AGREEMENT AND PLAN OF MERGER
BY AND AMONG
JITNEY-JUNGLE STORES OF AMERICA, INC.,
DELTA ACQUISITION CORPORATION
and
DELCHAMPS, INC.
July 8, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER...................................................... 1
1.1 The Offer .................................................1
1.2 Company Action............................................ 3
1.3 Directors .................................................5
ARTICLE II
THE MERGER..................................................... 6
2.1 The Merger................................................ 6
2.2 Effect of the Merger...................................... 6
2.3 Closing; Consummation of the Merger....................... 6
2.4 Articles of Incorporation; Bylaws; Directors and
Officers...................................................6
2.5 Conversion of Securities.................................. 7
2.6 Exchange of Certificates ..................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................9
3.1 Organization and Qualification; Subsidiaries.............. 9
3.2 Capitalization........................................... 10
3.3 Authority Relative to this Agreement .....................11
3.4 Non-Contravention; Approvals and Consents ................11
3.5 Brokers and Finders. .....................................12
3.6 SEC Filings.............................................. 12
3.7 Absence of Certain Changes or Events .....................13
3.8 Legal Proceedings........................................ 13
3.9 Compliance with Law...................................... 13
3.10 Taxes.................................................... 13
3.11 ERISA and Related Matters................................ 15
3.12 Environmental Matters.................................... 16
3.13 Information Supplied..................................... 18
3.14 Real Property............................................ 18
3.15 Labor Matters............................................ 19
3.16 Contracts; Certain Agreements............................ 20
3.17 Absence of Certain Liabilities ...........................21
3.18 Opinion of Financial Advisor .............................21
3.19 Takeover Statute .........................................21
3.20 Insurance................................................ 21
3.21 Intellectual Property ....................................21
3.22 Certain Agreements .......................................22
3.23 Indemnification Claims................................... 22
3.24 Prior Negotiations .......................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.............. 23
4.1 Organization of Parent and Sub ...........................23
4.2 Authority Relative to this Agreement..................... 23
4.3 Non-Contravention; Approvals and Consents ................23
4.4 Legal Proceedings ........................................24
4.5 Financing ................................................24
4.6 Information Supplied..................................... 25
ARTICLE V
COVENANTS OF THE COMPANY ......................................25
5.1 Conduct of Business by the Company Pending the Merger.....25
5.2 No Solicitation.......................................... 27
5.3 Company Stock Plans ......................................29
ARTICLE VI
ADDITIONAL COVENANTS.......................................... 29
6.1 Proxy Statement and Special Meeting...................... 29
6.2 HSR Matters ..............................................30
6.3 Publicity ................................................31
6.4 Investigation; Confidentiality ...........................32
6.5 Directors'and Officers'Indemnification and Insurance......32
6.6 Change of Control Agreements .............................34
6.7 Fees and Expenses ........................................34
6.8 Conduct of Business of Sub ...............................34
6.9 Cooperation ..............................................34
6.10 Post-Offer Action ........................................34
6.11 Transaction Litigation ...................................35
ARTICLE VII
CONDITIONS TO THE MERGER ......................................35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER .............................35
8.1 Termination ..............................................35
8.2 Effect of Termination ....................................37
8.3 Termination Payment ......................................37
8.4 Amendment ................................................39
8.5 Waiver ...................................................39
ARTICLE IX
GENERAL PROVISIONS............................................ 39
9.1 Non-Survival of Representations, Warranties and
Agreements................................................39
9.2 Certain Definitions ......................................39
9.3 Notices ..................................................40
9.4 Headings .................................................41
9.5 Applicable Law ...........................................41
9.6 No Assignment; Binding Effect ............................41
9.7 Counterparts .............................................41
9.8 Third Party Beneficiaries ................................41
9.9 Invalid Provisions .......................................41
9.10 Specific Performance .....................................41
9.11 Entire Agreement .........................................42
9.12 Days .....................................................42
9.13 Jurisdiction. ............................................42
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), dated
as of July 8, 1997, is by and among Jitney-Jungle Stores of
America, Inc., a Mississippi corporation ("Parent"), Delta
Acquisition Corporation, an Alabama corporation and a
wholly-owned subsidiary of Parent ("Sub"), and Delchamps, Inc.,
an Alabama corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub
and the Company have each determined that it is advisable and
in the best interests of their respective shareholders, on the
terms and subject to the conditions in this Agreement (i) for
Sub to make a cash tender offer to purchase all issued and
outstanding shares of the Company's common stock, $.01 par
value per share (the "Common Stock") and associated preferred
share purchase rights (the "Rights") issued pursuant to the
Rights Agreement (defined in Section 1.2) (such shares of
Common Stock and associated Rights, the "Shares"), and (ii)
following the consummation of the cash tender offer, for Sub to
merge with and into the Company, with the result that the
Company will become a wholly-owned subsidiary of Parent (the
"Merger").
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and none of the
events set forth in paragraph (c) of Annex A hereto shall have
occurred and be existing, and subject to the provisions of this
Agreement, no later than five business days after the date
hereof, Parent shall cause Sub to, and Sub shall, commence
(within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934 (the "Exchange Act")) a tender offer (the "Offer")
to purchase all of the issued and outstanding Shares, at a
price per Share of $30.00 (such amount, or any greater amount
per Share paid pursuant to the Offer, the "Per Share Price")
net to each seller in cash. Subject to the provisions of this
Agreement, Sub shall, and Parent shall cause Sub to, accept for
payment and pay the Per Share Price for any Shares validly
tendered and not withdrawn pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) The obligation of Parent and Sub to consummate the
Offer, and to accept for payment and pay for Shares tendered
pursuant to the Offer, shall be subject to only those
conditions set forth in Annex A. Parent and Sub may waive any
such condition other than (i) the Minimum Condition (defined in
Annex A), provided that Parent and Sub may reduce the Minimum
Condition to a majority of the outstanding Shares on a fully
diluted basis, or (ii) the condition relating to the expiration
of the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). Parent
and Sub expressly reserve the right (but have no obligation) to
increase the consideration per share payable in the Offer or
amend, modify or make any changes in the terms and conditions
of the Offer except that neither Parent nor Sub shall, without
the prior written consent of the Company's Board of Directors,
(i) impose conditions to the Offer in addition to those set
forth in Annex A, (ii) decrease the Per Share Price, (iii)
change the form of consideration, (iv) reduce the number of
Shares sought to be purchased in the Offer, (v) extend the
expiration date of the Offer (except as provided below in this
paragraph), or (vi) otherwise change any term of the Offer in
any manner adverse to the holders of Shares. The Offer shall
expire on the twentieth business day after its commencement,
except as provided below. The parties acknowledge their
intention to consummate the transactions contemplated hereby as
soon as reasonably practicable. To that end (provided that the
conditions set forth in paragraphs (c)(iii) through (c)(ix) and
(e) of Annex A have been met), Parent and Sub shall use
commercially reasonable best efforts, subject to the terms of
this Agreement (including Section 6.2 and Annex A), to
consummate the Offer within 30 business days following
commencement of the Offer, including the obtaining of requisite
financing, the receipt of the consent of the holders of its 12%
Senior Notes due 2006 as contemplated by Annex A and receipt of
requisite governmental approvals (including in respect of the
HSR Act) as contemplated by Annex A. If the conditions set
forth in paragraphs (c)(iii) through (c)(ix) and (e) of Annex A
have been met but the conditions set forth in either or both of
paragraphs (b) or (d) of Annex A are not met within 30 business
days following commencement of the Offer, Parent and Sub shall
use commercially reasonable best efforts, subject to the terms
of this Agreement (including Section 6.2 and Annex A), to
consummate the Offer on or prior to the sixtieth calendar day
following commencement of the Offer. Notwithstanding the
foregoing, the parties acknowledge Parent's and Sub's right,
without the consent of the Company, to extend the Offer on one
or more occasions as follows: (i) extend the Offer, if at the
then-scheduled expiration date of the Offer, any of the
conditions to Sub's obligations to accept for payment and pay
for Shares shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (ii) extend the Offer
for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission ("SEC")
or the staff thereof applicable to the Offer, (iii) extend the
Offer on one or more occasions for an aggregate period of not
more than 5 business days if the Minimum Condition has been
satisfied but less than 80% of the outstanding Shares (on a
fully diluted basis) have been validly tendered and not
withdrawn, (iv) extend the Offer for any reason on one or more
occasions for an aggregate period of not more than 10 business
days beyond the initial expiration date or the latest
expiration date that would otherwise be permitted under clause
(i), (ii) or (iii) of this sentence, and (v) extend the Offer
on one or more occasions for an aggregate period of not more
than 60 calendar days after the date of the commencement of the
Offer in order for Parent to obtain financing on terms
acceptable to it; provided, however, that without the written
consent of the Company, Parent and Sub may not extend the Offer
(A) for any period that would end more than 60 calendar days
after the date of the commencement of the Offer, unless on such
sixtieth day any of the conditions on Annex A are not
satisfied, or (B) for any period that would end more than 90
calendar days after the date of the commencement of the Offer;
provided further that if on the initial expiration date of the
Offer, or any extension thereof, the conditions set forth in
paragraphs (c)(iii) through (c)(ix) and (e) of Annex A have
been satisfied or waived but any of the conditions set forth in
paragraphs (b), (c)(i), (c)(ii) or (d) in Annex A shall not
have been satisfied or waived, Parent and Sub agree to extend
the Offer one or more times (for such periods as Parent and Sub
shall determine in their sole discretion) until 60 calendar
days after the date of the commencement of the Offer; provided,
further, that Parent and Sub may extend the Offer beyond such
90 calendar day period if the conditions set forth in Annex A
shall not have been satisfied as a result of a breach by the
Company of its obligations under this Agreement.
(c) On the date of commencement of the Offer, Parent and
Sub shall file with the Securities and Exchange Commission (the
"SEC") with respect to the Offer a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1"), and shall take such steps as
are reasonably necessary to cause the Offer to Purchase
(defined below) to be disseminated to the holders of Shares as
and to the extent required by applicable federal securities
laws. The Schedule 14D-1 shall contain an offer to purchase
(the "Offer to Purchase") and forms of the related letter of
transmittal and summary advertisement (the Offer to Purchase
and such other documents, together with any amendments or
supplements thereto, collectively, the "Offer Documents"). The
Company and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule 14D-1 and the Offer
Documents prior to their being filed with the SEC or
disseminated to the Company's shareholders. Parent and Sub
shall provide the Company and its counsel with a copy of any
written comments that Parent or Sub receives from the SEC or
its staff with respect to the Schedule 14D-1 and the Offer
Documents promptly after receipt of any such comments.
(d) Parent shall provide or cause to be provided to Sub
on a timely basis the funds necessary to accept for payment,
and pay for, any Shares that Sub becomes obligated to accept
for payment, and pay for, pursuant to the Offer.
(e) The parties understand and agree that the Per Share
Price has been calculated based upon the accuracy of the
representation and warranty set forth in Section 3.2(a) and
that, in the event the number of outstanding Shares or Shares
issuable upon the exercise of, or subject to, options or other
agreements exceeds the amounts specifically set forth in
Section 3.2(a) by more than 10,000 Shares (including without
limitation as a result of any stock split, reverse stock split,
stock dividend, including any dividend or distribution of
securities convertible into Shares, recapitalization, or other
like change occurring after the date of this Agreement), the
Per Share Price shall be appropriately adjusted downward. The
provisions of this paragraph (e) shall not, however, affect the
representation set forth in Section 3.2(a).
1.2 Company Action.
(a) The Company represents that (i) the Board of
Directors of the Company (the "Board of Directors") has by
unanimous vote of those present at the meeting at which the
Offer and the Merger were considered duly approved the Offer
and the Merger and this Agreement and has resolved to recommend
acceptance of the Offer and approval of the Merger by the
Company's shareholders; (ii) the affirmative vote of the
holders of record of at least two-thirds of the Shares
outstanding on the record date for the Special Meeting (defined
below) and entitled to vote (the "Requisite Shareholder
Approval") is the only vote of the holders of any class or
series of the capital stock of the Company required to approve
the Merger; and (iii) the Company has taken all necessary
actions so that the provisions of Article Eleven of the
Company's Articles of Incorporation will not apply to this
Agreement, the Offer, the Merger, or the acquisition of Shares
by Parent or Sub pursuant to this Agreement. In addition, the
Company represents that it has adopted Amendment No. 2 to the
Rights Agreement dated as of October 14, 1988 by and between
the Company and First Alabama Bank as Rights Agent, as amended
by the Amendment to Rights Agreement dated as of October 16,
1992 by and between the Company and the Rights Agent (as so
amended, the "Rights Agreement") and that a copy of such
Amendment No. 2 has been delivered by the Company to Parent;
that as of the date hereof and after giving effect to the
execution and delivery of this Agreement, each Right is
represented by the certificate representing the associated
Share and is not exercisable or transferable apart from the
associated Share; that there has not been a "Distribution Date"
or "Shares Acquisition Date," and that the Company has taken
all necessary actions so that the execution and delivery of
this Agreement and the consummation of the Offer and the Merger
will not result in the triggering of the provisions of Section
11 or Section 13 of the Rights Agreement or the occurrence of a
"Distribution Date" or "Shares Acquisition Date" and will not
result in Parent, Sub or any of their affiliates or associates
becoming an "Acquiring Person" (as such terms are defined in
the Rights Agreement) and that upon consummation of the Offer
the Rights will no longer be outstanding and the former holders
of the Rights will not have any claims or rights thereunder
(without any necessity to redeem the Rights to effectuate the
foregoing). The Company has been advised that all of its
directors intend either to tender their Shares pursuant to the
Offer or (solely in the case of directors who would as a result
of the tender incur liability under Section 16(b) of the
Exchange Act) to vote in favor of the Merger.
(b) On the date the Schedule 14D-1 is filed with the SEC,
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") and shall take such steps as are reasonably
necessary to cause the Schedule 14D-9 to be disseminated to the
holders of the Shares as and to the extent required by
applicable federal securities laws. Subject to the provisions
of Sections 5.2 and 8.3, the Offer Documents and the Schedule
14D-9 shall contain the recommendation of the Board of
Directors that the Company's shareholders accept the Offer and
vote to approve the Merger. Parent and its counsel shall be
given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC or
disseminated to the Company's shareholders. The Company shall
provide Parent and its counsel with a copy of any written
comments that the Company receives from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt of
any such comments.
(c) The Company shall promptly furnish Sub with mailing
labels containing the names and addresses of the record holders
of Shares and with lists of securities positions of Shares held
in stock depositories, each as of a recent date, and shall
furnish Sub with such additional information, including updated
lists of shareholders, mailing labels and lists of securities
positions, as Sub may reasonably request for the purpose of
communicating the Offer to the holders of Shares. Except as
and to the extent required by 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 Sub shall hold in confidence the information
contained in such labels and listings, and any other
information relating to the holders of Shares received from the
Company or its transfer agent, shall use such information only
in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with Section 8.1, shall
deliver to the Company all such information, including all
copies of and extracts or summaries from such information, then
in their possession or control.
1.3 Directors.
(a) Promptly upon payment by Sub for the Shares pursuant
to the Offer, Sub shall be entitled to designate such number of
directors, rounded up to the next whole number, as will give
Sub representation on the Board of Directors equal to at least
that number of directors equal to the product of (i) the total
number of directors on the Board of Directors and (ii) the
percentage that the number of Shares so purchased bears to the
number of Shares outstanding, and the Company shall, at such
time, use its best efforts to cause the appropriate number of
directors who are members of the Board of Directors as of the
date hereof to resign and Sub's designees to be appointed or
elected; provided, however, that notwithstanding the foregoing,
until the Effective Time (defined in Section 2.3), there shall
be, to the extent they are willing to continue to serve, at
least three directors on the Board of Directors who are
directors on the date hereof and who are not designees nor
officers, directors, employees or affiliates of Parent or Sub
nor are employees of the Company or any of its Subsidiaries
(the "Independent Directors"); provided, further, that if the
number of Independent Directors shall be reduced below three
for any reason, the Board of Directors shall, subject to the
approval of the remaining Independent Directors, if any,
designate a person or persons to fill the vacancy or vacancies
who are directors on the date hereof and not an officer,
director, employee or affiliate of Parent or Sub nor an
employee of the Company. Any vacancies that cannot be filled
in the foregoing manner shall be filled by the Board of
Directors at its discretion.
(b) The Company's obligations to appoint Sub's designees
to the Board of Directors shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. Parent and Sub
shall supply and shall be solely responsible for all
information with respect to themselves, their officers,
directors and affiliates, and Sub's designees required by
Section 14(f) and Rule 14f-1.
(c) Following the election of Sub's designees pursuant to
this Section and until the Effective Time, any amendment of
this Agreement or the Articles of Incorporation or Bylaws of
the Company, any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of
any of the obligations or other acts of Parent or Sub, any
waiver of any of the Company's rights hereunder, or any
transaction between Parent (or any affiliate or associate
thereof) and the Company shall require the concurrence of a
majority of the Independent Directors. The Independent
Directors shall have the authority to retain such counsel and
other advisors at the expense of the Company as are reasonably
appropriate to assist them in the exercise of their duties in
connection with this Agreement. In addition, the Independent
Directors shall have the authority to institute any action on
behalf of the Company to enforce performance of this Agreement.
ARTICLE II
THE MERGER
2.1 The Merger. At the Effective Time (defined in Section
2.3), in accordance with this Agreement and the provisions of
the ABCA, Sub shall be merged with and into the Company, the
separate existence of Sub shall cease, and the Company shall
continue as the surviving corporation under the corporate name
it possesses immediately prior to the Effective Time. The
Company hereinafter sometimes is referred to as the "Surviving
Corporation." Notwithstanding the foregoing, Parent may elect
at any time after consummation of the Offer (or prior to the
consummation of the Offer and with the written consent of the
Company, which shall not be withheld unreasonably) and prior to
the fifth business day immediately preceding the date of the
notice of the meeting of shareholders of the Company to
consider approval of the Merger and this Agreement that instead
of merging Sub into the Company as hereinabove provided, to
merge the Company with and into Parent, Sub or another direct
or indirect wholly-owned subsidiary of Parent; provided however
that each representation, warranty, covenant and agreement of
Parent and Sub contained herein and relating to Sub shall
thereupon be deemed to be made by Parent and such subsidiary
and to relate to such subsidiary, and provided further that the
Company shall not be deemed to have breached any of its
representations, warranties or covenants herein solely by
reason of such election. In such event the parties shall
execute an appropriate amendment to this Agreement in order to
reflect the foregoing and to provide that Parent, Sub or such
other subsidiary of Parent shall be in all respects substituted
for Sub and shall be the Surviving Corporation.
2.2 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable
provisions of the ABCA.
2.3 Closing; Consummation of the Merger.
(a) The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. local time at the New York or Philadelphia
offices of Dechert Price & ▇▇▇▇▇▇, or at such other location as
specified by Sub and on a date to be specified by Sub, which
date shall be as promptly as practicable after the satisfaction
or waiver of the conditions to the Merger set forth herein (the
"Closing Date").
(b) As soon as practicable after the satisfaction or
waiver of the conditions to the Merger set forth herein, the
parties shall cause the Merger to be consummated by delivering
to the Secretary of State of the State of Alabama for filing
articles of merger and any other documents in such form as
required by the relevant provisions of the ABCA and shall cause
the Merger to take effect on the date of such filing (the time
at which the Merger takes effect, the "Effective Time").
2.4 Articles of Incorporation; Bylaws; Directors and
Officers. The Articles of Incorporation of the Surviving
Corporation shall be the Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time,
until thereafter amended as provided therein and under the
ABCA. The Bylaws of the Surviving Corporation shall be the
Bylaws of the Company, as in effect immediately prior to the
Effective Time, until thereafter amended as provided therein
and under the ABCA. The directors of Sub immediately prior to
the Effective Time will be the initial directors of the
Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time (unless any directors
or officers of Parent or Sub are so designated in writing by
Parent prior to the Effective Time) will be the initial
officers of the Surviving Corporation, in each case until their
successors are elected or appointed.
2.5 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of
Parent, Sub, the Company or the holder of any of the securities
of the Company or Sub:
(a) Each Share issued and outstanding immediately prior
to the Effective Time (other than Shares to be canceled
pursuant to Section 2.5(b) and Dissenting Shares as defined in
Section 2.5(d)), together with associated Rights, shall be
converted into and become the right to receive the Per Share
Price. All such Shares and associated Rights shall no longer
be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate
representing any such Shares and associated Rights shall cease
to have any rights with respect thereto, except the right to
receive the Per Share Price, less any required withholding
taxes, upon the surrender of such certificate in accordance
with Section 2.6, without interest.
(b) All Shares, together with associated Rights, that are
owned by the Company as treasury stock and all Shares, together
with associated Rights, owned by Parent, Sub or any other
wholly-owned Subsidiary of Parent shall be canceled and retired
and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Each share of common stock, par value $.01 per share,
of Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation. Each
certificate representing outstanding shares of the common
stock of Sub at the Effective Time shall thereafter represent
an equal number of shares of the common stock of the Surviving
Corporation.
(d) (i) Notwithstanding any provision of this Agreement
to the contrary, each outstanding Share the holder of which has
perfected such holder's right to demand payment for such
holder's Shares in accordance with Article 13 of the ABCA and
has not effectively withdrawn or lost such right (a "Dissenting
Share"), shall not be converted into or represent the right to
receive the Per Share Price, but the holder thereof shall be
entitled only to such rights as are granted by Article 13 of
the ABCA; provided, however, that any Dissenting Share held by
a person at the Effective Time who shall, after the Effective
Time and in accordance with the ABCA, withdraw such person's
demand for payment or lose such person's dissenters' rights,
shall be deemed to be converted as of the Effective Time into
the right to receive the Per Share Price pursuant to Section
2.5(a).
(ii) The Company shall give Parent (A) prompt notice
and a copy of any written notice of a shareholder's intent to
demand payment, of any request to withdraw a demand for payment
and of any other instruments delivered to it pursuant to
Article 13 of the ABCA and (B) the opportunity to direct all
negotiations and proceedings with respect to demands for
payment under Article 13 of the ABCA. The Company shall not
voluntarily make any payment with respect to any demand for
payment and shall not, except with the prior written consent of
Parent, settle or offer to settle any such demands.
2.6 Exchange of Certificates.
(a) At such times as shall be necessary to make the
payments pursuant to Section 2.5 to holders of Shares, Parent
shall make available to the Surviving Corporation, and the
Surviving Corporation shall deposit with a bank or trust
company designated by Parent before the Closing Date and
reasonably acceptable to the Company (the "Payment Agent") an
amount in cash equal to the aggregate Per Share Price to which
holders of Shares shall be entitled upon consummation of the
Merger, to be held for the benefit of and distributed to such
holders in accordance with this Section. The Payment Agent
shall agree to hold such funds (such funds, together with
earnings thereon, being referred to herein as the "Payment
Fund") for delivery as contemplated by this Section and upon
such additional terms as may be agreed upon by the Payment
Agent, the Company and Parent. If for any reason (including
losses) the Payment Fund is inadequate to pay the cash amounts
to which holders of Shares shall be entitled, Parent and the
Surviving Corporation shall in any event remain liable, and
Parent shall make available to the Surviving Corporation
additional funds for the payment thereof. The payment Agent
shall invest portions of the Payment Fund as Parent directs.
All interest and other income earned in respect of the Payment
Fund shall inure to the benefit of, and shall be paid to, the
Surviving Corporation. The Payment Fund shall not be used for
any purpose except as expressly provided in this Agreement.
(b) As soon as practicable after the Effective Time,
Parent and the Surviving Corporation shall cause the Payment
Agent to mail to each record holder of one or more certificates
(the "Certificates") that immediately prior to the Effective
Time represented outstanding Shares and associated Rights that
have been converted pursuant to Section 2.5(a) into the right
to receive the Per Share Price (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon
receipt of the Certificates by the Payment Agent and shall be
in such form and have such other provisions as the Surviving
Corporation may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange
for the Per Share Price. Upon surrender of a Certificate to
the Payment Agent for cancellation, together with such letter
of transmittal duly executed and completed in accordance with
its terms, the holder of such Certificate shall be entitled to
receive in exchange therefor a check representing the Per Share
Price for each Share represented thereby, and the Certificate
so surrendered shall forthwith be canceled. In no event shall
the holder of any Certificate be entitled to receive interest
on any funds to be received by reason of the Merger, including
any interest earned by the Payment Fund. In the event of a
transfer of ownership of Shares that is not registered in the
transfer records of the Company, the Per Share Price may be
paid to a transferee if the Certificate representing such
Shares is presented to the Payment Agent accompanied by all
documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section, each
Certificate shall be deemed after the Effective Time to
represent only the right to receive upon such surrender the Per
Share Price for each Share represented thereby as contemplated
by this Article II.
(c) All cash paid upon the surrender for exchange of
Certificates in accordance with the terms hereof shall be
deemed to have been paid in full satisfaction of all rights
pertaining to the Shares and the Rights represented thereby.
From and after the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding
immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and
exchanged as provided in this Section, subject in the case of
Dissenting Shares, to applicable law and the provisions of this
Agreement.
(d) Any portion of the Payment Fund that remains
unclaimed by the Company's shareholders six months after the
Effective Time shall be delivered to the Surviving Corporation
upon demand, and any of the Company's shareholders who have not
theretofore complied with this Section shall thereafter look
only to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) as general creditors
for payment of their claim for the Per Share Price. Neither
Parent nor the Surviving Corporation shall be liable to any
holder of Shares for cash representing the Per Share Price
delivered to a public official in accordance with any
applicable abandoned property, escheat or similar law.
(e) The Surviving Corporation shall be entitled to deduct
and withhold from the Per Share Price or any payment made in
respect of Dissenting Shares such amounts as the Surviving
Corporation is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local
or foreign tax law. Such 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule attached as
Annex B (the "Disclosure Schedule") in a manner that makes
reasonably apparent that such matter relates to the particular
representation or warranty below, the Company represents and
warrants to each of Parent and Sub as follows:
3.1 Organization and Qualification; Subsidiaries.
(a) The Company has one Significant Subsidiary (defined
in Section 9.2), Supermarket Cigarette Sales, Inc., a Louisiana
corporation. The Company and its Significant Subsidiary are
corporations duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation and have all requisite corporate power and
authority to own their respective properties and carry on their
respective businesses as now being conducted. The Company and
its Significant Subsidiary are duly qualified as foreign
corporations to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or
held under lease or the nature of their activities makes such
qualification necessary, except to the extent that any failure
to so qualify or be in good standing would not have a Material
Adverse Effect or adversely affect the ability of the Company
to perform its obligations hereunder or to consummate the
Merger. As used herein, "Material Adverse Effect" means any
change or effect that is materially adverse to the condition
(financial or otherwise), total assets, total liabilities,
business, results of operations or prospects of the Company and
its Subsidiaries taken as a whole, including without limitation
any such change or effect that prevents Parent and Sub from
obtaining their contemplated financing for the Offer and the
Merger. The Company has made available to Parent correct and
complete copies of the articles of incorporation and bylaws of
the Company and the Significant Subsidiary.
(b) The only Subsidiaries of the Company are those set
forth in Section 3.1 of the Disclosure Schedule. Except as set
forth in Section 3.19 of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries owns, directly or
indirectly, any interest or investment (whether equity or
debt) in any corporation, partnership, limited liability
company, joint venture, business, trust or other person (other
than the Company's Subsidiaries).
3.2 Capitalization.
(a) The authorized capital stock of the Company consists
of (i) 25,000,000 shares of Common Stock, of which as of the
date hereof, 7,127,743 shares were issued and outstanding
(including 10,800 shares that were issued and outstanding under
the 1987 Restricted Stock Plan and remained subject to a
repurchase option thereunder) and no shares were held as
treasury shares and (ii) 5,000,000 shares of Preferred Stock,
no par value, of which, as of the date hereof, no shares were
issued and outstanding and 80,000 shares were reserved for
issuance pursuant to the Rights Agreement. Except as provided
in the Rights Agreement and except for Shares issuable upon the
exercise of outstanding options to purchase an aggregate of
455,050 Shares (the "Options") pursuant to the 1993 Stock
Incentive Plan and the Directors' Stock Option Plan, there are
no options, warrants or other rights, agreements or commitments
obligating the Company to issue any shares of its capital stock
or any securities convertible into its capital stock or to
repurchase or redeem any shares of its capital stock. All
Shares outstanding are, and all Shares subject to issuance as
aforesaid, when issued on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be,
duly authorized, validly issued, fully paid, non-assessable and
free of preemptive rights. There are no shareholder, voting
trust, or other agreements or understandings to which the
Company or any of its Subsidiaries is a party or to which any
of them are bound relating to the voting of any shares of the
capital stock of the Company or any of its Subsidiaries.
(b) All of the outstanding capital stock of the
Significant Subsidiary is duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights and
is owned by the Company free and clear of any claim, lien or
encumbrance. There are no outstanding options, calls or
commitments of any kind relating to the issued or unissued
capital stock or other securities of the Significant
Subsidiary.
3.3 Authority Relative to this Agreement. The Company
has all requisite corporate power and authority to enter into
this Agreement and, subject to the receipt of the Requisite
Shareholder Approval of the Merger, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized
by all necessary corporate (including shareholder) action on
the part of the Company, except for the Requisite Shareholder
Approval of the Merger. This Agreement has been duly and
validly executed and delivered by the Company. Subject to
receipt of the Requisite Shareholder Approval of the Merger,
and assuming the due authorization, execution and delivery of
this Agreement by Parent and Sub, this Agreement constitutes
the legal, valid and binding agreement of the Company
enforceable in accordance with its terms.
3.4 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its
obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, permit the termination
of any provision of, or result in the termination of, the
acceleration of the maturity of, or the acceleration of the
performance of, or result in the creation or imposition of any
lien upon any of the assets or properties of the Company or any
of its Subsidiaries under, any of the terms, conditions or
provisions of (i) the articles of incorporation or bylaws of
the Company or any of its Subsidiaries, or (ii) subject to
receipt of the Requisite Shareholder Approval and the taking of
the actions described in paragraph (b) of this Section, (x) any
statute, law, rule, regulation or ordinance (together, "Laws"),
or any judgment, decree, order, writ, permit or license
(together, "Orders"), of any court, tribunal, arbitrator,
authority, agency, commission, official or other
instrumentality of the United States or any state, county, city
or other political subdivision in the United States, or of any
foreign country (a "Governmental or Regulatory Authority")
applicable to the Company or any of its Subsidiaries or any of
their respective assets or properties, or (y) any note, bond,
mortgage, security agreement, indenture, license, franchise,
contract, lease or other instrument, obligation or agreement of
any kind (together, "Contracts") to which the Company or any of
its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective assets or
properties is bound, or (z) any Employee Plan or Benefit
Arrangement (defined in Section 3.11); except, with respect to
the foregoing clauses (ii) (x), (y) and (z) those which,
individually or in the aggregate, (I) could not reasonably be
expected to have a Material Adverse Effect or adversely affect
the ability of the Company to perform its obligations hereunder
or to consummate the Merger or (II) occur as a result of the
regulatory status of Parent, Sub or their Subsidiaries.
(b) Except for (i) the premerger notification
requirements of the HSR Act, (ii) the requirements of the
Exchange Act and the Nasdaq Stock Market, (iii) the filing of
appropriate documents relating to the Merger required by the
ABCA, and (iv) requirements of Law necessary to transfer liquor
licenses and pharmacy licenses, WIC permits and Food Stamp
permits, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other
person is required, under any Law or Order or any Contract to
which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound, for the execution and
delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder or the consummation of
the transactions contemplated hereby, except those that the
failure to make or obtain, individually or in the aggregate,
(I) could not reasonably be expected to have a Material Adverse
Effect or adversely affect the ability of the Company to
perform its obligations hereunder or to consummate the Merger
or (II) occur as a result of the regulatory status of Parent,
Sub or their Subsidiaries.
3.5 Brokers and Finders. The Company has not employed any
broker or finder to act on its behalf and has not incurred and
will not incur any liability for any brokerage fees or finders'
fees in connection with the transactions contemplated hereby,
other than pursuant to the letter agreement between the Company
and Credit Suisse First Boston Corporation ("CSFBC") dated as
of February 12, 1997, a copy of which has previously been
delivered to Parent.
3.6 SEC Filings. The Company has heretofore made
available to Parent and Sub its (i) Annual Report on Form 10-K
for the year ended June 29, 1996, (ii) Quarterly Reports on
Form 10-Q for the quarters ended September 28, 1996, December
28, 1996 and ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) proxy statements relating to
all of the Company's meetings of shareholders (whether annual
or special) held or scheduled to be held since June 29, 1996
and (iv) each other registration statement, proxy or
information statement, form, report and other document filed by
the Company with the SEC since June 29, 1996 (collectively, the
"SEC Filings"). At the time it was filed, each SEC Filing
(including all exhibits and schedules thereto and documents
incorporated by reference therein) and, at the time it is
filed, any SEC Filing filed by the Company with the SEC after
the date of this Agreement (i) complied, or with respect to
those not yet filed will comply, in all material respects with
the requirements of the Exchange Act and (ii) did not, or with
respect to those not yet filed will not, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial
statements of the Company and its consolidated Subsidiaries
included in the SEC Filings (including, in each case, the notes
and schedules, if any, thereto) (the "Company Financial
Statements"), were and will be prepared in accordance with
generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto or, in the case of
the unaudited statements, as permitted by Form 10-Q of the
SEC), complied as of their respective dates in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, and fairly presented and will present fairly in all
material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of
any unaudited interim financial statements, to normal recurring
year-end adjustments (which are not expected to be,
individually or in the aggregate, materially adverse to the
Company and its Subsidiaries taken as a whole)).
3.7 Absence of Certain Changes or Events. Since June 29,
1996, except as reflected in subsequent SEC Filings filed prior
to the date of this Agreement, (i) there has not been any
change, event or development having, or that could reasonably
be expected to have, individually or in the aggregate, a
Material Adverse Effect or adversely affect the ability of the
Company to perform its obligations hereunder or to consummate
the Merger, (ii) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary
course consistent with past practices; and, since March 29,
1997, neither the Company nor any of its Subsidiaries has taken
any action that, if taken after the date hereof, would
constitute a breach of any provision of Section 5.1.
3.8 Legal Proceedings. (i) There are no actions, suits,
arbitrations, proceedings or investigations pending or, to the
knowledge of the Company, threatened, against the Company or
any of its Subsidiaries or any of their respective assets and
properties that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or
adversely affect the ability of the Company to perform its
obligations hereunder or to consummate the Merger, and (ii)
neither the Company nor any of its Subsidiaries is subject to
any Order that, individually or in the aggregate, is having or
could reasonably be expected to have a Material Adverse Effect
or adversely affect the ability of the Company to perform its
obligations hereunder or to consummate the Merger.
3.9 Compliance with Law. Neither the Company nor any of
its Subsidiaries has violated or failed to comply with, or has
received any notice from any Governmental or Regulatory
Authority asserting a failure to comply with, any Law or Order,
except where a violation or failure to comply would not have a
Material Adverse Effect or adversely affect the ability of the
Company to perform its obligations hereunder or to consummate
the Merger. The Company and its Subsidiaries have and are in
compliance with all permits, licenses and franchises from
Governmental or Regulatory Authorities required to conduct
their businesses as now being conducted, except to the extent
that the failure to have or comply with such permits, licenses
and franchises would not have a Material Adverse Effect or
adversely affect the ability of the Company to perform its
obligations hereunder or to consummate the Merger.
3.10 Taxes.
(a) As used herein, "Taxes" means all taxes of any kind,
including those on, measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits
taxes, and all customs, duties and similar fees, assessments
and charges of any kind whatsoever, together with any interest
thereon and any penalties, additions to tax and additional
amounts imposed with respect thereto by any Governmental or
Regulatory Authority. As used herein, "Tax Return" means any
return, report, declaration, information statement and other
document with respect to Taxes required to be filed by the
Company or any of its Subsidiaries with the Internal Revenue
Service or any other Governmental or Regulatory Authority,
including all accompanying schedules.
(b) The Company and its Subsidiaries have timely filed
all federal and state income Tax Returns and all other material
Tax Returns required to be filed by them and have paid all
Taxes shown thereon to be due and all other Taxes for which a
notice of assessment or demand for payment has been received by
the Company or its Subsidiaries, except for such Taxes as to
which the failure to pay, individually or in the aggregate,
would not be material. There are no other material Taxes that
would be due if asserted by a Governmental or Regulatory
Authority. Neither the Company nor any of its Subsidiaries has
granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any
Tax. True, correct and complete copies of the federal and
state income Tax Returns of the Company and its consolidated
Subsidiaries for the fiscal years ended June 29, 1996, July 1,
1995, July 2, 1994 and July 3, 1993 have been made available to
Parent.
(c) (i) No material claim for unpaid Taxes has become a
lien against the property of the Company or any of its
Subsidiaries or is being asserted against the Company or any of
its Subsidiaries nor, to the Company's knowledge, are there
pending any material proposed adjustments to the manner in
which any Tax of a Company or a Subsidiary is determined; (ii)
to the knowledge of the Company, no audit of any Tax Return of
the Company or any of its Subsidiaries is being conducted by a
Governmental or Regulatory Authority; (iii) except with respect
to the Change of Control Agreements listed in the Disclosure
Schedule (the "Change of Control Agreements"), the 1993 Stock
Incentive Plan, the Directors' Stock Option Plan and the 1987
Restricted Stock Plan, neither the Company nor any of its
Subsidiaries is a party to any agreement or arrangement that
would result, individually or in the aggregate, in the actual
or deemed payment by the Company or a Subsidiary of any "excess
parachute payments" within the meaning of Section 280G of the
Code; and (iv) except with respect to the 1993 Stock Incentive
Plan, the Directors' Stock Option Plan and the 1987 Restricted
Stock Plan, no acceleration of the vesting schedule for any
property that is substantially unvested within the meaning of
the regulations under Section 83 of the Code will occur in
connection with the transactions contemplated by this
Agreement. No claim has been made by a Governmental or
Regulatory Authority in a jurisdiction where the Company or a
Subsidiary does not file Tax Returns that the Company or such
Subsidiary is or may be subject to taxation by that
jurisdiction.
(d) Neither the Company nor any Subsidiary has ever (i)
joined in or been required to join in the filing of a
consolidated or combined federal, state or local income Tax
Return with respect to which the Company or a Subsidiary could
be liable for the Taxes of a person other than the Company or
the Subsidiaries or (ii) been the subject of a Tax ruling or a
closing agreement with respect to Taxes with any Governmental
or Regulatory Authority that has continuing effect. Neither
the Company nor any Subsidiary is a party to any tax sharing or
tax allocation agreement or arrangement pursuant to which it
could be liable for Taxes of a person other than the Company or
the Subsidiaries. Neither the Company nor any Subsidiary has
agreed to make nor is it required to make any adjustment under
Section 481 of the Code by reason of a change in accounting
method or otherwise.
3.11 ERISA and Related Matters.
(a) Each Employee Plan (defined below) has been
maintained and administered in compliance with its terms and
with the requirements of applicable Laws, including the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code, except where the failure to comply
would not have a Material Adverse Effect. There is no
litigation, administrative or arbitration proceeding, or other
dispute pending or, to the Company's knowledge, threatened
that involves any Employee Plan or Benefit Arrangement (defined
below) that could reasonably be expected to have a Material
Adverse Effect or a material adverse effect on any employee or
director of the Company or its Subsidiaries or on any fiduciary
(as defined in ERISA Section 3(21)) of such Employee Plan or
Benefit Arrangement.
(b) The Company and its Subsidiaries do not maintain and
have never maintained nor been required to contribute to an
"employee benefit plan" as defined in Section 3 of ERISA that
is or was (i) a plan subject to Title IV of ERISA or (ii) a
"multiemployer plan" as defined in Section 3(37) of ERISA.
(c) Neither the Company, its Subsidiaries nor any of
their shareholders, directors, officers or employees has
engaged in any transaction with respect to an Employee Plan
that could subject the Company or any of its Subsidiaries to a
tax, penalty or liability for a prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the Code,
except for such taxes, penalties or liabilities that would not
have a Material Adverse Effect.
(d) As used herein:
(i) "Benefit Arrangement" means any employment,
severance or similar contract, or any other contract, plan,
policy or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including
any self-insured arrangement), health or medical benefits,
cafeteria plan benefits, disability benefits, severance
benefits and post-employment or retirement benefits (including
compensation, pension, health, medical and life insurance
benefits), other than an Employee Plan, that is maintained,
administered or contributed to by the Company or any of its
Subsidiaries and covers any employee or former employee of the
Company or any of its Subsidiaries.
(ii) "Employee Plan" means a plan or arrangement as
defined in Section 3(3) of ERISA that (A) is subject to any
provision of ERISA, (B) is maintained, administered or
contributed to by the Company or any of its Subsidiaries and
(C) covers any employee or former employee of the Company or
any of its Subsidiaries.
3.12 Environmental Matters.
(a) Each of the Company and its Subsidiaries has obtained
all material licenses, permits, authorizations, approvals and
consents from all Governmental or Regulatory Authorities
("Environmental Permits") that are required in respect of its
business or operations under any applicable Environmental Law
(defined below), and each of such Environmental Permits is in
full force and effect.
(b) Each of the Company and its Subsidiaries is in
compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental
Laws, except for such failures that, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect or adversely affect the ability of the Company
to perform its obligations hereunder or to consummate the
Merger.
(c) (i) No site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries is
listed or proposed for listing on the National Priorities List
or CERCLIS, promulgated pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), and the rules and regulations thereunder
or on any similar state or local list of sites requiring
investigation or remediation.
(ii) Neither the Company nor any of its Subsidiaries
has received any written notice of any actual or alleged
violation of any Environmental Law with respect to any of its
facilities, except a violation or violations that,
individually, or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect or adversely affect
the ability of the Company to perform its obligations hereunder
or to consummate the Merger.
(iii) The Company and its Subsidiaries are not
subject to any material outstanding agreements or orders with
any Governmental or Regulatory Authority or other person
respecting (A) Environmental Laws, (B) Remedial Action or (C)
any Release of a Hazardous Material.
(iv) Neither the Company nor any of its Subsidiaries
has received any written notice or request for information
pertaining to a response action (as defined by CERCLA), with
respect to any of its sites or facilities now or previously
owned, operated or leased by them, except for notices or
requests that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect or
adversely affect the ability of the Company to perform its
obligations hereunder or to consummate the Merger.
(v) No Hazardous Material is present (except in
quantities for retail sale to consumers or for store
maintenance) or has been Released (defined below) at, on,
about, under, or from any of the Company or any of its
Subsidiaries' sites or facilities, now or previously owned,
operated or leased by them, except in compliance with
Environmental Law (defined below), and except for the presence
of Hazardous Material or such Release(s) which individually or
in the aggregate could not reasonably be expected to have a
Material Adverse Effect or adversely affect the ability of the
Company to perform its obligations hereunder or to consummate
the Merger.
(d) No liens have arisen under or pursuant to any
Environmental Law on any site or facility owned, operated or
leased by the Company or any of its Subsidiaries, other than
liens that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect or
adversely affect the ability of the Company to perform its
obligations hereunder or to consummate the Merger.
(e) There have been no material environmental
investigations, studies, audits, tests, reviews or other
analyses conducted by, or which are in the possession of, the
Company or any of its Subsidiaries in relation to any site or
facility owned, operated or leased by the Company or any of its
Subsidiaries, except for those the reports of which have been
made available to Parent prior to the execution of this
Agreement.
(f) No sites or facilities, now or previously owned,
operated or leased by the Company or any of its Subsidiaries,
have or had at the time of ownership, operation, or leasing,
any (i) underground storage tanks, (ii) friable asbestos, (iii)
polychlorinated biphenyls ("PCBs"), or (iv) chlorofluorocarbons
("CFCs"), except in circumstances which could not reasonably be
expected to have individually or in the aggregate a Material
Adverse Effect or adversely affect the ability of the Company
to perform its obligations hereunder or to consummate the
Merger.
(g) As used herein:
(i) "Environmental Law" means any Law or Order
relating to the environment or to emissions, discharges or
Releases of pollutants, contaminants, or chemicals, or
industrial, toxic or hazardous substances or wastes, into the
environment (including structures, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
(ii) "Hazardous Material" means (A) any chemicals or
other materials or substances that are defined as or included
in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances,"
"pollutants," "contaminants," or words of similar import under
any Environmental Law, including petroleum, friable asbestos,
PCBs, and CFCs; and (B) any other chemical, material or
substance, the presence of or exposure to which is prohibited,
limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
(iii) "Release" means any actual or threatened (as
defined under CERCLA) release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the environment or any
structure.
(iv) "Remedial Action" means all actions, including
any capital expenditures, required by a Governmental or
Regulatory Authority, required under any Environmental Law or
voluntarily undertaken to (A) clean up, remediate, remove,
treat, or in any other way ameliorate or address any Hazardous
Materials Released into the environment; (B) prevent the
Release, or minimize the further Release of any Hazardous
Material so it does not endanger or threaten to endanger public
health or the environment; (C) perform pre-remedial studies and
investigations or post-remedial monitoring and care relating to
a Release; or (D) bring the applicable party into compliance
with any Environmental Law.
3.13 Information Supplied.
(a) The Schedule 14D-9 will not, on the date of its
filing with the SEC and the date it is first published, sent or
given to shareholders, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by
the Company with respect to information supplied in writing by
or on behalf of Parent or Sub expressly for inclusion therein
and information incorporated by reference therein from
documents filed by Parent or any of its Subsidiaries with the
SEC. The Schedule 14D-9 will comply as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations thereunder.
(b) Neither the information supplied or to be supplied in
writing by or on behalf of the Company for inclusion in, nor
the information incorporated by reference from documents filed
by the Company or any of its Subsidiaries with the SEC into,
the Schedule 14D-1 and the Offer Documents will, on the date
the Schedule 14D-1 and the Offer Documents are filed with the
SEC or on the date they are first published, sent or given to
shareholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading.
(c) The Company (and Parent and Sub, with respect to
written information supplied by either of them specifically for
use in the Schedule 14D-9) shall promptly correct the Schedule
14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company shall take
all steps necessary to cause such document as so corrected to
be filed with the SEC and disseminated to the Company's
shareholders to the extent required by applicable federal
securities laws.
3.14 Real Property.
(a) Section 3.14(a) of the Disclosure Schedule contains a
list of all real property or interests in real property owned
or leased by the Company and its Subsidiaries. Copies of all
leases so listed, including all modifications, amendments and
supplements thereto, have heretofore been made available to
Parent and all such leases are in full force and effect in
accordance with their respective terms.
(b) There are no existing defaults or events that, with
notice or lapse of time or both, would constitute defaults,
under any such leases, except for defaults that individually or
in the aggregate could not reasonably be expected to have a
material adverse effect on the Company's ability to continue to
operate the relevant properties as currently operated. Neither
the consummation of the Offer nor the Merger shall cause the
termination of any such leases, or have a material adverse
effect on the rights thereunder of the Company or its
Subsidiaries.
(c) The Company and its Subsidiaries enjoy peaceful and
undisturbed possession of the leased properties. The Company
or its relevant Subsidiary has good and valid title to the
leasehold estate in each property leased by it, except for (i)
mortgages and encumbrances that secure indebtedness that are
properly reflected on the Company Financial Statements; (ii)
liens for taxes accrued but not yet payable; (iii) liens
arising as a matter of Law in the ordinary course of business
with respect to obligations incurred after the date of the
Company Financial Statements, provided that the obligations
secured by such liens are not delinquent or are being contested
in good faith; and (iv) such imperfections of title and
encumbrances, if any, as do not, individually or in the
aggregate, materially detract from the value or materially
interfere with the present use of such property.
(d) The Company has good and marketable fee title to the
real property interests owned by it, except for (i) mortgages
and encumbrances that secure indebtedness that are properly
reflected on the Company Financial Statements; (ii) liens for
taxes accrued but not yet payable; (iii) liens arising as a
matter of Law in the ordinary course of business with respect
to obligations incurred after the date of the Company Financial
Statements, provided that the obligations secured by such liens
are not delinquent or are being contested in good faith; and
(iv) such imperfections of title and encumbrances, if any, as
do not, individually or in the aggregate, materially detract
from the value or materially interfere with the present use of
such property.
(e) The Company or its Subsidiaries are not in material
violation of any zoning, building or safety ordinance,
regulation or requirement or other Law applicable to the
operation of the owned real properties or leased properties
likely to impede the normal operation of the business of the
Company or its Subsidiaries, and the Company or its
Subsidiaries have not received any written notice of any such
violation with which such recipient has not complied.
(f) There are no pending, or, to the knowledge of the
Company, threatened condemnation or similar proceedings
relating to any of the owned real properties or leased
properties of the Company or its Subsidiaries.
3.15 Labor Matters. Except as set forth in Section 3.15
of the Disclosure Schedule, (a) there is no unfair labor
practice complaint against the Company or any Subsidiary
pending or to the knowledge of the Company threatened before
the National Labor Relations Board; (b) there is no labor
strike, dispute, slow down or stoppage actually pending or, to
the knowledge of the Company, threatened against or involving
the Company or any Subsidiary; and (c) no private agreement
restricts the Company or any Subsidiary from relocating,
closing or terminating any of their operations or facilities.
There are no controversies pending or, to the knowledge of the
Company, threatened between the Company or any of its
Subsidiaries and any representatives of its employees, and, to
the knowledge of the Company, there are no organizational
efforts underway involving employees of the Company or any of
its Subsidiaries, except in each case activities that would
not, individually or in the aggregate, have a Material Adverse
Effect or adversely affect the ability of the Company to
perform its obligations hereunder or to consummate the Merger.
3.16 Contracts; Certain Agreements.
(a) Except (i) as disclosed in the SEC Filings, (ii)
documents identified in Section 3.16(a) of the Disclosure
Schedule, (iii) the leases identified in Exhibit 3.14 to the
Disclosure Schedule and (iv) purchase orders issued for
inventory and supplies in the ordinary course of business,
there is no contract or agreement that is material to the
business, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole. Neither the
Company nor any of its Subsidiaries nor, to the knowledge of
the Company, any other party thereto is in breach or violation
of, or in default in the performance or observance of any term
or provision of, and no event has occurred that, with notice or
lapse of time or both, could reasonably be expected to result
in a default under, any Contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective assets or
properties is bound, except for breaches, violations and
defaults that individually or in the aggregate, are not having
and could not reasonably be expected to have a Material
Adverse Effect or adversely affect the ability of the Company
to perform its obligations hereunder or to consummate the
Merger.
(b) Neither the Company nor any of its Subsidiaries is a
party to any oral or written (i) union or collective bargaining
agreement, (ii) agreement with any executive officer or other
key employee of the Company or any of its Subsidiaries the
benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction
involving the Company or any of its Subsidiaries of the nature
contemplated by this Agreement, except for the Change of
Control Agreements and agreements pursuant to the Directors'
Stock Option Plan, the 1993 Stock Incentive Plan and the 1987
Restricted Stock Plan, (iii) employment agreement with respect
to any executive officer or other key employee of the Company
or any of its Subsidiaries, except for the Company's employment
agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated as of January 1, 1997, or
(iv) agreement or plan, including any stock option, stock
appreciation right, restricted stock, stock purchase plan or
Benefit Arrangement, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement, except for those
listed in clause (ii) above. Each of the Agreement among
Shareholders dated October 8, 1987 and the Agreement among
Shareholders dated October 14, 1988, each by and among the
Company and the shareholders named therein, as amended, are
terminated in their entirety and have no further force or
effect.
(c) Except as set forth in Section 3.16(c) of the
Disclosure Schedule, the consummation of the Offer, the Merger
and the other transactions contemplated by this Agreement will
not result in payments (including any gross-up payments in
respect of any "excess parachute payments" within the meaning
of Section 280G of the Code) under the agreements referred to
in Section 3.16(b)(ii).
3.17 Absence of Certain Liabilities. Except for matters
reflected or reserved against in the balance sheet for the
period March 29, 1997 included in the Company Financial
Statements, neither the Company nor any of its Subsidiaries
had at that date, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become
due) of any nature, whether or not required by generally
accepted accounting principles to be reflected in a
consolidated balance sheet of the Company and its consolidated
Subsidiaries (including the notes thereto), except liabilities
or obligations that (i) were incurred in the ordinary course of
business consistent with past practices and (ii) have not had,
and could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect or adversely affect
the ability of the Company to perform its obligations hereunder
or to consummate the Merger.
3.18 Opinion of Financial Advisor. The Company has
received a written opinion dated July 7, 1997 from its
financial advisor, CSFBC that, as of such date, and on the
basis of and subject to the matters set forth therein, the Per
Share Price was fair from a financial point of view to the
Company's shareholders and such opinion shall not have been (i)
withdrawn or (ii) modified or amended in a manner that is
adverse to Parent, Sub or the Offer, it being understood by the
Company, Parent and Sub that CSFBC has not been, and is not
expected to be, asked to update its opinion and shall have no
express or implied obligation to do so, and provided that any
advice of CSFBC contemplated by Section 5.2(a) shall not be
deemed to be such a withdrawal, modification or amendment. A
copy of such opinion has been provided to Parent.
3.19 Takeover Statute. The execution, delivery and
performance of this Agreement and consummation of the
transactions contemplated hereby will not cause to be
applicable to the Company any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover
statute or regulation enacted under Alabama law.
3.20 Insurance. There are no material retroactive premium
adjustments under any of the Company's insurance policies or
other insurance arrangements with third parties.
3.21 Intellectual Property.
(a) The Company, directly or indirectly, owns, licenses
or otherwise possesses (or has applied for), legally
enforceable rights to use as they are currently used in the
conduct of the Company's business all trademarks, trade names,
service marks, trade dress, logos and designs and any and all
registrations and applications therefor (and all goodwill
associated therewith), all copyrights, whether or not
registered, all patents and any applications therefor, computer
software and tangible or intangible proprietary information or
material (the "Company Intellectual Property Rights"), except
where the failure to so own, be licensed or otherwise possess
legally enforceable rights to use could not reasonably be
expected to have a Material Adverse Effect.
(b) Section 3.21 (b) of the Disclosure Schedule sets
forth a complete and accurate list of the Company's (i)
registered trademarks, trade names, service marks and
copyrights, and (ii) patent applications or issued patents.
Except as set forth in Section 3.21(b) of the Disclosure
Schedule, no claims with respect to the Company Intellectual
Property Rights have been asserted or, to the knowledge of the
Company, are threatened by any person, (i) that the
manufacture, use, sale or licensing by the Company or any of
its Subsidiaries infringes on any copyright, patent, trademark,
trade secret, service ▇▇▇▇, or other proprietary right of any
person, (ii) against the use by the Company or any of its
Subsidiaries of any material trademarks, service marks, trade
names, trade secrets, copyrights, patents, technology, know-how
or computer software programs and applications used in the
business of the Company and its Subsidiaries as currently
conducted, or (iii) challenging the ownership, validity or
effectiveness of any of the Company Intellectual Property
Rights. All registered trademarks, service marks, patents, and
copyrights owned or held by the Company are valid and
subsisting and not subject to cancellation or abandonment
proceedings. No claims or actions have been asserted or are
threatened by the Company against any person with regard to the
Company Intellectual Property Rights and, to the knowledge of
the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property
Rights by any third party, including any employee or former
employee of the Company or any of its subsidiaries, that could
reasonably be expected to have a Material Adverse Effect or
adversely affect the ability of the Company to perform its
obligations hereunder or to consummate the Merger. No Company
Intellectual Property Right or product of the Company or any of
its Subsidiaries is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the
licensing thereof by the Company or any of its Subsidiaries.
3.22 Certain Agreements. Neither the Company nor any of
its Subsidiaries is a party to, or bound by, any contract or
agreement that materially limits the ability of the Company
directly or through any of its Subsidiaries to compete in any
line of business or with any person in any geographic area
during any period of time.
3.23 Indemnification Claims. The Company is not aware of
any indemnification, breach of contract or similar claim by or
against the Company or any of its Subsidiaries that is pending
or threatened (or that could be reasonably expected to be made
in the future), in each case in excess of $250,000 in amount,
with respect to any acquisition by the Company after January 1,
1992.
3.24 Prior Negotiations. The Company, CSFBC and the
Company's other advisors and representatives have not been
involved in substantive discussions with any group or person
(or any of their respective affiliates or associates) or their
representatives, or furnished material confidential information
(including the offering memorandum prepared by the Company) to
any such group or person (or any of their respective affiliates
or associates) or their representatives, in connection with a
possible takeover proposal except for such groups or persons
which have executed and delivered to the Company a customary
confidentiality agreement (containing "standstill" provisions
that are substantially similar to the analogous provisions in
the Confidentiality Agreement (as defined in Section 9.11)).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub represents and warrants to the
Company as follows:
4.1 Organization of Parent and Sub. Parent and Sub are
corporations duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation and have all requisite corporate power and
authority to own their respective properties and carry on their
respective businesses as now being conducted. Parent and Sub
are duly qualified as foreign corporations to do business, and
are in good standing, in each jurisdiction where the character
of their properties owned or held under lease or the nature of
their activities makes such qualification necessary, except to
the extent that any failure to so qualify or be in good
standing would not have a material adverse effect on Parent or
Sub. Parent has delivered to the Company correct and complete
copies of the certificates of incorporation and bylaws of
Parent and Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement,
has engaged in no other business activities and has conducted
only such operations as are required for the execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby.
4.2 Authority Relative to this Agreement. Each of Parent
and Sub has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations under
this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by each of Parent and Sub and the consummation by
each of Parent and Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate (including
shareholder) action on the part of Parent and Sub. This
Agreement has been duly and validly executed and delivered by
each of Parent and Sub, and, assuming the due authorization,
execution and delivery of this Agreement by the Company,
constitutes the legal, valid and binding agreement of Parent
and Sub enforceable in accordance with its terms.
4.3 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by each
of Parent and Sub do not, and the performance by Parent and Sub
of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under,
permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the
acceleration of the performance of, or result in the creation
or imposition of any lien upon any of the assets or properties
of the Parent or any of its Subsidiaries under, any of the
terms, conditions or provisions of (i) the certificates of
incorporation or bylaws (or other comparable charter documents)
of the Parent or any of its Subsidiaries, or (ii) subject to
the taking of the actions described in paragraph (b) of this
Section, (x) any Law or Order applicable to Parent or any of
its Subsidiaries or any of their respective assets or
properties, (y) any Contract to which Parent or any of its
Subsidiaries is a party or by which Parent or any of its
Subsidiaries or any of their respective assets or properties is
bound, or (z) any employee benefit plan of Parent or any
Subsidiaries; except, with respect to the foregoing clauses
(x), (y) and (z) those that, individually or in the aggregate,
(I) could not reasonably be expected to adversely affect the
ability of Parent and Sub to consummate the transactions
contemplated hereby or (II) occur as a result of the regulatory
status of the Company or its Subsidiaries, and except for the
consent of the holders of a majority in principal amount
outstanding of its 12% Senior Notes due 2006 issued pursuant to
the Indenture dated as of March 5, 1996 described on Annex A.
(b) Except for (i) the premerger notification
requirements of the HSR Act, (ii) the requirements of the
Exchange Act, any relevant national securities exchange and the
Nasdaq Stock Market, (iii) the filing of appropriate documents
relating to the Merger required by the ABCA, and (iv) the
consent of the holders of a majority in principal amount
outstanding of its 12% Senior Notes due 2006 issued pursuant to
the Indenture dated as of March 5, 1996 described on Annex A,
no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other person is
necessary or required, under any of the terms, conditions or
provisions of any Law or Order or any Contract to which Parent
or any of its Subsidiaries is a party or by which Parent or any
of its Subsidiaries or any of their respective assets or
properties is bound, for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of
Parent and Sub of its obligations hereunder or the consummation
of the transactions contemplated hereby, except those that the
failure to make or obtain, individually or in the aggregate,
(I) could not reasonably be expected to adversely affect the
ability of Parent and Sub to consummate the transactions
contemplated hereby or (II) occur as a result of the regulatory
status of the Company or its Subsidiaries.
4.4 Legal Proceedings. (i) There are no actions, suits,
arbitrations, proceedings or investigations pending or, to the
knowledge of Parent, threatened, against Parent or any of its
Subsidiaries or any of their respective assets and properties
that, individually or in the aggregate, could reasonably be
expected to adversely affect the ability of Parent and Sub to
consummate the transactions contemplated hereby, and (ii)
neither Parent nor any of its Subsidiaries is subject to any
Orders that, individually or in the aggregate, could reasonably
be expected to adversely affect the ability of Parent and Sub
to consummate the transactions contemplated hereby.
4.5 Financing. Parent has received bridge financing
commitments aggregating at least $350 million, which is
sufficient to pay the aggregate amount payable in respect of
the Shares upon the consummation of the Offer and the Merger.
4.6 Information Supplied.
(a) The Schedule 14D-1 and the Offer Documents will not,
on the date filed with the SEC and first published, sent or
given to shareholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation is
made by Parent or Sub with respect to information supplied in
writing by or on behalf of the Company expressly for inclusion
therein and information incorporated by reference therein from
documents filed by the Company or any of its Subsidiaries with
the SEC. The Schedule 14D-1 and the Offer Documents will
comply as to form in all material respects with the
requirements of the Exchange Act.
(b) Neither the information supplied or to be supplied in
writing by or on behalf of Parent or Sub for inclusion in, nor
the information incorporated by reference from documents filed
by Parent or any of its Subsidiaries with the SEC into, the
Schedule 14D-9 will, on the date the Schedule 14D-9 is filed
with the SEC and first published, sent or given to shareholders
of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading.
(c) Parent and Sub (and the Company, with respect to
written information supplied specifically for use in the
Schedule 14D-1 and the Offer Documents) shall promptly correct
the Schedule 14D-1 and the Offer Documents if and to the extent
that they shall have become false or misleading in any material
respect and Parent and Sub shall take all steps necessary to
cause such documents as so corrected to be filed with the SEC
and disseminated to the Company's shareholders to the extent
required by applicable federal securities laws.
ARTICLE V
COVENANTS OF THE COMPANY
5.1 Conduct of Business by the Company Pending the
Merger. Except as described on the Disclosure Schedule or as
otherwise contemplated by this Agreement, prior to the
Effective Time, unless Sub shall otherwise agree in writing
(provided, however, that following the appointment of Sub's
designees to the Company's Board of Directors pursuant to
Section 1.3, Sub shall be deemed to have consented to all
actions taken by the Company thereafter, except actions, if
any, directed or caused by those directors who were not so
designated by the Sub or by the Board of Directors of the
Company prior to the appointment of such designees):
(a) The business of the Company and its Subsidiaries
shall be conducted only in the ordinary course consistent with
past practices.
(b) The Company shall use all commercially reasonable
efforts to preserve intact in all material respects the
business organization of the Company and its Subsidiaries, to
keep available the services of its and their present officers
and employees and to preserve the goodwill of those having
business relationships with it and its Subsidiaries.
(c) Except as permitted in Section 5.3, the Company shall
not, and shall not permit any of its Subsidiaries to (i) amend
its articles of incorporation or bylaws (or comparable charter
documents); (ii) split, combine, reclassify or take similar
action with respect to any of its capital stock; (iii) issue or
agree to issue any additional shares of, or rights of any kind
to acquire any shares of, its capital stock of any class, other
than, in the case of the Company, shares of capital stock and
Rights issuable pursuant to the Rights Agreement and Shares
issuable upon the exercise of outstanding options to purchase
an aggregate of 455,050 Shares pursuant to the 1993 Stock
Incentive Plan and the Directors' Stock Option Plan; (iv)
purchase, redeem or otherwise acquire any Shares or any other
shares of its capital stock of any class; or (v) declare, set
aside or pay any dividend payable in cash, stock or property or
make any other distributions with respect to Shares or any
other shares of its capital stock of any class; or (vi) make
any commitment to do any of the foregoing, except for (A) the
declaration and payment of dividends by a wholly-owned
Subsidiary of the Company solely to the Company and (B) the
declaration and payment of regular quarterly cash dividends by
the Company consistent with past practices (including as to
declaration, record and payment dates) in no event to exceed
$0.11 per Share per fiscal quarter.
(d) The Company shall not, and shall not permit any of
its Subsidiaries to (i) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof or make any
investment in any other person, either by purchase of stock or
securities, contribution to capital (other than to wholly-owned
Subsidiaries), property transfer or purchase of any material
amount of property or assets; (ii) other than sales of
inventory in the ordinary course of its business consistent
with past practices and other than the sale of surplus real
estate, sell, lease, grant any security interest in or
otherwise dispose of or encumber any material amount of its
assets or properties; (iii) incur any indebtedness for borrowed
money other than borrowings in the ordinary course of business
under existing lines of credit (or under any refinancing of
such existing lines of credit), or issue any debt securities,
or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other person
(other than a wholly-owned Subsidiary); (iv) make any capital
expenditure or commitment for additions to plant, property or
equipment constituting capital assets except expenditures
pursuant to commitments existing as of the date of this
Agreement and reflected in Section 5.1(d) of the Disclosure
Schedule or included in the Company's budgets for fiscal years
1997 and 1998 as described in Section 5.1(d) of the Disclosure
Schedule; (v) change any assumption underlying, or method of
calculating, any bad debt, contingency or other reserve (except
changes that may be necessary or appropriate in order to comply
with a change in generally accepted accounting principles that
takes effect after the date of this Agreement); (vi) pay,
discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other
than (A) the payment, discharge or satisfaction of liabilities
in the ordinary course consistent with past practices and (B)
costs relating to this Agreement and the transactions
contemplated hereby; (vii) waive, release, grant or transfer
any rights of material value or modify or change in any
material respect any existing material license, lease, contract
or other document; or (viii) enter into any contract,
agreement, commitment or arrangement with respect to any of the
foregoing; provided, however, that, notwithstanding the
foregoing, nothing herein shall prohibit the Company from
financing, constructing, equipping, supplying, staffing and
opening new stores and remodeling existing stores for which
commitments have been entered into by the Company prior to the
date hereof and which commitments are reflected in Section
5.1(d) of the Disclosure Schedule.
(e) Neither the Company nor any of its Subsidiaries shall
(i) enter into any new severance or change of control
agreement, or any employment agreement; (ii) amend any existing
employment contract or change of control or severance
agreement; (iii) grant any increases in compensation or
benefits other than increases in the ordinary course consistent
with past practices; (iv) adopt any new Employee Plan or
Benefit Arrangement; (v) make any change in or to any existing
Employee Plan or Benefit Arrangement, other than such changes
as are required by Law or that, in the opinion of its counsel,
are necessary or advisable to maintain the tax-qualified status
of such Employee Plan or Benefit Arrangement; (vi) make any
grants, awards or distributions under any Employee Plan or
Benefit Arrangement, other than those grants, awards or
distributions required to be made under such Employee Plans or
Benefit Arrangements as in effect on the date of this
Agreement; or (vii) make any amendment to any provision of any
outstanding grant or award.
(f) The Company shall not cause any of the Company's
representations or warranties that are subject to a materiality
qualification to become untrue and shall not cause any of the
Company's representations and warranties that are not so
qualified to become untrue in any material respect.
5.2 No Solicitation
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or
other advisor or representative of, the Company or any of its
Subsidiaries to, directly or indirectly, (i) solicit, initiate
or encourage the submission of any takeover proposal, or (ii)
participate in any discussions or negotiations regarding, or
furnish to any person or group (as those terms are defined in
Section 9.2) any information with respect to, or take any other
action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead
to any takeover proposal, provided, however, that prior to the
expiration of the Offer, upon receipt by the Company of a bona
fide written unsolicited takeover proposal to purchase all the
Shares outstanding for (A) a cash amount per Share in excess of
the Per Share Price or (B) consideration which is not all cash
that the Company has determined reasonably and in good faith to
be in excess of the Per Share Price and that CSFBC has advised
the Company in writing is in excess of the Per Share Price (a
copy of which advice has been furnished by the Company to
Parent), in either case by a group or person (or any of their
respective affiliates or associates) who (x) within the past 12
months has not executed and delivered to the Company a
confidentiality agreement and whose failure to execute a
confidentiality agreement does not constitute a breach of
Section 3.24 hereof (any such person or group a "New Bidder")
and (y) in the good faith reasonable judgment of the Board of
Directors after consultation with CSFBC possesses the financial
wherewithal reasonably to be capable of consummating the
takeover proposal (a "superior proposal"), following notice to
Parent as required by Section 5.2(c), the Company may
participate in negotiations with a New Bidder regarding the
superior proposal and furnish information with respect to the
Company pursuant to a customary confidentiality agreement
(containing "standstill" provisions no less onerous than in the
Confidentiality Agreement (as defined in Section 9.11)).
Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding
sentence by any officer, director or employee of the Company or
any of its subsidiaries or any investment banker, attorney or
other advisor or representative of the Company or any of its
Subsidiaries, shall be deemed to be a breach of this Section
5.2(a) by the Company. For purposes of this Agreement,
"takeover proposal" means any proposal for a tender offer,
merger or other transaction involving any Change in Control
described in Section 8.3(b)(i) or (iii).
(b) Neither the Board of Directors nor any committee
thereof shall (i) withdraw or modify, in a manner adverse to
Parent or Sub, the approval or recommendation by the Board of
Directors nor any such committee of this Agreement, the Offer
or the Merger, (ii) approve or recommend any takeover proposal,
(iii) enter into any agreement with respect to any takeover
proposal, (iv) amend the Rights Agreement, redeem the Rights or
waive any other anti-takeover provisions (including Article
Eleven of the Company's Articles of Incorporation) or otherwise
facilitate any other takeover proposal in any respect, or (v)
terminate this Agreement in connection with any takeover
proposal. Notwithstanding the foregoing, in the event the
Board of Directors receives a superior proposal from a New
Bidder or any other group or person which the Board of
Directors determines in its good faith reasonable judgment (and
based on the written advice of CSFBC) to be more favorable to
the Company's shareholders than the Offer and Merger, the Board
of Directors may (subject to the following sentence): (A)
withdraw or modify its approval or recommendation of this
Agreement, the Offer and the Merger taken together, (B)
recommend any such superior proposal, or (C) solely with
respect to such a superior proposal submitted by a New Bidder,
terminate this Agreement in order to enter into an agreement
with respect to such a superior proposal or amend the Rights
Agreement, redeem the Rights or waive any other anti-takeover
provisions in respect of such superior proposal and otherwise
facilitate such proposal, in each case (subject to Section
8.1(b)(iv)) at any time following Parent's receipt of written
notice of the Company's intent to take the actions described in
clauses (A), (B) and/or (C) above (a "Section 5.2(b) Notice")
advising Parent that the Board of Directors has received a
superior proposal, specifying the material terms and conditions
of such superior proposal and identifying the person or group
making such superior proposal. The Company may deliver the
Section 5.2(b) Notice and take any of the foregoing actions
described in clauses (A), (B) and/or (C) only if (i) the
Company is not otherwise in material breach of this Agreement
and (ii) the Company pays to Parent concurrent with the
delivery of the Section 5.2(b) Notice the Termination Fee and
the Expense Fee (as defined in Section 8.3).
(c) In addition to the obligations of the Company set
forth in paragraph (b) above, the Company shall promptly advise
Parent orally and in writing of any takeover proposal, or any
inquiry with respect to or which could reasonably be expected
to lead to any takeover proposal, the material terms and
conditions of such takeover proposal or inquiry, and the
identity of the person making any such takeover proposal or
inquiry. The Company will keep Parent fully informed of the
status and details of any such takeover proposal or inquiry and
the Company's responses and other actions with respect thereto.
The parties understand and agree that the Company shall be
entitled to disclose to its shareholders any such information
which is required by applicable law (including without
limitation the Exchange Act) regarding any takeover proposal.
The Company will not amend, modify, waive, or terminate any of
the provisions of any confidentiality agreement or "standstill"
agreement with any group or person to which the Company or any
of its Subsidiaries is a party and shall request the return of
any confidential information pursuant to the terms thereof.
The Company agrees that Parent shall be permitted to enforce
such agreements on the Company's behalf including seeking
equitable relief to the extent available.
(d) Notwithstanding anything to the contrary contained
herein, during the period commencing on the date hereof and
ending 180 calendar days following the date of this Agreement,
the Company shall not permit any of the actions described in
Section 5.2(a) or Section 5.2(b) (except the actions described
in clauses (A) and (B) of Section 5.2(b)) involving any person
or group, together with their affiliates or associates, who is
or should be listed in or referred to in Section 3.24 of the
Disclosure Schedule.
5.3 Company Stock Plans. Prior to the Effective Time,
the Company may elect to accelerate the exercisability of
options granted and outstanding prior to the date of this
Agreement under the Directors' Stock Option Plan and the 1993
Stock Incentive Plan and the vesting of restricted shares
granted and outstanding prior to the date of this Agreement
under the 1987 Restricted Stock Plan and may waive the two-year
holding period for stock issued pursuant to the Director
Compensation Plan. In addition, the Company shall have the
right prior to the Effective Time to pay to any holder of an
outstanding option to purchase Common Stock an amount equal to
the difference between the Per Share Price and the per Share
exercise price of a stock option held by such holder multiplied
by the number of Shares then subject to such option (whether or
not then exercisable), less any amounts required to be withheld
under the Code or any provision of state, local or foreign tax
law, in exchange for the surrender and cancellation of such
stock option. The Company shall use its commercially
reasonable best efforts to cause all options to be exercised
prior to the Effective Time. The Company has been advised by
its directors that they will exercise all options held by them
prior to the consummation of the Offer. Prior to the Effective
Time, the Company may adopt any amendments to its Directors'
Stock Option Plan, 1993 Incentive Compensation Plan or 1987
Restricted Stock Plan or any agreements thereunder as may be
necessary or appropriate to effectuate the foregoing, provided
that no such amendment may reduce the per Share exercise price
of such options. In addition, the Company may terminate or
amend the Director Compensation Plan to eliminate future
issuances of stock.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Proxy Statement and Special Meeting.
(a) Promptly after consummation of the Offer, the Company
shall prepare and file with the SEC, if required by the rules
of the SEC, a preliminary proxy statement, together with a form
of proxy, or information statement, with respect to the special
meeting of the Company's shareholders at which the shareholders
of the Company will be asked to approve the Merger (the
"Special Meeting"). The Company shall use its best efforts to
have the proxy statement or information statement cleared by
the SEC and, as promptly as practicable thereafter, subject to
compliance with the rules and regulations of the SEC, the
Company shall mail a definitive proxy statement or information
statement to shareholders of the Company (such proxy or
information statement and all amendments or supplements
thereto, if any, the "Proxy Statement"). Parent, Sub and the
Company shall cooperate with each other in the preparation of
the Proxy Statement. The Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for additional
information, and promptly shall provide to Parent copies of all
correspondence between the Company or any representative of the
Company and the SEC with respect to the Proxy Statement. The
Company shall give Parent and its counsel the opportunity to
review the Proxy Statement and all responses to SEC comments
and requests for additional information before they are sent to
the SEC. Each of the Company, Parent and Sub agrees to use its
best efforts, after consultation with the other parties hereto,
to respond promptly to all such comments of and requests for
information from the SEC and to cause the Proxy Statement to be
mailed at the earliest practicable time to the Company's
shareholders entitled to vote at the Special Meeting.
(b) Promptly after consummation of the Offer, the Company
shall take all action necessary, in accordance with the ABCA
and its Articles of Incorporation and Bylaws, to convene the
Special Meeting.
(c) Subject to the fiduciary obligations of the Board of
Directors under applicable law, (i) the Proxy Statement shall
contain the recommendation of the Board of Directors that the
shareholders of the Company vote to approve the Merger, and
(ii) the Company shall, if proxies are solicited, use its best
efforts to solicit from its shareholders proxies in favor of
such approval and to take all other action reasonably necessary
or helpful to secure the vote or consent of shareholders
required to effect the Merger.
(d) At the Special Meeting, Parent and its direct and
indirect Subsidiaries shall vote, or cause to be voted, all of
the Shares then owned by any of them in favor of the Merger.
6.2 HSR Matters.
(a) No later than seven business days after the date of
this Agreement, Parent, Sub and the Company shall file (or
cause their Ultimate Parent Entities as defined in the HSR Act
to file) with the Federal Trade Commission ("FTC") and the
Antitrust Division of the United States Department of Justice
("DOJ") the appropriate notification and report forms under the
HSR Act with respect to the transactions contemplated by this
Agreement. Parent, Sub and the Company shall comply, and
Parent and Sub shall cause their Ultimate Parent Entities to
comply, at the earliest practicable date with any request from
the FTC or the DOJ for additional information or documentation
with respect to such filing. To the extent permitted by law,
Parent, Sub and the Company shall request, and Parent and Sub
shall cause their Ultimate Parent Entities to request, that the
FTC and DOJ treat as confidential the information so submitted.
(b) Subject to the terms and conditions of this Section
6.2, Parent and Sub shall, and shall cause their Ultimate
Parent Entities to, use their commercially reasonable best
efforts to (i) resolve diligently and expeditiously any
objections that may be asserted by the FTC or the DOJ with
respect to the transactions contemplated by this Agreement
("Objections"), and (ii) obtain the termination of the waiting
period under the HSR Act, in each case prior to the initial
expiration date of the Offer or, if not possible by such date,
as soon as practicable thereafter.
(c) Parent, Sub and the Company shall cooperate fully and
in good faith in connection with overcoming Objections, and (i)
each of Parent, Sub and the Company shall promptly inform the
other of any material communication made by such party to, or
received by such party from, the FTC or the DOJ, and (ii)
Parent shall keep the Company informed of any material
discussions between Parent and/or Sub and the FTC and/or the
DOJ regarding this Agreement. Parent and Sub shall cause their
Ultimate Parent Entities to cooperate fully in connection with
the foregoing matters in this Section.
(d) Notwithstanding the foregoing, nothing contained in
this Agreement will require or obligate Parent or Sub (i) to
initiate or defend any litigation to which any Governmental or
Regulatory Authority (including the DOJ and the FTC) is a
party, (ii) to agree or otherwise become subject to any
material limitations on (A) the right of the Parent or Sub, or
their affiliates effectively to control or operate the
business, assets, or operations of the Company, (B) the right
of Parent, Sub, or its affiliates to acquire or hold the
business, assets, or operations of the Company, (C) the right
of Parent or Sub to exercise full rights of ownership of the
shares of Common Stock of the Company acquired by Parent or Sub
including, without limitation, the right to vote any shares
held by Parent or Sub on all matters properly presented to the
Company's shareholders, or (iii) to agree or otherwise be
required to sell or otherwise dispose of, hold separate
(through the establishment of a trust or otherwise), or divest
itself of all or any portion of the business, assets, or
operations of the Company, Sub or the Parent, except, in
connection with the proposed resolution of any Objections, for
the sale or disposal of such of the Company's supermarkets (or,
in lieu thereof, supermarkets of Parent) that did not in the
aggregate generate in excess of $2.7 million of net earnings
before interest, tax, depreciation and amortization for the
fiscal year ended June 29, 1997 (based upon the Company's books
and records for such supermarkets by location) ("EBITDA"). (If
Parent is required to divest a Parent store, the EBITDA of the
closest Company store shall be used in calculating the $2.7
million.)
6.3 Publicity. Neither Parent, Sub or their respective
representatives nor the Company or its representatives shall
disclose to any person (including by means of a press release)
any information relating to this Agreement and the transactions
contemplated hereby, except as expressly permitted hereby or to
the extent reasonably appropriate to accomplish the purposes of
this Agreement, without obtaining the prior consent of Parent
or the Company, as the case may be, which shall not be
unreasonably withheld; provided, however, that nothing in this
Section shall prohibit any party from making any disclosure
that its counsel deems necessary or advisable in order to
fulfill such party's disclosure obligations imposed by law or
the applicable rules of the SEC, any state securities
authority, any securities exchange or the Nasdaq Stock Market,
as long as such party makes a good faith effort to consult with
the other party prior to such disclosure. This Section shall
supersede the provisions of paragraph 2 of the Confidentiality
Agreement (defined in Section 9.11).
6.4 Investigation; Confidentiality.
(a) The Company shall give to Parent and Sub and their
respective representatives full access upon reasonable prior
notice and during normal business hours, to all officers,
employees, agents, attorneys, accountants, assets, properties,
books and records of the Company and its Subsidiaries, and
shall cause its and its Subsidiaries' officers and independent
auditors to furnish to such persons such financial and
operating data and other information, including access to the
working papers of its independent auditors, with respect to its
business and properties and the business and properties of its
Subsidiaries as such persons shall from time to time reasonably
request; provided, however, that in conducting their
investigation, Parent and Sub and such representatives may not
interfere unreasonably with the business and operations of the
Company and its Subsidiaries. Information obtained pursuant to
the immediately preceding sentence shall constitute
"Confidential Information" under the Confidentiality Agreement,
subject to paragraph 4 of such Agreement. This Section shall
supersede the first sentence of paragraph 6 of the
Confidentiality Agreement and the Company shall not be entitled
to request the return of Confidential Information pursuant to
paragraph 3 of such Agreement unless and until this Agreement
terminates.
(b) Parent and Sub shall, upon request by the Company,
provide the Company, its counsel, accountants and other
authorized representatives with such information concerning
Parent or Sub as may be reasonably necessary for the Company to
ascertain the accuracy and completeness of the information
supplied by or on behalf of Parent or Sub for inclusion in the
Schedule 14D-1, Schedule 14D-9 and the Proxy Statement and to
verify Parent's and Sub's performance of and compliance with
their respective representations, warranties and covenants
herein contained. Except as and to the extent required by law,
the Company shall keep confidential any information furnished
to it pursuant to the preceding sentence that is reasonably
designated as confidential at the time of delivery.
6.5 Directors' and Officers' Indemnification and
Insurance.
(a) The Company, and from and after the Effective Time,
the Surviving Corporation (each, an "Indemnifying Party"),
shall indemnify, defend and hold harmless each person who is
now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, a director or officer of
the Company or any of its Subsidiaries (the "Indemnified
Parties") against all losses, claims, damages, costs and
expenses (including attorneys' fees), liabilities, judgments
and settlement amounts that are paid or incurred in connection
with any claim, action, suit, proceeding or investigation
(whether civil, criminal, administrative or investigative and
whether asserted or claimed prior to, at or after the Effective
Time) that is based in whole or in part on, or arises in whole
or in part out of, the fact that such Indemnified Party is or
was a director or officer of the Company or any of its
Subsidiaries and (i) relates to or arises out of any action or
omission occurring or allegedly occurring at or prior to the
Effective Time, or (ii) is based in whole or in part on, arises
in whole or in part out of, or pertains in whole or in part to,
this Agreement or the transactions contemplated hereby, in each
case to the full extent a corporation is permitted under
applicable law to indemnify its own directors or officers, as
the case may be; provided that no Indemnifying Party shall be
liable for any settlement of any claim effected without its
written consent, which consent shall not be unreasonably
withheld. Without limiting the foregoing, in the event that
any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party (whether arising prior to
or after the Effective Time), the Indemnifying Parties will pay
expenses in advance of the final disposition of any such claim,
action, suit, proceeding or investigation to each Indemnified
Party to the full extent permitted by applicable law. To the
extent that any indemnification is sought pursuant to this
Section 6.5(a), the Indemnified Party will promptly notify the
Parent of any claim, action, suit, proceeding, or investigation
for which it may seek indemnification under this Section 6.5;
and in the event of any such claim, action, suit, proceeding,
or investigation (whether arising before or after the Effective
Time), (i) Parent or the Surviving Corporation will have the
right to assume the defense thereof, and neither Parent nor the
Surviving Corporation will be liable to such Indemnified
Parties for any legal expenses of other counsel subsequently
incurred thereafter by such Indemnified Parties in connection
with the defense thereof, except that an Indemnified Party will
have the right to retain separate counsel, reasonably
acceptable to the Parent, at the expense of the Indemnifying
Party if the named parties to any such proceeding include both
the Indemnified Party and the Company or Parent, or their
respective successors, and the representation of such parties
by the same counsel would be proscribed under applicable
standards of professional conduct; provided that, (i) neither
the Parent nor the Surviving Corporation will be responsible
for the legal expenses of more than one law firm in connection
with any one matter, (ii) the Indemnified Parties will
cooperate in the defense of any such matter, and (iii) neither
the Parent nor the Surviving Corporation will be liable for any
settlement effected without its prior written consent;
provided, however, that notwithstanding the foregoing, neither
the Parent nor the Surviving Corporation will have any
obligation under this Section 6.5 to indemnify an Indemnified
Party when and if a court of competent jurisdiction ultimately
determines, and such determination becomes final, that the
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(b) Except as required by applicable Law or legal
process, Parent, Sub and the Company will not take any action
so as to amend, modify or repeal the provisions for exculpation
of directors or indemnification of directors or officers
contained in the articles of incorporation or bylaws (or other
comparable charter documents) of the Surviving Corporation and
its Subsidiaries in such a manner as would adversely affect in
any material respect the rights of any individual who shall
have served as a director or officer of the Company or any of
its Subsidiaries prior to the Effective Time to be exculpated
or to be indemnified by such corporations in respect of their
serving in such capacities prior to the Effective Time. The
Company will honor in accordance with their respective terms
each of the indemnity agreements between the Company and each
of its directors as in effect on the date of this Agreement and
shall not terminate such agreements prior to the Effective
Time.
(c) The Company shall, and after the consummation of the
Offer, Parent shall cause the Company to, until the sixth
anniversary of the Effective Time and for so long thereafter as
any claim asserted prior to such date has not been fully
adjudicated by a court of competent jurisdiction, cause to be
maintained in effect the policies of directors' and officers'
liability insurance maintained by the Company and its
Subsidiaries as of the date hereof (or policies providing at
least the same coverage amounts and containing terms that are
no less advantageous to the insured parties) with respect to
claims arising from facts or events that occurred or are
alleged to have occurred at or prior to the Effective Time;
provided that the Company shall endeavor to obtain such
coverage at the lowest premium cost reasonably available and
that the Company shall not, and Parent shall not be obligated
to cause the Surviving Corporation to, pay an aggregate
(whether over time or on a one-time basis) premium in excess of
$600,000.
(d) The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each Indemnified
Party and each party entitled to insurance coverage under
paragraph (c) above, respectively, and his or her heirs and
legal representatives, and shall be in addition to any other
rights an Indemnified Party may have under the ABCA, any
indemnity agreement, the articles of incorporation or bylaws of
the Surviving Corporation or any of its Subsidiaries, or
otherwise.
6.6 Change of Control Agreements. The Company will, and
after the consummation of the Offer Parent shall cause the
Company to, honor in accordance with their respective terms
each of the Change of Control Agreements (defined in Section
3.10) as in effect on the date of this Agreement.
6.7 Fees and Expenses. Whether or not the Offer or the
Merger is consummated, all costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense, subject to Sections 5.2, 8.1,
8.2 and 8.3.
6.8 Conduct of Business of Sub. Parent shall cause Sub
to perform its obligations under this Agreement in accordance
with its terms.
6.9 Cooperation. Subject to the terms and conditions of
this Agreement (including, without limitation, Sections 1.1 and
6.2 and Annex A) Parent, Sub and the Company shall cooperate
with each other and use their respective commercially
reasonable best efforts to cause the conditions to the Offer in
Annex A to be met as soon as reasonably practicable. The
Company shall cooperate with Parent's reasonable requests for
assistance in connection with Parent's transition planning and
related activities prior to the Effective Time.
6.10 Post-Offer Action. As soon as practicable following
consummation of the Offer, Parent and Sub shall use their
commercially reasonable best efforts to cause the conditions to
the Merger set forth in Article VII to be met and to consummate
the Merger, subject to the terms of this Agreement.
6.11 Transaction Litigation. The Company shall give
Parent the opportunity to participate in the defense or
settlement of any litigation against the Company and its
directors directly relating to any of the transactions
contemplated by this Agreement until the purchase of Shares
pursuant to the Offer, and thereafter shall give Parent the
opportunity to direct the defense of such litigation and, if
Parent so chooses to direct such litigation, Parent shall give
the Company and its directors an opportunity to participate in
such litigation; provided, however, that no such settlement
shall be agreed to without Parent's consent, which consent
shall not be unreasonably withheld; and provided further that
no settlement requiring a payment by a director shall be agreed
to without such director's consent.
ARTICLE VII
CONDITIONS TO THE MERGER
The respective obligation of each party to effect the
Merger is subject to the fulfillment, at or prior to the
Closing, of each of the following conditions:
(i) Sub shall have purchased all Shares validly tendered
pursuant to the Offer;
(ii) This Agreement shall have been adopted by the
requisite vote of the shareholders of the Company under the
ABCA;
(iii) No Governmental or Regulatory Authority shall have
issued an Order or ruling or taken any other action declaring
illegal or otherwise prohibiting the Merger; and
(iv) All governmental consents, orders and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and
be in effect at the Effective Time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. Subject, in the case of the Company, to
any approval of Independent Directors required by Section
1.3(c), this Agreement may be terminated at any time (upon
written notice to the other parties hereto) prior to the
Effective Time, whether before or after approval by the
shareholders of the Company:
(a) by mutual written consent of the Boards of Directors
of the Company, Parent and Sub;
(b) by the Company,
(i) if the Offer has not been commenced timely in
accordance with Section 1.1, provided that such failure shall
not have been corrected on the next business day;
(ii) if any representation or warranty made by Parent
and/or Sub in this Agreement shall not be true and correct,
which materially and adversely affects the consummation of the
Offer, and such breach is not capable of being cured or is not
cured by Parent and/or Sub prior to the expiration of the
Offer;
(iii) if Parent or Sub shall not have performed and
complied with, in all material respects (without reference to
any materiality qualifications contained therein), each
agreement and covenant required by this Agreement to be
performed or complied with by it, and such breach is not
capable of being cured by Parent and/or Sub or is not cured
prior to the expiration of the Offer;
(iv) as provided in Section 5.2 in respect of a
superior proposal, provided that (x) the Company shall have
paid Parent the Termination Fee and the Expense Fee and (y)
Parent or Sub does not make within three business days of
receipt of the Section 5.2(b) Notice an offer that the
Company's Board of Directors believes in good faith after
consultation wih its legal counsel and financial advisors, is
at least as favorable, from a financial point of view, to the
Company's shareholders as such other other bidder's offer;
provided, however, that if subsequent to the payment of the
Termination Fee and the Expense Fee and prior to the
termination of this Agreement, Parent or Sub makes an offer
that the Company's Board of Directors believes in good faith
after consultation with its legal counsel and financial
advisors, is at least as favorable, from a financial point of
view, to the Company's shareholders as such other bidder's
offer, Parent and Sub shall, upon written request of the
Company, return the Termination Fee and the Expense Fee once
the Company shall have approved and recommended Parent's and
Sub's amended offer and shall have rescinded any actions taken
with respect to such superior proposal pursuant to clauses (A),
(B) and (C) of Section 5.2(b);
(c) prior to the purchase of Shares by Sub pursuant to
the Offer, by Parent or Sub, if
(i) any representation or warranty made by the
Company in this Agreement that contains a materiality
qualification shall not be true and correct, or any
representation or warranty made by the Company in this
Agreement that is not so qualified shall not be true and
correct in any material respect, and, in each case, such breach
of the representation or warranty is not capable of being cured
by the Company or is not cured prior to the expiration of the
Offer;
(ii) the Company shall not have performed and
complied with, in all material respects (without reference to
any materiality qualifications contained therein), each
agreement and covenant required by the Agreement to be
performed or complied with by it and such breach of the
agreement or covenant is not capable of being cured by the
Company or is not cured prior to the expiration of the Offer.
(d) by Parent, Sub or the Company, if
(i) (x) the Offer shall be terminated or expire in
accordance with its terms without the purchase of any Shares
pursuant thereto or (y) Sub shall not have accepted for payment
any Shares pursuant to the Offer within 90 calendar days
following the commencement of the Offer; provided, that Parent
and Sub shall not be entitled to terminate for such reason if
the cause thereof is a breach by Parent or Sub of any of their
obligations under this Agreement and the Company shall not be
entitled to terminate for such reason if the cause thereof is a
breach by the Company of any of its obligations under this
Agreement;
(ii) any Governmental or Regulatory Authority shall
have issued an Order or ruling or taken any other action
declaring illegal or otherwise prohibiting the consummation of
the Offer or the Merger and such Order shall have become final
and nonappealable;
(iii) if, at the Special Meeting (including any
adjournment or postponement thereof), the Requisite Shareholder
Approval is not obtained, except that the right to terminate
this Agreement under this Section 8.2(d)(iii) will not be
available to any party whose willful failure to perform any
material obligation or to perform any material condition under
this Agreement has been the proximate cause of, or resulted in,
the failure to obtain the Requisite Shareholder Approval.
8.2 Effect of Termination. If this Agreement is validly
terminated by either the Company or Parent or Sub pursuant to
Article VIII, this Agreement will forthwith become null and
void and there will be no liability or obligation on the part
of either the Company or Parent or Sub (or any of their
respective representatives or affiliates), except that (i) the
provisions of Sections 6.3 and 6.4 relating to confidentiality,
and 6.7 relating to fees and expenses, and Section 5.2, Section
8.3, Section 9.11, and, insofar as they relate to the other
provisions of this Agreement that survive termination, Sections
9.3 through 9.7, Sections 9.9 and 9.10 and Sections 9.12 and
9.13, and this Section 8.2 will continue to apply following any
such termination and (ii) nothing contained herein shall
relieve any party hereto from liability for wilful breach of
its representations, warranties, covenants or agreements
contained in this Agreement.
8.3 Termination Payment.
(a) If (i) Parent or Sub shall have provided the Company
with an irrevocable written notice of termination of this
Agreement pursuant to Section 8.1 based upon a material wilful
breach by the Company of this Agreement (provided that such
notice may state that it is subject to payment of the
Termination Fee and the Expense Fee by the Company and that, in
the event the Termination Fee and Expense Fee are not paid to
Parent and Sub within five business days, such termination
notice shall be deemed not to have been given and this
Agreement shall not terminate as a result of such notice and
the Company shall continue to be subject to its obligations to
pay the Termination Fee and the Expense Fee as set forth in
this Section 8.3) or (ii) any Change in Control shall have
occurred during the term of this Agreement, or within 180 days
following termination of this Agreement (other than pursuant to
(w) Section 8.1(a), (x) Section 8.1(b), (y) Section 8.1(d)(i)
if the Offer has expired due to the failure to satisfy any of
the conditions in paragraphs (b), (c)(i), (c)(ii), (c)(iii) or
(d) of Annex A, unless in the case of the conditions set forth
in paragraphs (b), (c)(i), (c)(ii) or (c)(iii) of Annex A
Parent and Sub are diligently pursuing the satisfaction of such
conditions and the Company shall not have agreed to Parent's or
Sub's written request to extend the Offer beyond the periods
prescribed by Section 1.1(b), or (z) Section 8.1(d)(ii), so
long as the Company shall not be in breach of this Agreement),
then the Company shall promptly, but in no event later than
five business days after the first to occur of any such event
described in clauses (i) and (ii) above (the "Payment Date"),
pay Parent a fee of $7,000,000 (the "Termination Fee") and
shall also reimburse Parent and Sub for all out-of-pocket
expenses and fees payable by them or their affiliates up to an
aggregate of $3,000,000 (including without limitation fees and
expenses of all counsel, printers, banks, investment banking
firms, and other financial institutions, and their respective
agents directly related to the transactions contemplated by
this Agreement (including the financing of the transactions
contemplated by this Agreement by Parent and Sub or obtaining
the required consents of Parent's noteholders) (the "Expense
Fee"), such amounts to be paid on the Payment Date in cash in
immediately available funds (United States Dollars) by wire
transfer to an account designated by Parent in writing not less
than one business day prior to the Payment Date. The
Termination Fee and the Expense Fee shall, in the alternative,
be due under the circumstances provided in Section 5.2. In no
event shall the Company be obligated to pay the Termination Fee
and the Expense Fee more than once, unless Parent and Sub have
previously refunded such Termination Fee and Expense Fee
pursuant to Section 8.1(b)(iv) in which case the Termination
Fee and Expense Fee shall continue to be payable in the
circumstances provided in Section 5.2 and this Section 8.3.
(b) As used herein, "Change in Control" means any of the
following:
(i) any person or group (other than Parent or Sub)
acquires or beneficially owns, or enters into an agreement with
the Company or any of its Subsidiaries to acquire, directly or
indirectly, 25% or more of the outstanding Shares or 25% or
more of the assets, revenues or earning power of the Company
and its Subsidiaries, taken as a whole (it being understood
that shares of Subsidiaries constitute assets of the Company
for purposes of this Section 8.3);
(ii) the Company distributes or transfers, or
publicly announces its intention to distribute or transfer, to
its shareholders, by dividend or otherwise, assets constituting
25% or more of the market value or earning power of the Company
on a consolidated basis; or
(iii) any person or group (other than Parent or Sub)
enters into an agreement with the Company or any of its
Subsidiaries to consummate, or consummates, directly or
indirectly, a tender offer or exchange offer for any Shares or
involving a merger, consolidation or other business combination
or similar transaction with or involving the Company.
The Company agrees to notify Parent and Sub within five
business days of the occurrence of any Change in Control and
Parent and Sub shall be entitled to provide wire transfer
instructions after receipt of such notice and the Payment Date
shall be the next business day after Parent or Sub delivers
such wire instructions to the Company.
(c) The Company acknowledges that the agreements
contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement, and that without
these agreements Parent and Sub would not enter into this
Agreement. The parties understand and agree that payment of
the Termination Fee and Expense Fee are in addition to all
other rights and remedies available to Parent and Sub
hereunder, at law or in equity, and that Parent and Sub shall
retain and apply the Termination Fee and Expense Fee against
all direct and indirect damages suffered by Parent and Sub,
whether or not as a result of the occurrence of the events
described under Section 8.3(a) above.
8.4 Amendment. Subject in the case of the Company to
Section 1.3(c), this Agreement may be amended, supplemented or
modified by action taken by the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time,
whether prior to or after the Requisite Shareholder Approval
shall have been obtained, but after such approval only to the
extent permitted by applicable law. No such amendment,
supplement or modification shall be effective unless set forth
in a written instrument duly executed by each party hereto.
8.5 Waiver. Subject in the case of the Company to
Section 1.3(c), at any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may
to the extent permitted by applicable law (i) extend the time
for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto
contained herein or (iii) waive compliance with any of the
covenants, agreements or conditions of the other parties hereto
contained herein. No such extension or waiver shall be
effective unless set forth in a written instrument duly
executed by the party extending the time of performance or
waiving any such inaccuracy or non-compliance. No waiver by
any party of any term or condition of this Agreement shall be
deemed to be or construed as a waiver of the same or any other
term or condition of this Agreement on any future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations, Warranties and
Agreements. The representations and warranties of the Company
in this Agreement shall not survive the consummation of the
Offer, and the other representations and warranties, and the
covenants and agreements in this Agreement shall not survive
the Effective Time, except for the agreements contained in
Article II and Section 6.5 (relating to directors' and
officers' indemnification and insurance) and any other
agreement contained herein that expressly contemplates
performance after the Effective Time.
9.2 Certain Definitions. For purposes of this
Agreement, the following terms have the following meanings:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the first
mentioned person;
(b) "associate" when used to indicate a relationship with
any person, has the meaning specified in Rule 405 promulgated
under the Securities Act of 1933, as amended;
(c) "group" includes the meaning specified in Section
13(d)(3) of the Exchange Act;
(d) "person" includes an individual, corporation,
partnership, association, trust, other entity or any
unincorporated organization;
(e) "Significant Subsidiary" means any Subsidiary of the
Company that is a "Significant Subsidiary" as such term is used
in Regulation S-X or that contributed in excess of $500,000 to
the Company's consolidated earnings before income taxes in any
of the Company's fiscal years 1995, 1996 or 1997 or would be
reasonably likely to contribute such amount in the Company's
fiscal year 1998; and
(f) a "Subsidiary" of a person is any corporation or
other incorporated or unincorporated organization more than 50%
of the equity interests of which are beneficially owned
directly or indirectly by such person or with respect to which
such person has the right to exercise control.
9.3 Notices. Any notices or other communications
hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by a nationally
recognized overnight delivery service, or transmitted by
facsimile transmission (with confirmation of receipt), or five
days after dispatch by registered or certified mail, postage
prepaid, addressed to the parties at the following addresses or
facsimile numbers:
(a) If to the Company, to: Delchamps, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Jones, Walker, Waechter, Poitevent,
Carrere & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇▇, ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent or Sub, to: Jitney-Jungle Stores of
America, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as shall be furnished in writing by any
party.
9.4 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for
convenience only and do not constitute a part of this
Agreement.
9.5 Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama without giving effect to the conflict of laws
provisions thereof.
9.6 No Assignment; Binding Effect. Subject to Section
2.1, neither this Agreement nor any right, interest or
obligation hereunder may be assigned, by operation of law or
otherwise, by any party hereto without the prior written
consent of the other parties hereto, and any attempt to do so
will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective
successors and assigns.
9.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
9.8 Third Party Beneficiaries. The terms and provisions
of this Agreement are intended solely for the benefit of each
party hereto and their respective successors or permitted
assigns, and except as otherwise expressly provided for herein,
it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
9.9 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under
any present or future Law or Order, and if the rights or
obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be
construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and
(iii) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance
herefrom.
9.10 Specific Performance. Nothing in this Agreement
shall preclude a party from seeking specific performance,
injunctive relief or any other remedies not involving the
payment of monetary damages in the event of any breach or
violation (or threatened breach or violation) of any provision
of this Agreement by the other party and each party
acknowledges that, in light of the unique benefit to it of its
rights under this Agreement, such remedies shall be available
in respect of any such breach or violation by it in any suit
properly instituted in a court of competent jurisdiction and
shall be in addition to any other remedies available at law or
in equity to such party.
9.11 Entire Agreement. The Confidentiality and Standstill
Agreement dated as of April 8, 1997 between Parent and the
Company (the "Confidentiality Agreement") shall remain in full
force and effect except as expressly superseded hereby;
provided that if the Company has paid (or is obligated to pay)
the Termination Fee and the Expense Fee, the standstill
provisions of the Confidentiality Agreement shall terminate.
This Agreement (including the Annexes, exhibits, schedules,
documents and instruments referred to herein) and the
Confidentiality Agreement constitute the entire agreement and
supersede (with prospective effect only) any other prior
agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
9.12 Days. As used herein "day" means calendar day unless
business day is expressly specified, and if the last day for
timely performance falls on a day that is not a business day,
performance may be timely made on the first business day
following.
9.13 Jurisdiction. The parties to this Agreement, acting
for themselves and for their respective successors and assigns,
hereby irrevocably and unconditionally consent to submit to the
non-exclusive jurisdiction of both the courts of the States of
Delaware and Alabama and of the United States of America
located in such States for any actions, suits or proceedings
arising out of or relating to this Agreement (and none of such
persons shall commence any action, suit or proceeding relating
thereto except in such courts). Each such person hereby
irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out
of this Agreement, in either the courts of the States of
Delaware and Alabama or of the United States of America located
in such States.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first written
above.
JITNEY-JUNGLE STORES OF AMERICA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President / Chief Executive Officer
DELTA ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President / Chief Executive Officer
DELCHAMPS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Annex A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub
shall not be required to accept for payment or pay for any
tendered Shares (subject to Rule 14e-1(c) under the Exchange
Act) and may delay in accordance with Section 1.1(b) the
acceptance for payment of, or the payment for, any Shares,
amend the Offer in accordance with Section 1.1(b) or terminate
the Offer (subject to Section 1.1(b)), if
(a) immediately prior to the expiration of the Offer
(as it may be extended in accordance with Article I of the
Agreement), there shall not have been validly tendered and not
withdrawn pursuant to the Offer a number of Shares such that,
upon consummation of the Offer, Sub and its affiliates will
beneficially own in the aggregate not less than two-thirds of
the Shares outstanding on a fully diluted basis (the "Minimum
Condition");
(b) any applicable (i) waiting period under the HSR
Act or (ii) period during which Parent shall have consented or
otherwise be barred from purchasing Shares pursuant to the
Offer as part of any agreement or other arrangement with any
Governmental or Regulatory Authority involving the HSR Act or
any other applicable antitrust laws shall not have expired or
terminated prior to the expiration of the Offer (as it may be
extended in accordance with Article I of the Agreement);
(c) at any time on or after the date of this
Agreement and before the time of payment for any Shares, any of
the following events shall have occurred and be continuing:
(i) there shall be threatened or pending by any
Governmental or Regulatory Authority (or the staff of the
Federal Trade Commission or the staff of the Antitrust Division
of the Department of Justice shall have recommended the
commencement of) any suit, action or proceeding, or there shall
be pending by any other person any suit, action or proceeding
which has a reasonable possibility of success, (A) challenging
the acquisition by Parent or Sub of any Shares, seeking to
restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions
contemplated by this Agreement or seeking to obtain from the
Company, Parent or Sub any damages or otherwise imposing
financial burdens, penalties or fines that are material in
relation to the Company and its Subsidiaries, or Parent and its
Subsidiaries, in each case taken as a whole, (B) seeking to
prohibit or limit the ownership or operation by the Company,
Parent or any of their respective Subsidiaries of a material
portion of the business or assets of the Company or its
Subsidiaries, or Parent or its Subsidiaries, as a result of the
Offer, the Merger or any of the other transactions contemplated
by this Agreement, (C) seeking to impose limitations on the
ability of Parent or Sub to acquire or hold, or exercise full
rights of ownership of, any Shares accepted for payment
pursuant to the Offer including, without limitation, the right
to vote the Shares accepted for payment by it on all matters
properly presented to the shareholders of the Company, (D)
seeking to prohibit Parent or any of its Subsidiaries from
effectively controlling or operating in any material respect
the business or operations of the Company or its Subsidiaries,
or (E) which otherwise is reasonably likely to have a Material
Adverse Effect;
(ii) there shall be any statute, rule,
regulation, judgment, order or injunction enacted, entered,
enforced, promulgated or deemed applicable to the Offer or the
Merger, or any other action shall be taken by any Governmental
or Regulatory Authority or court, other than the application to
the Offer or the Merger of applicable waiting periods under the
HSR Act, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses
(A) through (E) of paragraph (i) above, or any governmental
consents, orders and approvals legally required for the
consummation of the Offer or the Merger shall not have been
obtained, and such failure is reasonably likely to result,
directly or indirectly, in any of the consequences referred to
in clauses (A) through (E) of paragraph (i) above;
(iii) (A) a general suspension of trading in, or
limitation on prices for, securities on any national securities
exchange or in the over the counter market, (B) any change in
general, financial, bank or capital market conditions which
materially affects the ability of financial institutions to
extend credit or syndicate loans, (C) a decline in the Standard
& Poor's 500 Index by an amount in excess of 25%, measured from
July 3, 1997, (D) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States
or any material limitation (whether or not mandatory) imposed
by any Governmental or Regulatory Authority that is reasonably
likely to affect the extension of credit by lending
institutions in general, or (E) a commencement of a war or
armed hostilities or other national or international crisis
directly or indirectly involving the United States which war,
hostilities or crisis is reasonably likely to have a Material
Adverse Effect or adversely affect the ability of the Company
to perform its obligations hereunder or to consummate the
Merger or to materially affect Parent's ability to obtain the
consents referred to in paragraph (d) below; or in the case of
any of the events described in (A) through (E) above existing
as of the date hereof, a material acceleration or worsening
thereof;
(iv) any of the representations and warranties
made by the Company in the Agreement that are subject to a
materiality qualification shall not be true and correct, or any
of the representations and warranties made by the Company in
the Agreement that are not so qualified shall not be true and
correct in any material respect, in each case at any time prior
to the consummation of the Offer as though made on and as of
such date or, in the case of representations and warranties
made as of a specific date earlier than the date of the
consummation of the Offer, on and as of such earlier date;
provided, however, that if the Company discovers such a breach
of a representation or warranty, the Company shall promptly
notify Parent and Sub of the nature of such breach and if
Parent or Sub discovers such a breach of a representation or
warranty, Parent or Sub shall promptly notify the Company of
the nature of such breach and provided further that, in the
case of breaches that are reasonably capable of being cured
prior to the expiration of the Offer, the Company shall have
failed to diligently proceed to effect a cure of such breach
and, in any event, to cure such breach prior to the expiration
of the Offer (including any extensions thereof);
(v) the Company shall not have performed and
complied with, in all material respects (without reference to
any materiality qualifications contained therein), each
agreement and covenant required by the Agreement to be
performed or complied with by it; provided, however, that if
the Company discovers such a breach of an agreement or
covenant, the Company shall promptly notify Parent and Sub of
the nature of such breach and if Parent or Sub discovers such a
breach of an agreement or covenant, Parent or Sub shall
promptly notify the Company of the nature of such breach and
provided further that, in the case of breaches that are
reasonably likely to be cured prior to the expiration of the
Offer, the Company shall have failed to diligently proceed to
effect a cure of such breach and, in any event, to cure such
breach prior to the expiration of the Offer (including any
extensions thereof);
(vi) there shall have occurred any change (or
any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in any change) that is materially
adverse to the condition (financial or otherwise), total
assets, total liabilities, business, results of operations or
prospects of the Company and its Subsidiaries taken as a whole,
including without limitation any such change that prevents
Parent and Sub from obtaining the contemplated financing for
the Offer and the Merger;
(vii) the Company shall have delivered (or been
obliged to deliver) to Parent a Section 5.2 Notice or there
shall have been a Change in Control;
(viii) prior to the purchase of Shares pursuant
to the Offer, the Board of Directors (or any committee thereof)
shall have withdrawn or modified (including by amendment of its
Schedule 14D-9) in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, this Agreement or the
Merger or shall have recommended another takeover proposal, or
shall have adopted any resolution to effect any of the
foregoing; or
(ix) the Agreement shall have been terminated in
accordance with its terms, or Parent or Sub have reached an
agreement in writing with the Company providing for termination
of the Offer or delay in acceptance of, or payment for, the
Shares.
(d) Parent shall not have obtained prior to the
expiration of the Offer an amendment or supplement to the
Indenture dated as of March 5, 1996 among Parent, Interstate
Jitney Jungle Stores, Inc., an Alabama corporation and
successor by merger to JJ (Interstate), Inc., Southern Jitney
Jungle Company, a Mississippi corporation and successor by
merger to JJ (Southern), Inc., ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Co., Inc., a
Mississippi corporation and successor by merger to JJ (▇▇▇▇▇▇▇-
▇▇▇▇▇▇), Inc., Pump and Save, Inc., a Mississippi corporation
and successor by merger to JJ (Pump and Save), Inc., Jitney-
Jungle Bakery, Inc., a Mississippi corporation and successor by
merger to JJ (Bakery), Inc., and Marine Midland Bank, as
Trustee, (and, to the extent necessary, the Notes and
Guarantees referred to therein), all with the consent of the
holders of such Notes and in accordance with the terms of such
Indenture, to increase the amount of permitted indebtedness,
restricted payments and investments permitted to be incurred
or made, as applicable, by Parent and its Subsidiaries under
the Indenture and to make such other changes thereto as are
necessary to permit Parent to consummate the Offer, the Merger
and the other transactions contemplated by this Agreement.
(e) Prior to the expiration of the Offer, all of the
Company's directors and substantially all of the holders of the
Options who are employees of the Company shall have exercised
such Options or shall have entered into agreements with the
Company to exercise such Options prior to the Effective Time
(or such later time as may be specified by Parent) or otherwise
permit the Company to "cash-out" the Options as provided in the
second sentence of Section 5.3 of the Agreement.
which (in the case of each of paragraphs (a), (b), (c)(i)
through (c)(viii), (d) and (e) above) makes it inadvisable, as
determined by Sub in its sole judgment, to proceed with the
Offer or with such acceptance for payment of, or payment for,
Shares.
The foregoing conditions are for the sole benefit of
Sub and Parent and may be asserted by Sub or Parent and may be
waived by Sub or Parent, in whole or in part, at any time and
from time to time, in the sole discretion of Sub or Parent;
provided that, without the written consent of the Company,
Parent and Sub may not reduce the Minimum Condition to less
than a majority of the outstanding Shares on a fully diluted
basis or waive the condition set forth in (b) above. The
failure by Sub or Parent at any time to exercise any of the
foregoing rights will not be deemed a waiver of any right and
each right will be deemed an ongoing right which may be
asserted at any time and from time to time.