Exhibit 2.1
SHARE EXCHANGE AGREEMENT
by and between
ROUNDY'S ACQUISITION CORP.
and
ROUNDY'S, INC.
Dated: April 8, 2002
TABLE OF CONTENTS
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ARTICLE I Share Exchange .......................................................... 4
1.1 Share Exchange. ...................................................... 4
1.2 Effective Time ....................................................... 5
1.3 Effect of Share Exchange ............................................. 6
ARTICLE II Payment for Shares; Treatment of Stock Options; Dissenters Rights ...... 6
2.1 Payment Agent. ....................................................... 6
2.2 Exchange Procedures .................................................. 6
2.3 Stock Transfer Books ................................................. 7
2.4 Treatment of Stock Options and Stock Appreciation Rights ............. 7
2.5 Dissenting Shares .................................................... 8
ARTICLE III Closing; Closing Deliveries ........................................... 8
3.1 Time and Place of Closing ............................................ 8
3.2 Deliveries. .......................................................... 8
ARTICLE IV Representations and Warranties of the Company .......................... 11
4.1 Corporate Organization ............................................... 11
4.2 Authorization; No Violations. ........................................ 11
4.3 Capitalization of the Company ........................................ 12
4.4 Subsidiaries and Affiliates .......................................... 12
4.5 Securities Reports; Financial Statements. ............................ 13
4.6 Absence of Undisclosed Liabilities ................................... 14
4.7 Absence of Certain Changes or Events ................................. 14
4.8 Legal Proceedings .................................................... 15
4.9 Taxes. ............................................................... 15
4.10 Title to Properties and Related Matters. ............................. 16
4.11 Licenses, Permits, Authorizations and Consents ....................... 17
4.12 Intellectual Property ................................................ 17
4.13 Employees. ........................................................... 18
4.14 Benefit Plans. ....................................................... 18
4.15 Compliance with Applicable Law ....................................... 21
4.16 Minute Books, etc .................................................... 21
4.17 Environmental Matters. ............................................... 21
4.18 No Brokers or Finders ................................................ 22
4.19 Company Shareholders' Approval ....................................... 22
4.20 Opinion of Financial Advisor ......................................... 22
4.21 Disclosure Schedule .................................................. 22
4.22 Contracts ............................................................ 22
4.23 Insurance ............................................................ 23
4.24 Related Party Transactions ........................................... 24
4.25 Suppliers and Customers .............................................. 24
4.26 Names and Locations .................................................. 24
4.27 Officer and Directors; Bank Accounts ................................. 24
4.28 Board Recommendation ................................................. 24
4.29 No Misleading Statements ............................................. 25
4.30 Indebtedness ......................................................... 25
4.31 Expenses ............................................................. 25
4.32 Change in Control Payments ........................................... 25
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TABLE OF CONTENTS
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ARTICLE V Representations and Warranties of the Buyer ............................. 25
5.1 Corporate Organization ............................................... 25
5.2 Authorization ........................................................ 26
5.3 Consents and Approvals; No Violations ................................ 26
5.4 Investment Purpose ................................................... 26
5.5 No Brokers or Finders ................................................ 26
5.6 Financing ............................................................ 26
ARTICLE VI Covenants .............................................................. 26
6.1 Shareholders' Meeting; Board Recommendation; Proxy Statement ......... 26
6.2 Conduct of the Business of the Company Pending Closing ............... 27
6.3 Non-Solicitation of Other Proposals .................................. 30
6.4 Amendment of Articles of Incorporation and By-Laws; Voting Trust ..... 31
6.5 The Company's Policy on Redemptions of its Shares .................... 31
6.6 Access to Personnel, Properties, Books and Records ................... 32
6.7 Best Efforts. ........................................................ 32
6.8 Confidentiality ...................................................... 33
6.9 Contracts Honored .................................................... 33
6.10 Directors' and Officers' Indemnification and Insurance. .............. 34
6.11 Expenses. ............................................................ 35
6.12 Company's Buying Deposit Agreements .................................. 35
ARTICLE VII Conditions to the Obligations of the Buyer ............................ 35
7.1 Representations and Warranties True .................................. 35
7.2 Performance .......................................................... 35
7.3 Approvals, Permits, Etc. ............................................. 36
7.4 Delivery of Closing Documents ........................................ 36
7.5 Absence of Certain Events ............................................ 36
7.6 No Material Adverse Change ........................................... 36
7.7 Consents ............................................................. 36
7.8 Dissenting Shareholders .............................................. 36
7.9 Shareholders' Meeting ................................................ 36
7.10 Trademark Licenses ................................................... 36
7.11 Non-Competition Agreements ........................................... 36
7.12 Financing ............................................................ 36
7.13 Payoff Letters and Releases .......................................... 36
ARTICLE VIII Conditions to the Obligations of the Company ......................... 37
8.1 Representations and Warranties True .................................. 37
8.2 Performance .......................................................... 37
8.3 Approvals, Permits, Etc. ............................................. 37
8.4 Delivery of Closing Documents ........................................ 37
8.5 Absence of Certain Events ............................................ 37
8.6 Shareholders' Meeting; Certificate Holders' Meeting .................. 37
ARTICLE IX Termination ............................................................ 37
9.1 Termination .......................................................... 37
9.2 Effect of Termination. ............................................... 38
9.3 Superior Proposal. ................................................... 40
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TABLE OF CONTENTS
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ARTICLE X Miscellaneous Provisions ................................................ 41
10.1 Non-Survival of Representations and Warranties ....................... 41
10.2 Waiver of Compliance ................................................. 41
10.3 Notices .............................................................. 41
10.4 Public Announcements ................................................. 42
10.5 Binding Effect; Assignment ........................................... 42
10.6 No Third Party Beneficiary ........................................... 42
10.7 Captions and Paragraph Headings; Rules of Construction ............... 42
10.8 Entire Agreement; Modifications; Severability ........................ 43
10.9 Definition of Knowledge .............................................. 43
10.10 Definition of Material Adverse Effect and Material Adverse Change .... 43
10.11 Counterparts ......................................................... 43
10.12 Governing Law ........................................................ 43
10.13 Exclusive Jurisdiction ............................................... 43
10.14 Waiver Of Jury Trial ................................................. 43
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into this 8th
day of April, 2002, by and between Roundy's Acquisition Corp., a Delaware
corporation (the "Buyer"), and Roundy's, Inc., a Wisconsin corporation (the
"Company").
WHEREAS, the Company is engaged in the business of the wholesale
distribution and retail sale of food, groceries, general merchandise and other
related goods and services related thereto; and
WHEREAS, the respective Boards of Directors of the Company and Buyer have
approved a Share Exchange (as defined below) in accordance with the Wisconsin
Business Corporation Law ("WBCL"), upon the terms and subject to the conditions
set forth herein and in the Articles of Share Exchange attached hereto, as a
result of which the Buyer will acquire the Company and the shareholders of the
Company (other than shareholders who perfect dissenter's rights) will be
entitled to receive the consideration provided in this Agreement.
NOW, THEREFORE, in consideration of the premises and the promises and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Share Exchange
1.1 Share Exchange.
(a) Subject to the terms and conditions of this Agreement and in
accordance with the WBCL, at the Effective Time (as defined in Section 1.2), the
Buyer and the Company shall consummate a share exchange (the "Share Exchange")
in which each share of the Company's Class A common stock, par value $1.25 per
share, and Class B common stock, par value $1.25 per share (collectively, the
"Company Common Stock"), actually issued and outstanding immediately prior to
the Effective Time (other than shares of Company Common Stock owned by Buyer or
any corporation or other entity in which the Buyer has any direct or indirect
equity or other ownership interest) (each a "Share" and collectively, the
"Shares") shall, except as provided in subsection (b) and Section 2.5 below, and
without any action on the part of the holder thereof, be converted into the
right to receive from Buyer the Per Share Amount (as defined below in Section
1.1(c)), net to the seller in cash and without any interest thereon, at the
times and upon the conditions set forth herein. Until surrendered and canceled,
each stock certificate (each a "Certificate") which, immediately prior to the
Effective Time, represented Shares, other than Treasury Shares (as defined
below), shall be deemed to represent only the right to receive, upon such
surrender, the consideration payable hereunder in respect of the Shares
represented by such Certificate, on the terms set forth herein. (Each holder of
record of a Certificate shall hereinafter be referred to as an "Eligible
Shareholder," and all of such Shares held by Eligible Shareholders shall be
referred to as "Eligible Shares.")
(b) Any share of Company Common Stock held as treasury stock other
than shares of Company Common Stock held by the Company's Subsidiaries
("Treasury Shares") at the Effective Time shall, by virtue of the Share
Exchange, be canceled without payment of any consideration therefor and without
any conversion thereof.
(c) "Per Share Amount" shall mean an amount equal to: (i) the sum of
the Purchase Price and the aggregate Strike Price (as defined in Section 2.4)
divided by (ii) the aggregate number of shares of the Company Common Stock
(other than Treasury Shares but including shares of Company Common Stock owned
by Buyer or any corporation or other entity in which the Buyer has any direct or
indirect equity or other ownership interest) as of the Effective Time, on a
fully diluted basis (including the Stock Option/SAR Shares (as defined in
Section 2.4)).
(d) "Purchase Price" shall mean an amount equal to Seven Hundred
Fifty Million Dollars ($750,000,000) less (i) the sum of (A) the Closing
Indebtedness Amount and (B) the aggregate amount of Expenses of the Company and
its Subsidiaries, plus (ii) the lesser of (A) the amount of income tax savings
by the Company attributable to the tax deductions to which the Company will be
entitled as a result of the payments made in respect
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of the Stock Options and SARs under Section 2.4 hereof and (B) Nine Million Five
Hundred Thousand Dollars ($9,500,000) (the "Options Tax Benefit").
(e) "Closing Indebtedness Amount" shall mean the amount of the
outstanding balance of Indebtedness of the Company and its Subsidiaries as of
the date determined in accordance with Section 1.1(h) below; provided that for
purposes of such calculation, all interest, prepayment penalties, premiums, fees
and expenses (if any) which would be payable if such Indebtedness was paid in
full at the Closing shall be treated as Indebtedness.
(f) Solely for purposes of this Section 1.1 and Sections 6.2(b) and
7.13, "Indebtedness" shall mean at a particular time the sum of the following,
without duplication, (determined on a consolidated basis with respect to the
Company and its Subsidiaries): (i) any indebtedness for borrowed money or issued
in substitution for or exchange of indebtedness for borrowed money, (ii) any
indebtedness evidenced by any note, bond, debenture or other debt security,
(iii) any indebtedness for the deferred purchase price of property or services
(other than trade payables and other current liabilities incurred in the
ordinary course of business), (iv) obligations under capitalized leases (as
defined, and in the amount recordable as a liability, in accordance with GAAP),
(v) any indebtedness (other than trade payables and other current liabilities
incurred in the ordinary course of business) secured by any Lien (as defined in
Section 1.1(i) below) on the Company's or a Subsidiary's assets, (vi) any cash,
book or bank account overdrafts (other than those incurred in the ordinary
course of business consistent with past practice and custom), and (vii) any
accrued interest payable on the foregoing.
On the basis of the Company's Financial Statements as of the end of its
2001 fiscal year, the amount of "Indebtedness" determined under the foregoing
definition is $235,717,945, determined in the manner set forth on Exhibit A
hereto. The Closing Indebtedness Amount will be determined in a manner
consistent with the determination set forth on Exhibit A.
(g) For purposes of this Agreement, "Person" or "person" shall mean
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, an estate, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
(h) The dollar amount of the "Closing Indebtedness Amount" will be
determined by mutual agreement of the Buyer and the Company based on the books
of the Company as of a date mutually agreed upon by the Buyer and the Company,
prior to but as close as practicable to the Closing Date (the "Determination
Date"). "Net Expenses" will be determined based on amounts incurred through the
Determination Date, together with the parties' mutual good faith estimate of
amounts to be incurred after the Determination Date. The "Options Tax Benefit"
will be deemed to equal to forty and one hundred thirty-five one-thousandths
percent (40.135%) of the aggregate Stock Option/SAR Amount payable under Section
2.4 below. Amounts determined pursuant to the provisions of this Section 1.1(h)
will be used in determining the Purchase Price for purposes of the Closing, and
will be final and conclusive for all purposes hereunder.
(i) For purposes of this Agreement, "Lien" shall mean any lien,
claim, pledge, security interest, mortgage or charge of any kind, including,
without limitation, any conditional sale or other title retention agreement (or
lease in the nature thereof), any filing or agreement to file a financing
statement as debtor under the applicable Uniform Commercial Code or any similar
statute other than to reflect ownership by a third party of property leased to
the Company or any of its Subsidiaries under a lease which is not in the nature
of a conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person (other than any subordination arising in
the ordinary course of business).
1.2 Effective Time. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Articles VII and VIII, the
parties hereto shall cause the Share Exchange to be consummated by filing
articles of share exchange (the "Articles of Share Exchange") with the
Department of Financial Institutions of the State of Wisconsin (the "DFI") in
such form as required by, and executed in accordance with the relevant
provisions of, the WBCL (the date and time of such filing is referred to herein
as the "Effective Time").
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1.3 Effect of Share Exchange. Upon consummation of the Share Exchange, the
Shares will be exchanged as provided in this Agreement, and the Eligible
Shareholders shall be entitled only to the Per Share Amount relating to their
Shares or their rights under Sections 180.1301 to 180.1331 of the WBCL.
ARTICLE II
Payment for Shares; Treatment of Stock Options; Dissenters Rights
2.1 Payment Agent.
(a) Firstar Bank, N.A. shall serve as the agent (the "Payment Agent")
for the purpose of effecting disbursement of the amounts payable to Eligible
Shareholders in exchange for their Shares hereunder. At the Effective Time,
Buyer shall deposit or cause to be deposited with the Payment Agent for the
benefit of the Eligible Shareholders, the funds necessary to make the payments
to the Eligible Shareholders contemplated by Section 1.1 (the "Payment Fund").
The Payment Agent shall hold the Payment Fund for the exclusive benefit of the
Eligible Shareholders and shall disburse the Per Share Amount to the Eligible
Shareholders in accordance with this Article II. The Payment Fund shall not be
used for any other purpose.
(b) The Payment Agent shall invest the Payment Fund as directed by
Buyer in obligations of, or guaranteed by, the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Moody's Investor
Services or Standard & Poor's Corporation, respectively, or in certificates of
deposit, bank repurchase agreements or bankers' acceptances of commercial banks
with capital exceeding $200 million, in each case with maturities not exceeding
seven days. Buyer shall cause the Payment Fund to be promptly replenished to the
extent of any losses incurred as a result of the aforementioned investments. All
earnings thereon shall inure to the benefit of Buyer. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of Shares shall be entitled under this Agreement, Buyer shall in any
event be liable for payment thereof. The Payment Fund shall not be used for any
purpose except as expressly provided in this Agreement.
2.2 Exchange Procedures
(a) Within three (3) business days after the Effective Time, the
Company shall deliver to the Payment Agent a list setting forth the name and
mailing address (as the same shall appear on the Company's stock transfer books)
of each Eligible Shareholder, the number of Shares held by such Eligible
Shareholder, the name and mailing address of each Dissenting Shareholder (as
hereinafter defined), if any, and the number of Dissenting Shares (as
hereinafter defined) held by each Dissenting Shareholder (the "Eligible
Shareholder List").
(b) Within three (3) business days after its receipt of the Eligible
Shareholder List, the Payment Agent shall mail, by first-class United States
mail, to each person on the Eligible Shareholder List at the mailing address set
forth thereon, a letter of transmittal containing instructions on how to effect
a surrender of Certificates, or in the event that such person has lost such
Certificate, instructions for delivery of an affidavit of loss, stating that the
holder of a Certificate has lost such Certificate, together with the posting of
a bond (with a bond agency acceptable to the Buyer) relating to any loss, damage
or other expense resulting from a third party having a claim to such Certificate
or the shares of stock underlying such Certificate ("Affidavit").
(c) Upon surrender of a Certificate (or delivery of an Affidavit, as
the case may be), together with such letter of transmittal, duly executed, the
Payment Agent shall promptly issue to the person surrendering such Certificate
(or delivering such Affidavit) payment of the Per Share Amount represented by
such Certificate (or Affidavit). Absolutely no interest shall be paid or accrued
on the Per Share Amount payable upon the surrender of any Certificate.
(d) If payment is to be made to a person other than the person in
whose name the Certificate surrendered in exchange therefor is registered, it
shall be a condition of payment of the Eligible Shareholder's Per Share Amount
that the Certificate so surrendered (or Affidavit so delivered) be properly
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name of the record holder appears on such Certificate, with
signature guaranteed, and is otherwise in proper form for transfer, and that the
person requesting such payment shall pay any transfer or other taxes required by
law as a result of such payment to a person other than
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the record holder of the Certificate surrendered, or shall establish to the
Payment Agent's satisfaction that such tax has been paid or is not applicable.
(e) None of the Payment Agent, the Company, or Buyer shall be liable
to any former holder of Company Common Stock for any cash or other payment
delivered to a public official pursuant to any abandoned property, escheat or
similar laws.
(f) The Payment Agent shall provide each Eligible Shareholder with
an appropriate blank certificate that such Eligible Shareholder can use to
certify that such Eligible Shareholder is not subject to "backup withholding"
under the Code. Unless the Payment Agent receives such certification, the
Payment Agent shall be entitled to deduct and withhold from the disbursement of
any moneys to any Eligible Shareholder under this Section 2.2 such amounts as
the Company is required to deduct and withhold with respect to the making of the
payment of any withholding tax payments under the Internal Revenue Code of 1986,
as amended (the "Code"), or under any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Payment Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Eligible Shareholder in satisfaction of this Agreement.
(g) No interest will be paid or accrued on any amounts payable to any
Eligible Shareholder hereunder.
(h) Any portion of the Payment Fund made available to the Payment
Agent which remains unclaimed by the former shareholders of the Company for one
year after the Effective Time shall be delivered to Buyer, upon demand of Buyer,
and any former shareholders of the Company shall thereafter look only to Buyer
for payment of the Per Share Amount to which they are entitled.
2.3 Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of Shares thereafter on the records of the Company. From and after the
Effective Time, the holders of Certificates shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by law. Each
Certificate presented to the Company for transfer after the Effective Time shall
represent only the right of the transferee to receive the Per Share Amount
allocable to the Shares represented by any Certificate so presented, in the
amounts, at the times, and upon the conditions set forth in this Agreement.
2.4 Treatment of Stock Options and Stock Appreciation Rights. At the
Closing, each outstanding option and stock appreciation right issued pursuant to
the option plans of the Company (each, a "Stock Option" or "SAR"), whether or
not then exercisable, shall be exchanged for, and the holder thereof shall be
entitled to receive upon surrender of the Option or SAR for cancellation, a lump
sum cash payment (the "Stock Option/SAR Amount"), subject to any applicable
withholding tax, equal to the product of (i) the excess, if any, of the Per
Share Amount over the per share exercise price of each such Stock Option or, as
applicable, the per share base price of such SAR; times (ii) the number of
shares of Company Common Stock then issuable upon exercise of such Stock Option
or in respect of which the Company is obligated to make payment under such SAR
(the "Stock Option/SAR Shares"). "Strike Price" shall mean the exercise price of
each Stock Option and the per share base price of an SAR, in each case only if
the exercise price or the per share base price, as the case may be, is less than
the Per Share Amount. Each holder of record of a Stock Option or SAR shall
hereinafter be referred to as an "Option/SAR Holder." Amounts so payable to
Option/SAR Holders shall be paid at the Closing on the Closing Date, or as soon
thereafter as such Option/SAR Holder has duly surrendered his or her Options or
SARs for cancellation. Upon receipt of the Stock Option/SAR Amount, the Stock
Option or SAR shall be canceled. The surrender of a Stock Option or SAR to the
Company in exchange for the Stock Option/SAR Amount shall be deemed a release of
any and all rights the holder had or may have had in respect of such Option or
SAR. Prior to the Effective Time, the Company shall obtain all necessary
consents or releases from Option/SAR Holders under the Option Plans and take all
such other lawful action as may be necessary to give effect to the transactions
contemplated by this Section 2.4. The Option Plans shall terminate as of the
Effective Time, and the provisions in 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 Subsidiary thereof shall be canceled as of
the Effective Time. Prior to the Effective Time, the Company shall take all
action necessary to (i) ensure that, following the Effective Time, no
participant in the Option Plans or any
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other plans, programs or arrangements shall have any right thereunder to acquire
equity securities of the Company or any Subsidiary thereof and (ii) terminate
all such plans, programs and arrangements.
2.5 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective Time and held by
a holder ("Dissenting Shareholder") who has not voted in favor of the Share
Exchange and who has demanded payment for such Shares in accordance with
Sections 180.1301 to 180.1331 of the WBCL ("Dissenting Shares") shall not be
converted into the right to receive the Per Share Amount, unless and until such
holder fails to perfect or withdraws or otherwise loses his or her right to
dissent and demand payment under the WBCL. If, after the Effective Time, any
such holder fails to perfect or withdraws or loses his or her right to demand
payment, then such Shares shall no longer be Dissenting Shares and they shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Per Share Amount, if any, to which such holder is
entitled, without interest or dividends thereon. The Company shall give Buyer
prompt notice of any demands received by the Company for payment of Dissenting
Shares and, prior to the Effective Time, Buyer shall have the right to
participate in all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, except with the prior
written consent of Buyer, make any payment with respect to, settle or offer to
settle, any such demands. From time to time at or after the Effective Time,
Buyer shall take all lawful action necessary to make the appropriate cash
payments, if any, to holders of Dissenting Shares. Prior to the Effective time,
Buyer shall enter into appropriate commercial arrangements to ensure
effectuation of the immediately preceding sentence, it being understood that the
deposit by the Buyer of the Payment Fund in accordance with Section 2.1(a) shall
fully satisfy such obligation.
ARTICLE III
Closing; Closing Deliveries
3.1 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Whyte
Hirschboeck Dudek S.C., on a date selected by the parties as soon as practical
after the satisfaction or, if permissible, waiver of the conditions set forth in
Articles VII and VIII (the "Closing Date"), and shall become effective for all
purposes at the Effective Time as provided in Section 1.2.
3.2 Deliveries.
(a) Deliveries by the Company. The Company shall deliver or cause to
be delivered to the Buyer at the Closing the following:
(i) a certificate, dated as of the Closing Date and executed
by the President and Chief Financial Officer of the Company (in his or her
capacity as such), respectively, to the effect that: (A) all of the
representations and warranties of the Company contained in this Agreement
(including, without limitation, the Disclosure Schedule hereto) are true
and correct on the Closing Date as though such representations and
warranties were made on such date, except where the failure of such
representations and warranties to be true and correct shall not, in the
aggregate, be material to the business, financial condition, results of
operations or prospects of the Company and the Subsidiaries, taken as a
whole, it being understood, that for purposes of such certificate, each of
the representations and warranties of the Company contained in this
Agreement which is qualified in any respect by a separate standard of
materiality or by reference to Material Adverse Effect shall be deemed to
be made without giving effect to any of such separate qualifications; and
(B) the Company has performed and complied in all material respects (except
that where any statement in a covenant is qualified by a standard of
materiality, such statement, as so qualified, shall have been complied with
in all respects) with all covenants, conditions and obligations under this
Agreement which are required to be performed or complied with by it on or
prior to the Closing Date;
(ii) a certified copy of the Articles of Incorporation and
By-Laws of the Company;
(iii) all minute books, stock books, stock transfer records,
corporate seals and other corporate and shareholder records of the Company
and each Subsidiary (as hereinafter defined);
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(iv) letters of resignation, dated as of the Closing Date, of
all of the directors and officers of the Company and the Subsidiaries,
except as Buyer may otherwise direct (provided, that such resignations
shall be without prejudice to any contractual rights any of such officers
may have against the Company, under the contracts and agreements referred
to in Section 6.9 and under any of the Company's Stock Option Agreements,
Stock Appreciation Rights Agreements or the Company's 1991 Stock Incentive
Plan (collectively, the "Option Plans"));
(v) a written opinion of Whyte Hirschboeck Dudek S.C., counsel
for the Company, dated the Closing Date, in a form reasonably satisfactory
to the Buyer's counsel;
(vi) a copy, certified as of the Closing Date by the Secretary
of the Company, of the resolutions of the board of directors and
shareholders of the Company authorizing the execution, delivery and
performance of this Agreement by the Company;
(vii) evidence of the effectiveness of the amendments to the
Company Articles and Company By-Laws contemplated by Section 6.4 (provided,
that such effectiveness may be conditioned on the effectiveness of the
Share Exchange);
(viii) executed counterparts of the following agreements:
(A) Articles of Share Exchange and a Short-Form Plan of
Share Exchange, in a form mutually acceptable to the Buyer and
the Company; and
(B) Payment Agent Agreement entered into by and among the
Buyer and the Company and the Payment Agent, in a form mutually
acceptable to the Buyer and the Company;
(ix) certificates of status issued by the Wisconsin Department
of Financial Institutions and the appropriate agency of the state or other
jurisdiction in which each Subsidiary (as defined in Section 4.4) is
organized, dated within twenty (20) business days of the Closing Date,
certifying that the Company and each Subsidiary is a corporation organized
and existing under the laws of the such state and is in good standing (or,
in the case of any Wisconsin domestic corporation, is current in the filing
of its annual reports as required under the WBCL);
(x) evidence, reasonably satisfactory to the Buyer, as to the
termination of all shareholder agreements, voting trust agreements, nominee
arrangements, options, warrants, rights or other privileges with respect to
any shares of the Company's capital stock, if any, other than the "Stock
Options";
(xi) all executed written consents of third parties to the
Share Exchange contemplated hereunder which may be required pursuant to any
agreement or arrangement to which the Company, any Subsidiary or any
shareholder is a party.
(xii) (A) the Company shall have obtained, in preparation for
the Closing, at the Company's own cost and expense, and shall have
delivered to the Buyer, a commitment for an ALTA Owners Policy of Title
Insurance (the "Title Commitments") for each Owned Real Property (as
defined in Section 4.10 herein), issued by a title insurer reasonably
satisfactory to the Buyer (the "Title Insurer"), in such amount as the
Buyer reasonably determines to be the fair market value (including all
improvements thereon), insuring the Buyer's interest in such parcel as of
the Closing, subject only to the Permitted Liens (as defined in Section
4.10 herein). The Company shall deliver at the time of delivery of the
Title Commitments, copies of all documents of record referred to therein.
The Company will provide the Buyer with title insurance policies ("Title
Policies") on or before the Closing, from the Title Insurer based upon the
Title Commitments. The Company will deliver to the Title Insurer all
affidavits, undertakings and other title clearance documents necessary to
issue the Title Policies and endorsements thereto. Each such Title Policy
will be dated as of the date of closing and insure title to the applicable
parcels of real estate and all recorded easements benefiting such parcels,
subject only to Permitted Liens, and further contain (to the
9
extent available in the state in which the Owned Real Property is located):
(1) an "extended coverage endorsement" insuring over the general exceptions
contained customarily in such policies, (2) an ALTA Zoning Endorsement 3.1,
with parking (or equivalent), (3) an endorsement insuring that the parcel
described in such Title Policy is the parcel shown on the survey delivered
with respect to such parcel and a survey accuracy endorsement, (4) an
endorsement insuring that each street adjacent to such parcel is a public
street and that there is direct and unencumbered pedestrian and vehicular
access to such street from such parcel, (5) if the real estate covered by
such policy consists of more than one record parcel, a "contiguity"
endorsement insuring that all of the record parcels are contiguous to one
another, (6) a tax number endorsement and (7) such other endorsements as
the Buyer and the Buyer's lender may reasonably request; and (B) the
Company shall have procured, at its own cost and expense, in preparation
for the Closing, and shall have delivered to the Buyer, current surveys of
the Owned Real Property ("Surveys"), prepared by a licensed surveyor,
satisfactory to the Buyer, and conforming to 1999 ALTA/ACSM Minimum Detail
Requirements for Urban Land Title Surveys, and such standards as the Title
Insurer may require as a condition to the removal of any survey exceptions
from the Title Policy, and certified to the Buyer, the Buyer's lender and
the Title Insurer, within 30 days of the Closing Date, in a form
satisfactory to such parties;
(xiii) executed estoppel certificates from the landlords under
all the Real Property Leases (as defined in Section 4.10 herein) and, to
the extent a Real Property Lease has been subleased to a third party that
is not a Subsidiary, an estoppel certificate from such subtenant. Each such
estoppel certificate shall represent and warrant to the same facts and
conditions set forth in Section 4.10(b) of this Agreement;
(xiv) to the extent required by the Buyer's lender, an executed
landlord lien waiver and access agreement, or landlord consent to a
collateral assignment of lease or leasehold mortgage, with respect to those
Real Property Leases identified by Buyer's lender;
(xv) an affidavit dated as of the Closing and in form and
substance required under the Treasury Regulations issued pursuant to
Section 1445 of the Code so that Buyer is exempt from withholding any
portion of the Purchase Price as required thereunder; and
(xvi) such other duly executed documents and certificates as may
be reasonably requested by the Buyer.
(b) Deliveries by the Buyer. The Buyer shall deliver to the Company
or the Payment Agent, or to such other persons as are entitled to such
deliveries under this Agreement, as applicable, at the Closing the following:
(i) delivery of the Payment Fund in accordance with the
provisions of Article II;
(ii) payment of the Option/SAR Amounts to each Option/SAR
Holder contemplated by Section 2.4, upon delivery by such Option/SAR Holder
of such holder's Stock Option or SAR for cancellation;
(iii) a certificate, dated as of the Closing Date and executed
by a President or a Vice-President of the Buyer, on behalf of the Buyer, to
the effect that: (A) each of the representations and warranties of the
Buyer made under Article V hereof is true and correct in all material
respects (except that where any statement in a representation or warranty
is qualified by a standard of materiality, such statement, as so qualified,
shall not be untrue in any respect) on the Closing Date as though such
representations and warranties were made on such date and (B) the Buyer has
performed and complied in all material respects (except that where any
statement in a covenant is qualified by a standard of materiality, such
statement, as so qualified, shall have been complied with in all respects)
with all
10
covenants and obligations under this Agreement which are to be performed or
complied with by it on or prior to the Closing Date;
(iv) the written opinion of Kirkland & Ellis, special counsel
for the Buyer, dated the Closing Date, in a form reasonably satisfactory to
the Company's counsel;
(v) a copy, certified as of the Closing Date by a proper
officer of the Buyer, of the resolutions of the Board of Directors of the
Buyer authorizing the execution, delivery and performance of this Agreement
by the Buyer;
(vi) executed counterparts of each of the agreements specified
in Section 3.2(a)(viii) above to which the Buyer is a party; and
(vii) such other duly executed documents and certificates as may
be reasonably requested by the Company.
ARTICLE IV
Representations and Warranties of the Company
The Company makes the representations and warranties set forth in this
Article IV, each of which is true and correct as of the date hereof.
4.1 Corporate Organization. The Company is a corporation duly organized
and validly existing under the laws of the State of Wisconsin. The Company is
current in all filings necessary to maintain its corporate existence under
Wisconsin law and no proceedings have been filed or are pending for its
dissolution or winding up. The Company has all requisite corporate power and
authority to own, lease and operate the properties and assets it now owns,
leases or operates and to carry on its business as presently conducted or
presently proposed to be conducted. The Company is duly qualified to do business
as a foreign corporation in Illinois, Indiana, Michigan and Ohio and is not
required to be so qualified as a foreign corporation in any other jurisdiction,
except where the failure to be so qualified would not have a Material Adverse
Effect (as defined in Section 10.10). The Company has, upon or prior to
execution of this Agreement, delivered to the Buyer complete and correct copies
of its Articles of Incorporation, as amended to date, and By-Laws, as amended to
date. Neither the Articles of Incorporation nor the By-Laws of the Company have
been amended since their delivery to Buyer, nor has any action been taken for
the purpose of effecting any amendment of such instruments.
4.2 Authorization; No Violations.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the terms and conditions
hereof (including the amendments to its Articles of Incorporation and By-Laws
contemplated by Section 6.4 hereof (the "Amendments")), to consummate the
transactions contemplated hereby (provided that the Share Exchange is subject to
approval by the shareholders of the Company). The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and, except
for the Amendments, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the Share Exchange, which is subject to the approval of
the shareholders of the Company). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes a
valid and binding obligation of Buyer, this Agreement constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Company is not in default under or in violation of any
provision of its Articles of Incorporation or By-Laws.
11
(b) Except as set forth in Section 4.2(b) of the disclosure schedule
attached hereto (the "Disclosure Schedule"), the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not: (i) assuming the Amendments have
become effective, violate or conflict with any provision of the charter
documents of the Company or any Subsidiary (as defined in Section 4.4); (ii)
violate or (whether immediately or with the lapse of time or the giving of
notice or both) constitute an event of default under or an event which would
give rise to any right of termination, cancellation, modification, acceleration
or foreclosure under, or require any consent of or the giving of any notice to
any third party under, any note, bond, indenture, credit facility, mortgage,
security agreement, material lease, material license, material franchise,
material permit or other material agreement, instrument or obligation to which
the Company or any Subsidiary is a party , or by which the Company or any
Subsidiary or any of their properties or assets may be bound, or give rise to
the creation of any lien, claim, pledge, security interest, mortgage, equity,
right of first refusal, options, contractual commitment, conditional sales
contract, reservation, restriction, charge, or encumbrance of any nature
whatsoever (each an "Encumbrance") upon the capital stock of the Company or upon
the properties or assets of the Company or any Subsidiary; (iii) violate or
conflict with any law, statute, rule, regulation, ordinance, code, judgment,
order, writ, injunction, decree or other requirement of any court or of any
governmental body or agency thereof applicable to the Company or any Subsidiary
or by which any of their properties or assets may be bound; or (iv) require any
registration or filing by the Company, the Subsidiaries or any shareholders of
the Company with, or any permit, license, exemption, consent, authorization or
approval of, or the giving of any notice by the Company, any Subsidiary or any
of shareholders of the Company to, any governmental or regulatory body, agency
or authority, other than the HSR Filings (as defined in Section 7.3) and the
filing of Articles of Share Exchange (as defined in Section 1.2).
4.3 Capitalization of the Company. The authorized capital stock of the
Company consists of 60,000 shares of Class A common stock, par value $1.25 per
share and 2,400,000 shares of Class B common stock, par value $1.25 per share.
As of the date of this Agreement, (a) 9,900 shares of Class A common stock are
issued and outstanding, and 1,045,749 shares of Class B common stock are issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and non-assessable, except as provided by Section 180.0622(2)(b) of the WBCL
(such section, including judicial interpretations thereof and of Section
180.40(6), its predecessor statute, are referred to herein as "Section
180.0622(2)(b) of the WBCL"), and were not issued in violation of any preemptive
right of any Company shareholder, (b) 145,615 shares of Company Common Stock are
held in the treasury of the Company or owned by Subsidiaries (as defined in
Section 4.4), and (c) 100,000 shares of Company Common Stock are reserved for
future issuance under the Option Plans. All of the issued and outstanding shares
of the Company Common Stock are held of record and beneficially owned by the
Persons and by each such Person in the amount specified for such Person as set
forth on Section 4.3 of the Disclosure Schedule, and are owned of record and
beneficially by such respective Persons. Except as set forth in clause (c)
above, in the Voting Trust (as defined in Section 6.4(c)) and in the Company's
Policy Regarding Issuance and Sales of Roundy's, Inc. Stock and its Redemption
Policy (as defined in Section 6.5) (as set forth in the Company SEC Reports (as
defined in Section 4.5)), there are no options, warrants or other rights,
agreements, arrangements or commitments of any character pursuant to which the
Company or any Subsidiary is a party, including without limitation voting
agreements or arrangements, relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue, sell or otherwise cause to become outstanding any shares of capital stock
of, or other equity interests in, the Company or any Subsidiary. Other than the
Stock Redemption Policy, there are no obligations, contingent or otherwise, of
the Company to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or any other entity,
except for loan commitments and other funding obligations entered into in the
ordinary course of business. Section 4.3 of the Disclosure Schedule sets forth,
with respect to each Stock Option and SAR, the name of each Option/SAR Holder,
the number of Stock Options and/or SARs held by such Option/SAR Holder, the date
on which each Stock Option or SAR was granted, and the exercise price of each
Stock Option and/or base price of each SAR, as applicable.
4.4 Subsidiaries and Affiliates. Section 4.4 of the Disclosure Schedule
sets forth the name, jurisdiction of organization, capitalization, ownership,
officers and directors of each corporation or other entity in which the Company
has any direct or indirect equity interest or other ownership interest
("Subsidiary") and the jurisdictions, if any, in which each Subsidiary is
qualified or licensed to do business as a foreign corporation. Section 4.4 of
the Disclosure Schedule also describes in reasonable detail the business of and
assets (including material intangible assets) owned by each Subsidiary. Except
as set forth on Section 4.4 of the Disclosure Schedule,
12
the Company or another Subsidiary owns 100% of the issued and outstanding shares
of all classes of capital stock of each Subsidiary. All of the outstanding
shares of capital stock of each Subsidiary owned by the Company or another
Subsidiary are free and clear of any Encumbrance, except as provided in Section
180.0622(2)(b) of the WBCL, and are duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding or authorized options, warrants,
conversion privileges or any other rights, agreements, arrangements or
understandings (including, without limitation, rights of first refusal) with
respect to any shares of capital stock of any Subsidiary. There are no stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary. Each Subsidiary (i) is duly organized, validly existing and in
good standing under the laws of its state of organization, (ii) is current in
all filings necessary to maintain its existence under such law and no
proceedings have been filed or are pending for its dissolution or winding up,
(iii) has all requisite power and authority to own, lease and operate the
properties and assets it now owns, leases or operates and to carry on its
business as presently conducted or presently proposed to be conducted, and (iv)
is duly qualified to transact business as a foreign corporation in each
jurisdiction listed in Section 4.4 of the Disclosure Schedule and is not
required to be qualified to transact business as a foreign entity in any
jurisdiction other than the jurisdictions listed in Section 4.4 of the
Disclosure Schedule and such other jurisdictions wherein the failure to be so
qualified would not have a Material Adverse Effect. The Company has, upon or
prior to the execution of this Agreement, delivered to the Buyer complete and
correct copies of the Articles of Incorporation or Articles of Organization, as
amended to date, and By-Laws, as amended to date, of each Subsidiary. Neither
the Articles of Incorporation nor the Articles of Organization nor the By-Laws
of any Subsidiary have been amended since their delivery to Buyer, nor has any
action been taken for the purpose of effecting any amendment of such
instruments. None of the Subsidiaries is in default under or in violation of any
provision of its charter or bylaws.
4.5 Securities Reports; Financial Statements.
(a) The Company and each Subsidiary have filed all forms, reports and
documents required to be filed with:
(i) the Securities and Exchange Commission (the "SEC") since
January 1, 1997, and as of the date of this Agreement the Company has
delivered to the Buyer (A) its Annual Reports on Form 10-K for the fiscal
years ended January 1, 2000, December 30, 2000 and December 29, 2001,
respectively, (B) all Current Reports on Form 8-K filed by the Company with
the SEC since January 1, 2000, (C) all other reports or registration
statements (other than Quarterly Reports on Form 10-Q) filed by the Company
with the SEC since January 1, 2000 and (D) all amendments and supplements
to all such reports and registration statements filed by the Company with
the SEC since January 1, 2000 (collectively, the "Company SEC Reports");
and
(ii) any other applicable federal or state securities
authorities (all such reports and statements are collectively referred to
with the Company SEC Reports as the "Company Reports"). The Company
Reports, including all Company Reports filed after the date of this
Agreement, (x) were or will be prepared in all material respects in
accordance with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), or the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and (y) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports, including
any Company SEC Reports filed since the date of this Agreement and prior to or
on the Effective Time (collectively, the "Financial Statements"), complied in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principals ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents in accordance with applicable requirements of GAAP the consolidated
financial position of the Company and the Subsidiaries as of the respective
dates thereof and the consolidated results of its operations and changes in
financial position for the periods indicated, except that (i) any unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments
13
(none of which will be material, either individually or in the aggregate) and
footnotes and (ii) no representation is made with regard to the Company's
compliance with the provisions of SFAS 142 relating to charges for impairment of
goodwill or other intangible assets.
4.6 Absence of Undisclosed Liabilities. Except as specifically and
individually set forth in Section 4.6 of the Disclosure Schedule or other
section of the Disclosure Schedule (specific reference to which shall be made in
Section 4.6 of the Disclosure Schedule), the Company and the Subsidiaries do not
have any material liabilities (whether known, unknown, absolute, accrued,
contingent or otherwise), except (i) to the extent fully and adequately accrued,
reflected or reserved against in the most recent audited Financial Statements;
(ii) obligations under executory contracts entered into in the ordinary course
of business which are disclosed on Section 4.22 of the Disclosure Schedule;
(iii) liabilities incurred in the ordinary course of business since the date of
the most recent audited Financial Statements, none of which relates to (a)
breach of contract (other than customer write-offs, discounts or adjustments in
the ordinary course of business consistent with past custom and practice), (b)
breach of warranty, (c) tort, (d) infringement, (e) violation of law, (f) any
action, suit or proceeding (including, without limitation, any proceeding in
eminent domain or other similar proceeding affecting any portion of any Real
Property) or (g) any writ, injunction, decree, order, judgment or litigation
affecting the ownership, lease, occupancy or operation of any Real Property;
(iv) liabilities and contingencies relating to any of the litigation and
proceedings disclosed on Section 4.8 of the Disclosure Schedule; and (v)
liabilities under this Agreement.
4.7 Absence of Certain Changes or Events. Except as set forth in Section
4.7 of the Disclosure Schedule, since December 29, 2001 the Company and the
Subsidiaries have carried on their businesses in the ordinary course and
consistent with past practice and have not suffered or experienced any Material
Adverse Change (as defined in Section 10.10), and no event or events has or have
occurred that (either individually or in the aggregate) has had, or could have,
a Material Adverse Effect on the Company or any of its Subsidiaries. Except as
set forth in Section 4.7 of the Disclosure Schedule, or as expressly
contemplated by this Agreement, since December 29, 2001 the Company and the
Subsidiaries have not:
(a) incurred any material obligation or liability for borrowed money
(other than advances under existing credit facilities in the ordinary course of
business and consistent with past practice), nor guaranteed, or agreed to act as
surety, indemnitor, co-signer or accommodation party for, any indebtedness,
liability or obligation of any third party, except in the ordinary course of
business and consistent with past practice;
(b) suffered any damage, destruction or loss, whether or not covered
by insurance, affecting their properties, assets or business, exceeding $250,000
individually or $500,000 in the aggregate;
(c) mortgaged, pledged or subjected to any Encumbrance any material
portion of their assets, tangible or intangible, except in the ordinary course
of business and consistent with past practice;
(d) made any material change in any accounting principle or practice
or in their method of applying any such principle or practice, except as
disclosed in the most recent audited Financial Statements;
(e) issued any additional shares of capital stock or any options,
warrants or other rights to purchase, or any securities convertible into or
exchangeable for, shares of their capital;
(f) declared or paid any dividends on or made any other distributions
(however characterized) in respect of shares of their capital stock;
(g) repurchased or redeemed any shares of their capital stock;
(h) organized any new subsidiary, acquired any capital stock or other
equity security of any corporation or acquired any equity or other ownership
interest in any business;
(i) entered into any employment contract or collective bargaining
agreement or modified the terms of any existing such contract or agreement;
14
(j) granted any increase in base compensation of any of its
directors, officers or employees outside the ordinary course of business;
(k) adopted, amended or terminated any bonus, profit sharing
incentive, severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers or employees (or taken any such action with
respect to any other employee benefit plan);
(l) sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for a fair consideration in the ordinary
course of business and consistent with past practice;
(m) entered into, accelerated, terminated, modified, or cancelled any
agreement, contract (including collective bargaining agreements), lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $250,000 per annum or $500,000 in the aggregate;
(n) granted any license or sublicense of any rights under or with
respect to any intellectual property, except in the ordinary course of business
consistent with past practice;
(o) conducted its cash management (including with respect to
maintenance of working capital balances, collection of receivables, payment of
payables and maintenance of inventory) other than in the ordinary course of
business;
(p) entered into any transactions with any of its Affiliates;
(q) implemented any material employee layoffs;
(r) entered into any other material transactions, other than in the
ordinary course of business; or
(s) entered into any agreement or commitment to do any of the
foregoing.
4.8 Legal Proceedings. Except as set forth in Section 4.8 of the
Disclosure Schedule there are no suits, actions, proceedings (including, without
limitation, arbitral and administrative proceedings), or claims pending or any
governmental investigations or audits pending, nor to the Knowledge of the
Company, are any of the foregoing threatened, against the Company or any
Subsidiary or their properties, assets or business (nor are any of the foregoing
pending or, to the Knowledge of the Company, threatened against, relating to or
involving any of the shareholders, officers, directors, employees or agents of
the Company or any Subsidiary in connection with the businesses of the Company
or the Subsidiaries). There are no such suits, actions, proceedings, or claims
pending, or any governmental investigations or audits pending, nor, to the
Knowledge of the Company, are any of the foregoing threatened, challenging the
validity or propriety of, or otherwise relating to or involving, this Agreement
or the transactions contemplated hereby. Except as set forth in Section 4.8 of
the Disclosure Schedule, the Company and the Subsidiaries are fully insured with
respect to each of the matters set forth on Section 4.8 of the Disclosures
Schedule.
4.9 Taxes.
(a) Except as set forth in Section 4.9(a) of the Disclosure Schedule
and except for matters that would not have a Material Adverse Effect, (i) all
returns and reports relating to Taxes (as hereinafter defined) which are
required to be filed with respect to the Company and the Subsidiaries on or
before the date hereof or which will be required to be filed on or before the
Closing Date have been, or will be, duly and timely filed, and all such returns
and reports are accurate and complete; (ii) all Taxes that are due and payable
by the Company or any Subsidiary or that may become due and payable prior to the
Effective Time (except such as are being contested in good faith), have been or
will be paid or adequately reserved for on the Company's or a Subsidiary's
books; and (iii) all withholding Tax obligations imposed on the Company or any
Subsidiary that are required to be satisfied prior to the Effective Time have
been or will be satisfied in all respects.
15
(b) Except as set forth in Section 4.9(b) of the Disclosure Schedule,
there are no actions or proceedings currently pending or, to the Knowledge of
the Company, threatened against the Company or any Subsidiary by any
governmental authority for the assessment or collection of Taxes, no claim for
the assessment or collection of Taxes has been asserted or, to the Knowledge of
the Company, threatened, against the Company or any Subsidiary, and there are no
matters under discussion by the Company or any of the shareholders with any
governmental authority regarding claims for the assessment or collection of
Taxes against the Company or any Subsidiary.
(c) There are no agreements, waivers, or applications by the Company
or any Subsidiary for an extension of time for the assessment or payment of any
Taxes.
(d) There are no Tax liens on any of the assets of the Company or any
Subsidiary (other than any lien for current Taxes not yet due and payable).
(e) Except as set forth in Section 4.9 of the Disclosure Schedule,
the Company's federal income tax returns have been audited for all periods
through 1993. No issue has arisen in any examination of the Company or any of
the Subsidiaries by any taxing authority that, if raised with respect to the
same or substantially similar facts arising in any other Tax period not so
examined, would, if upheld, result in a deficiency for such other period (other
than deficiencies that would not, individually or in the aggregate, have a
Material Adverse Effect).
(f) Except as set forth in Section 4.9(f) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in the payment of any "excess parachute payment" within the
meaning of Section 280G of the Code (or any corresponding provision of state,
local or foreign Tax law) as a result of the transactions contemplated hereby.
(g) The Company has been subject to Subchapter T of the Code for all
taxable periods since prior to 1960.
(h) For purposes of this Agreement, the terms "Tax" and "Taxes" shall
mean and include any and all foreign, national, federal, state, local, or other
taxes, charges, duties, fees, levies or other assessments, payments-in-lieu of
taxes, social security obligations, deficiencies, fees, export or import duties,
or other governmental charges, including, without limitation, income, excise,
property, sales, use, gross receipts, recording, insurance, value added,
profits, license, withholding, payroll, employment, net worth, capital gains,
transfer, stamp, social security, environmental, occupation and franchise taxes,
any installment payment for taxes and contributions or other amounts determined
with respect to compensation paid to directors, officers, employees or
independent contractors, from time to time imposed by or required to be paid to
any governmental authority (and including any additions to tax thereon,
penalties for failure to pay any Tax or make any deposit or file any return or
report, and interest on any of the foregoing).
4.10 Title to Properties and Related Matters.
(a) With respect to all real property owned by the Company or any
Subsidiary ("Owned Real Property"), the Company or the applicable Subsidiary, as
the case may be, has good and marketable title in fee simple thereto, including
all structures, plants, improvements, systems and fixtures thereon, free and
clear of all Encumbrances whatsoever, except (i) as disclosed in Section 4.10(a)
of the Disclosure Schedule, (ii) Encumbrances securing debts and obligations
disclosed in the most recent audited Financial Statements or incurred in the
ordinary course of business since the date of the most recent audited Financial
Statements, (iii) liens for Taxes not yet due and payable, (iv) easements,
rights-of-way and similar covenants and restrictions of record, municipal and
zoning ordinances and building use restrictions filed of record, and unrecorded
easements, encroachments and similar matters of survey, none of which in any
material way impairs the use of such property in the manner currently used or
impairs the Company's or the applicable Subsidiary's good and marketable title
to such Owned Real Property, and (v) such other Encumbrances which do not have a
material adverse effect upon the use, or impair the good and marketable title,
of the Owned Real Property, as further disclosed in Section 4.10(a) of the
Disclosure Schedule (items (i) through (v) above, except to the extent
pertaining to any mortgages, financing statements or other monetary liens
against any Owned Real Property that are not expressly approved by Buyer as
exceptions to coverage
16
under the Title Policies to be delivered in accordance with Section 3.2(a)(xii),
referred to herein as "Permitted Liens").
(b) Except as set forth in Section 4.10(b) of the Disclosure Schedule
and except for matters which would not, individually or in the aggregate, have a
Material Adverse Effect, (i) each Real Property Lease (as hereinafter defined)
(and in the case of any sublease, to the Knowledge of the Company, the
underlying prime lease) is in full force and effect and the Company or
applicable Subsidiary has the right to occupy the Leased Real Property which is
the subject of such Real Property Lease, subject to the terms and conditions
thereof and to the rights of any subtenant or sublease; (ii) all lease payments
due to date on any such Real Property Lease (and in the case of any sublease, to
the Knowledge of the Company, the underlying prime lease) have been paid, and
neither the Company nor any Subsidiary nor, to the Knowledge of the Company, any
other party is in default under any such Real Property Lease (or, in the case of
any sublease, to the Knowledge of the Company, the underlying prime lease), and
no event has occurred which constitutes, or with the lapse of time or the giving
of notice or both would constitute, a default by the Company, the applicable
Subsidiary or, to the Knowledge of the Company, any other party under such lease
or sublease; and (iii) there are no material disputes or disagreements between
the Company, any Subsidiary and any other party with respect to any such Real
Property Lease (or, in the case of any sublease, to the Knowledge of the
Company, the underlying prime lease).
(c) Except as set forth in Section 4.10(c) of the Disclosure
Schedule, each of the Company and its Subsidiaries has good and marketable title
to all items of equipment, machinery, vehicles, furniture, fixtures and other
tangible personal property currently owned or used by the Company and each
Subsidiary (and reflected on the most recent audited Financial Statements or
acquired after the date thereof, other than personal property sold or otherwise
disposed of in the ordinary course of business and consistent with past
practice), free and clear of any Encumbrances, except (i) Encumbrances securing
debts and obligations disclosed in the most recent audited Financial Statements
or incurred in the ordinary course of business since the date of the most recent
audited Financial Statements and (ii) liens for Taxes not yet due and payable.
(d) For purposes of this Agreement, a Real Property Lease means only
a lease or sublease of real property under which the Company or a Subsidiary (i)
as lessee or tenant, (or sublessee or subtenant) occupies or has the right to
occupy the property, and (ii) as sublessor or sublandlord, subleases all or a
portion of its leased premises to a third party. "Leased Real Property" means
the real property which is the subject of any Real Property Lease.
4.11 Licenses, Permits, Authorizations and Consents. The Company and the
Subsidiaries have all material approvals, authorizations, consents, licenses,
orders and permits of all governmental and regulatory authorities, whether
foreign, federal, state or local (collectively, "Licenses") which are required
for the ownership of the Company's or the applicable Subsidiary's assets or the
conduct of its business as it is currently conducted. The Company or the
applicable Subsidiary has complied and are in compliance in all material
respects with all of the terms, conditions and requirements imposed by each of
the Licenses. Except as set forth on Section 4.11 of the Disclosure Schedule,
neither the Company, nor any of the Subsidiaries has received any notice of, and
the Company has no Knowledge of, any intention on the part of any appropriate
authority to cancel, revoke or modify, or any inquiries, proceedings or
investigations the purpose or possible outcome of which is the cancellation,
revocation or modification of any such License.
4.12 Intellectual Property. Section 4.12 of the Disclosure Schedule sets
forth a complete and correct list of all of the following owned (as indicated)
or used by the Company or a Subsidiary in any jurisdiction: (i) patents and
patent applications, (ii) registered and material unregistered trademarks,
service marks, logos, Internet domain names, trade names and business names and
applications to register the foregoing, (iii) registered and material
unregistered copyrights and applications to register copyrights, and (iv)
computer software (other than computer software that is regularly and
commercially available for a total cost of less than $10,000 and has not been
designed or written specifically for the Company). Except as set forth in
Section 4.12 of the Disclosure Schedule: (i) the Company or a Subsidiary, as
applicable, has good and marketable title to all of the registrations for
intellectual property and applications to register intellectual property set
forth in Section 4.12 of the Disclosure Schedule, free and clear of all liens,
security interests, joint ownership interests, licenses or other agreements
relating to its use, and any other express restrictions or limitations relating
to its use (it being understood that prior common law rights of third parties
are not express restrictions or limitations for this purpose); and (ii) the
Company
17
and its Subsidiaries own or have the right to use all other intellectual
property to the extent required for the conduct of their respective business as
and where the same is currently conducted or currently contemplated by the
Company or its Subsidiaries to be conducted (collectively, the "Intangible
Rights"). For purposes of this Section 4.12 an unregistered copyright,
trademark, service mark, logo, trade name or business name shall be deemed
"material" only if the loss of the Company's or a Subsidiary's rights to use
such copyrighted material, trademark, service mark, logo trade name or business
name would impair in any material respect (whether individually or in the
aggregate) the Company's (or a Subsidiary's) ability to continue to conduct its
business substantially as it is currently conducted and where it is currently
conducted. Except as set forth in Section 4.12 of the Disclosure Schedule, there
is no action, suit, claim or administrative proceeding pending or, to the
Knowledge of the Company and its Subsidiaries, threatened that (i) challenges or
questions the Company's or any Subsidiary's rights to use the Intangible Rights
in its business as currently conducted, (ii) challenges or questions the
enforceability or validity of any of the Intangible Rights or (iii) alleges that
the Company's or any Subsidiary's use of the Intangible Rights in its business,
or the conduct of its business, as currently conducted, infringes upon or
conflicts with the intellectual property rights of any other person, and to the
Knowledge of the Company, there is no basis for any such action, suit, claim or
administrative proceeding. Except as set forth in Section 4.12 of the Disclosure
Schedule, to the Knowledge of the Company, no other person is infringing upon or
conflicting with the Intangible Rights in any material respect. The operation of
the Company's and its Subsidiaries' respective businesses (including with
respect to any supply, customer, sales or license agreements) is not subject to
the Wisconsin or United States franchise investment laws. There is no action,
suit, claim or administrative proceeding pending or, to the Knowledge of the
Company and its Subsidiaries, threatened, that alleges that the operation of
such businesses as currently conducted violates any franchise, dealership,
distributorship or similar laws.
4.13 Employees.
(a) Complete and correct copies of all material written agreements
currently in effect with or concerning any Company employee (or any Former
Employee (as defined in Section 4.14(a))), including, without limitation, union
and collective bargaining agreements, have previously been delivered to the
Buyer, and a list of all such agreements (other than collective bargaining
agreements) is set forth in Section 4.13(a) of the Disclosure Schedule.
(b) The Company and each Subsidiary have complied at all times with
all laws, statutes, rules and regulations applicable with respect to employees
or employment practices in each of the jurisdictions in which they operate
and/or do business, except where such noncompliance would not have a Material
Adverse Effect. In particular, except where such noncompliance would not have a
Material Adverse Effect, the Company and each Subsidiary have complied with all
laws and statutes, and all rules and regulations applicable to and/or aiming at
discriminatory practices (including, without limitation, unlawful
discrimination), labor standards and working conditions, occupational health and
safety, payment of minimum wages and overtime rates, worker's compensation, the
withholding and payment of Taxes or any other kind of governmental charge from
any kind of compensation, or otherwise relating to the conduct of employers with
respect to employees or potential employees, and there are no claims pending or,
to the Knowledge of the Company, threatened thereunder against the Company or
any Subsidiary arising out of, relating to or alleging any violation of any of
the foregoing. Except as set forth on Section 4.13(b) of the Disclosure
Schedule, there are no strikes, work stoppages, picketing, material grievances
or other material controversies or disputes pending or, to the Knowledge of the
Company, threatened between the Company or any Subsidiary and any employees,
employee representatives or Former Employees (as hereinafter defined); no
organizational effort by or decertification effort against any labor union or
other collective bargaining unit is pending or, to the Knowledge of the Company,
threatened with respect to any employees; and no consent of or any other action
by or negotiation with any labor union or other collective bargaining unit is
required in connection with or to consummate the transactions contemplated by
this Agreement.
4.14 Benefit Plans.
(a) For purposes hereof, the term "Benefit Plan" shall mean each and
every defined benefit and defined contribution plan, employee stock ownership
plan, consulting or employment agreement, executive compensation plan, bonus
plan, incentive compensation plan or arrangement, deferred compensation
agreement or arrangement, agreement with respect to temporary employees,
vacation pay, sickness, disability or death benefit plan (whether provided
through insurance, on a funded or unfunded basis or otherwise), employee stock
option or
18
stock purchase plan, severance pay plan, arrangement or practice, employee
relations policy, practice or arrangement, retiree medical or life insurance
benefits, and each other employee benefit plan, program or arrangement, which is
maintained or contributed to by the Company or any Subsidiary (or to which the
Company or any Subsidiary may have any other liability or obligation) for the
benefit of or relating to any of the employees or to any former employee of the
Company or any Subsidiary ("Former Employee") or his/her dependents, survivors
or beneficiaries, whether written or oral, but not including any multi-employer
benefit plans within the meaning of Section 3(37) of ERISA (a "Multi-Employer
Plan"). Section 4.14(a) of the Disclosure Schedule identifies each and every
defined benefit and defined contribution plan, employee stock ownership plan,
consulting or employment agreement, executive compensation plan, material bonus
plan, material incentive compensation plan or arrangement, deferred compensation
agreement or arrangement, agreement with respect to temporary employees,
vacation pay, sickness, disability or death benefit plan (whether provided
through insurance, on a funded or unfunded basis or otherwise), employee stock
option or stock purchase plan, severance pay plan, arrangement or practice,
material employee relations policy, practice or arrangement, retiree medical or
life insurance benefits, and each other material employee benefit plan, program
or arrangement, which is maintained or contributed to by the Company or any
Subsidiary (or to which the Company or any Subsidiary may have any other
liability or obligation) for the benefit of or relating to any of the employees
or to any former employee of the Company or any Subsidiary ("Former Employee")
or his/her dependents, survivors or beneficiaries, whether written or oral, but
not including any multi-employer benefit plans within the meaning of Section
3(37) of ERISA (a "Multi-Employer Plan").
(b) Except as set forth on Schedule 4.14(b) of the Disclosure
Schedule:
(i) Each Benefit Plan which is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA), meets the requirements of
Section 401(a) of the Code; the trust, if any, forming part of such plan is
exempt from U.S. federal income tax under Section 501(a) of the Code; a
favorable determination letter has been issued by the Internal Revenue
Service (the "IRS") with respect to each plan and trust and each material
amendment thereto; an application for a new favorable determination letter
has been requested from the IRS which covers what are commonly known as
GUST requirements; and nothing has occurred since the date of such
determination letter that would adversely affect the qualification of such
plan;
(ii) No event or condition exists which respect to any Benefit
Plan that could subject the Company or any Subsidiary to any material Tax
under Section 4980B of the Code (or under its predecessor statute, Section
162(k) of the Code);
(iii) With respect to each Benefit Plan listed on Schedule
4.14(a), the Company has heretofore delivered to the Buyer complete and
correct copies of the following documents, where applicable: (A) the most
recent annual report (Form 5500 series), together with schedules, as
required, filed with the IRS, and any financial statements and opinions
required by Section 103(a)(3) of ERISA, (B) the most recent determination
letter issued by the IRS, (C) the most recent summary plan description and
all modifications, as well as all other descriptions distributed to
employees or set forth in any manuals or other documents, (D) the text of
the Benefit Plan and of any trust, insurance or annuity contracts
maintained in connection therewith, and (E) the most recent actuarial
report, if any, relating to the Benefit Plan.
(c) Except as set forth on Schedule 4.14(c) of the Disclosure
Schedule, neither the Company nor any corporation or other trade or business
under common control with the Company or any Subsidiary (as determined pursuant
to Section 414(b) or (c) of the Code) has maintained or contributed to or in any
way directly or indirectly has any liability (whether contingent or otherwise)
with respect to any Multi-Employer Plan. Except as set forth on Section 4.14(c)
of the Disclosure Schedule, the Company and the Subsidiaries have not completely
or partially withdrawn from any Multi-Employer Plan nor would any withdrawal
liability be incurred under Title IV of ERISA if the Company or any Subsidiary
were to withdraw as of the date hereof from any Multi-Employer Plan to which the
Company or any Subsidiary has contributed.
(d) No proceedings by the Pension Benefit Guaranty Corporation (the
"PBGC") to terminate any Benefit Plan have been instituted or threatened. To the
Knowledge of the Company no event has occurred or condition exists which
constitutes grounds for the PBGC to terminate any Benefit Plan.
19
(e) Except as set forth in Section 4.14(e) of the Disclosure
Schedule, the Company and the Subsidiaries do not currently maintain or
contribute to any plan subject to Title IV of ERISA or Section 412 of the Code
(other than Multi-Employer Plans), and, except as set forth in Section 4.14(c)
or 4.14(e) of the Disclosure Schedule, each such plan previously maintained or
contributed to by the Company and the Subsidiaries has been terminated in
accordance with the provisions of the Code and ERISA and the Company and the
Subsidiaries do not have any actual or contingent liability associated with any
such terminated plan, including, but not limited to, any future obligations or
liability associated with (i) the solvency or ability to provide benefits of any
insurance company providing annuity payments under such terminated plan, (ii)
claims by participants resulting from any alleged breach of fiduciary duty in
connection with the termination of any such terminated plan, or (iii) the
disqualification of any such terminated plan.
(f) All contributions and payments required to be made to or with
respect to each Benefit Plan (including contributions to union-sponsored pension
or health and welfare plans) with respect to the service of employees or other
individuals with or related to the Company or the Subsidiaries prior to the date
hereof have been made or have been accrued for in the most recent audited
Financial Statements, or, for periods after the most recent of the audited
Financial Statements and through the Closing Date, will be accrued in the books
and records of the Company or the applicable Subsidiary. Except to the extent
specifically accrued on the most recent audited Financial Statements or as set
forth on Section 4.14(f) of the Disclosure Schedule, no Benefit Plan which
provides for deferred compensation, retirement benefits, change in control
payments or severance benefits to executives, directors, officers and/or a
select group of management has any unfunded liabilities.
(g) Except as set forth in Section 4.14(g) of the Disclosure
Schedule, and except pursuant to the agreements described on Section 4.13(a) of
the Disclosure Schedule, the Company and the Subsidiaries do not provide, nor do
they have any obligation to provide, post-retirement medical, life insurance or
other benefits to employees or Former Employees or their survivors, dependents
and beneficiaries, except as may be required by the Consolidated Omnibus Budget
Reconciliation Act of 1986 or similar state medical temporary benefits
continuation law. Except pursuant to the terms of the agreements described on
Section 4.13(a) of the Disclosure Schedule, and except as disclosed on Section
4.14(g) of the Disclosure Schedule, the Company and the Subsidiaries will not
incur any liability under any severance agreement, deferred compensation
agreement, employment agreement or other compensation agreement as a result of
the consummation of the transactions contemplated by this Agreement, nor will
the terms or the Company's or any Subsidiary's liability or obligations under
any such agreement be altered, accelerated or increased as a result of such
transactions.
(h) Except as set forth in Section 4.14(h) of the Disclosure
Schedule, none of the Benefit Plans has been subject to a "reportable event,"
within the meaning of Section 4043 of ERISA; there have been no "prohibited
transactions," within the meaning of Section 4975 of the Code or Part 4 of
Subtitle B of Title I of ERISA; there have been no breaches of fiduciary
responsibility within the meaning of Part 4 of Subtitle B of Title I of ERISA;
and none of the Benefit Plans which are subject to Section 412 of the Code has
any "accumulated funding deficiency" within the meaning of Section 412 of the
Code and no event or set of conditions exist which could subject the Company or
any Subsidiary to any Tax under Section 4971 of the Code or a lien under Section
412(n) of the Code.
(i) Each Benefit Plan has been administered to date in all material
respects in accordance with the applicable provisions of ERISA, the Code and
applicable law and with the terms and provisions of all documents, contracts or
agreements pursuant to which such Benefit Plan is maintained. All material
reports and information required to be filed with the Department of Labor, the
IRS, the PBGC or plan participants or beneficiaries with respect to any Benefit
Plan have been timely filed; there is no dispute, arbitration, claim, suit or
grievance pending or to the Knowledge of the Company, threatened, involving a
Benefit Plan (other than routine claims for benefits). Except as set forth in
Section 4.14(i) of the Disclosure Schedule, none of the Benefit Plans nor any
fiduciary thereof has been the direct or indirect subject of an order or
investigation or examination by a governmental or quasi-governmental agency and
there are no matters pending before the IRS, the Department of Labor, the PBGC
or any other domestic or foreign governmental agency with respect to a Benefit
Plan. There have been no claims, or notice of claims, filed under any fiduciary
liability insurance policy covering any Benefit Plan. No event or set of
conditions exists which would subject the Company or any Subsidiary to any
material Tax under Sections 4972, 4974-76, 4979, 4980, or 5000 of the Code or as
a result of the transactions contemplated hereby or otherwise.
20
4.15 Compliance with Applicable Law. Each of the Company and its
Subsidiaries in all material respects has complied with all (and none of them
has received any written notice alleging any material noncompliance with any)
applicable laws, statutes, ordinances, codes, rules, regulations, and all
judgments, orders, injunctions, writs or decrees of any Federal, state, local or
foreign court or any governmental body or agency thereof, to which the Company
or any Subsidiary may be subject or which are applicable to the operations,
businesses or assets of the Company or any Subsidiary as such businesses are
currently conducted (except Environmental Laws, which are addressed exclusively
in Section 4.17). Except as set forth in Section 4.15 of the Disclosure Schedule
and except for routine regulatory inspections and reviews, none of which,
individually or in the aggregate, would materially impair the conduct of the
business of the Company or any Subsidiary, no investigation or review of the
Company or any Subsidiary by any governmental or regulatory body or authority is
pending or, to the Knowledge of the Company, threatened, nor has any such body
or authority indicated any intention to conduct the same.
4.16 Minute Books, etc. The minute books, stock certificate books and stock
ledgers of the Company and each Subsidiary are complete and correct in all
material respects and fairly reflect all transactions in shares of the Company's
or the applicable Subsidiary's capital stock. The minute books of the Company
and each Subsidiary contain accurate and complete records of all meetings or
written consents to action of the Board of Directors and shareholders of the
Company or the applicable Subsidiary and accurately reflect all material
corporate actions of the Company and the applicable Subsidiary which are
required by law to be passed upon by the Board of Directors (and all committees
thereof) or shareholders of the Company or the applicable Subsidiary.
4.17 Environmental Matters.
(a) Except as described on Section 4.17(a) of the Disclosure Schedule
and except for matters which, individually or in the aggregate, would not have a
Material Adverse Effect: (i) except for Hazardous Substances (as hereinafter
defined in Section 4.17(c)) generated, stored, treated, manufactured, refined,
handled, produced, disposed of or used by the Company or the Subsidiaries in the
ordinary course of their businesses, in compliance with the requirements of
currently applicable laws, rules and regulations or otherwise in a manner which
would not give rise to any liabilities or obligations under such laws, rules and
regulations, neither the Company nor any Subsidiary has caused there to be, nor
are there, any Hazardous Substances in, on or under any of the Owned Real
Property or Leased Real Property or any real property adjacent thereto
(collectively referred to in this Section 4.17 as "Real Property"); (ii) none of
such Real Property has been designated, restricted or investigated by any
governmental authority as a result of the actual or suspected presence,
spillage, leakage, discharge or other emission of Hazardous Substances; (iii) no
Hazardous Substances have been generated, used, stored, treated, manufactured,
refined, handled, produced or disposed of in, on or under, any of such Real
Property by the Company or any Subsidiary or by any persons or agents operating
under the control, direction and supervision of the Company or any Subsidiary,
including, without limitation, all employees, agents and contractors of the
Company or any Subsidiary; and (iv) the Company and the Subsidiaries have not
received any written or oral governmental notice, order, inquiry, investigation,
environmental audit or assessment or any lien, encumbrance, decree, easement,
covenant, restriction, servitude or proceeding concerning, or arising by reason
of, the actual or suspected presence, spillage, leakage, discharge, disposal or
other emission of any Hazardous Substance in, on, under, around, about or in the
vicinity of, any of such Real Property;
(b) Except as described on Section 4.17(a) of the Disclosure
Schedule, and except for matters which, individually or in the aggregate, would
not have a Material Adverse Effect: (i) neither the Company, the Subsidiaries
nor any Real Property (including storage tanks or other impoundment vessels,
whether above or below ground) are in violation of, or subject to any
liabilities as a result of any past or current violations of, any existing
federal, state or local law (including common law), statute, ordinance, rule or
regulation of any federal, state or local governmental authority relating to
pollution or protection of the environment, including, without limitation,
statutes, laws, ordinances, rules and regulations relating to the emission,
generation, discharge, spillage, leakage, storage, off-site dumping, release or
threatened release of Hazardous Substances into ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances (collectively, "Environmental Laws"); and (ii) no
expenditures are required in connection with the operation of the Company's or
the Subsidiaries' businesses as presently conducted in order to comply with any
Environmental Laws. The Company has all approvals, authorizations, consents,
licenses, orders and permits of all governmental and regulatory authorities
required under any Environmental Laws (collectively,
21
"Environmental Permits"), except for Environmental Permits the lack of which
would not have a Material Adverse Effect. Neither the Company nor any Subsidiary
has received any notice of, and the Company has no Knowledge of, any intention
on the part of any appropriate authority to cancel, revoke or modify, or any
inquiries, proceedings or investigations which seek to cancel, revoke or modify
of any such Environmental Permit.
(c) For purposes of this Agreement, the term "Hazardous Substance"
shall mean any product, substance, chemical, contaminant, pollutant, effluent,
waste or other material which, or the presence, nature, quantity and/or
intensity of existence, use, manufacture, disposal, transportation, emission,
discharge, spill, release or effect of which, either by itself or in combination
with other materials located on any of the Real Property, is defined or listed
in, regulated or monitored by, or otherwise classified pursuant to, any statute,
law, ordinance, rule or regulation applicable to the Real Property as "hazardous
substances," "hazardous materials," "hazardous wastes," "infectious wastes" or
"toxic substances." Hazardous Substances shall include, but not be limited to,
(i)(A) any "hazardous substance" as defined in the Comprehensive Environmental
Response, Compensation and Liability Act, (B) any "regulated substance" as
defined in the Solid Waste Disposal Act or (C) any substance subject to
regulation pursuant to the Toxic Substances Control Act, as such laws are now in
effect or may be amended through the Closing Date and any rule, regulation or
administrative or judicial policy statement, guideline, order or decision under
such laws, (ii) petroleum and refined petroleum products, (iii) asbestos and
asbestos-containing products, (iv) flammable explosives, (v) radioactive
materials, and (vi) radon.
(d) This Section 4.17 contains the sole representations and
warranties of the Company with respect to any matters that relate to or are
governed by Environmental Laws.
4.18 No Brokers or Finders. Except for the Company's arrangements with
Bear, Stearns & Co. Inc. and Houlihan Lokey Howard & Zukin, neither the Company
nor any Subsidiary nor any of their officers, directors or employees, on behalf
of the Company or any Subsidiary, has employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
4.19 Company Shareholders' Approval. The affirmative vote of shareholders
of the Company required for adoption of this Agreement is a majority of the
outstanding shares of the Company's Class A common stock and Class B common
stock entitled to vote thereon, each voting as a class.
4.20 Opinion of Financial Advisor. Houlihan Lokey Howard & Zukin has
rendered a written opinion to the Board of Directors of the Company, dated April
8, 2002, to the effect that as of the date hereof, the Per Share Amount and the
terms of the Share Exchange are fair from a financial point of view to the
Company's shareholders, a signed, true and complete copy of which opinion shall
be delivered to the Buyer, and such opinion has not been withdrawn or modified.
4.21 Disclosure Schedule. Any information which is disclosed in the
Disclosure Schedule or any other Schedule or Exhibit hereto shall be deemed to
be disclosed for all Sections of this Agreement to which such disclosure is
relevant; provided that no disclosure shall serve as an exception to a
representation unless such disclosure identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. All
capitalized terms used in the Disclosure Schedule and not otherwise defined
therein shall have the same meanings as are ascribed to such terms in this
Agreement. The inclusion of any matter on the Disclosure Schedule shall not be
deemed to imply that such matter is material or could have a Material Adverse
Effect.
4.22 Contracts. Section 4.22 of the Disclosure Schedule lists the following
contracts and other agreements to which any of the Company or its Subsidiaries
is a party (collectively, the "Material Contracts"):
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $100,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year or
involve
22
consideration in excess of $200,000 per annum, other than purchase orders
for the purchase of goods sold by the Company or its Subsidiaries to its
customers in the ordinary course of business;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $100,000
or under which it has imposed a Lien on any of its assets, tangible or
intangible;
(v) any material agreement concerning confidentiality or
noncompetition;
(vi) any material agreement with any Affiliate of the Company
or any of its Subsidiaries;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing material severance
benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
ordinary course of business;
(xi) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect;
(xii) any agreement relating to a license for or other right to
use, or to a covenant not to sue for the use of, any Intangible Rights or
other material intellectual property;
(xiii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $250,000 per annum
or $500,000 in the aggregate; and
(xiv) any other agreements or other instruments which have been
filed by the Company with the SEC pursuant to the requirements of the
Exchange Act as "material contracts."
The Company has delivered or made available to the Buyer a correct and complete
copy of each written Material Contract (as amended to date) and a written
summary setting forth the material terms and conditions of each oral Material
Contract. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect in all material
respects; (B) the Company is not, and to the Knowledge of the Company no other
party is, in material breach or default, and to the Knowledge of the Company no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any material
provision of the agreement.
4.23 Insurance. Section 4.23 of the Disclosure Schedule contains a list of
all policies of liability, environmental, crime, fidelity, life, fire, workers'
compensation, health, director and officer liability and all other forms of
insurance currently owned or held by the Company or any Subsidiary or to which
the Company or any Subsidiary is a named insured or otherwise the beneficiary
and identifies for each such policy: the underwriter, the name of the policy
holder, policy number, coverage type, the scope and amount of coverage, premium
(including a description of any retroactive premium adjustments or other
loss-sharing arrangements), expiration date and deductible. Section 4.23 of the
Disclosure Schedule also sets forth a claims history for the past five years in
respect
23
of such policies. All of the insurance policies listed in Section 4.23 of the
Disclosure Schedule are outstanding and in full force and effect and, except as
set forth in Section 4.23 of the Disclosure Schedule, will remain in full force
and effect after the consummation of the transactions contemplated hereby. All
premiums with respect to such policies are currently paid. Neither the Company
nor any of the Subsidiaries has (i) ever been in breach or default (including
with respect to the payment of premiums or the giving of notices) with respect
to its obligations under any such insurance policies, (ii) repudiated any
provision of any such insurance policies or (iii) ever been denied insurance
coverage. Except as set forth in Section 4.23 of the Disclosure Schedule,
neither the Company nor any Subsidiary has any self-insurance, deductible
retention or co-insurance programs, and the reserves set forth on the most
recent audited Financial Statements are adequate to cover all anticipated
liabilities with respect to any such self-insurance, deductible retention or
co-insurance programs.
4.24 Related Party Transactions. Except as disclosed in Section 4.24 of the
Disclosure Schedule, no officer, director, employee, partner or Affiliate of the
Company or any of the Subsidiaries or any individual related by blood, marriage
or adoption to any such individual or any entity in which any such Person or
individual owns any beneficial interest, is a party to any agreement, contract,
commitment or transaction with the Company or any of the Subsidiaries (other
than at-will employment arrangements) or has any material interest in any
property used by the Company. "Affiliate" means, in the case of a natural
Person, one or more members of a group comprised of such Person and such
Person's parents or grandparents, his children or grandchildren, his siblings
and any spouse of any of the foregoing. In the case of a corporation or other
Person which is not a natural Person, the term "Affiliate" means a Subsidiary or
other Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. For
purposes hereof, "control" means the power to vote or direct the voting of
sufficient securities or other interests to elect a majority of the directors or
to control the management of a Person.
4.25 Suppliers and Customers. Except as set forth in Section 4.25 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries has
received any written notice from any material supplier to the effect that, and
neither the Company nor any of its Subsidiaries has Knowledge that, such
supplier will stop, decrease the rate of, or change the terms (whether related
to payment, price or otherwise) with respect to, supplying materials, products
or services to the Company or any of its Subsidiaries (whether as a result of
the consummation of the transactions contemplated hereby or otherwise), other
than such changes in terms as arise in the ordinary course of business
consistent with past practices with respect to such supplier. Except as set
forth in Section 4.25 of the Disclosure Schedule, neither the Company nor any of
its Subsidiaries has received any written notice from any material customer of
the Company or any of its Subsidiaries to the effect that, and neither the
Company nor any of its Subsidiaries has Knowledge that, such customer will stop,
or materially decrease the rate of, purchasing services and/or products of the
Company or any of its Subsidiaries (whether as a result of the consummation of
the transactions contemplated hereby or otherwise).
4.26 Names and Locations. Except as disclosed in Section 4.26 of the
Disclosure Schedule, during the five-year period prior to the execution and
delivery of this Agreement, neither the Company nor any of the Subsidiaries has
used any name or names under which it has invoiced account debtors, maintained
records concerning its assets or otherwise conducted business. As of the date
hereof and as of the Closing, all of the tangible assets and properties of the
Company and its Subsidiaries are located at the locations set forth in Section
4.26 of the Disclosure Schedule.
4.27 Officer and Directors; Bank Accounts. Section 4.27 of the Disclosure
Schedule lists all officers of the Company and the Subsidiaries and all of the
bank accounts, safety deposit boxes and lock boxes (designating each authorized
signatory with respect thereto) of the Company and the Subsidiaries.
4.28 Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has by the vote of those directors present (who
constituted all but one of the directors then in office) (i) determined that
this Agreement and the transactions contemplated hereby, including the Share
Exchange, are fair to and in the best interests of the shareholders of the
Company and has approved the same, and (ii) resolved to recommend that the
holders of the shares of Company Common Stock approve this Agreement and the
transactions contemplated herein, including the Share Exchange.
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4.29 No Misleading Statements. Neither this Agreement nor any of the
exhibits, schedules or certificates supplied to Buyer by the Company or by or on
behalf of the Company or any of the Subsidiaries with respect to the
transactions contemplated hereby contain any untrue statement of a material fact
or omit to state any material fact necessary to make each statement contained
herein or therein not misleading. There is no fact which has not been disclosed
to the Buyer of which the Company or any of the officers or directors of the
Company is aware and which has had or could reasonably be anticipated to have a
Material Adverse Effect, other than facts related to United States economic
conditions generally or changes in industry conditions generally.
4.30 Indebtedness. Except as set forth in Section 4.30 of the Disclosure
Schedule or otherwise disclosed in the most recent audited Financial Statements,
neither the Company nor any of its Subsidiaries has any outstanding
Indebtedness, or is a party to any agreement, arrangement or understanding
providing for the creation, incurrence or assumption thereof. Other than for
purposes of Section 1.1, Section 6.2(b) and Section 7.13, as used in this
Agreement, "Indebtedness" shall mean, at a particular time, without duplication,
(i) any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by
any note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than Trade
Payables), (iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit) other than in respect of Trade Payables and other
than the guarantees set forth in Section 4.30 of the Disclosure Schedule of
obligations of customers of the Company or one of its Subsidiaries, (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse)
other than the guarantees set forth in Section 4.30 of the Disclosure Schedule
of obligations of customers of the Company or one of its Subsidiaries, (vi) any
obligations under capitalized leases with respect to which a Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations a Person assures a creditor against loss, (vii) any
indebtedness (other than Trade Payables) secured by any Encumbrance on a
Person's assets, (viii) any cash, book or bank account overdrafts other than
those incurred in the ordinary course of business consistent with past practice
and custom, (ix) any distributions payable or loans/advances payable to any
related parties as of the Closing, other than intercompany payables, (x) other
than accrued liabilities under the Company's workers' compensation
self-insurance programs, any other liabilities recorded in accordance with
generally accepted accounting principles (applied on a basis consistent with the
most recent year-end financial statements of the Company) as of the Closing that
arise from or are related to operations other than within one year of the
Closing, including, without limitation, any unfunded employee or retiree
obligations and any environmental liabilities and (xi) any accrued interest on
any of the foregoing. For purposes of the foregoing, "Trade Payables" means
trade payables and other current liabilities incurred in the ordinary course of
business which are not more than 90 days past due.
4.31 Expenses. Except as set forth in Section 4.31 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has incurred, or will
incur, any Expenses (as defined in Section 6.11(b)), or is a party to any
agreement, arrangement or understanding for the incurrence of any Expenses.
4.32 Change in Control Payments. Section 4.32 of the Disclosure Schedule
sets forth, with respect to the obligations described in Section 6.9 of this
Agreement, the amount of each payment due or to become due (whether or not
automatically upon the occurrence of the Closing) pursuant to Section 6.9, the
person or class of persons to whom such payment is payable, and the agreement or
other arrangement under which such payment arises.
ARTICLE V
Representations and Warranties of the Buyer
The Buyer makes the representations and warranties set forth in this
Article V, each of which is true and correct as of the date hereof:
5.1 Corporate Organization. The Buyer is a corporation duly organized and
validly existing under the laws of its incorporation. The Buyer is current in
all filings necessary to maintain its corporate existence under the law of the
jurisdiction of its incorporation and no proceedings have been filed or are
pending for its dissolution or winding up. The Buyer has all requisite corporate
power and authority to own, lease and operate the properties
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and assets it now owns, leases or operates and to carry on its business as
presently conducted or presently proposed to be conducted.
5.2 Authorization. The Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to the terms and
conditions hereof, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Buyer and no other corporate proceedings on the part
of the Buyer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by the Buyer and, assuming this Agreement constitutes a valid and
binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
5.3 Consents and Approvals; No Violations. The execution and delivery of
this Agreement does not and the consummation of the transactions contemplated
hereby will not: (i) violate or conflict with any provision of the charter
documents of the Buyer; (ii) except for matters which, individually or in the
aggregate, would not have a Material Adverse Effect on the Buyer, breach,
violate or (whether immediately or with the lapse of time or the giving of
notice or both) constitute an event of default under or an event which would
give rise to any right of termination, cancellation, modification, acceleration
or foreclosure under, or require any consent of or the giving of any notice to
any third party under, any note, bond, indenture, credit facility, mortgage,
security agreement, lease, license, franchise, permit or other agreement,
instrument or obligation to which the Buyer is a party, or by which the Buyer or
any of its properties or assets may be bound, or give rise to the creation of
any Encumbrance upon the properties or assets of the Buyer; (iii) violate or
conflict with any law, statute, rule, regulation, ordinance, code, judgment,
order, writ, injunction, decree or other requirement of any court or of any
governmental body or agency thereof applicable to the Buyer or by which any its
properties or assets may be bound, except where such violation or conflict would
not have a Material Adverse Effect on the Buyer; or (iv) require any
registration or filing by the Company or any shareholders of the Company with,
or any permit, license, exemption, consent, authorization or approval of, or the
giving of any notice by the Company, any Subsidiary or any of shareholders of
the Company to, any governmental or regulatory body, agency or authority, other
than the HSR Filings and the filing of the Articles of Share Exchange.
5.4 Investment Purpose. The Buyer is acquiring the Shares for investment
for its own account and not with a view to the sale or distribution of any part
thereof and the Buyer has no present intention of selling, granting
participations in, or otherwise distributing the Shares (not including
collateral assignments, transfers to affiliates of the Buyer or pledges of the
Shares for financing purposes).
5.5 No Brokers or Finders. Neither the Buyer nor any of its officers,
directors or employees, on behalf of Buyer, has employed any broker or finder or
incurred any other liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated hereby.
5.6 Financing. Attached hereto as Section 5.6 of the Disclosure Schedule
are true and complete copies of the Buyer's commitment letters to obtain the
funds necessary to make the payments contemplated by Section 1.1 (the
"Commitment Letters"). The Commitment Letters are in full force and effect as of
the date hereof, and there are no conditions to the funding of the credit
facilities referred to therein, other than such as are set forth in the
Commitment Letters.
ARTICLE VI
Covenants
6.1 Shareholders' Meeting; Board Recommendation; Proxy Statement.
(a) The Company, acting through its Board of Directors, shall:
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(i) duly call, give notice of, convene and hold a special
meeting of its shareholders ("Shareholders' Meeting"), to be held as soon
as practicable after the date hereof, for the purpose of considering and
taking action upon this Agreement;
(ii) mail proxy materials for the Shareholders' Meeting (the
"Proxy Statement") to the Company's shareholders (including each holder of
the voting trust certificates under the Voting Trust (collectively, the
"Trust Certificate Holders"));
(iii) include in the Proxy Statement the recommendation of the
Board of Directors that shareholders of the Company vote in favor of, and
the Trust Certificate Holders direct the trustees of the Voting Trust to
vote in favor of, the approval and adoption of this Agreement and the
transactions contemplated hereby, and not withdraw, modify or qualify (or
propose to withdraw, modify or qualify) such recommendation in any manner
adverse to the Buyer or take any action or make any statement in connection
with the Shareholders' Meeting or the Certificate Holder's Meeting
inconsistent with such recommendation; provided, that notwithstanding the
foregoing, the Board of Directors of the Company (the "Board") may
withdraw, modify, amend or qualify its recommendation after giving to the
Buyer at least five (5) days' prior written notice thereof if, prior to and
after giving such notice: (A) the Board, having consulted with and
considered the advice of the Company's outside counsel, shall have
determined in good faith that its failure to take such actions will
reasonably be deemed to constitute a breach of its fiduciary duties under
applicable law, (B) neither the Certificate Holders' Meeting (as defined
below) nor the Shareholders' Meeting shall have commenced, (C) there shall
have been no prior breach of any provision of Section 6.3 hereof, (D) the
Board shall have concluded in good faith that the Company is in receipt of
a Superior Proposal (as defined in Section 9.3 below), after delivering a
Proposal Notice in respect of such proposal to the Buyer in accordance with
and otherwise complying with Section 9.3(b) below, and (E) the Buyer shall
have failed to deliver to the Company a written notice proposing to amend
the terms of the Share Exchange in accordance with Section 9.3(b) below in
respect of such Proposal Notice within the time periods specified in
Section 9.3(b); and
(iv) use all reasonable efforts to obtain, as soon as
practicable after the date hereof, the necessary approvals by its
shareholders (including the Trust Certificate Holders) of this Agreement
and the transactions contemplated hereby.
The Company shall have commenced the preparation of the Proxy Statement prior to
the date hereof. As soon as practicable following the date hereof, the Company
shall finalize the Proxy Statement for mailing pursuant to Section 6.1(a)(ii)
above. The Company shall consult with the Buyer, and obtain the prior written
consent of the Buyer (which consent shall not be unreasonably withheld), with
respect to any disclosure made in the Proxy Statement with respect to this
Agreement or the transactions contemplated hereby, and the Proxy Statement to be
mailed pursuant to Section 6.1(a)(ii) above shall be substantially in the form
previously agreed to by the Buyer. The parties acknowledge that the Proxy
Statement will include substantially all of the information that would be
required under Regulation 14A and Rule 14a-101 thereof under the Exchange Act if
the Company were subject to such regulation. None of the information supplied or
to be supplied by the Company for inclusion in the Proxy Statement will, at the
date it is first mailed to the Company's shareholders or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(b) The Company shall ensure that a meeting of the Trust Certificate
Holders (the "Certificate Holders' Meeting") shall be duly called, convened, and
held immediately prior to the Shareholders' Meeting, for the purpose of
considering, and directing the trustees under the Voting Trust to vote the
shares of Company Common Stock deposited in the Voting Trust at the Shareholders
Meeting in respect of, this Agreement and the transactions contemplated hereby.
6.2 Conduct of the Business of the Company Pending Closing. The Company
covenants and agrees with the Buyer that, between the date hereof and the
Closing Date (except as otherwise agreed in writing by the Buyer):
27
(a) the business of the Company and each Subsidiary will be conducted
diligently and only in the ordinary course of business consistent with past
practice, including, without limitation, the payment of any Indebtedness, the
collection of receivables, purchase of inventory, provision of services, payment
of payables and incurrence of and payment or financing of capital expenditures;
(b) neither the Company nor any of its Subsidiaries shall make any
payments in respect of its Indebtedness (as defined in Section 1.1(f))
(including, without limitation, the acceleration or prepayment of any portion
its Indebtedness) other than (i) payments of interest and scheduled amortization
payments, if any, required to be made under the agreements governing its
Indebtedness and (ii) payments made in respect of the Company's revolving credit
facility in the ordinary course of business consistent with past practice and
custom;
(c) except as expressly contemplated hereby, no change will be made
in the Articles of Incorporation, By-Laws or other charter documents of the
Company or any Subsidiary;
(d) the Company shall preserve the assets, business and goodwill of
the Company and each Subsidiary, to keep available the services of the present
employees of the Company and each Subsidiary and to preserve the goodwill of the
Company's and each Subsidiary's customers, suppliers and others having business
relationships with the Company and the Subsidiaries, provided that the Company
and the Subsidiaries shall not be authorized (without the prior written consent
of the Buyer) to make any commitment on behalf of the Buyer;
(e) the Company and the Subsidiaries shall not announce or institute
any increase in the salary, commission or other compensation (including bonuses)
rates payable or to become payable by the Company or any Subsidiary to any
employee or agent of the Company or any Subsidiary, or approve, adopt, amend or
modify any Benefit Plan or similar plan, agreement or arrangement, except
pursuant to the terms of any contract or agreement to which the Company or the
Subsidiaries are a party and which is listed in any Section of the Disclosure
Schedule, or pursuant to existing policies and practices of the Company and the
Subsidiaries;
(f) the Company and the Subsidiaries shall not enter into any
contract or commitment, or series of related contracts or commitments, unless
such contract or commitment, or series of related contracts or commitments, (i)
arises in the ordinary course of business, and (ii) except for purchases and
sales of inventory in the ordinary course of business, involves expenditures or
receipts of less than of $250,000 in any one instance or $500,000 in the
aggregate;
(g) the Company shall promptly advise the Buyer in writing of the
commencement or threat of any suit, proceeding or investigation against,
relating to or involving the Company or any Subsidiary which, had it existed on
the date of this Agreement, would have been required to be disclosed on Section
4.7 [Absence of Changes or Events] or 4.8 [Legal Proceedings] of the Disclosure
Schedule;
(h) the Company shall promptly advise the Buyer in writing of (i) the
occurrence of any Material Adverse Change and (ii) any event, condition or state
of facts which will or may reasonably be expected to result in the failure to
satisfy any of the conditions in Article VII hereof;
(i) the Company shall not create or permit to become effective any
Encumbrance on the assets, tangible or intangible, of the Company or any
Subsidiary, except in the ordinary course of business consistent with past
practice;
(j) the Company and the Subsidiaries shall maintain their current
liability, casualty, property and other insurance coverages in full force and
effect without any material reduction in coverage;
(k) except as expressly contemplated hereby, the Company and the
Subsidiaries shall not issue any additional, or modify any outstanding, shares
of capital stock or any options, warrants or other rights to purchase, or
securities convertible into or exchangeable for, shares of capital stock of the
Company or any Subsidiary;
28
(l) the Company and the Subsidiaries shall not declare or pay any
dividends on or make any other distributions (however characterized) in respect
of shares of their capital stock;
(m) except for any redemptions required under the Stock Redemption
Policy described in Section 6.5, the Company and the Subsidiaries shall not
repurchase or redeem any shares of their capital stock;
(n) the Company and the Subsidiaries shall not organize any new
subsidiary, acquire any capital stock or other equity security of any
corporation or acquire any equity or other ownership interest in any business;
(o) except for any changes required under GAAP, the Company and the
Subsidiaries shall not make any material change in the accounting principles or
practices reflected in the most recent audited Financial Statements or in their
methods of applying such principles or practices; and
(p) the Company and the Subsidiaries shall not incur any material
obligation or liability for borrowed money (other than advances under existing
credit facilities in the ordinary course of business and consistent with past
practice), nor guarantee, or agree to act as surety, indemnitor, co-signer or
accommodation party for, any indebtedness, liability or obligation of any third
party, except in the ordinary course of business and consistent with past
practice;
(q) the Company and the Subsidiaries shall not sell, transfer or
otherwise dispose of any of their properties or assets (real, personal or mixed,
tangible or intangible) except in the ordinary course of business and consistent
with past practices;
(r) neither the Company nor any of its Subsidiaries shall engage in
any activity which would accelerate or delay the collection of the accounts or
notes receivable of the Company or any of its Subsidiaries, accelerate or delay
the payment of the accounts payable of the Company or any of its Subsidiaries,
or reduce or otherwise restrict the amount of the inventory (including raw
material, packaging, work-in-process, or finished goods) of the Company or any
of its Subsidiaries on hand, in each case, other than in the ordinary course of
the conduct of business;
(s) the Company and its Subsidiaries shall not waive any rights to
the ownership or use of any Intangible Rights which are material to the Company
or any of its Subsidiaries and shall take steps consistent with its ordinary
course of business and past practices to maintain in full force and effect such
Intangible Rights;
(t) the Company and its Subsidiaries shall comply in all material
respects with all applicable laws, ordinances and regulations in the operation
of the Company's and its Subsidiaries' business;
(u) the Company and its Subsidiaries shall not take any action which
would render, or which could reasonably be expected to render, any
representation or warranty made by the Company in this Agreement untrue at (or
at any time prior to) the Closing;
(v) neither the Company nor any of its Subsidiaries shall forgive,
cancel or waive any rights or any debts or other material obligations owed to
the Company or any of its Subsidiaries, except in the ordinary course of
business consistent with past practice in respect of (A) receivables owed by
customers of the Company or its Subsidiaries arising from the sale of goods sold
by the Company or its Subsidiaries to such customers in the ordinary course of
business, and (B) the cancellation or forgiveness of amounts due from employees
relating to advances, reimbursements and similar arrangements, the aggregate
amount of which does not exceed $150,000;
(w) neither the Company nor any of its Subsidiaries shall take any
action which would require disclosure under Section 4.7;
(x) neither the Company nor any of its Subsidiaries shall file an
amended Tax return, change any method of accounting, or file any Tax election
which may have the effect of increasing the Tax liability of the Company or any
of its Subsidiaries; and
29
(y) the Company and the Subsidiaries shall not enter into any
agreement or commitment to take any action prohibited under this Section 6.2.
6.3 Non-Solicitation of Other Proposals
(a) The Company shall, and shall cause each of its Affiliates,
directors, officers, employees, advisors, agents and other representatives
(collectively, its "Representatives") to, immediately cease and terminate any
solicitation, initiation, encouragement, activity, discussion or negotiation
with any person with respect to any proposed, potential or contemplated Takeover
Proposal (as defined below).
(b) Subject to Section 6.3(c) below, the Company shall not, and shall
ensure that none of its Representatives will, directly or indirectly, (i)
solicit or initiate, or encourage the submission of, any proposal or indication
of interest relating to any Takeover Proposal, (ii) participate in any
discussion or negotiation regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal or (iii) authorize, approve,
consummate, engage in, or enter into any agreement with respect to, any Takeover
Proposal. The Company shall promptly inform its Representatives of the
obligations undertaken in this Section 6.3(b) and Section 6.3(a). Nothing in
this Section 6.3 shall be deemed to prohibit the Company or its Representatives
from responding to or communicating with the proponent of an unsolicited
Takeover Proposal to the limited extent reasonably necessary to clarify the
terms and conditions of the proposal.
As used in this Agreement, "Takeover Proposal" shall mean an
unsolicited bona fide proposal for any (i) reorganization, dissolution,
liquidation or recapitalization of or involving the Company, (ii) merger,
consolidation, share exchange or acquisition of or involving the Company or any
of its Subsidiaries, (iii) sale of any material amount of assets of the Company
or any of its Subsidiaries (other than in the Company's ordinary course of
business consistent with past practice and custom), (iv) direct or indirect
purchase, sale or other disposition of any capital stock or other equity
interests of the Company, or any tender offer or exchange offer, involving 10%
or more of any class of equity securities of the Company or that if consummated
would result in any person beneficially owning 10% or more of any class of
equity securities of the Company, (v) similar transaction or business
combination involving the Company or its business or capital stock or assets or
(vi) other transaction the consummation of which would prevent, impede or delay
to any material degree the consummation of the Transaction. For purposes of this
paragraph, an "unsolicited" proposal shall include an unsolicited proposed
modification to a bid or proposal received on or prior to March 19, 2002, even
though the bid or proposal prior to March 19, 2002 was itself solicited.
Notwithstanding the foregoing, for purposes of Section 9.2 of this Agreement
only, a "Takeover Proposal" shall not include a proposal which in the good
faith, reasonable judgment of the Board will not result in a Superior Proposal,
provided that: (A) the Company has complied in all respects with its obligations
pursuant to this Agreement in respect of such proposal, including without
limitation its obligations pursuant to this Section 6.3(b) and Section 6.3(d)
below, (B) promptly after the Board has made the determination described in this
sentence, but in any event within ten (10) days after receipt of such proposal,
the Company has informed the Buyer of such determination and the basis for such
determination, (C) the Company has promptly provided to the Buyer such other
information as the Buyer may reasonably request to enable it to understand the
basis upon which the Board has made such determination, and (D) at no time after
the date hereof and prior to the end of the one (1)-year period commencing upon
any termination of this Agreement shall the Company, either directly or
indirectly through any of its Affiliates or Representatives, have entered into
discussions or negotiations with the person who made such proposal or any
Affiliate thereof relating to, or have entered into or proposed to enter into a
letter of intent, agreement in principle, merger agreement, share exchange
agreement, acquisition agreement, option agreement or other similar agreement
with respect to any Takeover Proposal (determined without regard to this
sentence).
(c) Notwithstanding Section 6.3(b) above, the Company may, and may
authorize and permit its Representatives to, provide other persons with
nonpublic information, otherwise facilitate any effort or attempt by another
person to make or implement a Takeover Proposal, and participate in discussions
and negotiations with any other person relating to such Takeover Proposal, if:
(i) each of the conditions in clauses (A), (B) and (C) of Section 6.1(a)(iii)
shall have been satisfied, (ii) the Company shall have notified the Buyer of
such Takeover Proposal by delivering a Proposal Notice to the Buyer in
accordance with Section 9.3(b) below and Buyer shall have failed to deliver to
the Company, within the period set forth in such provision, a written notice
proposing to amend
30
the terms of the Share Exchange in accordance with Section 9.3(b), and (iii)
after the conditions described in clauses (i) and (ii foregoing have been
satisfied, the Board shall have concluded in good faith that such Takeover
Proposal is reasonably likely to result in a Superior Proposal (as defined in
Section 9.3(a)).
(d) The Company shall immediately notify the Buyer of any
solicitation of information, proposal, indication of interest or other
communication of which it may become aware relating to a possible Takeover
Proposal, and immediately deliver to the Buyer a written notice of the same,
including the identity of the person making such Takeover Proposal (including
the names of the persons controlling any such entity) and, in reasonable detail,
the terms and conditions thereof. Further, if such person proposes any change in
any of the terms or conditions in a Takeover Proposal, the Company shall
immediately notify the Buyer, describing such change in reasonable detail,
orally and in writing.
(e) Prior to the termination of this Agreement in accordance with
Section 9.1 below, the Company shall not enter into any agreement, letter of
intent or other similar instrument accepting any Takeover Proposal by any person
other than the Buyer; any confidentiality letter or similar instrument entered
into with a party to any Takeover Proposal shall be on terms substantially
similar to those of the Confidentiality Agreement. Nothing in this Section 6.3
shall entitle the Company to terminate this Agreement (except as specifically
provided in Section 9.1 hereof) or affect any other obligation of the Company
under this Agreement.
6.4 Amendment of Articles of Incorporation and By-Laws; Voting Trust.
Prior to the Closing the Company will take appropriate action (as part of the
Shareholders' Meeting, the Certificate Holders' Meeting or otherwise), which
action may be contingent on the closing of the transactions contemplated hereby:
(a) to amend its Articles of Incorporation and By-Laws to the extent
necessary to remove any restrictions on the transfer or ownership of the
Company's stock that are inconsistent with or would be breached by the
transactions contemplated hereby;
(b) to repeal in its entirety Article V of its By-Laws, effective as
of the Closing Date; and
(c) to terminate the Voting Trust (the "Voting Trust") under Amended
and Restated Voting Trust Agreement dated September 16, 1983 (as amended to
date) (the "Trust Agreement").
6.5 The Company's Policy on Redemptions of its Shares. With respect to the
Company's Policy Relating to Redemption of Stock by Inactive Customer
Shareholders and Former Employees (the "Stock Redemption Policy"):
(a) the Company will take the following actions:
(i) the Company will suspend, for the period from the date of
this Agreement through the date specified in Section 9.1(i), any
repurchases of Shares pursuant to the Stock Redemption Policy for which a
repurchase request was received prior to the date hereof ("Tendered
Shares"), and will permit such Tendered Shares to remain outstanding for
such period or, if earlier, until the Effective Time;
(ii) between the date of this Agreement and the Closing Date,
the Company will not accept any new requests for redemption of Shares
pursuant to the Stock Redemption Policy; and
(iii) the Company will take appropriate actions to rescind the
Stock Redemption Policy entirely, conditioned upon the closing of the
transactions contemplated by this Agreement.
(b) the Company and the Buyer agree that with respect to any Tendered
Shares that are not repurchased pursuant to the Stock Redemption Policy as
contemplated under Section 6.5(a) prior to the Effective Time, all such Shares
will be treated as outstanding Shares of the Company for all purposes in
connection with this Agreement and will be treated in the same manner as other
Shares are treated hereunder; and
31
(c) in the event the transactions contemplated hereby are not
consummated, the Stock Redemption Policy will not be deemed rescinded, but
rather shall remain in full force and effect, and the rights and obligations of
the Company and its shareholders thereunder (including with respect to Tendered
Shares for which repurchase becomes suspended under paragraph 6.5(a) above) will
be unaffected by this Agreement or any actions taken by the Company hereunder.
6.6 Access to Personnel, Properties, Books and Records. From the date
hereof until the Closing Date, the Company will cooperate fully with the Buyer
in the Buyer's investigation of the business, assets and liabilities of the
Company and each Subsidiary. Without limiting the generality of the foregoing,
the Company will allow the employees, attorneys, accountants, lenders (and their
representatives), and other representatives of the Buyer to meet with the
management of the Company and each Subsidiary and their representatives, to have
full and complete access to the books, records, properties, financial statements
and other documents and materials relating to the Company's and the
Subsidiaries' operations (including the right to make extracts therefrom or
copies thereof); provided that reasonable accommodations will be made with
respect to the timing and location of such access to minimize interference with
individuals' regular duties and responsibilities and disruption of normal
business activities. The information furnished by the Company or its
representatives to the Buyer or its representatives pursuant to this Section 6.6
shall be subject to the provisions of the Confidentiality Agreement previously
entered into between the parties hereto (the "Confidentiality Agreement").
6.7 Best Efforts.
(a) Subject to Section 6.7(b), the Company and the Buyer shall each
cooperate with the other and use (and the Company shall cause the Subsidiaries
to use) their respective reasonable best efforts to promptly (i) take or cause
to be taken all necessary actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable laws to
consummate and make effective the Share Exchange and the other transactions
contemplated by this Agreement as soon as practicable, including, without
limitation, preparing and filing promptly and fully all documentation to effect
all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (ii) obtain all
approvals, consents, registrations, permits, authorizations and other
confirmations required to be obtained from any third party or governmental or
regulatory authority necessary, proper or advisable to consummate the Share
Exchange and the other transactions contemplated by this Agreement (each a
"Required Approval"). In furtherance and not in limitation of the foregoing,
each party hereto agrees to make, as promptly as practicable, to the extent it
has not already done so, (i) an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby (which filing shall be made in any event within five business days of the
date hereof ) and (ii) all necessary filings with other governmental or
regulatory authorities relating to the Share Exchange, and, in each case, to
supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to such laws and to use reasonable best
efforts to cause the expiration or termination of the applicable waiting periods
under the HSR Act and the receipt of Required Approvals under such other laws as
soon as practicable. The application filing fee under the HSR Act shall be borne
equally by the Buyer and the Company. Subject to applicable laws relating to the
exchange of information, the Company and Buyer shall have the right to review in
advance, and to the extent practicable each will consult the other on, all the
information relating to the Company and the Subsidiaries or Buyer, as the case
may be, that appears in any filing made with, or written materials submitted to,
any third party and/or any governmental or regulatory authority in connection
with the Share Exchange and the other transactions contemplated by this
Agreement.
(b) Without limiting Section 6.7(a), each of the Buyer and the
Company shall (and the Company shall cause the Subsidiaries to):
(i) use its reasonable best efforts to avoid the entry of, or
to have vacated or terminated, any decree, order, or judgment (including,
without limitation, a second request for information under the HSR Act)
that would restrain, prevent or delay the Closing, including without
limitation defending through litigation on the merits any claim asserted in
any court by any person;
(ii) in connection with the efforts referenced in Section
6.7(a) to obtain all Required Approvals, use its reasonable best efforts to
(i) cooperate in all respects with each other in connection with any filing
or submission and in connection with any investigation or other inquiry,
including any
32
proceeding initiated by a private party; (ii) promptly inform the other
party of any communication received by such party from, or given by such
party to any other governmental or regulatory authority and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communications given
by it to, and consult with each other in advance to the extent practicable
of any meeting or conference with, any such other governmental or
regulatory authority or, in connection with any proceeding by a private
party, with any other person, and to the extent permitted by applicable
governmental or regulatory authority or other person, give the other party
the opportunity to attend and participate in such meetings and conferences;
and
(c) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 6.7 shall limit a party's right to terminate
this Agreement pursuant to Section 9.1 provided that such party has up to then
complied in all respects with its obligations under this Section 6.7.
6.8 Confidentiality. The Company shall, and shall cause its
Representatives to, keep the terms of this Agreement and the transactions
contemplated hereby (including, without limitation, the terms of the Share
Exchange and the Proxy Statement) confidential; provided that (i) immediately
following the execution hereof, the Buyer and the Company shall jointly make the
press release in the form attached as Exhibit B hereto; (ii) the Company may
discuss with its shareholders and the Trust Certificate Holders the terms
(including financial terms) of the Share Exchange, but only after obtaining (and
not thereafter waiving) the agreement of such persons to hold such information
confidential (it being acknowledged that a breach of such undertaking of
confidentiality by such persons shall not be considered a breach by the Company
of this Agreement); (iii) the Company shall deliver the Proxy Statement to the
Company's shareholders and the Trust Certificate Holders as required under
Section 6.1(a)(ii) above; (iv) the Company will be permitted to make appropriate
disclosures (subject to Section 6.1(a)(iii)) to its shareholders and the Trust
Certificate Holders at the Shareholders Meeting and Certificate Holders'
Meeting, respectively; and (iv) the Company may discuss with its employees and
other interested parties the transactions contemplated by this Agreement, other
than any of its financial terms and the provisions contained in Sections 6.1 and
6.3 and Article IX hereof, following publication of the press release referenced
in clause (i) of this paragraph. The Proxy Statement shall include on its cover
a prominent statement, in form and content reasonably satisfactory to the Buyer,
that the contents thereof are delivered subject to an understanding between the
Company and the Buyer that the contents thereof shall be held confidential by
the Company, the Company's stockholders and the Trust Certificate Holders.
Except as provided in the preceding sentence and without limiting the generality
of the foregoing, without the prior written consent of the Buyer, no disclosure
shall be made by the Company or its Representatives relating to the terms of
this Agreement or the transactions contemplated hereby (except that the Company
may disclose the fact of the existence of the Share Exchange and the identity of
the parties) until after the Closing.
6.9 Contracts Honored. The Buyer acknowledges that various Company
employees (the "Contract Employees") have severance agreements, deferred
compensation agreements, and employment agreements with the Company, such
persons and their respective agreements being identified on Section 4.13 of the
Disclosure Schedule, which provide for the payment of certain benefits, and in
some cases the satisfaction of certain ongoing obligations, in the event of a
change in control such as would be effected by the Share Exchange contemplated
herein. Buyer agrees that, with respect to each of the Contract Employees, it
will (and will cause the Company to) honor their existing contracts and
agreements and, where applicable, be responsible for such ongoing obligations as
such contracts and agreements may provide. Buyer and the Company further agree
and acknowledge that, following consummation of the Share Exchange, each of the
Contract Employees who is listed on the Disclosure Schedule with the notation
"Good Reason" will have "Good Reason" (as that term is used in such agreements)
for the resignation of his or her position with the Company. Buyer and the
Company further agree that for the fiscal year of the Company in which the
Closing occurs, those employees of the Company who are participants in the
Company's 2001 Incentive Compensation Plan will, notwithstanding the terms of
such Plan, be entitled to receive an annual bonus under Part IV of that Plan, in
an amount equal to the Annual Bonus received thereunder for the fiscal year
2001, pro-rated for the portion of the 2002 fiscal year that has elapsed prior
to the Closing Date.
33
6.10 Directors' and Officers' Indemnification and Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director, officer or employee of the Company or any of the Subsidiaries
(including in his/her role as a fiduciary of the employee benefit plans of the
Company or the Subsidiaries, if applicable) (the "Indemnified Parties") is, or
is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of the Company, any of the Subsidiaries or any of
their respective predecessors or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that after
the Effective Time, the Buyer shall indemnify and hold harmless, to the fullest
extent permitted by applicable law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation, upon receipt of any undertaking reasonably
acceptable to the Company, if and to the extent required under applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and in
the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to them;
provided, however, that (A) Buyer shall have the right to assume the defense
thereof and upon such assumption the Buyer shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if the Buyer elects not to assume such defense or counsel
for the Indemnified Parties reasonably advises that there are issues which raise
conflicts of interest between the Buyer and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and the Buyer shall
pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (B) Buyer shall in all cases be obligated pursuant to this Section 6.10
to pay for only one firm of counsel for all Indemnified Parties, (C) Buyer shall
not be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld) and (D) Buyer shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable Law. Any
Indemnified Party wishing to claim indemnification under this Section 6.10, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify the Buyer thereof, provided that the failure to so notify shall
not affect the obligations of the Buyer under this Section 6.10 except to the
extent such failure to notify materially prejudices the Buyer.
(b) Buyer shall use its best efforts to purchase, and for a period of
three (3) years after the Effective Time maintain in effect, directors and
officers liability insurance coverage with respect to wrongful acts and/or
omissions committed or allegedly committed by any of the officers or directors
of the Company prior to the Effective Time ("D&O Coverage"). Such D&O Coverage
shall have an aggregate coverage limit over the term of such policy in an amount
no less than the aggregate annual coverage limit under the Company's existing
directors' and officers' liability insurance policy, and in all other material
respects shall be at least comparable to such existing policy; provided,
however, that in no event will the Buyer be required to expend, on an annual
basis, as the cost of maintaining such D&O Coverage, more than 150% of the
amount currently expended by the Company to procure its existing D&O Coverage
(the "Maximum Premium"); and provided further, that if the Buyer is unable to
obtain or maintain the D&O Coverage called for by this Section 6.10(b) for an
amount equal to or less than the Maximum Premium, then the Buyer will
nonetheless use its reasonable best efforts to procure and maintain as much
comparable D&O Coverage as it can obtain for such Maximum Premium. The amount
currently expended by the Company to procure its D&O Coverage is $130,000 per
annum. Notwithstanding the foregoing, the Buyer, if it so elects, may satisfy
its obligations under this Section 6.10(b) at any time by procuring one or more
so-called "tail" or "runoff" policies of directors' and officers' liability
insurance that insure against the risks that would be insured against by the D&O
Coverage.
(c) In the event the Buyer or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each
34
such case, proper provision shall be made so that the successors and assigns of
the Buyer assume the obligations set forth in this section.
(d) In addition to the other indemnification obligations set forth in
this Section 6.10, the Buyer will cause the Company's Articles of Incorporation
to continue to include indemnification provisions substantially the equivalent
of those currently contained therein, and fulfill the obligations of the Company
to indemnify directors and officers under such provisions.
(e) The provisions of this Section 6.10 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives
(f) For purposes of this Section 6.10, an "officer" of the Company
includes a person who is or has been a Trustee of the Company's Voting Trust.
6.11 Expenses.
(a) Except as otherwise provided in this Agreement, all Expenses (as
defined below) incurred by the Buyer and the Company shall be borne solely and
entirely by the party which has incurred the same.
(b) "Expenses" as used in this Agreement shall include all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, lenders, experts and consultants to
the party and its Affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, execution or performance of
this Agreement and the transactions contemplated hereby (including, in the case
of the Buyer, any such expenses incurred by or on behalf of Willis Stein &
Partners III, L.P. or any of its affiliates, and including any such expenses
incurred in connection with the due diligence review of the Company and the
transactions contemplated hereby and its participation in the sale process
conducted by the Company's financial advisor), the solicitation of shareholder
approvals and all other matters related to the closing of the transactions
contemplated hereby and thereby, including, without limitation, the fees paid by
the Company to and expenses incurred by the Company's financial advisor, Bear,
Stearns & Co. Inc.
6.12 Company's Buying Deposit Agreements. As of the Effective Time, the
Buying Deposit Agreements in effect between the Company and its retailer
customers will be terminated and the collateral held thereunder will be
released.
ARTICLE VII
Conditions to the Obligations of the Buyer
The obligations of the Buyer to consummate the transactions contemplated
hereunder shall be subject to the satisfaction of each of the following
conditions as of the Closing, unless waived by the Buyer in writing:
7.1 Representations and Warranties True. All of the representations and
warranties of the Company contained in this Agreement (including, without
limitation, the Disclosure Schedule hereto) shall be true and correct on the
Closing Date as though such representations and warranties were made on such
date, except where the failure of such representations and warranties to be true
and correct shall not, in the aggregate, be material to the business, financial
condition, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole, and the Company shall have delivered to the
Buyer a certificate to that effect at the Closing. For purposes of this Section
7.1, each of the representations and warranties of the Company contained in this
Agreement which is qualified in any respect by a separate standard of
materiality or by reference to Material Adverse Effect shall be deemed to be
made without giving effect to any of such separate qualifications.
7.2 Performance. The Company shall have performed and complied in all
material respects with all covenants and obligations under this Agreement which
are required to be performed or complied with by such parties on or prior to the
Closing Date.
35
7.3 Approvals, Permits, Etc. All consents, authorizations, approvals,
exemptions, licenses or permits of, or registrations, qualifications,
declarations or filings with, any governmental body or agency thereof that are
required in connection with the Share Exchange pursuant to this Agreement and
the consummation of the transactions contemplated hereby, shall have been duly
obtained or made in form and substance reasonably satisfactory to the Buyer and
its counsel and shall be effective at and as of the Closing Date, including
without limitation, the filing of notices with the appropriate authorities under
the Hart-Scott-Rodino Antitrust Improvements Act ("HSR Filings") and the
expiration of the waiting periods thereunder
7.4 Delivery of Closing Documents. The Company shall have delivered to the
Buyer the documents referred to in Section 3.2(a) hereof, in form and substance
reasonably satisfactory to the Buyer and its counsel.
7.5 Absence of Certain Events. No statute, rule or regulation shall have
been enacted or promulgated which would make any of the transactions
contemplated by this Agreement illegal or would otherwise prevent the
consummation thereof. No order, decree, writ or injunction shall have been
issued and shall remain in effect, by any court or governmental body or agency
thereof which restrains, enjoins or otherwise prohibits the consummation of the
transactions contemplated hereby.
7.6 No Material Adverse Change. There shall have been no Material Adverse
Change affecting the Company during the period between the date of the most
recent audited Financial Statements and the Closing Date.
7.7 Consents. The Company shall have obtained and delivered to Buyer all
consents of third parties in relation to the Share Exchange that may be required
pursuant to any agreement to which the Company is a party or by which it is
bound.
7.8 Dissenting Shareholders. Dissenter's rights shall not have been
exercised pursuant to Subchapter XIII of the WBCL with respect to more than ten
(10%) percent of the shares of Company Common Stock issued and outstanding as of
the Effective Time.
7.9 Shareholders' Meeting. The Company shall have called and held the
Shareholders' Meeting, at which the requisite affirmative vote of the
shareholders of the Company required under the WBCL for approval of the Share
Exchange shall have been obtained. The Certificate Holders' Meeting shall have
been held, and at such meeting the requisite affirmative vote of the Certificate
Holders required under the WBCL and the Voting Trust Agreement for approval of
the Share Exchange shall have been obtained.
7.10 Trademark Licenses. The Company and each of its Subsidiaries shall
have entered into written trademark licenses with respect to the "PICK `N SAVE"
trademark that are in form and substance reasonably satisfactory to the Buyer
and its counsel, with those of its customers that use the "PICK `N SAVE"
trademark, but are not currently parties to a written license to use such
trademark.
7.11 Non-Competition Agreements. Each of Messrs. Gerald F. Lestina and
Robert D. Ranus shall have executed and delivered to the Buyer a
non-competition, non-solicitation and confidentiality agreement, in form and
substance reasonably acceptable to the Buyer, and such agreements shall be in
full force and effect as of the Closing. No separate or additional monetary
consideration shall be payable to either Mr. Lestina or Mr. Ranus for such
agreements.
7.12 Financing. The Buyer shall have received the debt financing proceeds
in substantially the amounts, and on substantially the terms and conditions set
forth in the term sheets included with the Commitment Letters and reasonably
satisfactory to the Buyer.
7.13 Payoff Letters and Releases. The Company shall have provided to the
Buyer payoff letters with respect to all Indebtedness of the Company and its
Subsidiaries (other than capital leases that will remain in force and effect
following the Closing) outstanding as of the Closing and obtained releases of
all Encumbrances, including appropriate UCC termination statements, against the
Company's or any of its Subsidiaries' property, all on terms reasonably
satisfactory to the Buyer.
36
ARTICLE VIII
Conditions to the Obligations of the Company
The obligations of the Company to consummate the transactions contemplated
hereunder shall be subject to the satisfaction of each of the following
conditions on or prior to the Closing, unless waived by the Company in writing:
8.1 Representations and Warranties True. All of the representations and
warranties of the Buyer contained in this Agreement (including, without
limitation, the Disclosure Schedule) shall be true and correct in all material
respects (except that where any statement in a representation or warranty is
qualified by a standard of materiality, such statement, as so qualified, shall
not have become untrue in any respect) on the Closing Date as though such
representations and warranties were made on such date, and the Buyer shall have
delivered certificates to that effect at the Closing.
8.2 Performance. The Buyer shall have performed and complied in all
material respects with all covenants and obligations under this Agreement which
are required to be performed or complied with by it on or prior to the Closing
Date.
8.3 Approvals, Permits, Etc. All consents, authorizations, approvals,
exemptions, licenses or permits of, or registrations, qualifications,
declarations or filings with, any governmental body or agency thereof that are
required in connection with the Share Exchange pursuant to this Agreement and
the consummation of the transactions contemplated hereby shall have been duly
obtained or made in form and substance reasonably satisfactory to the Company
and its counsel and shall be effective at and as of the Closing Date, including,
without limitation, the HSR filings and the expiration of the waiting periods
thereunder.
8.4 Delivery of Closing Documents. The Company shall have received the
cash, instruments, agreements and other documents referred to in Section 3.2(b)
hereof in form and substance reasonably satisfactory to the Company and its
counsel.
8.5 Absence of Certain Events. No statute, rule or regulation shall have
been enacted or promulgated which would make any of the transactions
contemplated by this Agreement illegal or would otherwise prevent the
consummation thereof. No order, decree, writ or injunction shall have been
issued and shall remain in effect, by any court or governmental body or agency
thereof which restrains, enjoins or otherwise prohibits the consummation of the
transactions contemplated hereby.
8.6 Shareholders' Meeting; Certificate Holders' Meeting. The requisite
affirmative vote of the shareholders of the Company required under the WBCL for
approval of the Share Exchange shall have been obtained, and the requisite
affirmative vote of the Certificate Holders required under the WBCL and the
Voting Trust Agreement for approval of the Share Exchange shall have been
obtained.
ARTICLE IX
Termination
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date, subject to Section 9.2 below:
(a) by mutual written consent of the Buyer and the Company;
(b) by either the Buyer or the Company if any approval of the
shareholders of the Company required for the consummation of the Share Exchange
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of such shareholders or at any adjournment or
postponement thereof;
(c) by the Company or the Buyer (A) if there has been a breach in any
material respect (except that where any statement in a representation or
warranty is qualified by a standard of materiality, such statement, as so
qualified, shall have been breached) of any representation, warranty, covenant
or agreement on the
37
part of the other party set forth in this Agreement, or (B) if any
representation or warranty of the Company, on the one hand, or the Buyer, on the
other hand, shall be discovered to have become untrue in any material respect
(except that where any statement in a representation or warranty is qualified by
a standard of materiality, such statement, as so qualified, shall not have
become untrue in any respect), in either case, which breach or other condition
has not been cured within thirty (30) days following receipt by the
non-terminating party of notice of such breach or other condition, or which
breach by its nature, cannot be cured prior to the Closing Date; provided,
however, neither party shall have the right to terminate this Agreement pursuant
to this Section 9.1(c) unless the breach of any representation or warranty (but
not breaches of covenants or agreements), together with all other such breaches,
would entitle the party receiving such representation or warranty not to
consummate the transactions contemplated hereby under Section 7.1 (in the case
of a breach of a representation or warranty by the Company) or Section 8.1 (in
the case of a breach of a representation or warranty by the Buyer); and,
provided further that this Agreement may not be terminated pursuant to this
Section 9.1(c) by the breaching party or party making any representation or
warranty which shall have become untrue in any material respect;
(d) by the Company upon at least five (5) days' prior written notice
thereof to the Buyer so long as, prior to giving such notice and at the
effective time of such termination: (i) the Board shall have determined to
accept a Superior Proposal, (ii) the Board, after having consulted with and
considered the advice of the Company's outside counsel, shall have determined in
good faith that its failure to accept such Superior Proposal will reasonably be
deemed to constitute a breach of its fiduciary duties under applicable law, and
(iii) each of the conditions in clauses (B) through (E) of Section 6.1(a)(iii)
shall have been satisfied;
(e) [intentionally omitted]
(f) by the Buyer if (i) the Board shall not have recommended, or
shall have resolved not to recommend or shall have qualified, modified or
withdrawn (or proposed to qualify, modify or withdraw) its recommendation of the
Share Exchange or declaration that the Share Exchange is advisable and fair to
and in the best interest of the Company and its shareholders, or shall have
resolved to do so, (ii) any person (other than the Buyer) acquires or becomes
the beneficial owner of 20% or more of the outstanding shares of the Company
Common Stock, (iii) the Board shall have resolved to accept any Takeover
Proposal or recommended to the shareholders of the Company (or the Trust
Certificate Holders) any Takeover Proposal or shall have resolved to do so, (iv)
a tender offer or exchange offer for 20% or more of the outstanding shares of
capital stock is commenced, and the Board fails to recommend against acceptance
of such tender offer or exchange offer by its shareholders and the Trust
Certificate Holders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its shareholders or Trust
Certificate Holders), or (v) the Company or any of its Subsidiaries shall have
entered into or proposed to enter into a letter of intent, agreement in
principle, merger agreement, share exchange agreement, acquisition agreement,
option agreement or other similar agreement with respect to any Takeover
Proposal;
(g) by either the Buyer or the Company if any permanent injunction
preventing the consummation of the Share Exchange shall have become final and
nonappealable;
(h) by the Buyer if (i) there shall have been any breach of the
obligations of the Company or the Board under Section 6.1, Section 6.3 or
Section 6.8, or (ii) dissenter's rights shall have been exercised pursuant to
Subchapter XIII of the WBCL with respect to more than ten percent (10%) of the
shares of the Company Common Stock issued and outstanding as of the Effective
Time;
(i) by either the Buyer or the Company if the Share Exchange shall
not have been consummated by September 30, 2002; provided, however, that the
right to terminate this Agreement under this Section 9.1(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 consummation
of the Share Exchange as of such date.
9.2 Effect of Termination.
(a) In the event of the termination of this Agreement in accordance
with Section 9.1, this Agreement shall forthwith become void and all rights and
obligations of any party hereto shall cease except: (i) as set forth in this
Section 9.2, (ii) the provisions of this Section 9.2 and Section 6.11 shall
survive such termination;
38
and (iii) nothing herein shall relieve any party from liability for any breach
of this Agreement, except as provided in Section 9.2(d), or shall restrict
either party's rights in the case thereof notwithstanding the provisions of
Section 6.11.
(b) Notwithstanding anything herein to the contrary, in the event
that this Agreement is terminated:
(i) (A) by the Buyer or the Company in accordance with Section
9.1(g) or (B) by the Buyer or the Company in accordance with Section
9.1(i),
and a Takeover Proposal shall have been made prior to any such
termination of this Agreement,
OR
(ii) (A) by the Company or the Buyer in accordance with Section
9.1(b) or (B) by the Buyer in accordance with Section 9.1(c), Section
9.1(f)(i) or Section 9.1(h),
then the Company shall pay to the Buyer by wire transfer of immediately
available funds an amount equal to the lesser of the aggregate amount of Buyer's
Reimbursable Costs and Four Million Dollars ($4,000,000), and such termination
shall not be effective in respect of any of the Company's obligations under this
Agreement unless and until the Company shall have made such payment to the
Buyer. The Company's payment to the Buyer of such amount shall be made promptly,
but in no event later than the date of such termination. As used in this
Agreement, "Reimbursable Costs" means the reasonable out-of-pocket Expenses
incurred by the Buyer (or on its behalf), excluding the time of any employee,
officer or director of the Buyer or its Affiliates.
(c) Notwithstanding the provisions of Section 6.11, and without
duplication of the payments contemplated by Section 9.2(b) above, in the event
that:
(i) (A) this Agreement is terminated (1) by the Company or
the Buyer in accordance with Section 9.1(b), (2) by the Buyer in accordance
with Section 9.1(c), Section 9.1(f)(i) or Section 9.1(h), or (3) by the
Buyer or the Company in accordance with Section 9.1(g) or Section 9.1(i),
and
(A) a Takeover Proposal shall have been made prior to any
such termination of this Agreement, and
(B) concurrently with or within twelve months after any
such termination, (1) a Third Party Acquisition Event (as defined
below) occurs or (2) the Company shall enter into any letter of
intent, agreement in principle, acquisition agreement, merger
agreement, share exchange agreement, option agreement or other
similar agreement or propose publicly or agree to any of the
foregoing with respect to any Third Party Acquisition Event
(provided that in the case of this clause (2), the Third Party
Acquisition Event contemplated thereby is ultimately consummated,
even if after such twelve-month period); or
(ii) this Agreement is terminated by the Company in accordance
with Section 9.1(d); or
(iii) this Agreement is terminated by the Buyer in accordance
with Section 9.1(f)(ii), 9.1(f)(iii), 9.1(f)(iv) or 9.1(f)(v),
then, in each case and without duplication, the Company shall pay to Willis
Stein by wire transfer of immediately available funds a fee (the "Termination
Fee") equal to Twenty Million Dollars ($20,000,000) and to the Buyer an amount
equal to the Buyer's Reimbursable Costs; provided that the aggregate amount
payable by the Company to Willis Stein and the Buyer pursuant to this Section
9.2(c) will not exceed that amount which, when combined with the payment
previously made by the Company to the Buyer pursuant to Section 9.2(b), equals
Twenty One Million
39
Five Hundred Thousand Dollars ($21,500,000). Such payment shall be made
promptly, but in no event later than (x) in the case of clause (i) above,
subject to Section 9.2(b) above, the later to occur of the date of such
termination and the date of such Third Party Acquisition Event and (y) in the
case of clause (ii) or clause (iii) above, the date of such termination. If this
Agreement is terminated pursuant to Section 9.1(d) or by the Buyer pursuant to
Section 9.1(f), such termination shall not be effective in respect of any of the
Company's obligations hereunder until the Company has paid to the Buyer in full
all amounts owing to the Buyer pursuant to this Section 9.2(c). For purposes
hereof, "Willis Stein" means, collectively, Willis Stein & Partners III, L.P.,
Willis Stein & Partners Dutch III-A, L.P., Willis Stein & Partners Dutch III-B,
L.P., and Willis Stein & Partners III-C, L.P.
As used in this Agreement, a "Third Party Acquisition Event" involving the
Company means (1) a transaction or series of transactions pursuant to which any
person or group (as such term is defined under the Exchange Act), other then the
Buyer or any affiliate thereof ("Third Party"), acquires (or would acquire upon
completion of such transaction or series of transactions) more than twenty
percent (20%) of the outstanding equity securities or voting power of the
Company or any Subsidiary, pursuant to a tender offer or exchange offer or
otherwise, (2) a merger, consolidation, share exchange or other business
combination involving the Company or any Subsidiary pursuant to which any Third
Party acquires ownership (or would acquire ownership upon consummation of such
merger, consolidation, share exchange or other business combination) of more
than twenty percent (20%) of the outstanding equity securities or voting power
of the Company or any Subsidiary or of the entity surviving such merger or
business combination or resulting from such consolidation, (3) any other
transaction or series of transactions pursuant to which any Third Party acquires
(or would acquire upon completion of such transaction or series of transactions)
control of assets of the Company or any Subsidiary (including, for this purpose,
outstanding equity securities of subsidiaries of such party) having a fair
market value equal to more than twenty percent (20%) of the fair market value of
all the consolidated assets of the Company immediately prior to such transaction
or series of transactions, or (4) any transaction or series of transactions
pursuant to which any Third Party acquires (or would acquire upon completion of
such transaction or series of transactions) control of the Board or by which
nominees of any Third Party are (or would be) elected or appointed to a majority
of the seats on the Board.
(d) The Company hereby acknowledges that the agreements contained in
Section 9.2(b) and Section 9.2(c) are an integral part of the transactions
contemplated by this Agreement, and that, without such agreements, the Buyer
would not enter into this Agreement. Accordingly, if either (i) the Company
fails promptly to pay any amount due pursuant to Section 9.2(b) or (ii) the
Company fails promptly to pay any amount due pursuant to Section 9.2(c) and a
Third Party Acquisition Event has occurred, and, in order to obtain such
payment, the Buyer commences a lawsuit which results in a judgment against the
Company for all or any portion of the amounts contemplated by Section 9.2(b) or
Section 9.2(c), the Company shall pay to the Buyer the Buyer's costs and
expenses (including attorneys' fees and expenses) incurred in connection with
such lawsuit, together with interest at the prime rate in effect on the date
such payment was required to be made, as published in the Wall Street Journal.
The Company hereby agrees that any remedy or amount payable pursuant to Section
9.2(b) or Section 9.2(c) shall not preclude any other remedy or amount payable
hereunder and will not be an exclusive remedy for any breach by the Company of
any representation, warranty, covenant or agreement contained in this Agreement;
provided that if the Buyer terminates this Agreement in accordance with Section
9.1(c) and receives in a timely manner all payments to which it is entitled
pursuant to Section 9.2(b) and Section 9.2(c), then such payments will be the
Buyer's exclusive remedy for any breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement.
9.3 Superior Proposal.
(a) Subject to Section 9.3(b) below, for purposes of this Agreement,
a "Superior Proposal" shall mean a Takeover Proposal that (i) either is not
subject to a financing contingency or, if so subject, is accompanied by executed
financing commitments from bona fide lenders or investors in sufficient amount
and customary form, (ii) the Board in good faith concludes (following the
receipt of the advice from its financial advisors and outside counsel) will
result in a transaction which is likely to be consummated and (iii) the Board in
good faith concludes (following the receipt of the advice from its financial
advisors and outside counsel) will be likely to result in a transaction that, if
consummated, would yield a higher purchase price to, and would otherwise be more
favorable from a financial point of view to, the shareholders of the Company
than the Share Exchange (taking into account any changes to the terms of the
Share Exchange proposed by the Buyer pursuant to Section 9.3(b) below). In
making its determination under clause (iii) above, the Board shall take into
account, among other things,
40
the form of consideration offered, it being understood that, in valuing any such
consideration other than cash, the Board will take into account such valuation
factors (such as discounts for lack of liquidity and other risks associated with
the form of consideration offered) as are appropriate in the opinion of its
financial advisors, and all legal, regulatory and similar other risks that may
be associated with the proposal (and the person making it) as may be appropriate
in the opinion of the Company's outside counsel. In evaluating the superiority
of the proposal from a financial point of view, the Company shall give effect to
and take into account the amendments, if any, to the terms of the Share Exchange
proposed by the Buyer in accordance Section 9.3(b) below, any adjustment made
pursuant to the sentence immediately foregoing, and the effect on the total
consideration receivable by the Company's shareholders of the Termination Fee
and the amount that the Company may be obligated to reimburse the Buyer for its
expenses, as provided in Section 9.2 above.
(b) If the Board determines in good faith that the Company has
received a Takeover Proposal which is reasonably likely to result in, or
constitutes, a "Superior Proposal" and, consequently, the Board determines in
good faith to take any of the actions contemplated by Section 6.3(c), Section
9.1(d) or the proviso to Section 6.1(a)(iii), then prior to taking any such
action, the Company shall deliver a written notice (a "Proposal Notice") to the
Buyer specifying in reasonable detail: (i) the information required to be
provided under Section 6.3(d) above (if not previously provided); and (ii) such
other information as the Buyer may reasonably request to enable it to understand
the basis upon which the Board has made the determination that such proposal
(such "Proposal") is reasonably likely to result in, or constitutes, a Superior
Proposal. The Buyer shall be entitled, at its option, to propose in writing to
amend the terms of the Share Exchange at any time during the period of three (3)
business days following its receipt of the final Proposal Notice in respect of
such Proposal (the "Election Period"), so that the terms thereof will be
equivalent or superior to such Proposal, as determined in accordance with
Section 9.3(a). Notwithstanding anything herein to the contrary, no Proposal
shall constitute a Superior Proposal for purposes of this Agreement (including,
without limitation, any of Sections 6.1(a)(iii), 6.3(c) and 9.1(d)), unless the
Buyer fails to amend the terms of the Share Exchange in the foregoing manner
within the Election Period. Any failure of the Buyer to so amend the terms of
the Share Exchange shall in no way affect any of the Buyer's rights under this
Agreement or at law or in equity, including, without limitation, any rights it
may have to challenge the Board's determination that a Takeover Proposal is
reasonably likely to result in, or constitutes, a Superior Proposal.
ARTICLE X
Miscellaneous Provisions
10.1 Non-Survival of Representations and Warranties. The representations
and warranties in this Agreement shall terminate at the Effective Time.
10.2 Waiver of Compliance. Any failure by any of the parties hereto to
comply with any obligation, covenant or agreement or to fulfill any condition
herein may be waived only by a written notice from the party entitled to the
benefits thereof. No failure by any party hereto to exercise, and no delay in
exercising, any right hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude any other or
future exercise of that right or any other right hereunder by that party.
10.3 Notices. All notices, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been given
(i) when delivered personally to the recipient, if during business hours on a
business day, (ii) when received by facsimile, if during business hours on a
business day and otherwise on the next succeeding business day, but only so long
as a copy thereof is also delivered to the recipient by reputable overnight
courier service (charges prepaid), (iii) one business day after being sent to
the recipient by reputable overnight courier service (charges prepaid) or (iv)
four business days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to each of the parties hereto at
its respective address set forth below or at such other address as may from time
to time be designated by such party to the others in accordance with this
Section 10.3:
41
If to the Company Roundy's, Inc.
or the Company's 23000 Roundy Drive
Agent to: Pewaukee, WI 53072
Attention: Edward G. Kitz, Vice-President,
Secretary and Treasurer
Facsimile: (414) 953-7979
with a copy to: Whyte Hirschboeck Dudek S.C.
111 East Wisconsin Avenue, Suite 2100
Milwaukee, WI 53202
Attention: John F. Emanuel
Facsimile: (414) 223-5000
If to the Buyer to: Roundy's Acquisition Corp.
c/o Willis Stein & Partners III, L.P.
227 West Monroe Street
Suite 4300
Chicago, IL 60606
Attention: Mark P. Michaels, Managing
Director
Facsimile: (312) 422-2418
with a copy to: Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: John A. Weissenbach
David H.C. Lee
Facsimile: (312) 861-2200
10.4 Public Announcements. No party hereto will issue any report,
statement or release to the general public, to the trade, to the general or
trade press, or to any third party (other than its advisors and representatives
in connection with the transactions contemplated hereby), relating to this
Agreement and the transactions contemplated hereby, except as may be mutually
agreed by the parties hereto.
10.5 Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any rights, duties
or obligations shall be assigned by any party hereto without the prior hereto
written consent of the other parties, and any attempted assignment or transfer
without such prior written consent shall be null and void; provided that the
Buyer shall have the right to assign all or any portion of its rights and
obligations under this Agreement to (i) one or more wholly-owned subsidiaries of
the Buyer (including any subsidiary which may be organized subsequent to the
date hereof), (ii) in connection with a merger or consolidation involving the
Buyer or the Company or other disposition of all or substantially all of the
assets, any of the divisions of the Buyer or the Company, or (iii) after (or
contemporaneously with) the Effective Time, any lender providing financing to
the Buyer, the Company or any of their Affiliates, for collateral security
purposes, and any such lender may exercise all of the rights and remedies of the
Buyer hereunder (subject to any limitations or conditions that would be
applicable to the exercise of such rights by Buyer itself), provided that no
such assignment shall in any manner limit or impair the Buyer's obligations
hereunder.
10.6 No Third Party Beneficiary. Except as provided in Section 6.9 and
6.10, neither this Agreement nor any provision hereof, nor any statement,
schedule, certificate, instrument or other document delivered or to be delivered
pursuant hereto, nor any agreement entered into or to be entered into pursuant
hereto or any provision thereof, is intended to create any right, claim or
remedy in favor of, or impose any obligation upon, any person other than the
parties hereto and their respective successors and permitted assigns.
10.7 Captions and Paragraph Headings; Rules of Construction. Captions
and paragraph headings used herein are for convenience only and are not intended
to be a part of this Agreement and shall not be used in construing it. No
provision of this Agreement shall be construed against any party hereto solely
because such party or its legal representative drafted such provision.
42
10.8 Entire Agreement; Modifications; Severability. The making,
execution and delivery of this Agreement by the parties hereto has been induced
by no representations, statements, warranties or agreements other than those
herein expressed. This Agreement embodies the entire agreement of the parties
pertaining to the subject matter hereof and supersedes all prior or
contemporaneous agreements or understandings, written or oral, of the parties
relating to the subject matter hereof, including without limitation the
Exclusivity Agreement, by and among the Company, Buyer and Willis Stein, dated
as of March 21, 2002. This Agreement may be amended or modified only by an
instrument signed by the parties and Willis Stein, or by their duly authorized
agents. The invalidity, illegality or unenforceability for any reason of any one
or more provisions of this Agreement shall not affect the validity, legality or
enforceability of the remainder of this Agreement.
10.9 Definition of Knowledge. With respect to the representations and
warranties of the Company set forth herein which are made subject to the
qualification "to the Knowledge of the Company," or other qualification of
similar import, the Company shall be deemed to have Knowledge of (i) any matter,
fact, or thing that is, as of the date hereof or the Closing Date, actually
known to the President or any Board-appointed Vice President of the Company; and
(ii) any matter, fact or thing which reasonably should be known by such persons
after "due inquiry," taking into account any and all roles or positions which
such persons may hold and any and all duties and responsibilities they may have
vis-a-vis the Company and its business.
10.10 Definition of Material Adverse Effect and Material Adverse
Change. The term "Material Adverse Effect" as used in this Agreement shall mean
an effect that is materially adverse to the business, financial condition,
results of operations or prospects of the Company and the Subsidiaries (or the
Buyer, as the case may be) taken as a whole. The term "Material Adverse Change"
means a change or event that gives rise to a Material Adverse Effect.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.12 Governing Law. The parties hereby agree that this Agreement, and
the respective rights, duties and obligations of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of Wisconsin,
without giving effect to principles of conflicts of law thereunder.
10.13 Exclusive Jurisdiction. Each of the parties hereby (a)
irrevocably consents and agrees that any legal or equitable action or proceeding
arising under or in connection with this Agreement shall be brought exclusively
in any Federal or state court within Milwaukee or Waukesha County, State of
Wisconsin, and any court to which an appeal may be taken in any such litigation,
and (b) by execution and delivery of this Agreement, irrevocably submits to and
accepts with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the aforesaid courts, and irrevocably
waives any and all rights such party may now or hereafter have to object to such
jurisdiction under the constitution or laws of the State of Wisconsin or the
Constitution or laws of the United States of America or otherwise.
10.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH THIS AGREEMENT
OR ANY DISPUTE OR CONTROVERSY HEREUNDER OR THE TRANSACTIONS THAT ARE THE SUBJECT
HEREOF.
[Signature Page Follows]
43
[Signature Page to Share Exchange Agreement]
IN WITNESS WHEREOF, the parties hereto have duly executed this Share
Exchange Agreement on the date first above written.
ROUNDY'S, INC. ROUNDY'S ACQUISITION CORP.
By: /s/ GERALD F. LESTINA By: /s/ MARK P. MICHAELS
-------------------------------- -----------------------------------
Its: President & CEO Its:
-------------------------------- -----------------------------------
Solely for purposes of Section 9.2(c) and Section 10.8 of the Share Exchange
Agreement:
WILLIS STEIN & PARTNERS III, L.P.
WILLIS STEIN & PARTNERS DUTCH III-A, L.P.
WILLIS STEIN & PARTNERS DUTCH III-B, L.P.
WILLIS STEIN & PARTNERS III-C, L.P.
By WILLIS STEIN & PARTNERS MANAGEMENT III, L.P.
Its General Partner
By WILLIS STEIN & PARTNERS MANAGEMENT III, L.L.C.
Its General Partner
By: /s/ MARK P. MICHAELS
----------------------------------------------
Mark P. Michaels, Managing Director
44
Exhibit A to Share Exchange Agreement*
Closing Indebtedness Amount
As of December 29, 2001
-------------- --------------
Section 1.1(e) Amount Footnote
-------------- --------------
Indebtedness as defined in Section 1.1(f) $229,717,945
Interest $ 0 (a)
Prepayment penalties $ 6,000,000 (b)
Premiums $ 0
Fees $ 0
Expenses $ 0
--------------
Total Closing Indebtedness Amount $235,717,945
Section 1.1(f)
(i) Any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money
Total under 1.1(f)(i) [other than that included
in (f)(ii) below] $ 0
(ii) Any indebtedness evidenced by any note, bond, debenture or other
debt security
Senior Notes $130,000,000 (c)
Notes Payable under Revolving Credit Agreement $ 59,000,000 (c)
Subordinated Notes Payable $ 25,350,000
Other Long Term Debt $ 211,400
--------------
Total under 1.1(f)(ii) $214,561,400
(iii) Any indebtedness for the deferred purchase price of property or
services (other than trade payables and other current liabilities
incurred in the ordinary course of business)
Total under 1.1(f)(iii) $ 0
(iv) Obligations under capitalized leases (as defined, and in the amount
recordable as a liability, in accordance with GAAP)
Capital Lease Obligations $ 13,987,100
--------------
Total under 1.1(f)(iv) $ 13,987,100
(v) Any indebtedness (other than trade payables and other current
liabilities incurred in the ordinary course of business) secured by any
Lien on the Company's or a Subsidiary's assets
Total under 1.1(f)(v) $ 0 (c)
(vi) Any cash, book or bank overdrafts (other than those incurred in the
ordinary course of business consistent with past practice and custom)
Total under 1.1(f)(vi) $ 0
(vii) Any accrued interest payable on the foregoing Accrued Interest
Payable $ 1,169,445
--------------
Total under 1.1(f)(vii) $ 1,169,445
Total Indebtedness under Section 1.1(f) $229,717,945
45
Exhibit A to Share Exchange Agreement*
Closing Indebtedness Amount
As of December 29, 2001
Footnotes:
(a) Accrued interest is included in Indebtedness as defined in Section
1.1(f).
(b) Represents $6,000,000 in estimated breakage costs related to the
Company's $60,000,000 notional amount interest rate swap agreement
expiring April 4, 2005. Under the terms of the swap agreement, the
Company pays a fixed rate of 7.32% and receives a floating LIBOR rate.
(c) All indebtedness under the Senior Notes and Notes Payable under
Revolving Credit Agreement in 1.1(f)(ii) is secured by a pledge of all
of the Company's assets to the Lenders (as defined in Section 4.2(b) of
the Disclosure Schedule).
* All capitalized terms not otherwise defined herein shall have the meaning
accorded to them in the Share Exchange Agreement.
46
LIST OF OMITTED EXHIBITS AND SCHEDULES TO SHARE EXCHANGE
AGREEMENT BY AND BETWEEN ROUNDY'S ACQUISITION CORP. AND
ROUNDY'S, INC. DATED APRIL 8, 2002
Exhibit B Form of Press Release
Disclosure Schedule Pursuant to Article IV and Section 5.6 of the Share
Exchange Agreement
THE ABOVE-DESCRIBED EXHIBITS AND SCHEDULES ARE OMITTED FROM THIS FILING PURSUANT
TO ITEM 601(b)(2) OF REGULATION S-K. THE REGISTRANT, ROUNDY'S, INC., HEREBY
AGREES TO FURNISH A COPY OF SUCH EXHIBITS AND SCHEDULES TO THE COMMISSION UPON
REQUEST.