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): June 9, 1999
RICHFOOD HOLDINGS, INC.
(Exact name of registrant as specified in charter)
Virginia 0-16900 54-1438602
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4860 Cox Road, Suite 300
Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 915-6000
Not Applicable
(former name or former address if changed since last report)
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INFORMATION TO BE INCLUDED IN REPORT
Item 5: Other Events.
On June 9, 1999, Richfood Holdings, Inc., a Virginia corporation
("Richfood"), entered into an Agreement and Plan of Merger (the "Agreement"),
dated as of June 9, 1999, among SUPERVALU INC., a Delaware corporation
("SUPERVALU"), Winter Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of SUPERVALU ("Acquisition"), and Richfood. The following summary of
the transaction is qualified in its entirety by reference to the Agreement, a
copy of which is filed herewith and incorporated herein by reference.
Under the terms of the Agreement, Richfood will be merged with and into
Acquisition (the "Merger") with Acquisition being the surviving corporation in
the Merger. Pursuant to the Merger, each share of common stock, without par
value, of Richfood ("Richfood Common Stock") will be converted into, and become
exchangeable for, at the election of the holder, either (i) $18.50 in cash (the
"Cash Consideration") or (ii) the number of shares of common stock, par value
$1.00 per share, of SUPERVALU ("SUPERVALU Common Stock") equal to the ratio
determined by dividing $18.50 by the average of the per share last sales price
(the "Average SUPERVALU Price") of SUPERVALU Common Stock as reported on the New
York Stock Exchange composite transactions reporting system for the twenty (20)
consecutive trading days ending on (and including) the seventh trading day prior
to the closing date for the Merger (the "Stock Consideration," and together with
the Cash Consideration, the "Merger Consideration"); provided, however, that
shareholder elections shall be subject to allocation and proration such that the
number of shares of Richfood Common Stock to be converted into the right to
receive Cash Consideration in the Merger and the number of shares of Richfood
Common Stock to be converted into the right to receive Stock Consideration in
the Merger shall in each case be equal to fifty percent (50%) of the number of
shares of Richfood Common Stock issued and outstanding immediately prior to the
closing of the Merger.
The transaction has been approved by the Boards of Directors of Richfood
and SUPERVALU, but remains subject to regulatory approvals (including expiration
or early termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976), approval by Richfood's shareholders and other
customary closing conditions. In addition, the Agreement provides that if the
Average SUPERVALU Price is less than $18.50, each of SUPERVALU and Richfood will
have the right to terminate the Agreement; provided, however, that if the
Average SUPERVALU Price is between $15.00 and $18.50, Richfood will not have
such termination right if SUPERVALU increases the portion of the Merger
Consideration payable in cash (to the fullest extent consistent with treating
the Merger as a reorganization under Section 368(a) of the Internal Revenue Code
of 1986), and thereafter with additional SUPERVALU Common Stock. The transaction
is expected to be completed before the end of calendar 1999.
Either party may terminate the Agreement under certain circumstances,
including if the Merger has not been consummated on or before January 15, 2000.
In addition, Richfood may
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terminate the Agreement if it receives a bona fide, written, unsolicited offer
with respect to any merger, consolidation or business combination involving
Richfood or any of its subsidiaries, or the acquisition of all or any
significant part of the assets of Richfood or any of its subsidiaries, that the
Board of Directors of Richfood determines is more favorable, from a financial
point of view, to Richfood's shareholders than the Merger (a "Superior
Proposal"), and SUPERVALU does not match that Superior Proposal. In the event
that Richfood terminates the Agreement to enter into an agreement with respect
to a Superior Proposal, or if Richfood or SUPERVALU terminate the Agreement in
certain other limited circumstances, Richfood would be required to pay SUPERVALU
a termination fee of $27.0 million, plus SUPERVALU's reasonable out-of-pocket
expenses (not to exceed $3.0 million in the aggregate).
Richfood has postponed indefinitely its 1999 annual meeting of
shareholders, which previously had been scheduled for August 26, 1999, and
instead will hold a special meeting of shareholders to consider the Merger. The
date of the special meeting, which is expected to be held in September 1999,
will be announced as soon as practicable.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.
c) Exhibits
Number Exhibit
------ -------
2.1 Agreement and Plan of Merger, dated as of June 9, 1999, among
SUPERVALU INC., Winter Acquisition, Inc. and Richfood Holdings, Inc.
Pursuant to Rule 601(b)(2) of Regulation S-K, the Company agrees to
furnish supplementally to the Securities and Exchange Commission,
upon request, any omitted schedules or similar attachments to the
foregoing Exhibit.
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SIGNATURE
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.
RICHFOOD HOLDINGS, INC.
Date: June 11, 1999 By: /s/ John E. Stokely
--------------------------------------
John E. Stokely
Chairman, President &
Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger, dated as of June 9, 1999,
among SUPERVALU INC., Winter Acquisition, Inc. and
Richfood Holdings, Inc.
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
June 9, 1999
among
SUPERVALU INC.,
WINTER ACQUISITION, INC.
and
RICHFOOD HOLDINGS, INC.
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TABLE OF CONTENTS
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ARTICLE 1
THE MERGER................................................................................2
1.1 The Merger...................................................................2
1.2 Effective Time; Filing of Certificate and Articles of Merger.................2
1.3 Certificate of Incorporation.................................................2
1.4 Bylaws.......................................................................2
1.5 Directors and Officers.......................................................2
1.6 Additional Actions...........................................................3
1.7 Time and Place of Closing....................................................3
1.8 Effect of Merger on Capital Stock............................................3
1.9 Allocation of Merger Consideration; Election Procedures......................4
1.10 Company Stock Options and Warrants.........................................12
ARTICLE 2
OTHER AGREEMENTS.........................................................................14
2.1 Access......................................................................14
2.2 Disclosure Schedule.........................................................14
2.3 Acquisition Proposals.......................................................15
2.4 Public Announcements........................................................17
2.5 Confidentiality Agreement...................................................17
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................17
3.1 Due Incorporation...........................................................17
3.2 Capitalization..............................................................18
3.3 Authorization; Enforceability...............................................19
3.4 No Violation or Conflict....................................................20
3.5 SEC Documents and Other Reports.............................................21
3.6 No Undisclosed Liabilities..................................................22
3.7 No Violation of Law.........................................................22
3.8 Title to Assets.............................................................22
3.9 Litigation..................................................................22
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3.10 Absence of Certain Changes or Events.......................................23
3.11 Performance of Contracts...................................................23
3.12 ERISA......................................................................24
3.13 Taxes......................................................................26
3.14 Labor Matters..............................................................27
3.15 Existing Permits...........................................................28
3.16 Intangible Assets..........................................................28
3.17 Environmental Matters......................................................28
3.18 Vote Required..............................................................29
3.19 Disclosure Documents.......................................................29
3.20 Opinion of Financial Advisor...............................................30
3.21 Certain Agreements.........................................................30
3.22 Finders or Brokers.........................................................30
3.23 Takeover Statutes..........................................................30
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.................................31
4.1 Due Incorporation...........................................................31
4.2 Capitalization..............................................................32
4.3 Authorization; Enforceability...............................................32
4.4 No Violation or Conflict....................................................33
4.5 SEC Documents and Other Reports.............................................34
4.6 No Undisclosed Liabilities..................................................35
4.7 No Violation of Law.........................................................35
4.8 Litigation..................................................................35
4.9 Absence of Certain Changes or Events........................................35
4.10 Authorization of Parent Common Stock.......................................36
4.11 Brokers or Finders.........................................................36
4.12 Disclosure Documents.......................................................36
ARTICLE 5
COVENANTS................................................................................37
5.1 Conduct of Business by the Company..........................................37
5.2 Information Supplied........................................................39
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5.3 Shareholder Meeting.........................................................40
5.4 Filings; Approvals and Consents; Cooperation................................40
5.5 Listing of Parent Common Stock..............................................42
5.6 Affiliates..................................................................42
5.7 Takeover Statute............................................................43
5.8 Tax-Free Reorganization.....................................................43
ARTICLE 6
CONDITIONS...............................................................................44
6.1 Conditions to Each Party's Obligation to Effect the Merger..................44
6.2 Conditions to Parent's and Acquisition's Obligation to
Effect the Merger.......................................................44
6.3 Conditions to the Company's Obligation to Effect the Merger.................45
ARTICLE 7
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...........................46
7.1 No Survival of Representations and Warranties...............................46
7.2 Directors' and Officers' Indemnification; Insurance.........................46
ARTICLE 8
TERMINATION..............................................................................48
8.1 Termination.................................................................48
8.2 Rights on Termination.......................................................51
8.3 Termination Fee Payable to Parent...........................................51
8.4 Other Remedies..............................................................51
ARTICLE 9
MISCELLANEOUS............................................................................52
9.1 Expenses....................................................................52
9.2 Entire Agreement; Amendment.................................................52
9.3 Governing Law...............................................................52
9.4 Assignment..................................................................52
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9.5 Notices.....................................................................52
9.6 Counterparts; Headings......................................................54
9.7 Interpretation..............................................................54
9.8 Specific Performance........................................................54
9.9 No Reliance.................................................................54
9.10 Exhibits and Schedules.....................................................54
9.11 No Third Party Beneficiary.................................................54
ARTICLE 10
DEFINITIONS.............................................................................55
10.1 Affiliate..................................................................55
10.2 Agreement..................................................................55
10.3 Buildings..................................................................55
10.4 Contracts..................................................................55
10.5 Control....................................................................55
10.6 DGCL.......................................................................55
10.7 Disclosure Schedule........................................................55
10.8 Employees..................................................................55
10.9 Environmental Claim........................................................55
10.10 Environmental Laws........................................................56
10.11 Equipment.................................................................56
10.12 ERISA.....................................................................56
10.13 Existing Insurance Policies...............................................56
10.14 Existing Liens............................................................56
10.15 Existing Options..........................................................56
10.16 Existing Permits..........................................................57
10.17 Governmental Entity.......................................................57
10.18 Hazardous Materials.......................................................57
10.19 Indebtedness..............................................................57
10.20 Intangible Assets.........................................................57
10.21 Investment................................................................58
10.22 Knowledge.................................................................58
10.23 Law.......................................................................58
10.24 Lien......................................................................58
10.25 Material Adverse Effect...................................................58
10.26 Merger....................................................................58
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10.27 Parent Disclosure Schedule................................................59
10.28 Permitted Liens...........................................................59
10.29 Person....................................................................59
10.30 Real Estate...............................................................59
10.31 SEC.......................................................................59
10.32 Shareholders..............................................................59
10.33 Subsidiary................................................................59
10.34 VSCA......................................................................59
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EXHIBITS
Exhibit 1 Certificate of Merger
Exhibit 2 Articles of Merger
Exhibit 3 Affiliates Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 9, 1999, among
SUPERVALU INC., a Delaware corporation (the "Parent"), Winter Acquisition, Inc.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Acquisition"),
and Richfood Holdings, Inc., a Virginia corporation (the "Company"). The Company
and Acquisition are hereinafter sometimes collectively referred to as the
"Constituent Corporations." Capitalized terms not otherwise defined herein are
used as defined in Section 10 hereof.
WHEREAS, the Boards of Directors of Parent, Acquisition and
the Company have approved and deem it advisable and in the best interests of
their respective shareholders to consummate the acquisition of the Company by
the Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof it is proposed that the
acquisition be accomplished by a merger of the Company with and into Acquisition
(the "Merger") pursuant to which each outstanding share of common stock, without
par value, of the Company (the "Company Common Stock") will be converted into
the right to receive the Merger Consideration (as hereinafter defined), upon the
terms and conditions set forth in this Agreement;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Parent has entered into an agreement (the "Company Shareholders
Agreement") with certain shareholders of the Company pursuant to which such
shareholders agreed to vote the shares of Company Common Stock owned by them in
favor of the Merger (the Company Shareholders Agreement and this Agreement are
collectively referred to herein as the "Transaction Agreements").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, Parent, Acquisition and the Company agree as follows:
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ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the DGCL and VSCA, at the Effective
Time (as hereinafter defined), the Company shall be merged with and into
Acquisition, and Acquisition shall be the surviving corporation in the Merger
(in such capacity, the "Surviving Corporation").
1.2 Effective Time; Filing of Certificate and Articles of
Merger. The Merger shall be effected by the filing at the time of the Closing
(as hereinafter defined) of a properly executed certificate of merger (the
"Certificate of Merger") or other appropriate documents (in the form attached as
Exhibit 1 hereto) with the Secretary of State of the State of Delaware and the
filing of properly executed articles of merger (the "Articles of Merger") with
the State Corporation Commission of Virginia (the "SCC") (in the form attached
as Exhibit 2 hereto) in accordance with the provisions of the DGCL and VSCA,
respectively. The Merger shall become effective at the time a certificate of
merger is issued by the SCC or at such later date or time as Acquisition and the
Company shall agree and as specified in the Articles of Merger (the "Effective
Time").
1.3 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Acquisition as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with its terms and the DGCL.
1.4 Bylaws. At the Effective Time, the Bylaws of Acquisition,
as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with its terms and
the DGCL.
1.5 Directors and Officers. The directors of Acquisition
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation. Each
director and officer of the Surviving Corporation shall hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until his or her successor is duly appointed and qualified.
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1.6 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that consistent
with the terms of this Agreement any further assignments or any other acts are
necessary or desirable (i) to vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation, title to and possession of any property or right
of either Constituent Corporation acquired or to be acquired by reason of, or as
a result of, the Merger, or (ii) otherwise to carry out the purposes of this
Agreement, then, subject to the terms and conditions of this Agreement, the
officers and directors of the Surviving Corporation shall be directed and
authorized to execute and deliver, in the name and on behalf of the Constituent
Corporations, all such documents and to do all acts necessary or proper to vest,
perfect or confirm title to and possession of such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement;
and the officers and directors of the Surviving Corporation are fully authorized
in the name of either Constituent Corporation to take any and all such action.
1.7 Time and Place of Closing. The closing of the Merger (the
"Closing") shall take place (a) at the offices of Hunton & Williams, Riverfront
Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia 23219 as soon as
practicable and no later than the second business day following satisfaction or
waiver of all of the conditions set forth in Article 6, or (b) at such other
place, at such other time or on such other date as Parent and the Company may
mutually agree (the date of the Closing is hereinafter sometimes referred to as
the "Closing Date").
1.8 Effect of Merger on Capital Stock. At the Effective Time,
as a result of the Merger and without any action on the part of the holder of
any capital stock of the Company:
(a) Merger Consideration. Subject to Section 1.9,
each share of Company Common Stock issued and outstanding at the Effective Time
(other than Company Common Stock owned by Parent or any direct or indirect
Subsidiary of Parent or Company Common Stock owned by the Company or any direct
or indirect Subsidiary of the Company) shall be converted into, and become
exchangeable for, at the election of the holder of Company Common Stock in
accordance with Section 1.9(b): (i) $18.50 in cash (the "Cash Consideration"),
or (ii) the number of shares of common stock, par value $1.00 per share, of
Parent ("Parent Common Stock") equal to the ratio (the "Conversion Ratio")
determined by dividing $18.50 by the average of the per share last
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sales prices, regular way (rounded to four decimal points, the "Average Parent
Price") of Parent Common Stock as reported on the New York Stock Exchange, Inc.
(the "NYSE") composite transactions reporting system (as reported in the New
York City edition of The Wall Street Journal or, if not reported thereby,
another authoritative source) for the twenty (20) consecutive trading days (the
"Averaging Period") ending on (and including) the seventh trading day (the
"Determination Date") prior to the Closing Date (the "Stock Consideration") (the
Cash Consideration or the Stock Consideration, as applicable, being hereinafter
referred to as the "Merger Consideration"). "Aggregate Merger Consideration"
shall mean the amount of cash and shares of Parent Common Stock (valued at the
Average Parent Price) which, when combined, equals $18.50 times the Aggregate
Company Shares (as defined in Section 1.9).
(b) Cancellation of Shares. At the Effective Time,
all Company Common Stock (other than Company Common Stock owned by Parent or any
direct or indirect Subsidiary of Parent, except for shares owned on behalf of
third parties ("Parent Shares"), and other than Company Common Stock owned by
the Company or any direct or indirect Subsidiary of the Company, except for
shares owned on behalf of third parties (collectively, "Excluded Shares")) shall
no longer be outstanding and shall be canceled and retired and shall cease to
exist, and each certificate (a "Certificate") representing any of such Company
Common Stock (other than Excluded Shares) shall thereafter represent only the
right to receive the Merger Consideration and the right, if any, to receive cash
in lieu of fractional shares pursuant to Section 1.9(e) and any dividends or
other distributions pursuant to Section 1.9(c). Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time and owned
by the Company or any direct or indirect Subsidiary of the Company (other than
Company Common Stock that is owned on behalf of third parties), shall, by virtue
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
1.9 Allocation of Merger Consideration; Election Procedures.
(a) Allocation. Notwithstanding anything in this
Agreement to the contrary, the number of shares of Company Common Stock (the
"Cash Election Number") to be converted into the right to receive Cash
Consideration in the Merger, and the number of shares of Company Common Stock
(the "Stock Election Number") to be converted into the right to receive Stock
Consideration in the Merger shall in each case be equal to fifty percent (50%)
of (i) the number of shares of Company Common
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Stock issued and outstanding immediately prior to the Effective Time less (ii)
the number of Excluded Shares ((i) less (ii) shall mean "Aggregate Company
Shares"), unless such percentages are adjusted pursuant to the provisions of
Section 8.1(c)(iii) and then as so adjusted (the "Adjusted Percentage").
(b) Election Procedures; Proration.
(i) As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with an exchange agent selected by Parent, with the Company's
prior approval, which shall not be unreasonably withheld (the "Exchange Agent"),
for the benefit of the holders of Company Common Stock, certificates
representing the shares of Parent Common Stock and any cash to be issued or paid
pursuant to Section 1.8 and any cash, dividends or other distributions with
respect to the Parent Common Stock to be issued or paid pursuant to Section
1.9(c) (such cash and certificates for shares of Parent Common Stock, together
with the amount of any dividends or other distributions payable with respect
thereto, being hereinafter referred to as the "Exchange Fund").
(ii) Subject to allocation, conversion and proration in accordance
with the provisions of this Section 1.9, each record holder of Company Common
Stock (other than Excluded Shares) issued and outstanding immediately prior to
the Election Deadline (as defined below) shall be entitled (A) to elect to
receive in respect of each such share of Company Common Stock (x) Cash
Consideration (a "Cash Election") or (y) Stock Consideration (a "Stock
Election") or (B) to indicate that such record holder has no preference as to
the receipt of Cash Consideration or Stock Consideration for such Company Common
Stock (a "Non-Election"). Shares of Company Common Stock in respect of which a
Non-Election is made (including shares in respect of which such an election is
deemed to have been made pursuant to this Agreement (collectively, "Non-Election
Shares")) shall, as nearly as possible, be deemed (A) shares of Company Common
Stock in respect of which Stock Elections have been made in an amount equal to
fifty percent (50%) of the total number of such shares of Company Common Stock
(Company Common Stock in respect of which a Stock Election has been made,
together with Company Common Stock in respect of which a Stock Election is
deemed to be made pursuant to Section 1.9,
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being hereinafter referred to as "Stock Election Shares"), and (B) shares of
Company Common Stock in respect of which Cash Elections have been made in an
amount equal to fifty percent (50%) of the total number of such shares of
Company Common Stock (Company Common Stock in respect of which a Cash Election
has been made, together with Company Common Stock in respect of which a Cash
Election is deemed to be made pursuant to Section 1.9, being hereinafter
referred to as "Cash Election Shares"), unless the Adjusted Percentage applies
and then according to the Adjusted Percentage.
(iii) Elections pursuant to Section 1.9(b) (ii) shall be made on a
form and with such other provisions to be reasonably agreed upon by the Company
and Parent (a "Form of Election") to be provided by the Exchange Agent for that
purpose to holders of record of Company Common Stock (other than holders of
Excluded Shares), together with appropriate transmittal materials, at the time
of mailing to holders of record of Company Common Stock of the Proxy
Statement/Prospectus (as hereinafter defined) in connection with the Shareholder
Meeting referred to in Section 5.3. Elections shall be made by mailing to the
Exchange Agent a duly completed Form of Election. To be effective, a Form of
Election must be (x) properly completed, signed and submitted to the Exchange
Agent at its designated office, by 5:00 p.m., on the business day that is two
trading days prior to the Closing Date (which date shall be publicly announced,
along with the Conversion Ratio, by Parent as soon as practicable but in no
event less than five trading days prior to the Closing Date) (the "Election
Deadline") and (y) in the case of Shares that are not held in book entry form,
accompanied by the Certificate(s) representing the Company Common Stock (a
"Certificate" or "Certificates") as to which the election is being made or an
affidavit of loss and indemnification in lieu thereof (or by an appropriate
guarantee of delivery of such Certificate(s) by a commercial bank or trust
company in the United States or a member of a registered national security
exchange or of the National Association of Securities Dealers, Inc., provided
that such Certificates are in fact delivered to the Exchange Agent within three
trading days after the date of execution of such guarantee of delivery). For
shares of Company Common Stock that are held in book entry form, Parent shall
establish procedures for the delivery of such Company Common Stock, which
procedures shall be reasonably acceptable to the Company. The
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Company shall use its best efforts to make a Form of Election available as
promptly as practicable to all Persons who become holders of record of Company
Common Stock (other than Excluded Shares) between the date of mailing described
in the first sentence of this Section 1.9(b)(iii) and the Election Deadline.
Neither Parent nor the Exchange Agent will be under any obligation to notify any
Person of any defect in a Form of Election submitted to the Exchange Agent. A
holder of Company Common Stock that does not submit an effective Form of
Election prior to the Election Deadline shall be deemed to have made a
Non-Election.
(iv) An election may be revoked or amended, but only by written notice
received by the Exchange Agent prior to the Election Deadline. Any
Certificate(s) that have been submitted to the Exchange Agent in connection with
an election shall be returned without charge to the holder thereof in the event
such election is revoked as aforesaid and such holder requests in writing the
return of such Certificate(s). Upon any such revocation, unless a duly completed
Form of Election is thereafter submitted in accordance with paragraph (b)(iii),
such shares of Company Common Stock shall be Non-Election Shares. In the event
that this Agreement is terminated pursuant to the provisions hereof and any
shares of Company Common Stock have been transmitted to the Exchange Agent
pursuant to the provisions hereof, such shares shall promptly be returned
without charge to the Person submitting the same.
(v) In the event that the aggregate number of Cash Election Shares
exceeds the Cash Election Number, all Cash Election Shares shall be converted
into the right to receive Stock Consideration or Cash Consideration in the
following manner:
(A) Cash Election Shares shall be deemed converted to Stock
Election Shares, on a pro-rata basis for each record holder of Company Common
Stock with respect to those shares, if any, of such record holder that are Cash
Election Shares, to the minimum extent necessary so that the aggregate number of
Cash Election Shares following such conversion shall equal as closely as
practicable the Cash Election Number; all such Cash
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Election Shares so converted shall be converted into the right to receive Stock
Consideration; and
(B) any remaining Cash Election Shares shall be converted
into the right to receive Cash Consideration.
(vi) In the event that the aggregate number of Stock Election
Shares exceeds the Stock Election Number, all Stock Election Shares shall be
converted into the right to receive Stock Consideration or Cash Consideration in
the following manner:
(A) Non-Election Shares which would otherwise be deemed to
be Stock Election Shares pursuant to Section 1.9(b)(ii) shall be deemed
converted to Cash Election Shares, on a pro-rata basis for each record holder of
Company Common Stock with respect to those shares, if any, of such record holder
that are Non-Election Shares, to the minimum extent necessary so that the
aggregate number of Stock Election Shares following such conversion shall equal
as closely as practicable the Stock Election Number; all such Non-Election
Shares so converted shall be converted into the right to receive Cash
Consideration;
(B) in the event that the aggregate number of Stock Election
Shares still exceeds the Stock Election Number, all Stock Election Shares shall
be converted into the right to receive Stock Consideration or Cash Consideration
in the following manner: Stock Election Shares shall be deemed converted to Cash
Election Shares, on a pro-rata basis for each record holder of Company Common
Stock with respect to those shares, if any, of such record holder that are Stock
Election Shares, to the minimum extent necessary so that the aggregate number of
Stock Election Shares following such conversion (after taking into account the
actions described in (vi) (A) above) shall equal as closely as practicable the
Stock Election Number; all such Stock
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Election Shares so converted shall be converted into the right to receive Cash
Consideration; and
(C) any remaining Stock Election Shares shall be converted into
the right to receive Stock Consideration.
(vii) In the event that clause (v) of this Section 1.9(b) is not
applicable, all Cash Election Shares shall be converted into the right to
receive Cash Consideration, and in the event that clause (vi) of this Section
1.9(b) is not applicable, all Stock Election Shares shall be converted into the
right to receive Stock Consideration.
(viii) The Exchange Agent, in consultation with Parent and the
Company, shall make all computations to give effect to this Section 1.9.
(ix) In the event of a transfer of ownership of Company Common
Stock that is not registered in the transfer records of the Company, the Merger
Consideration together with any other cash, dividends or distributions in
respect thereof, may be issued and/or paid to such a transferee if the
Certificate formerly representing such Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. If any certificate for shares of Parent Common Stock is to be issued in a
name other than that in which the Certificate surrendered in exchange therefore
is registered, it shall be a condition of such exchange that the Person (as
defined herein) requesting such exchange shall pay any transfer or other taxes
required by reason of the issuance of certificates for shares of Parent Common
Stock in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of Parent or the Exchange
Agent that such tax has been paid or is not applicable.
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(c) Distributions with Respect to Unexchanged Shares; Voting.
(i) All shares of Parent Common Stock to be issued pursuant to the
Merger shall be deemed issued and outstanding as of the Effective Time and
whenever a dividend or other distribution is declared by Parent in respect of
the Parent Common Stock, the record date for which is at or after the Effective
Time, that declaration shall include dividends or other distributions in respect
of all shares issuable pursuant to this Agreement, provided that no dividends or
other distributions declared or made in respect of the Parent Common Stock after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby until the
holder of such Certificate shall surrender such Certificate in accordance with
this Section 1.9. Thereafter, subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be issued and/or paid
to the holder of the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (A) at the time of such
surrender, the dividends or other distributions with a record date at or after
the Effective Time theretofore payable with respect to such whole shares of
Parent Common Stock and not paid and (B) at the appropriate payment date, the
dividends or other distributions payable with respect to such whole shares of
Parent Common Stock with a record date at or after the Effective Time but with a
payment date subsequent to surrender.
(ii) Holders of unsurrendered Certificates representing Stock
Election Shares shall be entitled to vote after the Effective Time at any
meeting of Parent shareholders the number of whole shares of Parent Common Stock
represented by such Certificates, regardless of whether such holders have
exchanged their Certificates.
(d) Transfers. After the Effective Time, there shall
be no transfers on the stock transfer books of the Company of the shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates formerly representing shares of
Company Common Stock are presented to the Surviving Corporation or the Exchange
Agent, they shall be canceled and (subject to applicable abandoned property,
escheat and similar laws) exchanged for Merger Consideration (and cash in lieu
of fractional interests in
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accordance with Section 1.9(e)), without any interest thereon, as provided in
this Section 1.9.
(e) Fractional Shares. Notwithstanding any other
provision of this Agreement, no fractional shares of Parent Common Stock will be
issued and any holder of Company Common Stock entitled to receive a fractional
share of Parent Common Stock but for this Section 1.9(e) shall be entitled to
receive a cash payment in lieu thereof, which payment shall equal the product of
(i) such holder's proportionate interest in a share of Parent Common Stock, and
(ii) the Average Parent Price.
(f) Termination of Exchange Fund. Any portion of
the Exchange Fund (including the proceeds of any investments thereof and any
Parent Common Stock) that remains unclaimed by the shareholders of the Company
for one year after the Effective Time shall be paid to Parent. Any shareholders
of the Company who have not theretofore complied with this Section 1.9 shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration and any cash, dividends and other distributions in respect thereof
payable and/or issuable pursuant to Section 1.8 and Section 1.9 upon due
surrender of their Certificates (or affidavits of loss and indemnification in
lieu thereof), in each case, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Surviving Corporation, the Exchange Agent or any
other Person shall be liable to any former holder of Company Common Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In
the event any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen, or destroyed Certificate the Merger
Consideration and any cash payable and any unpaid dividends or other
distributions deliverable in respect thereof pursuant to Section 1.9.
(h) Affiliates. Notwithstanding anything herein to
the contrary, Certificates surrendered for exchange into Stock Consideration by
any "affiliate" (as determined pursuant to Section 5.6) of the Company shall not
be exchanged until Parent has received a written agreement from such Person as
provided in Section 5.6 hereof.
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(i) Withholding. The Exchange Agent or Parent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
the Exchange Agent, Parent or the Surviving Corporation, as the case may be, is
required to deduct and withhold with respect to such payment under the Code or
any provisions of state, local or foreign tax law. Any amounts so withheld shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Company Common Stock in respect of which such deduction and withholding
was made.
1.10 Company Stock Options and Warrants.
(a) At the Effective Time, by virtue of the Merger
and without any further action on the part of the Company or the holder thereof
each unexpired and unexercised option to purchase shares of Company Common Stock
(a "Company Stock Option") granted under the Company Stock Plans (as hereinafter
defined) or otherwise granted by the Company outside of any Company Stock Plan,
will be assumed by Parent as hereinafter provided. At the Effective Time, 50%of
the Company Stock Options which have a per share option exercise price equal to
or less than the Cash Consideration ("Positive Value Options") shall be
automatically converted into the right to receive cash equal to the difference
between the Cash Consideration and the per share exercise price of such Positive
Value Options and the remaining 50% of the Positive Value Options will be
automatically converted into the right to receive options (the "Parent Stock
Options") to purchase a number of shares of Parent Common Stock equal to the
number of shares of Company Common Stock that could have been purchased under
such Positive Value Options multiplied by the Conversion Ratio, at a price per
share of Parent Common Stock equal to the per share option exercise prices
specified in the Positive Value Option, divided by the Conversion Ratio.
Positive Value Options will be equally allocated between cash and Parent Stock
Options. Such Parent Stock Options shall otherwise be subject to the same terms
and conditions as such Positive Value Options. All Company Stock Options which
have a per share option exercise price greater than the Cash Consideration shall
be automatically converted into an option to purchase a number of shares of
Parent Common Stock equal to the number of shares of Company Common Stock that
could have been purchased under such Company Stock Option multiplied by the
Conversion Ratio, at a price per share of Parent Common Stock equal to the per
share option exercise price specified in the Company Stock Option, divided by
the Conversion Ratio. At the Effective Time, (i) all references in the Company
Stock Plans, the applicable stock option or other awards agreements issued
thereunder and in any other Company Stock Options to the Company shall be deemed
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to refer to Parent; and (ii) Parent shall assume the Company Stock Plans and all
of the Company's obligations with respect to the Company Stock Options.
(b) In respect of each Company Stock Option as
converted into a Parent Stock Option pursuant to Section 1.10(a) and assumed by
Parent, and the shares of Parent Common Stock underlying such option, Parent
shall file as soon as practicable after the Effective Time with the SEC, and
keep current the effectiveness of, a registration statement on Form S-8 (which
may be accomplished by amendment of the registration statement on Form S-4) or
other appropriate form for as long as such options remain outstanding (and
maintain the current status of the prospectus with respect thereto). Parent
agrees to reserve a number of shares of Parent Common Stock equal to the number
of shares of Parent Common Stock issuable upon the exercise of such Company
Stock Options. Notwithstanding the provisions of this Section 1.10, with respect
to any Person subject to Section 16(b) of the Exchange Act, any cash paid in
connection with the cancellation of a Company Stock Option shall be paid as soon
as practicable after the first date payment can be made without liability of
such Person under Section 16(b) of the Exchange Act. The surrender of a Company
Stock Option for cash hereunder shall be deemed a release of any and all rights
the holder had or may have had in respect of such Company Stock Option.
(c) The Company agrees that, from the date hereof
through the Effective Time, it will not grant any stock options, restricted
stock, stock appreciation rights or limited stock appreciation rights.
(d) At the Effective Time, by virtue of the Merger
and without any further action on the part of the Company or the holder thereof,
each outstanding and unexercised warrant to purchase shares of Company Common
Stock (the "Warrants") issued pursuant to that certain Warrant Agreement, dated
as of March 4, 1998, between the Company and First Union National Bank, as
Warrant Agent (the "Warrant Agreement") will, pursuant to the terms of the
Warrant Agreement, be automatically converted into the right to receive, upon
exercise of such Warrant, the amount of cash or number of shares of Parent
Common Stock receivable per share by the holders of a plurality of Non-Election
Shares as would be received by a holder of the number of shares of Company
Common Stock issuable under exercise of such Warrant immediately prior to the
Merger.
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ARTICLE 2
OTHER AGREEMENTS
2.1 Access. Subject to the provisions of the Confidentiality
Agreement referred to in Section 2.5 below, and so long as this Agreement has
not been terminated as herein provided, upon reasonable request, the Company
shall grant to Parent, Acquisition and their agents, accountants, attorneys and
other advisers reasonable access at all reasonable times to all of the
properties, facilities, books, records, financial statements and other documents
and materials relating to its financial condition, assets, liabilities and
business, including, without limitation, permitting Parent (at its expense and
subject to the prior approval of the Company, which approval shall not be
unreasonably withheld) to: (a) conduct appraisals of the Equipment, Buildings,
Real Estate and other properties of the Company; and (b) conduct an
environmental and occupational safety inspection of the properties of the
Company. Parent shall coordinate all requests for such access through the
Company's Chief Executive Officer or Chief Financial Officer. In addition, the
Company shall confer and consult with representatives of Parent, as Parent may
reasonably request, to report on operational matters, financial matters and the
general status of ongoing business operations of the Company.
2.2 Disclosure Schedule.
(a) Disclosure Schedule. The Company has delivered
to Parent the Disclosure Schedule and Parent has delivered to the Company the
Parent Disclosure Schedule, each of which was signed by the President and the
Secretary of the Company or Parent, as the case may be, stating that such
disclosure schedule was delivered pursuant to this Agreement and is the
Disclosure Schedule or Parent Disclosure Schedule, as the case may be, referred
to in this Agreement. The Disclosure Schedule and the Parent Disclosure Schedule
are collectively referred to herein as the "Disclosure Schedules." The
Disclosure Schedules are deemed to constitute an integral part of this Agreement
and to modify, as specified, the representations, warranties, covenants or
agreements of the Company or Parent, as the case may be, contained in this
Agreement.
(b) Updates. The Company and Parent shall update the
disclosure schedule delivered by such party (by either (i) revision of specific
schedules included in the original disclosure schedule referred to in Section
2.2(a) or (ii) addition of new schedules that were neither included in said
original disclosure schedule nor referred to in or contemplated by this
Agreement as of the date of this Agreement) as
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soon as practicable by written notice to the other party to reflect any matters
which occur from and after the date of this Agreement and which, if existing on
the date of delivery of the Disclosure Schedules, would have been required to be
described in the Disclosure Schedules. If the Disclosure Schedules are updated
by the addition of new schedules not referred to in or contemplated by this
Agreement as of the date of this Agreement: (i) each new schedule shall be
numbered to correspond to the applicable section or subsection which such new
schedule is intended to modify and (ii) the applicable section or subsection
corresponding to such new schedule shall be read to include the words "except as
set forth in Schedule [insert applicable section or subsection number]" or words
of similar meaning to appropriately connote the modifications created by such
new schedule. If requested by either Parent or the Company, as the case may be,
prior to Closing, the other party shall meet and discuss with the requesting
party prior to Closing any update to the Disclosure Schedules disclosed by such
other party which is, in the reasonable judgment of the requesting party,
adverse in any manner to either the Company or Parent. The delivery of an update
to the Disclosure Schedules pursuant to this Section 2.2 shall not cure any
breach of any representation or warranty made in this Agreement, have any effect
for the purpose of determining the satisfaction of the conditions set forth in
Article 6 of this Agreement or otherwise limit or affect the remedies available
hereunder to any party.
2.3 Acquisition Proposals.
(a) Prior to the Effective Time, the Company
agrees that neither it, nor any of its Subsidiaries or Affiliates, nor any of
their respective directors, officers, employees, agents or representatives,
will, directly or indirectly, (i) solicit, initiate, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company, the acquisition of all or any significant part of the
assets or capital stock of the Company or any Subsidiary of the Company (an
"Acquisition Transaction") or (ii) negotiate, explore or otherwise engage in
discussions with any Person (other than Parent and its representatives) with
respect to any Acquisition Transaction, or which may reasonably be expected to
lead to a proposal for an Acquisition Transaction, or enter into any agreement,
arrangement or understanding with respect to any such Acquisition Transaction;
provided, however, that the Company may, in response to an unsolicited written
proposal from a third party regarding a Superior Proposal (as hereinafter
defined), furnish information to and engage in discussions and negotiations with
such third party, but only if the Board of Directors of the Company determines
in good faith, after consultation with its financial advisors and outside
independent
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counsel, that taking such action is in the best interests of the Company and its
shareholders and such action is consistent with its fiduciary duties under
applicable Law. If specifically requested by a Person without prior contact from
the Company or its representatives, the Company may waive the provisions of any
"standstill" agreements between the Company and any Person to the extent
necessary to permit such Person to submit a proposal for an Acquisition
Transaction that the Board of Directors believes, in its good faith judgment, is
reasonably likely to result in a Superior Proposal; provided, that such waiver
(i) does not violate or conflict with the foregoing provisions of this Section
2.3(a) and (ii) would not, in any event, permit such Person to acquire any
direct or indirect beneficial ownership of shares of Company Common Stock or
participate in any tender offer or proxy solicitation relating to shares of the
Company Common Stock that would otherwise be prohibited by such "standstill"
agreement. It is understood and agreed, without limitation of the Company's
obligations, that any violation of this Section 2.3 by any director, officer,
Affiliate, investment banker, financial advisor, attorney or other advisor or
representative of the Company, whether or not such Person is purporting to act
on behalf of the Company, or otherwise, shall be deemed to be a breach of this
Section 2.3 by the Company.
(b) The Company agrees that, as of the date hereof,
it, its Subsidiaries and Affiliates, and the respective directors, officers,
employees, agents and representatives of the foregoing, shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Person (other than Parent and its representatives) conducted heretofore
with respect to any Acquisition Transaction. The Company agrees to promptly
advise Parent in writing of the existence of (x) any inquiries or proposals (or
desire to make a proposal) received by (or indicated to), any such information
requested from, or any negotiations or discussions sought to be initiated or
continued with, the Company, its Subsidiaries or Affiliates, or any of the
respective directors, officers, employees, agents or representatives of the
foregoing, in each case from a Person (other than Parent and its
representatives) with respect to an Acquisition Transaction, and (y) the terms
thereof, including the identity of such third party and the terms of any
financing arrangement or commitment in connection with such Acquisition
Transaction, and to update on an ongoing basis or upon Parent's reasonable
request, the status thereof. As used herein, "Superior Proposal" means a bona
fide, written and unsolicited proposal or offer made by any Person (or group)
(other than Parent or any of its Subsidiaries) with respect to an Acquisition
Transaction on terms which, as determined by the Board of Directors of the
Company in good faith (based on the written advice of independent financial
advisors) and in a manner consistent with its fiduciary duties under applicable
Law, are more favorable, from a
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financial point of view, to the Company and its Shareholders than the
transactions contemplated hereby.
2.4 Public Announcements. Any public announcement made by or
on behalf of either Parent or the Company prior to the termination of this
Agreement pursuant to Article 8 hereof concerning this Agreement, the
transactions described herein or any other aspect of the dealings heretofore had
or hereafter to be had between the Company and Parent and their respective
Affiliates must first be approved by the other party (any such approval not to
be unreasonably withheld), subject to either party's obligations under
applicable Law (but such party shall use its best efforts to consult with the
other party as to all such public announcements).
2.5 Confidentiality Agreement. The Company and Parent agree
that the Confidentiality Agreement entered into between the Company and Parent,
dated March 30, 1999, remains in effect, but shall at the Effective Time be
deemed to have terminated without further action by the parties.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Acquisition that:
3.1 Due Incorporation. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Virginia, has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each of the
jurisdictions in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. The Company has delivered to Parent copies of the
articles of incorporation and bylaws or other organizational documents of the
Company and each of its Subsidiaries. Such articles of incorporation and bylaws
or other organizational documents are complete and correct and in full force and
effect, and neither the Company nor any of its Subsidiaries is in violation of
any of the provisions of their respective articles of incorporation, bylaws or
similar organizational documents. Each of the Company's Subsidiaries is duly
organized,
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validly existing and in good standing under the Laws of its jurisdiction of
incorporation or organization, has the corporate, limited liability company or
partnership power and authority, as the case may be, to own its properties and
assets and to carry on its business as it is now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth in Section 3.1 of the Disclosure Schedule, all the
outstanding shares of capital stock of, or other ownership interests in, the
Company's Subsidiaries are duly authorized, validly issued, fully paid and
non-assessable and are owned by the Company, directly or indirectly, free and
clear of all Liens, claims, mortgages, encumbrances, pledges, security
interests, equities or charges of any kind. Other than the Subsidiaries and
except as set forth in Section 3.1 of the Disclosure Schedule, there are no
other Persons in which the Company owns, of record or beneficially, any direct
or indirect equity or similar interest or any right (contingent or otherwise) to
acquire the same.
3.2 Capitalization. The authorized capital stock of the
Company consists of 90,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, without par value ("Company Preferred Stock"). As of
June 7, 1999: (i) 47,727,490 shares of Company Common Stock were issued and
outstanding and no shares of Company Preferred Stock were issued and
outstanding; (ii) 990,350 shares of Company Common Stock were subject to
outstanding options issued pursuant to the Company's Amended and Restated
Omnibus Stock Incentive Plan, dated July 1997 (the "Omnibus Plan") and 1,247,525
shares of Company Common Stock were reserved for issuance under the Omnibus
Plan; (iii) 67,100 shares of Company Common Stock were subject to outstanding
options issued pursuant to the Company's Non-Employee Directors' Stock Option
Plan (the "Directors' Stock Plan") and 42,750 shares of Company Common Stock
were reserved for issuance under the Directors' Stock Plan; (iv) options to
purchase 554,150 shares of the Company Common Stock were outstanding that were
granted under other employee stock incentive plans (and together with the
Omnibus Plan and the Directors' Stock Plan, the "Company Stock Plans"); and (v)
warrants to purchase 1,500,000 shares of Company Common Stock at $25 per share
were outstanding in connection with the acquisition of substantially all of the
assets of Farm Fresh, Inc. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, the Company has previously provided a complete and correct
list of all holders of Existing Options, including such person's name, the
number of options (vested, unvested and total) held by such person and the
exercise price for each such option. All the outstanding shares of capital stock
of the Company are duly authorized,
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validly issued, fully paid and non-assessable and free of preemptive rights.
Except as set forth above or in Section 3.2 of the Disclosure Schedule, or as
otherwise contemplated by this Agreement, (1) there are no shares of capital
stock of the Company authorized, issued or outstanding, (2) there are no
authorized or outstanding options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its Subsidiaries, obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or other equity interests in the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment, and (3) there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares or other capital stock of the Company or
any Subsidiary of the Company or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any Subsidiary of the
Company or any other Person.
3.3 Authorization; Enforceability. The Board of Directors of
the Company has on or prior to the date of this Agreement (a) declared the
Merger advisable and in the best interests of the Company and the Shareholders
and approved this Agreement in accordance with applicable Law, (b) resolved to
recommend the approval of this Agreement by the Shareholders and (c) directed
that this Agreement be submitted to the Shareholders for approval. The Company
has all requisite corporate power and authority to enter into the Transaction
Agreements to which it is a party and, subject to approval by the Shareholders
of the Merger, to consummate the transactions contemplated hereby and thereby.
The execution and delivery of the Transaction Agreements to which it is a party
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to (x) approval by the
Shareholders and (y) the filing of the Articles of Merger pursuant to the VSCA
and the filing of the Certificate of Merger pursuant to the DGCL. The
Transaction Agreements to which it is a party have been duly executed and
delivered by the Company and (assuming the valid authorizations, execution and
delivery thereof by the other parties thereto) each such Transaction Agreement
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally
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or by general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.4 No Violation or Conflict. Assuming all consents,
approvals, authorizations and other actions described in this Section 3.4 have
been obtained and all filings and obligations described in this Section 3.4 have
been made and except as set forth in Section 3.4 of the Disclosure Schedule, the
execution and delivery of the Transaction Agreements do not, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the provisions hereof and thereof will not, conflict with, result in any
violation of, or breach or default (with or without notice or lapse of time, or
both) under, or give to others a right of termination, cancellation or
acceleration of any material obligation or the loss of a material benefit under,
or result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or any of its Subsidiaries
under, any provision of (i) the articles of incorporation or bylaws of the
Company, (ii) any provision of the comparable charter or organizational
documents of any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, lease, indenture or other contract, agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries, or (iv) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii), (iii) or (iv), any such conflicts, violations, breaches,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect, or
adversely affect the consummation of any of the transactions contemplated hereby
or thereby. No filing, notification or registration with, or authorization,
consent or approval of, any governmental entity is required by or with respect
to the Company or any of its Subsidiaries in connection with the execution and
delivery of the Transaction Agreements by the Company or is necessary for the
consummation by the Company of the Merger and the other transactions
contemplated by the Transaction Agreements, except for (i) in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the "Securities
Act") and the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the "Exchange Act"), (ii) the filing of
the Articles of Merger with the SCC and the Certificate of Merger with the
Secretary of State of the State of Delaware and the filing of appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger
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or by the transactions contemplated by this Agreement, (iv) applicable
requirements, if any, of blue sky laws and the NYSE, and (v) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect or adversely affect the consummation
of any of the transactions contemplated hereby or by any other Transaction
Agreement. The execution and delivery of the Transaction Agreements do not, and
the consummation of the transactions contemplated hereby and thereby and
compliance with the provisions hereof and thereof will not, conflict with,
result in any violation of, or breach or default (with or without notice or
lapse of time, or both) under, or give to others a right of termination,
cancellation or acceleration of any material obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under any leases, subleases, reciprocal
operating agreements or reciprocal easement agreements relating to the Company's
retail stores, other than conflicts, violations, breaches, defaults, rights,
liens, security interests, charges or encumbrances that would not have,
individually or in the aggregate, a Material Adverse Effect, or adversely affect
the consummation of any of the transactions contemplated hereby or thereby.
3.5 SEC Documents and Other Reports. The Company has filed all
required documents with the SEC since April 27, 1996 (the "Company SEC
Reports"). As of their respective dates, the Company SEC Reports complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and, at the respective times they were filed, none of
the Company SEC Reports contained any untrue statement of a material fact or
omitted 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 consolidated financial statements (including, in each
case, any notes thereto) of the Company included in the Company SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present in accordance with GAAP the consolidated financial position
of the Company and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). The unaudited consolidated balance sheet of the Company as
of May 1, 1999,
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and the unaudited consolidated statements of operations and cash flows of the
Company for the fiscal year ended May 1, 1999, which have been provided by the
Company to Parent were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except that footnotes are absent) and fairly
present in accordance with GAAP the consolidated financial position of the
Company and its consolidated Subsidiaries as at the date thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject to normal year-end audit adjustments which are
not material). Except as disclosed in the Company SEC Reports or as required by
GAAP, the Company has not, since May 2, 1998, made any change in the accounting
practices or policies applied in the preparation of financial statements. The
books and records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and other applicable legal and accounting
requirements.
3.6 No Undisclosed Liabilities. Neither the Company nor any of
its Subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, except (a) liabilities or obligations
reflected in the Company SEC Reports filed prior to the date hereof and (b)
liabilities or obligations incurred in the ordinary course of business which
would not, individually or in the aggregate, have a Material Adverse Effect.
3.7 No Violation of Law. The businesses of the Company and its
Subsidiaries are not being conducted in violation of any Law (provided that no
representation or warranty is made in this Section 3.7 with respect to
Environmental Laws (as hereinafter defined)) except (a) as set forth in Section
3.7 of the Disclosure Schedule and (b) for violations which would not,
individually or in the aggregate, have a Material Adverse Effect.
3.8 Title to Assets. Except as reflected in the Company SEC
Reports, the Company and its Subsidiaries own fee simple or valid leasehold (as
the case may be) title to the Real Estate and have valid title to their other
tangible assets and properties which they purport to own, free and clear of any
and all Liens, except for Permitted Liens. All Buildings and Equipment have been
well maintained and are in good and serviceable condition, normal wear and tear
excepted, except where the failure to be so maintained would not, individually
or in the aggregate, have a Material Adverse Effect.
3.9 Litigation. Except as set forth in the Company SEC Reports
filed prior to the date hereof or in Section 3.9 of the Disclosure Schedule, (a)
there are no actions, suits, claims (including worker's compensation claims),
litigation or other
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governmental or judicial proceedings or investigations or arbitrations pending
against the Company, its Subsidiaries or any of its properties, assets or
business, or, to the knowledge of the Company, any of the Company's or any
Subsidiary's current or former directors or officers or any other Person whom
the Company or any Subsidiary of the Company has agreed to indemnify that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; (b) as of the date hereof, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened, against the
Company relating to the transactions contemplated by the Transaction Agreements;
and (c) there are no outstanding orders, judgments, injunctions, awards or
decrees of any governmental entity against the Company, its Subsidiaries, any of
its properties, assets or businesses, or, to the knowledge of the Company, any
of the Company's or its Subsidiaries' current or former directors or officers or
any other Person whom the Company or any Subsidiary of the Company has agreed to
indemnify that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
3.10 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports filed with the SEC prior to the date of this
Agreement or set forth in Section 3.10 of the Disclosure Schedule, since May 2,
1998, (A) none of the Company or any of its Subsidiaries has incurred any
material liability or obligation (indirect, direct or contingent), or entered
into any material oral or written agreement or other transaction, that is not in
the ordinary course of business or that would, individually or in the aggregate,
result in a Material Adverse Effect, except for any such changes or effects
resulting from this Agreement, the transactions contemplated hereby or the
announcement thereof; (B) the Company or any of its Subsidiaries has not
sustained any loss or interference with their business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance) that would, individually or in the aggregate, have a Material Adverse
Effect; and (C) there has been no event, circumstance or development that would,
individually or in the aggregate, have a Material Adverse Effect, except for any
such changes or effects resulting from the Transaction Agreements, the
transactions contemplated hereby and thereby or the announcement thereof. Except
as disclosed in the Company SEC Reports filed with the SEC prior to the date of
this Agreement or set forth in Section 3.10 of the Disclosure Schedule, since
May 1, 1999, there has been no action taken by the Company or any of its
Subsidiaries, that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of Section 5.1
3.11 Performance of Contracts. Each material Contract is in
full force and effect and constitutes the legal and binding obligation of the
Company and, to the
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knowledge of the Company, constitutes the legal and binding obligation of the
other parties thereto. Except as disclosed in Section 3.11 of the Disclosure
Schedule, there are no existing breaches or defaults by the Company or, to the
knowledge of the Company, any other party to a Contract under any Contract the
effect of which would, individually or in the aggregate, constitute a Material
Adverse Effect and, to the knowledge of the Company, no event has occurred
which, with the passage of time or the giving of notice or both, could
reasonably be expected to constitute such a breach or default.
3.12 ERISA
(a) With respect to each material Company Plan (as
hereinafter defined), the Company has made (or as soon as practicable will make)
available to Parent a true and correct copy of (i) the three most recent annual
reports (Form 5500) filed with the Internal Revenue Service ("IRS"), (ii) such
Company Plan document, (iii) each trust agreement, insurance contract or
administration agreement relating to such Company Plan, (iv) the most recent
summary plan description of each Company Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to each Company Plan subject to Title IV of ERISA, and (vi) the most
recent determination letter, if any, issued by the IRS with respect to each
Company Plan intended to be qualified under Section 401(a) of the Code. Except
as disclosed in Section 3.12 of the Disclosure Schedule, and except for events
or actions that would not, individually or in the aggregate, have a Material
Adverse Effect, (i) each Company Plan complies with all applicable statutes and
governmental rules and regulations, including but not limited to ERISA, the Code
and COBRA, (ii) no "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Company Plan, (iii) neither the Company
nor any of its ERISA Affiliates has withdrawn from any Multiemployer Plan (as
hereinafter defined), or instituted, or is currently considering taking, any
action to do so, (iv) no action has been taken, or is currently being
considered, to terminate any Company Plan subject to Title IV of ERISA, and (v)
the Company and its ERISA Affiliates have complied with the continued medical
coverage requirements of COBRA. Except as would not, individually or in the
aggregate, have a Material Adverse Effect, no Company Plan, nor any trust
created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived. Except as disclosed in
Section 3.12 of the Disclosure Schedule, with respect to any Company Plan which
is subject to Title IV of ERISA, the present value of accrued benefit
obligations, as determined in accordance with FAS 87 in accordance with the
actuarial assumptions used to prepare the most recent reports of such Company
Plan, did not exceed the fair market value of the Plan assets as of the
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most recent valuation date for which an actuarial report has been prepared, and
the Company has no knowledge of any material adverse change to such status.
(b) With respect to the Company Plans, except as
disclosed in Section 3.12 of the Disclosure Schedule, no event has occurred in
connection with which the Company or any ERISA Affiliate would be subject to any
liability, other than for the payment of benefits made in the ordinary course of
business, under the terms of such Company Plans, ERISA, the Code or any other
applicable law which would have a Material Adverse Effect. Except as disclosed
in the Company SEC Reports filed prior to the date hereof or in Section 3.12 of
the Disclosure Schedule, with respect to any current or former employee or
contractor of the Company or its Subsidiaries, consummation of the transactions
contemplated by this Agreement shall not result in the payment or provision of
additional compensation or benefits or accelerate the vesting, payment or
funding of any compensation or benefits. Except as disclosed in the Company SEC
Reports filed prior to the date hereof or in Section 3.12 of the Disclosure
Schedule, no amounts payable or provided by the Company or its Subsidiaries
related to the transactions contemplated by this Agreement will constitute
"excess parachute payments" within the meaning of Section 280G of the Code.
Except as disclosed in Section 3.12 of the Disclosure Schedule, Company Plans
that are intended to be qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified, or a timely application for such
determination is now pending, and to the knowledge of the Company, there is no
reason why any Company Plan is not so qualified in operation. Neither the
Company nor any of its ERISA Affiliates has been notified by any Multiemployer
Plan that such Multiemployer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or that such
Multiemployer Plan intends to terminate or has been terminated under Section
4041A of ERISA. Except as disclosed in the Company SEC Reports filed prior to
the date hereof or in Section 3.12 of the Disclosure Schedule, neither the
Company nor any of its ERISA Affiliates has any liability or obligation under
any welfare plan to provide benefits after termination of employment to any
employee or dependent other than as required by ERISA. There are no pending, or
to the knowledge of the Company, threatened claims, suits, audits or
investigations related to any Company Plan other than claims for benefits in the
ordinary course and other than claims, suits, audits or investigations that
would not, individually or in the aggregate, have a Material Adverse Effect. As
used herein, (i) "Company Plan" means a "pension plan" (as defined in Section
3(2) of ERISA (other than a Multiemployer Plan)) or a "welfare plan" (as defined
in Section 3(1) of ERISA) established or maintained by the Company or any of its
ERISA Affiliates or as to which the Company or any of its ERISA Affiliates has
contributed in the last six years or otherwise may have any
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liability and all other retirement, deferred compensation, severance,
termination, change in control, stock option, restricted stock or phantom stock
plans, policies or programs of the Company or its Subsidiaries, (ii)
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates is or
has been obligated to contribute in the last six years or otherwise may have any
liability and (iii) with respect to any Person, "ERISA Affiliate" means any
trade or business (whether or not incorporated) which is under common control or
would be considered a single employer with such Person pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under those
sections or pursuant to Section 4001(b) of ERISA and the regulations promulgated
thereunder, including, without limitation, each of the Company's Subsidiaries.
3.13 Taxes.
(a) Tax Returns. For all years for which the
applicable statutory period of limitation has not expired, the Company has
timely and properly filed, and will through the Closing Date timely and properly
file, all material federal, state, local and foreign tax returns (including but
not limited to income, franchise, sales, payroll, employee withholding and
social security and unemployment) which were or (in the case of returns not yet
due but due on or before the Closing Date, taking into account any valid
extension of the time for filing) will be required to be filed. The Company has
paid all taxes (including interest and penalties) and withholding amounts owed
by it, except where the failure to pay such taxes or withholding amounts would
not, individually or in the aggregate, have a Material Adverse Effect. No
material, unpaid tax deficiencies have been proposed or assessed against the
Company and no material tax deficiencies, whether paid or unpaid, have been
proposed or assessed against the Company since December 31, 1996. To the
knowledge of the Company, no issue has been raised in any prior tax audit of the
Company which, by application of the same or substantially the same principles,
could reasonably be expected upon a future tax audit of the Company to result in
a proposed material deficiency for any period. Except as set forth in Section
3.13 of the Disclosure Schedule, the Company is not liable for any taxes
attributable to any other Person, whether by reason of being a member of another
affiliated group, being a party to a tax sharing agreement, as a transferee or
successor, or otherwise.
(b) Audits. Except as set forth in Section 3.13 of
the Disclosure Schedule, the Company has not consented to any extension of the
statute of limitation with respect to any open federal, state or local tax
returns.
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(c) Liens. Except as set forth in Section 3.13 of the
Disclosure Schedule, there are no tax Liens upon any property or assets of the
Company except for Liens for current taxes not yet due and payable.
(d) Deliveries. The Company has delivered to Parent
correct and complete copies of all material tax returns and reports of the
Company filed for all periods not barred by the applicable statute of
limitations through the Effective Time. Except as set forth in Section 3.13 of
the Disclosure Schedule, no examination or audit of any material tax return or
report for any period not barred by the applicable statute of limitations has
occurred, no such examination is in progress and, to the knowledge of the
Company, no such examination or audit is planned.
(e) Withholding Taxes. The Company has properly
withheld and timely paid substantially all withholding and employment taxes
which it was required to withhold and pay relating to salaries, compensation and
other amounts heretofore paid to its employees or other Persons. All Forms W-2
and 1099 required to be filed with respect thereto have been timely and properly
filed except where the failure to file would not, individually or in the
aggregate, have a Material Adverse Effect.
(f) Other Representations. The Company has not and
will not make any elections under Section 341(f) of the Code and, except as
shown in Section 3.13 of the Disclosure Schedule, has and will not be subject to
Section 280G of the Code.
3.14 Labor Matters. Except as set forth in Section 3.14 of the
Disclosure Schedule or in the Company SEC Reports filed prior to the date
hereof, neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or labor contract. Except as set forth in
Section 3.14 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practice with respect to any person
employed by or otherwise performing services primarily for the Company or any of
its Subsidiaries (the "Company Business Personnel"), and there is no unfair
labor practice complaint or grievance against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable state
agency pending or, to the Company's knowledge, threatened with respect to the
Company Business Personnel, except where such unfair labor practice, complaint
or grievance would not, individually or in the aggregate, have a Material
Adverse Effect. As of the date hereof, there is no labor strike, dispute,
slowdown or stoppage pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries which may interfere
with the respective business activities of the Company
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or any of its Subsidiaries, except where such dispute, strike or work stoppage
would not, individually or in the aggregate, have a Material Adverse Effect. The
Company and its Subsidiaries are in material compliance with all labor,
employment and wage payment-related laws, regulations and rules.
3.15 Existing Permits. No action or proceeding is pending or,
to the knowledge of the Company, threatened that is reasonably likely to result
in a revocation, non-renewal, termination, suspension or other material
impairment of any material Existing Permits.
3.16 Intangible Assets. Except as set forth in Section 3.16 of
the Disclosure Schedule, there are no material claims, demands or proceedings
instituted, pending or, to the knowledge of the Company, threatened by any
Person contesting or challenging the right of the Company or any of its
Subsidiaries to use any of its Intangible Assets. Each trademark registration,
service mark registration, copyright registration, patent and patent application
which is owned by the Company and any of its Subsidiaries has been maintained in
good standing except where the failure to so maintain would not, individually or
in the aggregate, have a Material Adverse Effect. The Company and each of its
Subsidiaries owns or possesses adequate licenses or other rights to use all
Intangible Assets necessary to conduct its business as now conducted, except
where the failure to own or possess such licenses could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The consummation of the Merger and the transactions contemplated by this
Agreement will not impair the validity, enforceability, ownership or right of
the Company and each of its Subsidiaries to use its Intangible Assets except, in
each case, where the impairment would not, individually or in the aggregate,
have a Material Adverse Effect.
3.17 Environmental Matters.
(a) Except as set forth in Section 3.17 of the
Disclosure Schedule, the Company is, and at all times has been, in full
compliance with Environmental Laws, except where the failure to be in compliance
would not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth in Section 3.17 of the Disclosure Schedule, and except as
would not otherwise, individually or in the aggregate, have a Material Adverse
Effect, the Company has not received any actual or proposed order, notice or
other communication (written or oral) from (i) any governmental body or third
party or (ii) the current or prior owner or operator of any property, of any
actual or potential violation or failure to comply with any Environmental Law,
or of any actual or threatened obligation to undertake or bear the cost of any
Environmental Claim with
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respect to any property or assets (whether real, personal or mixed) in which the
Company has had an interest.
(b) Except as disclosed in Section 3.17 of the
Disclosure Schedule or as would not, individually or in the aggregate, have a
Material Adverse Effect, there are no pending or, to the knowledge of the
Company, threatened Environmental Claims, encumbrances, or other restrictions of
any nature, resulting from any liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any property and assets (whether
real, personal or mixed) in which the Company has or had an interest.
(c) The Company has obtained all environmental,
health and safety permits and governmental authorizations (collectively, the
"Environmental Permits") required for its operations, and all such permits are
in good standing and the Company is in substantial compliance with all terms and
conditions of the Environmental Permits, except where the failure to obtain or
be in compliance with such Environmental Permits would not, individually or in
the aggregate, have a Material Adverse Effect.
3.18 Vote Required. The affirmative vote of the holders of
more than two-thirds of the shares of Company Common Stock entitled to vote with
respect to the Merger is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve the Merger, this Agreement and
the transactions contemplated hereby. The dissenter's rights provided in Article
15 of the VSCA are not applicable to the Merger and not available to holders of
Company Common Stock in the Merger.
3.19 Disclosure Documents. None of the information supplied or
to be supplied by the Company in writing specifically for inclusion in (i) the
Proxy Statement/Prospectus, and (ii) the Registration Statement will, in the
case of the Proxy Statement/Prospectus, either at the time of mailing of the
Proxy Statement/Prospectus to Shareholders or at the time of the Shareholder
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading or will, in the case of the Registration Statement, either at the
time the Registration Statement is filed with the SEC or at the time the
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein
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or necessary to make the statements therein not misleading except that no
representation or warranty is made by the Company with respect to the
information supplied by Parent.
3.20 Opinion of Financial Advisor. The Company has received
the opinion of Donaldson, Lufkin & Jenrette Securities Corporation, its
financial advisor, to the effect that, as of June 9, 1999, the Merger
Consideration to be received in the Merger, based upon and subject to the
assumptions and limitations set forth in such opinion, by the Shareholders is
fair to such Shareholders from a financial point of view, a copy of which
opinion has been delivered to Parent.
3.21 Certain Agreements. Except as set forth in Section 3.21
of the Disclosure Schedule, the Company is not a party to any oral or written
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. Except as described in
Section 3.21 of the Disclosure Schedule, the transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to any third party pursuant to, or accelerate the
vesting or repurchase rights under, the terms, conditions or provisions of any
material Contract.
3.22 Finders or Brokers. Except for Donaldson, Lufkin &
Jenrette Securities Corporation with respect to the Company, a copy of whose
engagement agreement has been or will be provided to Parent, neither the Company
nor its Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection with or upon consummation
of the transactions contemplated hereby.
3.23 Takeover Statutes. No restrictive provision of any "fair
price," "moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation (each a "Takeover Statute") or restrictive provision of
any applicable anti-takeover provision in the Company's articles of
incorporation and bylaws is applicable to the Company, the Company Common Stock,
the Merger or the other transactions contemplated by this Agreement (including,
without limitation, Article 14 of the VSCA).
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company as follows:
4.1 Due Incorporation. Each of Parent and Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each of the
jurisdictions in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. Parent has delivered to the Company copies of the
certificates of incorporation and bylaws or other organizational documents of
Parent, Acquisition and each of Parent's material Subsidiaries. Such
certificates of incorporation and bylaws or other organizational documents are
complete and correct and in full force and effect, and none of Parent,
Acquisition nor any such Subsidiary is in violation of any of the provisions of
their respective certificates of incorporation, bylaws or similar organizational
documents. Each of Parent's Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation or organization, has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. Acquisition has no Subsidiaries. Acquisition was formed
solely for the purpose of engaging in the transactions contemplated hereby and
has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated hereby. Except as set
forth on Schedule 4.1 of the Parent Disclosure Schedule, all the outstanding
shares of capital stock of, or other ownership interests in, Parent's
Subsidiaries are duly authorized, validly issued, fully paid and non-assessable
and are owned by Parent, directly or indirectly, free and clear of all Liens,
claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind. Other than the Subsidiaries, there are no other Persons in
which Parent owns, of record or beneficially, any direct or
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indirect equity or similar interest or any right (contingent or otherwise) to
acquire the same.
4.2 Capitalization.
(a) The authorized capital stock of the Parent
consists of 200,000,000 shares of Parent Common Stock and 1,000,000 shares of
preferred stock, no par value ("Parent Preferred Stock"). As of June 7, 1999:
(i) 119,759,837 shares of Parent Common Stock were issued and outstanding; (ii)
9,423,607 shares of Parent Common Stock were subject to outstanding options
issued pursuant to Parent's stock option plans ("Plans"), and 12,000,000 shares
of Parent Common Stock were reserved for issuance under the Plans; and (iii)
1,341 shares of Parent Preferred Stock were issued and outstanding. All the
outstanding shares of capital stock of Parent are duly authorized, validly
issued, fully paid and non-assessable. Except as disclosed in Parent's 1999
Proxy Statement and except as set forth above, other than the transactions
contemplated by this Agreement, (1) there are no shares of capital stock of
Parent authorized, issued or outstanding, (2) there are no authorized or
outstanding options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of Parent or any of its Subsidiaries,
obligating Parent or any of its Subsidiaries to issue, transfer or sell or cause
to be issued, transferred or sold any shares of capital stock or other equity
interest in Parent or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating Parent or any of
its Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (3) there
are no outstanding contractual obligations of Parent or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares or other capital stock of
Parent or any of its Subsidiaries or to provide funds to make any investment (in
the form of a loan, capital contribution or otherwise) in any Subsidiary of
Parent or any other Person.
(b) The authorized capital stock of Acquisition
consists of 1000 shares of common stock, par value $0.01 per share, all of which
are duly authorized, validly issued, fully paid and nonassessable and free of
any pre-emptive rights in respect thereof and all of which are owned by Parent.
4.3 Authorization; Enforceability. Each of Parent and
Acquisition has all requisite corporate power and authority to enter into the
Transaction Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of the Transaction
Agreements to which it is a party by
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Parent and Acquisition and the consummation by Parent and Acquisition of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and Acquisition, subject to the
filing of the Articles of Merger pursuant to the VSCA and the filing of the
Certificate of Merger pursuant to the DGCL. The Transaction Agreements to which
it is a party have been duly executed and delivered by each of Parent and
Acquisition and (assuming the valid authorizations, execution and delivery
thereof by the other parties thereto) each such Transaction Agreement
constitutes the valid and binding obligation of Parent and Acquisition
enforceable against Parent and Acquisition in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally or by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4 No Violation or Conflict. Assuming all consents,
approvals, authorizations and other actions described in this Section 4.4 have
been obtained and all filings and obligations described in this Section 4.4 have
been made and except as set forth in Schedule 4.4 of the Parent Disclosure
Schedule, the execution and delivery of the Transaction Agreements do not, and
the consummation of the transactions contemplated hereby and thereby and
compliance with the provisions hereof and thereof will not, conflict with,
result in any violation of, or breach or default (with or without notice or
lapse of time, or both) under, or give to others a right of termination,
cancellation or acceleration of any material obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Subsidiaries under, any provision of (i) the articles of
incorporation or bylaws of Parent, (ii) any provision of the comparable charter
or organizational documents of any of Parent's Subsidiaries, (iii) any loan or
credit agreement, note, bond, mortgage, lease, indenture or other contract,
agreement, instrument, permit, concession, franchise or license applicable to
Parent or any of its Subsidiaries, or (iv) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii), (iii) or (iv), any such conflicts, violations, breaches,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect, or
adversely affect the consummation of any of the transactions contemplated hereby
or thereby. No filing, notification or registration with, or authorization,
consent or approval of, any governmental entity is required by or with respect
to Parent and Acquisition or any of Parent's Subsidiaries in connection with the
execution and delivery of the Transaction Agreements by Parent and Acquisition
or is necessary for the
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consummation by Parent and Acquisition of the Merger and the other transactions
contemplated by the Transaction Agreements, except for (i) in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act and the
Exchange Act, (ii) the filing of the Articles of Merger with the SCC and the
Certificate of Merger with the Secretary of State of the State of Delaware, and
the filing of appropriate documents with the relevant authorities of other
states in which Parent or any of its Subsidiaries is qualified to do business,
(iii) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or by the transactions contemplated by
this Agreement, (iv) applicable requirements, if any, of blue sky laws and the
NYSE, and (v) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the consummation of any of the transactions contemplated hereby or by any
other Transaction Agreement.
4.5 SEC Documents and Other Reports. Parent has filed all
required documents with the SEC since February 22, 1997 (the "Parent SEC
Reports"). As of their respective dates, the Parent SEC Reports complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and, at the respective times they were filed, none of
Parent SEC Reports contained any untrue statement of a material fact or omitted
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 consolidated financial statements (including, in each case,
any notes thereto) of Parent included in the Parent SEC Reports complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with GAAP (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present in accordance with GAAP the consolidated financial position
of Parent and its consolidated Subsidiaries as at the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein). Except as disclosed in the Parent SEC Reports or as required by GAAP,
Parent has not, since February 27, 1999, made any change in the accounting
practices or policies applied in the preparation of financial statements. The
books and records of Parent and its Subsidiaries have been, and are
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being, maintained in accordance with GAAP and other applicable legal and
accounting requirements.
4.6 No Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, except (a) liabilities or obligations
reflected in Parent SEC Reports filed prior to the date hereof and (b)
liabilities or obligations incurred in the ordinary course of business which
would not, individually or in the aggregate, have a Material Adverse Effect.
4.7 No Violation of Law. The businesses of Parent and its
Subsidiaries are not being conducted in violation of any Law except (a) as set
forth in Schedule 4.7 of the Parent Disclosure Schedule and (b) for violations
which would not, individually or in the aggregate, have a Material Adverse
Effect.
4.8 Litigation. Except as set forth in Parent SEC Reports
filed prior to the date hereof or in Schedule 4.8 of the Parent Disclosure
Schedule, (a) there are no actions, suits, claims (including worker's
compensation claims), litigation or other governmental or judicial proceedings
or investigations or arbitrations pending against Parent, its Subsidiaries or
any of their properties, assets or business, or, to the knowledge of Parent, any
of Parent's or any Subsidiary's current or former directors or officers or any
other Person whom Parent or any Subsidiary of Parent has agreed to indemnify
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (b) as of the date hereof, there are no actions, suits
or proceedings pending or, to the knowledge of Parent, threatened, against
Parent relating to the transactions contemplated by the Transaction Agreements;
and (c) there are no outstanding orders, judgments, injunctions, awards or
decrees of any governmental entity against Parent, its Subsidiaries, any of
their properties, assets or businesses, or, to the knowledge of Parent, any of
Parent's or its Subsidiaries' current or former directors or officers or any
other Person whom Parent or any Subsidiary of Parent has agreed to indemnify
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
4.9 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Reports filed with the SEC prior to the date of this Agreement
or set forth in Schedule 4.9 of the Parent Disclosure Schedule, since February
27, 1999, (A) none of Parent or any of its Subsidiaries has incurred any
material liability or obligation (indirect, direct or contingent), or entered
into any material oral or written agreement or other transaction, that is not in
the ordinary course of business or that would,
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individually or in the aggregate, result in a Material Adverse Effect, except
for any such changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) Parent or any of its
Subsidiaries has not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that would, individually or in the aggregate, have a
Material Adverse Effect; and (C) there has been no event, circumstance or
development that would, individually or in the aggregate, have a Material
Adverse Effect, except for any such changes or effects resulting from the
Transaction Agreements, the transactions contemplated hereby or thereby or the
announcement thereof.
4.10 Authorization of Parent Common Stock. Parent has taken
all necessary action to permit it to issue the number of shares of Parent Common
Stock required to be issued pursuant to Article 1. Parent Common Stock issued
pursuant to Article 1 hereof will, when issued, be duly authorized, validly
issued, fully paid and nonassessable and no Person will have any preemptive
right of subscription or purchase in respect thereof.
4.11 Brokers or Finders. Except for Merrill Lynch & Co. with
respect to Parent, a copy of whose engagement agreement has or will be provided
to the Company, neither Parent nor any of its Subsidiaries has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee or any
commission in connection with or upon consummation of the transactions
contemplated hereby.
4.12 Disclosure Documents. None of the information supplied or
to be supplied by Parent for inclusion in (i) the Proxy Statement/Prospectus,
and (ii) the Registration Statement will, in the case of the Proxy
Statement/Prospectus, either at the time of mailing of the Proxy
Statement/Prospectus to Shareholders or at the time of the Shareholder Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
or will, in the case of the Registration Statement, either at the time the
Registration Statement is filed with the SEC or at the time the Registration
Statement becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading except
that no representation or warranty is made by Parent with respect to the
information supplied by the Company.
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ARTICLE 5
COVENANTS
5.1 Conduct of Business by the Company. From and after the
date of this Agreement and until the earlier of the termination of this
Agreement or the Effective Time (unless the other party shall otherwise agree in
writing and except as otherwise contemplated by this Agreement), the Company
will, and will cause each of its Subsidiaries to, conduct its operations
according to its ordinary and usual course of business consistent with past
practice and, to the extent consistent therewith, use best efforts to preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers, and others having business dealings with it. Without limiting the
generality of the foregoing, and except as otherwise permitted in this Agreement
or set forth on Section 5.1 of the Disclosure Schedule, prior to the Effective
Time, neither the Company nor its Subsidiaries will:
(a) except for shares to be issued or delivered
pursuant to the Existing Options, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition or
pledge or other encumbrance of (A) any additional shares of capital stock of any
class, or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital stock, or any
rights, warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock, or (B) any other securities in
respect of, in lieu of, or in substitution for, Company Common Stock outstanding
on the date hereof;
(b) amend its articles of incorporation or bylaws or
alter through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Subsidiary of the Company
(other than pursuant to the Merger) or split, combine, subdivide or reclassify
any Company Common Stock or declare, set aside for payment or pay any dividend
(except for regular quarterly dividends not in excess of $.05 per share of
Company Common Stock), or make any other actual, constructive or deemed
distribution in respect of any Company Common Stock or otherwise make any
payments to Shareholders in their capacity as such;
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(c) make payments or distributions (other than normal
salaries) to any Affiliate of the Company, except for transactions in the
ordinary course of business upon commercially reasonable, arm's length terms;
(d) (i) enter into, accelerate, terminate, modify in
any material respect, or cancel any supply agreement having a term in excess of
six months or any lease or purchase contract relating to the creation, expansion
or acquisition of a new retail store, (ii) enter into, accelerate, terminate,
modify in any material respect, or cancel any other Contract (other than
purchase orders entered into in the ordinary course of business with terms less
than six months) involving amounts greater than $750,000 and outside the
ordinary course of business or (iii) knowingly do any act or knowingly omit to
do any act or, to the extent within the Company's reasonable control, knowingly
permit any act or omission to act, which will cause a breach of any of the
Contracts that would have a Material Adverse Effect;
(e) (A) enter into or adopt any, or amend any
existing, severance plan, agreement or arrangement or enter into or amend any
Company Plan or employment or consulting agreement, other than (A) as required
by Law, or (B) except as expressly contemplated by this Agreement; increase the
compensation payable or to become payable to its officers, employees, or
directors except for increases in salaries or wages or payments of bonuses or
other compensation in the ordinary course of business consistent with past
practice to employees of the Company or any of its Subsidiaries who are not
executive officers of the Company or any of its Subsidiaries or grant any
additional rights to severance or termination pay to, or enter into any
employment or severance agreement with, any director or officer of the Company
or any of its Subsidiaries, or establish, adopt, enter into or, except as may be
required to comply with applicable Law, amend or take action in any such case in
a manner so as to enhance or accelerate any rights or benefits under, any labor,
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee;
(f) make any material acquisition, by means of
merger, consolidation or otherwise, or material disposition (other than
disposition of assets in the ordinary course of business, consistent with past
practice), of assets or securities or authorize or make any individual capital
expenditure (other than the capital expenditures provided in the Company's
capital expenditure budget for fiscal year 2000 which has been previously
provided to Parent) in excess of $250,000; provided, however, that
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representatives of the Company will consult on a regular basis with
representatives of Parent with respect to capital expenditures permitted by this
clause (f) and its plans with respect thereto;
(g) settle or compromise any material claims or
litigation, except in the ordinary and usual course of business;
(h) make any material change, other than in the
ordinary course of business and consistent with past practice or as required by
applicable Law, regulation or change in GAAP, in accounting policies or
procedures applied by the Company (including tax accounting policies and
procedures);
(i) create, incur or assume any Indebtedness or make
any Investment, other than in the ordinary course of business;
(j) fail to maintain all of the Existing Insurance
Policies (or policies substantially equivalent thereto) in full force and
effect, unless all reasonable efforts to maintain the Existing Insurance
Policies have been undertaken;
(k) fail to preserve in all material respects its
business organization intact, to retain the services of the employees and to
conduct business with suppliers, customers, creditors and others having business
relationships with the Company in the best interests of the Company, unless all
commercially reasonable efforts consistent with the Company's past practice to
preserve, retain and conduct such organization, employees and business have been
undertaken;
(l) knowingly do any act or omit to do any act that
would result in a breach of any representation by the Company set forth in this
Agreement; or
(m) authorize, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
5.2 Information Supplied. The Company and Parent each agrees,
as to itself and its Subsidiaries, that none of the information supplied or to
be supplied by it or its Subsidiaries in writing specifically for inclusion or
incorporation by reference in (i) the Registration Statement on Form S-4 (the
"Registration Statement") to be filed with the SEC by Parent in connection with
the issuance of shares of Parent Common Stock in the Merger (including the proxy
statement and prospectus (the "Proxy Statement/Prospectus") constituting a part
thereof) will, at the time the Registration
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Statement becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) the Proxy
Statement/Prospectus and any amendment or supplement thereto will, at the date
of mailing to shareholders and at the time of the meeting of shareholders of the
Company to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.3 Shareholder Meeting. The Company will take, in accordance
with applicable law and its articles of incorporation and bylaws, all action
necessary to convene a meeting of holders of Company Common Stock (the
"Shareholder Meeting") as promptly as practicable after the Registration
Statement is declared effective to consider and vote upon the approval of this
Agreement. Except as provided in Section 8.1(c)(i) with respect to a Superior
Proposal, the Company's board of directors shall recommend such approval and
shall take all lawful action to solicit such approval.
5.4 Filings; Approvals and Consents; Cooperation. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, investigating or challenging this Agreement or the
consummation of any of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
(b) Parent and the Company shall file as soon as
practicable after the date of this Agreement notifications under the HSR Act and
shall respond as
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promptly as practicable to all inquiries or requests received from the Federal
Trade Commission or the Antitrust Division of the Department of Justice for
additional information or documentation and shall respond as promptly as
practicable to all inquires and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters. The
parties shall cooperate with each other in connection with the making of all
such filings or responses, including providing copies of all such documents to
the other party and its advisors prior to filing or responding. Parent and
Acquisition agree to use their respective best efforts to avoid the entry of
(or, if entered, to lift, vacate or reverse) any order, decree, judgment or
ruling of any court or Governmental Entity restraining or preventing the
consummation of the Merger on the basis of any federal, state or local antitrust
laws or regulations, including by committing to or effecting (by consent decree,
hold separate order or otherwise) the sale or disposition of such assets of
Parent or the Company as may be required to avoid (or, if entered, to lift,
vacate or reverse) any such order, decree, judgment or ruling; provided,
however, that in no event shall Parent, Acquisition or the Company be obligated
under this Section 5.4 to take any action which is reasonably likely to have a
Material Adverse Effect on Parent, Acquisition or the Company.
(c) As soon as practicable following the execution of
this Agreement, Parent and the Company shall promptly prepare, and the Company
shall file with the SEC the Proxy Statement/Prospectus as preliminary proxy
materials under the Exchange Act, and shall seek confidential treatment with
respect thereto. Parent and the Company shall cooperate to respond promptly to
any comments made by the SEC with respect thereto. Upon resolution of any SEC
comments with respect to the draft Proxy Statement/Prospectus, or at such other
time as may be mutually determined by the parties hereto, Parent shall prepare
and file the Registration Statement (including the then-current draft of the
Proxy Statement/Prospectus) with the SEC, and:
(i) Parent and the Company shall respond promptly to any comments made by
the SEC with respect thereto;
(ii) Parent and the Company shall use their respective best efforts to cause
the Registration Statement to become effective under the Securities Act
as soon as practicable, and the Company shall cause the Proxy
Statement/Prospectus to be mailed to the Shareholders at the earliest
practicable time after effectiveness of the Registration Statement;
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(iii) Parent shall promptly advise the Company (A) when the Registration
Statement becomes effective, (B) when, prior to the Effective Time, any
amendment to the Registration Statement shall be filed or become
effective, (C) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (D) of the receipt
by Parent of any notification with respect to the suspension of the
registration or qualification of Parent Common Stock for sale in any
jurisdiction or the institution or threatening of any proceeding for
that purpose; and
(iv) Parent and the Company shall use their respective best efforts to
prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(d) The Company and Parent each shall, upon request
by the other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Proxy
Statement/Prospectus, the Registration Statement or any other statement, filing,
notice or applicable made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Merger and the transaction contemplated by this Agreement.
(e) The Company and Parent each shall keep the other
apprised of the status of matters relating to completion of the transactions
hereby, including promptly furnishing the other with copies of any notice or
other communications received by Parent or the Company, as the case may be, or
any of their respective Subsidiaries, from any third party and/or any
Governmental Entity with respect to the Merger and the other transactions
contemplated by this Agreement.
5.5 Listing of Parent Common Stock. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for listing on the NYSE, subject to official notice of issuance,
prior to the Closing Date.
5.6 Affiliates. Prior to the Effective Time, the Company shall
deliver to Parent a list of names and addresses of those Persons who are, in the
opinion of the Company, as of the time of the Shareholder Meeting, "affiliates"
of the Company within the meaning of Rule 145 under the Securities Act. The
Company shall provide to Parent
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such information and documents as Parent shall reasonably request for purposes
of reviewing such list. There shall be added to such list the names and
addresses of any other Person subsequently identified by either Parent or the
Company as a Person who may be deemed to be such an affiliate of the Company;
provided, however, that no such Person identified by Parent shall be added to
the list of affiliates of the Company if Parent shall receive from the Company,
on or before the date of the Shareholder Meeting, an opinion of counsel
reasonably satisfactory to Parent to the effect that such Person is not such an
affiliate. The Company shall seek to deliver or cause to be delivered to Parent,
prior to the date of the Shareholder Meeting, from each affiliate of the Company
identified in the foregoing list (as the same may be supplemented as aforesaid),
a letter dated as of the Closing Date substantially in the form attached as
Exhibit 3 (the "Affiliates Letter"). Parent shall not be required to maintain
the effectiveness of the Registration Statement or any other registration
statement under the Securities Act for the purposes of resale of Parent Common
Stock by such affiliates received in the Merger and the certificates
representing Parent Common Stock received by such affiliates shall bear a
customary legend regarding applicable Securities Act restrictions and the
provisions of this Section.
5.7 Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its board of directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
5.8 Tax-Free Reorganization. Each of Parent, Acquisition and
Company shall use all reasonable efforts to cause the Merger to constitute a
"reorganization" within the meaning of Section 368(a) of the Code. Unless
otherwise required (and then only to the extent otherwise required) by a
"determination" (as defined in Section 1313(a)(1)) of the Code or by a similar
applicable provision of state or local income tax law, each party shall (i)
report the Merger on all tax returns and other filings as a reorganization
within the meaning of Section 368(a) of the Code and, (ii) not take any position
that is inconsistent with the characterization of the Merger as such a
reorganization in any audit, administrative proceeding, litigation or otherwise.
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ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to consummate the Merger shall
be subject to the satisfaction prior to or at the Closing as hereinafter
provided of the following express conditions precedent, each of which may be
waived in whole or in part by the Company, Parent or Acquisition, as the case
may be, to the extent permitted by Law:
(a) Regulatory Approvals. Clearance from the
appropriate agencies pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), shall have been obtained by the Company
and Parent or the waiting period thereby required shall have expired or been
earlier terminated.
(b) Approval of Shareholders. This Agreement, the
Merger and the transactions contemplated by this Agreement shall have received
the requisite approval and authorization of the Shareholders.
(c) Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities Act
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn.
(d) Listing of Parent Common Stock. The Parent
Common Stock to be issued in the Merger shall have been approved for listing on
the NYSE, subject to official notice of issuance.
(e) Statutes, Court Orders. No statute, rule or
regulation shall have been enacted or promulgated by any governmental authority
which prohibits, restricts or makes illegal the consummation of the Merger; and
there shall be no order or injunction of a court of competent jurisdiction in
effect precluding or restricting consummation of the Merger.
6.2 Conditions to Parent's and Acquisition's Obligation
to Effect the Merger. The obligations of Parent and Acquisition to consummate
the Merger are further subject to
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(a) Representations and Warranties of the Company.
The representations and warranties made by the Company in this Agreement shall
be true and correct (i) in all respects at and as of the Effective Time (as to
representations and warranties specifically qualified or limited by the term
"Material Adverse Effect," the word "material" and phrases of like import), and
(ii) in all material respects at and as of the Effective Time (as to
representations and warranties not qualified or limited by the term "Material
Adverse Effect," the word "material" and phrases of like import), in each case
with the same force and effect as though made at and as of the Effective Time
(except to the extent they relate to a specific date), the Company shall have
performed in all material respects all of its obligations under this Agreement
theretofore to be performed, and Parent shall have received at the Effective
Time a certificate of the Chief Executive Officer and Chief Financial Officer of
the Company to that effect.
(b) No Material Adverse Change. During the period
from the date of this Agreement to the Closing Date, there shall not have
occurred any Material Adverse Effect with respect to the Company that continues
to exist on the Closing Date and as of the Effective Time.
(c) Tax Opinion. Parent shall have received the
opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois), special counsel to
Parent, dated the Closing Date and in form and substance reasonably satisfactory
to Parent, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing on the Closing Date, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code. In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom
(Illinois) may require and rely upon (and may incorporate by reference)
representations and covenants, including those contained in certificates of
officers of Parent, Acquisition, the Company and others.
6.3 Conditions to the Company's Obligation to Effect the
Merger. The obligation of the Company to consummate the Merger shall be subject
to the satisfaction prior to or at the Closing as hereinafter provided of the
following express conditions precedent:
(a) Representations and Warranties of Parent and
Acquisition. The representations and warranties made by Parent and Acquisition
in this Agreement shall be true and correct (i) in all respects at and as of the
Effective Time (as to representations and warranties specifically qualified or
limited by the term "Material Adverse Effect," the word "material" and phrases
of like import), and (ii) in all material
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respects at and as of the Effective Time (as to representations and warranties
not qualified or limited by the term "Material Adverse Effect," the word
"material" and phrases of like import), in each case with the same force and
effect as though made at and as of the Effective Time (except to the extent they
relate to a specific date), Parent and Acquisition shall have performed in all
material respects all of their respective obligations under this Agreement
theretofore to be performed, and the Company shall have received at the
Effective Time a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent to that effect.
(b) Tax Opinion. The Company shall have received the
opinion of Hunton & Williams, counsel to the Company, dated the Closing Date and
in form and substance reasonably satisfactory to the Company, to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing on the Closing
Date, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, Hunton & Williams may require and rely upon (and may incorporate
by reference) representations and covenants, including those contained in
certificates of officers of Parent, Acquisition, the Company and others.
ARTICLE 7
NO SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
7.1 No Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
7.2 Directors' and Officers' Indemnification; Insurance.
(a) From and after the Effective Time, Parent
shall cause the Surviving Corporation to indemnify and hold harmless each person
who is now, or has been at any time prior to the date hereof, an officer,
director, employee or agent of the Company or any of its Subsidiaries (the
"Indemnified Parties") against any losses, claims, damages, judgments,
settlements, liabilities, costs or expenses (including, without limitation,
reasonable attorneys' fees and out-of-pocket expenses) incurred in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such occurring at or prior to the Effective Time, whether asserted
or claimed prior to,
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at or after the Effective Time (including, without limitation, in connection
with the Merger and the other transactions contemplated by this Agreement), to
the fullest extent that the Company or such Subsidiaries would have been
permitted, under applicable law and the Articles of Incorporation or Bylaws of
the Company or the organizational documents of such Subsidiaries, each as in
effect on the date of this Agreement. In connection with the foregoing, Parent
shall cause the Surviving Corporation to advance expenses as incurred to the
fullest extent permitted under applicable Law upon receipt from the Indemnified
Party to whom expenses are advanced of any written undertaking to repay such
advances required under applicable Law. Parent shall cause the Surviving
Corporation to pay all reasonable expenses, including reasonable attorneys'
fees, that may be incurred by any Indemnified Party in enforcing this Section
7.2. If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving person or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 7.2. The parties
acknowledge and agree that to the extent that the Surviving Corporation fails to
comply with its indemnification obligations pursuant to this Section 7.2, Parent
shall indemnify and hold harmless each of the Indemnified Parties to the same
extent as the Surviving Corporation was required to indemnify such Indemnified
Parties hereunder.
(b) Unless otherwise required by Law, (i) at the
Effective Time, the Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain provisions providing for exculpation of director and
officer liability and indemnification by the Surviving Corporation of the
Indemnified Parties not less favorable to the Indemnified Parties than those
provisions providing for exculpation of director and officer liability and
indemnification by the Company of the Indemnified Parties contained in the
Articles of Incorporation and Bylaws of the Company as in effect on the date of
this Agreement, and (ii) for a period of five years from the Effective Time, the
Surviving Corporation and the Company's Subsidiaries shall not amend, repeal or
modify any such provisions contained in their respective certificates of
incorporation and bylaws, or other organizational documents of such
Subsidiaries, to reduce or adversely affect the rights of the Indemnified
Parties thereunder in respect of actions or omissions by them occurring at or
prior to the Effective Time.
(c) Parent shall cause the Surviving Corporation to
purchase a three-year extended reporting period endorsement ("reporting tail
coverage") under the Company's existing directors' and officers' liability
insurance coverage, provided that
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such reporting tail coverage shall extend the director and officer liability
coverage in force as of the date hereof from the Effective Time on terms, that
in all material respects, are no less advantageous to the intended beneficiaries
thereof than the existing directors' and officers' liability insurance.
(d) This covenant is intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties and their
respective heirs and legal representatives.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing (whether before or after the approval of this Agreement by the
Shareholders), as follows:
(a) by mutual written agreement of Parent and the
Company;
(b) by either of the Company or Parent:
(i) if the Effective Time shall not have occurred on or before January 15,
2000; provided, however, that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(ii) if any Governmental Entity shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action
the parties hereto shall use all reasonable efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree or
ruling or other action shall have become final and non-appealable; or
(iii) if, at the Shareholder Meeting (including any adjournment or
postponement thereof) called pursuant to Section 5.3
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hereof, the requisite vote of the Shareholders of the Company shall not
have been obtained.
(c) by the Company:
(i) if (a) the Company, based on the advice of outside legal counsel to the
Company that such action is consistent with the Board of Director's
fiduciary duties under applicable Law and the determination by the
Board of Directors of the Company in good faith that such action is in
the best interests of the Company and its shareholders, subject to
complying with the terms of this Agreement, is fully prepared to enter
into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Parent in
writing that it intends to enter into such an agreement, attaching the
most current version of such agreement to such notice, (b) Parent does
not make, within two business days of receipt of the Company's written
notification of its intention to enter into a binding agreement for a
Superior Proposal, an offer to enter into an amendment to this
Agreement such that the Board of Directors of the Company determines,
in good faith after consultation with its financial advisors, that this
Agreement as so amended is at least as favorable, from a financial
point of view, to the shareholders of the Company as the Superior
Proposal, (c) the Company prior to such termination pays to Parent in
immediately available funds any fees required to be paid pursuant to
Section 8.3 and (d) substantially simultaneously with such termination,
the Company enters into the binding written agreement referred to
in clause (a) above. The Company agrees (A) that it will not enter
into a binding agreement referred to in clause (a) above until at least
the third business day after it has provided the notice to Parent
required thereby and (B) to notify Parent promptly if its intention to
enter into a written agreement referred to in its notification shall
change at any time after giving such notification;
(ii) if Parent or Acquisition shall have breached in any material respect
any of their respective representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has
not been cured, in all material respects, within 30 days after the
giving of written notice to Parent or Acquisition, as applicable; or
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(iii) if the Average Parent Price is less than $18.50 and the Company
provides written notice of termination to Parent prior to the close of
business on the second trading day following the Determination Date
unless (x) the Average Parent Price is equal to or greater than $15.00
and (y) on or before the close of business on the third trading day
following its receipt of such written notice of termination from the
Company, Parent shall have delivered written notice to the Company of
its agreement to increase the percentage of Aggregate Merger
Consideration that shall be paid in cash such that the Aggregate Merger
Consideration shall consist of an aggregate number of shares of Parent
Common Stock used as Merger Consideration equal to 50% of Aggregate
Company Shares and the remainder in cash; provided, however, if the
amount of aggregate cash consideration set forth immediately above plus
the cash used in respect to the Company Stock Options under Section
1.10 would exceed the maximum amount permitted without preventing the
Merger from qualifying as a reorganization with the meaning of Section
368(a) of the Code as determined by the tax advisors of the Company and
Parent (the "Maximum Cash Amount"), then Parent may agree to provide
all Merger Consideration beyond the Maximum Cash Amount in Parent
Common Stock measured by the Average Parent Price.
(d) by Parent
(i) if prior to the consummation of the Merger, the Company shall have
breached any representation, warranty, covenant or other agreement
contained in this Agreement, which breach cannot be or has not been
cured, in all material respects, within 30 days after the giving of
written notice to the Company;
(ii) if, at any time prior to the Effective Time, the Board of Directors of
the Company shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or failed to reconfirm its
recommendation of this Agreement within five business days after a
written request by Parent to do so; or
(iii) if the Average Parent Price is less than $18.50 and Parent provides
written notice of termination to the Company
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prior to the close of business on the second trading day following the
Determination Date.
8.2 Rights on Termination. In the event of termination and
abandonment of the Merger by any party pursuant to Section 8.1, written notice
thereof shall forthwith be given to the other parties and this Agreement shall
terminate and the Merger and the other transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated and the transactions contemplated hereby are not
consummated pursuant to Section 8.1 of this Agreement, this Agreement shall
become void and of no further force and effect, except for (a) the provisions of
Section 2.1 relating to the obligation of Parent and Acquisition to keep
confidential and not to use certain information obtained from the Company and
(b) the provisions of Section 8.3 relating to the Company's obligations to make
certain payments to Parent.
8.3 Termination Fee Payable to Parent. Notwithstanding any
provision to the contrary contained herein, the Company shall immediately pay to
Parent (x) the amount of $27 million and (y) all reasonably documented
out-of-pocket expenses, not to exceed $3 million in the aggregate, reasonably
incurred by Parent and Acquisition in connection with this Agreement and the
Merger if this Agreement is terminated pursuant to Section 8.1(b)(iii), Section
8.1(c)(i), Section 8.1(d)(i) (if the breach thereof is due to the Company's
intentional or bad faith acts), or Section 8.1(d)(ii). The amount in (x) above
shall be paid concurrently with any such termination and the amount in (y) above
shall be paid within five (5) business days after receipt by the Company of
reasonably detailed evidence of the same. Upon receipt of such payments, Parent
shall not be entitled to and shall waive the right to seek damages or other
amounts or remedies from the Company for breach of, or otherwise in connection
with, this Agreement.
8.4 Other Remedies. Notwithstanding any provision to the
contrary contained herein, if this Agreement is terminated pursuant to Article 8
or otherwise by the Company, on the one hand, or Parent or Acquisition, on the
other hand, and the non-terminating party is not entitled to receive the
payments described in Section 8.3 (as the case may be), then the non-terminating
party shall be entitled to pursue any available legal rights to recover actual
damages, including, without limitation, its reasonable costs and expenses
incurred in pursuing such recovery (including, without limitation, reasonable
attorneys' fees).
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ARTICLE 9
MISCELLANEOUS
9.1 Expenses. Except as set forth in Section 8.3 hereof, if
this Agreement is not consummated, Parent and Acquisition, on the one hand, and
the Company, on the other hand, shall bear their respective legal fees and
expenses.
9.2 Entire Agreement; Amendment. This Agreement and the
documents referred to in this Agreement and required to be delivered pursuant to
this Agreement constitute the entire agreement among the parties pertaining to
the subject matter of this Agreement, and (except as contemplated in Section 2.5
hereof) supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement, except as specifically set
forth in this Agreement. No amendment, supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision of this
Agreement, whether or not similar, nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
9.3 Governing Law. This Agreement shall be governed and
construed (i) with respect to the Merger, in accordance with the Laws of the
Commonwealth of Virginia and State of Delaware, as applicable, and (ii) with
respect to all other transactions contemplated hereunder, in accordance with the
Laws of the Commonwealth of Virginia applicable to agreements made and to be
performed entirely within such State.
9.4 Assignment. Prior to the Closing, this Agreement may not
be assigned by any party hereto, except with the prior written consent of the
other parties hereto.
9.5 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date personally delivered or sent by telephonic
facsimile transmission (with a copy via regular mail) or one day after sending
via nationally recognized overnight courier or five days after deposit in the
United States mail, certified or registered mail, postage
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prepaid, return receipt requested, and addressed as follows, unless and until
any of such parties notifies the others in accordance with this Section of a
change of address:
If to Parent: SUPERVALU INC.
11840 Valleyview Road
Eden Prairie, MN 55344
Telephone: (612) 828 - 4000
Telecopy: (612) 828 - 4838
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
(Illinois)
333 West Wacker
Suite 2100
Chicago, Illinois 60606
Telephone: (312) 407-0700
Telecopy: (312) 407-0411
Attention: William R. Kunkel
If to the Company: Richfood Holdings, Inc.
4860 Cox Road, Suite 300
Glen Allen, VA 23060
Telephone: (804) 915 - 6000
Telecopy: (804) 915 - 6010
Attention: John E. Stokely
with a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Telephone: (804) 788-8200
Telecopy: (804) 788-8218
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Attention: Gary E. Thompson
9.6 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
9.7 Interpretation. Unless the context requires otherwise, all
words used in this Agreement in the singular number shall extend to and include
the plural, all words in the plural number shall extend to and include the
singular, and all words in any gender shall extend to and include all genders.
9.8 Specific Performance. The parties agree that the assets
and business of the Company as a going concern constitute unique property and,
accordingly, each party shall be entitled, at its option and in addition to any
other remedies available as herein provided, to the remedy of specific
performance to effect the Merger as provided in this Agreement.
9.9 No Reliance. Except for Section 7.2, which is intended to
be for the benefit of the Indemnified Parties, and except for the parties to
this Agreement: (a) no Person is entitled to rely on any of the representations,
warranties and agreements of the parties contained in this Agreement; and (b)
the parties assume no liability to any Person because of any reliance on the
representations, warranties and agreements of the parties contained in this
Agreement.
9.10 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
9.11 No Third Party Beneficiary. Except as provided pursuant
to Section 7.2 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors and
assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person.
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ARTICLE 10
DEFINITIONS
When used in this Agreement, and in addition to the other
terms defined herein, the following terms shall have the meanings specified:
10.1 Affiliate. "Affiliate" shall mean, in relation to any
party hereto, any entity directly or indirectly controlling, controlled by or
under common control with such party.
10.2 Agreement. "Agreement" shall mean this Agreement and Plan
of Merger, together with the Exhibits attached hereto and the Disclosure
Schedule, as the same may be amended from time to time in accordance with the
terms hereof.
10.3 Buildings. "Buildings" shall mean all buildings,
fixtures, structures and improvements leased or owned by the Company or its
Subsidiaries.
10.4 Contracts. "Contracts" shall mean all of the contracts,
agreements and obligations, written or oral, to which the Company is a party or
by which the Company or any of its assets are bound, including, without
limitation, any loan, bond, mortgage, indenture, lease, instrument, franchise or
license.
10.5 Control. "Control" (including the terms "controlling,"
"controlled by," and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities or by contract.
10.6 DGCL. "DGCL" shall mean the General Corporation Law of
the State of Delaware.
10.7 Disclosure Schedule. "Disclosure Schedule" shall mean
the Disclosure Schedule delivered by the Company to the Parent pursuant to
Section 2.2(a) of this Agreement.
10.8 Employees. "Employees" shall mean all of the employees
of the Company.
10.9 Environmental Claim. "Environmental Claim" shall mean any
and all administrative, regulatory or judicial actions, suits, demands, demand
letters, directives,
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claims, Liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person alleging liability (including, without
limitation, liability for enforcement, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries, or penalties) arising out of,
based on or resulting from: (A) the presence or environmental release of any
Hazardous Materials at any parcel of real property; or (B) circumstances forming
the basis of any violation or alleged violation, of any Environmental Law; or
(C) any and all claims by any Person seeking damages, contribution,
indemnification, cost, recovery, compensation or injunctive relief resulting
from the presence or environmental release of any Hazardous Materials.
10.10 Environmental Laws. "Environmental Laws" shall mean any
federal, state, local or foreign statute, Law, rule, ordinance, code, policy,
rule of common law and regulations relating to pollution or protection of human
health (excluding OSHA) or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
including, without limitation, Laws and regulations relating to environmental
releases or threatened environmental releases of Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
10.11 Equipment. "Equipment" shall mean all machinery,
equipment, boilers, furniture, fixtures, motor vehicles, furnishings, parts,
tools, office equipment, computers and other items of tangible personal property
owned or used by the Company or its Subsidiaries.
10.12 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be in effect from time to time.
10.13 Existing Insurance Policies. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect and
owned by the Company.
10.14 Existing Liens. "Existing Liens" shall mean those
Liens affecting any of the assets or properties of the Company.
10.15 Existing Options. "Existing Options" shall mean any of
the following relating to any capital stock or other equity interest of the
Company: (a) options or warrants (whether vested or not) to purchase or other
rights (including registration rights), agreements, arrangements or commitments
of any character to which the Company is a party relating to the issued or
unissued capital stock or other equity or phantom equity interests of the
Company to grant, issue or sell any shares of the capital stock or other equity
or phantom equity interests
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of the Company by sale, lease, license or otherwise; (b) rights to subscribe for
or purchase any shares of the capital stock or other equity or phantom equity
interests of the Company; or (c) Contracts with respect to any right to
purchase, put or call any shares of the capital stock or other equity or phantom
equity interests of the Company.
10.16 Existing Permits. "Existing Permits" shall mean those
permits, licenses, approvals, qualifications, authorizations, and registrations
required by Law which the Company has or holds.
10.17 Governmental Entity. "Governmental Entity" shall mean
any federal, state, local or foreign court, arbitral tribunal, administrative
agency or commission or other governmental or regulatory authority or
administrative agency.
10.18 Hazardous Materials. "Hazardous Materials" shall mean:
(A) any petroleum or petroleum products, radioactive materials, asbestos in any
form that is friable, urea formaldehyde foam insulation, and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls ("PCBs") above regulated levels and radon gas; and (B) any chemicals,
materials or substances which are now defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any Environmental Law; and (C)
any other chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated by any governmental authority.
10.19 Indebtedness. "Indebtedness" shall mean all liabilities
or obligations of the Company, whether primary or secondary or absolute or
contingent, in excess of $500,000 as to any single item: (a) for borrowed money;
or (b) evidenced by notes, bonds, debentures or similar instruments; or (c)
secured by Liens on any assets of the Company.
10.20 Intangible Assets. "Intangible Assets" shall mean (a)
any invention, United States and foreign patents, pending patent applications,
trade names, trade dress, logos, corporate names, trademarks, service marks,
trademark registrations, service mark registrations, pending trademark
applications, pending service mark applications, registered copyrights, and
pending copyright applications, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (b) proprietary software; and (c) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
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techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals).
10.21 Investment. "Investment" by the Company shall mean (a)
any transfer or delivery of cash, stock or other property or value by the
Company in exchange for equity, debt, preferred stock, partnership interests,
participations or any other security of another Person; (b) any loan or capital
contribution to or in any other Person; (c) any guaranty of any obligation to
pay money to, or perform an obligation of, any other Person; and (d) any
investments in any property or assets other than properties and assets acquired
and used in the ordinary course of the business of the Company.
10.22 Knowledge. "Knowledge," as to the Company, shall mean
the actual knowledge of those officers of the Company identified in Section
10.22A of the Disclosure Schedule, and "knowledge," as to the Parent and
Acquisition, shall mean the actual knowledge of those officers of Parent and
Acquisition identified in Section 10.22B of the Parent Disclosure Schedule.
10.23 Law. "Law" shall mean any foreign, federal, state or
local governmental law, rule, regulation or requirement, including any rules,
regulations and orders promulgated thereunder and any orders, decrees, consents
or judgments of any governmental regulatory agencies and courts having the force
of law, other than any Environmental Laws.
10.24 Lien. "Lien" shall mean, with respect to any asset
(real, personal or mixed): (a) any mortgage, pledge, lien, easement, lease,
title defect or imperfection or any other form of security interest, whether
imposed by Law or by Contract; and (b) the interest of a vendor or lessor under
any conditional sale agreement, financing lease or other title retention
agreement relating to such asset.
10.25 Material Adverse Effect. "Material Adverse Effect" shall
mean a material adverse effect on the business, financial condition , results of
operations, assets or liabilities of the Company and its Subsidiaries or Parent
and its Subsidiaries (including Acquisition), as applicable, each taken as a
whole, excluding any changes and effects resulting from general changes in
economic, market, regulatory or political conditions or changes in conditions
generally applicable to the industries in which the Company and its Subsidiaries
or Parent and its Subsidiaries, as applicable, are involved.
10.26 Merger. "Merger" shall mean the merger of
Acquisition with and into the Company pursuant to this Agreement.
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10.27 Parent Disclosure Schedule. "Parent Disclosure
Schedule" shall mean the Disclosure Schedule delivered by the Parent to the
Company pursuant to Section 2.2(a) of this Agreement.
10.28 Permitted Liens. "Permitted Liens" shall mean those of
the Existing Liens that do not materially detract from the value of the property
or assets of the Company taken as a whole subject thereto and do not materially
impair the business or operations of the Company taken as a whole and other
Liens incurred in the ordinary course of business of the Company that do not
materially detract from the value or impair the use of the specific property to
which such Lien relates.
10.29 Person. "Person" shall mean a natural person,
corporation, limited liability company, association, joint stock company, trust,
partnership, governmental entity, agency or branch or department thereof, or any
other legal entity.
10.30 Real Estate. "Real Estate" shall mean the parcels of
real property owned or leased by the Company or its Subsidiaries.
10.31 SEC. "SEC" shall mean the Securities and Exchange
Commission.
10.32 Shareholders. "Shareholders" shall mean all Persons
owning any shares of Company Common Stock.
10.33 Subsidiary. "Subsidiary" shall mean any corporation, at
least a majority of the outstanding capital stock of which (or any class or
classes, however designated, having ordinary voting power for the election of at
least a majority of the board of directors of such corporation) shall at the
time be owned by the relevant Person directly or through one or more
corporations which are themselves Subsidiaries.
10.34 VSCA. "VSCA" shall mean the Virginia Stock Corporation
Act.
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IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed as of the day and year first above written.
SUPERVALU INC.
By: /s/ Michael W. Wright
---------------------------------
Name: Michael W. Wright
Title: Chairman, CEO &
President
WINTER ACQUISITION, INC.
By: /s/ Michael W. Wright
--------------------------------
Name: Michael W. Wright
Title: Chairman, CEO &
President
RICHFOOD HOLDINGS, INC.
By: /s/ John E. Stokely
-------------------------------
Name: John E. Stokely
Title: Chairman, President &
Chief Executive Officer
