SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 20, 1994
PETRIE STORES CORPORATION
(Exact name of registrant as specified in charter)
New York 1-6166 36-213-7966
(State or other jurisdiction (Commission) (I.R.S. Employer
of incorporation) File Number) Identification No.)
70 Enterprise Avenue, Secaucus, New Jersey 07084
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 866-3600
N/A
(Former name or former address, if changed since last report)
5. Other Events
On April 20, 1994 Petrie Stores Corporation, a New
York corporation (the "Company"), entered into an
Acquisition Agreement (the "Acquisition Agreement") with
Toys "R" Us, Inc., a Delaware corporation ("Toys"),
pursuant to which the Company agreed to transfer all of
the common stock, par value $.10 per share ("Shares"), of
Toys held by the Company and its subsidiaries and, at the
option of the Company, cash to Toys in exchange for newly
issued Shares with an equivalent value, less
$115,000,000. The closing of the transaction is
conditioned upon, among other things, the Company
disposing of its retail operations in a manner to be
determined by the Company's Board of Directors. Promptly
after the closing of the transaction and the disposition
of the Company's retail operations, the Company will
liquidate and distribute to its stockholders the newly
issued Shares, except an amount to be held in a
liquidating trust established to cover the Company's
contingent liabilities as of the time of the closing.
The closing of the transaction is also conditioned upon
the Company receiving a favorable ruling from the
Internal Revenue Service to the effect that the
disposition of Shares and cash to Toys in exchange for
newly issued Shares, the subsequent liquidation of the
Company and distribution of Shares to the Company's
stockholders will be nontaxable transactions to the
Company and its stockholders. The transaction is also
subject to the approval of holders of two-thirds of the
Company's outstanding common shares. Milton Petrie,
Chairman of the Board of Directors of the Company, who
owns approximately 60% of the outstanding and 54% of the
fully diluted Company common shares, has agreed to vote
his shares in favor of the transaction pursuant to a
Voting Agreement and Proxy (the "Voting Agreement"),
dated as of April 20, 1994, between Mr. Petrie and Toys.
A copy of the Acquisition Agreement, dated April 20,
1994, is filed as Exhibit 10.1 to this Statement and is
incorporated herein by reference. A copy of the Voting
Agreement, dated April 20, 1994, is filed as Exhibit 99.1
to this Statement and is incorporated herein by
reference. A copy of the Press Release, dated April 20,
1994, announcing the signing of the Acquisition Agreement
is filed as Exhibit 99.2 to this Statement and is
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(c) Exhibits
Exhibit No. Description
10.1 Acquisition Agreement, dated
April 20, 1994.
99.1 Voting Agreement, dated April
20, 1994.
99.2 Press Release, issued April
20, 1994.
Signatures
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: April 22, 1994
PETRIE STORES CORPORATION
By: /s/ Peter A. Left
Name: Peter A. Left
Title: Vice Chairman, Chief
Operating Officer,
Chief Financial Officer
and Secretary
Exhibit Index
Exhibit Description
10.1 Acquisition Agreement,
dated as of April 20,
1994.
99.1 Voting Agreement, dated
April 20, 1994.
99.2 Press Release, issued
April 20, 1994.
79665095.L
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of April 20, 1994,
between TOYS "R" US, INC., a Delaware corporation (the "Buyer"),
and PETRIE STORES CORPORATION, a New York corporation (the
"Seller").
The Seller and its Subsidiaries currently hold, among
other assets, an aggregate of 40,402,488 shares (the "Petrie
Block Shares") of Common Stock, par value $.10 per share, of the
Buyer ("Buyer Common Stock"). The Seller intends to cause all
such Subsidiaries holding any Petrie Block Shares to transfer
such Petrie Block Shares to the Seller (the "Petrie Stock
Transfer") in a manner that will not give rise to the recognition
of taxable income or gain to the Seller or any of its
Subsidiaries under the Internal Revenue Code of 1986, as amended
(the "Code"). In advance of the Acquisition (as defined below),
the Seller intends to engage in the sale or other disposition
(the "Disposition"), in the manner permitted by the Ruling
Request and the Private Letter Ruling (as defined herein),
through one or more asset or stock sale transactions, of all of
the assets of the Seller and its Subsidiaries, other than the
Petrie Block Shares and such cash or cash equivalents as the
Seller desires to retain, first to an existing Subsidiary of the
Seller ("PSC Holdings") and then to one or more other Persons
(each, a "Petrie Business Acquiror"). The Disposition shall be
subject to the liabilities of the Seller and its Subsidiaries,
other than those liabilities expressly retained by the Seller and
its Subsidiaries.
Thereafter, pursuant to this Agreement, the Buyer and
the Seller propose to effect a tax-free reorganization under
Section 368(a)(1)(C) of the Code whereby the Seller will transfer
to the Buyer, free and clear of all of the liabilities of the
Seller and its Subsidiaries (the "Acquisition"), the following
(the "Purchased Assets"): all of the Petrie Block Shares (or
such lesser number as shall be permitted to be held by the Seller
on the Closing Date pursuant to Section 8.5 below (the "Closing
Date Petrie Block Shares")) and a portion of its cash, excluding
amounts deposited in escrow. In consideration therefor, the
Buyer will issue to the Seller a number of shares of Buyer Common
Stock, to be determined as set forth in Section 3 below. The
Seller will then dissolve (the "Dissolution") and, pursuant to
the Dissolution, will distribute such shares of Buyer Common
Stock to the holders of Common Stock, par value $1.00 per share,
of the Seller ("Seller Common Stock"), subject to an escrow and
other arrangements that adequately provide for the payment of all
liabilities of the Seller and its Subsidiaries, as provided in
Section 8.2 below.
This Agreement is intended to constitute the plan of
reorganization pursuant to which the reorganization under Section
368(a)(1)(C) of the Code will be effected.
Concurrently with the execution and delivery of this
Agreement, the individual named in the Disclosure Schedule (the
"Named Party") owning beneficially 28,111,274 shares of Seller
Common Stock, representing approximately 60% of the outstanding
Seller Common Stock (approximately 54% on a fully diluted basis),
has delivered to the Buyer a voting agreement and proxy (the
"Voting Agreement and Proxy") pursuant to which he has agreed to
vote such shares in favor of this Agreement and the transactions
contemplated hereby.
Accordingly, in consideration of the premises and the
mutual covenants herein contained and intending to be legally
bound hereby, the Buyer and the Seller hereby agree as follows:
1. Certain Definitions. As used in this Agreement,
the following terms shall have the meanings indicated below:
"Action" means any action, suit, claim or legal,
administrative or arbitral proceeding or investigation by or
before any Governmental Body.
"Affiliate" means, with respect to any Person, any
other Person controlling, controlled by or under common control
with such Person.
"BCL" means the Business Corporation Law of the State
of New York, as amended.
"Cash Cap Amount" means the lesser of (x) (A) the cash
proceeds of the Disposition received or receivable by the Seller
on or prior to the Closing Date less any Taxes paid or payable as
a result of the Disposition and any out-of-pocket costs or
expenses associated with planning, negotiating, preparing for and
consummating the Transactions, including without limitation,
legal, accounting, real estate advisory, financial advisory and
investment banking fees and commissions, less (B) the cash
proceeds of any sale of common stock of the Buyer (net of
transaction fees and costs and Taxes payable with respect
thereto) consummated by the Seller or any of its Subsidiaries on
or after April 13, 1994 (the "Stock Sale Proceeds") to the extent
the Stock Sale Proceeds exceeds $19,233,000 and (y) $250,000,000;
provided, that if the amount referred to in clause (x) above
shall be zero or less, then the Cash Cap Amount shall be zero.
"Commission" means the Securities and Exchange
Commission or any successor agency.
"Condition of the Seller" means the business, assets,
properties, results of operations or financial condition of the
Seller and its Subsidiaries, taken as a whole.
"Convertible Debentures" means the Seller's
$124,942,000 in principal amount of Convertible Subordinated
Debentures outstanding and due December 2010, which are
convertible at any time prior to maturity into shares of Seller
Common Stock at a conversion price of $22.125 per share and which
may be redeemed at any time at the option of the Seller at
scheduled redemption prices.
"Designated Amount" means $115,000,000.
"Disclosure Schedule" means the disclosure schedule
setting forth certain information concerning the Seller delivered
by the Seller to the Buyer on the date hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Governmental Body" means any government or political
subdivision thereof, whether federal, state or local, domestic or
foreign, or any agency or instrumentality of any such government
or political subdivision, or any court, tribunal or arbitrator.
"H-S-R Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service or any
successor agency.
"Lien" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right of first refusal,
easement, servitude, encumbrance or other restriction or
limitation.
"Losses" means losses, liabilities, obligations,
damages, deficiencies, demands, claims, actions, causes of
action, judgments, Taxes, assessments, settlement costs, court
costs or other costs or expenses (including, without limitation,
interest, penalties, reasonable costs of investigation,
discovery, case preparation, defense or appeal, expert witness
fees and expenses and reasonable attorneys and paralegal fees and
disbursements).
"Market Value Per Share" means, for any trading day,
the average of the high and low reported Consolidated Trading
sales prices (regular way) on the New York Stock Exchange.
"Permitted Shares" means a number of Petrie Block
Shares equal to the lesser of (x) 4,000,000 shares and (y) the
number of Petrie Block Shares in excess of which would interfere
with the ability of the parties hereto to consummate the
transactions contemplated hereby in a manner such that the
consummation of the Petrie Stock Transfer, the Acquisition and
the Dissolution will not give rise to the recognition of taxable
income or gain to the Buyer, the Seller or any Subsidiary for
Federal income tax purposes.
"Person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or
other entity.
"Petrie Business Indemnitors" means (a) PSC Holdings;
(b) any Person to which assets of the Seller or its Subsidiaries
are transferred by the Seller, or by PSC Holdings or their
respective Subsidiaries, in the Disposition by way of asset sale,
merger or otherwise; and (c) any Person holding assets of the
Seller or its Subsidiaries or PSC Holdings or its Subsidiaries
whose stock is sold in the Disposition by way of stock sale,
merger or otherwise.
"Registration Statement" means the registration
statement of the Buyer on Form S-4 and the prospectus included
therein for the registration under the Securities Act of shares
of Buyer Common Stock constituting the Purchase Consideration.
"Securities Act" means the Securities Act of 1933, as
amended.
"Subsidiary" means, with respect to any Person, any
corporation at least a majority of whose outstanding voting
securities, or any other Person at least a majority of whose
total equity interest, is owned by such Person.
"Tax" or "Taxes" means, with respect to any Person, a
net income, gross income, gross receipts, sales, use, ad valorem,
value added, franchise, profits, license, withholding, payroll,
employment, environmental, excise, severance, stamp, transfer,
occupation, premium, property or windfall profit tax, custom duty
or other tax, governmental fee or other similar assessment or
charge, together with any interest and any penalty, addition to
tax or additional amount imposed by any jurisdiction or taxing
authority (domestic or foreign) on such Person.
"Termination Date" means January 28, 1995, unless (a) a
Private Letter Ruling satisfying the conditions of Sections 9.2.3
and 9.3.3 shall not have been issued by the IRS on or before
November 15, 1994 or (b) the Seller shall not have irrevocably
waived, on or before November 15, 1994, any right to terminate
this Agreement pursuant to Section 10.1.10 below, in either which
event, the Termination Date shall be November 15, 1994.
The following terms are defined in the corresponding
Sections listed below:
Term Section
Acquisition . . . . . . . . . . . . . . . . . . . . . Recitals
Balance Sheet . . . . . . . . . . . . . . . . . . . . 6.5
Balance Sheet Date . . . . . . . . . . . . . . . . . 6.5
Buyer . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Buyer Common Stock . . . . . . . . . . . . . . . . . Recitals
Buyer Indemnification Agreement . . . . . . . . . . . 4(c)
Cash Amount . . . . . . . . . . . . . . . . . . . . . 2
Cash Shares . . . . . . . . . . . . . . . . . . . . . 3(a)
CERCLA . . . . . . . . . . . . . . . . . . . . . . . 6.8.4
CERCLIS . . . . . . . . . . . . . . . . . . . . . . . 6.8.4
Closing . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . 5
Closing Date Petrie Block Shares . . . . . . . . . . Recitals
Code . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Disposition . . . . . . . . . . . . . . . . . . . . . Recitals
Dissolution . . . . . . . . . . . . . . . . . . . . . Recitals
Escrow Amount . . . . . . . . . . . . . . . . . . . . 8.2.1
Exchange Shares . . . . . . . . . . . . . . . . . . . 3(a)
Form 10-Qs . . . . . . . . . . . . . . . . . . . . . 6.5
Hazardous Substance . . . . . . . . . . . . . . . . . 6.8.2
Named Party . . . . . . . . . . . . . . . . . . . . . Recitals
NPL . . . . . . . . . . . . . . . . . . . . . . . . 6.8.4
Other Buyer Filings . . . . . . . . . . . . . . . . . 8.8
Other Seller Filings . . . . . . . . . . . . . . . . 8.6
Petrie Block Shares . . . . . . . . . . . . . . . . . Recitals
Petrie Business Acquiror . . . . . . . . . . . . . . Recitals
Petrie Stock Transfer . . . . . . . . . . . . . . . . Recitals
Private Letter Ruling . . . . . . . . . . . . . . . . 9.2.3
Proxy Statement . . . . . . . . . . . . . . . . . . . 8.6
PSC Holdings . . . . . . . . . . . . . . . . . . . . Recitals
Purchase Consideration . . . . . . . . . . . . . . . 3(a)
Purchased Assets . . . . . . . . . . . . . . . . . . Recitals
Release . . . . . . . . . . . . . . . . . . . . . . . 6.8.2
Requirements of Law . . . . . . . . . . . . . . . . . 6.8.1
Ruling Request . . . . . . . . . . . . . . . . . . . 8.4
Seller . . . . . . . . . . . . . . . . . . . . . . . Recitals
Seller Common Stock . . . . . . . . . . . . . . . . . Recitals
Seller Financial Statements . . . . . . . . . . . . . 6.5
Seller Indemnification Agreement . . . . . . . . . . 4(b)
Shareholders Meeting . . . . . . . . . . . . . . . . 8.7
Transactions . . . . . . . . . . . . . . . . . . . . 6.2.1
Unaudited 1994 Financial Statements . . . . . . . . . 6.5
Valuation Period . . . . . . . . . . . . . . . . . . 3(a)
Voting Agreement and Proxy . . . . . . . . . . . . . Recitals
2. Sale of Assets. At the closing provided for in
Section 5 below (the "Closing"), the Seller shall sell, assign,
transfer and deliver to the Buyer the Purchased Assets,
constituting all or substantially all of the assets of the Seller
on the Closing Date, by (i) delivery of stock certificates
representing the Closing Date Petrie Block Shares, duly endorsed
in blank or accompanied by stock powers duly executed in blank,
in proper form for transfer and with all appropriate stock
transfer stamps affixed, if any such stamps are required under
applicable law, and (ii) wire transfer of immediately available
funds to an account designated by the Buyer of an amount of cash
not to exceed the Cash Cap Amount, such amount to be designated
by the Seller, after provision for all liabilities of the Seller
and its Subsidiaries as described in Section 8.2 below, in a
notice to the Buyer delivered at least 7 business days prior to
the Closing Date (the "Cash Amount").
3. Purchase Consideration. (a) The aggregate
consideration for the Purchased Assets (the "Purchase
Consideration") shall be composed of shares of Buyer Common Stock
equal in number to the "Exchange Shares" plus the "Cash Shares."
"Exchange Shares" means a number equal to: (i)(A) the product of
Closing Date Petrie Block Shares and the average of the Market
Value Per Share of Buyer Common Stock on the ten trading days
next preceding the trading day immediately prior to the date
hereof minus (B) the Designated Amount, divided by (ii) such
Market Value Per Share; provided, however, that the number of
Closing Date Petrie Block Shares and the Market Value Per Share
shall be adjusted appropriately if prior to the Closing Date
there is a change in the number of shares of Buyer Common Stock
held by the Seller or a change in the class of shares of Buyer
Common Stock held by the Seller, in each case, to the extent
attributable to the declaration of any stock dividend, stock
split, recapitalization, reclassification, combination or similar
event. "Cash Shares" means a number equal to (x) the Cash
Amount, divided by (y) the average of the Market Value Per Share
of Buyer Common Stock on the ten trading days next preceding the
second trading day prior to the Closing Date (the "Valuation
Period").
(b) At the Closing, the Buyer shall deliver to the
Seller, subject to Section 8.2 below, stock certificates
representing the Purchase Consideration, duly registered in the
name of the Seller (or its designees). All shares of Buyer
Common Stock delivered as Purchase Consideration shall be duly
authorized, fully paid and non-assessable and free of preemptive
rights.
4. No Assumption of Liabilities; Indemnification.
(a) Anything in this Agreement to the contrary notwithstanding,
the Buyer shall not assume, or in any way be liable or
responsible for, any liabilities or obligations of the Seller
whatsoever. Without limiting the generality of the foregoing,
the Buyer shall not assume (i) any liability or obligation of the
Seller arising out of or in connection with the negotiation and
preparation of this Agreement or the consummation and performance
of the transactions contemplated hereby, including, without
limitation, any liability relating to Taxes so arising; (ii) any
liability or obligation under contracts and other agreements to
which the Seller is a party or by or to which it or its assets,
properties or rights are bound or subject; (iii) any liability or
obligation to trade or other creditors or customers of the
Seller; (iv) any liability or obligation of the Seller or any
shareholder of the Seller for any Taxes; or (v) any liability or
obligation of the Seller with respect to any violation by the
Seller or any of its Subsidiaries of any Requirements of Law.
(b) At the Closing, each of the Seller and its
Subsidiaries shall, and the Seller shall use its reasonable best
efforts to cause each Petrie Business Indemnitor to, execute and
deliver to the Buyer an indemnification agreement (the "Seller
Indemnification Agreement") substantially in the form of Exhibit
A hereto.
(c) At the Closing, the Buyer shall execute and
deliver to the Seller and each Petrie Business Indemnitor that
executes and delivers the Seller Indemnification Agreement an
indemnification agreement (the "Buyer Indemnification Agreement")
substantially in the form of Exhibit B hereto.
5. Closing. The Closing of the sale and purchase of
the Purchased Assets shall take place at the offices of Schulte
Roth & Zabel, 900 Third Avenue, New York, New York 10022, at
10:00 A.M., local time, on a business day within 10 business days
after satisfaction or waiver of each of the conditions set forth
in Section 9 below, such business day to be mutually agreed by
the Buyer and the Seller (subject to reasonable delay of the
closing date by either party, but not to a date later than the
Termination Date), or at such other place, at such other time or
on such other date as the Buyer and the Seller mutually agree in
writing. The date upon which the Closing occurs is herein called
the "Closing Date."
6. Representations and Warranties of the Seller.
The Seller represents and warrants to the Buyer as follows:
6.1 Organization. The Seller is a corporation
organized, existing and in good standing under the laws of the
State of New York and has the requisite corporate power to own
its properties and carry on its business as now conducted.
6.2 Authority Relative to the Agreements.
6.2.1 The Seller has the requisite corporate
power and authority to enter into this Agreement and the Seller
Indemnification Agreement and to engage in the Acquisition, the
Petrie Stock Transfer, the Disposition and the Dissolution
(collectively, the "Transactions") and otherwise perform its
obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Seller Indemnification Agreement by the
Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of the Seller and, except for the approval of its
shareholders as set forth in Section 8.7 below, no other
corporate proceedings on the part of the Seller are necessary to
authorize this Agreement, the Seller Indemnification Agreement,
the Transactions or the other transactions contemplated hereby or
thereby; provided, that the Seller's Board of Directors has not
approved any particular form or terms of the Disposition or the
Dissolution. This Agreement has been duly executed and delivered
by the Seller. This Agreement constitutes, and the Seller
Indemnification Agreement will, upon its execution, constitute, a
valid and binding obligation of the Seller enforceable against it
in accordance with its terms.
6.2.2 Except as set forth in the Disclosure
Schedule, neither the execution and delivery of this Agreement or
the Seller Indemnification Agreement by the Seller, nor the
consummation of the transactions contemplated hereby or thereby
nor compliance by the Seller with any of the provisions hereof or
thereof will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon
any of the properties or assets of the Seller or any of its
Subsidiaries under, any of the terms, conditions or provisions of
(x) its charter or by-laws or (y) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which it is a party or to which it or
any of its properties or assets may be subject, except for
violations, conflicts, breaches, defaults or similar matters
under agreements providing for the lease by the Seller or any of
its Subsidiaries of real or personal property or (ii) subject to
compliance with the statutes and regulations referred to in
Section 6.2.3 below, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to the
Seller or its Subsidiaries or any of their respective properties
or assets, except in the case of clauses (i)(y) and (ii) above
for violations, breaches and defaults which would not,
individually or in the aggregate, have a material adverse effect
on the ability of the Seller to consummate the Transactions or
the other transactions contemplated hereby or on the Buyer;
provided, however, that the foregoing exception shall not limit
the rights of the Buyer and its Affiliates under the Seller
Indemnification Agreement.
6.2.3 Except as set forth in the Disclosure
Schedule, other than compliance with (i) the Exchange Act,
(ii) the Securities Act, (iii) applicable bulk transfer laws,
(iv) the H-S-R Act, and (v) Article 10 of the BCL, no notice to,
filing with, or authorization, consent or approval of, any
Governmental Body is necessary for the consummation by the Seller
of the Transactions or the other transactions contemplated by
this Agreement or the Seller Indemnification Agreement.
6.3 Board Recommendation. The Board of Directors of
the Seller has, by resolutions duly adopted by a vote at a
meeting of such Board duly held on April 20, 1994, approved and
adopted this Agreement, the Seller Indemnification Agreement, the
Transactions and the other transactions contemplated herein and
therein on the terms and conditions set forth herein, and has
recommended that holders of shares of Seller Common Stock approve
this Agreement, the Seller Indemnification Agreement, the
Transactions and the other transactions contemplated hereby and
thereby; provided, that the Seller's Board of Directors has not
approved any particular form or terms of the Disposition or the
Dissolution.
6.4 Title to Petrie Block Shares. The Seller and its
Subsidiaries own in the aggregate beneficially and of record, and
have the power and authority to convey, free and clear of any
Lien, the Petrie Block Shares, and, upon delivery of and payment
on the Closing Date for the Closing Date Petrie Block Shares as
herein provided, the Seller will convey to the Buyer good and
valid title to such Closing Date Petrie Block Shares, free and
clear of any Lien.
6.5 Commission Filings; Financial Statements. The
Seller has heretofore delivered to the Buyer its (i) Annual
Report on Form 10-K for the fiscal years ended January 30, 1993,
February 1, 1992 and February 2, 1991, as filed with the
Commission, (ii) Quarterly Reports on Form 10-Q for the quarters
ended October 30, 1993, July 31, 1993 (as amended) and May 1,
1993 (as amended) (collectively, the "Form 10-Qs"), and (iii)
proxy statements relating to all meetings of the Seller's
shareholders (whether annual or special) since December 31, 1992,
(iv) all other reports (including any Form 8-K's) or registration
statements filed by the Seller with the Commission since
December 31, 1992, and (v) the unaudited consolidated balance
sheet and related unaudited consolidated statements of income and
cash flows of the Seller and its Subsidiaries at January 29, 1994
and for year then ended (the "Unaudited 1994 Financial
Statements"). As of their respective dates, such reports and
registration statements (including all exhibits and schedules
thereto and documents incorporated by reference therein) complied
in all material respects with all applicable requirements of the
Exchange Act or the Securities Act, as applicable, and did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of the Seller and its Subsidiaries included or
incorporated by reference in the Form 10-Qs, such other reports
and the Unaudited 1994 Financial Statements (collectively, the
"Seller Financial Statements") have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto), and fairly present the
consolidated financial position of the Seller and its
Subsidiaries as of the dates thereof and the results of their
operations and changes in their financial position for the
periods then ended, except as otherwise noted therein and
subject, in the case of the unaudited interim financial
statements (other than the Unaudited 1994 Financial Statements),
to normal year-end adjustments and any other adjustments
described therein. The consolidated balance sheet of the Seller
and its Subsidiaries as at January 29, 1994, is referred to as
the "Balance Sheet," and January 29, 1994, is referred to as the
"Balance Sheet Date."
6.6 No Undisclosed Liabilities. At the Balance Sheet
Date, the Seller and its Subsidiaries taken as a whole did not
have any direct or indirect liabilities or obligations, secured
or unsecured, known or unknown, fixed or unfixed, choate or
inchoate, liquidated or unliquidated, accrued, absolute,
contingent or otherwise, not reflected, reserved against or
disclosed in the Balance Sheet or in the footnotes thereto which
were required to be reflected, reserved against or disclosed
therein in accordance with generally accepted accounting
principles. Since the Balance Sheet Date, except as disclosed in
the Unaudited 1994 Financial Statements or the Disclosure
Schedule, neither the Seller nor any of its Subsidiaries has
incurred any liabilities or obligations other than (i) in the
ordinary course of business, (ii) those contained in the
agreements entered into or to be entered into in connection with
the Transactions or incurred in connection with consummating the
Transactions or (iii) in amounts that, individually or in the
aggregate, are not material to the Condition of the Seller or its
ability to consummate the Transactions or the other transactions
contemplated hereby or to the Buyer, in relation to the
Designated Amount; provided, however, that the foregoing
exceptions shall not limit the rights of the Buyer and its
Affiliates under the Seller Indemnification Agreement.
6.7 Litigation. Except as set forth in the
Disclosure Schedule, there is no Action pending or, to the
Seller's knowledge, threatened against or involving the Seller or
any of its Subsidiaries, or any of its properties or rights, and
neither the Seller nor any of its Subsidiaries is subject to any
order, writ, injunction or decree, which, in each case, is
reasonably likely (i) to have a material adverse effect on the
Condition of the Seller or its ability to consummate the
Transactions or the other transactions contemplated hereby or
(ii) to be material to the Buyer, in relation to the Designated
Amount.
6.8 Regulatory and Environmental Compliance.
6.8.1 The Seller and each of its Subsidiaries
have conducted their respective businesses so as to comply with
all applicable Requirements of Law relating to the operations,
conduct or ownership of the property or business of the Seller or
any Subsidiary, the failure to comply with which would,
individually or in the aggregate, have a material adverse effect
on the Condition of the Seller. "Requirements of Law" means (i)
the charter or by-laws or other organizational or governing
documents of the Seller, or (ii) any statute, law (including
common law), treaty, rule, regulation or ordinance (including,
without limitation, environmental, pollution control,
occupational health and safety and food and drug regulations) or
permit or any judgment, decree, injunction, order or legally
binding determination of any Governmental Body applicable to the
Seller or any of its Subsidiaries existing as of the date hereof.
6.8.2 No notice, written notification (and, to
the Seller's knowledge, no oral notification or notice), demand,
request for information, citation, summons or order has been
received, no complaint has been filed, no penalty has been
assessed which has not been paid, and no written notice (and, to
the Seller's knowledge, no oral notification or notice) has been
received by the Seller or any of its Subsidiaries that any
investigation or review is pending or threatened by any
Governmental Body or other Person, with respect to any alleged
violation by the Seller or any of its Subsidiaries of any
Requirements of Law, with respect to any generation, treatment,
storage, recycling, transportation or disposal or release, as
defined in 42 USC SECTION 9601(22), including into an indoor
environment ("Release"), of any toxic, caustic or otherwise
hazardous substance including asbestos, petroleum, its
derivatives, by-products and other hydrocarbons, regulated under
federal, state or local environmental statutes, ordinances,
rules, regulations or orders ("Hazardous Substance").
6.8.3 No Hazardous Substance is present in
violation of any Requirements of Law at any property now owned or
leased by the Seller or any of its Subsidiaries, and no Hazardous
Substance resulting from the Seller's or any of its Subsidiaries'
operations is present in violation of any Requirements of Law at
any property formerly owned or leased by the Seller or any of its
Subsidiaries. There are no underground storage tanks for
Hazardous Substances present in violation of any Requirements of
Law at any property now owned or leased by the Seller or any of
its Subsidiaries or, on any property previously owned or leased
by the Seller or any of its Subsidiaries, with respect to which
the Seller or any such Subsidiary may have liability. There has
been no Release of any Hazardous Substance, and no Hazardous
Substance is present, in a reportable or threshold quantity,
where such a quantity has been established by statute, ordinance,
rule, regulation or order, at, on or under any property now or
previously owned by the Seller or any of its Subsidiaries, except
for Releases in such quantities that have been reported and for
which all Requirements of Law have been satisfied.
6.8.4 To the Seller's knowledge, neither the
Seller nor any of its Subsidiaries has transported or arranged
for the transportation, directly or indirectly, of any hazardous
waste (as defined under applicable Federal or state law) to any
location which is listed or proposed for listing on the National
Priorities List ("NPL") under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS"), or on
any similar state list, which is the subject of federal, state or
local enforcement actions or other investigations which may
reasonably be expected to lead to claims against the Seller or
any of its Subsidiaries for cleanup costs, remedial work, damages
to natural resources or for personal injury claims, including,
but not limited to, claims under CERCLA.
6.8.5 Except as set forth in the Disclosure
Schedule, no oral or written notification of a Release of a
Hazardous Substance has been filed by or on behalf of the Seller
or any of its Subsidiaries and no property now or, to the
Seller's knowledge, previously owned or leased by the Seller or
any of its Subsidiaries is listed or, to the Seller's knowledge,
proposed for listing, on the NPL, on CERCLIS or any similar state
list of sites requiring investigation or clean-up.
6.8.6 There are no environmental Liens on any
of the real property or other properties owned or leased by the
Seller or any of its Subsidiaries, and neither the Seller nor any
of its Subsidiaries has been notified of any governmental actions
that have been taken or are in process which could subject any of
such properties to such Liens and neither the Seller nor any of
its Subsidiaries are required to place any notice or restriction
relating to the presence of Hazardous Substances at any property
owned by any of them in any deed to such property.
6.8.7 To the Seller's knowledge, except as set
forth in the Disclosure Schedule, there is no fact, circumstance
or condition of or concerning any property now or previously
owned or leased by the Seller or any of its Subsidiaries that is
reasonably likely to result in any material liability to the
Seller, any of its Subsidiaries or the Buyer (in relation to the
Designated Amount) under or based on any Requirements of Law.
6.9 Brokers. Other than as previously disclosed to
the Buyer, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection
with the Acquisition or the transactions contemplated hereby
based upon arrangements made by or on behalf of the Seller.
6.10 Ruling Request. All representations and
statements of fact included in the Ruling Request (and any
supplements, additions or exhibits thereto), to the extent that
they relate to the Seller or its Subsidiaries, any Petrie
Business Acquiror or the Named Party are true, complete and
accurate in all material respects.
6.11 Disclosure. No written statement, certificate,
schedule, list or other written information furnished by or on
behalf of the Seller to the Buyer contemplated by this Agreement
contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
7. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller as follows:
7.1 Organization. The Buyer is a corporation
organized, existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power to carry
on its business as now conducted.
7.2 Authority Relative to this Agreement.
7.2.1 The Buyer has the requisite corporate
power and authority to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery of this
Agreement by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of the Buyer, and no other corporate
proceeding on the part of the Buyer is necessary to authorize
this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Buyer and
constitutes, and the Buyer Indemnification Agreement will, upon
its execution, constitute, a valid and binding obligation of the
Buyer, enforceable against the Buyer in accordance with its
terms.
7.2.2 Neither the execution and delivery of
this Agreement or the Buyer Indemnification Agreement by the
Buyer nor the consummation of the transactions contemplated
hereby nor compliance by the Buyer with any of the provisions
hereof will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon
any of the properties or assets of the Buyer under, any of the
terms, conditions or provisions of (x) the Certificate of
Incorporation or By-Laws of the Buyer or (y) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Buyer is a party, or
to which it, or any of its properties or assets, may be subject,
or (ii) subject to compliance with the statutes and regulations
referred to in Section 7.2.3 below, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer or any of its properties or assets,
except in the case of clauses (i)(y) and (ii) above for
violations, breaches and defaults which would not, individually
or in the aggregate, have a material adverse effect on the
ability of the Buyer to consummate the Transactions or the other
transactions contemplated hereby.
7.2.3 Other than compliance with the H-S-R Act
and the Securities Act, no notice to, filing with, or
authorization, consent or approval of, any Governmental Body is
necessary for the consummation by the Buyer of the transactions
contemplated by this Agreement and the Buyer Indemnification
Agreement.
7.3 Buyer Common Stock. The shares of Buyer Common
Stock constituting the Purchase Consideration, when issued and
delivered as consideration for the Purchased Assets pursuant to
the terms hereof, will be validly issued and outstanding, fully
paid and nonassessable, and the issuance of such shares is not
and will not be subject to preemptive rights of any
securityholder of the Buyer.
7.4 Brokers. Other than as previously disclosed to
the Seller, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection
with the Acquisition or the transactions contemplated hereby
based upon arrangements made by or on behalf of the Buyer.
7.5 Ruling Request. All representations and
statements of fact included in the Ruling Request (and any
supplements, additions or exhibits thereto), to the extent that
they relate to the Buyer, are true, complete and accurate in all
material respects.
8. Covenants and Agreements. The Buyer and the
Seller covenant and agree as follows:
8.1 Conduct of Business. From the date hereof
through the Closing Date, unless the Buyer shall otherwise agree
in writing or as otherwise expressly contemplated hereby, neither
the Seller nor any of its Subsidiaries shall, directly or
indirectly, take (or agree, in writing or otherwise, to take) any
action, including without limitation, any acquisition (by merger,
consolidation, or acquisition of stock or assets) of any other
Person, or any investment either by purchase of stock or
securities, contributions to capital (other than to wholly-owned
Subsidiaries), property transfer, or, except in the ordinary
course, purchase of any property or assets of any other Person,
or the incurrence of any indebtedness for money borrowed or the
issuance of any debt securities or the assumption or guarantee of
any of the foregoing, except short-term indebtedness incurred in
the ordinary course of business and consistent with past
practices, (i) which would make any representation or warranty in
Section 6 hereof untrue or incorrect in any material respect,
(ii) which materially impairs the Seller's ability to satisfy any
of the conditions set forth in Section 9.1 or 9.3 below or has
the effect of preventing or disabling the Seller from performing
its obligations under this Agreement, (iii) which diminishes the
number of shares of Buyer Common Stock held by the Seller or its
Subsidiaries as of the date hereof by an amount greater than the
number of Permitted Shares or (iv) which could reasonably result
in preventing the consummation of the Transactions or the other
transactions contemplated hereby.
8.2 The Petrie Stock Transfer; the Disposition; the
Dissolution.
8.2.1 Prior to the Closing Date, the Seller
will consummate the Petrie Stock Transfer in a manner that will
not give rise to the recognition of taxable income or gain to the
Seller or any of its Subsidiaries for Federal income tax
purposes. In addition, prior to the Closing Date, the Seller
shall use all commercially reasonable efforts to consummate the
Disposition in the manner set forth (x) in the Ruling Request or
in any manner set forth in a supplement to the Ruling Request and
(y) in the Private Letter Ruling, except to the extent the Buyer
concludes in good faith that the manner set forth in such
supplement may result in the Buyer incurring liabilities or
obligations. In any case, the parties intend that the
Disposition will not create, give rise to or result in any
liability or obligation to the Buyer. In that regard, the
Seller, on or prior to the Closing Date, (i) will cause to be
paid or satisfied any of its or its Subsidiaries' liabilities
that become due on or prior to the Closing Date, and (ii) will
establish an escrow and trust containing cash (or, to the extent,
the Seller's available cash shall be insufficient, shares of
Buyer Common Stock received as Purchase Consideration) and, to
the extent determined by the Seller, other assets in an amount
(the "Escrow Amount") reasonably believed by the Board of
Directors of the Seller to satisfy the requirements of the BCL
and be sufficient to pay or adequately provide for any known,
actual or contingent liabilities or obligations of the Seller or
its Subsidiaries, or arising out of the Transactions that may be
asserted against the Seller, its Subsidiaries, such escrow and
trust or the Buyer. Written notice of a preliminary estimate of
the Escrow Amount made by the Seller in good faith shall be
delivered to the Buyer at least 45 days prior to the Closing
Date. Written notice of the determination of the Escrow Amount
by the Seller's Board of Directors and the terms thereof,
including copies of the minutes of any meetings or any consents
related thereto, shall be delivered to the Buyer at least 5
business days prior to the Closing Date.
8.2.2 The foregoing escrow and trust shall be
established with an independent third party escrow agent
reasonably acceptable to the Buyer pursuant to an escrow
agreement and trust agreement, in form and substance reasonably
acceptable to the Buyer, which agreements shall include
provisions entitling the Buyer to receive payment thereunder.
The liabilities to be provided for in the escrow and trust will
include, without limitation, liabilities (if any) under
contracts, leases or other agreements, liability (if any) to
trade and other creditors, liability (if any) to dissenting
shareholders of the Seller, any liability (including legal fees
and disbursements) related to any Actions arising from the
transactions contemplated hereby or relating to any assertion of
liability provided for in this Section 8.2, environmental
liabilities (if any), indebtedness for money borrowed (if any)
and the fees and expenses of consummating the transactions
contemplated hereby. Such escrow agreement shall provide that
any tax imposed with respect to such escrow arrangement or the
earnings with respect to amounts contained in such escrow shall
be paid with funds withdrawn from such escrow.
8.2.3 Subsequent to the Acquisition, the Seller
will consummate the Dissolution, pursuant to which it will
distribute the shares of Buyer Common Stock received as Purchase
Consideration (other than shares subject to escrow as provided
above) to the holders of Seller Common Stock.
8.3 Call of Convertible Debentures. Prior to the
Closing Date, the Seller will call for redemption all outstanding
Convertible Debentures and, on or prior to the Closing Date,
cause all such Convertible Debentures to be redeemed or converted
into Seller Common Stock pursuant to the terms thereof.
8.4 Ruling Request. The Seller and the Buyer shall
promptly submit to the IRS a joint request for a Private Letter
Ruling, in a form to be agreed by the Seller and the Buyer,
requesting the IRS to rule that the Petrie Stock Transfer does
not give rise to the recognition of taxable income or gain to the
Seller or any Subsidiary thereof or the Buyer or any Subsidiary
thereof, and that the Acquisition and the Dissolution qualify as
a reorganization under Section 368(a)(1)(C) of the Code (the
"Ruling Request"), and, accordingly, no gain or loss will be
recognized by shareholders of the Seller by reason of receipt of
Buyer Common Stock in exchange for their Seller Common Stock.
The Seller and the Buyer shall each (i) notify the other promptly
of the receipt of any communications from the IRS regarding such
request, (ii) participate in any discussions with the IRS related
thereto, and (iii) provide the other with draft copies of all
submissions proposed to be made in connection with such request
sufficiently in advance so as to provide the other with an
adequate opportunity to review and comment on such submissions.
8.5 Agreement Not to Sell Petrie Block Shares. The
Seller hereby covenants and agrees that the Seller will not:
(i) directly or indirectly, sell, transfer,
assign, pledge, hypothecate or otherwise dispose of or encumber
the Petrie Block Shares, or enter into any contract, option,
agreement or the arrangement with respect to the foregoing;
provided, that the Seller may (A) sell or otherwise dispose of a
number of Petrie Block Shares equal to the number of Permitted
Shares, so long as (x) any such sale or disposition is made for a
purpose of which the Buyer is given prior written notice, (y) any
such sale or disposition is not made during the 10 trading days
immediately preceding the commencement of, or during, the
Valuation Period and (z) prompt notice of the consummation of
such sale or disposition is given to the Buyer; and (B) pledge
pursuant to a pledge agreement delivered to the Buyer promptly
upon the execution and delivery thereof any Petrie Block Shares
in one or more bona fide loan transactions for the purpose of
financing the Seller's working capital and capital expenditures
in the ordinary course of business so long as the aggregate
outstanding amount secured by such pledges does not, at any time,
exceed $175,000,000 (and upon foreclosure on any Petrie Block
Shares so pledged, the number of Petrie Block Shares so
foreclosed upon shall be taken into account in determining
compliance with clause (A) above);
(ii) directly or indirectly, solicit,
encourage, participate in or initiate discussions or negotiations
with, or provide information to, any Person other than the Buyer
or any Affiliate or representative of the Buyer, concerning any
direct or indirect sale or other disposition of the Petrie Block
Shares, except as permitted above; or
(iii) purchase any additional shares of Buyer
Common Stock.
8.6 Proxy Statement; Other Seller Filings. As
promptly as practicable after the date hereof, the Seller shall
prepare and file with the Commission under the Exchange Act, and
shall use all reasonable efforts to have cleared by the
Commission, and promptly thereafter shall mail to its
shareholders, a proxy statement and form of proxy with respect to
the Shareholders Meeting. "Proxy Statement" means such proxy
statement and form of proxy at the time it is initially mailed to
the Seller's shareholders and all amendments or supplements
thereto, if any, similarly filed and mailed. As soon as
practicable after the date of this Agreement, the Seller shall
promptly prepare and file any other filings required to be filed
by the Seller under the Exchange Act, Securities Act or any other
federal or state securities laws relating to the Acquisition and
the transactions contemplated herein ("Other Seller Filings").
The Seller shall notify the Buyer promptly of the receipt of any
comments of the Commission and of any request by the Commission
for amendments or supplements to the Proxy Statement or by any
other governmental official with respect to any Other Seller
Filing or for additional information and will supply the Buyer
with copies of all correspondence with respect to the Proxy
Statement and any Other Seller Filings. Each of the Seller and
the Buyer shall use its best efforts to obtain and furnish the
information required to be included in the Proxy Statement and
any Other Seller Filing. The Seller, after consultation with the
Buyer, shall use its best efforts to respond promptly to any
comments made by the Commission with respect to the Proxy
Statement and any Other Seller Filing and any preliminary version
thereof and cause the Proxy Statement and related form of proxy
to be mailed to the shareholders of the Seller at the earliest
practicable time. The Seller shall bear the costs and expenses
of printing and distributing the Proxy Statement and related form
of proxy (which will include the prospectus included in the
Registration Statement) to the Seller's shareholders, provided,
that the Buyer shall be responsible for any Commission or state
blue sky filing or similar fees relating to the Registration
Statement, subject to Section 8.9 below. The Seller shall notify
the Buyer of its intention to mail the Proxy Statement to the
shareholders of the Seller at least 48 hours prior to the
intended time of such mailing. The information provided and to
be provided by the Seller and the Buyer, respectively, for use in
the Proxy Statement and any Other Seller Filings shall, on the
date the Proxy Statement is first mailed to the Seller's
shareholders or any Other Seller Filing is filed with the
appropriate Governmental Body and in each case on the date of the
Shareholders Meeting, be true and correct in all material
respects and shall not omit to state a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading, and each of the
Seller and the Buyer agree to correct any such information
provided by it for use in the Proxy Statement or any Other Seller
Filing which shall have become false or misleading. The Proxy
Statement and any Other Seller Filing, when filed with the
appropriate Governmental Body, shall comply as to form in all
material respects with all applicable requirements of law.
8.7 Meeting of Shareholders. The Seller shall take
all action necessary, in accordance with the BCL and its
Certificate of Incorporation and By-Laws, to duly call, give
notice of, convene and hold a meeting of its shareholders as
promptly as practicable to consider and vote upon the approval of
the Acquisition and the transactions contemplated hereby (such
meeting and any adjournment or postponement thereof is referred
to as the "Shareholders Meeting"). The Proxy Statement shall
contain the determinations and recommendations of the Board of
Directors of the Seller as to the Acquisition and the
transactions contemplated hereby, provided, that the Seller's
Board of Directors need not approve or recommend any particular
form or terms of the Disposition. The Seller shall use its best
efforts to solicit from holders of shares of Seller Common Stock
proxies in favor of approval of the Acquisition and the
transactions contemplated hereby and to take all other action
necessary or, in the reasonable judgment of the Buyer, helpful to
secure the vote of holders of shares of Seller Common Stock
required by law to effect the Acquisition and the transactions
contemplated hereby.
8.8 Registration Statement; Other Buyer Filings. As
promptly as practicable after the date hereof, the Buyer shall
prepare and file the Registration Statement with the Commission
under the Securities Act and shall use all reasonable efforts to
cause the Registration Statement to be declared effective by the
Commission. As soon as practicable after the date of this
Agreement, the Buyer shall promptly prepare and file any other
filings required to be filed by the Buyer under the Securities
Act or any other federal or state securities laws relating to the
Acquisition and the transactions contemplated herein ("Other
Buyer Filings"). The Buyer shall notify the Seller promptly of
the receipt of any comments of the Commission and of any request
by the Commission for amendments or supplements to the
Registration Statement or by any other governmental official with
respect to any Other Buyer Filing or for additional information
and will supply the Seller with copies of all correspondence with
respect to the Registration Statement and any Other Buyer
Filings. Each of the Seller and the Buyer shall use its best
efforts to obtain and furnish the information required to be
included in the Registration Statement and any Other Buyer
Filing. The Buyer, after consultation with the Seller, shall use
its best efforts to respond promptly to any comments made by the
Commission with respect to the Registration Statement and any
Other Buyer Filing and any preliminary version thereof. The
information provided and to be provided by the Seller and the
Buyer, respectively, for use in the Registration Statement and
any Other Buyer Filings shall, on the date the prospectus
included in the Registration Statement is first mailed to
shareholders by the Seller as part of the Proxy Statement or any
Other Buyer Filing is filed with the appropriate Governmental
Body and, in each case, on the date of the Shareholders Meeting,
be true and correct in all material respects and shall not omit
to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading, and each of the Buyer and the Seller
agree to correct any such information provided by it for use in
the Registration Statement or any Other Buyer Filing which shall
have become false or misleading. The Registration Statement and
any Other Buyer Filing, when filed with the appropriate
Governmental Body, shall comply as to form in all material
respects with all applicable requirements of law.
8.9 Fees and Expenses. If this Agreement or the
transactions contemplated hereby are abandoned or terminated for
any reason (other than pursuant to Section 10.1.8 or other than
solely as a result of the failure to satisfy one or more of the
conditions set forth in (a) Section 9.2.1 or 9.2.2 or (b) Section
9.2.3 or 9.3.3 solely as a result of the Buyer's refusal to
comply with Section 8.10(iv) below), the Seller shall promptly
(and in any event within two days after written request by the
Buyer) reimburse the Buyer and its Affiliates for all reasonable
out-of-pocket expenses (including all fees and expenses of
counsel, outside accountants, investment banking firms, experts
and consultants to the Buyer and its Affiliates) incurred by them
or on their behalf, commencing in November 1993, in connection
with the transactions contemplated hereby, including without
limitation, all costs and expenses of or relating to (i) the
preparation and negotiation of this Agreement, the Voting
Agreement and Proxy, the Seller Indemnification Agreement, the
Buyer Indemnification Agreement and the Ruling Request, (ii) the
printing and filing of the Registration Statement and exhibits
thereto, each prospectus included therein and any amendment or
supplement to the Registration Statement or any such prospectus,
including, without limitation, any filing fees payable to the
Commission or any applicable blue sky authorities, (iii) the
preparation and delivery of stock certificates representing the
Purchase Consideration, (iv) the distribution, shipping and
mailing to the Seller's shareholders of any prospectus, including
any supplement thereto, included in the Registration Statement,
(v) the listing of the shares representing the Purchase
Consideration on the New York Stock Exchange, (vi) any
registration or qualification of the shares representing the
Purchase Consideration with applicable blue sky authorities,
including the fees and disbursements of blue sky counsel in
connection therewith and the preparation and printing of any blue
sky memoranda and (vii) compliance with the H-S-R Act, including
the payment of any filing fees. Except as provided in the
preceding sentence, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses.
8.10 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly
as practicable the transactions contemplated by this Agreement
and to cooperate with each other in connection with the
foregoing, including (i) using reasonable best efforts to obtain
the favorable Private Letter Ruling contemplated by Sections
9.2.3 and 9.3.3 below and all necessary waivers, consents and
approvals from other parties to loan agreements, leases and other
contracts and instruments; (ii) using reasonable best efforts to
obtain all necessary consents, approvals and authorizations as
are required to be obtained under any federal, state or foreign
law or regulations, to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby, to lift or rescind any
injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the
transactions contemplated hereby; (iii) effecting all necessary
registrations and filings, including, but not limited to, filings
under the H-S-R Act and submissions of information requested by
governmental authorities and (iv) suspending any tax-free
distribution of shares of any Subsidiary if necessary to satisfy
the conditions set forth in Sections 9.2.3 and 9.3.3 below. For
purposes of the foregoing sentence, the obligations of the Seller
and the Buyer to use "reasonable best efforts" to obtain waivers,
consents and approvals to loan agreements, leases and other
contracts shall not, by way of example, include any obligation to
agree to an adverse modification of the terms of such documents
or to prepay or incur additional obligations to such other
parties. Nothing herein shall require the Seller to effect the
Disposition other than on terms its Board of Directors finds
acceptable.
8.11 Access to Information; Confidentiality.
8.11.1 Prior to the Closing Date, the Buyer
shall be entitled, through its officers, employees and agents,
complete access at all reasonable times to the offices and
facilities of the Seller and its Subsidiaries and to their
officers, employees, agents, properties, books, records and
contracts, and the Seller shall furnish the Buyer and its
representatives all financial, operating and other data and
information as the Buyer, through its representatives, may
reasonably request. In addition, the Seller shall deliver to the
Buyer a copy of any report, opinion, recommendation, assessment,
summary, compilation or other document relating to the
liabilities of the Seller and its Subsidiaries and prepared for
or on behalf of or addressed to the Seller, the Seller's Board of
Directors or any committee thereof. At the Buyer's request, the
Seller shall cause the party preparing any such document to
provide a letter permitting the Buyer to rely thereon as though
it were addressed to the Buyer. Subject to the requirements of
law or judicial process, the Buyer shall hold in confidence, and
shall use its best efforts to cause its representatives to hold
in confidence, all nonpublic information concerning the Seller
until such time as such information is otherwise publicly
available, and, if this Agreement is terminated, the Buyer will,
and will use its best efforts to cause its representatives to,
deliver to the Seller all documents, work papers and other
material (including copies) obtained by the Buyer, or on its
behalf, from the Seller as a result of this Agreement or in
connection herewith, whether so obtained before or after the
execution hereof.
8.11.2 Prior to the Closing Date, the Seller
shall be entitled to participate in a due diligence meeting with
one or more members of the senior management of the Buyer, such
member or members to be reasonably designated by the Buyer, to
the extent that such meeting shall be reasonably necessary to
fulfill the due diligence obligations of the Seller under the
federal securities laws in connection with the Proxy Statement.
Subject to the requirements of law or judicial process, the
Seller shall hold in confidence all nonpublic information
concerning the Buyer until such time as such information is
otherwise publicly available.
8.11.3 No investigation pursuant to this Section
8.11 shall affect any representations, warranties, covenants or
agreements of the Seller or the Buyer under this Agreement.
8.12 Public Announcements. The Seller and the Buyer
will consult with each other before issuing any press release or
otherwise making any public statements with respect to the
transactions contemplated hereby (other than the Disposition) and
shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required
by law. Each of the Seller and the Buyer shall expeditiously
review any such press release or other document in connection
with any such consultation.
8.13 Notification of Certain Matters. The Seller
shall give prompt notice to the Buyer, and the Buyer shall give
prompt notice to the Seller, of (i) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely
to cause any of the representations or warranties of the Seller
or the Buyer, as the case may be, contained in this Agreement to
be untrue or inaccurate in any material respect at any time from
the date hereof to the Closing Date, and (ii) any material
failure of the Seller or the Buyer, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder, provided, however, that no such
notifications shall affect the representations or warranties of
the parties or the conditions to the obligations of the parties
hereunder.
8.14 Brokers. Any broker, finder or other fee or
commission in connection with the Transactions or the other
transactions contemplated hereby based upon arrangements made by
or on behalf of either of the parties hereto will be paid, except
as set forth in Section 8.9 above, by the party making such
arrangements or on whose behalf such arrangements were made.
Each party hereto will indemnify and hold the other party
harmless from any claims, liabilities, costs and expenses
incurred by such other party as a result of broker, finder or
other fees or commissions which were incurred by, or as result of
any action or involvement of, the indemnifying party in
connection with the Transactions or the other transactions
contemplated hereby.
8.15 Bulk Sales. The Seller shall indemnify and hold
harmless the Buyer and its Affiliates against any Losses relating
to, arising out of or in connection with any liability under any
Bulk Sales Act or similar law arising from the Seller's
consummation of the Disposition or any other transactions
contemplated hereby.
8.16 Fiduciary Duty. Notwithstanding anything to the
contrary herein, neither the Seller nor the Buyer (or their
respective boards of directors) shall be prohibited from (i)
making any disclosure to its own shareholders that, in the
judgment of the disclosing party's board of directors, in
accordance with the advice of counsel, is required under
applicable law or (ii) taking any action which the board of
directors of the Seller or the Buyer, as the case may be,
determines in good faith on the basis of advice of counsel is
necessary in order for such board of directors to comply with its
fiduciary obligations under applicable law; provided, that, prior
to making any such disclosure or taking any such action, the
party making such disclosure or taking such action shall notify
the other party in writing and afford the other party a
reasonable opportunity for consultation as to such proposed
disclosure or action; provided, further, (x) that the Buyer shall
not exercise any rights under clause (ii) above unless the Buyer
shall determine in good faith to enter into a transaction not
solicited or initiated by the Buyer that its Board of Directors
determines, based upon advice of counsel, the Buyer is required
to enter into in accordance with the Board's fiduciary
obligations and that would be restricted or prohibited under the
terms of the Ruling Request (other than the transaction described
in Section 8.10(iv)) and (y) that the Seller shall not exercise
any rights under clause (ii) above unless the Seller shall
determine in good faith to enter into a transaction not solicited
or initiated by the Seller that its Board of Directors
determines, based upon advice of counsel, the Seller is required
to enter into in accordance with the Board's fiduciary
obligations.
9. Conditions.
9.1 Conditions to the Obligations of Each Party to
Effect the Acquisition. The respective obligations of each party
to effect the Acquisition shall be subject to the fulfillment at
or prior to the Closing Date of each of the following conditions:
9.1.1 The Transactions and the other
transactions contemplated hereby shall have been approved by the
shareholders of the Seller by the vote (if any) required by the
BCL.
9.1.2 Any waiting period (and any extension
thereof) applicable to the consummation of the Acquisition under
the H-S-R Act shall have expired or been terminated.
9.1.3 No preliminary or permanent injunction or
other order, decree or ruling issued by a Governmental Body nor
any statute, rule, regulation or executive order promulgated or
enacted by a Governmental Body shall be in effect which would
(i) make the acquisition by the Buyer of the Petrie Block Shares
illegal or (ii) otherwise prevent the consummation of the
Acquisition and the transactions contemplated hereby.
9.1.4 The Registration Statement shall be
effective under the Securities Act and no "stop order" shall have
been issued with respect to the Registration Statement and no
proceeding for such purpose shall have been commenced.
9.1.5 The Petrie Stock Transfer and the
Disposition shall have been completed in a manner permitted by
the Ruling Request and the Private Letter Ruling, as the same
shall be amended or supplemented from time to time.
9.1.6 The Buyer Common Stock constituting the
Purchase Consideration shall have been approved for listing by
the New York Stock Exchange, subject to official notice of
issuance.
9.1.7 Any licenses, permits, consents,
approvals, waivers, authorizations, qualifications and orders of
domestic governmental authorities and parties to contracts and
leases with the Seller and its Subsidiaries as are necessary in
connection with the consummation of the transactions contemplated
hereby shall have been obtained.
9.2 Additional Conditions to the Obligations of the
Seller. The obligation of the Seller to effect the Acquisition
is also subject to each of the following conditions:
9.2.1 The Buyer shall in all material respects
have performed each obligation to be performed by it hereunder on
or prior to the Closing Date.
9.2.2 The representations and warranties of the
Buyer set forth in this Agreement shall be true and correct in
all material respects at and as of the Closing Date as if made at
and as of such time, except to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct as of such date.
9.2.3 The Seller shall have received a
favorable private letter ruling (the "Private Letter Ruling"), in
form and substance reasonably satisfactory to the Seller, from
the IRS, to the effect that the consummation of the Petrie Stock
Transfer, the Acquisition and the Dissolution will not give rise
to the recognition of taxable income or gain to the Seller, any
of its Subsidiaries or the Buyer for Federal income tax purposes
and no gain or loss will be recognized by shareholders of the
Seller by reason of receipt of Buyer Common Stock in exchange for
their Seller Common Stock.
9.2.4 The Seller shall have received the legal
opinion of Schulte Roth & Zabel, counsel to the Buyer, to the
effect set forth in Exhibit C.
9.3 Additional Conditions to the Obligations of the
Buyer. The obligation of the Buyer to effect the Acquisition is
also subject to each of the following conditions:
9.3.1 The Seller shall in all material respects
have performed each obligation to be performed by it hereunder on
or prior to the Closing Date.
9.3.2 The representations and warranties of the
Seller set forth in this Agreement shall be true and correct in
all material respects at and as of the Closing Date as if made at
and as of such time, except to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct as of such date.
9.3.3 The Buyer shall have received a favorable
Private Letter Ruling, in form and substance satisfactory to the
Buyer in good faith, from the IRS, to the effect that the
consummation of the Petrie Stock Transfer, the Acquisition and
the Dissolution will not give rise to the recognition of taxable
income or gain to the Seller, any of its Subsidiaries or the
Buyer for Federal income tax purposes and no gain or loss will be
recognized by shareholders of the Seller by reason of receipt of
Buyer Common Stock in exchange for their Seller Common Stock.
9.3.4 Prior to the Closing Date, the Seller
shall have taken all steps necessary to consummate the
Dissolution other than the filing of the Certificate of
Dissolution of the Seller with the Department of State of the
State of New York, each in a form and by a method acceptable to
the Buyer.
9.3.5 Prior to the Closing Date, the Seller
shall have paid or satisfied all of its liabilities and
indebtedness or the Seller's Board of Directors shall have made
adequate provision therefor in the escrow and trust required by
Section 8.2 above in an amount, and with terms and conditions,
reasonably satisfactory to the Buyer, in relation to the
Designated Amount.
9.3.6 The Buyer shall not have reasonably
determined, after taking into account any applicable terms and
provisions of the escrow and trust required by Section 8.2 above,
that the consummation of the Transactions and the other
transactions contemplated hereby (i) could result in liability to
the Buyer or (ii) could result in the Buyer receiving less than
the Designated Amount, as set forth in this Agreement.
9.3.7 No Action shall have been commenced and
be pending by any Person against the Seller or the Buyer or any
of their Affiliates, associates, officers or directors, which is
reasonably likely to be material to the Buyer, in relation to the
Designated Amount.
9.3.8 The holders of no more than 9.5% of the
shares of Seller Common Stock outstanding on the Closing Date
shall have perfected dissenter's rights with respect to any of
the Transactions.
9.3.9 The Buyer shall have received the legal
opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to the
Seller, to the effect set forth in Exhibit D.
10. Termination, Amendment and Waiver.
10.1 Termination. This Agreement may be terminated
and the Acquisition and the transactions contemplated hereby may
be abandoned, by written notice promptly given to the other party
hereto, at any time prior to the Closing Date, whether prior to
or after approval by the shareholders of the Seller:
10.1.1 By mutual written consent of the Boards
of Directors of the Seller and the Buyer;
10.1.2 By either the Seller or the Buyer, if a
Governmental Body shall have issued an order, decree or ruling or
promulgated or enacted any statute, rule, regulation or executive
order, in each case, permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement; provided, however, that any such order, decree or
ruling shall have become final and nonappealable;
10.1.3 By either the Seller or the Buyer, if the
Closing shall not have occurred on or before the Termination
Date, unless the absence of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to
perform in all material respects each of its obligations under
this Agreement required to be performed by it prior to the
Closing Date;
10.1.4 By either the Seller or the Buyer, if at
the Shareholders Meeting the Transactions and any other
transactions contemplated hereby that are required to be approved
by the shareholders of the Seller shall fail to be approved by
such shareholders by the vote required by the BCL;
10.1.5 By either the Seller or the Buyer, if the
Private Letter Ruling issued by the IRS does not satisfy the
conditions set forth in Sections 9.2.3 and 9.3.3 above,
respectively;
10.1.6 By the Buyer, if the Buyer shall have
reasonably determined, after taking into account any applicable
terms and provisions of the escrow and trust required by Section
8.2 above, that consummation of the Transactions and the other
transactions contemplated hereby (i) could result in liability to
the Buyer or (ii) could result in the Buyer receiving less than
the Designated Amount, as set forth in this Agreement;
10.1.7 By the Buyer, if the Seller shall have
(i) withdrawn, modified or amended in any respect its approval or
recommendation of the Acquisition or the transactions
contemplated hereby (other than any particular form of
Disposition), (ii) failed to include in the Proxy Statement such
recommendation (including the recommendation that the
shareholders of the Seller vote in favor of the Acquisition and
the transactions contemplated hereby (other than any particular
form of Disposition), (iii) taken any public position
inconsistent with such recommendation or (iv) if the Board of
Directors of the Seller shall have resolved to do any of the
foregoing;
10.1.8 By the Seller, if the Buyer fails to
perform in all material respects its obligations under this
Agreement; provided, however, that the Buyer shall have ten days
from the date it receives notice of such failure to cure any
failure to perform any such obligations;
10.1.9 By the Buyer, if the Seller fails to
perform in all material respects its obligations under this
Agreement; provided, however, that the Seller shall have ten days
from the date it receives notice of such failure to cure any
failure to perform any such obligations; or
10.1.10 By the Seller, if the Board of Directors
of the Seller shall reasonably determine and notify the Buyer in
writing that the contingent liabilities of the Seller and its
Subsidiaries have not been reduced below $200,000,000.
10.2 Effect of Termination. In the event of the
termination of this Agreement and abandonment of the Acquisition
as provided in Section 10.1 above, this Agreement shall forthwith
become void and there shall be no liability on the part of the
Seller or the Buyer, except as set forth in this Section, Section
8.9 above, the last sentences of Sections 8.11.1 and 8.11.2 above
and Section 8.11.3 above and except to the extent that such
termination results from the willful breach of a party hereto of
any of its representations, warranties, covenants or agreements
set forth in this Agreement.
10.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
the parties hereto.
10.4 Waiver. At any time prior to the Closing Date,
whether before or after the Shareholders Meeting, any party
hereto, by action taken by its Board of Directors, may (i) extend
the time for the performance of any of the obligations or other
acts of any other party hereto or (ii) waive compliance with any
of the agreements of any other party or with any conditions to
its own obligations. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party by a
duly authorized officer.
11. General Provisions.
11.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by cable, telegram,
telecopier or telex to the parties at the following addresses or
at such other addresses as shall be specified by the parties by
like notice:
(a) if to the Seller:
Petrie Stores Corporation
70 Enterprise Avenue
Secaucus, New Jersey 07094
Attention: Peter A. Left
Chief Operating Officer
Facsimile: (201) 866-2355
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Richard T. Prins, Esq.
Facsimile: (212) 735-2000
(b) if to the Buyer:
Toys "R" Us, Inc.
395 W. Passaic Street
Rochelle Park, New Jersey 07662
Attention: Louis Lipschitz
Chief Financial Officer
Facsimile: (201) 845-0973
with a copy to:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Andre Weiss, Esq.
Facsimile: (212) 593-5955
11.2 Representations and Warranties; Etc. The
respective representations and warranties (other than Sections
6.10 and 7.5 above) of the Seller and the Buyer contained herein
shall expire with, and be terminated and extinguished upon,
consummation of the Acquisition and the transactions contemplated
hereby, and thereafter neither the Seller nor the Buyer nor any
officer, director or principal thereof shall be under any
liability whatsoever with respect to any such representation or
warranty. This Section 11.2 shall have no effect upon any other
obligation of the parties hereto, whether to be performed before
or after the consummation of the Acquisition and the transactions
contemplated hereby.
11.3 Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
11.4 Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation
of this Agreement.
11.5 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
11.6 Miscellaneous. This Agreement and the Voting
Agreement and Proxy (i) constitute the entire agreement and
supersedes all other prior agreements and undertakings, both
written and oral, between or among the parties thereto with
respect to the subject matter hereof or thereof; (ii) may not be
assigned by either the Seller or the Buyer without the consent of
the other party; and (iii) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the
State of New York applicable to agreements made and to be
performed entirely within such State. This Agreement may be
executed in one or more counterparts which together shall
constitute a single agreement.
IN WITNESS WHEREOF, the Seller and the Buyer have
caused this Agreement to be executed as of the date first above
written by their respective officers thereunto duly authorized.
TOYS "R" US, INC.
By:/s/ Louis Lipschitz
Name: Louis Lipschitz
Title: Senior VP-Finance
and CFO
PETRIE STORES CORPORATION
By:/s/ Allan Laufgraben
Name: Allan Laufgraben
Title: CEO-President
ACQUISITION AGREEMENT
between
TOYS "R" US, INC.
and
PETRIE STORES CORPORATION
Dated: As of April 20, 1994
TABLE OF CONTENTS
Page
1. Certain Definitions . . . . . . . . . . . . . . . 3
2. Sale of Assets . . . . . . . . . . . . . . . . . . 8
3. Purchase Consideration . . . . . . . . . . . . . . 9
4. No Assumption of Liabilities; Indemnification . . 10
5. Closing . . . . . . . . . . . . . . . . . . . . . 11
6. Representations and Warranties of the Seller . . . 12
6.1 Organization . . . . . . . . . . . . . . . 12
6.2 Authority Relative to the Agreements . . . 12
6.3 Board Recommendation . . . . . . . . . . . 14
6.4 Title to Petrie Block Shares . . . . . . . 15
6.5 Commission Filings; Financial Statements . 15
6.6 No Undisclosed Liabilities . . . . . . . . 17
6.7 Litigation . . . . . . . . . . . . . . . . 18
6.8 Regulatory and Environmental Compliance . 18
6.9 Brokers . . . . . . . . . . . . . . . . . . 22
6.10 Ruling Request . . . . . . . . . . . . . . 22
6.11 Disclosure . . . . . . . . . . . . . . . . 22
7. Representations and Warranties of the Buyer . . . 22
7.1 Organization . . . . . . . . . . . . . . . 22
7.2 Authority Relative to this Agreement . . . 23
7.3 Buyer Common Stock . . . . . . . . . . . . 24
7.4 Brokers . . . . . . . . . . . . . . . . . . 25
7.5 Ruling Request. . . . . . . . . . . . . . . 25
8. Covenants and Agreements . . . . . . . . . . . . . 25
8.1 Conduct of Business . . . . . . . . . . . . 25
8.2 The Petrie Stock Transfer;
the Disposition; the Dissolution . . . . 26
8.3 Call of Convertible Debentures . . . . . . 29
8.4 Ruling Request . . . . . . . . . . . . . . 29
8.5 Agreement Not to Sell Petrie Block Shares . 29
8.6 Proxy Statement; Other Seller Filings . . . 31
8.7 Meeting of Shareholders . . . . . . . . . . 33
8.8 Registration Statement; Other
Buyer Filings . . . . . . . . . . . . . . 34
8.9 Fees and Expenses . . . . . . . . . . . . . 35
8.10 Additional Agreements . . . . . . . . . . . 37
8.11 Access to Information; Confidentiality . . 38
8.12 Public Announcements . . . . . . . . . . . 40
8.13 Notification of Certain Matters . . . . . . 40
8.14 Brokers . . . . . . . . . . . . . . . . . . 41
8.15 Bulk Sales . . . . . . . . . . . . . . . . 41
8.16 Fiduciary Duty . . . . . . . . . . . . . . 41
9. Conditions . . . . . . . . . . . . . . . . . . . . 43
9.1 Conditions to the Obligations of Each Party
to Effect the Acquisition . . . . . . . . 43
9.2 Additional Conditions to the Obligations
of the Seller . . . . . . . . . . . . . . 44
9.3 Additional Conditions to the Obligations
of the Buyer . . . . . . . . . . . . . . 45
10. Termination, Amendment and Waiver . . . . . . . . 47
10.1 Termination . . . . . . . . . . . . . . . . 47
10.2 Effect of Termination . . . . . . . . . . . 50
10.3 Amendment . . . . . . . . . . . . . . . . . 50
10.4 Waiver . . . . . . . . . . . . . . . . . . 50
11. General Provisions . . . . . . . . . . . . . . . . 51
11.1 Notices . . . . . . . . . . . . . . . . . . 51
11.2 Representations and Warranties; Etc. . . . 51
11.3 Validity . . . . . . . . . . . . . . . . . 52
11.4 Descriptive Headings . . . . . . . . . . . 52
11.5 Parties in Interest . . . . . . . . . . . . 52
11.6 Miscellaneous . . . . . . . . . . . . . . . 52
Exhibits
A Form of Seller Indemnification Agreement
B Form of Buyer Indemnification Agreement
C Form of Opinion of Buyer's Counsel
D Form of Opinion of Seller's Counsel
Disclosure Schedule
1 Named Party
6.2.2 Conflicts
6.2.3 Compliance
6.6 Liabilities
6.7 Litigation
6.8 Environmental Matters
VOTING AGREEMENT AND PROXY
VOTING AGREEMENT AND PROXY, dated as of April 20, 1994,
between TOYS "R" US, INC., a Delaware corporation (the "Buyer"),
and MILTON PETRIE, the record and beneficial owner (the
"Shareholder") of 28,111,274 shares (the "Shares") of common
stock of Petrie Stores Corporation, a New York corporation (the
"Seller").
Concurrently herewith, the Buyer and the Seller are
entering into an acquisition agreement (the "Acquisition
Agreement"), pursuant to which, among other things, (i) the
Seller intends to cause all Subsidiaries holding any shares of
the Buyer's common stock (any such shares held by the Seller or
its Subsidiaries being collectively, the "Petrie Block Shares")
to transfer such shares to the Seller in a manner that will not
give rise to the recognition of taxable income or gain to the
Seller or any of its Subsidiaries under the Code, (ii) the Seller
intends to sell or dispose of in the manner permitted by the
Ruling Request and the Private Letter Ruling, through one or more
asset or stock sale transactions, all assets of the Seller and
its Subsidiaries, other than an agreed upon number of Petrie
Block Shares and such cash or cash equivalents as the Seller
desires to retain, first to an existing Subsidiary of the Seller
and then to one or more other Persons, (iii) the Seller will
transfer such number of Petrie Block Shares and a portion of its
cash, excluding amounts deposited in escrow, to the Buyer, free
and clear of all of the liabilities of the Seller and its
Subsidiaries, in exchange for shares of the Buyer's common stock,
and (iv) the Seller will dissolve and, pursuant to such
dissolution, will distribute such shares of the Buyer's common
stock to the holders of the Seller's common stock, subject to an
escrow and other arrangements that adequately provide for the
payment of all liabilities of the Seller and its Subsidiaries
(the transactions in (i)-(iv) above being collectively, the
"Transactions").
As a condition to its willingness to enter into the
Acquisition Agreement, the Buyer has requested that the
Shareholder execute and deliver this Agreement to the Buyer. As
an inducement for the Buyer to enter into the Acquisition
Agreement, the Shareholder is executing and delivering this
Agreement to the Buyer.
Capitalized terms used but not defined herein shall
have the meanings specified in the Acquisition Agreement.
Accordingly, in consideration of the premises and the
agreements set forth herein and for other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereby agree as follows:
1. Voting Agreement. The Shareholder shall vote the
Shares, or execute a consent with respect to the Shares, in favor
of each of the Transactions at any annual, special or adjourned
meeting of the Seller's shareholders called by the Board of
Directors for the purpose of voting on, or at which any vote is
taken related to, any of the Transactions, any consent in lieu of
any such meeting or otherwise.
2. Proxy. (a) The Shareholder grants to the Buyer
an irrevocable proxy and irrevocably makes, constitutes and
appoints the Buyer, and any designees of the Buyer, as the
attorney and proxy of the Shareholder, with full power of
substitution, to exercise all voting, consent and other rights to
approve the Transactions and to defeat any other proposal which
the Buyer believes would be reasonably likely to interfere with
or impede the Transactions with respect to the Shares in respect
of any annual, special or adjourned meeting of the Seller's
shareholders called by the Board of Directors for the purpose of
voting on, or at which any vote is taken related to, any of the
Transactions, as such attorney and proxy or his designee or
substitute shall in his sole discretion deem proper. The
Shareholder hereby revokes all prior powers of attorney and
proxies appointed by the undersigned at any time with respect to
the Shares to the extent inconsistent with this Agreement, except
that the powers of attorney jointly granted to Bernard Petrie,
Joseph H. Flom, Jerome A. Manning and Albert Ratner, pursuant to
the power of attorney executed on March 15, 1983, shall remain in
effect, such attorneys-in-fact agreeing hereby to exercise such
powers in accordance with this Agreement.
(b) This power of attorney and proxy is coupled
with an interest in the Shares and is irrevocable, shall not be
terminated by any act of the Shareholder or by operation of law,
by death, disability or incompetence of the Shareholder, by lack
of appropriate power or authority, or by the occurrence of any
other event or events and shall be binding on all beneficiaries,
heirs at law, legatees, distributees, successors, assigns and
legal representatives of the Shareholder. If after the execution
of this Agreement the Shareholder shall die or become
incapacitated, cease to have appropriate power or authority, or
if any other such event or events shall occur, the Buyer is
nevertheless authorized and directed to vote the Shares in
accordance with the terms of this Agreement as if such death,
incapacity, lack of appropriate power or authority or other event
or events had not occurred and regardless of notice thereof.
(c) The proxy granted herein shall expire at the
earlier of (i) the termination of the Acquisition Agreement in
accordance with its terms, or (ii) the Closing Date.
3. Agreement Not to Sell Shares. (a) Except as
permitted by Sections 3(b) and (c) below, the Shareholder will
not (i) directly or indirectly, sell, transfer, assign, pledge,
hypothecate or otherwise dispose of or encumber any Shares, or
enter into any contract, option, agreement or other arrangement
with respect to the foregoing, other than this Agreement; (ii)
directly or indirectly, solicit, encourage, participate in or
initiate discussions or negotiations with, or provide information
to, any Person concerning any direct or indirect sale or other
disposition of the Shares; (iii) take any action which could
reasonably result in preventing the consummation of the
transactions contemplated by the Acquisition Agreement; or
(iv) take any action that would have the effect of preventing or
disabling the Shareholder from performing the Shareholder's
obligations under this Agreement. Any shares of common stock of
the Seller (or any other voting securities of the Seller or
securities convertible into shares of common stock or other
voting securities of the Seller) acquired by the Shareholder
prior to the Closing Date shall be included in the Shares subject
to this Agreement.
(b) Notwithstanding Section 3(a) above, the
Shareholder and/or his legal representatives, as applicable, may
sell, transfer or otherwise dispose of, for any purpose, (i)
prior to approval of the Transactions by the shareholders of the
Seller at the Shareholders Meeting, up to 1,500,000 Shares;
provided, that the Shareholder shall continue to own at least a
majority of the shares of common stock of the Seller on a fully
diluted basis and (ii) following the approval by the Seller's
shareholders of the Transactions at the Shareholders Meeting, a
number of Shares which, when added to the number of Shares sold,
transferred or otherwise disposed of pursuant to clause (i)
above, will equal 4,000,000 Shares; provided, that if the
Shareholder dies, his legal representatives may sell, transfer or
otherwise dispose of, after the approval by the Seller's
shareholders of the Transactions at the Shareholders Meeting, a
number of Shares as shall be deemed advisable by the Seller's
legal representatives in connection with the administration of
the Shareholder's estate, including the timely payment of any or
all estate taxes; provided, further, that any charitable trust,
foundation, organization or similar entity to which any Shares
are transferred shall agree to be bound by this Agreement.
Notwithstanding the foregoing, (x) if, after approval of the
Transactions at the Shareholders Meeting, another meeting of the
Seller's shareholders shall be called for the purpose of voting
on any of the Transactions or any other proposal which the Buyer
believes would be reasonably likely to interfere with or impede
the Transactions, or any consent in lieu thereof shall be
solicited, clause (ii) above and the proviso immediately
following it shall be suspended, as to any Shares then subject to
this Agreement, until the Transactions shall have been approved
or such other proposal shall have been defeated; and (y) no sale,
transfer or other disposition under this Section 3(b) shall be
permitted if it would cause any representation contained in the
Ruling Request or the Private Letter Ruling to be inaccurate.
(c) Notwithstanding Section 3(a) above, the
Shareholder may pledge any number of Shares to finance the
Shareholder's living, charitable and other customary expenses in
one or more bona fide loan transactions, so long as (x) the
pledge agreement provides that any such Shares prior to
foreclosure thereon and sale thereof pursuant to such pledge
agreement shall continue to be subject to this Agreement (other
than Section 3(a) above) and (y) any Shares as to which the
pledgee has so foreclosed shall be taken into account in
determining compliance with this Section 3.
(d) A copy of each pledge agreement relating to
Shares and of each agreement by a charitable trust, foundation,
organization or similar entity referred to in Section 3(b) above
shall be delivered to the Buyer promptly upon the pledge or
transfer of such Shares, as the case may be.
(e) Upon the sale, transfer, assignment, pledge,
hypothecation or other disposition of any Shares in compliance
with Sections 3(b) and (c) above, such Shares shall cease to be
subject to this Agreement except as expressly provided therein.
4. Legend. Each certificate evidencing the Shares
shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A VOTING AGREEMENT DATED AS OF
APRIL 20, 1994 BETWEEN TOYS "R" US, INC. AND THE
SHAREHOLDER."
The legend set forth above shall be removed from the
certificates evidencing any shares which cease to be Shares in
accordance with this Agreement or upon the termination of this
Agreement pursuant to Section 2(c) above.
5. Delivery of Reports, Etc. The Shareholder shall
deliver to the Buyer a copy of any report, opinion,
recommendation, assessment, summary, compilation or other
document relating to the liabilities of the Seller and its
Subsidiaries and prepared for or on behalf of or addressed to the
Shareholder or the Shareholder's attorneys-in-fact and not
previously delivered to the Buyer by the Seller. At the Buyer's
request, the Shareholder or such attorneys-in-fact, as the case
may be, shall cause the party preparing any such document to
provide a letter permitting the Buyer to rely thereon as though
it were addressed to the Buyer.
6. Miscellaneous.
6.1. Binding Effect; No Assignment. This
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors and legal
representatives, heirs and assigns. This Agreement may not be
assigned by either party hereto without the consent of the other
party.
6.2. Entire Agreement; Modification and Waiver.
This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous agreements, representations and
understandings of the parties, both written and oral. No
supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto. The
waiver by a party of a breach of any provision of this Agreement
shall not operate as or be construed as a waiver of any
subsequent breach thereof.
6.3. Notices. All notices, requests, demands and
other communications hereunder shall be in writing and shall be
deemed to have been given if delivered personally or sent by
cable, telegram, telecopier or telex to the parties at the
following addresses or at such other addresses as shall be
specified by the parties by like notice:
(i) if to the Shareholder, to:
Bernard Petrie
633 Battery Street
San Francisco, California 94111
Joseph H. Flom
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Jerome A. Manning
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004 and
Albert Ratner
Forest City Enterprises
10800 Brookpark
Cleveland, Ohio 44130
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Richard T. Prins, Esq.
Facsimile: (212) 735-2000
(ii) if to the Buyer, to:
Toys "R" Us, Inc.
395 W. Passaic Street
Rochelle Park, New Jersey 07662
Attention: Louis Lipschitz
Chief Financial Officer
Facsimile: (201) 845-0973
with a copy to:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Andre Weiss, Esq.
Facsimile: (212) 593-5955
6.4. Governing Law. This Agreement shall be
governed in all respects, including validity, interpretation and
effect, by the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
6.5. Counterparts. This Agreement may be
executed by the parties hereto in one or more counterparts which
together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date first above written.
TOYS "R" US, INC.
By: /s/ Louis Lipschitz
Name: Louis Lipschitz
Title: Senior VP-Finance and CFO
MILTON PETRIE
By: /s/ Bernard Petrie
Bernard Petrie, as Attorney-in-Fact
By: /s/ Joseph H. Flom
Joseph H. Flom, as Attorney-in-Fact
By: /s/ Jerome A. Manning
Jerome A. Manning, as Attorney-in-Fact
By: /s/ Albert Ratner
Albert Ratner, as Attorney-in-Fact
PETRIE STORES CORPORATION
70 Enterprise Avenue
Secaucus, NJ 07094
(201) 866-3600
FOR IMMEDIATE RELEASE
PETRIE STORES ANNOUNCES SHARE EXCHANGE PLAN WITH TOYS 'R' US
Tax-Free Transaction is Designed to Unlock Shareholder
Value In Petrie Stores
New York, New York, April 21, 1994 -- Petrie Stores
Corporation (NYSE: PST) announced today that it has entered into a
definitive agreement with Toys 'R' Us (NYSE: TOY) to exchange
approximately 40 million shares of Toys 'R' Us common stock and
cash for newly issued shares of Toys 'R' Us common stock. Under
the terms of the agreement, the newly issued Toys 'R' Us stock to
be exchanged with Petrie Stores will equal the value of the stock
and cash transferred to Toys 'R' Us, less $115 million.
The transaction is conditioned on the disposition of Petrie's
approximately 1700 specialty retail stores. Petrie Stores is
considering a number of methods of disposing of its retail
operations, including: a rights offering in which its shareholders
would be given the opportunity to purchase shares in a new holding
company for its retail operations; a sale to a third-party buyer;
and a public offering of the shares of a new holding company for
its retail operations.
The transaction with Toys 'R' Us is also conditioned on the
company receiving from the Internal Revenue Service a ruling that
the transaction will be tax-free to Petrie Stores, Toys 'R' Us and
Petrie's stockholders.
Promptly after the closing of the transaction and the
disposition of Petrie's retail operations, Petrie Stores will
liquidate the company and distribute to its shareholders all the
newly issued Toys 'R' Us stock, except an amount to be held in a
liquidating trust covering the company's contingent liabilities at
the time of the closing. The closing is anticipated to occur in
the fall of 1994.
It is expected that Petrie Store's retail operations will
continue uninterrupted and that senior management will remain with
those operations.
"This transaction will allow Petrie shareholders to unlock the
true value of Petrie's long-standing stake in Toys 'R' Us, as well
the value of Petrie's 1700 stores," said Allan Laufgraben, Petrie's
President and Chief Executive Officer, and Peter Left, Chief
Operating Officer. "Milton Petrie is a visionary who created one
of the nation's leading retail companies. It is our intention to
continue the operation of Petrie stores, and we are very excited
about the prospects of this organization. We intend to expand on
what Mr. Petrie has accomplished, while delivering value to Petrie
shareholders and opening new opportunities for its employees."
The company said that it has held preliminary discussions with
several potential buyers regarding its retail operations and has
received indications of interest in the range of $200 million to
$250 million. The company is currently pursuing discussions with
one such buyer, who is working with the existing senior management
group, on an all-equity proposal in such range.
However, Petrie Stores has not entered into a letter of intent
or any other agreement or commitment with any potential buyer, and
there can be no assurance that it will conclude a transaction with
any such party.
Petrie Stores has conditioned its obligation to close the
transaction on reducing its contingent liabilities, primarily
retail lease guarantees by Petrie Stores, to less than $200
million, and Toys 'R' Us has conditioned its obligation to close on
being satisfied that it will not become responsible for Petrie
Stores' liabilities. In connection with the transaction, Petrie
Stores will be seeking to modify its lease guarantees covering
approximately two-thirds of the retail store leases and to transfer
them to a new holding company for its retail operations.
The transaction, which may be terminated if it is not
consummated by January 28, 1995 (or by November 15, 1994 if either
a favorable ruling has not been received by then from the IRS or
Petrie has not adequately reduced its contingent liabilities), is
subject to the approval by holders of two-thirds of Petrie Stores'
outstanding shares. Mr. Petrie who owns approximately 28 million
shares of Petrie Stores stock, constituting approximately 60% of
the outstanding and 54% of the fully diluted shares, has agreed to
vote his shares in favor of the transaction.
In connection with the transaction, Petrie Stores is obligated
to call its 8% Convertible Subordinated Debentures due 2010, of
which $125 million principal amount are still outstanding.
Petrie Stores is one of the largest women's specialty
retailing chains in the country -- with more than 1700 stores in
all 50 states, Puerto Rico, the U.S. Virgin Islands, and the
District of Columbia. The trade names of its stores include
Marianne, G&G, Rave, Jean Nicole, Winkleman's, Stuarts, and M.J.
Carroll.
This is neither an offer to sell, nor a solicitation of offers
to purchase, any securities. The Toys 'R' Us stock will be
distributed only pursuant to an effective registration statement.
###
Contact: Gregory W. Miller
(201) 866-3600
Ext. 7371 or 7372
Walter G. Montgomery
Robinson, Lake, Lerer & Montgomery/Sawyer Miller Group
(212) 484-6721
