Tender-Offer Statement — Third-Party Tender Offer — Schedule TO
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC TO-T Tender-Offer Statement -- Third-Party Tender Offer 6 36K
2: EX-99.(A)(1)(A) Offer to Purchase 45 244K
3: EX-99.(A)(1)(B) Letter of Transmittal 12 59K
4: EX-99.(A)(1)(C) Notice of Guaranteed Delivery 2 14K
5: EX-99.(A)(1)(D) Letter to Brokers,Dealers 3 16K
6: EX-99.(A)(1)(E) Letter to Clients 3 17K
7: EX-99.(A)(1)(F) Guidelines for Certification of Taxpayer I.D. 5± 21K
No.
8: EX-99.(A)(5)(F) Summary Advertisement as Published May 5± 25K
17,2002
9: EX-99.(A)(5)(G) Press Release Issued by Sears on May 17,2002 1 8K
10: EX-99.(D)(1) Acquisition Agreement 55 228K
11: EX-99.(D)(2) Form of Tender Agreement,Dated May 12,2002 12 43K
12: EX-99.(D)(3) Confidentiality Agreement 8 34K
13: EX-99.(D)(4) Letter Agreement,Dated May 13,2002 2 14K
Exhibit (d)(1)
Execution Copy
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ACQUISITION AGREEMENT
AND AGREEMENT AND PLAN OF MERGER
by and among
SEARS, ROEBUCK AND CO.,
INLET ACQUISITION CORP.
and
LANDS' END, INC.
dated as of
May 12, 2002
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TABLE OF CONTENTS
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ARTICLE I THE OFFER AND MERGER.....................................................2
SECTION 1.1 THE OFFER.......................................................2
SECTION 1.2 COMPANY ACTIONS.................................................4
SECTION 1.3 DIRECTORS.......................................................5
SECTION 1.4 THE MERGER......................................................7
SECTION 1.5 EFFECTIVE TIME..................................................7
SECTION 1.6 CLOSING.........................................................7
SECTION 1.7 EFFECTS OF THE MERGER...........................................7
SECTION 1.8 SUBSEQUENT ACTIONS..............................................8
SECTION 1.9 MERGER WITHOUT MEETING OF STOCKHOLDERS..........................8
SECTION 1.10 INFORMATION STATEMENT...........................................8
ARTICLE II CONVERSION OF SECURITIES...............................................10
SECTION 2.1 CONVERSION OF CAPITAL STOCK....................................10
SECTION 2.2 EXCHANGE OF CERTIFICATES.......................................11
SECTION 2.3 DISSENTING SHARES..............................................13
SECTION 2.4 COMPANY OPTION PLANS...........................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................15
SECTION 3.1 CORPORATE EXISTENCE AND POWER..................................15
SECTION 3.2 CORPORATE AUTHORIZATION; APPROVALS.............................15
SECTION 3.3 GOVERNMENTAL AUTHORIZATION.....................................16
SECTION 3.4 NON-CONTRAVENTION..............................................16
SECTION 3.5 CAPITALIZATION.................................................17
SECTION 3.6 SUBSIDIARIES...................................................18
SECTION 3.7 PAST SEC DOCUMENTS.............................................18
SECTION 3.8 FINANCIAL STATEMENTS; LIABILITIES..............................19
SECTION 3.9 SCHEDULE 14D-9.................................................19
SECTION 3.10 ABSENCE OF CERTAIN CHANGES.....................................20
SECTION 3.11 LITIGATION.....................................................20
SECTION 3.12 TAXES..........................................................20
SECTION 3.13 COMPLIANCE WITH LAWS; LICENSES, PERMITS AND REGISTRATIONS......21
SECTION 3.14 CONTRACTS......................................................21
SECTION 3.15 EMPLOYEE BENEFIT PLANS.........................................22
SECTION 3.16 TRANSACTIONS WITH AFFILIATES...................................24
SECTION 3.17 INTELLECTUAL PROPERTY..........................................24
SECTION 3.18 REQUIRED VOTE; BOARD APPROVAL..................................25
SECTION 3.19 TITLE TO PROPERTIES; ENCUMBRANCES..............................25
SECTION 3.20 MAJOR SUPPLIERS................................................26
SECTION 3.21 FINDERS' FEES; OPINION OF COMPANY FINANCIAL ADVISOR............26
SECTION 3.22 SECTION 203 OF THE DGCL........................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.............26
SECTION 4.1 CORPORATE EXISTENCE AND POWER..................................27
SECTION 4.2 CORPORATE AUTHORIZATION; APPROVALS.............................27
SECTION 4.3 GOVERNMENTAL AUTHORIZATION.....................................27
SECTION 4.4 NON-CONTRAVENTION..............................................27
SECTION 4.5 INFORMATION IN THE OFFER DOCUMENTS.............................28
SECTION 4.6 FINANCING......................................................28
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SECTION 4.7 PURCHASER'S OPERATIONS.........................................28
SECTION 4.8 VOTE REQUIRED..................................................28
SECTION 4.9 OWNERSHIP OF COMPANY COMMON SHARES.............................28
SECTION 4.10 FINDERS' FEES..................................................28
ARTICLE V COVENANTS...............................................................29
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY..............................29
SECTION 5.2 HSR ACT; FOREIGN ANTITRUST LAWS................................31
SECTION 5.3 ACQUISITION PROPOSALS..........................................31
SECTION 5.4 CERTAIN TAX MATTERS............................................34
SECTION 5.5 CERTAIN DELIVERIES.............................................34
ARTICLE VI COVENANTS OF PARENT AND PURCHASER......................................34
SECTION 6.1 DIRECTOR AND OFFICER LIABILITY.................................34
SECTION 6.2 EMPLOYEE BENEFITS..............................................35
SECTION 6.3 CONDUCT OF THE PURCHASER.......................................36
ARTICLE VII COVENANTS OF PURCHASER AND COMPANY....................................36
SECTION 7.1 REASONABLE BEST EFFORTS........................................36
SECTION 7.2 CERTAIN FILINGS; COOPERATION IN RECEIPT OF CONSENTS............37
SECTION 7.3 PUBLIC ANNOUNCEMENTS...........................................37
SECTION 7.4 ACCESS TO INFORMATION..........................................38
SECTION 7.5 NOTICES OF CERTAIN EVENTS......................................38
SECTION 7.6 TRANSFER TAXES.................................................38
ARTICLE VIII CONDITIONS...........................................................38
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.....38
ARTICLE IX TERMINATION............................................................39
SECTION 9.1 TERMINATION....................................................39
SECTION 9.2 EFFECT OF TERMINATION..........................................41
SECTION 9.3 FEES AND EXPENSES..............................................41
ARTICLE X MISCELLANEOUS...........................................................43
SECTION 10.1 WAIVERS AND AMENDMENTS.........................................43
SECTION 10.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES..................43
SECTION 10.3 NOTICES........................................................43
SECTION 10.4 INTERPRETATION.................................................44
SECTION 10.5 COUNTERPARTS...................................................45
SECTION 10.6 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES....................45
SECTION 10.7 SEVERABILITY...................................................45
SECTION 10.8 GOVERNING LAW..................................................45
SECTION 10.9 ASSIGNMENT.....................................................45
SECTION 10.10 HEADINGS.......................................................45
SECTION 10.11 SPECIFIC PERFORMANCE...........................................45
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DEFINED TERM PAGE NUMBER
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Acquisition Proposal...................... 33
affiliate(s).............................. 46
Agreement................................. 1
Certificate of Merger..................... 7
Certificates.............................. 11
Closing................................... 8
Closing Date.............................. 8
COBRA..................................... 23
Code...................................... 14
Company................................... 1
Company 10-K.............................. 19
Company Balance Sheet..................... 19
Company Common Shares..................... 1
Company Employee Plan..................... 23
Company Employees......................... 36
Company Financial Advisor................. 27
Company Foreign Benefit Plan.............. 24
Company Intellectual Property............. 25
Company Material Adverse Effect........... 15
Company Option Plans...................... 13
Company Options........................... 14
Company Preferred Shares.................. 17
Company Required Governmental Consents.... 16
Company Returns........................... 21
Company Stockholder Approval.............. 26
Company Subsidiary........................ 7
Company Tender Recommendation............. 4
DGCL...................................... 1
Dissenting Shares......................... 13
Effective Time............................ 8
Employee Option Plan...................... 13
ERISA..................................... 22
Exchange Act.............................. 2
Expiration Date........................... 2
Fully-Diluted Basis....................... 2
GAAP...................................... 19
Governmental Entity....................... 12
HSR Act................................... 16
Indemnified Parties....................... 36
Independent Directors..................... 6
Information Statement..................... 9
Initial Expiration Date................... 2
IRS....................................... 23
Knowledge of Company...................... 46
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Lien...................................... 17
Merger.................................... 7
Merger Consideration...................... 10
Minimum Condition......................... 2
NYSE...................................... 16
Offer..................................... 2
Offer Documents........................... 4
Offer Price............................... 2
Offer to Purchase......................... 2
Option Spread Payment..................... 14
Outside Date.............................. 3
Parent.................................... 1
Parent Financial Advisor.................. 29
Parent Material Adverse Effect............ 16
Parent Required Governmental Consents..... 28
Parent Subsidiary......................... 7
Past SEC Documents........................ 19
Paying Agent.............................. 11
person.................................... 46
Post-Signing Returns...................... 35
Proxy Statement........................... 9
Purchaser................................. 1
Purchaser Common Stock.................... 10
Real Property............................. 26
Real Property Leases...................... 26
Schedule 14D-9............................ 4
Schedule TO............................... 3
SEC....................................... 3
Securities Act............................ 16
Share Purchase Date....................... 5
Subsequent Offering Period................ 3
Subsidiary................................ 7
Superior Proposal......................... 34
Suppliers................................. 26
Surviving Corporation..................... 7
Tax....................................... 21
Tax Returns............................... 21
Taxes..................................... 21
Taxing Authority.......................... 21
Tender Agreements......................... 1
Termination Fee........................... 43
Transactions.............................. 1
Transfer Taxes............................ 40
Triggering Person......................... 43
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Exhibits
Exhibit A - Conditions to the Tender Offer
Schedules
Company Disclosure Schedule
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ACQUISITION AGREEMENT
AND AGREEMENT AND PLAN OF MERGER
--------------------------------
ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF MERGER (this
"Agreement"), dated as of May 12, 2002, by and among Sears, Roebuck and Co.,
a New York corporation (the "Parent"), Inlet Acquisition Corp., a Delaware
corporation and a direct, wholly-owned subsidiary of the Parent (the
"Purchaser"), and Lands' End, Inc., a Delaware corporation (the "Company").
WHEREAS, this Agreement provides for the Parent to acquire the
Company by (i) causing the Purchaser to make a tender offer for all issued
and outstanding shares of common stock, par value $0.01 per share, of the
Company (referred to herein as "Company Common Shares") for $62.00 per share,
net to the seller in cash, and (ii) as promptly as practicable after the
closing of such tender offer, causing the Purchaser to merge with and into
the Company, with each then issued and outstanding Company Common Share being
converted into the same amount of cash per share as paid in the tender offer,
upon the terms and conditions set forth herein;
WHEREAS, the boards of directors of the Parent, the Purchaser and
the Company have each declared advisable and approved and adopted this
Agreement and the Merger (as defined in Section 1.4 hereof) following the
Offer in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), and upon the terms and subject to the
conditions set forth herein;
WHEREAS, the board of directors of the Company has determined that
the consideration to be paid for each Company Common Share in the Offer and
the Merger is fair to the holders of such Company Common Shares and has
resolved to recommend that the holders of such Company Common Shares accept
the Offer, tender their Company Common Shares pursuant thereto and approve
and adopt this Agreement and each of the transactions contemplated hereby,
including the Offer and the Merger (the "Transactions"), upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as a condition and inducement to the Parent's and the
Purchaser's entering into this Agreement, certain stockholders of the
Company, concurrently herewith, are entering into a Tender Agreement
(collectively, the "Tender Agreements"), dated as of the date hereof, with
the Parent and the Purchaser, pursuant to which such stockholders are
agreeing, subject to the terms and conditions contained therein, to tender
the Company Common Shares held by them in the Offer.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 9.1 and none of the events set forth in Exhibit A
hereto shall have occurred and be continuing, as promptly as practicable and
in any event within 7 business days of the date hereof, the Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder
("Exchange Act")) an offer (the "Offer") to purchase all Company Common
Shares at a price of $62.00 per Company Common Share, net to the seller in
cash (such price, or the highest of any price per Company Common Share as may
be paid in the Offer, being referred to herein as the "Offer Price"). The
obligations of the Purchaser to accept for payment and to pay for Company
Common Shares validly tendered pursuant to the Offer on or prior to the
expiration of the Offer and not withdrawn shall be subject only to (i) there
being validly tendered and not withdrawn prior to the final expiration of the
Offer that number of Company Common Shares which, together with the Company
Common Shares beneficially owned by the Parent or the Purchaser or any of
their Subsidiaries, represents at least two-thirds of the Company Common
Shares then issued and outstanding on a Fully-Diluted Basis (the "Minimum
Condition") and (ii) the other conditions set forth in Exhibit A hereto. The
Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Exhibit A hereto.
"Fully-Diluted Basis" shall mean, as of any date, the number of Company
Common Shares issued and outstanding, together with the Company Common Shares
that may be issued by the Company pursuant to warrants, options, rights or
obligations outstanding at that date whether or not vested or then
exercisable. Unless extended in accordance with Section 1.1(b) and/or Section
1.1(c) below, the Offer shall expire 20 business days after the date of its
commencement (the "Initial Expiration Date" and, as may be extended in
accordance with Section 1.1(b) and/or Section 1.1(c) below, the "Expiration
Date").
(b) Purchaser expressly reserves the right to modify the terms of
the Offer, except that, without the prior written consent of the Company
(such consent to be authorized by the board of directors of the Company or a
duly authorized committee thereof), the Purchaser shall not (and the Parent
shall cause the Purchaser not to) (i) amend or waive the Minimum Condition,
(ii) decrease the Offer Price, (iii) change the form of consideration payable
in the Offer, (iv) decrease the number of Company Common Shares sought in the
Offer, (v) impose additional conditions or modify any of the conditions set
forth in Exhibit A hereto in any manner adverse to the holders of Company
Common Shares, or (vi) extend the Offer, except in accordance with Section
1.1(c) or the next sentence. Notwithstanding the foregoing, the Purchaser
may, without the consent of the Company, but shall, at the request of the
Company, (x) from time to time, extend the Offer if at the Initial Expiration
Date or the then current Expiration Date, as the case may be, any of the
conditions to the Offer set forth in clauses (a), (b) and (f) of Exhibit A
shall not be satisfied or waived, until such time as such conditions are
satisfied or waived; provided that if any of the conditions to the Offer set
forth in clauses (c), (d)
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or (e) of Exhibit A shall not be satisfied or waived, the Purchaser may, but
shall not be required to, extend the Offer beyond the then current Expiration
Date; provided further, that if all conditions other than the Minimum Condition
are satisfied or waived, the Purchaser may on one occasion for a period not to
exceed 20 business days, extend the Offer beyond the then current Expiration
Date, and (y) extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer; provided however that the Expiration Date may not be so extended beyond
September 30, 2002 (the "Outside Date").
(c) As soon as practicable after the Expiration Date, assuming the
prior satisfaction or waiver of the Minimum Condition and the other
conditions of the Offer set forth in Exhibit A as contemplated hereby, the
Purchaser shall accept for payment and pay for all Company Common Shares
which have been validly tendered and not withdrawn pursuant to the Offer. The
Parent shall provide or cause to be provided to the Purchaser on a timely
basis the funds necessary to purchase all Company Common Shares that the
Purchaser becomes obligated to purchase pursuant to the Offer, and shall be
liable on a direct and primary basis for the performance by the Purchaser of
its obligations under this Agreement. If, on the Expiration Date, the Minimum
Condition has been satisfied or, with the consent of the Company, waived, and
all other conditions to the Offer have been satisfied or waived but less than
90% of the Company Common Shares then issued and outstanding on a
Fully-Diluted Basis, together with the Company Common Shares beneficially
owned by the Parent, the Purchaser and their Subsidiaries, have been validly
tendered and not withdrawn, the Purchaser may extend the Offer for a further
period of time, after it has accepted and paid for (in accordance with the
first sentence of this Section) all of the Company Common Shares tendered in
the initial offer period, by means of a subsequent offering period (a
"Subsequent Offering Period") of at least 3 but no more than 20 business days
in accordance with Rule 14d-11 under the Exchange Act to meet the objective
(which is not a condition to the Offer) that there be tendered prior to the
Expiration Date (as so extended) and not withdrawn a number of Company Common
Shares which, together with the Company Common Shares beneficially owned by
the Parent, the Purchaser and their Subsidiaries, represents at least 90% of
the then issued and outstanding Company Common Shares on a Fully-Diluted
Basis. During the Subsequent Offering Period, the Purchaser shall immediately
accept for payment and promptly pay for all Company Common Shares as they are
tendered pursuant to the Offer in accordance with Rule 14d-11 under the
Exchange Act.
(d) If this Agreement has been terminated pursuant to Section 9.1,
the Purchaser shall, and the Parent shall cause the Purchaser to, promptly
terminate the Offer without accepting any Company Common Shares for payment.
(e) As soon as practicable on the date the Offer is commenced, the
Parent and the Purchaser shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule TO with
respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule TO"). The Schedule TO will
include the summary term sheet required thereby and, as exhibits, the Offer
to Purchase and a form of letter of transmittal and summary advertisement and
all other ancillary offer documents (collectively, together with any
amendments and supplements thereto, the "Offer Documents"). The Parent and
the Purchaser further agree to take all steps necessary
to cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of Company Common Shares, in each case as and to the extent required by
applicable federal securities laws and as contemplated hereby. Each of the
Parent, the Purchaser and the Company agrees to correct promptly any information
provided by it or on its behalf for use in the Offer Documents if and to the
extent that such information shall have become false and misleading in any
material respect and the Purchaser further agrees to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Company Common Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review and comment on the Offer
Documents and any amendments thereto before the filing thereof with the SEC. In
conducting the Offer, the Parent and the Purchaser shall comply in all material
respects with the provisions of the Exchange Act and any other applicable law.
In addition, the Parent and the Purchaser agree to provide the Company and its
counsel in writing with any comments, whether written or oral, that the Parent,
the Purchaser or their counsel may receive from time to time from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments, and any written or oral responses thereto.
Section 1.2 Company Actions.
(a) The Company hereby represents and warrants that the board of
directors of the Company, at a meeting duly called and held, has (i)
unanimously determined that the terms of the Offer and the Merger are fair to
and in the best interests of the stockholders of the Company, (ii) approved
this Agreement and each of the Tender Agreements and approved the
Transactions and the transactions contemplated by the Tender Agreements and
(iii) subject to the proviso to Section 1.2(b), resolved to recommend that
the holders of the Company Common Shares accept the Offer (and has consented
to the inclusion of such recommendation in the Offer Documents) and tender
their Company Common Shares to the Purchaser thereunder (the "Company Tender
Recommendations") and approve and adopt this Agreement and the Merger.
(b) As promptly as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-9") which shall
contain the Company Tender Recommendation; provided that the Company Tender
Recommendation need not be made or, if previously made, may be withdrawn,
modified or amended to the extent that the board of directors of the Company
shall have determined, in good faith after consultation with its legal
counsel, that the failure to take such action would be inconsistent with the
fiduciary duties of the Company's directors under applicable law (it being
agreed and understood by the parties that any withdrawal, modification or
amendment of the recommendation of the Company's board of directors shall not
alter the approval of the Company's board of directors of this Agreement, the
Tender Agreements and the Transactions for purposes of Section 203 of the
DGCL). The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
Company Common Shares, together with the Offer Documents, in each case as and
to the extent required by applicable federal securities laws. Each of the
Company, the Parent and the Purchaser agrees to correct promptly any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false and misleading in any
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material respects and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Company Common Shares, in each case as and to the
extent required by applicable federal securities laws. The Parent, the Purchaser
and their counsel shall be given an opportunity to review and comment on the
Schedule 14D-9 and any amendment thereto before it is filed with the SEC. In
addition, the Company agrees to provide the Parent, the Purchaser and their
counsel in writing with any comments, whether written or oral, that the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments, and
any written or oral responses thereto.
(c) In connection with the Offer, the Company will as promptly as
practicable furnish or cause to be furnished to the Purchaser mailing labels,
security position listings and any available listing or computer file
containing the names and addresses of the record holders of the Company
Common Shares as of a recent date, and shall furnish the Purchaser with such
information and assistance as the Purchaser or its agents may reasonably
request for the purpose of communicating the Offer to the record and
beneficial holders of the Company Common Shares. Subject to the same
exceptions against disclosure of Evaluation Material as contemplated by the
Confidentiality Agreement and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to
consummate the Transactions, the Parent and the Purchaser and each of their
affiliates, associates, partners, directors, officers, employees, agents and
advisors shall hold in confidence the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence and all extracts and summaries thereof; will use such information
only in connection with the Transactions, and, if this Agreement is
terminated, will deliver or cause to be delivered to the Company, or destroy
or cause to be destroyed (and certify such destruction to the Company), all
copies of such information then in their possession or under their control.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for Company Common
Shares by the Parent or any of its Subsidiaries representing at least
two-thirds of the issued and outstanding Company Common Shares (the "Share
Purchase Date") and prior to the Effective Time, (i) the size of the board of
directors of the Company shall be increased to 9, (ii) all current directors
shall resign, other than 3 of the current directors who are not employees of
the Company or stockholders, affiliates, associates or employees of the
Parent or the Purchaser (as shall be designated by the board of directors of
the Company prior to the Share Purchase Date) and any other current director
who may be designated by the Parent, and (iii) a number of persons equal to
the aggregate vacancies so created shall be designated by the Parent and
shall be elected to fill the vacancies so created. The Company shall, upon
request of the Parent, use its reasonable best efforts promptly to secure the
resignations of such number of its incumbent directors as is necessary to
enable the Parent's designees to be so elected or appointed to the Company's
board of directors (and to the extent the Company is not successful in
securing all of such resignations, increase the size of the board of
directors of the Company to enable the Parent to designate at least
two-thirds of the total number of directors of the Company), and shall use
its reasonable best efforts to cause the Parent's designees to be so elected
or appointed at such time. The Company's obligations under this Section
1.3(a) shall be subject to Section 14(f) of the
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Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to such Section 14(f) and Rule 14f-1 in order
to fulfill its obligations under this Section 1.3(a) (subject to the Parent's
timely notification to the Company of such information as is necessary to
fulfill such obligations), including mailing to stockholders (together with the
Schedule 14D-9 if the Parent has then provided the necessary information) the
information required by such Section 14(f) and Rule 14f-1 as is necessary to
enable the Parent's designees to be elected or appointed to the Company's board
of directors. The Parent or the Purchaser will supply the Company in writing and
be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. The provisions of this Section 1.3(a) are in addition to
and shall not limit any rights which the Purchaser, the Parent or any of their
affiliates may have as a holder or beneficial owner of Company Common Shares as
a matter of law with respect to the election of directors of the Company or
otherwise.
(b) As provided in Section 1.3(a), following the Share Purchase Date
and prior to the Effective Time, the Company shall cause its board of
directors to have at least 3 directors who are directors on the date hereof
and who are not employed by the Company and who are not affiliates,
associates, stockholders or employees of the Parent or the Purchaser (the
"Independent Directors"); provided that if any Independent Directors cease to
be directors for any reason whatsoever, the remaining Independent Directors
(or Independent Director, if there is only one remaining) shall be entitled
to designate any other person(s) who shall not be stockholders, affiliates,
associates or employees of the Parent or any of its Subsidiaries to fill such
vacancies and such person(s) shall be deemed to be Independent Director(s)
for purposes of this Agreement (provided that the remaining Independent
Directors shall fill such vacancies as soon as practicable, but in any event
within 5 business days, and further provided that if no such Independent
Director is appointed in such time period, the Parent shall designate such
Independent Director(s)), provided further that if no Independent Director
then remains, the other directors shall designate 3 persons who shall not be
stockholders, affiliates, associates or employees of the Parent or any of its
Subsidiaries to fill such vacancies and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Following the Share
Purchase Date and prior to the Effective Time, neither the Parent nor the
Purchaser will take any action to cause any Independent Director to be
removed other than for cause. Notwithstanding anything in this Agreement to
the contrary, after the Share Purchase Date and prior to the Effective Time,
any approval by the board of directors of the Company or any other Company
action must be made at a time when there are at least 3 Independent Directors
serving on the board of directors of the Company and with the approval of at
least 8 of the 9 directors of the Company (in each case, or such other number
of directors that ensures that at least a majority of the Independent
Directors has granted such approval) in order to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights,
benefits or remedies hereunder, or (iii) take any other action of the
Company's board of directors under or in connection with this Agreement in
any manner that adversely affects the holders of Company Common Shares, as
determined by a majority of the Independent Directors. The Independent
Directors shall have the authority to retain such counsel and other advisors
at the expense of the Company as determined appropriate by any of the
Independent Directors. In addition, the Independent Directors shall have the
authority to institute any action, on behalf of the Company, to enforce
performance of this Agreement.
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For purposes of this Agreement, "Subsidiary" means, with respect to any
person, any corporation, limited liability company, partnership, association or
other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that person or one or more of
the other Subsidiaries of that person or a combination thereof or (ii) if a
limited liability company, partnership, association, or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by that person or one or
more Subsidiaries of that person or a combination thereof. For purposes hereof,
a person or persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity if
such person or persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any general partner of such partnership association or a
majority of the voting interests of the equity ownership of the limited
liability company or other business entity. "Parent Subsidiary" means a
Subsidiary of the Parent and "Company Subsidiary" means a Subsidiary of the
Company.
Section 1.4 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company and the Purchaser shall consummate
a merger (the "Merger") pursuant to which (i) the Purchaser shall be merged with
and into the Company and the separate corporate existence of the Purchaser shall
thereupon cease, (ii) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by the laws of the
State of Delaware, and (iii) the separate corporate existence of the Company
with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. The corporation surviving the Merger is
sometimes hereinafter referred to as the "Surviving Corporation." The Merger
shall have the effects set forth in Section 1.7 below and the DGCL.
Section 1.5 Effective Time. The Parent, the Purchaser and the Company shall
cause (i) a certificate of merger or (ii) a certificate of ownership and merger
as contemplated hereby (in either such case, the "Certificate of Merger") to be
executed and filed on the date of the Closing (as defined in Section 1.6 hereof)
with the Secretary of State of the State of Delaware as provided in the DGCL.
The Merger shall become effective on the date and at the time when the
Certificate of Merger has been duly filed with the Secretary of State of the
State of Delaware or such later time on the date of such filing as is agreed
upon by the parties and specified in the Certificate of Merger (the "Effective
Time"); provided that the Effective Time shall not be prior to the Share
Purchase Date.
Section 1.6 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Central Standard Time on a date that shall be no later than
the third business day after satisfaction or waiver of all of the conditions
(other than conditions with respect to actions the respective parties are to
take at the Closing) set forth in Article VIII hereof (the "Closing Date"), at
the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois,
unless another date or place is agreed to in writing by the parties hereto.
Section 1.7 Effects of the Merger
(a) At the Effective Time, the certificate of incorporation of the
Company shall be amended to read in its entirety as the certificate of
incorporation of the Purchaser, as in effect at the Effective Time, and as so
amended shall be the certificate of incorporation of the Surviving
Corporation (except that the name and any incorporator of the Surviving
Corporation as specified therein shall be the name and incorporator of the
Company as specified in its certificate of incorporation as of immediately
prior to the Merger).
(b) At the Effective Time, the by-laws of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Corporation, except as to the name of the Surviving Corporation,
until thereafter amended in accordance with applicable law.
(c) At the Effective Time, the directors of the Purchaser
immediately prior to the Effective Time shall, from and after the Effective
Time, be the directors of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation, in each case
until their respective successors shall have been duly elected or appointed
or qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation and
by-laws.
Section 1.8 Subsequent Actions. If at any time after the Effective Time the
Surviving Corporation will consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, instruments of conveyance, assignments and assurances and to take and
do, in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
Section 1.9 Merger Without Meeting of Stockholders. As soon as practicable
after the Purchaser has acquired, pursuant to the Offer or otherwise, at least
90% of the then issued and outstanding Company Common Shares, the Purchaser
shall take, or cause to be taken, all necessary and appropriate action to cause
the Merger to become effective, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
Section 1.10 Information Statement.
(a) If after the consummation of the Offer and after the Subsequent
Offering Period, if any, the Merger cannot be consummated under Section 253
of the DGCL pursuant to Section 1.9, the Company, acting through its board of
directors, shall, in accordance with applicable law:
8
(i) obtain Company Stockholder Approval by written consent in
lieu of a meeting pursuant to Section 228 of the DGCL; and
(ii) promptly prepare in accordance with the rules and
regulations of the SEC and file with the SEC an information statement
relating to the Merger and this Agreement and obtain and furnish the
information required to be included by the SEC in an information statement
(the "Information Statement") and, after consultation with the Parent,
respond promptly to any comments made by the SEC with respect to the
Information Statement and cause the Information Statement to be mailed to
its stockholders;
(b) At the election of the Company, such stockholder approval may be
obtained by duly calling, giving notice of, convening and holding a special
meeting of its stockholders in accordance with Section 251(c) of the DGCL, in
which case the Company shall promptly prepare and file with the SEC a proxy
statement (a "Proxy Statement") otherwise in accordance with the foregoing
provisions relating to the Information Statement and include in the proxy
statement the recommendation of the board of directors of the Company that
stockholders of the Company vote in favor of the approval of the Merger and
the adoption of this Agreement.
(c) Each of the Parent and the Purchaser agrees that it will execute
a written consent or vote, or cause to be voted, all of the Company Common
Shares acquired by it pursuant to the Offer and otherwise then owned by it
and its Subsidiaries in favor of the approval of the Merger and the adoption
of this Agreement. In addition, each of the Parent and the Purchaser agrees
that from (and including) the Share Purchase Date through the Effective Time,
it will not sell, transfer, assign, pledge, exchange or otherwise dispose of
any Company Common Shares (including those purchased in the Offer) or rights
therein (whether acquired pursuant to the Offer or otherwise).
(d) No amendment or supplement to the Information Statement will be
made by the Company without providing the Parent with the opportunity to
review and comment thereon. The Company will advise the Parent, promptly
after it receives notice thereof, of any supplement or amendment has been
filed, or any request by the SEC for amendment of the Information Statement
(or Proxy Statement, as the case may be) or comments of the SEC thereon and
responses thereto or requests by the SEC for additional information. If at
any time prior to the Effective Time the Company or the Parent discovers any
information relating to either party, or any of their respective affiliates,
officers or directors, that should be set forth in an amendment or supplement
to the Information Statement (or Proxy Statement, as the case may be), so
that such document would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the
party that discovers such information shall promptly notify the other parties
hereto and the parties shall jointly prepare an appropriate amendment or
supplement describing such information which shall be promptly filed with the
SEC and, to the extent required by law or regulation, disseminated to the
stockholders of the Company.
9
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Company Common Shares or shares of common stock, par value $.01 per share, of
the Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of the
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and the Parent-Owned Stock. All
Company Common Shares that are owned by the Company as treasury stock and any
Company Common Shares owned by the Parent, the Purchaser or any other
wholly-owned Subsidiary of the Parent shall automatically be cancelled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Company Common
Share (other than shares to be cancelled in accordance with Section 2.1(b)
hereof and other than Dissenting Shares (as defined in Section 2.3 hereof))
shall be converted automatically into the right to receive the Offer Price,
payable to the holder thereof in cash, without interest (the "Merger
Consideration"). From and after the Effective Time, all such Company Common
Shares shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.2 hereof, without interest.
10
Section 2.2 Exchange of Certificates.
(a) Paying Agent. The Parent shall designate a bank or trust company
reasonably satisfactory to the Company to act as agent for the benefit of the
holders of Company Common Shares in connection with the Merger (the "Paying
Agent") to receive the funds to which holders of Company Common Shares shall
become entitled pursuant to Section 2.1(c) hereof. Prior to the Effective Time,
the Parent or the Purchaser shall deposit, or cause to be deposited, with the
Paying Agent the aggregate Merger Consideration. For purposes of determining the
amount of Merger Consideration to be so deposited, the Parent and the Purchaser
shall assume that no stockholder of the Company will perfect any right to
appraisal of his, her or its Company Common Shares. Such funds shall be invested
by the Paying Agent as directed by the Parent or the Surviving Corporation
pending payment thereof by the Paying Agent to the holders of the Company Common
Shares; provided that such investments shall be (i) direct obligations of the
United States of America, (ii) obligations for which the full faith and credit
of the United States of America is pledged to provide for the payment of
principal and interest, or (iii) commercial paper rated the highest quality by
either Moody's Investors Services, Inc. or Standard & Poor's Corporation;
provided further that no loss thereon or thereof shall affect the amounts
payable to holders of Company Common Shares pursuant to Section 2.1(c). Earnings
from such investments shall be the sole and exclusive property of the Parent and
the Surviving Corporation, and no part of such earnings shall accrue to the
benefit of holders of Company Common Shares.
(b) Exchange Procedures. Promptly after the Effective Time, the Parent
shall instruct the Paying Agent to mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented issued and outstanding Company Common Shares (the "Certificates"),
whose shares were converted pursuant to Section 2.1 hereof into the right to
receive the Merger Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as are reasonable
and customary in transactions such as the Merger) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by the Parent,
together with such letter of transmittal, duly executed and completed, and such
other documents as may reasonably and customarily be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each Company Common Share formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made to
a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not payable. Until
surrendered as contemplated by this Section 2.2, each Certificate (other than
Certificates representing shares to be cancelled in accordance with Section
2.1(b) and Dissenting Shares) shall be deemed at any
11
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration in cash as contemplated by this Section 2.2,
without interest thereon. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit (in a form reasonably satisfactory to
the Purchaser) of that fact by the person claiming such Certificate to be lost,
stolen or destroyed, the Paying Agent will issue, in each case, in exchange for
such affidavit, the appropriate amount of Merger Consideration deliverable in
respect thereof as determined in accordance with Section 2.1; provided that the
person to whom the Merger Consideration is paid shall, as a condition precedent
to the payment thereof, upon the request of Purchaser or Parent indemnify the
Surviving Corporation and the Parent in a manner reasonably satisfactory to them
(by the posting by such person of such bond and security as the Surviving
Corporation and the Parent may reasonably request) against any claim that may be
made against the Surviving Corporation and the Parent with respect to the
Certificate claimed to have been lost, stolen or destroyed.
(c) Transfer Books; No Further Ownership Rights in Company Common
Shares. At the Effective Time, the stock transfer books of the Company shall
be closed and thereafter there shall be no further registration of transfers
of Company Common Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of Company
Common Shares issued and outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Company Common Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
II. The Merger Consideration paid upon the surrender of Certificates in
accordance with the terms of this Section 2.2 shall be deemed to have been
paid in full satisfaction of all rights pertaining to the Company Common
Shares theretofore represented by such Certificates.
(d) Termination of Deposit; No Liability. At any time following
6 months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it on demand any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed (or of which disbursement is not
pending subject only to the Paying Agent's routine administrative procedures) to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) for payment of the Merger Consideration in respect of their
Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Any
amounts remaining unclaimed by any holder of Company Common Shares immediately
prior to such time when such amounts would otherwise escheat to or become the
property of any federal, state or local governmental authority, any
transgovernmental authority or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (each,
a "Governmental Entity"), shall, to the extent permitted by applicable laws,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
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(e) Withholding Rights. Each of the Surviving Corporation, the
Paying Agent and the Parent shall be entitled to deduct and withhold from the
Merger Consideration otherwise payable hereunder to any person such amounts
as it is required to deduct and withhold with respect to the making of such
payment under any provision of Federal, state, local or foreign tax law. To
the extent that amounts are so deducted and withheld and paid to the
appropriate governmental authority, such deducted and withheld amounts shall
be treated for all purposes of this Agreement as having been paid to such
holders in respect of which such deduction and withholding was made.
Section 2.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
Company Common Shares issued and outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has complied with all of the relevant
provisions of Section 262 of the DGCL ("Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his or her right to
appraisal in accordance with Section 262 of the DGCL. A holder of Dissenting
Shares shall be entitled to receive payment of the appraised value of such
Company Common Shares held by him, her or it in accordance with the
provisions of Section 262 of the DGCL, unless, after the Effective Time, such
holder fails to perfect or withdraws or loses his or her right to appraisal
in accordance with Section 262 of the DGCL, in which case such Company Common
Shares shall be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
Certificate or Certificates representing such Company Common Shares pursuant
to Section 2.2.
(b) (i) The Company shall give the Parent prompt notice of any
written demands for appraisal of any Company Common Shares, attempted
withdrawals of such demands and any other instruments served pursuant to the
DGCL and received by the Company relating to rights of appraisal and (ii) the
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL. Except with
the prior written consent of the Parent, the Company shall not make any
payment with respect to any demands for appraisal or settle or offer to
settle any such demands for appraisal or agree to do any of the foregoing.
Section 2.4 Company Option Plans
(a) As soon as possible following the date of this Agreement, the
board of directors of the Company and any committee administering the
Company's Stock Option Plan (the "Employee Option Plan"), and the
Non-Employee Director Stock Option Plan (collectively with the Employee
Option Plan, the "Company Option Plans") shall adopt such resolutions and/or
take such other actions as may be necessary or appropriate to effect the
provisions of this Section 2.4 and to cause the transactions contemplated by
this Section 2.4 to be exempt from the provisions of Section 16(b) of the
Exchange Act. All options outstanding under the Company Option Plans are
referred to herein as the "Company Options."
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(b) The Parent hereby acknowledges that the transactions
contemplated by this Agreement shall (i) constitute a "Sale of the Company"
as defined in and pursuant to the Company Options, and, under the terms of
those Options, upon the consummation of the Offer, all such Company Options
shall fully vest and become exercisable, and (ii) constitute a "Sale of the
Company" as defined in and pursuant to the Employment Agreement dated as of
December 11, 1998 by and between the Company and David F. Dyer, the President
and Chief Executive Officer of the Company. As a result, the Parent and the
Company hereby acknowledge and agree that, upon the consummation of the
Offer, all conditions and restrictions with respect to the Company Options
then outstanding, including limitations on exercisability and vesting, risks
of forfeiture and conditions and restrictions requiring continued performance
of services or the meeting of any targets or milestones with respect to the
exercisability or vesting of any such the Company Options, shall immediately
lapse.
(c) Each Company Option unexercised and outstanding immediately
prior to the Effective Time shall at the Effective Time be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Option immediately prior to the Effective Time,
the Merger Consideration. In addition, as contemplated by each of the Company
Option Plans, the committee which administers the Company Option Plans shall
make the provision for a cash payment to each holder of a Company Option
unexercised and outstanding at the Effective Time in accordance with this
subsection (c). Each Company Option unexercised and outstanding at the
Effective Time shall be cancelled as of the Effective Time in exchange for a
cash payment to the holder of the Company Option in an amount equal to the
excess of (x) the Merger Consideration multiplied by the number of Company
Common Shares purchasable pursuant to such Company Option immediately prior
to the Effective Time over (y) the aggregate exercise price for the Company
Common Shares purchasable pursuant to such Company Option immediately prior
to the Effective Time (in each case assuming such Company Option had been
fully vested and fully exercisable as of the Effective Time as contemplated
by the immediately preceding subsection), less any amounts as are required to
be deducted and withheld under the United States Internal Revenue Code of
1986, as amended (the "Code") or any provision of state or local tax law in
connection with such payment (the "Option Spread Payment"). The Company shall
make the Option Spread Payment at or promptly following the Closing by check
or wire transfer of immediately available funds as directed by the holder of
the Company Option.
(d) As of the Effective Time, the Company Option Plans shall
terminate and all rights under any provision of any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Company Subsidiary shall
be cancelled. At and after the Effective Time, no person shall have any right
under the Company Options, the Company Option Plans or any other plan,
program or arrangement with respect to equity securities of the Surviving
Corporation or any Subsidiary thereof, except the right to receive the amount
payable under Section 2.4(c) above.
(e) Each Company Common Share granted to any employee or director of
the Company or any Company Subsidiary as compensation for services that is
subject to restrictions on ownership or transferability shall vest in full
and become fully transferable and free of restrictions not later than
immediately prior to the Effective Time.
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule attached
hereto (with respect to which any particular reference to a section of this
Agreement shall be deemed to be disclosed under all other articles and
sections of this Agreement to which it is readily apparent from the text that
such disclosure is relevant to such other articles and sections), the Company
represents and warrants to the Parent and the Purchaser as follows:
Section 3.1 Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate power required to carry on its business
as now conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing, individually or in the aggregate, would not have a Company Material
Adverse Effect. As used herein, the term "Company Material Adverse Effect" shall
mean any adverse change, effect, event, occurrence or state of facts (A)
affecting the financial condition, business, assets, properties, operations or
results of operations of the Company or any of its Subsidiaries which is
material to the Company and its Subsidiaries, taken as a whole, or (B) which
would prevent or materially impair the Company from consummating the Offer, the
Merger, and the other Transactions, which has occurred or would reasonably be
expected to occur as a result of any such change, effect, event, occurrence or
state of facts, excluding in each case (i) any changes or effects resulting from
general changes in economic and financial market conditions, (ii) changes in
conditions (including as a result of changes in laws, including without
limitation, common law, rules and regulations or the interpretations thereof)
generally applicable to the retail or catalog retail industry that are not
unique to the Company and its Subsidiaries, (iii) changes resulting from the
announcement of the transactions described in this Agreement or the identity of
the Parent or the Purchaser or from the performance of this Agreement and
compliance with the covenants set forth herein and (iv) any actions required
under this Agreement to obtain any approval or authorization under applicable
antitrust or competition laws for the consummation of the Transactions. The
Company has heretofore made available to the Parent true and complete copies of
the Company's certificate of incorporation and by-laws as currently in effect.
Section 3.2 Corporate Authorization; Approvals.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to the requisite approval of
this Agreement by the holders of the issued and outstanding Company Common
Shares with respect to the Merger, if such is required by applicable law, to
consummate the Transactions. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on
the part of the Company, and, except for the approval of this Agreement by
the requisite holders of the issued and outstanding Company Common Shares in
the case of the Merger (if required), no other corporate action on the part
of the Company is necessary to authorize the consummation of the
15
Transactions. This Agreement has been duly executed and delivered by the
Company and, assuming that this Agreement constitutes a valid and binding
obligation of the Parent and the Purchaser, this Agreement constitutes a
valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms.
(b) The board of directors, or an appropriate committee thereof, of
the Company has taken (or will take prior to the Merger) all action necessary so
that the exemption from Section 16 under the Exchange Act which is contemplated
by Section 16b-3(e) is applicable to the disposition of Company Common Shares
and Company Options in or in connection with the Merger as contemplated by this
Agreement by all persons who are directors and/or officers of the Company.
Section 3.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Transactions require no action by or in respect of, or filing with, any
Governmental Entity, other than (a) the filing of (i) the Certificate of Merger
in accordance with the DGCL and (ii) appropriate documents with the relevant
authorities of other states or jurisdictions in which the Company or any Company
Subsidiary is qualified to do business; (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and foreign antitrust authorities, (c) the New York
Stock Exchange (the "NYSE"); (d) compliance with any applicable requirements of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act") and the Exchange Act; (e) such as
may be required under any applicable state securities or blue sky laws or state
takeover laws; and (f) such other consents, approvals, actions, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not, individually or in the aggregate, (x) have a Company
Material Adverse Effect or (y) prevent or materially impair the ability of the
Company and the Parent to consummate the Transactions (the filings and
authorizations referred to in clauses (a) through (f) being referred to
collectively as the "Company Required Governmental Consents"). As used herein,
the term "Parent Material Adverse Effect" shall mean any adverse change, effect,
event, occurrence or state of facts resulting in a material adverse change in
the ability of Parent to consummate the Offer, the Merger and other transactions
contemplated by this Agreement, which has occurred or would reasonably be
expected to occur as a result of any such change, effect, event, occurrence or
state of facts.
Section 3.4 Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
Transactions do not and will not (a) contravene or conflict with the Company's
certificate of incorporation or by-laws, (b) assuming that all of the Company
Required Governmental Consents are obtained, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any
Company Subsidiary (except that no representation or warranty is made with
respect to any antitrust statute, regulation, rule or other such restriction),
(c) constitute a default under or give rise to a right of termination,
cancellation or acceleration (with or without due notice or lapse of time or
both) of any right or obligation of the Company or any Company Subsidiary or to
a loss of any benefit or status to which the Company or any Company Subsidiary
is entitled under any
16
provision of any agreement, contract or other instrument binding upon the
Company or any Company Subsidiary or any license, franchise, permit or other
similar authorization held by the Company or any Company Subsidiary or (d)
result in the creation or imposition of any Lien (as defined below) on any asset
of the Company or any Company Subsidiary, other than, in the case of each of
(b), (c) and (d), any such items that would not, individually or in the
aggregate, (x) have a Company Material Adverse Effect or (y) prevent or
materially impair the ability of the Company and the Parent to consummate the
Transactions. As used in this Agreement, "Lien" means any mortgage, lien,
pledge, charge, claim, security interest or encumbrance of any kind; provided,
however, that the term "Lien" shall not include (i) liens for water and sewer
charges and current taxes, assessments and other governmental levies, fees or
charges not yet due and payable or being contested in good faith, (ii)
mechanics', carriers', workers', repairers', materialmen's, warehousemen's and
similar liens and (iii) purchase money liens and liens securing rental payments
under capital lease arrangements.
Section 3.5 Capitalization.
(a) The authorized capital stock of the Company consists of
160,000,000 Company Common Shares and 5,000,000 shares of preferred stock of
the Company, par value $0.01 per share (the "Company Preferred Shares"). As
of the close of business on the date hereof, (i) 30,012,942 Company Common
Shares were issued and outstanding and 10,207,646 Company Common Shares were
held in treasury and (ii) no Company Preferred Shares were issued and
outstanding or held in treasury. As of the close of business on the date
hereof, the Company Options to acquire an aggregate of 2,804,051 Company
Common Shares are outstanding under the Company Option Plans. A complete and
correct list, as of the date of the Agreement, of all outstanding Company
Options, the number of Company Common Shares subject to such Company Options,
the exercise prices and the names of the holders of each Company Option has
been provided to the Parent and is attached to the Company Disclosure
Schedule. All outstanding shares of the capital stock of the Company are, and
all shares which may be issued pursuant to the exercise of the Company
Options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable and not
subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the Company's certificate of incorporation,
the Company's by-laws or any contract to which the Company is a party or
otherwise bound.
(b) As of the date hereof, except as described in Section 3.5(a),
there are no outstanding (i) shares of capital stock or other voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
or (iii) options or other rights to acquire from the Company, or obligations
of the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
the Company. There are no outstanding obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any Company
Common Shares or other capital stock of the Company or any Company Subsidiary
or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Company Subsidiary or other entity, other
than loans to Subsidiaries in the ordinary course of business.
17
Section 3.6 Subsidiaries.
(a) No Subsidiary of the Company is a Subsidiary that constitutes a
"significant subsidiary" of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Exchange Act. The Company Disclosure Schedule sets
forth a list of all Subsidiaries of the Company and their respective
jurisdictions of incorporation or organization. All of the outstanding shares
of capital stock of, or other ownership interest in, each Subsidiary of the
Company, are owned by the Company, directly or indirectly.
(b) Each Company Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation, and has all corporate powers required to carry on its business
as now conducted. Each Company Subsidiary is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except where the failure to be
so qualified, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(c) All of the outstanding shares of capital stock of, or other
ownership interest in, each Subsidiary of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All of
the outstanding capital stock of, or other ownership interest, which is
owned, directly or indirectly, by the Company in each of its Subsidiaries is
owned free and clear of any Lien and free of any other limitation or
restriction, including any limitation or restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership interest
(other than any of such under the Securities Act or any state securities
laws). There are no outstanding (i) securities of the Company or any of the
Company Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests in
any of the Company Subsidiaries, (ii) options, warrants or other rights to
acquire from the Company or any of the Company Subsidiaries, or obligations
of the Company or any of the Company Subsidiaries to issue, any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any of the Company Subsidiaries or
(iii) obligations of the Company or any of the Company Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities of any of
the Company Subsidiaries or any capital stock of, or other ownership
interests in, any of the Company Subsidiaries. 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.
Section 3.7 Past SEC Documents. The Company has filed, in a timely manner,
all reports, filings, registration statements and other documents required to be
filed by it with the SEC after February 1, 2000 and prior to the date of this
Agreement (collectively, the "Past SEC Documents"). As of its filing date or as
amended or supplemented prior to the date hereof, each Past SEC Document
complied in all material respects with the applicable requirements of the
Securities Act and/or the Exchange Act, as the case may be. No Past SEC
Document, as of its filing date or effective date, as appropriate, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
18
Section 3.8 Financial Statements; Liabilities.
(a) The audited consolidated financial statements of the Company
included in the Company annual report on Form 10-K for its fiscal year ended
February 1, 2002 (the "Company 10-K") fairly present in all material respects
with the applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto and fairly present, in conformity
with United States generally accepted accounting principles, consistently
applied ("GAAP") (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its Subsidiaries as of the
dates thereof and their consolidated results of operations and changes in
financial position for the respective periods then ended.
(b) There are no liabilities of the Company or any Company
Subsidiary of any kind whatsoever, whether known or unknown, asserted or
unasserted, accrued, contingent, absolute, determined, determinable or
otherwise, in each case, other than:
(i) liabilities or obligations disclosed or provided for in the
Company's consolidated balance sheet included in the Company 10-K
(including the notes thereto, the "Company Balance Sheet");
(ii) liabilities or obligations existing as of February 1, 2002
and not required to be disclosed or provided for in the Company Balance
Sheet;
(iii) liabilities or obligations under this Agreement or incurred
in connection with the Transactions;
(iv) since February 1, 2002, obligations of the Company to comply
with all applicable laws;
(v) since February 1, 2002, ordinary course obligations of the
Company and its Subsidiaries under the agreements, contracts, leases and
licenses to which they are a party; and
(vi) other liabilities or obligations incurred since February 1,
2002 which, individually or in the aggregate, would not have a Company
Material Adverse Effect.
Section 3.9 Schedule 14D-9. Neither the Schedule 14D-9, any other document
required to be filed by the Company with the SEC in connection with the Offer,
nor any information supplied by the Company for inclusion or incorporation by
reference in the Offer Documents will, at the respective times when the Schedule
14D-9, any such other filings by the Company, the Offer Documents or any
amendments or supplements thereto are filed with the SEC or are first published,
given or mailed to the Company's stockholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they are made, not misleading. The
Schedule 14D-9 when filed with the SEC will comply in all material respects with
the provisions of the applicable federal securities laws and the rules and
regulations thereunder. Notwithstanding the foregoing, the
19
Company makes no representation or warranty with respect to statements made or
incorporated by reference in any of the foregoing documents based on and in
conformity with information supplied in writing by or on behalf of the Parent or
the Purchaser for inclusion or incorporation by reference therein.
Section 3.10 Absence of Certain Changes. Since February 1, 2002, except as
otherwise expressly contemplated by this Agreement, the Company and the Company
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been any damage, destruction or other
casualty loss (whether or not covered by insurance) or any action, event,
occurrence, development or state of circumstances or facts that, individually or
in the aggregate, would have a Company Material Adverse Effect. Since February
1, 2002, to the Company's Knowledge, neither the Company nor any Company
Subsidiary has taken any action other than in the ordinary course of business
which, if taken after the date hereof, would constitute a breach of any
provision set forth in Section 5.1 hereof.
Section 3.11 Litigation. As of the date of this Agreement, (i) there are
no, and to the Knowledge of the Company there are no threatened, actions, suits,
claims, litigation or other governmental or judicial proceedings or
investigations or arbitrations against the Company, its Subsidiaries or any of
their respective properties, assets or businesses, or, to the Knowledge of the
Company, any of the Company's or any Company Subsidiary's current or former
directors or officers (in their capacity as such) or any other person whom the
Company or any Subsidiary has agreed to indemnify (that would give rise to the
obligation of the Company to indemnify such person); and (ii) there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against the Company, its Subsidiaries, any of their
respective properties, assets or businesses, or, to the Knowledge of the
Company, any of the Company's or its Subsidiaries' current or former directors
(in their capacity as such) or officers or any other person whom the Company or
any Subsidiary has agreed to indemnify (that would give rise to the obligation
of the Company to indemnify such person).
Section 3.12 Taxes
(a) As used herein, (i) the terms "Tax" or "Taxes" mean any and all
taxes, fees, levies, duties, tariffs, imposts, assessments, and other charges
of any kind imposed by any Taxing Authority, including but not limited to any
and all federal, state, provincial, local or foreign income, gross receipts,
windfall or excess profit, employment, franchise, severance, sales, use,
value added, license, unclaimed property, customs, stamp, estimated,
withholding, or similar taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions
or penalties; (ii) the term "Taxing Authority" means any Governmental Entity
responsible for the imposition or collection of any Taxes; and (iii) the term
"Tax Returns" means any and all federal, state, provincial, local or foreign
returns, reports, elections, claims for refund filings, information returns,
statements or declarations (including any amendments thereto) relating to
Taxes filed or required to be filed with any Taxing Authority.
(b) With respect to the last 7 taxable years prior to the current
taxable year: (i) all Tax Returns required to be filed with any Taxing
Authority by or with respect to the Company and the Company Subsidiaries
through the Closing (the "Company Returns") have
20
been or will be filed in accordance with all applicable laws; (ii) the Company
and the Company Subsidiaries have timely paid all Taxes shown as due with
respect to the periods covered by the Company Returns that have been so filed
and, as of the time of filing, the Company Returns correctly reflected the facts
regarding the income, business, assets, operations, activities and status of the
Company and the Company Subsidiaries (other than Taxes which are being contested
in good faith and for which adequate reserves are reflected on the Company
Balance Sheet); (iii) the Company and the Company Subsidiaries have paid or will
pay when due all estimated Taxes and other Taxes due before or at Closing with
respect to periods for which Tax Returns are not due (including because of
properly filed extensions) before or at Closing; (iv) to the Company's
Knowledge, the Company Returns are not subject to examination currently by any
Taxing Authority and no written notice has been received by the Company or any
Company Subsidiary with respect to any actual or threatened audit or examination
of any Company Return; (v) all deficiencies asserted or assessments made as a
result of the examination of the Company Returns have been paid in full or are
being contested in good faith; (vi) no waivers of the statutes of limitation
have been given with respect to any Taxes of the Company or the Company
Subsidiaries; (vii) all Taxes that the Company and the Company Subsidiaries have
been required to collect or withhold have been duly collected or withheld and
have been or will be duly paid to the proper Taxing Authority when due; (viii)
none of the Company or any Company Subsidiary has made, requested or agreed to
make, nor is required to make, any adjustment under Section 481(a) of the Code
by reason of a change in accounting method or otherwise for any taxable year;
and (ix) there are no material elections with respect to Taxes affecting the
Company or any Company Subsidiary, except, with respect to clauses (i) through
(ix) above, where the failure to take such actions would not, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 3.13 Compliance with Laws; Licenses, Permits and Registrations.
(a) Neither the Company nor any Company Subsidiary is in violation
of, or has violated, any applicable provisions of any laws, statutes,
ordinances, regulations, judgments, injunctions, orders or consent decrees
(including, without limitation, any laws, statutes, ordinances, regulations,
judgments, injunctions, orders or consent decrees relating to pollution,
protection of human health, safety or the environment (collectively,
"Environmental Laws")), except for any such violations which, individually or
in the aggregate, would not have a Company Material Adverse Effect.
(b) Each of the Company and the Company Subsidiaries has all
permits, licenses, approvals, authorizations of and registrations with and
under all federal, state, local and foreign laws (including, without
limitation, under any Environmental Law), and from all Governmental Entities
required by the Company and the Company Subsidiaries to carry on their
respective businesses as currently conducted, except where the failure to
have any such permits, licenses, approvals, authorizations or registrations,
individually or in the aggregate, would not have a Company Material Adverse
Effect.
Section 3.14 Contracts. Each material lease, license, contract, agreement
or obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties may be bound is valid, binding and
enforceable and in full force and effect with
21
respect to the Company or its Subsidiaries and, to the Knowledge of the Company,
with respect to the other parties thereto, except where the failure thereof
would not have a Company Material Adverse Effect, and there are no existing
defaults thereunder with respect to the Company or any of its Subsidiaries or,
to the Company's Knowledge, the other parties thereto, except for those defaults
that would not have a Company Material Adverse Effect. Other than any agreement
among only the Company and one or more of its wholly-owned Company Subsidiaries,
neither the Company nor any of its Subsidiaries is a party to any agreement that
materially limits the ability of the Company or any of its Subsidiaries to
compete in or conduct any material line of its business or compete with any
person or in any geographic area or during any period of time.
Section 3.15 Employee Benefit Plans.
(a) Section 3.15 of the Company Disclosure Schedule contains an
accurate and complete list of (i) each "employee benefit plan" (as such term
is defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), (ii) each employment, severance, change in
control, termination, or similar contract, plan, arrangement or policy, and
(iii) each other material employee benefit plan, program or arrangement
providing for compensation, bonuses, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred compensation,
health or medical benefits, disability benefits, life insurance and any other
paid time off programs, workers' compensation, supplemental unemployment
benefits and post-employment or retirement benefits which is maintained,
sponsored or contributed to by the Company or any of its affiliates on behalf
of any employee or former employee of the Company or any Company Subsidiary
located within the United States (each, a "Company Employee Plan").
(b) Each Company Employee Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code has received a determination
from the United States Internal Revenue Service (the "IRS") that such Company
Employee Plan is qualified under Section 401(a) of the Code.
(c) Neither the Company nor any Company Subsidiary maintains,
contributes to or has any liability under or with respect to any plan subject
to Title IV of ERISA, or any "multiemployer plan" (as defined in Section
3(37) of ERISA). No asset of the Company or any Company Subsidiary is subject
to any lien under ERISA or the Code. There are no pending or, to the
Knowledge of the Company, threatened actions, suits, investigations or claims
with respect to any Company Employee Plan (other than routine claims for
benefits) which could result in material liability to the Purchaser or the
Parent, and to the Knowledge of the Company there are no facts which could
give rise to (or be expected to give rise to) any such actions, suits,
investigations or claims.
(d) In all material respects, (i) each of the Company Employee Plans
has been maintained, funded and administered, in both form and operation, in
compliance with its terms and in compliance with the applicable provisions of
ERISA, the Code and any other applicable laws, and (ii) all filings required
for the Company Employee Plans and all contributions to the Company Employee
Plans have been timely made. The Company and the Company Subsidiaries have
complied in all material respects with the health care continuation
requirements of Part 6 of
22
Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA"), and the
Company and each Company Subsidiary have no obligations under any Company
Employee Plan or otherwise to provide health, medical, dental or disability
benefits to former employees of the Company or the Company Subsidiaries or any
other person, except as specifically required by COBRA.
(e) With respect to each Company Employee Plan, the Company has made
available to the Parent and the Purchaser true, complete and correct copies
of, to the extent applicable: (i) the current plan documents and summary plan
descriptions, (ii) annual reports (Form 5500 series) filed with the IRS (with
applicable attachments) for the previous two years, (iii) financial
statements and the Company's Retiree Program actuarial valuation statements
for the previous two years and (iv) the most recent determination letter
received from the IRS.
(f) None of the Company, any Company Subsidiary, any affiliate of
the Company or any Company Subsidiary, nor to the Knowledge of the Company,
any plan fiduciary of any Company Employee Plan, has engaged in any
transaction in violation of Section 406(a) or (b) of ERISA or any "prohibited
transaction" (as defined in Section 4975(c)(1) of the Code) which would
subject the Company, the Parent, the Purchaser or the Surviving Corporation
to any material taxes, penalties or other liabilities resulting from such
prohibited transaction and, to the Knowledge of the Company, no condition
exists that would subject any of the Company, the Parent, the Purchaser or
the Surviving Corporation to any material excise penalty tax or fine related
to any Company Employee Plan.
(g) The consummation of the Transactions will not, either alone or
in combination with another event, (i) entitle any current or former
employee, director or officer of the Company or any of its Subsidiaries to
severance pay, unemployment compensation or any other payment, (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, director or officer, or (iii) require the
immediate funding or financing of any compensation or benefits.
(h) Section 3.15 of the Company Disclosure Schedule contains an
accurate and complete list of all employee benefit plans, agreements or
arrangements applicable to employees of the Company or any of its
Subsidiaries located outside the United States of America (a "Company Foreign
Benefit Plan"). With respect to any Company Foreign Benefit Plans providing
benefits as mandated by applicable foreign laws, the Company has established
and maintained such Company Foreign Benefit Plan in accordance with such
applicable foreign laws, except where the failure to do so would not,
individually or in the aggregate, have a Company Material Adverse Effect.
With respect to any non-legally mandated Company Foreign Benefit Plan: (i)
all employer and employee contributions to such Company Foreign Benefit Plan
required by law or by the terms of such Company Foreign Benefit Plan have
been made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Company
Foreign Benefit Plan, the liability of each insurer for any Company Foreign
Benefit Plan funded through insurance or the book reserve established for any
Company Foreign Benefit Plan, together with any accrued contributions, is
sufficient to procure or provide for the accrued benefit obligations, as of
the Effective Time, with respect to all current and former participants in
such plan according to the actuarial assumptions and valuations most
23
recently used to determine employer contributions to such Company Foreign
Benefit Plan and no transaction contemplated by this Agreement shall cause such
assets or insurance obligations to be less than such benefit obligations; and
(iii) each Company Foreign Benefit Plan required to be registered has been
registered and has been maintained in good standing with applicable regulatory
authorities, except in the case of each of (i), (ii) and (ii), where the failure
to do so would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(i) Any Company Employee Plan that is intended to satisfy the
requirements of Section 501(c)(9) of the Code has so satisfied such
requirements.
(j) Neither the Company nor any Company Subsidiary has used the
services or workers provided by third party contract labor suppliers,
temporary employees, "leased employees" (within the meaning of Section 414(n)
of the Code), or individuals who have provided services as independent
contractors in such a way that would (A) entitle such individuals to
participate in a Company Employee Plan or (B) reasonably be expected to
result in the disqualification of any of the Company Employee Plans or the
imposition of penalties or excise taxes with respect to the Company Employee
Plans by the IRS, the United States Department of Labor, the Pension Benefit
Guaranty Corporation or any other Governmental Entity.
Section 3.16 Transactions with Affiliates. Except to the extent disclosed
in the (i) Company 10-K, (ii) the proxy or information statements of the Company
dated after or used after February 1, 2002, and prior to the date hereof, and
(iii) all other reports, filings, registration statements and other documents
filed by the Company with the SEC after February 1, 2002 and prior to the date
hereof, there have been no transactions, agreements, arrangements or
understandings prior to the date hereof between the Company or its Subsidiaries,
on the one hand, and the affiliates of the Company (other than wholly-owned
Subsidiaries of the Company), on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act.
Section 3.17 Intellectual Property. The Company and its Subsidiaries own or
have the right to use all Company Intellectual Property necessary to carry on
their respective businesses as currently conducted, except where, individually
or in the aggregate, such failure would not have a Company Material Adverse
Effect. As used in this Agreement, "Company Intellectual Property" means all
United States and foreign trademarks, service marks, trade names, Internet
domain names, designs, logos, slogans and general intangibles of like nature,
together with goodwill, registrations and applications relating to the
foregoing; patents, copyrights, (including registrations and applications for
any of the foregoing); computer programs, including any and all databases and
compilations, including any and all data and collections of data; trade secrets;
and any other owned by the Company and its Subsidiaries or held for use or used
in the business of the Company and its Subsidiaries as conducted as of the date
hereof, or as presently contemplated to be conducted and any licenses to use any
of the foregoing.
(a) To the Knowledge of the Company, neither the Company nor its
Subsidiaries have received written notice from any third party regarding any
actual or potential infringement or misappropriation, or other violations, by
the Company or any of its Subsidiaries
24
of any intellectual property of such third party except, where individually or
in the aggregate, such actual or potential infringement or misappropriation, or
other violations would not have a Company Material Adverse Effect;
(b) To the Knowledge of the Company, (i) neither the Company nor its
Subsidiaries have received written notice from any third party regarding any
material assertion or claim challenging the validity of any Company Intellectual
Property, and (ii) no third party is misappropriating, infringing, diluting or
violating any Company Intellectual Property, in each case, except as,
individually or in the aggregate, would not have a Company Material Adverse
Effect;
(c) All of the issued or registered material Company Intellectual
Property owned by the Company is held of record in the name of the Company or
the applicable Subsidiary free and clear of all Liens, and is not the subject of
any cancellation or reexamination proceeding or any other proceeding challenging
their extent or validity.
Section 3.18 Required Vote; Board Approval.
(a) The affirmative vote of the holders of two-thirds of the issued
and outstanding Company Common Shares (the "Company Stockholder Approval") is
the only vote of any class or series of capital stock of the Company required by
law, rule or regulation or the certificate of incorporation or the bylaws of the
Company to approve this Agreement and the Merger, in the event the Special
Meeting is required.
(b) The Company's board of directors has (i) determined that this
Agreement and the Transactions, including the Offer and the Merger, are
advisable and in the best interests of the Company and its stockholders, (ii)
approved this Agreement and the Transactions and (iii) subject to Section
1.2(a), resolved to recommend to such stockholders that they accept the Offer,
tender their Company Common Shares pursuant thereto and, in the event the
Special Meeting is required, vote in favor of adopting and approving this
Agreement and the Merger in accordance with the terms hereof.
Section 3.19 Title to Properties; Encumbrances.
(a) Section 3.19(a) of the Company Disclosure Schedule sets forth a
list of all the real property ("Real Property") which is owned in fee by the
Company or its Subsidiaries. The Company or its Subsidiaries, as the case may
be, has good, marketable and insurable title to the Real Property.
(b) The Company has heretofore made available to the Parent a true
correct and complete copy of all material leases and subleases ("Real Property
Leases") under which the Company or its Subsidiaries has the right to occupy
space, including all amendments thereto. All Real Property Leases are, in all
material respects, valid, binding and enforceable against the Company and its
Subsidiaries and, to the Company's Knowledge, the other parties thereto, in
accordance with their terms; neither the Company nor any of its Subsidiaries has
received notice of any default by the Company or any of its Subsidiaries under
any Real Property Leases which, individually or in the aggregate, would have a
Company Material Adverse Effect; there are no
25
existing defaults with respect to the Company or its Subsidiaries or, to the
Company's Knowledge, the other parties thereto or any condition or event
which with the giving of notice or lapse of time would constitute a default
by the Company or any of its Subsidiaries thereunder which, individually or
in the aggregate, would have a Company Material Adverse Effect.
(c) Neither the Company nor any Subsidiary is obligated under any
option, right of first refusal or other contractual right to purchase, acquire,
sell or dispose of the Real Property or any portion thereof or interest therein.
Section 3.20 Major Suppliers. Section 3.20 of the Company Disclosure
Schedule sets forth the ten largest suppliers of the Company in terms of costs
recognized for the purchase of products or services during the fiscal year ended
February 1, 2002 (the "Suppliers"). As of the date of this Agreement, the
Company has not received any written or oral notice from any of the Suppliers of
a plan or intent to, and to the Knowledge of the Company none of the Suppliers
plan or intend to, terminate, cancel or otherwise adversely modify its
relationship with the Company or to decrease materially or limit its products to
or services to the Company.
Section 3.21 Finders' Fees; Opinion of Company Financial Advisor.
(a) Except for Peter J. Solomon Company Limited (the "Company
Financial Advisor"), no investment banker, broker, finder or other such
intermediary has been retained by, or is authorized to act on behalf of, the
Company or any Company Subsidiary or is entitled to any fee or commission from
the Company or any of its Subsidiaries upon consummation of the Transactions.
The Company has provided the Parent with true and correct copies of all
agreements between the Company and the Company Financial Advisor.
(b) The Company has received the opinion of the Company Financial
Advisor, dated as of the date hereof, to the effect that, as of such date, the
Merger Consideration to be received by holders of Company Common Shares is fair
to such holders (other than, if applicable, the Parent and any Parent
Subsidiary) from a financial point of view.
Section 3.22 Section 203 of the DGCL. The board of directors of the Company
has taken all action necessary so that the provisions of Section 203 of the DGCL
applicable to a "business combination" (as defined in Section 203 of the DGCL)
will not apply to the Parent and the Purchaser's acquisition of beneficial
ownership of Company Common Shares pursuant to the Offer and the Merger or to
the execution, delivery or performance of this Agreement or the Tender
Agreements. Other than Section 203 of the DGCL, no state takeover or similar
statute or regulation in any jurisdiction in which the Company does business
applies or purports to apply to the Offer, the Merger, this Agreement or the
Tender Agreements, or any of the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Except as disclosed in the Parent Disclosure Schedule attached hereto,
the Parent and the Purchaser represent and warrant to the Company as follows:
26
Section 4.1 Corporate Existence and Power. Each of the Parent and the
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers required to carry on its business as now conducted. Each of the
Parent and the Purchaser is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing, individually or in the aggregate, would not have a Parent Material
Adverse Effect. The Parent has heretofore made available to the Company true and
complete copies of the Parent's certificate of incorporation and by-laws as
currently in effect. Since the date of its incorporation, the Purchaser has not
engaged in any activities other than in connection with or as contemplated by
this Agreement.
Section 4.2 Corporate Authorization; Approvals. The execution, delivery and
performance by the Parent and the Purchaser of this Agreement and the
consummation by the Parent and the Purchaser of the Transactions are within the
corporate powers of the Parent and the Purchaser and have been duly authorized
by all necessary corporate action. Assuming that this Agreement constitutes the
valid and binding obligation of the Company, this Agreement constitutes a valid
and binding agreement of each of the Parent and the Purchaser, enforceable in
accordance with its terms.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by the Parent and the Purchaser of this Agreement and the
consummation by the Parent and the Purchaser of the Transactions require no
action by or in respect of, or filing with, any Governmental Entity, other than
(a) those set forth in clauses (a) through (e) of Section 3.3 and (b) such other
consents, approvals, actions, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not, individually
or in the aggregate, (x) have a Parent Material Adverse Effect or (y) prevent or
materially impair the ability of the Parent and the Purchaser to consummate the
Transactions (the filings and authorizations referred to in clauses (a) and (b)
being referred to collectively as the "Parent Required Governmental Consents").
Section 4.4 Non-Contravention. The execution, delivery and performance by
the Parent and the Purchaser of this Agreement and the consummation by the
Parent and the Purchaser of the Transactions do not and will not (a) contravene
or conflict with the certificate of incorporation or by-laws of the Parent or
the certificate of incorporation or by-laws of the Purchaser, (b) assuming that
all of the Parent Required Governmental Consents are obtained, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Parent
or any Parent Subsidiary, (c) constitute a default under or give rise to a right
of termination, cancellation or acceleration (with or without due notice or
lapse of time or both) of any right or obligation of the Parent or any Parent
Subsidiary or to a loss of any benefit or status to which the Parent or any
Parent Subsidiary is entitled under any provision of any material agreement,
contract or other instrument binding upon the Parent or any Parent Subsidiary or
any material license, franchise, permit or other similar authorization held by
the Parent or any Parent Subsidiary, or (d) result in the creation or imposition
of any Lien on any material asset of the Parent or any Parent Subsidiary other
than, in the case of each of (b), (c) and (d), any such items that would not,
27
individually or in the aggregate, (x) have a Parent Material Adverse Effect or
(y) prevent or materially impair the ability of the Parent or the Purchaser to
consummate the Transactions.
Section 4.5 Information in the Offer Documents. Neither the Offer
Documents, any other document required to be filed by the Parent or the
Purchaser with the SEC in connection with the Transactions, nor any information
supplied by the Parent or the Purchaser for inclusion or incorporation by
reference in the Schedule 14D-9 or Information Statement (or Proxy Statement, as
the case may be) will, at the respective times when such are filed with the SEC
and/or are first published, given or mailed to the Company's stockholders, as
the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not misleading. The Offer Documents when filed by the Purchaser with
the SEC will comply in all material respects with the provisions of the
applicable federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, neither the Parent nor the Purchaser makes any
representation or warranty with respect to statements made or incorporated by
reference in any of the foregoing documents based on and in conformity with
information supplied by or on behalf of the Company for inclusion or
incorporation by reference therein.
Section 4.6 Financing. At the time of execution of this Agreement,
expiration of the Offer and at the Effective Time, either the Purchaser will
have available or the Parent will make available to the Purchaser the funds
necessary to purchase all of the Company Common Shares pursuant to the Offer and
the Merger and to pay all fees and expenses in connection therewith.
Section 4.7 Purchaser's Operations. The Purchaser was formed solely for the
purpose of engaging in the Transactions and has not engaged in any business
activities or conducted any operations other than in connection with the
Transactions.
Section 4.8 Vote Required. No vote of the holders of any of the outstanding
shares of capital stock or any other securities of the Parent is necessary to
approve this Agreement or any of the Transactions.
Section 4.9 Ownership of Company Common Shares. As of the date of this
Agreement, neither the Parent nor any of its Subsidiaries (i) beneficially owns,
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
case of either clause (i) or (ii), any Company Common Shares, except for the
Tender Agreement.
Section 4.10 Finders' Fees. Except for Morgan Stanley & Co. Incorporated
(the "Parent Financial Advisor"), whose fees will be paid by the Parent, there
is no investment banker, broker, finder or other intermediary who might be
entitled to any fee or commission from the Parent or any of its affiliates upon
consummation of the Transactions.
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ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. Except as set forth in the
Section 5.1 of the Company Disclosure Schedule or as otherwise expressly
contemplated or permitted hereby, unless otherwise approved in writing by the
Parent, which approval shall not be unreasonably withheld or delayed, from the
date hereof until the Effective Time, the Company shall, and shall cause each of
the Company Subsidiaries to, conduct its business in the ordinary course
consistent with past practice and shall use commercially reasonable efforts to
(i) preserve intact its present business organization and (ii) maintain in
effect all material foreign, Federal, state and local licenses, approvals and
authorizations, including, without limitation, all material licenses and permits
that are required for the Company or any Company Subsidiary to carry on its
business. Without limiting the generality of the foregoing, except as set forth
in the Company Disclosure Schedule or as otherwise expressly contemplated or
permitted by this Agreement, from the date hereof until the Effective Time,
without the prior written consent of the Parent, which shall not be unreasonably
withheld or delayed, the Company shall not, nor shall it permit any Company
Subsidiary to:
(a) amend its certificate of incorporation or by-laws;
(b) split, combine or reclassify any shares of capital stock of the
Company or any less-than-wholly-owned Company Subsidiary or declare, set aside
for payment or pay any dividend or make any other actual, constructive or deemed
distribution (whether in cash, stock or property or any combination thereof) in
respect of any Company Common Shares or any other Company capital stock, or
redeem, repurchase or otherwise acquire or offer to redeem, repurchase or
otherwise acquire any Company equity or equity related securities or any equity
or equity related securities of any Company Subsidiary;
(c) issue, deliver or sell or authorize the issuance, delivery or sale
of, any shares of the Company's capital stock of any class or series or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such capital stock or any such convertible or
exchangeable securities, other than in connection with the issuance of Company
Common Shares upon the exercise of Company Options, the granting of Company
Options to acquire Company Common Shares in the ordinary course of business
consistent with past practice (including under the Employee Option Plan, as
proposed to be amended at the Company's 2002 annual meeting) and the issuance of
Company Common Shares in accordance with the terms of the Director Stock Grant
Plan;
(d) amend any term of any outstanding security of the Company or any
Company Subsidiary; provided that the Company may amend the Employee Option Plan
at its 2002 annual meeting as disclosed in the Company's definitive proxy
statement filed with the SEC on April 12, 2002;
(e) incur any capital expenditures or any obligations or liabilities
in respect thereof, except for those (i) contemplated by the capital expenditure
budget for the Company and
29
the Company Subsidiaries, which budget is included in or attached to the Company
Disclosure Schedule or (ii) not otherwise described in clause (i) which, in the
aggregate, do not exceed $5.0 million;
(f) acquire (whether pursuant to merger, stock or asset purchase or
otherwise) or propose to acquire in one transaction or a series of related
transactions (i) any assets (including any equity interests) outside of the
ordinary course of business or (ii) all or substantially all of the equity
interests of any person or any business or division of any person;
(g) sell, lease, encumber or otherwise dispose of any material assets,
other than (i) sales in the ordinary course of business consistent with past
practice, (ii) equipment and property no longer used in the operation of the
business of the Company and the Company Subsidiaries and (iii) assets related to
discontinued operations of the Company or any Company Subsidiary;
(h) other than with respect to contracts terminable upon no more than
90 days' notice without penalty, enter into any new contract or agreement, or
modify, amend, terminate or renew any existing contract or agreement to which
the Company or any of its Subsidiaries is a party, other than (i) in the
ordinary course of business or (ii) if the dollar value of such new contract or
agreement, or existing contract or agreement as so amended, modified, terminated
or renewed, is or would be less than $250,000 (or $2 million in the aggregate);
(i) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any Company Subsidiary or
guarantee any debt securities of others, except in the ordinary course of
business consistent with past practice (which shall include, without limitation,
borrowings made in the ordinary course of business under existing credit
facilities of the Company within the borrowing capacity thereunder as of the
date hereof);
(j) except in the ordinary course of business, amend, modify or
terminate any material contract, agreement or arrangement of the Company or any
Company Subsidiary, or otherwise waive, release or assign any material rights,
claims or benefits of the Company or any Company Subsidiary thereunder; provided
that the Company may amend its Employee Option Plan at its 2002 annual meeting
as disclosed in the Company's definitive proxy statement filed with the SEC on
April 12, 2002;
(k) (i) except as required by law or an agreement, policy or
arrangement existing on the date hereof, increase the amount of compensation of
any director or executive officer or make any increase in or commitment to
increase any employee health, welfare or retirement benefits, (ii) except as
required by law or a written agreement, policy or arrangement existing on the
date hereof, grant any severance or termination pay or rights to any director,
officer or employee of the Company or any Company Subsidiary, (iii) adopt any
additional Company Employee Plan or, except in the ordinary course of business
or as required by law, make any contribution to any existing such plan or (iv)
except as may be required by law, amend in any material respect any Company
Employee Plan; provided however that the Company may adopt a change in control
policy or enter into agreements providing for payments to be made by
30
the Company in connection with, among other things, a change in control of the
Company, in each case, with such employees and substantially on the terms
disclosed in Section 3.15 of the Company Disclosure Schedule; provided further
that the Company may amend its Employee Option Plan at its 2002 annual meeting
as disclosed in the Company's definitive proxy statement filed with the SEC on
April 12, 2002;
(l) change the Company's (x) methods of accounting in effect at
February 1, 2002, except as required by changes in GAAP or by Regulation S-X
of the Exchange Act, as concurred in by its independent public accountants or
(y) fiscal year;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than: (i) the
payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the Company Balance Sheet, (ii)
those incurred in the ordinary course of business or (iii) those incurred as
otherwise permitted by this Section 5.1;
(n) except as described in Section 3.15 of the Company Disclosure
Schedule, make payments or distributions (other than normal salaries and
other compensation in the ordinary course of business consistent with past
practice) to any affiliate of the Company;
(o) except as disclosed in Section 3.4 of the Company Disclosure
Schedule, permit any insurance policy naming the Company or any of its
Subsidiaries as a beneficiary or loss payable payee to be cancelled or
terminated with notice to the Parent;
(p) knowingly do any act or omit to do any act that would result in
a breach of any representation, warranty or covenant by the Company set forth
in this Agreement or, except as permitted by Section 5.3, otherwise
materially impair or delay the ability of the Company to consummate the Offer
or the Merger; or
(q) agree, resolve, commit or publicly announce an intention to do
any of the foregoing;
provided that the limitations set forth in clauses 5.1(a) through 5.1(q)
shall not apply to any action, transaction or event occurring exclusively
between the Company and any wholly-owned Company Subsidiary or between any
wholly-owned Company Subsidiaries.
Section 5.2 HSR Act; Foreign Antitrust Laws. The Company and the Parent
shall cooperate with one another and shall take all reasonable actions necessary
to prepare and file as soon as practicable following the date hereof, but in no
event later than 10 business days after the date hereof, notifications under the
HSR Act and any foreign antitrust, investment or competition law or regulation
and to respond as promptly as practicable to any inquiries received from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
or any foreign Governmental Entity for additional information or documentation
and to respond as promptly as practicable to all inquiries and requests received
from any State Attorney General or any other Governmental Entity in connection
with antitrust or competition matters.
Section 5.3 Acquisition Proposals.
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(a) The Company agrees that after the date hereof it shall not, nor
shall it permit any Company Subsidiary to, nor shall it authorize or
knowingly permit any officer, director, employee, investment banker,
attorney, accountant, agent or other advisor or representative of the Company
or any Company Subsidiary, directly or indirectly, to
(i) solicit, initiate or knowingly facilitate or encourage the
submission of any tender or exchange offer involving the Company or any
proposal for, or indication of interest in, a merger, consolidation, stock
exchange, business combination, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving the Company
or any of its significant subsidiaries, any purchase of a material portion
(by value) of the assets of the Company and its Subsidiaries taken as a
whole or a material portion of the Company Common Shares, other than the
Transactions (an "Acquisition Proposal"),
(ii) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any other
action knowingly to facilitate any inquiries or the making of any proposal
that constitutes, or could be reasonably expected to lead to, an
Acquisition Proposal,
(iii) grant any waiver or release under any standstill or similar
agreement with respect to any class of the Company's equity securities, or
(iv) enter into any agreement (other than a confidentiality
agreement on customary terms and conditions) with respect to any
Acquisition Proposal or approve or recommend any Acquisition Proposal or
any agreement, understanding or arrangement relating to any Acquisition
Proposal other than in the manner contemplated by this Section 5.3;
provided that if the Company enters into such a confidentiality agreement
with respect to an Acquisition Proposal that contains provisions that are
less protective to the Company than the provisions of the confidentiality
agreement dated as of February 29, 2002, by and between the Parent and the
Company (the "Confidentiality Agreement"), the Company agrees to amend the
Confidentiality Agreement so as to provide the Parent with the benefit of
any such less protective provisions;
provided, however, that prior to the Share Purchase Date and subject to the
other provisions of this Section 5.3,
(1) in response to a written Acquisition Proposal, the Company may request
clarifications from (but not, in reliance on this subsection (1), enter into
negotiations with or furnish nonpublic information to) any third party which
makes such written Acquisition Proposal if such action is taken solely for the
purpose of obtaining information reasonably necessary for the Company to
ascertain whether such Acquisition Proposal is a Superior Proposal;
(2) the Company may take any action described in clauses (a)(ii) or
(a)(iii) of this Section in respect of any person, but only if such person
delivers an Acquisition Proposal that, in the good faith judgment of the
Company's board of directors, is a Superior Proposal and in the good faith
judgment of the Company's board of directors after consultation with its legal
counsel,
32
the failure to respond to such Acquisition Proposal would be inconsistent with
its fiduciary duties to the Company's stockholders; and
(3) the Company may enter into an agreement (other than a confidentiality
agreement, which may be entered into as contemplated by clause (a)(iv) of this
Section) regarding an Acquisition Proposal, or approve or recommend any
Acquisition Proposal, in each case, at any time after the third business day
following the Parent's receipt of written notice from the Company (i) advising
the Parent that the board of directors of the Company has received a Superior
Proposal which it intends to accept, identifying the person making such Superior
Proposal and specifying the financial and other material terms and conditions of
such Superior Proposal and (ii) inviting the Parent to propose adjustments in
the terms and conditions of this Agreement with a view to enabling the Company
to proceed with the transactions contemplated herein on such adjusted terms
(provided that the Company shall fully cooperate, and cause its legal and
financial advisors to cooperate, with the Parent in making any such
adjustments). The Company may not exercise its right to terminate this Agreement
under Section 9.1(c)(iii) and may not enter into a binding agreement with
respect to such Superior Proposal, unless prior to or concurrent with such
termination, the Company shall have paid to the Parent the Termination Fee as
contemplated by Section 9.3;
provided further that nothing contained in this Section 5.3 or elsewhere in this
Agreement shall prevent the Company's board of directors from complying with
Rule 14e-2 under the Exchange Act with respect to any Acquisition Proposal or
making any disclosure required by the fiduciary duties of the Company's
directors or by applicable law.
For purposes of this Agreement, "Superior Proposal" means a bona fide, written
Acquisition Proposal not received in violation of Section 5.3(a) that is fully
financed or reasonably capable of being fully financed and is on terms that the
board of directors of the Company determines in good faith after consultation
with its financial advisors would or is reasonably likely to result in a
transaction that, if consummated, would be more favorable to the Company's
stockholders (taking into account all such factors as the board deems relevant,
including, among other things, the identity of the offeror, the likelihood that
such transaction will be consummated and all legal, financial, regulatory and
other aspects of the proposal) than the Transactions.
(b) The Company shall cease and cause to be terminated immediately all
existing discussions or negotiations with any persons conducted heretofore with
respect to any Acquisition Proposal. The Parent acknowledges that, prior to the
date of this Agreement, the Company has solicited or caused to be solicited by
the Company Financial Advisor indications of interest and proposals for an
Acquisition Proposal.
(c) The Company shall (i) promptly (and in no event later than 2
business days after receipt of any Acquisition Proposal or inquiry) notify
the Parent after receipt by it (or its financial advisors) of any Acquisition
Proposal or any inquiries indicating that any person is considering making or
wishes to make an Acquisition Proposal, identifying such person, and the
financial and other material terms and conditions of any Acquisition Proposal
or potential Acquisition Proposal, (ii) promptly notify the Parent after
receipt of any request for nonpublic information relating to it or any of its
Subsidiaries or for access to its or any of its Subsidiaries'
33
properties, books or records by any person, that may be considering making, or
has made, an Acquisition Proposal, (iii) prior to furnishing any such written
information, the Company shall use its reasonable best efforts to provide
reasonable advance notice to the Parent that it intends to do so, (iv) promptly
provide the Parent with any nonpublic information which is given to such person
pursuant to this Section 5.3(c), and (v) promptly keep the Parent advised of the
status and the financial and other material terms and conditions of any such
Acquisition Proposal, indication or request.
Section 5.4 Certain Tax Matters. The Company agrees that after the date
hereof it:
(a) will file timely all material Tax Returns ("Post-Signing
Returns") required to be filed by it (after taking into account any
applicable extensions), timely pay all material Taxes due and payable with
respect to such Post-Signing Returns that are so filed, accrue a liability in
its books and records and financial statements in accordance with past
practice and GAAP for all Taxes payable by the Company for which no
Post-Signing Return is due prior to the Effective time; and
(b) will not make any material Tax election other than in the
ordinary course of business consistent with past practice, change any
material Tax election already made, adopt any material accounting method or
change any material accounting method relating to Taxes unless required by
GAAP, enter into any closing agreement or settle any material claim or
material assessment relating to Taxes or consent to any claim or assessment
relating to Taxes or any waiver of the statute of limitations for any such
claim or assessment.
Section 5.5 Certain Deliveries. The Company agrees that prior to 21 days
after the date hereof, it shall deliver to the Parent (a) true and complete
copies of any Company Subsidiary's constitutive documents not made available
prior to the date hereof and (b) a complete and accurate list of foreign
trademarks owned by the Company and its Subsidiaries.
ARTICLE VI
COVENANTS OF PARENT AND PURCHASER
Section 6.1 Director and Officer Liability.
(a) From and after the Effective Time, the Parent and the Surviving
Corporation jointly and severally shall indemnify, to the full extent
permitted under the DGCL, the present and former directors and officers of
the Company and its Subsidiaries (the "Indemnified Parties") in respect of
actions taken prior to and including the Effective Time in connection with
their duties as directors or officers of the Company or its Subsidiaries
(including the Transactions). Without limitation of the foregoing, in the
event any Indemnified Party becomes involved in such capacity in any action,
proceeding or investigation in connection with any matter, including the
Transactions, occurring prior to and including the Effective Time, the
Surviving Corporation, to the extent permitted and on such conditions as may
be required by the DGCL, will periodically advance expenses to such
Indemnified Party for his or her legal and
34
other out-of-pocket expenses (including the cost of any investigation and
preparation) incurred in connection therewith.
(b) For not less than six years after the Effective Time, the Parent
or the Surviving Corporation shall maintain in effect directors' and
officers' liability insurance covering the persons who are currently covered
by the existing directors' and officers' liability insurance of the Company
with respect to actions that shall have taken place prior to or at the
Effective Time, on terms and conditions (including coverage amount) no less
favorable to such persons than those in effect on the date hereof under the
existing directors' and officers' liability insurance of the Company;
provided that at the Parent's election, the Parent may meet its obligations
under this Section 6.1(b) by covering such persons under the Parent's
insurance policy or policies on the terms described in this Section 6.1(b).
(c) If the Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity in such consolidation or merger or (ii) transfers all or substantially
all its properties and assets to any person, then, and in each case, proper
provision shall be made so that the successors and assigns of the Parent or
the Surviving Corporation, as the case may be, honor the indemnification and
insurance obligations set forth in this Section 6.1.
(d) The obligations of the Surviving Corporation and the Parent
under this Section 6.1 shall not be terminated or modified in such a manner
as to adversely affect any person to whom this Section 6.1 applies without
the prior written consent of such affected person.
Section 6.2 Employee Benefits.
(a) During the period commencing on the date of the Effective Time
and ending on the first anniversary thereof, the Parent shall provide (or
shall cause the Surviving Corporation to provide) employees that were
employees of the Company and the Company Subsidiaries immediately prior to
the Effective Time ("Company Employees") with salary and benefits under the
Company Employee Plans that are no less favorable in the aggregate than those
provided by the Company and the Company Subsidiaries to such employees
immediately prior to the Effective Time (including, without limitation,
benefits pursuant to qualified and nonqualified retirement plans, savings
plans, medical, dental, disability and life insurance plans and programs,
deferred compensation arrangements, bonus plans, and retiree benefit plans,
policies and arrangements), excluding any equity related compensation. Except
to the extent necessary to avoid duplication of benefits, the Parent shall
recognize (or cause to be recognized) service with the Company and the
Company Subsidiaries and any predecessor entities (and any other service
credited by the Company under similar benefit plans) for purposes of vesting.
eligibility to participate, severance and vacation accrual under employee
benefit plans or arrangements maintained by the Parent, the Surviving
Corporation or any Subsidiary of the Parent, if any, in which Company
employees are eligible to participate following the Effective Time.
35
(b) From and after the Effective Time, the Parent shall, and shall
cause the Parent Subsidiaries to, waive any pre-existing condition
limitations and credit any deductibles and out-of-pocket expenses that are
applicable and/or covered under the Company Employee Plans, and are incurred
by the employees and their beneficiaries during the portion of the calendar
year prior to participation in any employee benefit plans or arrangements
maintained by the Parent or any Parent Subsidiary.
(c) The provisions of this Section 6.2 shall not create in any
Company Employee any rights to employment or continued employment with the
Parent or the Surviving Corporation or any of their respective Subsidiaries
or affiliates.
(d) From and after the Effective Time, the Parent shall honor and
perform, and shall cause the Surviving Corporation to honor and perform, in
accordance with their respective terms, the severance, change in control and
termination programs, policies, agreements (including any change in control,
termination, severance agreements or employment agreements containing such
type of provisions) and plans of the Company or any Company Subsidiary set
forth in Section 6.2 of the Company Disclosure Schedule; provided, however,
that the foregoing shall not restrict the Parent's or the Surviving
Corporation's right to amend or terminate any such programs, policies,
agreements and plans in accordance with the terms thereof and this Section 6.2.
Section 6.3 Conduct of the Purchaser. The Parent will take all action
necessary to cause the Purchaser to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
ARTICLE VII
COVENANTS OF PURCHASER AND COMPANY
Section 7.1 Reasonable Best Efforts. Subject to the terms and conditions
hereof, each party will use reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
Transactions as promptly as practicable; provided that nothing in this Section
shall require the Company, the Parent or the Purchaser to take any action which
would be inconsistent with the fiduciary duties of its board of directors as
such duties would exist under applicable law in the absence of this Section;
provided further that, for these purposes, reasonable best efforts of the
Company, the Parent and/or the Purchaser shall be deemed to include, without
limitation, (i) offering to enter into, and entering into, any settlement,
undertaking, consent decree, stipulation or agreement or agreeing to any order
regarding antitrust matters in connection with any objections of any
Governmental Entity to the Transactions and (ii) offering to divest to others
and/or hold separate, and divesting or otherwise holding separate (including by
establishing a trust or otherwise), or taking any other action (or otherwise
agreeing to do any of the foregoing) with respect to, any portion of its and/or
its Subsidiaries' business, assets or properties, other than any such action
pursuant to clause(s) (i) and/or (ii) requiring any divestiture, holding
separate (including by establishing a trust or otherwise) or sale (by whatever
means) of (or any agreement to do any of the foregoing) any material assets of
any party. In
36
connection with and without limiting the foregoing, the Parent and the Company
shall (i) take all action reasonably necessary to ensure that neither Section
203 of the DGCL, nor any other state takeover statute or similar statute or
regulation (other than the Wisconsin Corporate Takeover Law) is or becomes
applicable to the Offer, the Merger, this Agreement or any of the other
Transactions and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, this Agreement or any of
the other Transactions (including the Wisconsin Corporate Takeover Law), take
all action reasonably necessary to ensure that the Offer, the Merger and the
other Transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize or eliminate the effect
of such statute or regulation on the Offer, the Merger and the other
Transactions. The Company, the Parent and the Purchaser shall each furnish to
one another and to one another's counsel all such information as may be required
in order to accomplish the foregoing actions.
Section 7.2 Certain Filings; Cooperation in Receipt of Consents. The
Company and the Parent shall cooperate with one another in (x) determining
whether any other action by or in respect of, or filing with, any Governmental
Entity is required, or any actions, consents, approvals or waivers are required
to be obtained from parties to any material contracts, in connection with the
consummation of the Transactions and (y) taking any such other actions,
obtaining any consents, approvals or waivers or making any filings, furnishing
information required in connection therewith and seeking promptly to obtain any
such actions, consents, approvals or waivers. Without limiting the generality of
the foregoing, the Parent and the Company shall each (i) file any notification
and report forms and related material that it may be required to file in
connection with the Transactions with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the HSR Act
as soon as practicable, but in no event later than 10 business days after the
date of this Agreement, (ii) use its reasonable best efforts to obtain an early
termination of the applicable waiting period, (iii) make any further filings
pursuant thereto that may be necessary, proper or advisable, (iv) make any
filings or obtain any other consents required by any foreign Governmental Entity
and (v) make all filings and obtain any other consents required by the Wisconsin
Corporate Takeover Law. Each party shall permit the other party to review any
communication given by it to, and consult with each other in advance of any
meeting or conference with, any Governmental Entity or, in connection with any
proceeding by a private party, with any other person, and to the extent
permitted by the applicable Governmental Entity or other person, give the other
party the opportunity to attend and participate in such meetings and
conferences, in each case in connection with the Transactions.
Section 7.3 Public Announcements. The parties shall consult with each other
before issuing any press release or SEC filing (including, without limitation,
the Offer Documents, the Schedule 14D-9 and the Information Statement) or making
any public statement or communication with respect to this Agreement or the
Transactions and, except as may be required by fiduciary duties, applicable law
or any listing agreement with any national securities exchange, will not issue
any such press release or SEC filing or make any such public statement or
communication prior to such consultation. The Company agrees to give reasonable
consideration to all comments provided by the Parent.
37
Section 7.4 Access to Information. From the date hereof until the
Effective Time and subject to applicable law, the Company shall (i) give to the
Parent, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to its offices, properties, books and records,
(ii) furnish or make available to the Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such persons may reasonably request and (iii) instruct
its employees, counsel, financial advisors, auditors and other authorized
representatives to cooperate with the reasonable requests of the Parent in its
investigation. Any investigation pursuant to this Section 7.4 shall be conducted
in such manner as not to interfere unreasonably with the conduct of the business
of the Company. Unless otherwise required by law, the Parent will hold, and will
cause its officers, employees, counsel, financial advisors, auditors and other
authorized representatives to hold, any nonpublic information obtained in any
such investigation in confidence in accordance with the Confidentiality
Agreement, which shall survive the execution and delivery of this Agreement. No
information or knowledge obtained in any investigation pursuant to this Section
7.4 shall affect or be deemed to modify any representation or warranty made by
the Company hereunder.
Section 7.5 Notices of Certain Events. The Company and the Parent shall
promptly notify the other of: (i) any notice or other communication from any
person alleging that the consent of such person is or may be required in
connection with the Transactions; (ii) any notice or other communication from
any Governmental Entity in connection with the Transactions; (iii) any actions,
suits, claims, investigations or proceedings commenced or, to the Knowledge of
the Company or to the knowledge of Parent, as the case may be, threatened
against, relating to or involving or otherwise affecting the Parent or any of
its Subsidiaries (including the Purchaser), on the one hand, or the Company or
any of its Subsidiaries, on the other hand, which relate to the consummation of
the Transactions; and (iv) any action, event or occurrence that would constitute
a breach of any representation, warranty, covenant or agreement of such party
set forth in this Agreement, provided that no such notification pursuant to
clause (iv) shall affect or be deemed to modify any representation or warranty
made by the party giving such notice.
Section 7.6 Transfer Taxes. The Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, applications,
questionnaires or other documents regarding any real property transfer, stamp,
recording, documentary, gains, sales, use, value added, stock transfer or other
taxes and any other fees and similar taxes which become payable to any Taxing
Authority in connection with the Merger, other than withholding taxes
(collectively, the "Transfer Taxes"). Except as specifically provided in this
Agreement, from and after the Effective Time, the Parent shall pay or cause to
be paid, without deduction or withholding from any amounts payable to the
holders of Company Common Shares, all Transfer Taxes.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation To Effect the Merger.
The obligations of the Company, the Parent and the Purchaser to consummate the
Merger are subject to the satisfaction of the following conditions:
38
(a) Stockholder Approval. The Company Stockholder Approval shall
have been obtained, if required by applicable law, in order to consummate the
Merger; provided however that neither the Parent nor the Purchaser may invoke
this condition if either of them or any of their respective affiliates shall
have failed to vote Company Common Shares as contemplated by this Agreement;
(b) No Injunction. (i) No statute, rule or regulation shall have
been enacted or promulgated by any governmental authority which prohibits the
consummation of the Merger, and (ii) there shall be no judgment, decree order
or injunction of a court of competent jurisdiction in effect precluding
consummation of the Merger; provided that no party may invoke the condition
in (ii) of this Section if it or any of its affiliates shall have failed to
employ its reasonable best efforts to oppose, contest and resolve such order
or injunction; and
(c) Purchase of Company Common Shares in Offer. The Parent, the
Purchaser or their affiliates shall have purchased Company Common Shares
pursuant to the Offer; provided that neither the Purchaser nor the Parent
shall be entitled to invoke on this condition if either of them shall have
failed to purchase Company Common Shares pursuant to the Offer in breach of
their obligations under this Agreement.
ARTICLE IX
TERMINATION
Section 9.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Transactions
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) by mutual written agreement of the Parent and the Purchaser, on
the one hand, and the Company, on the other hand; provided that any such
agreement by the Company after the Share Purchase Date shall have been duly
authorized by at least 8 of the 9 directors of the Company (or such other
number of directors that ensures that at least a majority of the Independent
Directors has granted such approval) at a time when there are at least 3
Independent Directors serving on such board;
(b) by either the Parent or the Company:
(i) if (A) the Offer terminates or expires in accordance with its
terms without any Company Common Shares being purchased therein or (B)
the Purchaser has not accepted for payment any Company Common Shares
tendered pursuant to the Offer by the Outside Date; provided however
that the right to terminate this Agreement under this Section 9.1(b)(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 Parent or the Purchaser, as the case may be, to
purchase Company Common Shares pursuant to the Offer on or prior to such
date;
39
(ii) if there is any law or regulation that makes consummation of
the Offer or Merger illegal or otherwise prohibited or if any
Governmental Entity having competent jurisdiction shall have issued an
order, decree, ruling or injunction or taken any other action, which
permanently restrains, enjoins or otherwise prohibits the acceptance for
payment of, or payment for, Company Common Shares pursuant to the Offer
or the Merger and such order, decree, ruling or injunction or other
action shall have become final and non-appealable and, prior to such
termination, the parties shall have used their reasonable best efforts
to resist, resolve or lift, as applicable, such law, regulation,
judgment, injunction, order or decree; provided that the right to
terminate this Agreement under this Section 9.1(b)(ii) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, such action or
inaction;
(c) by the Company prior to the Share Purchase Date if:
(i) the Parent or the Purchaser (A) fails to commence the Offer
within the number of days specified in Section 1.1(a), or (B) makes any
change to the Offer in contravention of the provisions of this
Agreement;
(ii) (A) the representations and warranties of the Parent and/or
the Purchaser contained in Article IV of this Agreement shall not be true
and correct in any material respect either (x) as of the date referred to
in any representation or warranty which addresses matters as of a
particular date or (y) as to all other representations and warranties, as
of the date of determination, or (B) the Parent or the Purchaser materially
breaches or materially fails to perform its covenants and other agreements
contained herein; provided that, in each of the foregoing clauses (A) and
(B), such breach or failure cannot be or has not been cured in all material
respects within 30 days after the giving of written notice thereof to the
Parent or the Purchaser;
(iii) the Company enters into a definitive agreement with respect
to an Acquisition Proposal, or approves or recommends any Acquisition
Proposal, in accordance with Section 5.3; provided that the Company
makes payment of the Termination Fee in accordance with Section 9.3; or
(d) by the Parent or the Purchaser prior to the Share Purchase Date,
if:
(i) (A) the representations and warranties of the Company
contained in Article III of this Agreement shall not be true and correct
in any respect that causes a failure of the condition set forth in
clause (c) of Exhibit A, or (B) the Company materially breaches or
materially fails to perform its covenants or other agreements contained
herein which breach or failure cannot be or has not been cured in all
material respects, prior to the earlier of the date that is (x) thirty
(30) days after the giving of written notice thereof to the Company or
(y) two (2) business days prior to the date on which the Offer expires;
(ii) the Company's board of directors (A) withdraws or modifies
in a manner adverse to the Parent or the Purchaser the Company Tender
Recommendation; or
40
(B) fails to reconfirm the Company Tender Recommendation within 3 business
days after receipt of a request by the Parent or the Purchaser, provided
that any such request may be made only one time within 3 business days
after notice of any of the following events (as any of the following events
may occur from time to time): (i) receipt by the Company of an Acquisition
Proposal, (ii) any material change to an existing Acquisition Proposal,
(iii) a public announcement of any transaction to acquire a material
portion of the Company Common Shares by a Person other than the Purchaser,
the Parent or any of their Subsidiaries or affiliates other than an
existing Acquisition Proposal, (iv) any extension of the Offer, and (v) any
other material event or circumstance reasonably related to the Offer;
(iii) the Company enters into a definitive agreement with respect
to an Acquisition Proposal, or approves or recommends any Acquisition
Proposal, in accordance with the provisions of Section 5.3; or
(iv) any person or group (as defined in Section 13(d)(3) of the
Exchange Act), other than the Parent, the Purchaser, any of their
respective subsidiaries or affiliates or any person acting in concert
with the Parent, the Purchaser or any of their respective Subsidiaries
or affiliates, shall have become the beneficial owner of more than 35%
of the outstanding Company Common Shares (the "Triggering Person") on a
Fully-Diluted Basis; provided that this provision shall not apply to any
person or group that owns more than such percentage on the date hereof.
Section 9.2 Effect of Termination. If any party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party,
except (i) for fraud or for any liability of any party then in breach and (ii)
for the obligation to pay the fees and expenses (including the Termination Fee,
if any) as contemplated by Section 9.3(b); provided that the provisions of this
Section 9.2, Section 9.3 and Article X and the second to last sentence of
Section 7.4 of this Agreement shall remain in full force and effect and survive
any termination of this Agreement.
Section 9.3 Fees and Expenses.
(a) Except as set forth in this Section 9.3, all fees and expenses
incurred in connection herewith and the Transactions shall be paid by the
party incurring such expenses (including any HSR Act filing fees), whether or
not any of the Transactions are consummated.
(b) The Company shall pay to the Parent a termination fee equal to
$77.5 million, plus documented out-of-pocket expenses of the Parent not to
exceed $4.0 million incurred in connection with this Agreement other than
primarily as a result of the termination of this Agreement (the "Termination
Fee"):
(i) if this Agreement is terminated by the Company pursuant to
Section 9.1(c)(iii);
(ii) if this Agreement is terminated by the Parent or the
Purchaser pursuant to Section 9.1(d)(ii) or Section 9.1(d)(iii);
41
(iii) if this Agreement is terminated by either the Parent, the
Purchaser or the Company pursuant to Section 9.1(b)(i), but only if (A) the
Minimum Condition was not satisfied or, with the consent of the Company, waived
and all other conditions set forth in Exhibit A were satisfied or, with the
consent of the Company, waived at the Expiration Date of the Offer, (B) after
the date hereof and prior to such termination, an Acquisition Proposal had been
publicly announced and not withdrawn or abandoned at the time of termination and
(C) within 12 months after such termination, the Company enters into a
definitive agreement with respect to any Acquisition Proposal or consummates any
Acquisition Proposal;
(iv) if this Agreement is terminated by either the Parent or the
Purchaser pursuant to Section 9.1(d)(i)(B), but only if (A) after the date
hereof and prior to such termination, an Acquisition Proposal had been publicly
announced and not withdrawn or abandoned at the time of termination and (B)
within 12 months after such termination, the Company enters into a definitive
agreement with respect to such Acquisition Proposal (or announces its intention
to do so); or
(v) if this Agreement is terminated by either the Parent or the
Purchaser pursuant to Section 9.1(d)(iv), but only if within 12 months after
such termination the Company enters into a definitive agreement with respect to
an Acquisition Proposal with the Triggering Person;
provided however that no Termination Fee shall be payable if both (A) the
Purchaser or the Parent was in willful and material breach (which for purposes
of this clause shall mean a willful breach that has a material adverse effect on
consummating the transactions contemplated hereby) of its representations,
warranties or obligations under this Agreement at the time of termination and
(B) the Company has given to the Parent or the Purchaser, as the case may be,
written notice of such willful and material breach at or prior to the time of
such termination and a reasonable opportunity to cure such breach, if curable;
provided further that in no event shall Purchaser be entitled to receive payment
of more than one Termination Fee hereunder.
(c) The Termination Fee shall be made by wire transfer of
immediately available funds to the Parent (i) in the case of a termination
described in Section 9.3(b)(i), concurrent with such termination, (ii) in the
case of a termination described in Section 9.3(b)(ii), on the next business
day following the date of termination, (iii) in the case of a termination
described in Section 9.3(b)(iii), no later than simultaneously with the
earliest to occur of the events set forth in subclause (C) of Section
9.3(b)(iii), (iv) in the case of a termination described in Section
9.3(b)(iv), no later than simultaneously with the earliest to occur of the
events set forth in subclause (B) of Section 9.3(b)(iv) and (v) in the case
of the events described in Section 9.3(b)(v), simultaneously with the Company
entering into the definitive agreement described in Section 9.3(b)(v).
(d) The Parent shall be solely responsible for payment of all
expenses relating to the preparation, printing and distribution of the Offer
Documents and the Information Statement (or Proxy Statement, as the case may
be).
42
(e) The parties hereto agree that the provisions contained in this
Section 9.3 are an integral part of the transactions contemplated by this
Agreement, that the damages resulting from termination of this Agreement
where a Termination Fee is payable are uncertain and incapable of accurate
calculation and that the amounts payable pursuant to Section 9.3(b) are
reasonable forecasts of the actual damages which may be incurred by the
parties under such circumstances. The amounts payable pursuant to Section
9.3(b) constitute liquidated damages and not a penalty and shall be the sole
monetary remedy in the event of termination of this Agreement on the bases
specified in this Section except in the event of a willful material breach by
the Company, in which case any claim for damages therefor shall be reduced by
the amount of any Termination Fee actually paid.
ARTICLE X
MISCELLANEOUS
Section 10.1 Waivers and Amendments. Subject to Section 1.3(b), at any time
prior to the Effective Time, the parties hereto, by action taken by or pursuant
to resolutions of their respective boards of directors, may (i) extend the time
for the performance of any of the obligations or other acts of the parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) except
for adoption of this Agreement by the stockholders of the Company, waive
compliance with any of the agreements or conditions contained herein. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. Subject to Section 1.3(b), any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, the Parent and the Purchaser or in the case of a
waiver, by the party against whom the waiver is to be effective.
Section 10.2 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. This Section 10.2 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service, such as Federal
Express, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
43
(a) if to the Parent or the Purchaser, to:
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, IL 60179
Attention: Senior Vice President and General Counsel
Facsimile: (847) 286-2471
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 W. Wacker Drive
Chicago, IL 60606
Attention: Gary P. Cullen, Esq.
Facsimile: (312) 407-0411
and
(b) if to the Company, to:
Lands' End, Inc.
5 Lands' End Lane
Dodgeville, WI
Attention: Senior Legal Officer
Facsimile: (608) 935-6550
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Robert S. Osborne, P.C.
Facsimile: (312) 861-2200
Section 10.4 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof", and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to May 12, 2002. As used in this Agreement, the term "affiliate(s)"
shall have the meaning set forth in Rule l2b-2 of the Exchange Act. As used in
this Agreement, the term "Knowledge of the Company" means the actual knowledge,
after reasonable inquiry, of David F. Dyer, the President and Chief Executive
Officer, Donald R Hughes, the Executive Vice President and Chief Financial
Officer, Jeffrey A. Jones, the Chief Operating Officer, Karl A. Dahlen, Vice
President, Senior Legal Officer, and Mindy C. Meads, the Executive Vice
President of Merchandising of the Company. As used in this Agreement, the term
"person" shall mean an
44
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including any
Governmental Entity.
Section 10.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 10.6 Entire Agreement; Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.1 hereof is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder; provided that this Agreement shall not supersede or in any
way modify the terms of the Confidentiality Agreement, which Agreement shall
remain in full force and effect.
Section 10.7 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 10.8 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
Section 10.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Any purported transfer or
assignment in violation hereof shall be null and void.
Section 10.10 Headings. The Article, Section and paragraph headings herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
Section 10.11 Specific Performance. Except under such circumstances as
cause a Termination Fee to be payable, (i) each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages and (ii) it is accordingly agreed that the
parties hereto (a) will waive, in any action for specific performance, the
defense of adequacy of a remedy at law and (b) shall be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted in a court of
competent jurisdiction.
45
* * * * *
46
IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
SEARS, ROEBUCK AND CO.
By: /s/ Alan J. Lacy
--------------------------------------------
Name: Alan J. Lacy
Title: President and Chief Executive Officer
INLET ACQUISITION CORP.
By: /s/ Glenn R. Richter
--------------------------------------------
Name: Glenn R. Richter
Title: President
LANDS' END, INC.
By: /s/ David F. Dyer
--------------------------------------------
Name: David F. Dyer
Title: President and Chief
Executive Officer
47
EXHIBIT A
CONDITIONS TO THE TENDER OFFER
------------------------------
Notwithstanding any other provision of the Offer, the Purchaser
shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered
Company Common Shares promptly after termination or withdrawal of the Offer),
pay for any Company Common Shares tendered pursuant to the Offer, and may
terminate or amend the Offer and may postpone the acceptance for payment of
and payment for Company Common Shares tendered (in each case, in accordance
with the Agreement), if (I) the Minimum Condition shall not have been
satisfied or, with the consent of the Company, waived after the Offer has
remained open for at least 20 business days, (II) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to
the expiration of the Offer, or (III) at any time prior to the acceptance for
payment of Company Common Shares, any of the following events shall have
occurred and be continuing:
(a) there shall have been enacted, entered, enforced or promulgated
by any Governmental Entity any statute, rule, regulation, legislation,
judgment, order or injunction, other than the routine application of the
waiting period provisions of the HSR Act, which, directly or indirectly, (i)
prohibits or makes illegal or otherwise directly or indirectly restrain or
prohibit the Offer, the acceptance for payment of, or payment for, any
Company Common Shares by the Parent or the Purchaser; (ii) prohibits or
materially limits the ownership or operation by the Company, the Parent or
any of their Subsidiaries of all or any material portion of the business or
assets of the Company or any of its Subsidiaries or compels the Company, the
Parent or any of their Subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of the Company, the Parent or any
of their Subsidiaries; or (iii) imposes material limitations on the rights of
ownership of the Parent, the Purchaser or any other affiliate of the Parent
with respect to the Company Common Shares; provided that the Purchaser shall
have used its reasonable best efforts to resist, resolve, defend against or
lift, as applicable, such statute, rule, regulation, legislation, judgment,
order or injunction;
(b) there shall have occurred and continue to exist (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or in the Nasdaq National Market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or (iii) any limitation (whether or not mandatory) by any U.S.
Governmental Entity that materially and adversely affects the extension of
credit by banks or other lending institutions in the United States;
(c) the representations and warranties of the Company contained in
Article III of this Agreement (which for these purposes shall exclude all
qualifications or exceptions relating to "materiality" and/or Company
Material Adverse Effect) shall not be true and correct, either (i) as of the
date referred to in any representation or warranty which addresses matters as
of a particular date or (ii) as to all other representations and warranties,
as of the date of determination, in either case (other than with respect to
Section 3.5, which shall be true and correct in all material respects),
except where the failure to be so true and correct would not,
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individually or in the aggregate, have a Company Material Adverse Effect;
provided that such breach or failure cannot be or has not been cured in all
material respects prior to the earlier of the 30th day after the giving of
written notice thereof to the Company and the then current Expiration Date;
(d) the Company shall have failed to perform in any material respect
any obligation under this Agreement or to comply in any material respect with
any of its covenants or other obligations under this Agreement;
(e) the board of directors of the Company (or a special committee
thereof) (i) shall have withdrawn, modified or changed in a manner adverse to
the Parent and the Purchaser (including by amendment of the Schedule 14D-9)
its recommendation of the Offer, this Agreement or the Merger, (ii) shall
have recommended or announced a neutral position with respect to an
Acquisition Proposal, (iii) shall have adopted any resolution to effect the
foregoing, or (iv) fails to reconfirm the Company Tender Recommendation
within 3 business days after receipt of a request by the Parent or the
Purchaser, provided that any such request may be made only one time within 3
business days after notice of any of the following events (as any of the
following events may occur from time to time): (i) receipt by the Company of
an Acquisition Proposal, (ii) any material change to an existing Acquisition
Proposal, (iii) a public announcement of any transaction to acquire a
material portion of the Company Common Shares by a Person other than the
Purchaser, the Parent or any of their Subsidiaries or affiliates other than
an existing Acquisition Proposal, (iv) any extension of the Offer, and (v)
any other material event or circumstance reasonably related to the Offer;
(f) any applicable waiting period under the HSR Act relating to the
Offer and the Merger shall not have expired or been terminated and all
material consents, approvals and authorizations required to be obtained prior
to the consummation of the Offer and the Merger by the parties hereto from
governmental and regulatory authorities to consummate the Offer and the
Merger, shall not have been made or obtained, as the case may be;
(g) this Agreement shall have been terminated in accordance with its
terms; which, in the sole good faith judgment of the Purchaser in any such case,
makes it inadvisable to proceed with the Offer and/or such acceptance for
payment of or payment for the Company Common Shares.
The foregoing conditions are for the sole benefit of the Purchaser
and the Parent and may be asserted by the Purchaser or the Parent regardless
of the circumstances giving rise to any such condition or may be waived by
the Parent or the Purchaser in whole or in part at any time and from time to
time in the sole discretion of the Parent or the Purchaser, except that the
conditions in clause (I) and paragraph (f) above may not be waived by the
Parent or the Purchaser without the prior written consent of the Company. The
failure by the Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
Dates Referenced Herein and Documents Incorporated by Reference
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