitations with respect to income or
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other material Taxes, or consent to any material assessment of Taxes, or settle
any judicial proceeding affecting any material amount of Taxes;
(i) except as otherwise expressly permitted in this Agreement, the Company
shall not, and shall not permit any Company Subsidiary to (i) issue, sell or
otherwise distribute or dispose of any shares of Company Common Stock to, (ii)
become indebted in respect of borrowed money or make any commitment with respect
to borrowed money from, (iii) sell (other than sales of retail merchandise),
distribute, mortgage, license, lease or otherwise dispose of any of its assets
to, or (iv) enter into any other such agreement, arrangement, commitment or
transaction involving the Company's assets or finances with any officer,
director or legal or beneficial owner of more than 5% of the Company Common
Stock and their affiliates, except for continuing payments under the Lease shown
on Section 4.24(a)(ii) of the Disclosure Schedule as "123-Natick" and payments
owed to Fillberg Limited; and
(j) the Company shall notify Parent of any emergency or other substantial
change in the normal course of its or its Subsidiaries' respective businesses or
in the operation of its or its Subsidiaries' respective properties and of any
complaints of or hearings (or written communications indicating that the same
are threatened) of which the Company has knowledge before any Governmental
Entity if such emergency, change, complaint, investigation or hearing would have
a Material Adverse Effect on the Company.
Section 6.2 No Solicitations.
(a) Neither the Company nor any of the Company Subsidiaries nor any of the
officers and directors of any of them shall, and the Company shall direct and
use its reasonable best efforts to cause its and the Company Subsidiaries'
employees, agents and representatives, including any investment banker, attorney
or accountant retained by it or any of the Company Subsidiaries (the Company,
the Company Subsidiaries and their respective officers, directors, employees,
agents and representatives being the "Company Representatives") not to, directly
or indirectly through another Person, (i) initiate, solicit, encourage or
otherwise knowingly facilitate any inquiries (by way of furnishing information
or otherwise) or the making of any inquiry, proposal or offer from any Person
which constitutes an Acquisition Proposal (or would reasonably be expected to
lead to an Acquisition Proposal) or (ii) participate in any discussions or
negotiations regarding an Acquisition Proposal; provided, however, that the
Company's Board of Directors may, or may authorize the Company Representatives
to, in response to an Acquisition Proposal that the Board of Directors of the
Company concludes in good faith is an Incipient Superior Proposal, (x) furnish
information with respect to the Company and its Subsidiaries to any Person
making such Acquisition Proposal pursuant to a customary confidentiality
agreement and (y) participate in discussions or negotiations regarding such
Acquisition Proposal, provided that, prior to taking any such action, the
Company provides reasonable advance notice to Parent that it is taking such
action.
For purposes of this Agreement:
(i) "Acquisition Proposal " means any direct or indirect inquiry,
proposal or offer (or any improvement, restatement, amendment, renewal or
reiteration thereof) relating to the acquisition or purchase of a business
or shares of any class of equity securities of the Company or any of its
Subsidiaries, any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning any class of equity
securities of the Company or any of its Subsidiaries, or any merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction (a
"Business Combination Transaction") involving the Company or any of its
Subsidiaries, or any purchase or sale of a substantial portion of the
assets (including stock of Subsidiaries owned directly or indirectly by the
Company) or business of the Company or any of its Subsidiaries (an "Asset
Transaction"), other than the transactions contemplated by this Agreement
or as permitted by Section 6.1 of this Agreement.
(ii) "Incipient Superior Proposal" shall mean an unsolicited bona fide
written Acquisition Proposal that the Board of Directors of the Company
concludes in good faith (after consultation with the Company's financial
advisor) would, if consummated, provide greater aggregate value to the
Shareholders from a financial point of view than the transactions
contemplated by this Agreement; provided that for
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purposes of the definition of Incipient Superior Proposal, the term
"Acquisition Proposal" shall have the meaning set forth above, except that
(x) references to "shares of any class of equity securities of the Company"
shall be deemed to be references to "100% of the outstanding Shares" and
(y) an "Acquisition Proposal" shall be deemed to refer only to a Business
Combination Transaction involving the Company or, with respect to an Asset
Transaction, such transaction must involve the assets of the Company and
its Subsidiaries, taken as a whole, and not any Subsidiary of the Company
alone.
(iii) "Superior Proposal" shall mean an Incipient Superior Proposal
for which any required financing is committed or which, in the good faith
judgment of the Board of Directors in the Company (after consultation with
its financial advisor), is capable of being financed by the Person making
the Acquisition Proposal.
(b) Except as expressly permitted by this Section 6.2, neither the
Company's Board of Directors nor any committee thereof shall (i) withdraw,
modify or change, or propose publicly to withdraw, modify or change, in a manner
adverse to Parent, the recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement unless the Board of
Directors of the Company shall have determined in good faith, after consultation
with its financial advisor, that the Offer, the Merger or this Agreement is no
longer in the best interests of the Company's Shareholders and that such
withdrawal, modification or change is, therefore, required in order to satisfy
its fiduciary duties to the Shareholders under applicable law, (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") related to any Acquisition Proposal. Notwithstanding
the foregoing, the Company may, in response to a Superior Proposal, (x) take any
of the actions described in clauses (i) or (ii) above or (y) subject to this
Section 6.2 (b), terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into any Acquisition
Agreement with respect to any Acquisition Proposal) but only after the third
business day following Parent's receipt of written notice advising Parent that
the Company's Board of Directors is prepared to accept an Acquisition Proposal,
and attaching the most current version of any such Acquisition Proposal or any
draft of an Acquisition Agreement, provided the Company is not in breach of any
of its obligations under this Section 6.2.
(c) In addition to the obligations of the Company set forth in Sections 6.2
(a) and (b) the Company shall promptly (but in any event within one business
day) notify Parent orally and in writing of any Acquisition Proposal or any
inquiry regarding the making of any Acquisition Proposal, indicating, in
connection with such notice, the name of such Person making such Acquisition
Proposal or inquiry and the substance of any such Acquisition Proposal or
inquiry. The Company thereafter shall keep Parent reasonably informed of the
status and terms (including amendments or proposed amendments) of any such
Acquisition Proposals or inquiries and the status of any discussions or
negotiations relating thereto.
(d) Nothing contained in this Section 6.2 shall prohibit the Company or its
Board of Directors from at any time taking and disclosing to its Shareholders a
position contemplated by Rule 14e-2 promulgated under the Exchange Act or from
making any disclosure to the Company's Shareholders required by applicable law.
Section 6.3 Access to Information.
(a) From the date of this Agreement until the earlier of Effective Time and
the date, if any, on which this Agreement is earlier terminated, the Company
shall afford to Parent and the Parent's representatives reasonable access upon
reasonable prior notice to all of its and the Company Subsidiaries' senior
management, books, records, files and documents and, during such period, the
Company shall provide to Parent access to (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of the federal securities laws and (ii) such
other information including, copies of books, records, files, documents and
Company Agreements, concerning the Company's business, properties and personnel
as Parent may reasonably request; provided, that Parent and Parent's
representatives will conduct all such inspections in a reasonable manner and so
as to not unreasonably interfere with the conduct of the business or affairs of
the Company. The Company shall in addition use its reasonable best efforts to
provide Parent and Parent's representatives with access to the representatives,
commercial bankers, actuaries, trustees, outside Plan administrators and
consultants of the Company and to use its
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reasonable best efforts to cause such representatives, commercial bankers,
actuaries, trustees, outside Plan administrators and consultants to provide
Parent and Parent's representatives with such information regarding the Company
as may be reasonably requested. Parent and Parent's representatives shall use
reasonable best efforts to conduct any activities pursuant to this Section
6.3(a) in a manner that does not interfere in any material respect with the
management and conduct of the Company's operations. The obligations of the
Company under this Section 6.3(a) are subject to any and all limitations imposed
by law.
(b) Until the Effective Time, Parent and Acquisition will, with respect to
the information furnished to Parent by or on behalf of the Company, and the
Company will, with respect to the information furnished to the Company by or on
behalf of Parent or Acquisition, have the same confidentiality obligations as
set forth in the Confidentiality Agreement dated March 8, 2000, between Parent
and the Company ("Confidentiality Agreement").
Section 6.4 Further Action; Reasonable Best Efforts.
From the date of this Agreement until the earlier of the Effective Time and
the date, if any, on which this Agreement is earlier terminated:
(a) Upon the terms and subject to the conditions provided in this
Agreement, each of the Parties shall use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including to (i) comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated by this Agreement (which
actions shall include, without limitation, furnishing all information required
by applicable law in connection with approvals of or filings with any
Governmental Entity), (ii) satisfy the conditions precedent to the obligations
of such Party, (iii) except for those items listed on Schedule 6.4(a) of the
Disclosure Schedule, obtain each consent, authorization, order or approval of,
and exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Acquisition, the Company or any of
their Subsidiaries in connection with the Merger or the taking of any action
contemplated by this Agreement, (iv) effect all necessary registrations and
filings and (v) take any action reasonably necessary to vigorously defend, lift,
mitigate and/or rescind the effect of any litigation or administrative
proceeding adversely affecting the Merger or this Agreement, including promptly
appealing any adverse court or administrative decision.
(b) Subject to appropriate confidentiality protections, each of the Parties
will furnish to the other Parties such necessary information and reasonable
assistance as such other Parties may reasonably request in connection with the
foregoing and will provide the other Parties with copies of all filings made by
such Party with any Governmental Entity and, upon request, any other information
supplied by such Party to a Governmental Entity in connection with this
Agreement and the transactions contemplated by this Agreement, except for
documents and other information provided in response to Item 4(c) of the
Notification and Report Form required under the HSR Act. Upon the terms and
subject to the conditions provided in this Agreement, in case 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/or directors of the Parties
shall use their reasonable best efforts to take or cause to be taken all such
necessary action.
(c) Without limiting the generality of the undertakings in this Section
6.4, Parent and the Company shall take or cause to be taken the following
actions: (i) consult and cooperate with and provide assistance to each other in
the preparation and filing with the SEC of the Offer Documents, the Schedule
14D-9, the Preliminary Statement and the Proxy Statement and all necessary
amendments or supplements thereto; (ii) provide promptly to Governmental
Entities with regulatory jurisdiction over enforcement of any applicable
antitrust laws (a "Government Antitrust Entity") information and documents
requested by any Government Antitrust Entity or necessary, proper or advisable
to permit consummation of the Offer, the Merger and the transactions
contemplated by this Agreement; (iii) without in any way limiting the provisions
of Sections 6.4(c)(i) and 6.4(c)(ii), file any Notification and Report Form and
related material required under the HSR Act as soon as practicable and in any
event not later than ten (10) business days after the date hereof, and
thereafter use its reasonable efforts to certify as soon as practicable its
substantial compliance with any requests for additional information or
documentary material that may be made under the HSR Act;
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(iv) take promptly, in the event that any permanent or preliminary injunction or
other order is entered or becomes reasonably foreseeable to be entered in any
antitrust proceeding that would make consummation of the Offer or the Merger in
accordance with the terms of this Agreement unlawful or that would prevent or
materially delay consummation of the Offer or the Merger or the other
transactions contemplated by this Agreement, any and all steps (including the
appeal thereof or the posting of a bond) necessary to vacate, modify or suspend
such injunction or order so as to permit such consummation on a schedule as
close as possible to that contemplated by this Agreement (each of the Company
and Parent will provide to the other copies of all correspondence between it (or
its advisors) and any Government Antitrust Entity relating to the Offer or the
Merger or any of the matters described in this Section 6.4(c)); and (v) avoid
the entry of, or have vacated or terminated, any decree, order, or judgment that
would restrain, prevent, or materially delay the consummation of the Offer or
the Merger, including defending through litigation on the merits any claim
asserted in any court by any Person.
Section 6.5 Employee Benefits.
(a) Honor Current Obligations. The Company shall, and after the Effective
Time Parent or the Surviving Corporation shall, honor all obligations under all
existing Plans and under the Company's employment agreements.
(b) Stock Options. The Company shall use its reasonable best efforts to
cause each outstanding option to purchase shares of Company Common Stock
(including any related alternative rights) granted under any equity compensation
plan or arrangement of the Company or its Subsidiaries (collectively, the
"Company Option Plans") (including those granted to current or former employees
and directors of the Company or any of its Subsidiaries) (the "Employee Stock
Options") to become exercisable, and each share of restricted Company Common
Stock granted under the Company Option Plans, to vest in full and become fully
transferable and free of restrictions, either prior to the purchase of the
shares pursuant to the Offer or immediately prior to the Effective Time, as
permitted pursuant to the terms and conditions of the applicable Company Option
Plan. The Company shall offer to each holder of an Employee Stock Option that is
outstanding immediately prior to the first purchase of Shares pursuant to the
Offer (the "Purchase Date") (whether or not then presently exercisable or
vested) to, and shall use its reasonable best efforts to cause such holders to,
cancel such Employee Stock Option in exchange for an amount in cash equal to the
product obtained by multiplying (x) the difference between the Offer Price and
the per share exercise price of such Employee Stock Option, and (y) the number
of shares of Company Common Stock covered by such Employee Stock Option. All
payments in respect of such Employee Stock Options shall be funded by Parent and
made on the Purchase Date, subject to the collection or withholding of all
applicable withholding Taxes required by law to be collected or withheld by the
Company.
(c) Except with respect to any stock options or stock-related programs, for
the period of one year following the Effective Time, Parent will, or will cause
the Surviving Corporation to, provide, on an uninterrupted basis, employee
benefits to the employees of the Surviving Corporation which are, in the
aggregate, no less favorable than those in effect on the date hereof.
Section 6.6 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 nonoccurrence of any event the occurrence or nonoccurrence
of which would cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of the Company, Parent or Acquisition, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement and (iii) the
commencement or the threat of any action, suit, claim, investigation or
proceeding which relates to this Agreement or the transactions contemplated by
this Agreement; provided, however, that the delivery of any notice pursuant to
this Section 6.6 shall not limit or otherwise affect the remedies, if any,
available under this Agreement to the party receiving such notice.
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Section 6.7 Directors' and Officers' Insurance and Indemnification.
(a) From and after the Effective Time, Parent will, or will cause the
Surviving Corporation to, indemnify and hold harmless each present and former
director and officer of the Company and its Subsidiaries (the "Indemnified
Parties"), against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, by reason of the fact that such individual is
or was a director, officer, employee or agent of the Company or any of its
Subsidiaries, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the purchase of Shares in the Offer, to the fullest extent permitted under
applicable law, and Parent shall, or shall cause the Surviving Corporation to,
also advance fees and expenses (including attorneys' fees) as incurred to the
fullest extent permitted under applicable law.
(b) The Articles of Incorporation of the Company shall, from and after the
Effective Time, and the Articles of Incorporation of the Surviving Corporation
shall, from and after the Effective Time, contain provisions no less favorable
with respect to indemnification than are set forth as of the date of this
Agreement in the Articles of Incorporation of the Company, which provisions
shall not be amended, repealed or otherwise modified for a period of six (6)
years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers or employees of the Company; provided that nothing contained herein
shall limit Parent's ability to merge the Company into Parent or any of its
Affiliates or otherwise eliminate the Company's corporate existence if the
surviving Person assumes responsibility for such indemnification.
(c) For six (6) years from the Effective Time, Parent shall maintain, or
cause the Surviving Corporation to maintain, in effect the Company's and its
Subsidiaries' current directors' and officers' liability insurance policy (the
"Policies") covering those persons who are currently covered by the Policies;
provided, however, that in no event shall Parent or the Surviving Corporation be
required to expend in any one year an amount in excess of the annual premiums
currently paid by the Company and its Subsidiaries for such insurance, and,
provided, further, that if the annual premiums of such insurance coverage
exceeds such amount, Parent or the Surviving Corporation shall be obligated to
obtain policies with the greatest coverage available for a cost not exceeding
150% of such amount; and provided, further, that Parent or the Surviving
Corporation may meet its obligations under this paragraph by covering the above
persons under Parent or the Surviving Corporation's insurance policy on the
terms described above that expressly provide coverage for any acts which are
covered by the existing policies of the Company and its Subsidiaries.
(d) Nothing in this Agreement is intended to, shall be construed to, or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its Subsidiaries or any of their respective officers,
directors or employees, it being understood and agreed that the indemnification
provided for in this Section 6.7 is not prior to or in substitution for any such
claims under such policies.
(e) Each Indemnified Party is a third party beneficiary of this Section 6.7
and is entitled, without limitation, to directly enforce the obligations in this
Section 6.7 of Parent, the Company and the Surviving Corporation.
(f) The Surviving Corporation shall pay all expenses, including reasonable
fees and expenses of counsel, that an Indemnified Party may incur in enforcing
the indemnity and other obligations provided for in this Section 6.7.
Section 6.8 Parent Undertaking. Parent shall be responsible for and shall
cause Acquisition to perform all of its obligations under this Agreement in a
timely manner.
Section 6.9 Takeover Statute. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of Parent,
Acquisition and the Company, and the members of their respective Boards of
Directors, shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
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Section 6.10 Disclosure Schedule Supplements. From time to time after the
date of this Agreement and prior to the Effective Time, the Company will
promptly advise Parent of any and all matters hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedule or which is
necessary to make correct any information in a schedule or in any representation
and warranty of the Company which has been rendered inaccurate thereby in any
material respect; provided, however, that the Disclosure Schedule shall not be
deemed amended thereby for any purpose.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each Party to consummate the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) This Agreement shall have been approved and adopted by the Shareholders
if required by applicable law;
(b) No Governmental Entity shall have issued, given notice of its intent to
issue or commenced any proceeding for the purpose of issuing any order, and
there shall not be any statute, rule, decree or regulation restraining,
prohibiting or making illegal the acquisition of the Shares by Acquisition or
Parent or the consummation of the Merger;
(c) Parent or Acquisition or any Affiliate of either of them shall have
purchased Shares pursuant to the Offer, except that this condition shall not be
a condition to Parent's and Acquisition's obligation to effect the Merger if
Parent or Acquisition shall have failed to purchase Shares pursuant to the Offer
in breach of their obligations under this Agreement; and
(d) Any waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after Shareholder approval thereof:
(a) By the mutual consent of Parent, Acquisition and the Company.
(b) By either the Company or Parent if:
(i) (1) the Offer shall have expired without any Shares being
purchased pursuant thereto, or (2) the Offer has not been consummated on or
before October 31, 2000 (the "Outside Date"); provided, however, that the
right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall
not be available to any Party whose failure to fulfill any obligation under
this Agreement or the Offer has been the cause of, or resulted in, the
failure of the Shares to have been purchased pursuant to the Offer;
(ii) a statute, rule, regulation or executive order shall have been
enacted, entered or promulgated prohibiting the consummation of the Offer
or the Merger substantially on the terms contemplated hereby;
(iii) the Shareholders of the Company fail to approve and adopt this
Agreement at the Special Meeting, if such meeting is required (including
any postponement or adjournment thereof); or
(iv) any Governmental Entity shall have issued or threatened to issue
a statute, order, decree or regulation or taken any other action, in each
case permanently restraining, enjoining or prohibiting the consummation of
the transactions contemplated by this Agreement and such statute, order,
decree,
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regulation or other action shall have become final and non-appealable;
provided, that the Party seeking to terminate this Agreement pursuant to
this Section 8.1(b)(iv) shall have used its reasonable best efforts to
remove such order, decree, ruling or injunction and shall not be in
violation of Section 6.4;
(c) by Parent if due to an occurrence or circumstance, other than as a
result of a breach by Parent or Acquisition of its obligations hereunder or
under the Offer resulting in a failure to satisfy any condition set forth in
Annex A, Acquisition shall have (i) failed to commence the Offer within 30 days
following the date of this Agreement, or (ii) terminated the Offer without
having accepted any Shares for payment thereunder;
(d) by the Company, upon approval of its Board of Directors, if Acquisition
shall have terminated the Offer without having accepted any Shares for payment
thereunder, other than as a result of a breach by the Company of its obligations
hereunder that would result in a failure to satisfy any of the conditions set
forth in Annex A;
(e) by the Company, in accordance with Section 6.2(b); provided, that such
termination shall not be effective unless and until the Company shall have paid
to Parent the fee described in Section 9.1(b) hereof and shall have complied
with the provisions of Sections 6.2(b) and (c).
Section 8.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1, written notice thereof shall forthwith be
given to the other Party or Parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall terminate and be of no
further force and effect (except for the provisions of Sections 6.3, 9.1(a),
9.1(b), 9.10, 9.13 and 8.2 in the case of termination of this Agreement at any
time, and Section 6.5(b) in the case of a termination following the purchase of
Shares pursuant to the Offer), and there shall be no other liability on the part
of Parent, Acquisition or the Company or their respective officers or directors
except liability arising out of a willful breach of this Agreement. In the event
of termination of this Agreement prior to the expiration of the Offer, Parent
and Acquisition will promptly terminate the Offer upon such termination of this
Agreement without the purchase of Shares thereunder. No termination of this
Agreement shall affect the continued effect of the Confidentiality Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses.
(a) Except as otherwise provided in this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated in this Agreement shall be paid by the Party incurring
such expenses.
(b) If this Agreement shall have been terminated pursuant to Section 8.1(e)
as a result of the failure of any condition of the Offer set forth in Paragraph
(e) of Annex A hereto or Section 8.1(e), the Company shall immediately pay
Parent or Acquisition (as designated by Parent) a fee equal to $13,000,000
million (the "Termination Fee"), payable by wire transfer of immediately
available funds, the receipt of which by Parent or Acquisition in the case of
such termination, shall be a condition to the effectiveness of such termination.
(c) The Parties acknowledge that the agreements contained in this Section
9.1 are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, the Parties would not enter into this Agreement;
accordingly, if a Party fails to pay an amount due pursuant to this Section 9.1,
and, in order to obtain such payment, another Party commences a suit which
results in a judgment against the owing Party for any fee set forth in this
Section 9.1, the owing Party shall pay to the Party to which such amount is due
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of Citibank N.A. in effect on the date such payment was required to be
made.
(d) Parent shall be solely responsible for any and all filing fees that are
payable in connection with or on account of any filing by Parent or any other
Party concerning the transactions contemplated by this Agreement under or
pursuant to the HSR Act.
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Section 9.2 Amendment; Waiver.
(a) This Agreement may be amended by the Parties, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval by the Shareholders of the matters presented in connection with the
Merger, but after any such approval no amendment shall be made without the
approval of the Shareholders if such amendment changes the Merger Consideration
or alters or changes any of the other terms or conditions of this Agreement in a
manner that materially adversely affects the rights of the Shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the Parties.
(b) At any time prior to the Effective Time, the Parties may (i) extend the
time for the performance of any of the obligations or other acts of the Parties,
(ii) waive any inaccuracies in the representations and warranties of one or more
Parties contained in this Agreement or in any document, certificate or writing
delivered pursuant to this Agreement or (iii) waive compliance with any of the
agreements or conditions of the Parties contained in this Agreement. Any
agreement on the part of any Party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
Party.
Section 9.3 Survival. The respective representations and warranties of
Parent, Acquisition and the Company contained herein or in any certificates or
other documents delivered prior to or as of the Effective Time shall not survive
beyond the Effective Time. The covenants and agreements of the Parties
(including the Surviving Corporation after the Merger) shall survive the
Effective Time without limitation (except for such covenants and agreements
which, by their terms, contemplate a shorter survival period).
Section 9.4 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission provided that a confirmed
delivery by a standard overnight carrier or a hand delivery is made within two
business days of the date such facsimile is sent or (b) confirmed delivery by a
standard overnight carrier or when delivered by hand, addressed at the following
addresses (or at such other address for a Party as shall be specified by like
notice):
(a) if to the Company, to:
David's Bridal, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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and
(b) if to Parent or Acquisition, to:
The May Department Stores Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 314-342-4422
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
The May Department Stores Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Section 9.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" when used in this Agreement shall mean
that the information referred to has been made available if requested by the
Party to which such information is to be made available. The words "Affiliate"
and "Associate" when used in this Agreement shall have the respective meanings
ascribed to them in Rule 12b-2 under the Exchange Act. The phrase "beneficial
ownership" and words of similar import when used in this Agreement shall have
the meaning ascribed to it in Rule 13d-3 under the Exchange Act.
Section 9.6 Section Headings; Section References. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein to a
particular "Section" shall mean a reference to that Section in this Agreement
unless otherwise provided.
Section 9.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
be considered one and the same agreement.
Section 9.8 Entire Agreement. This Agreement, together with the
Disclosure Schedule, Annex A and the Confidentiality Agreement, (i) constitutes
the entire agreement between the Parties on the subject matter of this
Agreement, and supersedes all prior agreements and understandings (written and
oral), among the Parties with respect to the subject matter of this Agreement
and (ii) except as provided in Section 6.7, is not intended to confer upon any
Person other than the Parties any rights or remedies under this Agreement.
Section 9.9 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 9.10 Governing Law; Waiver of Jury Trial; Enforcement. This
Agreement shall be governed and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of conflicts of law
thereof. Each Party (a) consents to submit itself to the nonexclusive personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, and (b) agrees that it
will not attempt to deny such personal jurisdiction by motion or other request
for leave from any such court.
Section 9.11 Assignment; Binding Effect. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement shall be assigned
or delegated by any of the Parties (whether by operation of
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law or otherwise) without the prior written consent of the other Parties, except
that Acquisition may, in its sole discretion, assign any or all of its rights,
interests and obligations under this Agreement to Parent or any majority-owned
Affiliate of Parent. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns. Any assignment not permitted under this
Section 9.11 shall be null and void.
Section 9.12 Enforcement of Agreement. The Parties agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including specific performance, without bond or
other security being required.
Section 9.13 Continuation of Attorney-Client Privilege. The Company has
been represented by counsel in connection with the Merger and representatives of
the Company, including certain of the Key Executives, have had and through the
Closing will have communications with such counsel concerning or related to the
Merger, the reasons for the Merger, alternatives available to the Company to
resolve its financial situation, existing or possible financing arrangements,
and other similar or related matters that are entitled to be treated as
confidential attorney-client communications under the Delaware Lawyers' Rules of
Professional Conduct and Delaware law (collectively, the "Merger
Communications"). Subsequent to the consummation of the transactions
contemplated by this Agreement, the confidential nature of the Merger
Communications shall be preserved and, therefore, the Merger Communications
shall be treated as confidential by Parent and shall not be directly or
indirectly disclosed to or used by Parent or any representative of Parent or the
Company, notwithstanding that the Company is owned by Parent.
Section 9.14 Finders or Brokers. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated with respect to Parent and Credit Suisse First Boston Corporation
with respect to the Company, a copy of whose engagement agreement has been
provided by the Company to Parent, neither Parent nor the Company nor any of
their respective Subsidiaries has employed any investment banker, broker, finder
or intermediary in connection with the transactions contemplated hereby who
would be entitled to any fee or any commission in connection with or upon
consummation of the Offer or the Merger.
Section 9.15 Publicity. The initial press release with respect to the
Offer and the Merger shall be a joint press release. Thereafter, subject to
their respective legal obligations (including requirements of stock exchanges
and other similar regulatory bodies), the Company, Parent and Acquisition shall
consult with each other before issuing any such press release or otherwise
making public statements with respect to the Offer or Merger.
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IN WITNESS WHEREOF, Parent, Acquisition and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
THE MAY DEPARTMENT STORES COMPANY,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary
ALPHA OMEGA ACQUISITION, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President & Secretary
DAVID'S BRIDAL, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President & CEO
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ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A have the meanings set forth in
the attached Agreement, except that the term "the Agreement" shall be deemed to
refer to the attached Agreement.
Notwithstanding any other provision of the Offer, Acquisition shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act (relating to Acquisition's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may
postpone the acceptance for payment of and payment for Shares tendered, and,
except as set forth in this Agreement, terminate the Offer as to any Shares not
then paid for if (i) the Minimum Condition shall not have been satisfied at the
scheduled expiration date of the Offer, (ii) any applicable waiting period under
the HSR Act shall not have expired or been terminated, or (iii) immediately
prior to the expiration of the Offer, any of the following conditions shall
exist:
(a) there shall have been entered, enforced or issued by any Governmental
Entity, any judgment, order, injunction or decree (i) which makes illegal,
restrains or prohibits or makes materially more costly the making of the Offer,
the acceptance for payment of, or payment for, any Shares by Parent, Acquisition
or any other Affiliate of Parent, or the consummation of the Merger transaction;
(ii) which prohibits or limits materially the ownership or operation by the
Company, Parent or any of their Affiliates of all or any material portion of the
business or assets of the Company, Parent or any of their Affiliates, or compels
the Company, Parent or any of their Affiliates to dispose of or hold separate
all or any portion of the business or assets of the Company, Parent or any of
their Affiliates; (iii) which imposes or confirms limitations on the ability of
Parent, Acquisition or any other Affiliate of Parent to exercise full rights of
ownership of any Shares, including, without limitation, the right to vote any
Shares acquired by Acquisition pursuant to the Offer or otherwise on all matters
properly presented to the Shareholders, including, without limitation, the
approval and adoption of this Agreement and the transactions contemplated by
this Agreement; (iv) which requires divestiture by Parent, Acquisition or any
other Affiliate of Parent of any Shares; or (v) which otherwise would have a
Material Adverse Effect on the Company to the extent that it relates to or
arises out of the transactions contemplated by this Agreement or Parent; except
in the case of clauses (i) through (v), where such events are consistent with or
result from Parent's, Acquisition's and the Company's obligations under Section
6.4 of the Agreement;
(b) there shall have been any statute, rule, regulation, legislation or
interpretation enacted, enforced, promulgated, amended or issued by any
Governmental Entity or deemed by any Governmental Entity applicable to (i)
Parent, the Company or any Subsidiary or Affiliate of Parent or the Company or
(ii) any transaction contemplated by this Agreement, other than the HSR Act,
which is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above,
except where such events are consistent with or result from Parent's,
Acquisition's and the Company's obligations under Section 6.4 of the Agreement;
(c) there shall have occurred any changes, conditions, events or
developments that would have, or be reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on the Company and the Company
Subsidiaries, taken as a whole;
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the New York Stock Exchange or the
National Association of Securities Dealers Automated Quotation other than a
shortening of trading hours or any coordinated trading halt triggered solely as
a result of a specified increase or decrease in a market index, (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) any limitation (whether or not mandatory) on
the extension of credit by banks or other lending institutions in the United
States, (iv) the commencement of a war, material armed hostilities or any other
material international or national calamity involving the United States or (v)
in the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;
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(e) (i) it shall have been publicly disclosed or Parent shall have
otherwise learned that any Person, other than Parent or any of its
Affiliates, shall have acquired or entered into a definitive agreement or
agreement in principle to acquire beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of the then outstanding Shares, or shall have been granted
any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of 50% or more of the then outstanding Shares, or
(ii) the Board of Directors of the Company or any committee thereof
shall have (A) withdrawn, modified or changed, in a manner adverse to
Parent or Acquisition, the recommendation by such Board of Directors or
such committee of the Offer, the Merger or this Agreement, (B) approved or
recommended, or proposed publicly to approve or recommend, an Acquisition
Proposal, (C) caused the Company to enter into any Acquisition Agreement
relating to any Acquisition Proposal, or (D) resolved to do any of the
foregoing;
(f) the representations and warranties of the Company set forth in the
Agreement shall not be true and correct, individually or in the aggregate with
other representations and warranties of the Company set forth in the Agreement,
without regard to any qualification or limitation contained in or related to any
such representation or warranty relating to Material Adverse Effect, in a manner
having a Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole, in each case, as if such representations and warranties were
made as of such time on or after the date of the Agreement (except to the extent
that such representations and warranties speak as of a specific date or as of
the date hereof, in which case such representations and warranties shall not be
so true and correct in a manner having a Material Adverse Effect on the Company
and the Company Subsidiaries, taken as a whole, as of such specific date or as
of the date hereof, respectively);
(g) the Company 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 the Company to be performed or complied with by it
under the Agreement;
(h) the Agreement shall have been terminated in accordance with its terms;
or
(i) Acquisition and the Company shall have agreed that Acquisition shall
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder; which, in the reasonable good faith judgment of the Parent in
any such case, and regardless of the circumstances (including any action or
inaction by Parent or any of its Affiliates) giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the benefit of Acquisition and Parent and
may be asserted by Acquisition or Parent regardless of the circumstances giving
rise to any such condition or may be waived by Acquisition or Parent in whole or
in part at any time and from time to time in their sole and absolute discretion.
The failure by Parent or Acquisition at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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