Exhibit (d)(1)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 15, 2003, is made and entered into by and among The ▇▇▇▇▇-▇▇▇▇▇▇▇
Stores Corp., an Ohio corporation (the "Company"), The Bon-Ton Stores, Inc., a
Pennsylvania corporation ("Parent"), and Elder Acquisition Corp., an Ohio
corporation ("Sub").
WHEREAS, the Board of Directors of the Company has determined that it
is advisable and in the best interest of the Company and its shareholders to
consummate and has recommended approval by the shareholders of the Company of
the business combination transaction provided for herein in which Sub would
merge with and into the Company and the Company would become an indirect wholly
owned subsidiary of Parent (the "Merger");
WHEREAS, the Boards of Directors of Parent and Sub have each determined
that it is advisable and in the best interests of their respective companies and
shareholders to consummate, and have approved, the Merger and this Agreement;
WHEREAS, in furtherance of such business combination transaction and
the Merger, Parent proposes to cause Sub to make a cash tender offer for all of
the issued and outstanding shares of common stock, without par value, of the
Company (the "Company Common Shares"), on the terms specified herein and the
Board of Directors of the Company has approved the tender offer and recommended
that it be accepted by the shareholders of the Company; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer (as hereinafter defined) and the Merger and also to prescribe various
conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE OFFER
Section 1.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 9.01 hereof and so long as none
of the events or circumstances set forth in Annex A hereto shall have
occurred and be continuing and shall not have been waived by Parent
(other than with respect to matters that by their terms are not
required to be satisfied until expiration or consummation of the
Offer), Sub shall, and Parent shall cause Sub to, as promptly as
practicable commence (within the meaning of the applicable rules and
regulations of the Securities and Exchange Commission (the "SEC")
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), but in no event later than fifth business day
following the initial public announcement of the execution of this
Agreement, an offer to purchase for cash (the "Offer") all of the
issued
and outstanding Company Common Shares at a price of $8.00 per Company
Common Share, subject to any required withholding Taxes (as hereinafter
defined) net to the seller in cash. For purposes of this Agreement, the
term "Transaction Consideration" shall mean $8.00 per Company Common
Share in cash or any higher price as shall be paid in respect of the
Company Common Shares in the Offer. The obligations of Sub to commence
the Offer and to accept for payment and to pay for any Company Common
Shares tendered shall be subject to only the conditions set forth in
Annex A hereto (any or all of which may, subject to the provisions
hereof, be waived by Parent or Sub, subject to applicable law). The
initial expiration date of the Offer shall be the 20th business day
following the commencement of the Offer determined using Rule 14d-2
under the Exchange Act, unless this Agreement is terminated in
accordance with Section 9.01, in which case the Offer (whether or not
previously extended in accordance with the terms hereof) shall expire
on such date of termination. Without the prior written consent of the
Company, Sub shall not, and Parent shall cause Sub not to (i) decrease
the Transaction Consideration, (ii) decrease the number of Company
Common Shares to be purchased in the Offer, (iii) change the form of
consideration payable in the Offer, (iv) add to or change the
conditions to the Offer set forth in Annex A, (v) waive the Minimum
Tender Condition (as defined in Annex A) or (vi) make any other change
in the terms or conditions of the Offer in any manner materially
adverse to the holders of Company Common Shares. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the
Offer in increments of not more than ten business days each, if at the
then scheduled expiration date of the Offer any of the conditions to
Sub's obligation to purchase Company Common Shares are not satisfied,
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 SEC or the staff thereof applicable
to the Offer and (iii) make available a subsequent offering period
(within the meaning of Rule 14d-11 under the Exchange Act). Without
limiting the right of Sub to extend the Offer, provided that this
Agreement shall not have been terminated in accordance with Section
9.01 hereof, if the conditions set forth in Annex A are not satisfied
or, to the extent permitted hereby, waived by Parent or Sub as of the
date the Offer would otherwise have expired, then, except to the extent
that such conditions are incapable of being satisfied, at the request
of the Company, Sub will extend the Offer from time to time until the
earlier of October 31, 2003 (the "Final Date") or the consummation of
the Offer. Sub shall, and Parent shall cause Sub to, subject to the
terms and conditions of the Offer, accept for payment Company Common
Shares validly tendered and not withdrawn promptly after expiration of
the Offer in compliance with Rule 14e-1(c) promulgated under the
Exchange Act.
(b) On the date the Offer is commenced, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule
TO and the documents included therein pursuant to which the Offer will
be made, together with any amendments or supplements thereto, the
"Offer Documents"). The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents
prior to their being filed with the SEC. Each of Parent, Sub and the
Company shall promptly correct any information provided by it for use
in the Offer Documents if and to the extent that such information shall
have become false or
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misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and
to cause the Offer Documents as so amended or supplemented to be filed
with the SEC and to be disseminated to the Company's shareholders, in
each case as and to the extent required by applicable federal
securities laws. Parent and Sub shall provide the Company and its
counsel with any comments, whether written or oral, Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments and any
written or oral responses thereto.
Section 1.02 Company Actions. Subject to the right of the Board of
Directors of the Company to take action permitted by Section 6.02, the Company
hereby consents to the Offer and represents and warrants that (a) its Board of
Directors (at a meeting duly called and held) has duly adopted resolutions
unanimously (with one director abstaining) (i) declaring that each of the Offer
and the Merger is in the best interests of the Company and its shareholders and
is advisable and fair to the shareholders of the Company, (ii) approving the
Offer and the Merger and approving this Agreement, and (iii) recommending
acceptance of the Offer and approval and adoption of the Agreement by the
shareholders of the Company and (b) RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., a member company of
RBC Capital Markets ("RBC"), (i) has delivered to the Company's Board of
Directors its opinion, dated the date hereof, to the effect that, as of the date
hereof, the Transaction Consideration to be received in the Offer and the Merger
by the shareholders of the Company is fair from a financial point of view to the
shareholders of the Company and (ii) has agreed, subject to its reasonable
approval, of references to it and its opinion in the Offer Documents and
Schedule 14D-9 (as hereinafter defined) to permit therein the inclusion of the
full text of its opinion and references to it and its opinion. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Company's Board of Directors described above in this Section 1.02, and shall
not withdraw or modify such recommendation, except in accordance with Section
6.02. The Company shall provide for inclusion in the Offer Documents any
information reasonably requested by Parent or Sub, and to the extent requested
by Parent or Sub, the Company shall cooperate in the preparation of the Offer
Documents. As soon as practicable after the date the Offer Documents are filed
with the SEC, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer, including an appropriate
information statement ("Information Statement") under Rule 14f-1 (such Schedule
14D-9 and Information Statement, as amended from time to time, the "Schedule
14D-9") and shall mail the Schedule 14D-9 to the holders of Company Common
Shares. The Schedule 14D-9 shall contain the recommendation described above,
unless such recommendation has been withdrawn or modified in accordance with
Section 6.02. Parent and its counsel shall be given a reasonable opportunity to
review the Schedule 14D-9 prior to its being filed with the SEC. Each of Parent,
Sub and the Company shall promptly correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall take
all steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable federal securities laws. The Company shall provide Parent
and its counsel with any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and any written or oral responses thereto. In
connection with the Offer, provided that this Agreement shall not have been
terminated in
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accordance with Section 9.01 hereof, the Company will, or will cause its
transfer agent to, promptly furnish Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Company Common Shares as of the most
recent practicable date, and shall furnish Sub with such additional information
(including, but not limited to, updated lists of holders of the Company Common
Shares and their addresses, mailing labels and lists of security positions) and
assistance as Sub or its agents may reasonably request in communicating the
Offer to the shareholders of the Company. Subject to the requirements of law,
and except for such steps as are necessary to disseminate the Offer Documents,
Parent and Sub shall hold in confidence the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence, will use such information only in connection with the Offer and, if
this Agreement is terminated, will promptly deliver to the Company all copies of
such information (and extracts or summaries thereof) then in their possession.
Section 1.03 Board of Directors and Committees; Section 14(f).
(a) Subject to the requirements of this Section 1.03 and
applicable law, promptly upon the date that Company Common Shares are
first accepted for payment pursuant to the Offer (the "Share Acceptance
Date"), assuming there are no conditions to payment outstanding, and
from time to time thereafter, Sub shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company (the "Board") as will give Sub
representation on the Board equal to the product of the number of
directors on the Board, after giving effect to such representation, and
the percentage that the number of Company Common Shares beneficially
owned by Parent and its Subsidiaries following such purchase bears to
the total number of issued and outstanding Company Common Shares, and
the Company shall use its reasonable best efforts to, upon request by
Sub, promptly increase the size of the Board (subject to the provisions
of the Company's articles of incorporation and code of regulations)
and/or secure the resignation of such number of directors as is
necessary to enable Sub's designees to be elected to the Board and
shall cause Sub's designees to be so elected. At such times the Company
will use its reasonable best efforts to cause individuals designated by
Sub to constitute the same percentage as is on the Board of (i) each
committee of the Board (other than any committee of the Board
established to take action under this Agreement or to the extent such
appointment would be contrary to applicable law or any exchange on
which Company Common Shares are then listed), (ii) each board of
directors of each Subsidiary of the Company designated by Sub and (iii)
each committee of each such board. Notwithstanding the foregoing, the
Company shall use its reasonable best efforts to ensure that the Board
and its committees and such boards and committees of the Company's
Subsidiaries, shall continue to include members of the Board, as of the
date hereof who are not employees of the Company and who are not
otherwise affiliated with Sub until the Effective Time (as defined in
Section 2.03). All nominees of Parent and Sub shall promptly resign
from the Board if the Transaction Consideration for any Company Common
Shares accepted for payment pursuant to the Offer is not promptly paid
in accordance with the terms of the Offer.
(b) The Company's obligations to appoint designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.
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The Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
this Section 1.03, including mailing to its shareholders an Information
Statement containing the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. Parent or Sub will
supply to the Company in writing and be solely responsible for any
information so supplied with respect to any of them and their nominees,
officers, directors and affiliates required by Section 14(f) and Rule
14f-1 to be included in the Information Statement.
(c) The foregoing notwithstanding, at all times following
the purchase by Sub of Company Common Shares pursuant to the Offer and
prior to the Effective Time, the Company shall be entitled to have four
(4) members of the Board consisting of (i) three (3) persons who are
directors on the date hereof and who are not employed by the Company
and who are not affiliates, associates or employees of Parent or Sub
or, in the event of a vacancy, persons designated by such persons (the
"Independent Directors") and (ii) one (1) person who is a director on
the date hereof and who is the Chief Executive Officer of the Company
on the date hereof. Following the purchase by Sub of Company Common
Shares pursuant to the Offer and prior to the Effective Time, neither
Parent nor Sub will take any action to cause any Independent Director
to be removed as members of the Board other than for cause. In
addition, following the election or appointment of Sub's designees to
the Board pursuant to this Section 1.03 and prior to the Effective
Time, any amendment of this Agreement or the articles of incorporation
or code of regulations of 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, waiver of any of the Company's rights hereunder or the
authorization of any other action to be taken under or in connection
with this Agreement if such action materially and adversely effects the
holders of Company Common Shares other than Parent or Sub, will require
the concurrence of a majority of the directors of the Company then in
office who are neither designated by Sub, employees of the Company or
any of its Subsidiaries nor otherwise affiliated with Sub. The
Independent Directors shall have the authority to retain such counsel
and other advisors at the expense of the Company as reasonably
determined appropriate by any of the Independent Directors. 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
Section 2.01 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, Sub shall be merged with
and into the Company in accordance with the General Corporation Law of the State
of Ohio (the "OGCL"). At the Effective Time, the separate existence of Sub shall
cease and the Company shall continue as the surviving corporation in the Merger
(the "Surviving Corporation") and an indirect wholly owned subsidiary of Parent.
Sub and the Company are sometimes referred to herein as the "Constituent
Corporations." As a result of the Merger, the outstanding shares of capital
stock and the treasury shares of the Constituent Corporations shall be converted
or cancelled in the manner provided in ARTICLE III.
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Section 2.02 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 9.01, and subject to the satisfaction or waiver (where
applicable) of the conditions set forth in ARTICLE VIII, the closing of the
Merger (the "Closing") will take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., local time, on the
third business day following satisfaction of the conditions set forth in ARTICLE
VIII (other than those conditions that, by their nature, are to be satisfied at
the Closing, but subject to the fulfillment or waiver of those conditions),
unless another date, time or place is agreed to by the parties hereto (the
"Closing Date").
Section 2.03 Effective Time. At the Closing, a certificate of
merger (the "Certificate of Merger") shall be duly prepared and executed by the
Constituent Corporations on the forms prescribed by the Secretary of State of
the State of Ohio (the "Secretary of State") and thereafter delivered to the
Secretary of State for filing, as provided in Section 1701.81 of the OGCL, on
the Closing Date. The Merger shall become effective at the time of the filing of
the Certificate of Merger with the Secretary of State (the date and time of such
filing being referred to herein as the "Effective Time").
Section 2.04 Articles of Incorporation and Code of Regulations of
the Surviving Corporation. At the Effective Time and subject to the provisions
of Section 7.07, (i) the articles of incorporation of Sub as in effect
immediately prior to the Effective Time shall be amended so that the name of Sub
shall be changed to The ▇▇▇▇▇-▇▇▇▇▇▇▇ Stores Corp. and, as so amended, such
articles of incorporation shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
articles of incorporation, and (ii) the code of regulations of Sub as in effect
immediately prior to the Effective Time shall be the code of regulations of the
Surviving Corporation until thereafter amended as provided by law, the articles
of incorporation of the Surviving Corporation and such code of regulations.
Section 2.05 Directors and Officers of the Surviving Corporation.
The directors and officers of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's articles of incorporation and
code of regulations.
Section 2.06 Effects of the Merger. Subject to the foregoing, the
effects of the Merger shall be as provided in the applicable provisions of the
OGCL.
Section 2.07 Further Assurances. Each party hereto will, either
prior to or after the Effective Time, execute such further documents,
instruments, deeds, bills of sale, assignments and assurances and take such
further actions as may reasonably be requested by one or more of the others to
consummate the Merger, to vest the Surviving Corporation with full title to all
assets, properties, privileges, rights, approvals, immunities and franchises of
either of the Constituent Corporations or to effect the other purposes of this
Agreement.
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ARTICLE III
CONVERSION OF SHARES
Section 3.01 Conversion of Capital Shares. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof:
(a) Conversion of Sub Common Shares. Each issued and
outstanding common share, without par value, of Sub ("Sub Common
Shares"), shall be converted into and become one fully paid and
non-assessable common share, without par value, of the Surviving
Corporation ("Surviving Corporation Common Shares"). Each certificate
representing outstanding Sub Common Shares shall at the Effective Time
represent an equal number of Surviving Corporation Common Shares.
(b) Cancellation of Treasury Shares and Shares Owned by
Parent and Subsidiaries. All Company Common Shares that are owned by
the Company as treasury shares and any Company Common Shares owned by
Parent, Sub or any other direct or indirect wholly owned Subsidiary of
Parent shall be cancelled and retired and shall cease to exist and no
stock of Parent or other consideration shall be delivered in exchange
therefor.
(c) Conversion Ratio for Company Common Shares.
(i) Each issued and outstanding Company Common
Share (other than shares to be cancelled in accordance with
Section 3.01(b) and other than Dissenting Shares (as defined
in Section 3.01(d))) shall be converted into the right to
receive the Transaction Consideration, without any interest
thereon, subject to appropriate adjustment for any stock
dividend, subdivision, reclassification, recapitalization,
split, combination or exchange with respect to the Company
Common Shares occurring before the Effective Time.
(ii) All Company Common Shares converted in
accordance with paragraph (i) of this Section 3.01(c) shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive
the Transaction Consideration per share, upon the surrender of
such certificate in accordance with Section 3.02, without any
interest thereon, subject to any applicable withholding tax.
(d) Dissenting Shares.
(i) Notwithstanding anything in this Agreement
to the contrary, each outstanding Company Common Share that is
held of record by a holder who has properly exercised
dissenters' rights with respect thereto under Section 1701.85
of the OGCL (a "Dissenting Share"), shall not be converted
into or represent the right to receive the Transaction
Consideration pursuant to Section 3.01(c), but the holder
thereof shall be entitled to receive such payment of the fair
cash value of such Company Common Share from the Surviving
Corporation as shall be
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determined pursuant to Section 1701.85 of the OGCL; provided,
however, that if any such holder shall have failed to perfect
or shall withdraw or lose such holder's rights under Section
1701.85 of the OGCL, each such holder's Company Common Shares
shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Transaction
Consideration, without any interest thereon, pursuant to
Section 3.01(c).
(ii) The Company shall give Parent (x) prompt
notice of any written demands for payment of the fair cash
value of shares, withdrawals of such demands and any other
instruments delivered pursuant to Section 1701.85 of the OGCL
and (y) the opportunity jointly to participate with the
Company in all negotiations and proceedings with respect to
demands for payment under Section 1701.85 of the OGCL. The
Company will not voluntarily make any payment with respect to
any demands delivered to the Company pursuant to Section
1701.85 of the OGCL and will not, except with the prior
written consent of Parent, settle or offer to settle any such
demands or waive any failure to comply with Section 1701.85 of
the OGCL by any holder of Company Common Shares.
(e) Company Stock Option Plan.
(i) Subject to paragraph (iii) below,
immediately prior to the Effective Time, each outstanding
option to acquire Company Common Shares, whether or not vested
or exercisable ("Company Options") granted under The
▇▇▇▇▇-▇▇▇▇▇▇▇ Stores Corp. Equity and Performance Incentive
Plan, as amended and restated as of September 21, 2000 (the
"Company Option Plan"), shall be cancelled by the Company. In
consideration of such cancellation, the holder thereof shall
be entitled to receive from the Company at the Effective Time
an amount in respect thereof equal to the product of (A) the
excess, if any, of the Transaction Consideration per share
over the per share exercise price thereof and (B) the number
of Company Common Shares subject thereto (the "Option Amount")
(such payment to be net of applicable withholding taxes).
Prior to the Effective Time, the Company shall deposit in a
bank account an amount of cash equal to the Option Amount for
each Company Option then outstanding (subject to any
applicable withholding tax), together with instructions that
such cash be promptly distributed following the Effective Time
to the holders of such Company Options in accordance with this
Section 3.01(e). From and after the Effective Time, other than
as expressly set forth in this Section 3.01(e), no holder of
an Option shall have any other rights in respect thereof other
than to receive payment, if any, for his or her Options as set
forth in this Section 3.01(e).
(ii) Subject to paragraph (iii) below,
immediately prior to the Effective Time, each outstanding
Deferred Share (as such term is defined in the Company Option
Plan), whether or not subject to deferral limitations under
the Company Option Plan, granted under the Company Option Plan
shall be cancelled by the Company. In consideration of such
cancellation, the holder thereof shall be entitled to receive
from the Company at the Effective Time an amount in respect
thereof equal to the Transaction Consideration (such payment
to be net of
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applicable withholding taxes). Prior to the Effective Time,
the Company shall deposit in a bank account an amount of cash
equal to the Transaction Consideration for each Deferred Share
then outstanding (subject to any applicable withholding tax),
together with instructions that such cash be promptly
distributed following the Effective Time to the holders of
such Deferred Shares in accordance with this Section 3.01(e).
From and after the Effective Time, other than as expressly set
forth in this Section 3.01(e), no holder of a Deferred Share
shall have any other rights in respect thereof other than to
receive payment for his or her Deferred Shares as set forth in
this Section 3.01(e).
(iii) Except as provided herein or as otherwise
agreed in writing by the parties, the Company shall take all
actions prior to or as of the Closing Date to the effect that
the Company Option Plan and any other plan, program or
arrangement with any current or former employee, officer,
director or consultant providing for the issuance or grant of
any interest in respect of the capital stock of the Company
shall terminate as of the Effective Time. The Company shall
exercise its reasonable best efforts to ensure that as of the
Effective Time no Person, other than Parent, Sub or their
Affiliates shall have any option, warrant or other right to
acquire any Company Common Shares or any other equity interest
in the Company under the Company Option Plan or any other
plan, program, arrangement or agreement maintained by the
Company or to which the Company is a party.
(iv) Prior to the Effective Time, the Board of
Directors of the Company (or, if appropriate, any committee
administering the Company Option Plan) shall adopt such
resolutions or take such actions as are necessary to carry out
the terms of Section 3.01(e)(i) and (ii), subject, if
necessary, to obtaining consents of the holders of Company
Options and/or Deferred Shares to the cancellation thereof in
exchange for the consideration set forth in Section 3.01(e)(i)
and (ii).
Section 3.02 Exchange of Certificates.
(a) Payment Agent. At the Closing, Parent shall deposit
with a bank or trust company designated before the Closing Date by
Parent and reasonably acceptable to the Company (the "Payment Agent"),
a cash amount equal to the aggregate Transaction Consideration to which
holders of Company Common 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 3.02. 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 3.02 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 Company Common Shares shall be
entitled, Parent and the Surviving Corporation shall in any event
remain liable, and shall make available to the Payment Agent additional
funds, for the payment thereof. All earnings in the Payment Fund in
excess of the aggregate Transaction Consideration are the property of
Parent and shall be
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disbursed to Parent promptly upon termination of the Payment Fund. The
Payment Fund shall not be used for any purpose except as expressly
provided in this Agreement.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation shall
cause the Payment Agent to mail to each holder of record of a
certificate or certificates that immediately prior to the Effective
Time represented outstanding Company Common Shares (the "Certificates")
whose shares are converted pursuant to Section 3.01(c) into the right
to receive the Transaction Consideration (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the
Certificates to the 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 Transaction Consideration. Upon
surrender of a Certificate for cancellation to the Payment Agent,
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
Transaction Consideration per Company Common Share represented thereby,
subject to any applicable withholding tax, which such holder has the
right to receive pursuant to the provisions of this ARTICLE III, and
the Certificate so surrendered shall forthwith be cancelled. In no
event shall the holder of any Certificate be entitled to receive
interest on any funds to be received in the Merger, including any
interest accrued in respect of the Payment Fund. In the event of a
transfer of ownership of Company Common Shares that is not registered
in the transfer records of the Company, the Transaction Consideration
may be issued to a transferee if the Certificate representing such
Company Common 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 3.02(b), each Certificate
shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Transaction Consideration
per Company Common Share represented thereby as contemplated by this
ARTICLE III, together with the dividends, if any, that may have been
declared by the Company on the Company Common Shares in accordance with
the terms of this Agreement and that remain unpaid at the Effective
Time. Parent and the Surviving Corporation shall pay all fees and
expenses of the Payment Agent in connection with the distribution of
the Transaction Consideration.
(c) Lost Certificates. If any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
Person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Paying Agent shall issue in
exchange for such lost, stolen or destroyed Certificate, the
Transaction Consideration due to such Person as provided in Section
3.02(b).
(d) No Further Ownership Rights in Company Common Shares.
All cash paid upon the surrender for exchange of Certificates in
accordance with the terms hereof shall
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be deemed to have been paid in full satisfaction of all rights
pertaining to the Company Common Shares represented thereby, subject,
however, to the Surviving Corporation's obligation to pay any dividends
that may have been declared by the Company on such shares of Company
Common Shares in accordance with the terms of this Agreement and that
remained unpaid at the Effective Time. Unless otherwise required by
Section 1701.85 of the OGCL, from and after the Effective Time, the
share transfer books of the Company shall be closed and there shall be
no further registration of transfers on the share transfer books of the
Surviving Corporation of the Company Common Shares that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates (other than Certificates representing
Dissenting Shares) are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this
Section 3.02.
(e) Termination of Payment Fund. Any portion of the
Payment Fund that remains undistributed to the shareholders of the
Company for six (6) months after the Effective Time shall be delivered
to the Surviving Corporation, upon demand, and any shareholders of the
Company who have not theretofore complied with this ARTICLE III 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 Transaction Consideration per Company
Common Share. Neither Parent nor the Surviving Corporation shall be
liable to any holder of Company Common Shares for cash representing the
Transaction Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. Parent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any holder of Company Common Shares such amounts
as Parent 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 applicable provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Shares in respect
of which such deduction and withholding was made by Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 4.01 Organization and Qualification. Each of the Company
and its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties. Each of the
Company and its Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good
- 11 -
standing which, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole. Section 4.01 of the letter dated the date hereof and delivered
to Parent and Sub by the Company concurrently with the execution and delivery of
this Agreement (the "Company Disclosure Letter") sets forth (i) the name and
jurisdiction of incorporation of each Subsidiary of the Company, (ii) the
authorized capital shares of each such Subsidiary, (iii) the number of issued
and outstanding capital shares of each such Subsidiary, and (iv) the record
owners of all such shares. Except for interests in the Subsidiaries of the
Company as set forth in Section 4.01 of the Company Disclosure Letter, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, limited liability company,
joint venture or other business association or entity. The Company has
previously delivered or made available to Parent complete and correct copies of
the certificates or articles of incorporation and code of regulations or bylaws
(or other comparable charter documents) of the Company and its Subsidiaries.
Section 4.02 Capitalization.
(a) The authorized capital shares of the Company consists
solely of 25,000,000 Company Common Shares and 5,000,000 preferred
shares, without par value ("Company Preferred Shares"). As of September
15, 2003, 11,585,457 Company Common Shares were issued and outstanding
and no shares were held in the treasury of the Company. As of September
15, 2003, the Company had authorized for issuance 2,750,000 Company
Common Shares pursuant to the Company Option Plan, and awards relating
to 1,722,097 Company Common Shares have been issued of which the number
of awards relating to Company Common Shares with an exercise price less
than the Transaction Consideration is set forth in Section 4.02 of the
Company Disclosure Letter. As of the date hereof, no Company Preferred
Shares are issued and outstanding. As of the date hereof, The
▇▇▇▇▇-▇▇▇▇▇▇▇ Stores Corp. Employee Stock Purchase Plan is terminated
and no Options are issued and outstanding thereunder. All of the issued
and outstanding Company Common Shares are, and all shares reserved for
issuance pursuant to the Company Option Plan will be upon issuance in
accordance with the terms specified in the Company Option Plan and the
agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and non-assessable. Except pursuant to this
Agreement and the Rights Agreement, dated as of December 30, 1997, as
amended as of November 11, 1998, as further amended as of June 25, 2003
and as further amended as of the date hereof, by and between the
Company and Norwest Bank Minnesota, N.A., as rights agent (the "Company
Rights Agreement"), and except as set forth in Section 4.02 of the
Company Disclosure Letter, there are no outstanding subscriptions,
options, warrants, rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments, understandings or
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"),
obligating the Company or any of its Subsidiaries to issue or sell any
capital shares of the Company or to grant, extend or enter into any
Option with respect thereto.
(b) Except as set forth in Section 4.02 of the Company
Disclosure Letter, all of the outstanding capital shares of each
Subsidiary of the Company are duly authorized, validly issued, fully
paid and non-assessable and are owned, beneficially and of record,
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by the Company or a Subsidiary wholly owned, directly or indirectly, by
the Company, free and clear of any liens, claims, mortgages,
encumbrances, pledges, security interests, equities and charges of any
kind (each a "Lien"). Except as set forth in Section 4.02 of the
Company Disclosure Letter, there are no (i) outstanding Options
obligating the Company or any of its Subsidiaries to issue or sell any
capital shares of any Subsidiary of the Company or agreements to grant,
extend or enter into any such Option or (ii) voting trusts, proxies or
other commitments, understandings, restrictions or arrangements in
favor of any Person other than the Company or a Subsidiary wholly
owned, directly or indirectly, by the Company with respect to the
voting of or the right to participate in dividends or other earnings on
any capital shares of any Subsidiary of the Company.
(c) Except as set forth in Section 4.02 of the Company
Disclosure Letter, there are no outstanding contractual obligations of
the Company or any Subsidiary of the Company to repurchase, redeem or
otherwise acquire any Company Common Shares or any capital shares of
any Subsidiary of the Company or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary of the Company or any other Person.
Section 4.03 Authority Relative to this Agreement. The Company has
the requisite corporate power and authority to enter into this Agreement and,
subject to obtaining the Company Shareholders' Approval (as defined in Section
7.03), if required by law, 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 and validly approved by
the Board of Directors of the Company; the Board of Directors of the Company has
recommended that the shareholders of the Company accept the Offer, tender their
shares pursuant to the Offer and vote to adopt this Agreement; and no other
corporate proceedings on the part of the Company or its shareholders are
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby, other than obtaining the Company Shareholders' Approval, if
required by law. This Agreement has been duly and validly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 4.04 Non-Contravention; Approvals and Consents.
(a) Except as set forth in Section 4.04 of the Company
Disclosure Letter, 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,
result in or give to any Person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, loss of a
material benefit under 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
- 13 -
under, any of the terms, conditions or provisions of (i) the
certificates or articles of incorporation or code of regulations or
bylaws (or other comparable charter documents) of the Company or any of
its Subsidiaries, or (ii) subject to the obtaining of the Company
Shareholders' Approval, if required by law, and the taking of the
actions described in paragraph (b) of this Section 4.04, (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, any
foreign country or any domestic or foreign state, county, city or other
political subdivision (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, permit, concession,
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,
excluding from the foregoing clauses (x) and (y) conflicts, - -
violations, breaches, defaults, rights of payment or reimbursement,
terminations, cancellations, modifications, accelerations and creations
and impositions of Liens that, individually or in the aggregate, would
not reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability of the
Company to consummate the transactions contemplated by this Agreement
(but not excluding any conflicts, violations, breaches, defaults,
rights of payment or reimbursement, terminations, cancellations,
modifications, accelerations and creations or impositions of Liens
under (i) the Company Store Leases (as defined in Section 4.16(b))
other than those that can not reasonably be expected to have a material
adverse impact on one or more Company Store Lease or (ii) the ▇▇▇▇▇▇
Holdings Merger Agreement (as defined in Section 10.11(i))).
(b) Except (i) for the filing of a pre-merger
notification report by the Company under, and any other actions
required under, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR
Act"), (ii) for the filing of the Schedule 14D-9 with the SEC pursuant
to the Exchange Act and the actions required under Section 14(f) and
Rule 14f-1 under the Exchange Act as provided in Section 1.03(b), (iii)
for the filing of the Proxy Statement (as defined in Section 4.09) with
the SEC pursuant to the Exchange Act, (iv) for the filing of the
Certificate of Merger and other appropriate merger documents required
by the OGCL with the Secretary of State and appropriate documents with
the relevant authorities of other states in which the Constituent
Corporations are qualified to do business, and (v) as set forth in
Section 4.04 of the Company Disclosure Letter, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any Law or
Order of any Governmental or Regulatory Authority 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 by the Company of the transactions
contemplated hereby, excluding from the foregoing such consents,
approvals, actions, filings and notices that the failure to make or
obtain, as the
- 14 -
case may be, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to
consummate the transactions contemplated by this Agreement (but not
excluding any consents, approvals, actions, filings or notices under
the Company Store Leases or the ▇▇▇▇▇▇ Holdings Merger Agreement).
Section 4.05 SEC Reports and Financial Statements.
(a) As of their respective dates, each form, report,
schedule, registration statement, definitive proxy statement and other
document (together with all amendments thereof and supplements thereto)
filed by the Company or any of its Subsidiaries with the SEC since
February 4, 2000 (as such documents have since the time of their filing
been amended or supplemented, the "Company SEC Reports"), which are all
of the documents that the Company and its Subsidiaries were required to
file with the SEC since such date: (i) complied as to form in all
material respects with the requirements of the Securities Act of 1933,
as amended, and the rules and regulations thereunder (the "Securities
Act"), or the Exchange Act, as the case may be, and if applicable, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated
thereunder (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Company SEC Reports
(the "Company Financial Statements") complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC, including, without
limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, applicable thereto, were 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 and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and fairly
present (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments) the
consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated
results of their operations and cash flows for the respective periods
then ended. Except as set forth in Section 4.05 of the Company
Disclosure Letter, each Subsidiary of the Company is treated as a
consolidated Subsidiary of the Company in the Company Financial
Statements for all periods covered thereby.
(b) The Company maintains disclosure controls and
procedures required by Rule 13a-15 or 15d-15 under the Exchange Act;
such controls and procedures are effective to ensure that all material
information concerning the Company and its Subsidiaries is made known
on a timely basis to the individuals responsible for the preparation of
the Company's filings with the SEC and other public disclosure
documents.
(c) As used in this Section 4.05, the term "file" shall
be broadly construed to include any manner in which a document or
information is furnished, supplied or otherwise made available to the
SEC.
- 15 -
Section 4.06 Absence of Certain Changes or Events. Except as set
forth in the Company SEC Reports filed prior to the date of this Agreement or as
set forth in Section 4.06 of the Company Disclosure Letter, since February 2,
2003 (a) there has not been any change, event or development that, individually
or in the aggregate, would reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole other than any
change, event or development resulting from the announcement of the Company's
receipt of a proposal from Parent or the execution of this Agreement and (b) the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary course consistent with past practice.
Section 4.07 Absence of Undisclosed Liabilities. Except for
matters reflected or reserved against in the most recent balance sheet included
in the Company Financial Statements or as set forth in Section 4.07 of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries had
at such date, or has incurred since that date, any liabilities (whether
absolute, accrued, contingent, fixed or otherwise, or whether due or to become
due) of any nature, except liabilities (i) that were incurred in the ordinary
course of business consistent with past practice, (ii) that have been disclosed
in Section 4.07 of the Company Disclosure Letter, or (iii) that, individually or
in the aggregate, would not reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
Section 4.08 Legal Proceedings. Except as specifically identified
in the Company SEC Reports filed prior to the date of this Agreement or as set
forth in Section 4.08 of the Company Disclosure Letter, (i) there are no
actions, suits, arbitrations or proceedings pending or, to the knowledge of the
Company, threatened against, relating to or affecting, nor to the knowledge of
the Company are there any Governmental or Regulatory Authority investigations or
audits pending or threatened against, relating to or affecting, the Company or
any of its Subsidiaries or any of their respective assets and properties that,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement, and (ii) neither the Company nor any of its Subsidiaries is
subject to any order of any Governmental or Regulatory Authority that,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement.
Section 4.09 Information Supplied. None of (a) the proxy statement
relating to the Company Shareholders' Meeting, as amended or supplemented from
time to time (as so amended and supplemented, the "Proxy Statement"), the
Schedule 14D-9, and any other documents to be filed by the Company with the SEC
or any other Governmental or Regulatory Authority in connection with the Offer,
the Merger and the other transactions contemplated hereby or (b) information
supplied by the Company in writing for inclusion in the Schedule TO or the other
Offer Documents will, on the date of its filing or, in the case of the Proxy
Statement, at the date it is mailed to shareholders of the Company and at the
time of the Company Shareholders' Meeting, 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 or necessary to correct
any statement in any earlier communication with respect to any solicitation of
proxies for the
- 16 -
Company Shareholders' Meeting that shall have become false or 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. Each of the Schedule 14D-9
and the Proxy Statement filed by the Company with the SEC under the Exchange Act
will comply as to form in all material respects with the Exchange Act.
Section 4.10 Permits; Compliance with Laws and Orders. The Company
and its Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental and Regulatory Authorities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders and
approvals that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole. The Company, its Subsidiaries, the Owned Real Property and the
Company Store Leases are in compliance with the terms of the Company Permits,
except for failures so to comply that, individually or in the aggregate, would
not reasonably be expected to have a material adverse effect on the Company and
its Subsidiaries taken as a whole. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, the Company and its
Subsidiaries are not in violation of or default under any Law or Order of any
Governmental or Regulatory Authority, except for such violations or defaults
that, individually or in the aggregate, would not reasonably be expected to have
a material adverse effect on the Company and its Subsidiaries taken as a whole.
Section 4.11 Compliance with Agreements; Certain Agreements.
(a) 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, would reasonably be expected to result in a
default under, (i) the certificates or articles of incorporation or
code of regulations or bylaws (or other comparable charter documents)
of the Company or any of its Subsidiaries or (ii) 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 with respect to (ii) for breaches,
violations and defaults that, individually or in the aggregate, would
not reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole. All such Contracts are
in full force and effect, except to the extent they have previously
expired in accordance with their terms, or except where such invalidity
or unenforceability would not reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
(b) Except as set forth in Section 4.11 of the Company
Disclosure Letter or in the Company SEC Reports filed prior to the date
of this Agreement or as provided for in this Agreement, neither the
Company nor any of its Subsidiaries is a party to any oral or written
(i) consulting agreement providing for annual payments by the Company
or any of its Subsidiaries in excess of $50,000, (ii) union or
collective bargaining agreement, (iii) agreement with any executive
officer or other key employee of the Company or any
- 17 -
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, (iv) agreement with respect to
any executive officer or other key employee of the Company or any of
its Subsidiaries providing any term of employment or compensation
guarantee, (v) agreement or plan, including any stock option, stock
appreciation right, restricted stock or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement, (vi) agreement that would restrict the
Company's or any Subsidiary's ability to compete in any business in any
location, (vii) agreement concerning a partnership or joint venture,
(viii) loan agreement, promissory note, security agreement, deed of
trust and other agreement relating to indebtedness for borrowed money
or deferred purchase price of property (other than trade payables
arising in the ordinary course of business), (ix) agreement relating to
business acquisitions or dispositions not yet consummated, including
any separate Tax or indemnification agreements, and (x) other agreement
that would be required to be filed as an exhibit to an Annual Report on
Form 10-K of the Company if the Company were to file such a report on
the date of this Agreement (assuming for this purpose that the fiscal
year covered thereby ended on the date of this Agreement).
(c) The ▇▇▇▇▇▇ Holdings Merger Agreement has been
terminated in accordance with its terms. In full satisfaction of the
obligations of the Company thereunder, the Company, within two business
days after the execution and delivery of this Agreement, will pay to
▇▇▇▇▇▇ Holdings, Inc. an aggregate amount of no more than four million
dollars ($4,000,000.00) and the Company will have no further
obligations or liabilities under such agreement. Each of ▇▇▇▇▇▇
Holdings, Inc. and its affiliates and subsidiaries remains bound by the
terms and conditions of the Confidentiality Agreement, dated as of
March 24, 2003, with the Company (the "WH Confidentiality Agreement").
A true and correct copy of such WH Confidentiality Agreement, as
amended to date, has been delivered to Parent. To the knowledge of the
Company, neither ▇▇▇▇▇▇ Holdings, Inc. nor any of its affiliates, or
subsidiaries or any other Person that is bound by such agreement is, in
any material respect, in breach, violation or default under the terms
thereof. Promptly following the execution of this Agreement, the
Company shall request from ▇▇▇▇▇▇ Holdings, Inc. that all non-public
information made available to ▇▇▇▇▇▇ Holdings, Inc., its affiliates,
subsidiaries and representatives that is subject to such WH
Confidentiality Agreement be returned to the Company or destroyed in
accordance with the terms thereof.
Section 4.12 Taxes. For purposes of this Agreement, "Taxes"
(including, with correlative meaning, the word "Tax") shall include any and all
federal, state, county, local, foreign or other taxes, charges, imposts, rates,
fees, levies or other assessments imposed by any Governmental or Regulatory
Authority, including, without limitation, all net income, alternative minimum,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock, production,
business and occupation, disability, employment, payroll, license, estimated,
stamp, custom duties, severance, withholding
- 18 -
or other taxes, fees, assessments or other similar charges of any kind
whatsoever, together with any interest and penalties (civil or criminal) on or
additions to any such taxes. "Tax Returns" (including, with correlative meaning,
"Tax Return") shall mean federal, state, local and foreign returns, estimates,
information statements, designations, forms, schedules, reports and documents of
every nature whatsoever required to be filed with any Governmental or Regulatory
Authority relating to Taxes. Except as set forth in Section 4.12 of the Company
Disclosure Letter:
(a) Each of the Company and its Subsidiaries has filed
all material Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed or granted
and have not expired, and all such Tax Returns are complete and
accurate in all material respects;
(b) The Company and each of its Subsidiaries has timely
paid (or, in the case of a Subsidiary, the Company has timely paid on
its behalf) all Taxes shown as due on such Tax Returns;
(c) The Company and each of its Subsidiaries has withheld
and timely paid to the applicable Governmental or Regulatory Authority
with respect to its employees all federal and state income Taxes, Taxes
pursuant to the Federal Insurance Contribution Act, Taxes pursuant to
the Federal Unemployment Tax Act and other Taxes required to be
withheld, except to the extent that failures to withhold and pay would
not be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole;
(d) Neither the Company nor any of its Subsidiaries has
been delinquent in the payment of any material Tax nor is there any
material Tax deficiency outstanding, proposed or assessed against the
Company or any of its Subsidiaries;
(e) Neither the Company nor any of its Subsidiaries has
any liability for any material unpaid Taxes that has not adequately
been accrued for, or reserved on, the most recent financial statements
contained in the Company SEC Reports, other than any liability for
unpaid Taxes that may have accrued since the date of the Company SEC
Reports in connection with the operation of the business of the Company
and its Subsidiaries in the ordinary course, and except for
inadequately accrued or reserved Taxes that, individually or in the
aggregate, would not reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole;
(f) No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its Subsidiaries
that are not adequately reserved for, except for inadequately reserved
deficiencies which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Company
and its Subsidiaries taken as a whole;
(g) No requests for waivers of the time to assess any
Taxes against the Company or any of its Subsidiaries have been granted
or are pending;
- 19 -
(h) No audits or other proceedings by any Governmental or
Regulatory Authority are presently pending or, to the knowledge of the
Company, threatened with regard to any Taxes or Tax Returns of the
Company or any of its Subsidiaries;
(i) Each power of attorney currently in force that has
been granted by the Company or any of its Subsidiaries concerning any
Tax matter is set forth in Section 4.12(f) of the Company Disclosure
Letter;
(j) The Company has made available to Parent complete and
accurate copies of (i) all material Tax Returns for all years for which
the applicable statute of limitations has not expired, and any
amendments thereto, filed by or on behalf of the Company or any of its
Subsidiaries, (ii) all audit reports or written proposed adjustments
(whether formal or informal) received from any Governmental or
Regulatory Authority relating to any Tax Return filed by or on behalf
of the Company or any of its Subsidiaries and (iii) any Tax ruling or
request for a Tax ruling applicable to the Company or any of its
Subsidiaries and closing agreements entered into by the Company or any
of its Subsidiaries;
(k) Neither the Company nor any of its Subsidiaries (i)
is a party to, is bound by, or has any obligation under, any agreement
relating to the allocation or sharing of Taxes or has any material
liability for the Taxes of any Person other than the Company or its
Subsidiaries, as a transferee, or successor or otherwise (including,
without limitation, any liability under Treasury Regulations Section
1.1502-6 or any similar provision of state, local or foreign law), (ii)
has made any, or is obligated to make any, material payments, or is a
party to any agreement that under certain circumstances could obligate
it to make any material payments that under Code Section 280G will not
be deductible, (iii) has ever been a member of an affiliated group of
corporations (within the meaning of Code Section 1504(a)) filing
consolidated federal Tax Returns (or any other consolidated, combined
or unitary income Tax Return), other than the affiliated group of which
the Company is the common parent, (iv) has made an election under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company or by any of its
subsidiaries; or (v) have been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during
the past five years;
(l) Each of the Company and its Subsidiaries has
disclosed on its federal income Tax Returns each position taken therein
that could give rise to a substantial understatement of United States
federal income Tax within the meaning of Code Section 6662;
(m) There are no material Liens for Taxes upon the assets
of the Company or of any of its Subsidiaries, other than Liens for
current Taxes not yet due and payable and Liens for Taxes that are
being contested in good faith by appropriate proceedings;
(n) There is no contract, agreement, plan or arrangement
to which the Company or any of its Subsidiaries is a party as of the
date of this Agreement, including
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but not limited to, the provisions of this Agreement, covering any
employee or former employee of the Company or any of its Subsidiaries
that, individually or in the aggregate, would reasonably be expected to
give rise to the payment of any amount as a result of the Merger that
would not be deductible pursuant to Section 404 or 162(m) of the Code;
(o) Neither the Company nor any Affiliate has
participated in any reportable or listed transaction as defined under
Treasury Regulations Section 1.6011-4. If the Company or any Affiliate
has participated in a reportable or listed transaction, such entity has
properly disclosed such transaction in accordance with applicable
Treasury Regulations;
(p) Section 4.12 of the Company Disclosure Letter sets
forth the states in which the Company and its Subsidiaries currently
file income Tax Returns or corporate franchise Tax Returns. No claim
has ever been made by a Governmental or Regulatory Authority in a
jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns that the Company or such Subsidiary is or may be subject to
taxation by such jurisdiction;
(q) None of the assets of the Company or of any of its
Subsidiaries are tax exempt use property within the meaning of Section
168(h) of the Code; and
(r) Neither the Company nor any of its Subsidiaries has
constituted a "distributing corporation" or a "controlled corporation"
in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (1) in the two years prior to the date of this
Agreement or (2) in a distribution that could otherwise constitute part
of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) that includes the Offer and the Merger.
Section 4.13 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 4.13 of the Company
Disclosure Letter or as would not reasonably be expected to have a
material adverse effect on the Company and its Subsidiaries taken as a
whole, (i) all Company Employee Benefit Plans (as defined below) are
and have been maintained in compliance with all applicable requirements
of Law, including without limitation ERISA (as defined below) and the
Code, and (ii) neither the Company nor any of its Subsidiaries has any
liabilities or obligations with respect to any such Company Employee
Benefit Plans, whether accrued, contingent or otherwise, nor to the
knowledge of the Company are any such liabilities or obligations
expected to be incurred other than contribution obligations and payment
of benefits arising in the normal course under any Company Employee
Benefit Plan. Section 4.13(a)(1) of the Company Disclosure Letter lists
all Company Employee Benefit Plans and all ERISA Affiliates. Except as
set forth in Section 4.13(a)(2) of the Company Disclosure Letter, the
execution of, and performance of the transactions contemplated in, this
Agreement by the Company will not constitute an event under any Company
Employee Benefit Plan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any current or former employee or
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beneficiary thereof. The only severance agreements or severance
policies applicable to the Company or any of its Subsidiaries are the
agreements and policies set forth in Section 4.13(a)(3) of the Company
Disclosure Letter. Each Company Employee Benefit Plan and related trust
intended to be qualified under Section 401(a) or 501(c)(9) of the Code
is so qualified, has received a favorable determination letter from the
IRS, and nothing has occurred that could adversely affect such
determination.
(b) As used herein:
(i) "Company Employee Benefit Plan" means any
Plan entered into, established, maintained, sponsored,
contributed to or required to be contributed to by the Company
or any of its Subsidiaries or any ERISA Affiliate for the
benefit of the current or former employees or directors of the
Company or any of its Subsidiaries or any ERISA Affiliate and
existing on the date of this Agreement or at any time
subsequent thereto and on or prior to the Effective Time and,
in the case of a Plan which is subject to Part 3 of Title I of
the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder ("ERISA"),
Section 412 of the Code or Title IV of ERISA, at any time
during the five-year period immediately preceding the date of
this Agreement.
(ii) "Plan" means any employment, bonus,
incentive compensation, deferred compensation, long term
incentive, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, leave of absence, layoff, vacation, day
or dependent care, legal services, cafeteria, life, health,
medical, accident, disability, workers' compensation or other
insurance, severance, separation, termination, change of
control or other benefit plan, agreement, practice, policy,
program, scheme or other arrangement, whether written or oral,
including, but not limited to any "employee benefit plan"
within the meaning of Section 3(3) of ERISA.
(iii) "ERISA Affiliate" means any Person, who on
or before the Effective Time, is under common control with the
Company within the meaning of Section 414 of the Code.
(c) Complete and correct copies of the following
documents have been made available to Parent: (i) all Company Employee
Benefit Plans and any related trust agreements or insurance contracts,
(ii) the most current summary plan descriptions of each Company
Employee Benefit Plan subject to the requirement to give a summary plan
description under ERISA, (iii) the most recent Form 5500 and schedules
thereto for each Company Employee Benefit Plan subject to such
reporting, (iv) the most recent determination of the Internal Revenue
Service with respect to the qualified status of each Company Employee
Benefit Plan or related trust that is intended to qualify under Section
401(a) or 501(c)(9) of the Code, (v) the most recent accountings with
respect to each Company Employee Benefit Plan funded through a trust
and (vi) the most recent actuarial report of the actuary of each
Company Employee Benefit Plan with respect to which actuarial
valuations are conducted.
- 22 -
(d) Except as set forth in Section 4.13(d) of the Company
Disclosure Letter, neither the Company nor any Subsidiary nor any ERISA
Affiliate maintains or is obligated to provide benefits under any life,
medical or health Plan (other than as an incidental benefit under a
Plan qualified under Section 401(a) of the Code) that provides benefits
to retirees or other terminated employees other than benefit
continuation rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(e) Except as set forth in Section 4.13(e) of the Company
Disclosure Letter, each Company Employee Benefit Plan covers only
employees who are employed by the Company or a Subsidiary (or former
employees or beneficiaries with respect to service with the Company or
a Subsidiary) or directors of the Company. The transactions
contemplated by this Agreement will require no spin-off of assets and
liabilities or other division or transfer of rights with respect to any
such plan.
(f) Neither the Company, any Subsidiary of the Company,
any ERISA Affiliate nor any other corporation or organization
controlled by or under common control with any of the foregoing within
the meaning of Section 4001 of ERISA has at any time contributed to any
"multiemployer plan," as that term is defined in Section 4001 of ERISA
or to any "multiple employer plan" as described in Section 413(c) of
the Code.
(g) No event has occurred, and there exists no condition
or set of circumstances in connection with any Company Employee Benefit
Plan or any Plan sponsored by an ERISA Affiliate, under which the
Company or any Subsidiary, directly or indirectly (through any
indemnification agreement or otherwise), would reasonably be expected
to be subject to any risk of material liability on the Company and its
Subsidiaries under Section 409 of ERISA, Section 502(i) of ERISA, Title
IV of ERISA or Section 4975 of the Code.
(h) No transaction contemplated by this Agreement will
result in liability to the Pension Benefit Guaranty Corporation
("PBGC") under Section 302(c)(11), 4062, 4063, 4064 or 4069 of ERISA,
or otherwise, with respect to the Company or any of its Subsidiaries or
any corporation or organization controlled by or under common control
with any of the foregoing within the meaning of Section 4001 of ERISA,
and, to the knowledge of the Company, no event or condition exists or
has existed which would reasonably be expected to result in any
material liability to the PBGC with respect to the Company, any of its
Subsidiaries or any other of such entities. Except as set forth in
Section 4.13(h) of the Company Disclosure Schedule, no "reportable
event" within the meaning of Section 4043 of ERISA has occurred with
respect to any Company Employee Benefit Plan that is a defined benefit
plan under Section 3(35) of ERISA. With respect to each plan that is
subject to Section 301 et seq. of ERISA or Section 412 of the Code, the
Company and its Subsidiaries are not liable for any accumulated funding
deficiency as that term is defined in Section 412 of the Code and the
benefit obligations of all such plans as most currently determined by
the plan's actuary on a plan-termination basis do not exceed the assets
of such plans as of the date of this Agreement by more than $4,500,000.
- 23 -
(i) Except as disclosed in Section 4.13(i) of the Company
Disclosure Letter, no condition, agreement or Plan provision limits the
right of the Company or its affiliates to amend, cut back or terminate
any Plan (except to the extent such limitation arises under ERISA)
without further liability to the Company or its Subsidiaries.
(j) Except as set forth in Section 4.13(j) of the Company
Disclosure Letter, no employer securities, employer real property or
other employer property is included in the assets of any Company
Employee Benefit Plan.
(k) The Company has not violated Section 306 or 402 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
Section 4.14 Labor Matters. Except as set forth in Section 4.14 of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement with any labor union,
confederation or association and there are no discussions, negotiations, demands
or proposals that are pending or, to the knowledge of the Company, threatened,
or have been conducted or made with or by any labor union, confederation or
association regarding organizational activities since February 4, 2000. Except
as disclosed in the Company SEC Reports filed prior to the date of this
Agreement or as set forth in Section 4.14 of the Company Disclosure Letter,
there are no material 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 material organizational efforts presently being made involving any of the now
unorganized employees of the Company or any of its Subsidiaries. Since February
4, 2000, there has been no work stoppage, strike, material dispute or other
concerted action by employees of the Company or any of its Subsidiaries. During
that period, the Company and its Subsidiaries have complied in all material
respects with all applicable Laws relating to the employment of labor,
including, without limitation, those relating to wages, hours and collective
bargaining. There is no pending or, to the knowledge of the Company, threatened
action, complaint, arbitration, proceeding or investigation against the Company
or any of its Subsidiaries by or before (or, in the case of any threatened
matter, that could be brought before) any court, governmental agency,
administrative agency, board, commission or arbitrator brought by or on behalf
of any prospective, current or former employees of the Company or any of its
Subsidiaries which would reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries, taken as a whole. Except as set
forth in Section 4.14 of the Company Disclosure Letter, neither the Company nor
any of its Subsidiaries has closed any retail store, distribution center or
other facility, or effectuated any layoffs of employees or implemented any early
retirement, separation or similar program in connection with any retail store
closing since January 1, 2002, nor has the Company or any of its Subsidiaries
planned or announced any such action or program for the future.
Section 4.15 Environmental Matters.
(a) Each of the Company and its Subsidiaries is and has
been in compliance, in all material respects, with all applicable
Environmental, Health, and Safety Requirements.
- 24 -
(b) Without limiting the generality of the foregoing,
each of the Company and its Subsidiaries has obtained and is in
compliance with all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements in
connection with the use or operations on any real property or with
respect to the business of each of the Company and its Subsidiaries
except for such permits, licenses or other authorizations the failure
of which to obtain and be in compliance with would not reasonably be
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(c) Neither the Company or its Subsidiaries has received
any written or oral notice, report or other information regarding any
actual or alleged material violation of Environmental, Health, and
Safety Requirements, or any material liabilities or potential
liabilities to any governmental authorities or third parties under any
Environmental, Health, and Safety Requirements. None of the Company or
its Subsidiaries is subject to any order, decree, injunction or lien by
any governmental authority or any claim, indemnity or other agreement
with any third party relating to liability under any Environmental,
Health, and Safety Requirements.
(d) The properties currently owned, leased or operated by
the Company and its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any
Hazardous Material in such a manner or concentration that the Company
would be required under any Environmental, Health and Safety
Requirements to remedy the existence of such Hazardous Material. The
properties formerly owned, leased or operated by the Company or any of
its Subsidiaries were not contaminated with Hazardous Material during
the period of ownership or operation by the Company or any of its
Subsidiaries in such a manner or concentration that the Company would
be required under any Environmental, Health and Safety Requirements to
remedy the existence of such Hazardous Material. Neither the Company
nor any of its Subsidiaries are or, to the knowledge of the Company,
are alleged to be, subject to liability for any Release of Hazardous
Material on the property of any third party.
(e) Except as set forth on Section 4.15 of the Company
Disclosure Letter, none of the following exists at any real property or
facility owned or operated by the Company or its Subsidiaries: (1)
underground storage tanks, (2) asbestos-containing material, (3)
materials or equipment containing polychlorinated biphenyls, or (4)
lead-based paint, mold, fungi, bacteria or other biological material or
organisms for which remediation, abatement or removal is necessary for
the health, safety or welfare of persons in or about the real property
or for which remediation is required under applicable Laws.
(f) None of Company or its Subsidiaries has treated,
stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or Released any Hazardous Materials in a manner
that has given or would give rise to liabilities under applicable
Environmental, Health, and Safety Requirements, including, but not
limited to, any material liability for response costs, corrective
action costs, personal injury, property damage, natural resources
damage or attorney or consultant fees under Environmental, Health, and
Safety Requirements.
- 25 -
(g) For purposes of this Section 4.15, the following
terms shall have the following meanings:
(i) "Environmental, Health, and Safety
Requirements" means all federal, state, local and foreign
statutes, laws (including principles of common law),
regulations, ordinances, licenses, permits, approvals or
restrictions concerning public health and safety, worker
health and safety, natural resources and pollution or
protection of the environment, including without limitation,
all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of
any Hazardous Material, as such requirements are enacted and
in effect on or prior to the Effective Time.
(ii) "Hazardous Material" means all pollutants,
contaminants, hazardous substances, hazardous waste, toxic
substances, solid or special waste and materials, petroleum
and petroleum constituents, PCBs, asbestos, radon, radioactive
materials and any other compound, element, material or
substance in any form whatsoever regulated or restricted by or
under Environmental Health and Safety Requirements.
(iii) "Release" means the spilling, leaking,
disposing, discharging, emitting, depositing, ejecting,
leaching, escaping or any other release or threatened release,
however defined, whether intentional or unintentional, of any
Hazardous Material.
Section 4.16 Company Real Property.
(a) Section 4.16 of the Company Disclosure Schedule
identifies each parcel of real property owned or leased by the Company
or one of its Subsidiaries (the "Company Real Property"). The Company
and its Subsidiaries have good and marketable fee simple title to each
property identified as owned by it, free and clear of all Liens other
than (i) Liens that do not, individually or in the aggregate,
materially impair the conduct by the Company of its business thereon or
materially detract from the value thereof, (ii) Liens for Taxes accrued
but not yet payable, and (iii) Liens that secure obligations of the
Company under the Amended and Restated Credit Agreement, dated as of
July 9, 2002, by and among the Company, Citibank, N.A., as issuer,
Citicorp USA, Inc., as agent, Swing Loan Bank and the other lenders
named therein (the "Company Credit Facility") (each of (i), (ii) and
(iii) being "Permitted Encumbrances"). The Company holds a valid
leasehold interest under a lease or sublease covering each property
identified as leased by it free and clear of all Liens other than
Permitted Encumbrances.
(b) The Company has made available to Parent a complete,
correct and current copy of the store leases and distribution center
lease relating to each property identified as leased by it (the
"Company Store Leases"), including any modifications and supplements.
Except as set forth in Section 4.16 of the Company Disclosure Schedule
(i) all of the Company Store Leases are in full force and effect, (ii)
the Company and, to the
- 26 -
knowledge of Company, all other parties to the Company Store Leases
have, in all material respects, duly and timely performed their
obligations and are not in default under the Company Store Leases,
(iii) the Company has not given or received any notice of a material
default under any of the Company Store Leases, (iv) no event has
occurred or condition exists that, with the giving of notice, the
passage of time, or both, would constitute a material default by the
Company or, to the knowledge of the Company, any other party under any
of the Company Store Leases, and (v) to the knowledge of the Company,
none of the Company Store Leases is subject to any impending
cancellation.
(c) The use of the Company Real Property by the Company
and its Subsidiaries in their businesses as presently and ordinarily
conducted conforms with applicable zoning laws, regulations and
permits, except where the failure to conform would not reasonably be
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Neither the Company nor any of its
Subsidiaries is obligated under or bound by any agreement, option,
right of first refusal, purchase contract or other contractual right to
sell, lease or dispose of any Owned Real Property or any portions
thereof.
Section 4.17 Intellectual Property Rights. The Company and its
Subsidiaries have all right, title and interest in, or a valid and binding
license to use, all Intellectual Property (as defined below) free and clear of
all liens, security interests or other encumbrances which is material to the
conduct of the businesses of the Company and its Subsidiaries taken as a whole.
Except as set forth in Section 4.17 of the Company Disclosure Letter, neither
the Company nor any Subsidiary of the Company is in default (or with the giving
of notice or lapse of time or both, would be in default) under any license to
use such Intellectual Property, and, to the Company's knowledge, such
Intellectual Property is not being infringed by any third party and neither the
Company nor any Subsidiary of the Company is infringing any Intellectual
Property of any third party, except for such defaults and infringements which,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole. No
material claim has been asserted and is pending by any Person challenging the
use of any such Intellectual Property or the validity or effectiveness of any
such Intellectual Property. For purposes of this Agreement, "Intellectual
Property" means patents and patent rights, trademarks and trademark rights,
trade names and trade name rights, service marks and service ▇▇▇▇ rights,
service names and service name rights, copyrights and copyright rights, trade
secrets, Internet domain names and other proprietary intellectual property
rights and all pending applications for and registrations of any of the
foregoing.
Section 4.18 Insurance. Section 4.18 of the Company Disclosure
Letter contains a list of all material insurance policies which are owned by the
Company and any of its Subsidiaries and which name the Company or any of its
Subsidiaries as an insured, including without limitation, self-insurance
programs and those which pertain to the Company's assets, employees or
operations. All such insurance policies are in full force and effect and the
Company has not received notice of cancellation of any such insurance policies.
Section 4.19 Affiliate Transactions. Except as set forth in the
Company SEC Reports, there are no contracts, commitments, agreements,
arrangements or other transactions between the Company or any of its
Subsidiaries, on the one hand, and any (i) present officer or director of the
- 27 -
Company or any of its Subsidiaries or any of their immediate family members
(including their spouses) or (ii) affiliate of any such officer, director,
family member or beneficial owner, on the other hand, required to disclosed
pursuant to Item 404 of Regulation S-K of the SEC.
Section 4.20 Vote Required. The affirmative vote of the holders of
record of at least two-thirds of the outstanding Company Common Shares with
respect to the adoption of this Agreement is the only vote of the holders of any
class or series of the capital shares of the Company required to adopt this
Agreement and approve the Merger and the other transactions contemplated hereby.
Section 4.21 Opinion of Financial Advisor. The Company has
received the opinion of RBC, dated the date hereof, to the effect that, as of
the date hereof, the Transaction Consideration to be received in the Offer and
the Merger by the shareholders of the Company is fair from a financial point of
view to the shareholders of the Company and the Company has delivered a true and
complete copy of such fairness opinion to Parent.
Section 4.22 Company Rights Agreement. Each right issued under the
Company Rights Agreement is represented by the certificate representing the
associated Company Common Shares and is not exercisable or transferable apart
from the associated Company Common Shares, and the Company has taken all
necessary actions so that (a) the Company Rights Agreement will not be
applicable to this Agreement, the Offer, the Merger and the other transactions
contemplated hereby and (b)(i) none of Parent, Sub or their Affiliates is an
Acquiring Person (as defined in the Company Rights Agreement) pursuant to the
Company Rights Agreement and (ii) a Distribution Date, a Triggering Event or a
Share Acquisition Date (as such terms are defined in the Company Rights
Agreement) does not occur, in the case of clauses (i) and (ii), by reason of the
execution of this Agreement and the consummation of the Offer, the Merger and
the other transactions contemplated hereby.
Section 4.23 Anti-takeover Statutes Not Applicable. Except for
Section 1707.01 et seq. of the Ohio Revised Code, no "fair price," "merger
moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation existing under, or adopted in connection with, the laws of the
State of Ohio will apply to this Agreement, the Offer, the Merger or the other
transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as of the date of
this Agreement as follows:
Section 5.01 Organization and Qualification. Each of Parent and
Sub is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has full corporate power
and authority to conduct its business as and to the extent now conducted and to
own, use and lease its assets and properties, except for such failures to be so
incorporated, existing and in good standing or to have such power and authority
which, individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on Parent and its Subsidiaries taken as a whole.
Sub was formed solely for the purpose of
- 28 -
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities, has conducted its operations only as contemplated
hereby and has no material liabilities. In Schedule 5.01 to the letter dated the
date hereof and delivered to Company by Parent and Sub concurrently with the
execution and delivery of this Agreement (the "Parent Disclosure Letter") there
is included complete and correct copies of the certificates or articles of
incorporation and code of regulations or bylaws (or other comparable charter
documents) of Parent and Sub.
Section 5.02 Authority Relative to this Agreement. Each of Parent
and Sub has the requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder 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 and validly
approved by their respective Boards of Directors and by Parent in its capacity
as the sole shareholder of Sub, and no other corporate proceedings on the part
of either of Parent or Sub or their respective shareholders are necessary to
authorize the execution, delivery and performance of this Agreement by Parent
and Sub and the consummation by Parent and Sub of the Merger and the other
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and constitutes a legal, valid
and binding obligation of each of Parent and Sub enforceable against each of
Parent and Sub in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 5.03 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 each of 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, result in or give to any Person any right of payment
or reimbursement, termination, cancellation, modification or
acceleration of, loss of a material benefit under or result in the
creation or imposition of any Lien upon any of the assets or properties
of Parent or any of its Subsidiaries under, any of the terms,
conditions or provisions of (i) the certificates or articles of
incorporation or code of regulations or bylaws (or other comparable
charter documents) of Parent or any of its Subsidiaries, or (ii)
subject to the taking of the actions described in paragraph (b) of this
Section 5.03, (x) any Laws or Orders of any Governmental or Regulatory
Authority applicable to Parent or any of its Subsidiaries or any of
their respective assets or properties, or (y) any Contracts 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, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, rights of payment or reimbursement,
terminations, cancellations, modifications, accelerations and creations
and impositions of Liens which, individually or in the aggregate, would
not reasonably be expected to have a material adverse effect on Parent
and its Subsidiaries taken as a whole or the ability of Parent and Sub
to consummate the transactions contemplated by this Agreement.
- 29 -
(b) Except (i) for the filing of a pre-merger
notification report by Parent and Sub under, and any other actions
required under, the HSR Act, (ii) for the filing of the Schedule TO
with the SEC pursuant to the Exchange Act and the filing of certain
information relating to the Offer under Section 1707.041 of the Ohio
Revised Code and (iii) for the filing of the Certificate of Merger and
other appropriate merger documents required by the OGCL with the
Secretary of State and appropriate documents with the relevant
authorities of other states in which the Constituent Corporations are
qualified to do business, no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any Governmental
or Regulatory Authority 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, other than
such consents, approvals, actions, filings and notices that the failure
to make or obtain, as the case may be, individually or in the
aggregate, would not be reasonably expected to have a material adverse
effect on Parent and its Subsidiaries taken as a whole or the ability
of Parent and Sub to consummate the transactions contemplated by this
Agreement.
Section 5.04 Information Supplied. Neither the information
supplied or to be supplied in writing by or on behalf of Parent or Sub for
inclusion, in the Schedule 14D-9 or the Proxy Statement or any other documents
to be filed by Parent, Sub or the Company with the SEC or any other Governmental
or Regulatory Authority in connection with the Offer or the Merger and the other
transactions contemplated hereby, including without limitation, the Schedule TO
and the other Offer Documents will, on the date of its filing or, in the case of
the Proxy Statement, at the date it is mailed to shareholders of the Company and
at the time of the Company Shareholders' Meeting, 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.
Section 5.05 Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of Parent or Sub,
threatened against, relating to or affecting, nor to the knowledge of Parent or
Sub are there any Governmental or Regulatory Authority investigations or audits
pending or threatened against, relating to or affecting, Parent or any of its
Subsidiaries or any of their respective assets and properties that, individually
or in the aggregate, would reasonably be expected to have a material adverse
effect on Parent and its Subsidiaries taken as a whole or the ability of Parent
and Sub to consummate the transactions contemplated by this Agreement, and
neither Parent nor any of its Subsidiaries is subject to any order of any
Governmental or Regulatory Authority that, individually or in the aggregate,
would reasonably be expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole or the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
Section 5.06 Capitalization of Sub. The authorized capital stock
of Sub consists of 1,000 common shares, without par value, all of which shares
are validly issued and outstanding, fully paid and nonassessable and are owned
by The Bon-Ton Department Stores, Inc., a Pennsylvania corporation and a wholly
owned subsidiary of Parent, free and clear of any and all
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Liens. On the date hereof Sub has, and at all times through the Effective Time,
Sub will continue to have, no obligations or liabilities (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of any
nature except for nominal liabilities associated with Sub's organization and
liabilities arising under or in connection with this Agreement.
Section 5.07 Financing. Parent has, or has received binding
(subject to the terms and conditions thereof) written commitments from
financially responsible financial institutions to obtain, the funds necessary to
consummate the Offer and the Merger and pay the Transaction Consideration as
provided in Section 3.01, and to refinance all debt of the Company and Parent
that is or could be required to be repurchased or becomes, or could be declared,
due and payable as a result of the Offer or the Merger or the financing thereof
and to pay related fees and expenses (collectively, the "Commitment Letters"),
and, in addition to satisfying any obligations under Section 7.17, will make
such funds necessary to pay the Transaction Consideration available to Sub
immediately prior to the expiration of the Offer. Parent has provided the
Company with true and complete copies of all commitments and agreements from
third parties to provide such financing to Parent or Sub. As of the date of this
Agreement, Parent is not aware of any condition in such Commitment Letters
which, subject to the Company's compliance with Section 6.03, is not capable of
being satisfied on or prior to October 31, 2003. Parent shall keep the Company
informed with respect to material activity concerning the status of such
financing, and shall give the Company prompt notice of any material adverse
change with respect to such financing.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.01 Covenants of the Company. At all times from and after
the date hereof until the Share Acceptance Date, the Company covenants and
agrees as to itself and its Subsidiaries that (except as expressly contemplated
or permitted by this Agreement, or to the extent that Parent shall otherwise
consent in writing (which consent shall not be unreasonably withheld or
delayed)):
(a) The Company and each of its Subsidiaries shall
conduct their respective businesses only in, and neither the Company
nor any such Subsidiary shall take any action except in, the ordinary
course consistent with past practice.
(b) Without limiting the generality of paragraph (a) of
this Section 6.01, (x) the Company and its Subsidiaries shall use -
commercially reasonable efforts to preserve intact in all material
respects their present business organizations and reputation, to keep
available the services of their key officers and employees, to maintain
their assets and properties in good working order and condition,
ordinary wear and tear excepted, to maintain insurance on their
tangible assets and businesses in such amounts and against such risks
and losses as are currently in effect, to preserve their relationships
with customers and suppliers and others having significant business
dealings with them and to comply in all material respects with all Laws
and Orders of all Governmental or Regulatory Authorities applicable to
them, and (y) the Company - shall not, nor shall it permit any of its
Subsidiaries to:
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(i) amend or propose to amend its certificate or
articles of incorporation or code of regulations or bylaws (or
other comparable charter documents);
(ii) (A) declare, set aside or pay any dividends
on or make other distributions in respect of any of its
capital shares, except for the declaration and payment of
dividends by a wholly-owned Subsidiary solely to its parent
corporation, (B) split, combine, reclassify or take similar
action with respect to any of its capital shares or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for its capital
shares, (C) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization, or (D) directly or
indirectly redeem, repurchase or otherwise acquire any capital
shares or any Option with respect thereto, except for
repurchases in connection with the Company Option Plan that
result from a participant's use of Company Common Shares to
exercise options or pay withholding taxes in connection with
such exercise;
(iii) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any of its capital
shares or any securities convertible into or exercisable for
any of its capital shares or any Option, warrants or rights
with respect thereto, other than (A) the issuance of Company
Common Shares or share appreciation or similar rights, as the
case may be, pursuant to Options outstanding on the date of
this Agreement and in accordance with their present terms, (B)
the issuance by a wholly owned Subsidiary of its capital
shares to its parent corporation, or (C) the issuance of
rights pursuant to the Company Rights Agreement in accordance
with the terms thereof, or modify or amend any right of any
holder of outstanding capital shares or Options with respect
thereto except as contemplated by this Agreement;
(iv) except for transactions provided for in or
contemplated by the Company's 2003 Budget approved by the
Board and furnished to Parent (the "Company Budget"), a copy
of which is attached to the Company Disclosure Letter, acquire
(by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the
assets of, or by any other manner) any business or any
corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree
to acquire any assets other than inventory and other assets to
be sold or used in the ordinary course of business consistent
with past practice;
(v) sell, lease, sell and lease back, pledge,
grant any security interest in or otherwise dispose of or
encumber any of its assets or properties, other than (i) sales
of inventory in the ordinary course of business consistent
with past practice, (ii) to the extent provided for in the
Company Budget or disclosed in the Company Disclosure Letter,
and (iii) sales of assets, in the aggregate between the date
hereof and Closing, of up to $250,000;
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(vi) except to the extent required by applicable
Law or Order make any tax election or settle or compromise any
material income tax liability with any Governmental or
Regulatory Authority;
(vii) except as set forth in Section 6.01(b)(vii)
of the Company Disclosure Letter or to the extent provided for
in or contemplated by the Company Budget (x) incur any
indebtedness for borrowed money, except pursuant to the
Company Credit Facility in the ordinary course of business or
(y) enter into any new credit facility;
(viii) except for the vesting of all unvested
Options as contemplated by Section 3.01(e), enter into, adopt,
amend in any material respect (except as may be required by
applicable Law) or terminate any Company Employee Benefit Plan
or other agreement, arrangement, plan or policy between the
Company or one of its Subsidiaries and one or more of its
directors, officers or employees, pay any benefit not required
by any plan or arrangement in effect as of the date hereof,
increase in any manner the compensation or fringe benefits of
any officer or director of the Company or its Subsidiaries or,
except for normal increases in the ordinary course of business
consistent with past practice, increase in any manner the
compensation or fringe benefits of any non-officer employee;
(ix) enter into any Contract or amend or modify
any existing Contract, or engage in any new transaction
outside the ordinary course of business consistent with past
practice or not on an arm's length basis, with any Affiliate
of the Company or any of its Subsidiaries;
(x) make any capital expenditures or commitments
for capital expenditures for the opening of any new stores or
the expansion or remodeling of any existing stores or any
other material capital projects, except as set forth in
Section 6.01(b)(x) of the Company Disclosure Letter;
(xi) settle or compromise any litigation (whether
or not commenced prior to the date of this Agreement), other
than settlements involving payments that are not in excess of
$100,000 in the aggregate over amounts fully recoverable from
insurance;
(xii) make any change in the lines of business in
which it participates or is engaged; or
(xiii) enter into any Contract, commitment or
arrangement to do or engage in any of the foregoing.
(c) The Company shall confer on a regular basis with
Parent with respect to its business and operations and other matters
relevant to the Merger, and shall promptly advise Parent of any change
or event, including, without limitation, any complaint, investigation
or hearing by any Governmental or Regulatory Authority (or
communication indicating the same may be contemplated) or the
institution or threat of litigation, known to the Company, which would
reasonably be expected to have a
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material adverse effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Company to consummate the transactions
contemplated hereby.
Section 6.02 No Solicitation.
(a) Prior to the Effective Time, the Company agrees (1)
that neither it nor any of its Subsidiaries shall, and it shall cause
its and their respective Representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation,
any proposal or offer to its shareholders) with respect to an
Alternative Proposal, or engage in any negotiations concerning, or
provide any confidential information or data to, or have any
discussions with, any Person or group relating to an Alternative
Proposal (excluding the transactions contemplated by this Agreement) or
grant any waiver or release under any confidentiality, standstill or
similar agreement with respect to any class of equity securities of the
Company or any Subsidiary; and (2) that it will immediately - cease and
cause to be terminated any existing activities, discussions or
negotiations with any parties with respect to any of the foregoing, and
it will take the necessary steps to inform such parties of its
obligations under this Section 6.02; provided, however, that nothing
contained in this Section 6.02 shall prohibit the Board of Directors of
the Company from (i) furnishing information to (but only pursuant to a
confidentiality agreement in customary form and having terms and
conditions no less favorable to the Company than the Confidentiality
Agreement; provided, however, that any such confidentiality agreement
shall not restrict the parties thereto from making an Alternative
Proposal) or entering into discussions or negotiations with any Person
or group that makes an unsolicited bona fide Alternative Proposal, if a
majority of the Board of Directors of the Company, without including
directors who may be considered Affiliates (as defined in Rule 405
under the Securities Act) of any person making an Alternative Proposal
("Disinterested Directors"), determines in good faith (after receipt of
advice from reputable outside legal counsel experienced in such matters
(including without limitation ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP) that there is a
reasonable basis to conclude that the failure to take any action that
would otherwise be prohibited by any such restriction would result in a
breach of the Board of Directors' fiduciary duties under applicable
Law) that the Alternative Proposal is or presents a reasonable
likelihood of resulting in a Superior Proposal and was not solicited by
it after the date hereof and did not otherwise result from a breach of
this Section 6.02; and (ii) to the extent required, taking and
disclosing to the Company's shareholders a position contemplated by
Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act with regard
to an Alternative Proposal, or making any other disclosure to the
Company's shareholders if, in the good faith judgment of a majority of
the Disinterested Directors, after being advised by reputable outside
counsel experienced in such matters (including without limitation,
▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP), there is a reasonable basis to conclude that
disclosure is required under applicable Law. The Company will promptly
notify Parent after receipt of a proposal relating to any Alternative
Proposal or any request for information relating to the Company or for
access to the properties, books or records of the Company by any Person
that has made a proposal relating to an Alternative Proposal or any
Person who the Company believes in its reasonable judgment may be
considering making, or has made, a proposal relating to an Alternative
Proposal, or any request for nonpublic information from any Person, and
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will keep Parent fully informed on a current basis (and in any event
within 24 hours after receipt of an indication, request or a proposal
relating to an Alternative Proposal, or any revision of such proposal)
of the status and details of any such Alternative Proposal, indication
or request. The Company will not enter into any agreement or
arrangement (other than a confidentiality agreement as described
above), or make any recommendation (except as contemplated by Section
6.02(a)(ii) above), with respect to an Alternative Proposal that is or
presents a reasonable likelihood of resulting in a Superior Proposal
for one business day after delivery of such a notice to Parent
indicating the Company's intention to enter into such an agreement or
arrangement, or to make such a recommendation, with respect to such
Alternative Proposal, which notice shall include all material terms of
such proposal, and the Company will negotiate exclusively in good faith
with Parent for such one-business day period to make such adjustments
in the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein on such
adjusted terms; provided, however, that any such proposed adjustments
shall be at the discretion of the parties hereto at the time and that
no more than one one business day negotiation period shall apply to any
particular Alternative Proposal, it being understood that any material
change to an Alternative Proposal will give rise to a new one business
day negotiation period under this Section 6.02, unless the Company
shall have notified Parent in writing that the Company does not intend
to enter into any agreement or arrangement (other than a
confidentiality agreement as described above), or make a
recommendation, with respect to such Alternative Proposal as modified
by such material change. Nothing in this Section 6.02 shall permit the
Company to terminate this Agreement except as provided in ARTICLE IX.
(b) Neither the Company nor the Board of Directors of the
Company nor any committee thereof shall withdraw or modify, or propose
to withdraw or modify, in any manner adverse to Parent, the approval or
recommendation of this Agreement or the Merger, or, except as
contemplated by Section 6.02(a)(ii) above, propose publicly to approve
or recommend an Alternative Proposal unless a majority of the
Disinterested Directors determines, in its good faith judgment (after
receipt of advice from reputable outside legal counsel experienced in
such matters, including without limitation ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP) that
there is a reasonable basis to conclude that the failure to take such
action would result in a breach of the Board of Directors' fiduciary
duties under applicable Law and the Company has otherwise complied with
its obligations under this Section 6.02.
(c) For purposes of this Agreement, "Alternative
Proposal" means any merger, consolidation or other business combination
including the Company or any of its Subsidiaries or any acquisition or
similar transaction (including, without limitation, a tender or
exchange offer) involving the purchase of (i) all or any significant
portion of the assets of the Company and its Subsidiaries taken as a
whole, (ii) 20% or more of the outstanding Company Common Shares, or
(iii) any of the outstanding capital shares of any Subsidiary of the
Company. For purposes of this Agreement, "Superior Proposal" means any
bona fide written Alternative Proposal (with the percentages included
in the definition of Alternative Proposal replaced with 50% for
purposes of this definition) that a majority of the Disinterested
Directors determines, in its good faith judgment (after consultation
with the Company's legal and financial advisors and taking into account
all
- 35 -
the terms and conditions of the Alternative Proposal and this Agreement
deemed relevant by such Disinterested Directors): (1) that contains
terms that - provide greater value to the Company's shareholders than
the Offer and the Merger (and any revised proposal made by Parent); (2)
that is reasonably likely to be completed, taking into account all
legal, financial, regulatory and other aspects of the - Alternative
Proposal; and (3) for which financing, to the extent required, is, as
of the date of the determination by the - Disinterested Directors,
committed at least to the same extent as Parent's financing is
committed as of the date hereof.
Section 6.03 Financing-Related Cooperation. The Company agrees to
provide, and will cause its Subsidiaries and its and their respective directors,
officers, employees and advisors to provide, all cooperation reasonably
necessary in connection with the arrangement of any financing to be consummated
in respect of the transactions contemplated by this Agreement, including
participation in meetings, due diligence sessions, the execution and delivery of
any commitment letters, underwriting or placement agreements, pledge and
security documents, other definitive financing documents or other requested
certificates or documents as may be reasonably required by Parent and taking
such other actions as are reasonably required to by taken by the Company;
provided that all such agreements, letters, and instruments executed by the
Company are unilaterally revocable by the Company as to the Company prior to the
Effective Time without notice or penalty of any kind and do not obligate the
Company to pay any fees or expenses to such financing sources prior to the
Effective Time; provided further that Parent shall use commercially reasonable
efforts to ensure that the disclosures made by Parent in response to
representations and warranties contained in any financing agreements executed by
Parent in respect of the transactions contemplated by this Agreement are not
materially inconsistent with the corresponding disclosures contained in the
Company Disclosure Letter with respect to the same or similar matters; and
provided further, that Parent shall use reasonable efforts not to materially
interfere with the duties of such officers, employees and advisors such that the
Company's business and results of operations would be materially adversely
affected thereby. In addition, in conjunction with the obtaining of any such
financing, the Company agrees, at the reasonable request of Parent, to call for
prepayment or redemption, or to prepay, redeem and/or renegotiate, as the case
may be, any then existing indebtedness of the Company and its Subsidiaries;
provided that no call for redemption or prepayment shall be irrevocably made
until contemporaneously with or after the Effective Time.
Section 6.04 SEC Reports. The Company shall cause the forms,
reports, schedules, statements and other documents required to be filed with the
SEC by the Company between the date of this Agreement and the Effective Time
(the "New SEC Reports") to be prepared in all material respects in accordance
with the requirements set forth in Section 4.05(a) hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Access to Information; Confidentiality. The Company shall,
and shall cause each of its Subsidiaries to, throughout the period from the date
hereof to the Effective Time, (i) provide Parent and its Representatives with
full access, upon reasonable prior notice and during normal business hours, to
all officers, employees, agents and accountants of the Company and its
Subsidiaries and their respective assets, properties, books and records, but
only
- 36 -
to the extent that such access does not unreasonably interfere with the
business and operations of the Company and its Subsidiaries, and (ii) furnish
promptly to Parent (x) a copy of each report, statement, schedule and other
document filed or received by the Company or any of its Subsidiaries pursuant to
the requirements of federal or state securities laws and each material report,
statement, schedule and other document filed with any other Governmental or
Regulatory Authority, and (y) all other information and data (including, without
limitation, copies of Contracts, Company Employee Benefit Plans and other books
and records) concerning the business and operations of the Company and its
Subsidiaries as Parent or any of such other Persons shall reasonably request. No
investigation pursuant to this Section 7.01 or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto. Any such information or material obtained
pursuant to this Section 7.01 shall be governed by the terms of the
Confidentiality Agreement, dated as of July 30, 2003, between the Company and
Parent (the "Confidentiality Agreement"). Notwithstanding anything to the
contrary contained herein or in the Confidentiality Agreement, the obligations
of confidentiality contained herein or in the Confidentiality Agreement shall
not apply, and any party hereto or its employees, representatives and other
agents may disclose to any and all persons, without limitation of any kind, (a)
the "tax treatment" and "tax structure" of the "transactions" contemplated by
this Agreement (as these terms are defined in Treasury Regulations Section
1.6011-4(b) and (c)) and (b) all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment or
tax structure; provided, however, that such disclosure may not be made (to
persons other than tax advisors) (i) until the earlier of (A) the date of the
public announcement of the discussions relating to such transactions, (B) the
date of the public announcement of such transactions or (C) the date of the
execution of this Agreement and (ii) to the extent required to be kept
confidential to comply with any applicable federal or state securities Laws.
Section 7.02 Preparation of Proxy Statement. If a Company
Shareholders' Meeting is required by applicable law in order to consummate the
Merger, the Company shall prepare and file with the SEC the Proxy Statement as
soon as reasonably practicable after Sub accepts for purchase Company Common
Shares pursuant to the Offer, and shall use its reasonable best efforts to have
the Proxy Statement cleared by the SEC. If at any time prior to the Effective
Time any event shall occur that should be set forth in an amendment of or a
supplement to the Proxy Statement, the Company shall prepare and file with the
SEC such amendment or supplement as soon thereafter as is reasonably
practicable. Parent, Sub and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information, and shall provide to Parent promptly copies of all
correspondence between the Company or any Representative of the Company and the
SEC 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
requests for additional information by and replies to comments of the SEC before
their being filed with, or sent to, the SEC. Each of the Company, Parent and Sub
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC and to cause the Proxy Statement to be mailed to the holders of Company
Common Shares entitled to vote at the Company Shareholders' Meeting at the
earliest practicable time.
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Section 7.03 Approval of Shareholders. If required by applicable
law in order to consummate the Merger, the Company shall, through its Board of
Directors, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders' Meeting") for the purpose of voting on
the adoption of this Agreement and obtaining approval of adoption of this
Agreement by the holders of at least two-thirds of the Company Common Shares
entitled to vote thereon (the "Company Shareholders' Approval") as soon as
reasonably practicable after the date that Sub accepts for purchase Company
Common Shares pursuant to the Offer. Except as permitted by Section 6.02, the
Company shall, through its Board of Directors, include in the Proxy Statement
the recommendation of the Board of Directors of the Company that the
shareholders of the Company adopt this Agreement and shall use its reasonable
best efforts to obtain such adoption.
Section 7.04 Merger Without Meeting of Shareholders.
Notwithstanding the foregoing, in the event that Parent, Sub, or any their
Affiliates shall acquire at least ninety percent (90%) of the outstanding
Company Common Shares, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective, as soon as
practicable after the expiration of the Offer, without a meeting of shareholders
of the Company, in accordance with Section 1701.801 of the OGCL.
Section 7.05 Regulatory and Other Approvals. Subject to the terms
and conditions of this Agreement and without limiting the provisions of Section
7.02, Section 7.03 and Section 7.04, each of the Company and Parent will use
reasonable best efforts to, as promptly as practicable, (a) obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other public or private third
parties required of Parent, the Company or any of their Subsidiaries to
consummate the Offer and the Merger and the other transactions contemplated
hereby, including, without limitation, the filing by Parent and Sub of
Information Pertaining to a Control Bid on Form 041 pursuant to Section 1707.01
et seq. of the Ohio Revised Code, and (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other public or
private third parties as the other party or such Governmental or Regulatory
Authorities or other public or private third parties may reasonably request in
connection therewith. In addition to and not in limitation of the foregoing,
each of the parties will (x) take promptly all actions necessary to make the
filings required of Parent and the Company or their Affiliates under the HSR
Act, (y) comply at the earliest practicable date with any request for additional
information received by such party or its Affiliates from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") pursuant to the HSR Act, and (z) cooperate with the
other party in connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
Merger or the other transactions contemplated by this Agreement commenced by any
of the FTC, the Antitrust Division or any state or state attorney general.
Notwithstanding the foregoing, the Company shall not, without Parent's prior
written consent, commit to any divestiture transaction, and Parent shall not be
required to divest or hold separate or otherwise take or commit to take any
action that limits its freedom of action with respect to, or its ability to
retain the Company, any of its Subsidiaries or any of the material businesses or
assets of the Company or its Subsidiaries. Notwithstanding the foregoing, the
parties hereto acknowledge and agree that the failure to obtain any or all of
the consents identified by an asterisk (*) in Section 4.04 of the Company
- 38 -
Disclosure Letter shall not result in the failure to satisfy the condition set
forth in clause (b) of Annex A.
Section 7.06 Employee Matters.
(a) Except for employees covered by any collective
bargaining contract, and except as otherwise expressly provided in this
Agreement, during the period commencing at the Share Acceptance Date
and ending December 31, 2003, Parent will (i) cause the Company
Employee Benefit Plans (other than the Company Option Plan and other
Plans providing equity or equity-based awards) in effect on the date of
this Agreement to remain in effect; provided, however, this covenant
shall not prohibit changes in benefit plans in the ordinary course of
business or as may be required by applicable Laws or (ii) to the extent
that such Company Employee Benefit Plans are not so continued, cause
the Company to maintain until such date benefit plans that are
substantially comparable, in the aggregate, to the Company Employee
Benefit Plans (other than the Company Option Plan and other Plans
providing equity or equity-based awards) in effect on the date of this
Agreement.
(b) The Plans in which the Company's employees
participate following the Share Acceptance Date will (i) credit, for
vesting and eligibility purposes only, all service performed for the
Company prior to the Share Acceptance Date, but not for benefit accrual
(including eligibility for any subsidized early retirement pension
amount), (ii) waive any pre-existing condition exclusions (other than
pre-existing conditions that, as of the Share Acceptance Date, have not
been satisfied under any Company Employee Benefit Plan) and (iii)
provide that any covered expenses incurred on or before the Share
Acceptance Date during the plan year of the applicable Company Employee
Benefit Plan will be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket provisions
after the Share Acceptance Date.
(c) Following the Share Acceptance Date and prior to
January 1, 2005, Parent shall cause the Company to maintain the
Employment Termination Pay Plan (as defined in Section 4.13(a)(1) of
the Company Disclosure Letter) on terms no less favorable to any person
employed by the Company on the Share Acceptance Date than the terms of
such plan on the date of this Agreement. Parent shall cause the Company
to pay to any person employed by the Company on the Share Acceptance
Date who becomes eligible to receive a severance payment under the
Employment Termination Pay Plan at any time after the Share Acceptance
Date and prior to January 1, 2005 an amount equal to the greater of (i)
the severance amount payable to such employee under the Employment
Termination Pay Plan and (ii) the severance amount that would be
payable to a comparable employee of Parent under Parent's severance
program then in effect.
(d) As promptly as practicable after the date hereof, the
Board shall take all actions necessary or desirable to amend the
Company Option Plan to provide that following the Share Acceptance Date
(i) Section 5.5 of the Company Option Plan shall be deleted in its
entirety and no Participant (as
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defined in the Company Option Plan) shall be entitled to defer any
portion of an Annual Incentive Award (as defined in the Company Option
Plan) and (ii) Section 5.7 shall be amended to provide that a
Participant (as defined in the Company Option Plan) employed by the
Company on the Share Acceptance Date shall be entitled to receive an
Annual Incentive Award for the 2003 fiscal year of the Company under
the Company Option Plan determined in accordance with the provisions of
the Plan, but in no event would a Participant's Annual Incentive Award
be less than such Participant's annualized award for the fiscal year of
the Company ending February 2, 2003 provided that (i) the "Net
Operating Profit" (as defined in the Performance Incentive Plan for the
2003 fiscal year of the Company which Plan is set forth in Section 7.06
of the Company Disclosure Letter) exceeds $18,700,000 and (ii) either
(x) the Participant was --- - continuously employed by the Company from
the Share Acquisition Date to April 15, 2004 or (y) the Participant's
employment - was terminated (1) by the Company other than for cause or
(2) by the Participant provided that there was a material decrease in
the Participant's annual compensation after the Share Acceptance Date
and on or prior to April 15, 2004. Parent shall cause the Company to
pay all Annual Incentive Awards earned by employees of the Company
pursuant to such amended Plan no later than April 15, 2004 (or if April
15, 2004 is not a business day, the first business day thereafter).
Section 7.07 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Share Acceptance Date until the
sixth anniversary of the Effective Time, Parent shall indemnify,
advance expenses to, and hold harmless the present and former officers
and directors of the Company and its Subsidiaries, in each case to the
fullest extent permitted by law, in respect of acts or omissions
occurring prior to or after the Share Acceptance Date. From and after
the Effective Time, Parent shall cause the articles of incorporation
and code of regulations of the Surviving Corporation to contain
provisions substantially similar in terms of the rights granted in the
provisions with respect to indemnification and insurance set forth in
the Company's articles of incorporation and code of regulations in
effect on the date hereof, which provisions shall not be amended in any
manner prior to the sixth anniversary of the Effective Time that would
adversely affect the rights thereunder of the Company's employees,
agents, directors or officers for acts or omissions occurring on or
prior to the Effective Time, except if such amendment is required by
applicable Law. Any determination required to be made with respect to
whether an officer's or director's conduct complies with the standards
set forth in the Company's articles of incorporation or code of
regulations shall be made by independent counsel selected by Parent and
reasonably acceptable to such officer or director. Parent shall pay
such counsel's fees and expenses so long as such officer or director
does not challenge any such determination by such independent counsel.
With respect to acts or omissions occurring on or prior to the Share
Acceptance Date or, with respect to directors or officers who continue
to serve until the Effective Time, the Effective Time, Parent and the
Surviving Corporation shall, until the sixth anniversary of the
Effective Time and for so long thereafter as any claim for insurance
coverage asserted on or prior to such date has not been fully
adjudicated, cause to be maintained in effect, at no cost to the
beneficiaries thereof, to the extent available, the policies of
directors' and officers' liability insurance maintained by the Company
and its Subsidiaries as of the date hereof to the extent that such
insurance coverage can be maintained at an annual cost to the Surviving
Corporation of not greater than 200% of the annual premium for the
Company's current insurance policies and, if such insurance
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coverage cannot be so purchased or maintained at such cost, providing
as much of such insurance as can be so purchased or maintained at such
cost.
(b) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and
in each such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall assume its
obligations set forth in this Section 7.07.
Section 7.08 Expenses. Except as set forth in Section 9.02,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses. Parent shall pay the filing
fee in connection with the filings required under the HSR Act. Promptly after
the execution of this Agreement, Parent shall pay to the Company by wire
transfer to an account designated by the Company the amount paid by the Company
to ▇▇▇▇▇▇ Holdings, Inc. pursuant to Section 8.02 of the ▇▇▇▇▇▇ Holdings Merger
Agreement; provided, however, that in no event shall Parent be obligated to pay
to the Company more than three million dollars ($3,000,000.00) pursuant to this
Section 7.08.
Section 7.09 Sub. Prior to the Effective Time, Sub shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a de
minimis amount of cash paid to Sub for the issuance of its stock to Parent) or
any material liabilities. Parent will take all action necessary to cause Sub to
perform its obligations under this Agreement and to consummate the Offer and the
Merger on the terms and conditions set forth in this Agreement.
Section 7.10 Brokers or Finders. Each of Parent and the Company
represents, as to itself and its Subsidiaries and Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or Person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except (a) RBC, whose fees and expenses will be paid by the Company in
accordance with the Company's agreement with such firm (a complete and correct
copy of which has been delivered by the Company to Parent) and (b) Lazard Freres
& Co. LLC, whose fees and expenses will be paid by Parent in accordance with
Parent's agreement with such firm. Each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or commission or
expenses related thereto asserted by any Person on the basis of any act or
statement alleged to have been made by such party or its Affiliate.
Section 7.11 Takeover Statutes. If any "fair price," "merger
moratorium," "control share acquisition" or other form of anti-takeover statute
or regulation shall become applicable to the transactions contemplated hereby,
the Company and the members of the Board of Directors of the Company shall, to
the extent permitted by law, grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act, to the extent
- 41 -
permitted by Law, to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby and thereby.
Section 7.12 Conveyance Taxes. The Company and Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time.
Section 7.13 Notice and Cure. Each of Parent and the Company will
notify the other of, and will use commercially reasonable efforts to cure before
the Closing, any event, transaction or circumstance, as soon as practicable
after it becomes known to such party, that causes or will cause any covenant or
agreement of Parent or the Company under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Parent or the
Company contained in this Agreement. Each of Parent and the Company also will
notify the other in writing of, and will use commercially reasonable efforts to
cure before the Closing, any violation or breach, as soon as practicable after
it becomes known to such party, of any representation, warranty, covenant or
agreement made by Parent or the Company in this Agreement. No notice given
pursuant to this Section 7.13 shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
Section 7.14 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will take or cause
to be taken commercially reasonable steps necessary or desirable to satisfy each
condition to the other's obligations contained in this Agreement and to
consummate and make effective the transactions contemplated by this Agreement,
and neither Parent nor the Company will, nor will it permit any of its
Subsidiaries to, take or fail to take any action that could be reasonably
expected to result in the non-fulfillment of any such condition.
Section 7.15 Environmental Matters. The Company shall make
available to Parent and Sub all investigations, reports, assessments and other
materials in its possession relating to the compliance of the Real Property with
applicable federal and state laws relating to the protection of the environment
or the existence of any obligations or liabilities arising thereunder. The
Company shall cooperate with Parent and Sub in making any environmental
investigations of the Real Property that parent or Sub deems appropriate;
provided that (i) Parent and Sub shall obtain the Company's written consent
prior to entering any Real Property and prior to conducting any assessment or
testing with respect thereto and (ii) the Company shall have entered into an
agreement reasonably satisfactory to it with each contractor of Parent or Sub
who will perform such testing.
Section 7.16 Delisting. Each of the parties agrees to cooperate
with each other in taking, or causing to be taken, all actions necessary to
delist the Company Common Shares from Nasdaq and terminate registration under
the Exchange Act, provided that such delisting and termination shall not be
effective until after the expiration of the Offer or the Effective Time, as
appropriate.
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Section 7.17 Existing Credit Facilities. Following the execution
of this Agreement, if requested by Parent in writing, the Company shall use its
reasonable best efforts to obtain any waivers under its existing credit and
other financing facilities that may be required so that such facilities would
not become due and payable until the Effective Time. In the event that any such
extensions are not obtained, Parent will make available to the Company as of the
Share Acceptance Date sufficient funds to repay all amounts that may become due
and owing as of the Share Acceptance Date under such facilities.
ARTICLE VIII
CONDITIONS
Section 8.01 Conditions to Each Party's Obligation to Effect 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:
(a) Shareholder Approval. This Agreement shall have been
adopted by the requisite vote of the shareholders of the Company under
the OGCL and the Company's articles of incorporation, if such vote is
required by applicable law.
(b) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(c) No Injunctions or Restraints. No Governmental or
Regulatory Authority having proper jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) that is then in effect and has the
effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Merger or the other transactions
contemplated by this Agreement.
(d) The Offer. Sub shall have purchased Company Common
Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01 Termination. This Agreement may be terminated, and
the transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Shareholders' Approval:
(a) By mutual written agreement of the parties hereto
duly authorized by action taken by or on behalf of their respective
Boards of Directors (with, in the case of the Company following the
Share Acceptance Date, the concurrence of a majority of the Independent
Directors);
(b) by Parent upon written notice to the Company if an
occurrence or circumstance (except where Parent's or Sub's failure to
fulfill any of their respective obligations under this Agreement is the
cause of or resulted in such occurrence or circumstance or except where
there has been a material breach of any representation,
- 43 -
warranty, covenant or agreement on the part of Parent or Sub that has
not been cured) has rendered the conditions set forth in Annex A hereto
incapable of being satisfied, and (i) Sub shall have failed to commence
the Offer after the date of this Agreement in accordance with the terms
of this Agreement or (ii) the Offer shall have been terminated or shall
have expired, in either instance in accordance with the terms of this
Agreement, without Sub having purchased any Company Common Shares
pursuant to the Offer;
(c) by either Parent or the Company upon written
notification to the non-terminating party by the terminating party if
any court of competent jurisdiction or other competent Governmental or
Regulatory Authority shall have issued a Law or Order making illegal or
otherwise restricting, preventing or prohibiting the Offer or the
Merger and any such Order shall have become final and non-appealable;
(d) by Parent upon written notification to the Company,
prior to the Share Acceptance Date, if (i) Parent or Sub shall discover
that there has been a material breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, which breach is not curable or, if curable, has not been
cured within the earlier of thirty (30) days following receipt by the
Company of notice of such breach from Parent or the Final Date, (ii)
the Board of Directors of the Company shall have withdrawn or modified
or qualified in a manner adverse to Parent its approval or
recommendation of this Agreement, the Offer or the Merger or shall have
approved, recommended or entered into any agreement with respect to any
other Alternative Proposal or failed to reconfirm its recommendation of
this Agreement, the Offer and the Merger within ten (10) business days
following a reasonable written request for such reconfirmation by
Parent or (iii) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer at least two-thirds of
the Company Common Shares, on a fully diluted basis, and after the date
hereof and on or prior to the Final Date a person shall have made or
modified a written Alternative Proposal to the Company and not
withdrawn such proposal;
(e) by the Company upon written notification to Parent,
prior to the Share Acceptance Date if (i) the Company shall discover
that there has been a material breach of any representation, warranty,
covenant or agreement on the part of Parent or Sub set forth in this
Agreement, which breach is not curable or, if curable, has not been
cured within the earlier of thirty (30) days following receipt by
Parent of notice of such breach from the Company or the Final Date or
(ii) after the date hereof the Board of Directors of the Company shall
receive an unsolicited bona fide Alternative Proposal and the Board of
Directors determines in good faith (after receiving advice from
reputable outside legal counsel experienced in such matters (including
without limitation, Thomson ▇▇▇▇ LLP)) that the Alternative Proposal is
or presents a reasonable likelihood of resulting in a Superior Proposal
and was not solicited by it after the date hereof and did not otherwise
result from a breach of Section 6.02; provided that the Company's
ability to terminate this Agreement pursuant to this paragraph (e)(ii)
is conditioned upon the payment by the Company to Parent of any amounts
owed by it pursuant to Section 9.02(d) and Section 9.02(e); or
- 44 -
(f) by the Company if there shall not have been a
material breach of any representation, warranty, covenant or agreement
on the part of the Company that has not been cured and (i) Sub shall
have failed to commence the Offer within the time required by Section
1.01(a) hereof, (ii) the Offer shall have been terminated or shall have
expired without Sub having purchased any Company Common Shares pursuant
to the Offer or (iii) Sub shall have failed to pay for Company Common
Shares pursuant to the Offer prior to the Final Date.
Section 9.02 Effect of Termination.
(a) If this Agreement is validly terminated by either the
Company or Parent pursuant to Section 9.01, 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 any of their
respective Representatives or Affiliates), except (i) that the
provisions of Section 7.08 and Section 7.10 and this Section 9.02 will
continue to apply following any such termination, (ii) that nothing
contained herein shall relieve any party hereto from liability for
willful breach of its representations, warranties, covenants or
agreements contained in this Agreement and (iii) as provided in
paragraphs (b) (c), (d) and (f) below.
(b) In the event that this Agreement is terminated:
(i) by Parent pursuant to Section 9.01(b)(i) or
Section 9.01(d)(iii) or by the Company pursuant to Section
9.01(f)(i) and an Alternative Proposal is publicly disclosed
or publicly proposed to the Company or its shareholders at any
time after the date hereof and prior to the date of
termination;
(ii) by Parent pursuant to Section 9.01(b)(ii) or
the Company pursuant to Section 9.01(f)(ii) or (iii) (assuming
Parent and Sub were not then in material breach of any
representation, warranty, covenant or agreement on the part of
Parent or Sub that had not been cured); or
(iii) by Parent pursuant to Section 9.01(d)(i)
(other than with respect to a breach of Section 1.02 or
Section 6.02),
then the Company shall pay to Parent by wire transfer of same
day funds within two (2) business days of the date of such
termination an amount of up to One Million Dollars
($1,000,000) to reimburse Parent and Sub for all reasonable
documented out-of-pocket expenses and fees incurred by them in
connection with this Agreement and the transactions
contemplated hereby (including without limitation, fees and
expenses payable to all banks, investment banking firms and
other financial institutions and Persons and their respective
agents and counsel for acting as Parent's financial advisor
with respect to, or arranging or committing to provide or
providing any financing for, the Merger) (collectively, the
"Expense Reimbursement"). If, with respect to the event
described in clause (i) above, concurrently or within 12
months of the date of termination pursuant to such clause (i),
the Company does not, in the case of an Alternative Proposal
in the form of a tender offer, recommend against acceptance of
the tender offer, or
- 45 -
enters into a definitive agreement or arrangement with respect
to, an Alternative Proposal, then the Company shall pay to
Parent, by wire transfer of same day funds within two (2)
business days of such occurrence, a termination fee of Two
Million Dollars ($2,000,000) (the "Termination Fee"). If, with
respect to the events described in clauses (ii) and (iii),
above, an Alternative Proposal has been publicly disclosed or
publicly proposed to the Company or its shareholders at any
time after the date hereof and prior to the date of
termination, and concurrently or within 12 months of the date
of termination as provided in such clauses (ii) and (iii),
respectively, the Company does not, in the case of an
Alternative Proposal in the form of a tender offer, recommend
against acceptance of the tender offer, or enters into a
definitive agreement or arrangement with respect to, an
Alternative Proposal, then the Company shall pay to Parent, by
wire transfer of same day funds within two (2) business days
of such occurrence, the Termination Fee.
(c) In the event that this Agreement is terminated by
Parent pursuant to Section 9.01(d)(i) due to a breach by the Company of
Section 1.02 or Section 6.02, then the Company shall pay to Parent, by
wire transfer of same day funds within two (2) business days of the
date of such termination, the Expense Reimbursement and, if
concurrently or within 12 months of the date of such termination, the
Company announces or enters into an Alternative Proposal, the
Termination Fee.
(d) In the event that this Agreement is terminated (i) by
the Company pursuant to Section 9.01(e)(ii) or (ii) by Parent pursuant
to Section 9.01(d)(ii), then the Company shall pay to Parent, by wire
transfer of same day funds within two (2) business days of the date of
such termination, the Expense Reimbursement and the Termination Fee.
(e) In addition to, and not in limitation of, any payment
or payments that are due to Parent pursuant to Section 9.02(b), Section
9.02(c) or Section 9.02(d), in the event of a termination of this
Agreement for any reason whatsoever other than if this Agreement is
terminated (x) by the Company pursuant to Section 9.01(e)(i), (y) by
Parent pursuant to Section - - 9.01(b)(ii) or Section 9.01(d)(iii) or
(z) by the Company pursuant to Section 9.01(f)(ii) or (iii), in the
case of clauses - (y) and (z), solely by reason of the failure to
satisfy the Financing Condition (as defined in Annex A) at the time
that the - Offer shall have been terminated or shall have expired or
such other conditions set forth in Annex A that shall not have been
satisfied at such time primarily or exclusively because of the failure
to satisfy the Financing Condition, then the Company shall pay to
Parent, by wire transfer of same day funds within two (2) business days
of the date of such termination an amount equal to the amount paid by
Parent to the Company pursuant to Section 7.08.
(f) In the event of a termination of this Agreement
pursuant to which a payment or payments are made in full compliance
with Section 9.02(b), Section 9.02(c), Section 9.02(d) or Section
9.02(e), the receipt of such payment shall serve as liquidated damages
with respect to any breach of this Agreement by the party who has made
such payment giving rise to such termination, and the receipt of any
such payment shall be the sole and exclusive remedy (at law or in
equity) with respect to any such breach. In the event any action, suit,
proceeding or claim is commenced or asserted by a party against
- 46 -
another party and/or any director or officer of such other party
relating, directly or indirectly, to this Agreement, it is expressly
agreed that no party shall be entitled to obtain any punitive,
exemplary, treble, or consequential damages of any type under any
circumstances in connection with such action, suit, proceeding or
claim, regardless of whether such damages may be available under law,
the parties hereby waiving their rights, if any, to recover any such
damages in connection with any such action, suit, proceeding or claim.
(g) The Company acknowledges that the agreements
contained in Section 9.02(b), Section 9.02(c), Section 9.02(d) and
Section 9.02(e) 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.
Section 9.03 Amendment. This Agreement may be amended,
supplemented or modified by action taken by or on behalf of the respective
Boards of Directors of the Company (in accordance with the provisions of Section
1.03(c) of this Agreement), Parent and Sub at any time prior to the Effective
Time, whether prior to or after the Company Shareholders' Approval shall have
been obtained, but after such adoption and 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 or on behalf
of each party hereto.
Section 9.04 Waiver. At any time prior to the Effective Time any
party hereto, by action taken by or on behalf of the respective Board of
Directors of the Company (in accordance with the provisions of Section 1.03(c)
of this Agreement), Parent and Sub, 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
in any document delivered pursuant hereto, 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 or on behalf of 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, in any one or more
instances, 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 X
GENERAL PROVISIONS
Section 10.01 Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and agreements
contained in this Agreement shall not survive the Merger but shall terminate at
the Effective Time; provided, however, that this Section 10.01 shall not limit
any covenant or agreement of the parties hereto, which by its terms contemplates
performance after the Effective Time or the termination of this Agreement.
Section 10.02 Notices. All notices, demands and other
communications to be given or delivered under or by reason of the provisions of
this Agreement will be in writing and will be deemed to have been given (i) when
delivered if personally delivered by hand (with written
- 47 -
confirmation of receipt), (ii) when received if sent by a nationally recognized
overnight courier service (receipt requested), (iii) five business days after
being mailed, if sent by first class mail, return receipt requested, or (iv)
when receipt is acknowledged by an affirmative act of the party receiving
notice, if sent by facsimile, telecopy or other electronic transmission device
(provided that such an acknowledgement does not include an acknowledgment
generated automatically by a facsimile or telecopy machine or other electronic
transmission device). Notices, demands and communications to the parties will,
unless another address is specified in writing, be sent to the address indicated
below:
If to Parent or Sub, to:
The Bon-Ton Stores, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy to:
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
If to the Company, to:
The ▇▇▇▇▇-▇▇▇▇▇▇▇ Stores Corp.
▇▇▇▇ ▇▇-▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Section 10.03 Entire Agreement; Incorporation of Exhibits.
(a) This Agreement supersedes all prior discussions and
agreements among the parties hereto with respect to the subject matter
hereof and contains, together with the Confidentiality Agreement, the
sole and entire agreement among the parties hereto with respect to the
subject matter hereof.
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(b) The Company Disclosure Letter and any exhibit or
schedule attached to this Agreement and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
Section 10.04 Public Announcements. Except as otherwise required by
Law or the rules of any applicable securities exchange or national market
system, so long as this Agreement is in effect, Parent and the Company will not,
and will not permit any of their respective Representatives to, issue or cause
the publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Parent and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
Section 10.05 No Third Party Beneficiary. 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 provided in
Section 7.07 (which is intended to be for the benefit of the Persons entitled to
therein, and may be enforced by any of such Persons), it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.
Section 10.06 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned 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
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns.
Section 10.07 Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define, modify or
limit the provisions hereof.
Section 10.08 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.
Section 10.09 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio applicable to a
contract executed and performed in such State, notwithstanding any conflict of
law provisions to the contrary.
Section 10.10 Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to seek an injunction or injunctions to prevent breaches of this
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Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 10.11 Certain Definitions. As used in this Agreement:
(a) the term "Affiliate," as applied to any Person, shall
mean any other Person directly or indirectly controlling, controlled
by, or under common control with, that Person; for purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities, by contract or otherwise;
(b) a Person will be deemed to "beneficially" own
securities if such Person would be the beneficial owner of such
securities under Rule 13d-3 under the Exchange Act, including
securities which such Person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time);
(c) the term "business day" means a day other than
Saturday, Sunday or any day on which banks located in the State of Ohio
are authorized or obligated to close;
(d) any reference to any event, change or effect being
"material" or "materially adverse" or having a "material adverse
effect" on or with respect to an entity (or group of entities taken as
a whole) means such event, change or effect is material or materially
adverse, as the case may be, to the business, properties, assets,
liabilities, prospects, condition (financial or otherwise) or results
of operations of such entity (or of such group of entities taken as a
whole);
(e) the term "knowledge" or any similar formulation of
"knowledge" shall mean, with respect to the Company, the actual
knowledge of each of the Company's directors and the actual knowledge,
after due inquiry, of each of the Company's executive officers.
(f) the term "Person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which
term shall include a "group" as such term is defined in Section
13(d)(3) of the Exchange Act);
(g) the "Representatives" of any entity means such
entity's directors, officers, employees, legal, investment banking and
financial advisors, accountants and any other agents and
representatives;
(h) the term "Subsidiary" means, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which more than fifty percent (50%) of either the
equity interests in, or the voting control of, such corporation or
other organization is, directly or indirectly through Subsidiaries or
otherwise, beneficially owned by such party; and
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(i) the term "▇▇▇▇▇▇ Holdings Merger Agreement" means
that certain Agreement and Plan of Merger, dated as of June 25, 2003,
as amended by Amendment No. 1 dated September 9, 2003 and Amendment No.
2 dated September 12, 2003, by and among the Company, ▇▇▇▇▇▇ Holdings,
Inc. and ▇▇▇▇▇▇ Sub, Inc.
Section 10.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS ON THE NEXT PAGE]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
THE ▇▇▇▇▇-▇▇▇▇▇▇▇ STORES CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board
THE BON-TON STORES, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
ELDER ACQUISITION CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
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ANNEX A
TO
AGREEMENT AND PLAN OF MERGER
THE CAPITALIZED TERMS USED IN THIS ANNEX A HAVE THE MEANINGS SET FORTH IN THE
ATTACHED AGREEMENT AND PLAN OF MERGER.
Notwithstanding any other provisions of the Offer, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to a bidder's obligation to pay for or return tendered securities promptly after
termination or expiration of such bidder's offer), to pay for any Company Common
Shares tendered pursuant to the Offer, and, except as set forth in this
Agreement, may extend, terminate or amend the Offer, unless (i) there are
validly tendered and not withdrawn immediately prior to the expiration date of
the Offer a number of Company Common Shares, that, when added to the Company
Common Shares then beneficially owned by Parent, represent at least two-thirds
of the total number of Company Common Shares outstanding on a "fully diluted
basis" (on a "fully diluted basis" meaning the number of Company Common Shares
then issued and outstanding plus the number of Company Common Shares that the
Company may be required to issue as of such date pursuant to options, warrants,
rights, convertible or exchangeable securities or similar obligations then
outstanding, whether or not then vested or exercisable, including without
limitation, Company Common Shares that the Company may be required to issue
pursuant to Company Options, whether or not vested or exercisable, and the
number of Deferred Shares then outstanding, whether or not then subject to any
deferral limitations) (the "Minimum Tender Condition"), (ii) Parent shall have
available to it the proceeds of the financings contemplated by the Commitment
Letters or such other financings that are sufficient, together with cash on
hand, to consummate the Offer and the Merger and to refinance all debt of the
Company and Parent that is or could be required to be repurchased or becomes, or
could be declared, due and payable as a result of the Offer or the Merger or the
financing thereof and to pay all related fees and expenses (the "Financing
Condition"), (iii) the period of time during which the Ohio Division of
Securities may suspend the Offer pursuant Sections 1707.01, 1707.041 and
1707.042 of the Ohio Revised Code, (the "Ohio Control Bid Law"), without the
occurrence of any such suspension (or if a suspension shall have occurred, it
shall no longer be continuing), shall have expired or Parent being satisfied, in
its reasonable discretion, that the Ohio Control Bid Law is invalid or
inapplicable to the acquisition of the Company Common Shares in the Offer (the
"Control Bid Condition") and (iv) the waiting period under the HSR Act
applicable to the purchase of the Company Common Shares pursuant to the Offer
shall have expired or been terminated (the "HSR Condition"). In addition,
notwithstanding any other provisions of the Offer, Sub shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after termination
or expiration of such bidder's offer), to pay for any Company Common Shares
tendered pursuant to the Offer, and, except as set forth in this Agreement, may
extend, terminate or amend the Offer if at any time on or after the date that
the Offer is commenced, and prior to the time of payment for Company Common
Shares pursuant to the Offer (whether or not any
- A-1 -
Company Common Shares have theretofore been accepted for payment pursuant to the
Offer), any of the following conditions exist:
(a) there shall be a judgment, order, decree, statute,
law, ordinance, rule or regulation entered, enacted, promulgated,
enforced or issued by any court or other Governmental Authority or
Regulatory Authority of competent jurisdiction, which remains in
effect, (i) restraining or prohibiting or seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or (ii)
restraining or prohibiting or seeking to restrain or prohibit the
performance of the Merger Agreement; (iii) imposing or seeking to
impose any material limitations on the ability of Parent or its
Affiliates to combine and operate the business and assets of the
Company and its subsidiaries, or requiring or seeking to require
divestiture by Parent of any significant portion of the business,
assets or property of the Company or of Parent; (iv) imposing or
seeking to impose any material limitations on the ability of Parent or
any Affiliate of Parent to acquire or hold or to exercise full rights
of ownership of any securities of the Company, including, without
limitation, the right to vote any Company Common Shares acquired by Sub
pursuant to the Offer or otherwise on all matters properly presented to
the Company's shareholders; or (v) imposing or seeking to impose other
material sanctions, damages, or liabilities directly arising out of the
Offer or the Merger on Parent or any of its officers or directors; or
(b) all consents, approvals and actions of, filings with
and notices to any Governmental or Regulatory Authority or any other
public or private third parties required of Parent, the Company or any
of their Subsidiaries to consummate the Offer and the Merger, the
failure of which to be obtained or taken would reasonably be expected
to have a material adverse effect on Parent and its Subsidiaries or the
Surviving Corporation and its Subsidiaries, in each case taken as a
whole, or on the ability of Parent or the Company to consummate the
Offer and the Merger, shall not have been obtained or taken, all in
form and substance reasonably satisfactory to Parent; or
(c) the representations and warranties made by the
Company in this Agreement are not true and correct in all material
respects as of the date of consummation of the Offer or, in the case of
representations and warranties made as of a specified date earlier than
such date, on and as of such earlier dated, except as affected by the
transactions contemplated by this Agreement; or
(d) the Company shall have failed to perform and comply,
in all material respects, with each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the
Company on or prior to the consummation of the Offer; or
(e) this Agreement shall have been terminated in
accordance with its terms; or
(f) any actions required to be taken by the Company
pursuant to this Agreement prior to consummation of the Offer in
connection with the Offer or the Merger or any documents incident
thereto shall fail to be reasonably satisfactory in form and substance
to Parent, or Parent shall not have received copies of all such
documents
- A-2 -
and other evidences as Parent may reasonably request in order to
establish the taking of all such actions; or
(g) the rights issued pursuant to the Company Rights
Agreement shall have become exercisable or transferable apart from the
associated Company Common Shares or the Company shall not have taken
all necessary actions so that (1) the Company Rights Agreement will not
be applicable to the Offer, the Merger and this Agreement and (2) a
Distribution Date, a Triggering Event or a Share Acquisition Date (as
such terms are defined in the Company Rights Agreement) does not occur,
in the case of clauses (1) and (2), by reason of the execution of this
Agreement and the consummation of the Offer, the Merger and the other
transactions contemplated hereby; or
(h) the Company's Board of Directors or any committee
thereof shall have withdrawn or modified (including by amendment of the
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 to the Company's shareholders any Alternative Proposal
or shall have adopted any resolution to effect any of the foregoing
that, in the sole judgment of Sub in any such case, and regardless of
the circumstances (including any action or omission by Sub) giving rise
to any such condition, makes it inadvisable to proceed with such
acceptance or payment.
The foregoing conditions are for the sole benefit of Parent, Sub and their
Affiliates and may be asserted by Parent or Sub in its reasonable discretion in
whole or in part at any time or from time to time before the expiration of the
Offer or, with respect to the HSR Condition, before payment for any Company
Common Shares pursuant to the Offer. Subject to the provisions of this
Agreement, Parent and Sub expressly reserve the right to waive any of the
conditions to the Offer and to make any change in the terms of or conditions to
the Offer. Any failure by Parent or Sub at any time to exercise its rights under
any of the foregoing conditions shall not be deemed a waiver of any such right.
The waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances.
Each such right shall be deemed an ongoing right that may be asserted at any
time or from time to time.
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