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AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 8, 1995
BY AND AMONG
DIAMOND SHAMROCK, INC.
SHAMROCK ACQUISITION CORP.
AND
NATIONAL CONVENIENCE STORES INCORPORATED
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TABLE OF CONTENTS
ARTICLE I
THE TENDER OFFER
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Consent and Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Dissemination of Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE MERGER
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Certificate of Incorporation and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Conversion of Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Commit to Vote Shares in Favor of Merger; Exercise of Warrants . . . . . . . . . . . . . . . . . . . 7
2.11 Merger Without Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.13 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SECURITIES
3.1 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Payment for Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Commission Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Information in Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 No Material Adverse Change; Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 DGCL Section 203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND SUB
5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Offer Documents; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6 Status as an Interested Stockholder or an Acquiring Person . . . . . . . . . . . . . . . . . . . . . 21
5.7 Interim Operations of the Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
COVENANTS
6.1 Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Certain Agreements, Employee Benefits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Post Merger Treatment of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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6.11 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . 29
7.2 Conditions to Obligations of the Company to Effect the Merger . . . . . . . . . . . . . . . . . . . . 29
7.3 Conditions to Obligations of the Parent and Sub to Effect the Merger . . . . . . . . . . . . . . . . 29
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Certain Termination Fees; Certain Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
MISCELLANEOUS
9.1 Non-survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.10 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.11 Entire Agreement; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ANNEX I Conditions to the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ANNEX II Amended and Restated Certificate of Incorporation of National Convenience Stores Incorporated... 40
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SCHEDULE OF DEFINED TERMS
Defined Term Location
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Acquiring Person Section 5.6
Acquisition Transaction Section 6.9(a)
Agreement Preamble
Agreements Section 6.5(a)
Article IX Section 3.1
Certificates Section 3.2(b)
Claims Section 6.4
Closing Section 2.13
Code Section 4.8
Commission Section 1.1
Common Stock Preamble
Company Preamble
Confidentiality Agreement Section 6.2(b)
Continuing Directors Section 9.2
DGCL Section 2.1
Disclosure Schedule Section 4.1(a)
Dissenting Shares Section 3.1
Distribution Date Section 4.11
Effective Time Section 2.2
Environmental Laws Section 4.4(c)
Exchange Act Section 1.2
Governmental Entity Section 4.4(a)
HSR Act Section 4.4(a)
Indemnified Parties Section 6.4
Instrument of Merger Section 2.2
Interested Stockholder Section 5.6
IRS Section 4.9(a)
Merger Section 2.1
Merger Consideration Section 2.7(a)
Minimum Condition Annex I
NYSE Section 1.5
Offer Preamble
Offer Documents Section 1.2
Offer to Purchase Section 1.1
Option Plan Section 2.12
Options Section 2.12
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Parent Preamble
Paying Agent Section 3.2(a)
Payment Fund Section 3.2(a)
Per Share Amount Preamble
Person Section 6.9(a)
Proxy Statement Section 4.6(b)
Rights Section 4.2
Rights Agreement Section 4.2
Schedule 14D-1 Section 1.2
Schedule 14D-9 Section 1.3
SEC Documents Section 4.5
Securities Act Section 4.5
Securities Preamble
Special Meeting Section 2.9(a)(i)
Sub Preamble
Subsidiary Section 4.1(a)
Surviving Corporation Section 2.1
Taxes Section 4.9(b)
Tax Returns Section 4.9(b)
Voting Debt Section 4.2
Warrant Agreement Preamble
Warrants Preamble
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 8, 1995 (this
"Agreement"), by and among Diamond Shamrock, Inc., a Delaware corporation
("Parent"), Shamrock Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of the Parent ("Sub"), and National Convenience Stores
Incorporated, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent and the Company
have determined that the acquisition of the Company by the Parent would be
advantageous and beneficial to their respective corporations and stockholders,
and that such transaction is consistent with and in furtherance of such
entities' respective long-term business strategies;
WHEREAS, in furtherance thereof, it is proposed that the Parent and the
Sub will make a cash tender offer to acquire (a) all of the outstanding shares
of the Company's Common Stock, par value $.01 per share (the "Common Stock"),
together with the attached Rights (as defined in Section 4.2), for $27.00 per
share of Common Stock (and attached Right) net to the seller (pre-tax) in cash
(such amount, or any greater amount per share of Common Stock (and attached
Right) pursuant to such cash tender offer, being hereinafter referred to as the
"Per Share Amount") and (b) all of the outstanding Warrants to Purchase Common
Stock (the "Warrants") issued pursuant to the Warrant Agreement dated as of
March 9, 1993, between the Company and Boatmen's Trust Company, as Warrant
Agent (the "Warrant Agreement"), for $9.25 per Warrant net to the seller
(pre-tax) in cash (such amount, or any greater amount per Warrant pursuant to
such cash tender offer, being hereinafter referred to as the "Per Warrant
Amount") (the Common Stock (and attached Rights) and the Warrants being
hereinafter collectively referred to as the "Securities"), in accordance with
the terms and subject to the conditions provided herein and in the Offer
Documents (as defined in Section 1.2) (the "Offer");
WHEREAS, it is proposed that, following consummation of the Offer, there
be a merger of the Sub with and into the Company with the Company surviving as
a subsidiary of the Parent;
WHEREAS, for convenience and simplicity, references to the "Parent" in
Article I of this Agreement shall be deemed to include the "Sub", unless the
context otherwise requires;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE TENDER OFFER
1.1 The Offer. Provided that this Agreement has not been terminated
in accordance with Section 8.1, the Parent will commence the Offer as promptly
as practicable after the date hereof, but in no event later than November 14,
1995. The Offer will have an initial expiration date which is 20 business days
(as defined in the relevant rules of the Securities and Exchange Commission
(the "Commission")) after the commencement thereof. The obligation of the
Parent to accept for payment any Securities tendered pursuant to the Offer will
be subject only to the satisfaction of the conditions set forth in Annex I
hereto. The Parent expressly reserves the right to increase the Per Share
Amount and the Per Warrant Amount to be paid in the Offer or to extend the
Offer if any condition thereto is not satisfied. Without the prior written
consent of the Company, the Parent will not (a) decrease the Per Share Amount
or the Per Warrant Amount, (b) decrease the number of Securities to be
purchased in the Offer, (c) change the form of consideration payable in the
Offer, (d) add to or change the conditions to the Offer set forth in Annex I
hereto, (e) change or waive the Minimum Condition (as defined in Annex I
hereto) or (f) make any other change in the terms or conditions of the Offer
which is materially adverse to the holders of the Securities. The conditions
set forth in Annex I are for the benefit of the Parent, and may be asserted by
the Parent or, subject to the immediately preceding sentence, may be waived by
the Parent, in whole or in part, at any time and from time to time in its
discretion and regardless of the circumstances relating thereto. The Offer
will be made by means of an offer to purchase (the "Offer to Purchase")
containing the terms set forth in this Agreement and only the conditions set
forth in Annex I hereto. Subject to the terms of the Offer and this Agreement
and the satisfaction of all the conditions of the Offer set forth in Annex I
hereto as of any expiration date of the Offer, the Parent will accept for
payment and pay for all Securities validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after such expiration date of the Offer.
Subject to Section 8.1, if the conditions set forth in Annex I hereto are not
satisfied or, to the extent permitted by this Agreement, waived by the Parent,
as of the date the Offer would otherwise have expired, the Parent will extend
the Offer from time to time until the earlier of the consummation of the Offer
or the date which is 60 days from the commencement of the Offer.
1.2 Offer Documents. On the date of commencement of the Offer, the
Parent will file with the Commission a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Schedule 14D-1 will contain (including as an
exhibit) or will incorporate by reference the Offer to Purchase and forms of
the related letters of transmittal and summary advertisement (which Schedule
14D-1, Offer to Purchase and other documents, together with any supplements or
amendments
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thereto, are referred to herein collectively as the "Offer Documents"). The
Parent will disseminate the Offer to Purchase, related letters of transmittal
and other related Offer Documents to holders of the Securities. Each of the
Parent and the Company will promptly correct any information provided by it for
use in the Offer Documents that becomes false or misleading in any material
respect and the Parent will promptly take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the Commission and the other
Offer Documents as so corrected to be disseminated to holders of the
Securities, in each case as and to the extent required by applicable law. The
Parent will provide the Company and its counsel in writing with any comments
the Parent or its counsel may receive from the Commission or its staff with
respect to the Offer Documents promptly after the receipt of such comments. To
the extent reasonably practicable, the Parent and its counsel will provide the
Company and its counsel with a reasonable opportunity to participate in all
material communications with the Commission and its staff, including any
meetings and telephone conferences relating to the Offer Documents, the Offer,
the Merger (as defined in Section 2.1) or this Agreement.
1.3 Consent and Recommendation. The Company's Board of Directors
has determined that the Offer and the Merger are fair to, and are in the best
interests of, the holders of the Securities. Accordingly, the Company hereby
approves and consents to the Offer. The Company will file with the Commission,
as promptly as practicable after the filing by the Parent of the Schedule 14D-1
(but in any event on the same business day), a Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") pursuant to the Exchange
Act, reflecting the recommendation of the Company's Board of Directors that
holders of Securities tender their Securities pursuant to the Offer and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act, all subject to the fiduciary duties of the Board of Directors of
the Company under applicable laws as advised in the written opinion of outside
counsel to the Company. Each of the Company and the Parent will promptly
correct any information provided by it for use in the Schedule 14D-9 that
becomes false or misleading in any material respect, and the Company will
promptly take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the Commission and disseminated to holders of the Securities,
in each case as and to the extent required by applicable law. The Company will
provide the Parent and its counsel in writing with any comments the Company or
its counsel may receive from the Commission or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments. To the extent
reasonably practicable, the Company and its counsel will provide the Parent and
its counsel with a reasonable opportunity to participate in all material
communications with the Commission and its staff, including any meetings and
telephone conferences relating to the Schedule 14D-9, the Merger or this
Agreement.
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1.4 Dissemination of Offer Documents.
(a) The Company will (i) promptly furnish the Parent with
mailing labels containing the names and addresses of all record holders of
Securities as of a recent date and of those persons becoming record holders
after such date, together with copies of all security position listings and
computer files and all other information in the Company's control regarding the
beneficial owners of Securities that the Parent may reasonably request and (ii)
furnish to the Parent such other assistance as the Parent or its agents may
reasonably request in communicating the Offer to holders of Securities.
(b) Subject to the requirements of law, and except for such
steps as are necessary to disseminate the Offer Documents, the Parent shall,
and shall cause each of its Subsidiaries (as defined in Section 4.1(a)) to,
hold in confidence the information contained in any of such labels and lists,
use such information only in connection with the Offer and, if this Agreement
is terminated, deliver to the Company all copies of, and extracts or summaries
from, such information then in their possession.
1.5 Directors. Effective upon the acceptance for payment by the
Parent of the Securities pursuant to the Offer, and from time to time
thereafter so long as the Parent and/or any of its wholly owned Subsidiaries
(as defined in Section 4.1(a)) (including the Sub) owns a majority of the
outstanding shares of Common Stock, the Parent will be entitled, subject to
compliance with applicable law, the Restated Certificate of Incorporation of
the Company and the provisions of the next sentence, to designate at its option
up to that number of directors, rounded up to the nearest whole number, of the
Company's Board of Directors as will make the percentage of the Company's
directors designated by the Parent equal to the percentage of outstanding
shares of Common Stock held by the Parent and any of its wholly owned
Subsidiaries (including the Sub), including shares of Common Stock accepted for
payment pursuant to the Offer. The Company will, upon the request of the
Parent, promptly increase the size of its Board of Directors and/or use its
reasonable best efforts to secure the resignation of such number of directors
as is necessary to enable the Parent's designees to be elected to the Company's
Board of Directors and will use its reasonable best efforts to cause the
Parent's designees to be so elected, subject in all cases to Section 14(f) of
the Exchange Act, it being understood that the Company agrees to comply with
such Section of the Exchange Act as promptly as practicable after the date
hereof, provided that, prior to the Effective Time (as defined in Section 2.2),
the Company will use its reasonable best efforts to assure that the Company's
Board of Directors always has at least two members who are directors of the
Company as of the date hereof. At such times, the Company will use its
reasonable best efforts, subject to any limitations imposed by applicable laws
or rules of the New York Stock Exchange, Inc. (the "NYSE"), to cause persons
designated by the Parent to constitute the same percentage as such persons
represent on the Company's Board of Directors of (a) each
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committee of the Board of Directors of the Company, (b) each board of directors
or board of management of each Subsidiary of the Company and (c) each committee
of each such board.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Delaware General
Corporation Law (the "DGCL"), the Sub shall be merged with and into the Company
(the "Merger") as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VII hereof. Subject to the
terms and conditions hereof (including the qualifications in Section 6.3), each
of the parties will use its reasonable best efforts to cause the Merger to
occur within 90 days after the purchase of the Securities pursuant to the
Offer. Following the Merger, the Company shall continue as the surviving
corporation (the "Surviving Corporation") under the name "National Convenience
Stores Incorporated" and shall continue its existence under the laws of
Delaware, and the separate corporate existence of the Sub shall cease.
2.2 Effective Time. The Merger shall be consummated by filing with
the Secretary of State of the State of Delaware a certificate of merger or a
certificate of ownership and merger, as appropriate (the "Instrument of
Merger"), in such form as is required by, and executed in accordance with, the
relevant provisions of, the DGCL (the time of such filing or such other time
specifically set forth therein being the "Effective Time").
2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
2.4 Certificate of Incorporation and By-Laws.
(a) The Restated Certificate of Incorporation of the Company in
effect at the Effective Time will be amended in its entirety to read as set
forth in Annex II hereto, and, as such, will be the Restated Certificate of
Incorporation of the Surviving Corporation, until amended in accordance with
applicable law to the extent permitted by Section 2.4(c).
(b) The Restated By-Laws of the Company in effect at the
Effective Time will be the By-Laws of the Surviving Corporation until amended
in accordance with applicable law to the extent permitted by Section 2.4(c).
(c) The Company, the Parent and the Sub each agrees that, as
long as the Company, the Parent or the Surviving Corporation has any liability
pursuant to Section 6.4 to
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defend, indemnify and hold harmless any Indemnified Parties (as defined in
Section 6.4), it will not amend or permit the amendment of Article XI of the
Company's Restated Certificate of Incorporation or Article VII of the Company's
Restated By-Laws, in each case as in effect on the date of this Agreement.
2.5 Directors. The directors of the Sub at the Effective Time shall
be the directors of the Surviving Corporation until their successors are duly
elected and qualified or until their earlier death, resignation or removal in
accordance with the terms of Surviving Corporation's Certificate of
Incorporation and By-Laws and the DGCL.
2.6 Officers. The officers of the Company at the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the terms of Surviving Corporation's
Certificate of Incorporation and By-Laws and the DGCL.
2.7 Conversion of Securities.
(a) Each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares owned by the Parent,
the Sub or any other direct or indirect Subsidiary of the Parent or held in the
treasury of the Company, all of which shall be cancelled, and Dissenting Shares
(as defined in Section 3.1)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the Per Share Amount without interest thereon, net (pre-tax) to the
holder in cash (sometimes, the "Merger Consideration") payable to the holder
thereof upon surrender of the certificate representing such share.
(b) Each Warrant issued and outstanding immediately prior to
the Effective Time (other than Warrants held in the treasury of the Company,
which shall be cancelled) shall remain outstanding following, and be unaffected
by, the Merger, except that, as provided in Section 10.1(a) of the Warrant
Agreement, from and after the Effective Time each holder of Warrants shall have
the right to obtain upon the exercise of each Warrant, in lieu of the one share
of Common Stock theretofore issuable upon exercise of such Warrant, the Per
Share Amount without interest thereon, net to the holder in cash.
2.8 Conversion of Sub Common Stock. Each share of common stock, par
value $0.01 per share, of the Sub issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into one share of common stock of the
Surviving Corporation.
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2.9 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable law and the Company's Restated Certificate of
Incorporation and Restated By-Laws:
(i) subject to its fiduciary duties under applicable
law as advised in the written opinion of outside counsel to the Company, duly
call, give notice of, convene and hold a special meeting (the "Special
Meeting") of the holders of Common Stock as soon as practicable following the
acceptance for payment of Securities in the Offer solely for the purpose of
considering and taking action on this Agreement and the transactions
contemplated hereby;
(ii) subject to its fiduciary duties under applicable
law as advised in the written opinion of outside counsel to the Company,
include in the Proxy Statement (as defined in Section 4.6(b)) the
recommendation of its Board of Directors that holders of Common Stock vote in
favor of the approval and adoption of this Agreement and the transactions
contemplated hereby; and
(iii) (x) as promptly as practicable after the date
hereof, obtain and furnish the information required to be included by it in the
Proxy Statement, and after consultation with the Parent, respond promptly to
any comments made by the Commission or its staff with respect to the Proxy
Statement and any preliminary version thereof, (y) cause the Proxy Statement to
be mailed to its stockholders at the earliest practicable time following the
acceptance for payment of Securities in the Offer, and (z) subject to the
fiduciary duties of the Board of Directors under applicable law as advised in
the written opinion of outside counsel to the Company, use its best efforts to
obtain the necessary approval of the Merger by its stockholders.
2.10 Commit to Vote Shares in Favor of Merger; Exercise of Warrants.
The Parent and the Sub each agrees that, at the Special Meeting, all of the
shares of Common Stock acquired directly or indirectly pursuant to the Offer or
otherwise by the Parent, the Sub or any other Subsidiary of the Parent will be
voted in favor of the approval and adoption of this Agreement and the Merger.
The Parent also agrees that it or the Sub will, prior to the record date for
the Special Meeting, exercise such number of Warrants as may be necessary to
assure that no affirmative vote of any holder of Common Stock other than the
Parent or the Sub is required for adoption of this Agreement.
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2.11 Merger Without Meeting of Stockholders. Notwithstanding the
matters set forth in Section 2.9, in the event that the Sub shall acquire at
least 90 percent of the outstanding shares of Common Stock pursuant to the
Offer or otherwise, the Parent agrees, subject to Sections 7.1 and 7.3, to take
all necessary and appropriate action (including the exercise of Warrants to the
extent necessary to achieve the 90 percent threshold) to cause the Merger to
become effective as soon as practicable after the acceptance for payment of
Securities in the Offer, but in no event later than 10 business days (or such
other time as the Company (acting through the Continuing Directors (as that
term is defined in Section 9.2)) and Parent may agree) thereafter in accordance
with Section 253 of the DGCL.
2.12 Stock Options. Each option ("Option") to acquire shares of
Common Stock that has been granted pursuant to the Company's 1993 Non-Qualified
Stock Option Plan dated as of March 9, 1993 (the "Option Plan") whether or not
otherwise exercisable, shall, subject to the prior written approval of each
optionee, be cancelled and each optionee shall be entitled to receive promptly
after the acceptance of Securities for payment in the Offer, in cancellation
and settlement of such Option, a cash payment from the Company in an amount
equal to the difference between the Per Share Amount and the per share exercise
price of such option, multiplied by the number of shares of Common Stock
covered by such Option. The Board of Directors has taken all necessary action
under the Option Plan to fix the Effective Time as the date on which Options
granted under the Option Plan which are not cancelled as provided in the
preceding sentence shall terminate pursuant to Section 10.2 of the Option Plan,
and the Company will give prompt notice thereof to the holders of such Options.
2.13 Closing. Upon the terms and subject to the conditions hereof,
as soon as practicable after consummation of the Offer, and if required by law,
after the vote of the holders of the Common Stock in favor of the adoption of
this Agreement has been obtained, the Company and the Sub shall execute in the
manner required by the DGCL and deliver to the Secretary of State of the State
of Delaware a duly executed and verified Instrument of Merger, as required by
the DGCL, and the parties shall take all such other and further actions as may
be required by law to make the Merger effective. Prior to the filing referred
to in this Section 2.13, a closing (the "Closing") will be held at the office
of the Company, 100 Waugh Drive, Houston, Texas 77007 (or such other place as
the parties may agree) for the purpose of confirming all the foregoing.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SECURITIES
3.1 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock that are issued and outstanding
immediately prior to the Effective
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Time and that are held by holders of Common Stock who did not vote in favor of
the Merger, and owned of record by the holders who comply with all of the
relevant provisions of Article IX of the Company's Restated Certificate of
Incorporation ("Article IX") and Section 262 of the DGCL (the "Dissenting
Shares"), shall not be converted into the right to receive the Merger
Consideration for such shares, unless and until such holders shall have failed
to perfect or shall have effectively withdrawn or lost their rights to
appraisal under Article IX and the DGCL. If any such holder shall have failed
so to perfect or shall have effectively withdrawn or lost such right, such
holder's Dissenting Shares shall thereupon be deemed to have been converted
into the right to receive, as of the Effective Time, the Merger Consideration
for such Dissenting Shares without any interest thereon.
3.2 Payment for Securities.
(a) Prior to the Effective Time, the Parent shall designate
KeyCorp Shareholder Services, Inc. or a United States bank or trust company
reasonably satisfactory to the Company to act as paying agent in the Merger
(the "Paying Agent"). At the Effective Time, the Parent shall deposit in trust
with the Paying Agent cash in an aggregate amount necessary to make the
payments pursuant to Section 2.7(a) hereof to holders (other than the Parent or
the Sub or any of their respective Subsidiaries) of shares of Common Stock that
are issued and outstanding immediately prior to the Effective Time (such
amounts being hereinafter referred to as the "Payment Fund"), and will deposit
from time to time thereafter cash sufficient to make the appropriate cash
payments, if any, to holders of Dissenting Shares. Promptly following the date
which is six months after the Effective Time, the Paying Agent shall return to
the Surviving Corporation all cash in its possession that constitutes any
portion of the Payment Fund, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate (as defined in Section 3.2(b)) may
surrender such certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without interest, but shall have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under applicable law.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each record holder, as of
the Effective Time, of an outstanding certificate or certificates that
immediately prior to the Effective Time represented shares of Common Stock (the
"Certificates"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent)
and instructions for use in effecting the surrender of the Certificate(s) and
payment therefor. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed, the holder of such
Certificate shall be paid in exchange therefor cash in an amount equal to the
product of the
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number of shares of Common Stock formerly represented by such Certificate
multiplied by the Merger Consideration, and such Certificate shall forthwith be
cancelled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If payment is to be made to a person other than
the person in whose name the Certificate surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.2(b), each
Certificate (other than Certificates representing shares of Common Stock owned
by the Parent, the Sub or any other Subsidiary of the Parent, and Dissenting
Shares) shall represent for all purposes the right to receive an amount in cash
equal to the Merger Consideration multiplied by the number of shares of Common
Stock formerly evidenced by such Certificate, without any interest thereon.
From and after the Effective Time, holders of Certificates immediately prior to
the Effective Time will have no right to vote or to receive any dividends or
other distributions with respect to any shares of Common Stock which were
theretofore represented by such Certificates, and will have no other rights
other than as provided herein or by applicable law.
(c) After the Effective Time, there shall be no transfers of
shares of Common Stock that were outstanding immediately prior to the Effective
Time on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for cash as provided in this Article III. At
the close of business on the day of the Effective Time, the stock ledger of the
Company with respect to Common Stock shall be closed.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to the Parent and the Sub
as follows:
4.1 Organization.
(a) Each of the Company and its Subsidiaries (as defined in
this Section 4.1(a)) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing or in good standing or to have such
power and authority would not, individually or in the aggregate, have a
material adverse effect on the
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Company and its Subsidiaries. As used in this Agreement, the word "Subsidiary"
means, with respect to the Company or the Parent, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party, by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. A list of all direct or indirect
Subsidiaries of the Company, including their jurisdiction of incorporation or
organization, capitalization and equity owners is set forth in Section 4.1(a)
of the Disclosure Schedule delivered by the Company to the Parent pursuant to
this Agreement (the "Disclosure Schedule"). Except as set forth in Section
4.1(a) of the Disclosure Schedule, the Company does not own, directly or
indirectly, or have any voting rights with respect to, any capital stock or
other securities of any corporation or any direct or indirect equity or other
ownership interest in any business. References to a wholly owned Subsidiary of
an entity include a Subsidiary all of the common equity of which is owned
directly or through "wholly owned" Subsidiaries by such entity. As used in
this Agreement, any reference to any event, change or effect being material or
having a material adverse effect on or with respect to an entity (or such
entity and its Subsidiaries) means such event, change or effect which is
materially adverse to the business, assets, prospects, results of operations or
financial condition of such entity (or, if with respect to such entity and its
Subsidiaries, such group of entities taken as a whole), but does not include
any adverse change or effect on the prospects of such entity or group of
entities resulting from general economic or industry conditions. Each of the
Company and its Subsidiaries is duly qualified or licensed to do business and
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries.
(b) The Company has heretofore provided to the Parent a
complete and correct copy of the charter and by-laws, each as amended to date,
of the Company and each of its Subsidiaries. Such charters and by-laws are in
full force and effect. Neither the Company nor any of its Subsidiaries is in
violation of any provision of its charter or by-laws, except for such
violations that would not, individually or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries.
4.2 Capitalization. The authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock of which, as of November 6,
1995, 6,090,389 shares were
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issued and outstanding and no shares were held in the Company's treasury and
(ii) 1,000,000 shares of Preferred Stock, $1.00 par value, of which, as of
November 6, 1995, 100,000 shares had been designated as the Company's Series A
Junior Participating Preferred Stock, none of which was then issued and
outstanding but all of which had been reserved for issuance upon the exercise
of the Company's Rights to Purchase Preferred Stock (the "Rights") pursuant to
the Rights Agreement, dated as of August 31, 1995, between the Company and
Boatmen's Trust Company, as Rights Agent (the "Rights Agreement"). Also, as of
November 6, 1995, the Company had reserved for issuance (a) 1,349,611 shares of
Common Stock upon exercise of the Warrants, (b) 775,000 shares of Common Stock
upon exercise of then-outstanding Options under the Option Plan and (c) 35,000
shares of Common Stock in respect of future grants of Options pursuant to the
Option Plan. Since March 9, 1993, the Company has not issued any shares of its
capital stock, except for issuances of Common Stock upon the exercise of
Warrants or Options granted under the Option Plan, and has not repurchased,
redeemed or otherwise retired any shares of its capital stock. All the
outstanding shares of the Company's capital stock are, and all shares which may
be issued pursuant to the Warrant Agreement, the Rights Agreement and the
Option Plan will be, when issued and paid for in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and nonassessable
and not subject to any preemptive rights of third parties in respect thereto.
No bonds, debentures, notes or other indebtedness having the right to vote
under ordinary circumstances (or convertible into securities having such right
to vote) ("Voting Debt") of the Company or any of its Subsidiaries are issued
or outstanding. Except as set forth above, as disclosed in the SEC Documents
(as defined in Section 4.5) filed prior to November 1, 1995 or as set forth in
Section 4.2 of the Disclosure Schedule, there are no existing options,
warrants, calls, subscriptions, rights, commitments or other agreements of any
character obligating the Company or any of its Subsidiaries to issue, transfer
or sell or cause to be issued, transferred or sold any shares of capital stock,
Voting Debt or other interests of the Company or of any of its Subsidiaries or
securities convertible into or exchangeable for such shares or other securities
or interests or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription, right,
agreement or commitment. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its Subsidiaries.
Each of the outstanding shares of capital stock of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid, nonassessable and
free of any preemptive rights in respect thereto (and in the case of
partnership interests, not subject to current or future capital calls), and,
except as set forth in Section 4.2 of the Disclosure Schedule or as disclosed
in the SEC Documents filed prior to November 1, 1995, such shares and other
interests are owned by the Company or by a Subsidiary of the Company free and
clear of any lien, claim, option, charge, security interest, limitation on
voting or transfer rights and encumbrance of any kind, except which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries.
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4.3 Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than any adoption of this Agreement by
the holders of such shares of Common Stock as may be required by applicable
law). The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and 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, with respect to the Merger, any
required stockholder action as noted above, and the filing and recordation of
the Instrument of Merger with the Secretary of State of the State of Delaware.
This Agreement has been duly executed and delivered by the Company and,
assuming this Agreement constitutes a valid and binding obligation of the
Parent and the Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
4.4 Consents and Approvals; No Violations.
(a) Except as set forth in Section 4.4(a) of the Disclosure
Schedule and except for filings, permits, authorizations, notices, consents and
approvals as may be required under, and other applicable requirements of, the
Exchange Act and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the filing and recordation of the Instrument of
Merger in accordance with the DGCL, neither the execution, delivery or
performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby and compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any
breach of any provisions of the charter documents or by-laws of the Company or
any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") (except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not prevent consummation of the Offer or the Merger and would
not, individually or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, or result in the creation of any lien or other encumbrance on any
property or asset of the Company or any of its Subsidiaries pursuant to, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
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of its Subsidiaries is bound, except, in the case of clauses (iii) and (iv),
for violations, breaches, defaults or other occurrences which would not prevent
consummation of the Offer or the Merger and would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries.
(b) Except as disclosed in the SEC Documents filed prior to
November 1, 1995 or as set forth in Section 4.4(b) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries is in default under or in
violation of (i) any order, writ, injunction, decree, statute, rule or
regulation of any Governmental Entity applicable to the Company or any of its
Subsidiaries or by which any of them or any of their properties or assets may
be bound or (ii) any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, except in each case for any such defaults or violations
which, individually or in the aggregate, would not have a material adverse
effect on the Company and its Subsidiaries.
(c) Except as disclosed in the SEC Documents filed prior
November 1, 1995 or as set forth in Section 4.4(c) of the Disclosure Schedule,
(i) the Company and its Subsidiaries are in compliance with all applicable
statutes, ordinances, rules and regulations of any Governmental Entity relating
to protection of the environment and human health including, without
limitation, with respect to air, surface water, ground water, land and
subsurface strata (collectively, "Environmental Laws") except for
non-compliance which, individually or in the aggregate, would not have a
material adverse effect on the Company and its Subsidiaries and (ii) neither
the Company nor any of its Subsidiaries has received written notice of, or is
the subject of, any action, cause of action, claim, investigation, demand or
notice by any person or entity alleging liability under or non-compliance by
the Company or any of its Subsidiaries with any Environmental Law which,
individually or in the aggregate, would have a material adverse effect on the
Company and its Subsidiaries.
(d) Skipper Beverage Company, Inc. is in compliance in all
material respects with the rules and regulations of the Texas Liquor Control
Board.
4.5 Commission Reports and Financial Statements. Since June 30,
1993, the Company has filed with the Commission all forms, reports and
documents required to be filed by it under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act"), and has heretofore provided to
the Parent true and complete copies of all such forms, reports and documents
(as they have been amended since the time of their filing and prior to the date
hereof, collectively, the "SEC Documents"). The SEC Documents, including
without limitation any financial statements or schedules included therein, at
the time filed, and any forms, reports or other documents filed by the Company
with the Commission after the date of this
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Agreement, (i) 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 and (ii) complied or will be prepared in compliance,
in each case in all material respects, with the applicable requirements of the
Exchange Act or the Securities Act, as the case may be. The financial
statements of the Company included in the SEC Documents have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, to normal
audit adjustments) and fairly present (subject, in the case of the unaudited
statements, to normal audit adjustments) the consolidated financial position of
the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Except as reflected, reserved against or otherwise disclosed in the
financial statements of the Company included in the SEC Documents or as
otherwise disclosed in the SEC Documents, in each case filed prior to November
1, 1995, or as set forth in Section 4.5 of the Disclosure Schedule, as of the
date hereof, neither the Company nor any of its Subsidiaries had any
liabilities or obligations (absolute, accrued, fixed, contingent or otherwise)
that would be required to be reflected on a balance sheet, or the notes
thereto, prepared in accordance with generally accepted accounting principles,
other than liabilities incurred in the ordinary course of business consistent
with past practice.
4.6 Information in Other Documents.
(a) Neither the Schedule 14D-9 nor any of the information
supplied by the Company and any of its affiliates specifically for inclusion in
the Offer Documents will, at the respective times the Schedule 14D-9 or the
Offer Documents are filed with the Commission or are first published, sent or
given to stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Schedule 14D-9 will comply as to form in all material
respects with the applicable requirements of the Exchange Act and the rules and
regulations thereunder.
(b) Any proxy or information statement used in connection
with the Special Meeting and the Merger (as it may be amended from time to
time, the "Proxy Statement") will not, at the date mailed to the Company's
stockholders and at the time of the Special Meeting, contain any statement,
which at the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the statements therein not
false and misleading. The Proxy Statement will, when filed with the Commission
by the Company, comply as to form
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in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
(c) Notwithstanding the foregoing, the Company makes no
representation with respect to statements made in any of the foregoing
documents based on information supplied by the Parent or the Sub specifically
for inclusion therein.
4.7 Litigation. Except as disclosed in the SEC Documents filed
prior to November 1, 1995 or in Section 4.7 of the Disclosure Schedule, there
is no suit, claim, action, proceeding or investigation pending or, to the best
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries which, individually or in the aggregate, would have a material
adverse effect on the Company and its Subsidiaries or affect adversely in any
material respect the ability of the Company to consummate the transactions
contemplated by this Agreement. Except as disclosed in the SEC Documents filed
prior to November 1, 1995 or in Section 4.7 of the Disclosure Schedule, neither
the Company nor any of its Subsidiaries is subject to any outstanding order,
writ, injunction or decree which, individually or in the aggregate, would have
a material adverse effect on the Company and its Subsidiaries or affect
adversely in any material respect the ability of the Company to consummate the
transactions contemplated hereby.
4.8 No Material Adverse Change; Material Agreements. Except as
disclosed in the SEC Documents filed prior to November 1, 1995 or as set forth
in Section 4.8 of the Disclosure Schedule, (a) since June 30, 1995, there has
not been (i) any action which would be prohibited under Section 6.1 were it to
occur after the date of this Agreement nor (ii) any material adverse change in
the assets, business, prospects (other than changes in prospects arising from
general economic or industry conditions), results of operations or financial
condition of the Company and its Subsidiaries, and (b) neither the Company nor
any of its Subsidiaries has become a party to any agreement or amendment to an
existing agreement which would be required to be filed by the Company as an
exhibit to its next Annual Report on Form 10-K other than this Agreement.
Except as disclosed in the SEC Documents filed prior to November 1, 1995 or as
set forth in Section 4.8 of the Disclosure Schedule, the transactions
contemplated by this Agreement will not constitute a "change of control" under,
require the consent from or the giving of notice to a third party pursuant to,
or accelerate vesting or repurchase rights under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of its properties or
assets may be bound, except where the adverse consequences resulting from such
change of control or where the failure to obtain such consents or provide such
notices would not, individually or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries; provided, however, that the
immediately preceding exception will not be
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applicable to any employment, compensation, termination or severance agreement,
or other instrument or obligation of the Company or any of its Subsidiaries.
Section 4.8 of the Disclosure Schedule sets forth a good faith estimate of the
total amounts payable to officers and directors of the Company as a result of
the transactions contemplated by this Agreement and/or any subsequent
employment termination (excluding any consideration received for Common Stock
and Warrants and any cash-out or acceleration of options but including any
"gross-up" payments applicable to "excess parachute payments" pursuant to
Section 280G of the Internal Revenue Code of 1986, as amended ("Code"), with
respect thereto); and such amounts (x) are based on compensation data
applicable as of the date hereof, calculated assuming effective tax rates of
41.05%, and including, without limitation, amounts payable pursuant to
employment agreements, bonus plans and retirement plans and any "gross-up"
payments applicable to "excess parachute payments" pursuant to Section 280G of
the Code, and (y) will not exceed the amounts set forth in Section 4.8 of the
Disclosure Schedule, except to the extent noted therein.
4.9 Taxes.
(a) The Company and its Subsidiaries each has duly filed all
federal, state, local and foreign Tax Returns (as defined in Section 4.9(b))
required to be filed by it, and, except as set forth in Section 4.9 of the
Disclosure Schedule, the Company has duly paid or caused to be paid all Taxes
(as defined in Section 4.9(b)) shown to be due on such Tax Returns in respect
of the periods covered by such returns and has made adequate provision in the
Company's financial statements included in the SEC Documents for payment of all
Taxes anticipated to be payable in respect of all taxable periods or portions
thereof ending on or before the date hereof. Section 4.9 of the Disclosure
Schedule lists the periods through which the Tax Returns required to be filed
by the Company have been examined by the Internal Revenue Service (the "IRS")
or other appropriate taxing authority, or the period during which any
assessments may be made by the IRS or other appropriate taxing authority has
expired. Except as set forth in Section 4.9 of the Disclosure Schedule, all
material deficiencies and assessments asserted as a result of such examinations
or other audits by federal, state, local or foreign taxing authorities have
been paid, fully settled or adequately provided for in the Company's financial
statements included in the SEC Documents, and no issue or claim has been
asserted in writing for Taxes by any taxing authority for any prior period, the
adverse determination of which would result in a deficiency which, individually
or in the aggregate, would have a material adverse effect on the Company and
its Subsidiaries, other than those heretofore paid or provided for in the
Company's financial statements included in the SEC Documents filed prior to
November 1, 1995. Except as set forth in Section 4.9 of the Disclosure
Schedule, there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of the Company or
its Subsidiaries. Neither the Company nor any of its Subsidiaries has made an
election, pursuant to Section 382(l)(5)(H)
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of the Code, not to have the provisions of Section 382(l)(5) apply. Since
March 9, 1993, an "ownership change" within the meaning of Section 382(g) of
the Code has not occurred with respect to the ownership of the stock of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any of its Subsidiaries. Except as set forth in
Section 4.9 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that could
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code or any payment that
will not be deductible under Section 162(m) of the Code. Except as set forth
in Section 4.9 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries (i) has been a member of a group filing consolidated returns for
federal income tax purposes, or (ii) is a party to a tax sharing or tax
indemnity agreement or any other agreement of a similar nature that remains in
effect.
(b) For purposes of this Agreement, the term "Taxes" means
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, use, transfer,
license, payroll, withholding, capital stock, franchise, employment, severance,
stamp, custom duties, profits, withholding, social security (or similar)
unemployment, disability, alternative or minimum, estimated or other similar
obligation imposed by the United States or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions thereto. For purposes of this Agreement, the term "Tax Return"
means any report, return or other information or document required to be
supplied to a taxing authority in connection with Taxes.
4.10 Opinion of Financial Advisor. The Company has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, its financial
advisor, to the effect that, as of the date of such opinion, the cash
consideration to be received pursuant to the Offer and the Merger, as the case
may be, by the holders of the Securities is fair to such holders from a
financial point of view.
4.11 Company Rights Agreement. Assuming the accuracy of the Parent's
representation contained in Section 5.6 (without giving effect to the knowledge
qualification thereof) and the redemption of the Rights as provided in Section
6.6 hereof, none of the transactions contemplated in this Agreement will result
in a "Distribution Date" as defined in the Rights Agreement, nor shall the
Rights become exercisable as a result of the Offer, the Merger or any other
transactions contemplated by this Agreement.
4.12 DGCL Section 203. Assuming the accuracy of the Parent's
representation contained in Section 5.6 (without giving effect to the knowledge
qualification thereof), the
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Board of Directors of the Company has approved the transactions to be effected
in accordance with this Agreement pursuant to Section 203(a)(1) of the DGCL,
and determined that such approval satisfies the requirements of Section
203(a)(1) of the DGCL and, as a result, renders the other provisions of Section
203(a) of the DGCL inapplicable to the Offer, the Merger and this Agreement.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND SUB
The Parent and the Sub, jointly and severally, represent, warrant and
covenant to the Company as follows:
5.1 Organization and Qualification. Each of the Parent and the Sub
is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite
corporate power to carry on its business as it is now being conducted.
5.2 Authority Relative to this Agreement. Each of the Parent and
the Sub has full corporate power and authority to execute and deliver this
Agreement and 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
respective Boards of Directors of the Parent and the Sub, and by the Parent as
the sole stockholder of the Sub, and no other corporate proceedings on the part
of the Parent or the Sub are necessary to authorize this Agreement, to commence
the Offer or to consummate the transactions so contemplated by this Agreement
(including the Offer and the Merger). This Agreement has been duly and validly
executed and delivered by each of the Parent and the Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of each of the Parent and
the Sub, enforceable against each of the Parent and the Sub in accordance with
its terms.
5.3 Offer Documents; Proxy Statement. (a) None of the Offer
Documents nor any of the information supplied by the Parent, the Sub or any of
the Parent's other Subsidiaries specifically for inclusion in the Schedule
14D-9 will, at the respective times the Offer Documents (including any
amendments or supplements thereto) or the Schedule 14D-9 are filed with the
Commission or are first published, sent or given to stockholders, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements included therein, in
the light of the circumstances under which they were made, not misleading. The
Offer Documents and the Offer will comply as to form
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in all material respects with the applicable requirements of the Exchange Act
and the rules and regulations promulgated thereunder.
(b) The information supplied by the Parent and its affiliates
specifically for inclusion or incorporation by reference in the Proxy
Statement, if required, will not, at the time the Proxy Statement is mailed to
the Company's stockholders and at the time of the Special Meeting, contain any
statement, which at the time and in the light of the circumstances under which
it is made, is false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the statements
therein not false and misleading.
(c) Notwithstanding the foregoing, the Parent and the Sub
make no representation with respect to statements made in any of the foregoing
documents based on information supplied by the Company specifically for
inclusion therein.
5.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by the Parent and the Sub nor the consummation of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective certificates of incorporation or
by-laws of the Parent or the Sub or any of the Parent's other Subsidiaries; (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (i) in
connection with the HSR Act, (ii) pursuant to the Exchange Act, (iii) the
filing of the Instrument of Merger pursuant to the DGCL or (iv) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not (x) prevent the consummation of the
Offer or the Merger, (y) have a material adverse effect on the terms of the
Offer or the Merger or (z) individually or in the aggregate have a material
adverse effect on the financial condition, business or results of operations of
the Parent and its Subsidiaries; (c) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement or other instrument or
obligation to which the Parent, the Sub or the Parent's other Subsidiaries is a
party or by which the Parent, the Sub or the Parent's other Subsidiaries, or
any of their respective assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or that would not (x) prevent the
consummation of the Offer or the Merger, (y) have a material adverse effect on
the terms of the Offer or the Merger or (z) individually or in the aggregate
have a material adverse effect on the financial condition, business or results
of operations of the Parent and its Subsidiaries; or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Parent,
the Sub and the Parent's other Subsidiaries or any of their respective assets,
except for violations that would not (x) prevent the consummation of the Offer
or the Merger, (y) have a material adverse effect on the terms of the Offer or
the Merger or (z) individually or in the
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aggregate have a material adverse effect on the financial condition, business
or results of operations of the Parent and its Subsidiaries.
5.5 Financing. The Parent has received a firm written commitment
from a financially responsible third party to obtain the funds necessary to
consummate the Offer and the Merger, and to pay related fees and expenses.
5.6 Status as an Interested Stockholder or an Acquiring Person. As
of the date of this Agreement, neither the Parent nor the Sub nor, to the best
knowledge of the Parent, any of the Parent's affiliates is an "Interested
Stockholder" as such term is defined in Section 203 of the DGCL, or an
"Acquiring Person" as such term is defined in the Rights Agreement.
5.7 Interim Operations of the Sub. The Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
ARTICLE VI
COVENANTS
6.1 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior written consent of the Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will
use all reasonable efforts, and will cause each of its Subsidiaries to use all
reasonable efforts, to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
material relationships with licensors, licensees, customers, suppliers,
employees and any others having business dealings with it. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, without the prior written consent of the Parent, the Company
will not, and will not permit any of its Subsidiaries to, prior to the
Effective Time:
(a) adopt any amendment to its certificate of incorporation
or by-laws or comparable organizational documents or to the Rights Agreement;
(b) issue, reissue, sell or pledge or authorize or propose
the issuance, reissuance, sale or pledge of any shares of capital stock of any
class, or securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or capital
stock, other than the issuance of shares of Common Stock (and attached Rights)
upon the exercise of Warrants and Options issued pursuant to the Option Plan
outstanding on the
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date of this Agreement and identified in Section 6.1(b) of the Disclosure
Schedule, in each case in accordance with their present terms;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except that
any wholly owned Subsidiary of the Company may pay dividends and make
distributions to the Company or any of the Company's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, except that the Company may redeem
the Rights in accordance with Section 6.6;
(e) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and its Subsidiaries may
incur or pre-pay debt in the ordinary course of business consistent with past
practice under existing lines of credit, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity except in the
ordinary course of business consistent with past practice, or (iii) make any
loans, advances or capital contributions to, or investments in, any other
person or entity except for loans, advances, capital contributions or
investments between the Company and any of its wholly owned Subsidiaries or
between wholly owned Subsidiaries of the Company in the ordinary course of
business consistent with past practice;
(f) settle or compromise any suit or claim or threatened suit
or claim relating to the transactions contemplated hereby;
(g) except for (i) increases in salary, wages and benefits of
employees of the Company or its Subsidiaries (other than officers and directors
of the Company) in accordance with past practice and (ii) increases in salary,
wages and benefits granted to employees of the Company or its Subsidiaries
(other than officers and directors of the Company) in conjunction with
promotions or other changes in job status consistent with past practice or
required under existing agreements, increase the compensation or fringe
benefits payable or to become payable to its directors, officers or employees
(whether from the Company or any of its Subsidiaries), or pay any benefit not
required by any existing plan or arrangement (including, the granting of, or
waiver of performance or other vesting criteria under, stock options, or grant
any severance or termination pay to (except pursuant to existing agreements or
policies), or enter into any employment or severance agreement with, any
director, officer or employee of the Company or any of its Subsidiaries) or
establish, adopt, enter into, terminate or amend any bonus, profit sharing,
thrift, compensation, stock option, pension, retirement, welfare, deferred
compensation, employment, termination, severance or other employee benefit
plan, agreement,
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trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except to the extent such termination
or amendment is required by applicable law; provided, however, that nothing
herein will be deemed to prohibit the payment of benefits as they become
payable under existing plans, agreements, trusts, funds, policies or
arrangements in accordance with their terms;
(h) acquire (except as otherwise permitted by clause (j)
below), sell, lease, or dispose of or pledge, mortgage or encumber any assets
(including licenses, permits and other rights) of the Company and its
Subsidiaries other than in the ordinary course of business consistent with past
practice and in each case not exceeding $250,000, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice other than transactions between a wholly owned Subsidiary of the
Company and the Company or between wholly owned Subsidiaries of the Company;
(i) (i) modify, amend or terminate any contract, license or
permit, (ii) waive, release, relinquish or assign any contract (including any
insurance policy) or other license, permit, right or claim, or (iii) cancel or
forgive any indebtedness owed to the Company or its Subsidiaries, other than in
each case in a manner in the ordinary course of business consistent with past
practice and which is not material to the business of the Company and its
Subsidiaries;
(j) authorize, commit to or make any capital expenditures
except pursuant to and in accordance with the capital budget previously
provided to the Parent;
(k) make any tax election not required by law or settle or
compromise any tax liability, in either case that is material to the Company
and its Subsidiaries;
(l) change any of the accounting principles or practices used
by it except as required by the Commission or the Financial Accounting
Standards Board; or
(m) agree in writing or otherwise to take any of the
foregoing actions or any action which would make any representation or warranty
in this Agreement untrue or incorrect in any material respect.
6.2 Access.
(a) Between the date of this Agreement and the Effective
Time, the Company will (i) give the Parent and its authorized representatives
reasonable access during regular business hours upon reasonable notice to all
stores, offices, warehouses and other facilities and to all books and records
of the Company and its Subsidiaries, (ii) permit the Parent to make
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such inspections as it may reasonably require and (iii) cause its officers and
those of its Subsidiaries to furnish the Parent with such financial and
operating data and other information with respect to the business and
properties of the Company and its Subsidiaries as the Parent may from time to
time reasonably request, provided that no investigation pursuant to this
Section 6.2 or otherwise will affect or be deemed to modify any of the
representations and warranties made by the Company in this Agreement.
(b) Information obtained by the Parent pursuant to this
Section 6.2 shall be subject to the provisions of the Confidentiality Agreement
between the Parent and the Company dated October 2, 1995 (the "Confidentiality
Agreement"), which Confidentiality Agreement remains in full force and effect;
provided, however, that (i) the Company will not request that the Parent return
the Evaluation Materials (as that term is defined in the Confidentiality
Agreement) prior to 30 calendar days after the date that this Agreement is
terminated in accordance with Section 8.1 and (ii) effective as of the date
hereof, the Confidentiality Agreement is hereby amended to delete Sections 4, 6
and 8 thereof in their entirety.
6.3 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, and to the fiduciary duties of their respective Boards of
Directors under applicable laws as advised in the written opinion of their
outside counsel, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including taking all action reasonably required
under the HSR Act. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take
all such necessary action. Notwithstanding the foregoing, neither the Company,
the Parent nor the Sub shall be obligated to waive any of its rights under this
Agreement, including without limitation those specified in Article VII of this
Agreement or in Annex I hereto. All actions, judgments and determinations of
the parties hereto required or permitted hereby or by the Offer Documents or
otherwise contemplated by this Agreement shall be made in good faith.
6.4 Indemnification and Insurance. It is understood and agreed that
the Company shall defend, indemnify and hold harmless, and after the Effective
Time, the Surviving Corporation and the Parent shall, jointly and severally,
defend, indemnify and hold harmless, each person listed under "Indemnity
Agreements" in Section 6.5(a) of the Disclosure Schedule (the "Indemnified
Parties") to the full extent required or permitted under (a) Delaware law, (b)
as provided in the Restated Certificate of Incorporation and Restated By-Laws
of the Company and (c) as otherwise provided for or permitted pursuant to any
agreement in effect at the date hereof listed in Section 6.5(a) of the
Disclosure Schedule. The rights to be defended,
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indemnified and held harmless pursuant to this Section 6.4 shall survive the
Merger and shall continue in full force and effect without time limitation from
and after the Effective Time and without amendment or modification of the terms
of any of the agreements referred to in clause (c) above. Without limiting the
foregoing, the Company, and after the Effective Time the Surviving Corporation
and the Parent, will periodically advance expenses as incurred with respect to
the foregoing, to the fullest extent permitted by applicable law; provided the
person to whom the expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification. The Company, after consultation in good faith with the Parent
so as to minimize the cost thereof, or the Parent shall purchase, as promptly
as practicable and in any event prior to the Effective Time and without any
lapse in coverage, policies of directors' and officers' "run-off" liability
insurance (or policies which contain terms and conditions that are no less
advantageous to the directors and officers and former directors and officers of
the Company as the directors' and officers' liability insurance policies that
are in effect at the Company on the date hereof), which insurance shall remain
in effect for a period of not less than six years from and after the Effective
Time; provided that, in the event that any claim or claims (a "Claim" or
"Claims") are asserted or made within such six-year period, the Parent and the
Surviving Corporation shall cause such insurance to be continued in respect of
any such Claim or Claims until final disposition of any and all such Claims.
6.5 Certain Agreements, Employee Benefits, etc..
(a) The Parent hereby agrees to honor, and to cause the
Surviving Corporation and its Subsidiaries to honor (in accordance with the
terms thereof), all contracts, agreements, arrangements, policies, plans and
commitments of the Company (or any of its Subsidiaries) in effect as of the
date hereof that are applicable to any officer or employee or former officer or
employee or any director or former director of the Company (or any of its
Subsidiaries or former Subsidiaries) (collectively, the "Agreements"). A list
of all Agreements is set forth in Section 6.5(a) of the Disclosure Schedule.
Without limiting the generality of the foregoing, the Parent hereby
unconditionally agrees to perform and pay, or cause the Surviving Corporation
and its Subsidiaries to perform and pay, when due any and all amounts payable
pursuant to the terms of the Agreements.
(b) The Parent hereby agrees that for a period of one year
immediately following the Effective Time, it shall cause the Surviving
Corporation and its Subsidiaries to continue to maintain (except as required by
law) the employee benefit plans for employees and former employees of the
Company and its Subsidiaries listed under Section 6.5(b) of the Disclosure
Schedule, or other plans that, on a plan-by-plan basis, provide benefits that
are no less favorable to such employees than the benefits currently in effect
with respect to such employees under the plans listed under Section 6.5(b) of
the Disclosure Schedule.
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Notwithstanding anything contained in this Agreement to the contrary, at the
Parent's election, the Surviving Corporation (i) may elect to become a
nonsubscriber under the Texas Workers' Compensation Act and implement the
Parent's Work Injury Program, and (ii) implement the Parent's Dialogue Dispute
Resolution Program.
(c) If any employee of the Company or any of its Subsidiaries
becomes a participant in any employee benefit plan, practice or policy of the
Parent or the Surviving Corporation, such employee shall be given credit under
such plan for all service prior to the Effective Time with the Company and its
Subsidiaries, or any predecessor employer (to the extent such credit was given
by the Company), for purposes of eligibility and vesting (but not for benefit
accrual purposes) for which such service is either taken into account or
recognized.
(d) Notwithstanding anything to the contrary contained
herein, from and after the Effective Time, the Surviving Corporation shall have
sole discretion over the hiring, promotion, retention, firing and other terms
and conditions of the employment of officers and employees of the Surviving
Corporation.
6.6 Rights Agreement. The Board of Directors of the Company shall
take all action necessary to defer the Distribution Date (as that term is
defined in the Rights Agreement) to prevent the occurrence of the Distribution
Date as a result of the commencement of the Offer, this Agreement or the
consummation of the transactions contemplated hereby (including the Offer and
the Merger). The Company will redeem the Rights effective immediately prior to
the Parent's acceptance for payment of Securities pursuant to the Offer and
will not otherwise redeem the Rights, or amend or terminate the Rights
Agreement unless required to do so by a court of competent jurisdiction. The
record date for determining holders of record of Common Stock entitled to
receive the redemption price for the Rights shall be established in accordance
with the regulations of the NYSE.
6.7 Public Announcements. The initial press release announcing this
Agreement will be a joint press release and thereafter the Parent, the Sub and
the Company will use reasonable efforts to consult with each other before
issuing any press release or similar public announcement with respect to the
Offer, the Merger or the other transactions contemplated hereby and in
connection with making any filings with the Commission or any other
Governmental Entity or the NYSE and shall not issue any such press release or
make any such public announcement or filing prior to such consultation without
providing the other party with notice and a reasonable opportunity to comment
thereon, except as may be required by law or by obligations pursuant to any
listing agreement with any national securities exchange.
6.8 Post Merger Treatment of Warrants. Following the Effective Time
and subject to the terms and conditions of the Warrant Agreement, the Parent
will cause the Surviving
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Corporation to make available, as necessary, sufficient funds to pay, and will
pay, to holders of Warrants, upon the exercise thereof, the amount of cash,
without interest, to which such holders would have been entitled pursuant to
the Merger if such holders had exercised their Warrants and acquired shares of
Common Stock immediately prior to the Effective Time.
6.9 Exclusivity.
(a) Except as provided in Section 6.9(b), until the earlier
of the termination of this Agreement pursuant to Section 8.1 or the Effective
Time, the Company will not, and will cause its officers, directors,
Subsidiaries, affiliates, representatives or agents, directly or indirectly,
not to, do any of the following: (i) negotiate, undertake, authorize, propose
or enter into, either as the proposed surviving, merged, acquiring or acquired
corporation, any transaction (other than the Offer and the Merger) involving
any sale, transfer or other disposition or other change of ownership (whether
by tender or exchange offer or otherwise) of any securities of the Company or
any of its Subsidiaries, or any assets of the Company or any of its direct or
indirect Subsidiaries constituting one percent or more of the consolidated
assets of the Company or one percent or more of the consolidated revenues of
the Company, whether in a single transaction or series of related transactions
(an "Acquisition Transaction"); (ii) solicit or initiate the submission of a
proposal or offer in respect of, or engage in negotiations concerning, an
Acquisition Transaction; or (iii) furnish or cause to be furnished to any
corporation, partnership, person or other entity or group (other than the
Parent, the Sub and their representatives) (a "Person") any non-public
information concerning the business, operations, properties or assets of the
Company in connection with an Acquisition Transaction; provided nothing herein
will prohibit the Company's Board of Directors from taking and disclosing to
the Company's securityholders a position with respect to a tender offer
pursuant to Rule 14d-9 promulgated under the Exchange Act. The Company will
inform the Parent by telephone (confirmed in writing) promptly, and in any
event within one day of its receipt of any proposal or bid in respect of any
Acquisition Transaction and provide the Parent with copies of any written
proposals or bids. Nothing in this Section 6.9(a) will (i) permit the Company
to enter into any agreement with respect to an Acquisition Transaction for so
long as this Agreement remains in effect (it being agreed that for as long as
this Agreement remains in effect, the Company will not enter into any agreement
with any Person that provides for, or in any way facilitates, an Acquisition
Transaction), or (ii) affect any other obligation of the Company under this
Agreement.
(b) Notwithstanding anything else contained in this Section
6.9, the Company and its officers, directors, Subsidiaries, representatives and
agents may engage in discussions or negotiations with, and may furnish
information to, a third party or its representative who makes a written
proposal with respect to an Acquisition Transaction if (i) the Company's Board
of Directors determines in good faith after consultation with its financial
advisors that such
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proposal may reasonably be expected to result in a transaction that is
financially superior to the transactions contemplated by this Agreement, and
(ii) the Board of Directors of the Company determines in good faith after
receipt of a written opinion of outside counsel that such actions are required
by its fiduciary duties under applicable law.
6.10 Fees and Expenses. Except as provided in Section 8.3, whether
or not the Offer or the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby will
be paid by the party incurring such expenses.
6.11 Brokers or Finders. Each of the Parent and the Company
represents and warrants, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any brokers' or finders' fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement except Merrill Lynch, Pierce, Fenner & Smith
Incorporated, whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm, a copy of which has been provided
to the Parent, and Wasserstein Perella & Co. Inc., whose fees and expenses will
be paid by the Parent in accordance with the Parent's agreement with such firm,
a copy of which has been provided to the Company.
6.12 Notification of Certain Matters. The Company will give prompt
notice to the Parent and the Parent will give prompt notice to the Company of
(a) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in any material respect, (b) any
failure of the Company or the Parent or the Sub, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder in any material respect, (c) any written notice or
other written communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement and (d) any written notice or other written
communication from the Commission or any other Governmental Entity in
connection with the transactions contemplated by this Agreement; provided,
however, that the delivery of any notice pursuant to this Section 6.12 will not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) this Agreement shall have been adopted by the affirmative
vote of the stockholders of the Company by the requisite vote in accordance
with the Company's Restated Certificate of Incorporation and applicable law, if
such vote is required;
(b) no United States or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any Governmental Entity that is in effect and has
the effect of making the acquisition or ownership of the Securities illegal or
otherwise prohibiting or materially restricting the consummation of the Offer
or the Merger or that would make the acquisition or ownership by the Parent or
its Subsidiaries of the common stock of the Surviving Corporation illegal; and
(c) the waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.2 Conditions to Obligations of the Company to Effect the Merger.
The obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver, where permissible, at or prior to the Effective Time,
of the following conditions:
(a) each of the Parent and the Sub shall have performed in
all material respects its respective covenants in this Agreement, to the extent
such covenants are to be performed prior to the Effective Time; and
(b) the representations and warranties of the Parent and the
Sub shall be true and correct in all material respects at and as of the
Effective Time as if made as of the Effective Time.
7.3 Conditions to Obligations of the Parent and Sub to Effect the
Merger. The obligations of the Parent and the Sub to effect the Merger are
further subject to the satisfaction or waiver, where permissible, at or prior
to the Effective Time, of the following conditions:
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(a) the Sub (or any permitted assignee) shall have accepted
for payment and paid for Securities tendered pursuant to the Offer, provided
that this condition will be deemed satisfied if the Sub (or any permitted
assignee) fails to accept for payment and pay for Securities tendered pursuant
to the Offer in violation of the terms hereof or thereof; and
(b) the Company shall have performed in all material respects
the covenants in this Agreement, to the extent such covenants are to be
performed prior to the Effective Time.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after any required adoption of this
Agreement by the stockholders of the Company:
(a) by mutual consent of the Parent and the Company by action
of their respective Boards of Directors;
(b) by the Company if (i) the Parent and the Sub fail to
commence the Offer as provided in Section 1.1, (ii) the Offer expires or is
terminated without any Securities being purchased thereunder, or (iii) the Sub
(or any permitted assignee) fails to purchase Securities validly tendered and
not withdrawn in violation of the terms and conditions of the Offer or this
Agreement;
(c) by either the Parent or the Company if the Sub (or any
permitted assignee) has not purchased the shares of Common Stock validly
tendered and not withdrawn pursuant to the Offer in accordance with the terms
hereof within 120 calendar days after the commencement of the Offer; provided
however, that the party (in the case of the Parent, together with the Sub)
seeking to terminate this Agreement pursuant to this Section 8.1(c) is not in
material breach of this Agreement (including without limitation any
representation, warranty or covenant herein contained);
(d) by either the Parent or the Company if the Merger is not
consummated before March 31, 1996, despite the reasonable good faith effort of
such party to effect such consummation; provided, however, that the party (in
the case of the Parent, together with the Sub) seeking to terminate this
Agreement pursuant to this Section 8.1(d) is not in material breach of this
Agreement (including without limitation any representation, warranty or
covenant herein contained);
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(e) by either the Parent or the Company if any court of
competent jurisdiction has issued an injunction permanently restraining,
enjoining or otherwise prohibiting the consummation of the Offer or the Merger,
which injunction has become final and non-appealable;
(f) by the Parent if (i) the Board of Directors of the
Company shall have withdrawn, modified or amended in any respect adverse to the
Parent its favorable recommendation of the Offer or the Merger or shall have
resolved to do any of the foregoing, (ii) prior to the expiration of the Offer,
any of the representations and warranties of the Company contained in this
Agreement were incorrect in any material respect when made or have since
become, and at the time of termination remain, incorrect in any material
respect or (iii) there has been a material breach on the part of the Company in
the covenants of the Company set forth herein, or any failure on the part of
the Company to comply with its material obligations hereunder, including
without limitation the obligation under Section 6.6 to redeem the Rights; or
(g) by the Company, prior to the expiration of the Offer, if
(i) (x) any of the representations and warranties of the Parent or the Sub
contained in this Agreement were incorrect in any material respect when made or
have since become, and at the time of termination remain, incorrect in any
material respect, or (y) there has been a material breach on the part of the
Parent or the Sub in the covenants of the Parent or the Sub set forth herein,
or any failure on the part of the Parent or the Sub to comply with its material
obligations hereunder, or (ii) the Board of Directors of the Company, after
consulting with its outside counsel and financial advisor, determines in good
faith, and based in part on a written opinion of outside counsel, that its
fiduciary duties require that it withdraw, modify or amend in a manner adverse
to the Parent its favorable recommendation of the Offer or the Merger in order
to approve the execution of a definitive agreement with respect to an
Acquisition Transaction with another party which the Board of Directors has
determined in good faith is financially superior to the transactions
contemplated by this Agreement; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 8.1(g)(ii) until the Company
has paid to the Parent in full the amount referred to in Section 8.3(a).
8.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or the Parent in accordance with Section 8.1,
no party hereto (or its directors or officers) will have any liability or
further obligation to any other party to this Agreement, except for obligations
pursuant to Sections 6.2(b) and 8.3 and any liability resulting from the
willful breach of any other covenant or agreement set forth herein.
8.3 Certain Termination Fees; Certain Costs and Expenses. (a) Prior
to any termination of this Agreement by the Company pursuant to Section
8.1(g)(ii) or within two
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business days after any termination of this Agreement by the Parent or the Sub
pursuant to Section 8.1(f)(i), the Company will pay to the Parent $7,000,000 in
cash and (b) after such termination (and in any event within two business days
of receiving the Parent or the Sub's documented invoice) the Company will
reimburse the Parent and the Sub for the documented out-of-pocket costs and
expenses incurred by the Parent or the Sub in connection with the Offer and the
other transactions contemplated by this Agreement, including without limitation
the fees and expenses of the financial advisors and counsel to the Parent and
the Sub and fees incurred by the Parent or the Sub to obtain financing
commitments for the Offer and the Merger.
ARTICLE IX
MISCELLANEOUS
9.1 Non-survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement will survive the Effective Time. The covenants and
agreements herein will survive termination of this Agreement and the Effective
Time.
9.2 Amendment. This Agreement may be amended by the parties hereto
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company, but, after any such approval, no
amendment will be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Notwithstanding anything contained in this Agreement to the contrary,
any action by the Company (a) to terminate this Agreement, (b) to waive or
amend any provision of this Agreement and (c) to extend the time for the
performance of any obligation under this Agreement, in each case following
consummation of the Offer will require the approval of a majority of the
directors of the Company then in office who are directors of the Company on the
date hereof (the "Continuing Directors").
9.3 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements of the other parties
hereto or conditions to their own obligations contained herein, other than
satisfaction of the Minimum Condition. Any
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agreement on the part of a party hereto to any such extension or waiver will be
valid only if set forth in a written instrument signed on behalf of such party.
9.4 Notices. All notices and other communications hereunder will be
in writing and will be deemed given if delivered personally, telecopied (which
is confirmed) or mailed by registered or certified (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as is specified by like notice):
(a) if to the Parent or the Sub:
Diamond Shamrock, Inc.
9830 Colonnade Blvd.
San Antonio, Texas 78230
Attention: Chairman and Chief Executive Officer
Telecopy No.: 210/641-8885
with a copy to:
Timothy J. Fretthold, Esq.
Diamond Shamrock, Inc.
9830 Colonnade Blvd.
San Antonio, Texas 78230
Telecopy No.: 210/641-8885
and
Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Telecopy No.: 212/755-7306
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and
(b) if to the Company, to:
National Convenience Stores Incorporated
100 Waugh Drive
Houston, Texas 77007
Attention: Chief Executive Officer
Telecopy No.: 713/880-0579
with a copy to:
A. J. Gallerano
Senior Vice President, General Counsel and Secretary
National Convenience Stores Incorporated
100 Waugh Drive
Houston, Texas 77007
Telecopy No.: 713/880-0579
and
Edgar J. Marston III
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana
Houston, Texas 77002-2871
Telecopy No.: 713/221-1212
9.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference will be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement they will be deemed to be followed by
the words "without limitation." The phrases "the date of this Agreement," "the
date hereof" and terms of similar import, unless the context otherwise
requires, will be deemed to refer to November 8, 1995.
9.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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9.7 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware regardless of the laws
that might otherwise govern under principles of conflict of laws applicable
thereto.
9.8 Specific Performance. The parties hereto agree that if any
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached, irreparable damage would occur, no adequate
remedy at law would exist and damages would be difficult to determine, and
that, subject to the provisions of Article VIII, the parties will be entitled
to specific performance of the terms hereof, in addition to any other remedy at
law or equity.
9.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that the Sub may assign, in its sole discretion, any
or all rights, interests and obligations hereunder to the Parent or any direct
or indirect wholly owned Subsidiary of the Parent incorporated under the laws
of the State of Delaware. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
9.10 Validity. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforcement of any other
provisions hereof, which will remain in full force and effect. If any term or
other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other terms and provisions of
this Agreement will nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner that is adverse to any party which is entitled to the
benefit thereof and which has not been waived by such party. Upon any such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
9.11 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the Disclosure Schedules, the Annexes and the other documents and
the instruments referred to herein), and the Confidentiality Agreement (as
hereby amended pursuant to Section 6.2(b)) (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matters hereof, and (b) other
than Sections 6.4 and 6.5 of this Agreement are not intended to confer upon any
person other than the parties hereto and thereto any rights or remedies
hereunder or thereunder. The
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covenants of the Parent and the Sub in Sections 6.4 and 6.5 of this Agreement
may be enforced after the Effective Time by any of the Indemnified Parties.
IN WITNESS WHEREOF, the Parent, the Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
DIAMOND SHAMROCK, INC.
By: /s/ A. W. O'DONNELL
_____________________________________
A. W. O'Donnell
Senior Vice President
SHAMROCK ACQUISITION CORP.
By: /s/ A.W. O'DONNELL
_____________________________________
A.W. O'Donnell
President
NATIONAL CONVENIENCE STORES
INCORPORATED
By: /s/ V.H. VAN HORN III
_____________________________________
V.H. Van Horn III
President and Chief Executive Officer
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ANNEX I
Conditions to the Offer
Notwithstanding any other provision of the Offer, neither the Parent nor
the Sub will be required to accept for payment, purchase or, subject to
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, to pay for any Securities tendered pursuant to the
Offer, and may, subject to the provisions of Section 1.1 of this Agreement,
amend, extend or terminate the Offer or postpone the expiration date, the
acceptance for payment of and/or the purchase or (subject to the applicable
rules and regulations aforesaid) payment for Securities tendered, if as of the
expiration of the Offer (as the Offer may have been extended pursuant to
Section 1.1 of this Agreement) (i) at least two-thirds of the shares of the
Common Stock on a fully-diluted basis (after giving effect to the exercise of
all Warrants validly tendered pursuant to the Offer and not withdrawn) have not
been validly tendered pursuant to the Offer and not withdrawn (the "Minimum
Condition"), (ii) the waiting periods under the HSR Act applicable to the Offer
and the Merger have not expired or been terminated or (iii) at any time on or
after the date of this Agreement and at or prior to the time of payment for the
Securities (whether or not any Securities have been accepted for payment or
paid for pursuant to the Offer) any one or more of the events listed in the
paragraphs below have occurred and are continuing;
(a) there has been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, enacted, entered or
deemed applicable to the Offer or the Merger, by any Governmental Entity
that in the sole judgment of the Parent (i) makes the acceptance for
payment of or payment for Securities illegal, challenges the acquisition
by the Parent or the Sub of the Securities or otherwise seeks to restrain
or prohibit the consummation of the Offer or the Merger, (ii) renders the
Parent unable to accept for payment, pay for or purchase the Securities,
(iii) seeks to impose or imposes limitations on the ability of the Parent
to acquire or hold, transfer or dispose of, or effectively to exercise any
of its rights of ownership of, the Securities, including, without
limitation, the right to vote the shares of Common Stock purchased by it
on all matters properly presented to the stockholders of the Company, (iv)
as a result of the Offer or the Merger, seeks to require or requires the
Parent, the Company, or any of their respective Subsidiaries or affiliates
to dispose of or hold separate or otherwise limits or affects the exercise
of ordinary ownership or control rights in respect of all or any
significant portion of the Company's or the Parent's respective
businesses, assets or properties, each taken as a whole, or imposing any
limitations on the ability of any such entities to conduct their
respective businesses and own such assets and properties, or (v) seeks to
impose or imposes any limitations on the ability of the Parent or any of
its Subsidiaries effectively
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to control the business or operations of the Company or any of its
Subsidiaries as a result of the Offer or the Merger; or
(b) there has been instituted or pending any action,
proceeding, claim or counterclaim by or before any Governmental Entity, or
any other person or entity seeking to restrain or prohibit the making of
the Offer or the Merger, seeking to obtain any significant damages from
the Parent or its Subsidiaries, or the Company or its Subsidiaries or from
any other person or entity to whom or to which any of the foregoing has an
indemnity obligation arising from the Offer or the Merger or seeking to
prohibit the ownership by the Parent or any of its Subsidiaries of the
Securities or of any significant portion of their businesses or assets,
taken as a whole or any significant portion of the business or assets of
the Company and its Subsidiaries taken as a whole, or to compel the
Parent, the Company or any of their affiliates to dispose of or hold
separate all or a significant portion of any of their business or assets,
taken as a whole, in each case as a result of the Offer or the Merger; or
(c) there has occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE or the
over-the-counter market, (ii) a decline of at least 20% in either the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 Index from
the date of this Agreement, (iii) the declaration of a banking moratorium
or any limitation or suspension of payments in respect of the extension of
credit by banks or other lending institutions in the United States, (iv)
any limitation by any Governmental Entity on, or any other event which in
the sole judgment of the Parent may have a material adverse effect on the
extension of credit by banks or other lending institutions, (v) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or (vi) in the
case of any of the foregoing which exists at the time of the commencement
of the Offer, a material acceleration or worsening thereof; or
(d) any material adverse change has occurred since September
30, 1995 in the business, assets, results of operations, or financial
condition or prospects (not including a change in prospects arising from
general economic or industry conditions) of the Company and its
Subsidiaries taken as a whole; or
(e) the Company has breached or failed to perform in any
material respect any of its obligations under this Agreement, including
without limitation a failure to cause the Rights to be redeemed as
provided for therein; or
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(f) any of the representations and warranties of the Company
contained in this Agreement shall not have been true and correct when made
or have since ceased to be true and correct and remain incorrect at the
expiration date of the Offer; or
(g) it shall have been publicly disclosed or the Parent shall
have learned that any person or entity shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any shares of capital
stock of the Company (including without limitation the shares of Common
Stock) or a merger, consolidation or other business combination or any
acquisition or disposition of any material assets or any comparable event
with or involving the Company or any of its Subsidiaries; or
(h) the Company's Board of Directors shall have failed to
recommend and approve, or shall no longer recommend and approve, the Offer
or the adoption of this Agreement, or shall modify or amend its
recommendation and approval with respect thereto, or shall have resolved
to do any of the foregoing; or
(i) this Agreement has terminated in accordance with its
terms; or
(j) the Parent and the Company agree that the Parent will
amend or terminate the Offer;
which, in the sole judgment of the Parent, and in each case regardless of the
circumstances (including without limitation any inaction by the Parent or its
affiliates other than a material breach by the Parent or its affiliates of this
Agreement), with respect to each and every matter referred to above makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
purchase of or such payment for the Securities.
The foregoing conditions (i) may be asserted by the Parent or the Sub
regardless of the circumstances (including any action or inaction by the Parent
or any of its affiliates other than a material breach by the Parent or the Sub
of this Agreement) giving rise to such condition and (ii) other than the
Minimum Condition, are for the sole benefit of the Parent and its affiliates.
The foregoing conditions, except or as otherwise provided in this Agreement,
may be waived by the Parent in whole or in part at any time and from time to
time in its sole discretion. The failure by the Parent at any time to exercise
any of the foregoing rights will not be deemed a waiver of any right and each
right will be deemed an ongoing right which may be asserted by the Parent at
any time and from time to time. Any determination by the Parent concerning the
events described in this Section will be final and binding upon all parties.
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ANNEX II
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL CONVENIENCE STORES INCORPORATED
National Convenience Stores Incorporated, a Delaware corporation (the
"Corporation"), does hereby certify that this Amended and Restated Certificate
of Incorporation of National Convenience Stores Incorporated was duly adopted
in accordance with Section 245 of the General Corporation Law of the State of
Delaware; the Corporation was originally incorporated under the name of NCS
Merging Corporation; and the Corporation's original Certificate of
Incorporation was filed with the Delaware Secretary of State on June 21, 1979.
The text of the Corporation's Restated Certificate of Incorporation as
heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:
FIRST: The name of the Corporation (the "Corporation") is
National Convenience Stores Incorporated.
SECOND: The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation
shall have authority to issue is 10,000,000 shares of Common Stock, par value
$.01 per share.
FIFTH: Elections of directors need not be by written
ballot except and to the extent provided in the by-laws of the Corporation.
48
SIXTH: (1) Notwithstanding any contrary provision of
Section 262(b) of the General Corporation Law of the State of Delaware, as in
effect on August 1, 1983, any stockholder of the Corporation who complies with
the requirements of Section 262 of the General Corporation Law of the State of
Delaware, as in effect on August 1, 1983 ("Section 262"), shall be entitled to
an appraisal by the Court of Chancery of the fair value of his shares of Common
Stock (as hereinafter defined) and Preferred Stock (as hereinafter defined)
under each of the circumstances described in subparagraphs (a), (b) and (c)
below (an "Article Sixth Transaction"), all upon the terms and conditions set
forth in this Article Sixth and in Section 262:
(a) the merger or consolidation of the Corporation
with (1) any Interested Stockholder (as hereinafter defined) or
(2) any other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder; or
(b) the sale, lease or exchange of all or
substantially all of the property and assets of the Corporation
(in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(c) any amendment of the Certificate of
Incorporation of the Corporation which effects a
reclassification of securities (including any reverse stock
split) or a recapitalization of the Corporation, which has the
effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of Voting Stock (as
hereinafter defined) which is beneficially owned (as hereinafter
defined) by any Interested Stockholder or any Affiliate of any
Interested Stockholder.
(2) For the purposes of this Article Sixth:
(a) The term "person" shall mean any individual, firm,
corporation, partnership or other entity.
(b) The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than any profit
sharing, employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciary with respect to
any such plan when acting in such capacity) who or which:
(1) is the beneficial owner (as hereinafter defined)
of 15 percent or more of the Voting Stock; or
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(2) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to an
Announcement Date (as hereinafter defined) was the beneficial
owner of 15 percent or more of the Voting Stock; or
(3) is the assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to an Announcement Date
beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933, as
amended.
(c) A specified person shall be a "beneficial owner" of and
shall be deemed to "beneficially own" any Voting Stock:
(1) which such specified person or any of its
Affiliates or Associates (as hereinafter defined), directly or indirectly,
through contract, arrangement, understanding, relationship or otherwise
has or shares (A) voting power, which includes the power to vote, or to
direct the voting of, such stock and/or (B) investment power, which
includes the power to dispose of, or to direct the disposition of, such
stock; or
(2) which such specified person or any of its
Affiliates or Associates has, directly or indirectly, the right to acquire
(whether such right is then exercisable or becomes exercisable at some
future time by the passage of time or upon the occurrence of a specified
event) pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants, options or
otherwise; or
(3) which is subject to the exercise, directly or
indirectly, of sole or shared voting and/or investment power as described
in clause (1) above by any other person with which such specified person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of any shares of Voting Stock.
(d) For the purpose of determining whether a specified person
is an Interested Stockholder pursuant to subparagraph (b) of this paragraph 2,
the number of shares of Voting Stock deemed to be outstanding shall include
unissued or issued but not outstanding shares deemed beneficially owned by such
specified person through application of subparagraph (c) of this paragraph 2
but shall not include any other unissued or issued but not outstanding shares
of Voting Stock which may be issuable or deliverable pursuant to any agreement,
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arrangement or upon exercise of conversion rights, exchange rights, warrants,
options or otherwise.
(e) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations, as in effect on August 1, 1983, promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended.
(f) The term "Subsidiary" shall mean any corporation of which
all the shares of each class of capital stock are beneficially owned, directly
or indirectly, by the Corporation.
(g) The term "Fair Market Value" shall mean (1) in the case
of stock, the highest closing sale price during the 30-day period immediately
preceding and including a Determination Date of a share of such stock on the
Composite Tape for New York Stock Exchange - Listed Stock, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period immediately preceding and including a
Determination Date on the National Association of Securities Dealers, Inc.
Automated Quotation System or any system then in use, or, if no such quotations
exist or are otherwise available, the fair market value on a Determination Date
of a share of such stock as determined in good faith by an investment banking
firm of national reputation retained by the Corporation following such firm's
selection by a committee of at least three stockholders of the Corporation
(other than the Interested Stockholder and any of its Affiliates and
Associates) who shall beneficially own in the aggregate at least 5% of the then
outstanding Common Stock and who shall be appointed by the Board of Directors
of the Corporation ("Independent Advisor") and (2) in the case of property
other than stock or cash, the fair market value of such property on a
Determination Date as determined in good faith by an Independent Advisor.
(h) The term "Voting Stock" shall include (1) each then
outstanding share of Common Stock and (2) each then outstanding share of
Preferred Stock which is entitled to vote in the election of the directors of
the Corporation.
(i) The term "Common Stock" shall mean any stock of any class
of the Corporation which is entitled to vote in the election of directors of
the Corporation, which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation and which is not subject to redemption by the
Corporation.
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(j) The term "Preferred Stock" shall mean any class of
capital stock of the Corporation (other than Common Stock) which may be from
time to time authorized in or by the Certificate of Incorporation of the
Corporation.
(k) The term "Corporation" shall refer to the corporation
created pursuant to this Certificate of Incorporation and any successor by
merger, consolidation or otherwise.
(l) The term "Determination Date" shall mean the date as of
which a determination is made pursuant to subparagraph (g) of paragraph 2 of
this Article Sixth concerning the Fair Market Value of any stock or other
property.
(3) (a) If within 115 days after the effective date of an Article
Sixth Transaction no stockholder of the Corporation, who has complied with the
provisions of Section 262 and is otherwise entitled to appraisal rights, shall
have filed a petition in the Court of Chancery demanding a determination of the
fair value of the Common Stock and/or Preferred Stock owned by all stockholders
similarly situated, the Corporation shall promptly, and in any event within 120
days after the effective date of an Article Sixth Transaction, file such a
petition. In any appraisal proceeding initiated by a stockholder or by the
Corporation pursuant to Section 262 relating to an Article Sixth Transaction,
the Corporation shall file appropriate pleadings which confirm and at all
stages of the proceeding vigorously assert (1) that the fair value of each
share of Common Stock subject to such proceeding, exclusive of interest, if
any, is not less than the highest amount determined pursuant to subparagraph
(b) below ("Minimum Fair Value Per Share of the Common Stock") and (2) that the
fair value of each share of each class or series of Preferred Stock subject to
such proceeding, exclusive of interest, if any, is not less than the highest
amount determined pursuant to subparagraph (c) below for the shares of each
such class of series ("Minimum Fair Value Per Share of Each Class or Series of
Preferred Stock").
(b) The Minimum Fair Value Per Share of the Common Stock
shall be equal to the higher amount determined under clauses (1) and (2) below:
(1) (if applicable) the highest per share price
(including brokerage commissions, placement agent fees, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any share
of Common Stock acquired by it (A) within the two-year period immediately
prior to the first public announcement of the proposed Article Sixth
Transaction ("Announcement Date") or (B) in the transaction in which it
became an Interested Stockholder, whichever is higher; and
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(2) the Fair Market Value per share of Common Stock
(A) as of the Announcement Date or (B) as of the date on which the
Interested Stockholder became an Interested Stockholder ("Inception
Date"), whichever is higher.
(c) The Minimum Fair Value Per Share of Each Class or Series
of Preferred Stock shall be equal to the higher amount determined under
clauses (1) and (2) below:
(1) (if applicable) the highest per share price
(including brokerage commissions, placement agent fees, transfer taxes,
and soliciting dealers' fees) paid by an Interested Stockholder for any
shares of such class or series of Preferred Stock acquired by it (A)
within the two-year period immediately prior to the Announcement Date or
(B) in the transaction in which it became an Interested Stockholder,
whichever is higher; and
(2) the Fair Market Value per share of such class or
series of Preferred Stock as of the (A) Announcement Date or (B) Inception
Date, whichever is higher.
(d) If the Court of Chancery determines in any appraisal
proceeding relating to an Article Sixth Transaction that the fair value,
exclusive of interest, if any, of any share of Common Stock or Preferred
Stock is less than the Minimum Fair Value Per Share of the Common Stock or
the Minimum Fair Value Per Share of Each Class or Series of Preferred
Stock, respectively, the Corporation shall nevertheless pay to
stockholders who are entitled to receive the fair value of their shares in
such appraisal proceeding an amount per share, before giving effect to any
interest awarded by the Court of Chancery, equal to the Minimum Fair Value
Per Share of the Common Stock or the Minimum Fair Value Per Share of Each
Class or Series of Preferred Stock, as the case may be.
(e) All per share amounts determined pursuant to this
paragraph 3 shall be appropriately adjusted to reflect all stock
dividends, property distributions, stock splits and combinations, and
subdivisions and reclassifications of the outstanding capital stock of the
Corporation.
(4) The Corporation hereby acknowledges that it is equitable in the
circumstances, and accordingly the Corporation shall pay all costs and expenses
(including the reasonable fees and expenses of attorneys, the reasonable fees
and expenses of experts and the costs of the proceeding) incurred by any
stockholder of the Corporation in any appraisal proceeding involving an Article
Sixth Transaction wherein the Fair Market Value of the per share consideration
offered to stockholders of the Corporation in the Article Sixth Transaction is,
in the opinion of the Court of Chancery, less than the Minimum Fair Value Per
Share of the Common Stock or the Minimum Fair Value Per Share of Each Class or
Series of Preferred Stock, as the case may be.
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(5) Notwithstanding any other provisions of this Certificate of
Incorporation or the by-laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the by-laws of the Corporation), the affirmative vote of the
holders of 66-2/3 percent or more of the shares of stock of the Corporation
otherwise entitled to vote thereon and not beneficially owned by any Interested
Stockholder or any of its Affiliates and Associates, voting as a class, shall
be required to amend or repeal, or adopt any provisions inconsistent with, this
Article Sixth.
SEVENTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director; provided, however, that the foregoing clause
shall not apply to any liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. This Article Seventh shall not eliminate or limit
the personal liability of a director for any act or omission occurring prior to
the date this Article Seventh becomes effective.
EIGHTH: In furtherance and not in limitation of the rights,
powers, privileges, and discretionary authority granted or conferred by the
General Corporation Law of the State of Delaware or other statutes or laws of
the State of Delaware, the Board of Directors is expressly authorized to make,
alter, amend or repeal the by-laws of the Corporation, without any action on
the part of the stockholders, but the stockholders may make additional by-laws
and may alter, amend or repeal any by-law whether adopted by them or otherwise.
The Corporation may in its by-laws confer powers upon its Board of Directors in
addition to the foregoing and in addition to the powers and authorities
expressly conferred upon the Board of Directors by applicable law.
NINTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed herein or by applicable law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Certificate
of Incorporation in its present form or as hereafter amended are granted
subject to this reservation.
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IN WITNESS WHEREOF, I the undersigned, being a duly authorized
officer of the Corporation, do hereby execute this Amended and Restated
Certificate of Incorporation this _____ day of _________________, 1995.
_______________________________________________
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