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Document Preview Agreement and Plan of Merger |
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Title: |
Agreement and Plan of Merger |
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Entities: |
Bon-Ton Stores, Inc.; Citibank, NA; Citicorp USA, Inc.; Elder Beerman Stores Corp; RBC Dain Rauscher Inc.; Wolf, Block, Schorr and Solis-Cohen |
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Date: |
2003 |
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Preview shows 42KB of 211KB total |
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Price: |
$57 |
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ID: |
#1688418 |
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 15, 2003, is made and entered into by and among The Elder-Beerman
Stores Corp., an Ohio corporation (the "Company"), The Bon-Ton Stores, Inc., a
Pennsylvania corporation ("Parent"), and Elder Acquisition Corp., an Ohio
corporation ("Sub").
WHEREAS, the Board of Directors of the Company has determined that it
is advisable and in the best interest of the Company and its shareholders to
consummate and has recommended approval by the shareholders of the Company of
the business combination transaction provided for herein in which Sub would
merge with and into the Company and the Company would become an indirect wholly
owned subsidiary of Parent (the "Merger");
WHEREAS, the Boards of Directors of Parent and Sub have each determined
that it is advisable and in the best interests of their respective companies and
shareholders to consummate, and have approved, the Merger and this Agreement;
WHEREAS, in furtherance of such business combination transaction and
the Merger, Parent proposes to cause Sub to make a cash tender offer for all of
the issued and outstanding shares of common stock, without par value, of the
Company (the "Company Common Shares"), on the terms specified herein and the
Board of Directors of the Company has approved the tender offer and recommended
that it be accepted by the shareholders of the Company; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer (as hereinafter defined) and the Merger and also to prescribe various
conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE OFFER
Section 1.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 9.01 hereof and so long as none
of the events or circumstances set forth in Annex A hereto shall have
occurred and be continuing and shall not have been waived by Parent
(other than with respect to matters that by their terms are not
required to be satisfied until expiration or consummation of the
Offer), Sub shall, and Parent shall cause Sub to, as promptly as
practicable commence (within the meaning of the applicable rules and
regulations of the Securities and Exchange Commission (the "SEC")
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), but in no event later than fifth business day
following the initial public announcement of the execution of this
Agreement, an offer to purchase for cash (the "Offer") all of the
issued
<PAGE>
and outstanding Company Common Shares at a price of $8.00 per Company
Common Share, subject to any required withholding Taxes (as hereinafter
defined) net to the seller in cash. For purposes of this Agreement, the
term "Transaction Consideration" shall mean $8.00 per Company Common
Share in cash or any higher price as shall be paid in respect of the
Company Common Shares in the Offer. The obligations of Sub to commence
the Offer and to accept for payment and to pay for any Company Common
Shares tendered shall be subject to only the conditions set forth in
Annex A hereto (any or all of which may, subject to the provisions
hereof, be waived by Parent or Sub, subject to applicable law). The
initial expiration date of the Offer shall be the 20th business day
following the commencement of the Offer determined using Rule 14d-2
under the Exchange Act, unless this Agreement is terminated in
accordance with Section 9.01, in which case the Offer (whether or not
previously extended in accordance with the terms hereof) shall expire
on such date of termination. Without the prior written consent of the
Company, Sub shall not, and Parent shall cause Sub not to (i) decrease
the Transaction Consideration, (ii) decrease the number of Company
Common Shares to be purchased in the Offer, (iii) change the form of
consideration payable in the Offer, (iv) add to or change the
conditions to the Offer set forth in Annex A, (v) waive the Minimum
Tender Condition (as defined in Annex A) or (vi) make any other change
in the terms or conditions of the Offer in any manner materially
adverse to the holders of Company Common Shares. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the
Offer in increments of not more than ten business days each, if at the
then scheduled expiration date of the Offer any of the conditions to
Sub's obligation to purchase Company Common Shares are not satisfied,
until such time as such conditions are satisfied or waived, (ii) extend
the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable
to the Offer and (iii) make available a subsequent offering period
(within the meaning of Rule 14d-11 under the Exchange Act). Without
limiting the right of Sub to extend the Offer, provided that this
Agreement shall not have been terminated in accordance with Section
9.01 hereof, if the conditions set forth in Annex A are not satisfied
or, to the extent permitted hereby, waived by Parent or Sub as of the
date the Offer would otherwise have expired, then, except to the extent
that such conditions are incapable of being satisfied, at the request
of the Company, Sub will extend the Offer from time to time until the
earlier of October 31, 2003 (the "Final Date") or the consummation of
the Offer. Sub shall, and Parent shall cause Sub to, subject to the
terms and conditions of the Offer, accept for payment Company Common
Shares validly tendered and not withdrawn promptly after expiration of
the Offer in compliance with Rule 14e-1(c) promulgated under the
Exchange Act.
(b) On the date the Offer is commenced, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule TO with respect
to the Offer, which shall contain an offer to purchase and a related
letter of transmittal and summary advertisement (such Schedule TO and
the documents included therein pursuant to which the Offer will be
made, together with any amendments or supplements thereto, the "Offer
Documents"). The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their
being filed with the SEC. Each of Parent, Sub and the Company shall
promptly correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become
false or
-2-
<PAGE>
misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and
to cause the Offer Documents as so amended or supplemented to be filed
with the SEC and to be disseminated to the Company's shareholders, in
each case as and to the extent required by applicable federal
securities laws. Parent and Sub shall provide the Company and its
counsel with any comments, whether written or oral, Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments and any
written or oral responses thereto.
Section 1.02 Company Actions. Subject to the right of the Board of
Directors of the Company to take action permitted by Section 6.02, the Company
hereby consents to the Offer and represents and warrants that (a) its Board of
Directors (at a meeting duly called and held) has duly adopted resolutions
unanimously (with one director abstaining) (i) declaring that each of the Offer
and the Merger is in the best interests of the Company and its shareholders and
is advisable and fair to the shareholders of the Company, (ii) approving the
Offer and the Merger and approving this Agreement, and (iii) recommending
acceptance of the Offer and approval and adoption of the Agreement by the
shareholders of the Company and (b) RBC Dain Rauscher Inc., a member company of
RBC Capital Markets ("RBC"), (i) has delivered to the Company's Board of
Directors its opinion, dated the date hereof, to the effect that, as of the date
hereof, the Transaction Consideration to be received in the Offer and the Merger
by the shareholders of the Company is fair from a financial point of view to the
shareholders of the Company and (ii) has agreed, subject to its reasonable
approval, of references to it and its opinion in the Offer Documents and
Schedule 14D-9 (as hereinafter defined) to permit therein the inclusion of the
full text of its opinion and references to it and its opinion. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Company's Board of Directors described above in this Section 1.02, and shall
not withdraw or modify such recommendation, except in accordance with Section
6.02. The Company shall provide for inclusion in the Offer Documents any
information reasonably requested by Parent or Sub, and to the extent requested
by Parent or Sub, the Company shall cooperate in the preparation of the Offer
Documents. As soon as practicable after the date the Offer Documents are filed
with the SEC, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer, including an appropriate
information statement ("Information Statement") under Rule 14f-1 (such Schedule
14D-9 and Information Statement, as amended from time to time, the "Schedule
14D-9") and shall mail the Schedule 14D-9 to the holders of Company Common
Shares. The Schedule 14D-9 shall contain the recommendation described above,
unless such recommendation has been withdrawn or modified in accordance with
Section 6.02. Parent and its counsel shall be given a reasonable opportunity to
review the Schedule 14D-9 prior to its being filed with the SEC. Each of Parent,
Sub and the Company shall promptly correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall take
all steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable federal securities laws. The Company shall provide Parent
and its counsel with any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and any written or oral responses thereto. In
connection with the Offer, provided that this Agreement shall not have been
terminated in
-3-
<PAGE>
accordance with Section 9.01 hereof, the Company will, or will cause its
transfer agent to, promptly furnish Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Company Common Shares as of the most
recent practicable date, and shall furnish Sub with such additional information
(including, but not limited to, updated lists of holders of the Company Common
Shares and their addresses, mailing labels and lists of security positions) and
assistance as Sub or its agents may reasonably request in communicating the
Offer to the shareholders of the Company. Subject to the requirements of law,
and except for such steps as are necessary to disseminate the Offer Documents,
Parent and Sub shall hold in confidence the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence, will use such information only in connection with the Offer and, if
this Agreement is terminated, will promptly deliver to the Company all copies of
such information (and extracts or summaries thereof) then in their possession.
Section 1.03 Board of Directors and Committees; Section 14(f).
(a) Subject to the requirements of this Section 1.03 and
applicable law, promptly upon the date that Company Common Shares are
first accepted for payment pursuant to the Offer (the "Share Acceptance
Date"), assuming there are no conditions to payment outstanding, and
from time to time thereafter, Sub shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company (the "Board") as will give Sub
representation on the Board equal to the product of the number of
directors on the Board, after giving effect to such representation, and
the percentage that the number of Company Common Shares beneficially
owned by Parent and its Subsidiaries following such purchase bears to
the total number of issued and outstanding Company Common Shares, and
the Company shall use its reasonable best efforts to, upon request by
Sub, promptly increase the size of the Board (subject to the provisions
of the Company's articles of incorporation and code of regulations)
and/or secure the resignation of such number of directors as is
necessary to enable Sub's designees to be elected to the Board and
shall cause Sub's designees to be so elected. At such times the Company
will use its reasonable best efforts to cause individuals designated by
Sub to constitute the same percentage as is on the Board of (i) each
committee of the Board (other than any committee of the Board
established to take action under this Agreement or to the extent such
appointment would be contrary to applicable law or any exchange on
which Company Common Shares are then listed), (ii) each board of
directors of each Subsidiary of the Company designated by Sub and (iii)
each committee of each such board. Notwithstanding the foregoing, the
Company shall use its reasonable best efforts to ensure that the Board
and its committees and such boards and committees of the Company's
Subsidiaries, shall continue to include members of the Board, as of the
date hereof who are not employees of the Company and who are not
otherwise affiliated with Sub until the Effective Time (as defined in
Section 2.03). All nominees of Parent and Sub shall promptly resign
from the Board if the Transaction Consideration for any Company Common
Shares accepted for payment pursuant to the Offer is not promptly paid
in accordance with the terms of the Offer.
(b) The Company's obligations to appoint designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.
-4-
<PAGE>
The Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
this Section 1.03, including mailing to its shareholders an Information
Statement containing the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. Parent or Sub will
supply to the Company in writing and be solely responsible for any
information so supplied with respect to any of them and their nominees,
officers, directors and affiliates required by Section 14(f) and Rule
14f-1 to be included in the Information Statement.
(c) The foregoing notwithstanding, at all times following the
purchase by Sub of Company Common Shares pursuant to the Offer and
prior to the Effective Time, the Company shall be entitled to have four
(4) members of the Board consisting of (i) three (3) persons who are
directors on the date hereof and who are not employed by the Company
and who are not affiliates, associates or employees of Parent or Sub
or, in the event of a vacancy, persons designated by such persons (the
"Independent Directors") and (ii) one (1) person who is a director on
the date hereof and who is the Chief Executive Officer of the Company
on the date hereof. Following the purchase by Sub of Company Common
Shares pursuant to the Offer and prior to the Effective Time, neither
Parent nor Sub will take any action to cause any Independent Director
to be removed as members of the Board other than for cause. In
addition, following the election or appointment of Sub's designees to
the Board pursuant to this Section 1.03 and prior to the Effective
Time, any amendment of this Agreement or the articles of incorporation
or code of regulations of the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of
Parent or Sub, waiver of any of the Company's rights hereunder or the
authorization of any other action to be taken under or in connection
with this Agreement if such action materially and adversely effects the
holders of Company Common Shares other than Parent or Sub, will require
the concurrence of a majority of the directors of the Company then in
office who are neither designated by Sub, employees of the Company or
any of its Subsidiaries nor otherwise affiliated with Sub. The
Independent Directors shall have the authority to retain such counsel
and other advisors at the expense of the Company as reasonably
determined appropriate by any of the Independent Directors. In
addition, the Independent Directors shall have the authority to
institute any action, on behalf of the Company, to enforce performance
of this Agreement.
ARTICLE II
THE MERGER
Section 2.01 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time, Sub shall be merged with and into the
Company in accordance with the General Corporation Law of the State of Ohio (the
"OGCL"). At the Effective Time, the separate existence of Sub shall cease and
the Company shall continue as the surviving corporation in the Merger (the
"Surviving Corporation") and an indirect wholly owned subsidiary of Parent. Sub
and the Company are sometimes referred to herein as the "Constituent
Corporations." As a result of the Merger, the outstanding shares of capital
stock and the treasury shares of the Constituent Corporations shall be converted
or cancelled in the manner provided in ARTICLE III.
-5-
<PAGE>
Section 2.02 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.01, and subject to the satisfaction or waiver (where applicable) of
the conditions set forth in ARTICLE VIII, the closing of the Merger (the
"Closing") will take place at the offices of Thompson Hine LLP, 2000 Courthouse
Plaza, N.E., Dayton, Ohio 45402 at 10:00 a.m., local time, on the third business
day following satisfaction of the conditions set forth in ARTICLE VIII (other
than those conditions that, by their nature, are to be satisfied at the Closing,
but subject to the fulfillment or waiver of those conditions), unless another
date, time or place is agreed to by the parties hereto (the "Closing Date").
Section 2.03 Effective Time. At the Closing, a certificate of merger
(the "Certificate of Merger") shall be duly prepared and executed by the
Constituent Corporations on the forms prescribed by the Secretary of State of
the State of Ohio (the "Secretary of State") and thereafter delivered to the
Secretary of State for filing, as provided in Section 1701.81 of the OGCL, on
the Closing Date. The Merger shall become effective at the time of the filing of
the Certificate of Merger with the Secretary of State (the date and time of such
filing being referred to herein as the "Effective Time").
Section 2.04 Articles of Incorporation and Code of Regulations of the
Surviving Corporation. At the Effective Time and subject to the provisions of
Section 7.07, (i) the articles of incorporation of Sub as in effect immediately
prior to the Effective Time shall be amended so that the name of Sub shall be
changed to The Elder-Beerman Stores Corp. and, as so amended, such articles of
incorporation shall be the articles of incorporation of the Surviving
Corporation until thereafter amended as provided by law and such articles of
incorporation, and (ii) the code of regulations of Sub as in effect immediately
prior to the Effective Time shall be the code of regulations of the Surviving
Corporation until thereafter amended as provided by law, the articles of
incorporation of the Surviving Corporation and such code of regulations.
Section 2.05 Directors and Officers of the Surviving Corporation. The
directors and officers of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's articles of incorporation and
code of regulations.
Section 2.06 Effects of the Merger. Subject to the foregoing, the
effects of the Merger shall be as provided in the applicable provisions of the
OGCL.
Section 2.07 Further Assurances. Each party hereto will, either prior
to or after the Effective Time, execute such further documents, instruments,
deeds, bills of sale, assignments and assurances and take such further actions
as may reasonably be requested by one or more of the others to consummate the
Merger, to vest the Surviving Corporation with full title to all assets,
properties, privileges, rights, approvals, immunities and franchises of either
of the Constituent Corporations or to effect the other purposes of this
Agreement.
-6-
<PAGE>
ARTICLE III
CONVERSION OF SHARES
Section 3.01 Conversion of Capital Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Conversion of Sub Common Shares. Each issued and
outstanding common share, without par value, of Sub ("Sub Common
Shares"), shall be converted into and become one fully paid and
non-assessable common share, without par value, of the Surviving
Corporation ("Surviving Corporation Common Shares"). Each certificate
representing outstanding Sub Common Shares shall at the Effective Time
represent an equal number of Surviving Corporation Common Shares.
(b) Cancellation of Treasury Shares and Shares Owned by
Parent and Subsidiaries. All Company Common Shares that are owned by
the Company as treasury shares and any Company Common Shares owned by
Parent, Sub or any other direct or indirect wholly owned Subsidiary of
Parent shall be cancelled and retired and shall cease to exist and no
stock of Parent or other consideration shall be delivered in exchange
therefor.
(c) Conversion Ratio for Company Common Shares.
(i) Each issued and outstanding Company Common Share
(other than shares to be cancelled in accordance with Section
3.01(b) and other than Dissenting Shares (as defined in
Section 3.01(d))) shall be converted into the right to receive
the Transaction Consideration, without any interest thereon,
subject to appropriate adjustment for any stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange with respect to the Company Common
Shares occurring before the Effective Time.
(ii) All Company Common Shares converted in accordance
with paragraph (i) of this Section 3.01(c) shall no longer be
outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the
Transaction Consideration per share, upon the surrender of
such certificate in accordance with Section 3.02, without any
interest thereon, subject to any applicable withholding tax.
(d) Dissenting Shares.
(i) Notwithstanding anything in this Agreement to the
contrary, each outstanding Company Common Share that is held
of record by a holder who has properly exercised dissenters'
rights with respect thereto under Section 1701.85 of the OGCL
(a "Dissenting Share"), shall not be converted into or
represent the right to receive the Transaction Consideration
pursuant to Section 3.01(c), but the holder thereof shall be
entitled to receive such payment of the fair cash value of
such Company Common Share from the Surviving Corporation as
shall be
-7-
<PAGE>
determined pursuant to Section 1701.85 of the OGCL; provided,
however, that if any such holder shall have failed to perfect
or shall withdraw or lose such holder's rights under Section
1701.85 of the OGCL, each such holder's Company Common Shares
shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Transaction
Consideration, without any interest thereon, pursuant to
Section 3.01(c).
(ii) The Company shall give Parent (x) prompt notice
of any written demands for payment of the fair cash value of
shares, withdrawals of such demands and any other instruments
delivered pursuant to Section 1701.85 of the OGCL and (y) the
opportunity jointly to participate with the Company in all
negotiations and proceedings with respect to demands for
payment under Section 1701.85 of the OGCL. The Company will
not voluntarily make any payment with respect to any demands
delivered to the Company pursuant to Section 1701.85 of the
OGCL and will not, except with the prior written consent of
Parent, settle or offer to settle any such demands or waive
any failure to comply with Section 1701.85 of the OGCL by any
holder of Company Common Shares.
(e) Company Stock Option Plan.
(i) Subject to paragraph (iii) below, immediately
prior to the Effective Time, each outstanding option to
acquire Company Common Shares, whether or not vested or
exercisable ("Company Options") granted under The
Elder-Beerman Stores Corp. Equity and Performance Incentive
Plan, as amended and restated as of September 21, 2000 (the
"Company Option Plan"), shall be cancelled by the Company. In
consideration of such cancellation, the holder thereof shall
be entitled to receive from the Company at the Effective Time
an amount in respect thereof equal to the product of (A) the
excess, if any, of the Transaction Consideration per share
over the per share exercise price thereof and (B) the number
of Company Common Shares subject thereto (the "Option Amount")
(such payment to be net of applicable withholding taxes).
Prior to the Effective Time, the Company shall deposit in a
bank account an amount of cash equal to the Option Amount for
each Company Option then outstanding (subject to any
applicable withholding tax), together with instructions that
such cash be promptly distributed following the Effective Time
to the holders of such Company Options in accordance with this
Section 3.01(e). From and after the Effective Time, other than
as expressly set forth in this Section 3.01(e), no holder of
an Option shall have any other rights in respect thereof other
than to receive payment, if any, for his or her Options as set
forth in this Section 3.01(e).
(ii) Subject to paragraph (iii) below, immediately
prior to the Effective Time, each outstanding Deferred Share
(as such term is defined in the Company Option Plan), whether
or not subject to deferral limitations under the Company
Option Plan, granted under the Company Option Plan shall be
cancelled by the Company. In consideration of such
cancellation, the holder thereof shall be entitled to receive
from the Company at the Effective Time an amount in respect
thereof equal to the Transaction Consideration (such payment
to be net of
-8-
<PAGE>
applicable withholding taxes). Prior to the Effective Time,
the Company shall deposit in a bank account an amount of cash
equal to the Transaction Consideration for each Deferred Share
then outstanding (subject to any applicable withholding tax),
together with instructions that such cash be promptly
distributed following the Effective Time to the holders of
such Deferred Shares in accordance with this Section 3.01(e).
From and after the Effective Time, other than as expressly set
forth in this Section 3.01(e), no holder of a Deferred Share
shall have any other rights in respect thereof other than to
receive payment for his or her Deferred Shares as set forth in
this Section 3.01(e).
(iii) Except as provided herein or as otherwise agreed
in writing by the parties, the Company shall take all actions
prior to or as of the Closing Date to the effect that the
Company Option Plan and any other plan, program or arrangement
with any current or former employee, officer, director or
consultant providing for the issuance or grant of any interest
in respect of the capital stock of the Company shall terminate
as of the Effective Time. The Company shall exercise its
reasonable best efforts to ensure that as of the Effective
Time no Person, other than Parent, Sub or their Affiliates
shall have any option, warrant or other right to acquire any
Company Common Shares or any other equity interest in the
Company under the Company Option Plan or any other plan,
program, arrangement or agreement maintained by the Company or
to which the Company is a party.
(iv) Prior to the Effective Time, the Board of Directors
of the Company (or, if appropriate, any committee
administering the Company Option Plan) shall adopt such
resolutions or take such actions as are necessary to carry out
the terms of Section 3.01(e)(i) and (ii), subject, if
necessary, to obtaining consents of the holders of Company
Options and/or Deferred Shares to the cancellation thereof in
exchange for the consideration set forth in Section 3.01(e)(i)
and (ii).
Section 3.02 Exchange of Certificates.
(a) Payment Agent. At the Closing, Parent shall deposit with
a bank or trust company designated before the Closing Date by Parent
and reasonably acceptable to the Company (the "Payment Agent"), a cash
amount equal to the aggregate Transaction Consideration to which
holders of Company Common Shares shall be entitled upon consummation of
the Merger, to be held for the benefit of and distributed to such
holders in accordance with this Section 3.02. The Payment Agent shall
agree to hold such funds (such funds, together with earnings thereon,
being referred to herein as the "Payment Fund") for delivery as
contemplated by this Section 3.02 and upon such additional terms as may
be agreed upon by the Payment Agent, the Company and Parent. If for any
reason (including losses) the Payment Fund is inadequate to pay the
cash amounts to which holders of Company Common Shares shall be
entitled, Parent and the Surviving Corporation shall in any event
remain liable, and shall make available to the Payment Agent additional
funds, for the payment thereof. All earnings in the Payment Fund in
excess of the aggregate Transaction Consideration are the property of
Parent and shall be
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<PAGE>
disbursed to Parent promptly upon termination of the Payment Fund. The
Payment Fund shall not be used for any purpose except as expressly
provided in this Agreement.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the
Payment Agent to mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Company Common Shares (the "Certificates") whose shares are
converted pursuant to Section 3.01(c) into the right to receive the
Transaction Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to
the Payment Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Transaction Consideration. Upon
surrender of a Certificate for cancellation to the Payment Agent,
together with such letter of transmittal duly executed and completed in
accordance with its terms, the holder of such Certificate shall be
entitled to receive in exchange therefor a check representing the
Transaction Consideration per Company Common Share represented thereby,
subject to any applicable withholding tax, which such holder has the
right to receive pursuant to the provisions of this ARTICLE III, and
the Certificate so surrendered shall forthwith be cancelled. In no
event shall the holder of any Certificate be entitled to receive
interest on any funds to be received in the Merger, including any
interest accrued in respect of the Payment Fund. In the event of a
transfer of ownership of Company Common Shares that is not registered
in the transfer records of the Company, the Transaction Consideration
may be issued to a transferee if the Certificate representing such
Company Common Shares is presented to the Payment Agent accompanied by
all documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.02(b), each Certificate
shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Transaction Consideration
per Company Common Share represented thereby as contemplated by this
ARTICLE III, together with the dividends, if any, that may have been
declared by the Company on the Company Common Shares in accordance with
the terms of this Agreement and that remain unpaid at the Effective
Time. Parent and the Surviving Corporation shall pay all fees and
expenses of the Payment Agent in connection with the distribution of
the Transaction Consideration.
(c) Lost Certificates. If any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
Person of a bond in such reasonable amount as the Surviving Corporation
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