<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
DART GROUP CORPORATION
(NAME OF SUBJECT COMPANY)
----------------
DGC ACQUISITION, INC.
RICHFOOD HOLDINGS, INC.
(BIDDERS)
----------------
COMMON STOCK, $1.00 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
237415104
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
JOHN E. STOKELY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RICHFOOD HOLDINGS, INC.
4860 COX ROAD, SUITE 300
GLEN ALLEN, VIRGINIA 23060
(804) 915-6000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
GARY E. THOMPSON, ESQ.
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219-4074
(804) 788-8200
----------------
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- -------------------------------------------------------------------------------
<S> <C>
$192,400,320.00 $38,480.00
- -------------------------------------------------------------------------------
</TABLE>
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* Estimated for purposes of calculating the amount of the filing fee only.
The amount assumes the purchase of 1,202,502 shares of common stock, $1.00
par value per share (the "Shares"), at a price per Share of $160.00 in
cash. Such number of Shares represents all the Shares outstanding as of
April 6, 1998 and assumes the exercise of all existing options, warrants
and other rights to acquire Shares from the Company.
[_]Check box if any part of this fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No.: Not Date Filed: Not Applicable
Applicable
Page 1 of 7 Pages
(Exhibit Index is located on Page 7)
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<PAGE>
SCHEDULE 14D-1
PAGE 2 OF 7 PAGES
CUSIP NO. 237415104
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSONS
Richfood Holdings, Inc.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
541438602
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT [_]
TO ITEMS 2(e) OR 2(f)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN [_]
SHARES
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10 TYPE OF REPORTING PERSON
HC
</TABLE>
<PAGE>
SCHEDULE 14D-1
PAGE 3 OF 7 PAGES
CUSIP NO. 237415104
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSONS
DGC Acquisition, Inc.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
Applied for.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) [_]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN [_]
SHARES
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10 TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 is filed by DGC Acquisition,
Inc., a Delaware corporation ("Purchaser"), and Richfood Holdings, Inc.
("Parent"), a Virginia corporation and the direct owner of all of the
outstanding capital stock of Purchaser, relating to the offer by Purchaser to
purchase all outstanding shares of common stock, $1.00 par value per share
(the "Shares"), of Dart Group Corporation, a Delaware corporation (the
"Company"), at $160.00 per Share, net to the seller in cash, on the terms and
subject to the conditions set forth in the Offer to Purchase, dated April 15,
1998 (the "Offer to Purchase"), and in the related Letter of Transmittal and
any amendments or supplements thereto, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively (which collectively constitute the
"Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Dart Group Corporation, a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is 3300 75th Avenue, Landover, Maryland, 20785.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by Purchaser and Parent. The information set forth
on the cover page, under "Introduction," in Section 9 and in Schedule I of the
Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Sections 9 and 11 of the Offer to Purchase
is incorporated herein by reference.
(b) The information set forth under "Introduction" and in Sections 9, 11 and
12 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction" and in Sections 9, 11
and 12 of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Introduction" and in Sections 9, 11, 12 and
13 of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Introduction" and in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "Introduction" and in Sections 11 and 12
of the Offer to Purchase is incorporated herein by reference.
(b)-(c),(e) The information set forth in Section 15 of the Offer to Purchase
is incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated April 15, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated April 15, 1998.
(a)(8) Text of Press Release, dated April 9, 1998, as issued by Parent.
(a)(9) Company Letter to Stockholders.
(b) Commitment Letter, dated April 8, 1998, between Parent and First Union
National Bank.
(c) Agreement and Plan of Merger, dated April 9, 1998 among Parent,
Purchaser and the Company.
(d) None
(e) Not applicable
(f) None
5
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: April 15, 1998
RICHFOOD HOLDINGS, INC.
By /s/ JOHN E. STOKELY
-----------------------------------
Name: John E. Stokely
Title: President & Chief
Executive Officer
DGC ACQUISITION, INC.
By /s/ JOHN E. STOKELY
-----------------------------------
Name: John E. Stokely
Title: President & Chief
Executive Officer
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated April 15, 1998
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated April 15, 1998
(a)(8) Text of Press Release, dated April 9, 1998, as issued by Parent
(a)(9) Company Letter to Stockholders
(b) Commitment Letter, dated April 8, 1998, between Parent and First
Union National Bank
(c) Agreement and Plan of Merger, dated as of April 9, 1998, among
Parent, Purchaser and the Company
(d) None
(e) Not Applicable
(f) None
</TABLE>
7
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DART GROUP CORPORATION
AT
$160.00 NET PER SHARE
BY
DGC ACQUISITION, INC.
A DIRECT WHOLLY-OWNED SUBSIDIARY
OF
RICHFOOD HOLDINGS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
MAY 12, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES
PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) A NUMBER OF THE
COMPANY'S SHARES REPRESENTING A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY
DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
OF THE OFFER, AND (2) THE EXPIRATION OF THE APPLICABLE WAITING PERIOD UNDER
THE HSR ACT. SEE INTRODUCTION AND SECTIONS 1, 14 AND 15 OF THIS OFFER TO
PURCHASE.
----------------
IMPORTANT
Any stockholder desiring to tender all or a portion of that stockholder's
shares of common stock, par value $1.00 per share, of the Company (the
"Shares") should either (1) complete and sign the Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver it and any other required documents to
the Depositary and either deliver the certificates for those Shares to the
Depositary along with the Letter of Transmittal or tender those Shares
pursuant to the procedures for book-entry transfer set forth in Section 3
hereof, or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder.
Any stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact that broker,
dealer, commercial bank, trust company or other nominee if the stockholder
wishes to tender such Shares.
Any stockholder who wishes to tender Shares and whose certificates
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender
those Shares by following the procedures for guaranteed delivery set forth in
Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials may be directed to
the Information Agent or to brokers, dealers, commercial banks and trust
companies.
----------------
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
April 15, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
INTRODUCTION............................................................. 1
THE OFFER................................................................ 2
1. Terms of the Offer............................................... 2
2. Acceptance for Payment and Payment for Shares.................... 4
3. Procedure for Tendering Shares................................... 5
4. Withdrawal Rights................................................ 7
Certain Federal Income Tax Consequences of the Offer and the
5. Merger........................................................... 8
6. Price Range of the Shares; Dividends on the Shares............... 9
7. Effect of the Offer on the Market for the Shares, Stock Exchange
Listing,
Exchange Act Registration and Status as Margin Securities........ 10
8. Certain Information Concerning the Company....................... 11
9. Certain Information Concerning Purchaser and Parent.............. 13
10. Source and Amount of Funds....................................... 16
11. Background....................................................... 17
12. Purpose of the Offer and the Merger; Plans for the Company; the
Merger Agreement;
Other Agreements................................................. 19
13. Dividends and Distributions...................................... 28
14. Certain Conditions of the Offer.................................. 29
15. Certain Legal Matters............................................ 30
16. Fees and Expenses................................................ 32
17. Miscellaneous.................................................... 32
SCHEDULES
I. Directors and Executive Officers of Parent and Purchaser ........ S-1
</TABLE>
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OFDART GROUP CORPORATION:
INTRODUCTION
DGC Acquisition, Inc., a Delaware corporation ("Purchaser"), hereby offers
to purchase all the outstanding shares of common stock, $1.00 par value per
share (the "Shares"), of Dart Group Corporation, a Delaware corporation (the
"Company"), at a purchase price of $160.00 per Share (the "Offer Price"), net
to the seller in cash, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"). Purchaser is a direct, wholly-owned subsidiary of
Richfood Holdings, Inc., a Virginia corporation ("Parent").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 9, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, after the
purchase of Shares pursuant to the Offer and subject to the satisfaction or
waiver of certain conditions set forth therein, Purchaser will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as
a direct wholly-owned subsidiary of Parent (the "Surviving Corporation"),
which shall continue under the name Dart Group Corporation. In the Merger,
each Share issued and outstanding (excluding Shares owned, directly or
indirectly, by the Company or any wholly-owned subsidiary of the Company or by
Parent, Purchaser or any other wholly-owned subsidiary of Parent and excluding
Shares owned by stockholders of the Company who shall have properly perfected
their appraisal rights under Delaware law) immediately prior to the effective
time of the Merger (the "Effective Time") will be converted at the Effective
Time into the right to receive the Offer Price in cash, without any interest
thereon (the "Merger Consideration"). If Purchaser acquires a majority of the
outstanding Shares, it will have sufficient voting power to approve and adopt
the Merger Agreement and the Merger without the vote of any other stockholder
of the Company. If Purchaser acquires at least 90% of the outstanding Shares,
Parent intends to cause Purchaser to approve and consummate the Merger without
any action by, or any further prior notice to, the other stockholders of the
Company pursuant to the short-form merger provisions of the Delaware General
Corporation Law (the "DGCL").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND THE COMPANY'S STOCKHOLDERS (THE "STOCKHOLDERS");
HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER; AND RECOMMENDS THAT THE STOCKHOLDERS
ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
WASSERSTEIN PERELLA & CO., INC., THE COMPANY'S FINANCIAL ADVISOR
("WASSERSTEIN"), HAS DELIVERED TO THE COMPANY ITS WRITTEN OPINION DATED APRIL
8, 1998, THAT, AS OF SUCH DATE AND SUBJECT TO THE MATTERS STATED THEREIN, THE
CONSIDERATION TO BE RECEIVED BY HOLDERS OF THE SHARES IN THE OFFER AND THE
MERGER AS CONTEMPLATED BY THE MERGER AGREEMENT IS FAIR, FROM A FINANCIAL POINT
OF VIEW, TO SUCH STOCKHOLDERS. WASSERSTEIN'S OPINION IS DIRECTED ONLY TO THE
FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE CASH CONSIDERATION TO BE
RECEIVED IN THE OFFER AND THE MERGER TO HOLDERS OF SHARES AND IS NOT INTENDED
TO CONSTITUTE, AND DOES NOT CONSTITUTE, A RECOMMENDATION AS TO WHETHER ANY
STOCKHOLDER SHOULD TENDER SHARES PURSUANT TO THE OFFER. A COPY OF THE WRITTEN
OPINION OF WASSERSTEIN IS CONTAINED IN THE COMPANY'S SOLICITATION/
RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 ("SCHEDULE 14D-9") FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE
OFFER, A COPY OF WHICH IS BEING FURNISHED TO STOCKHOLDERS CONCURRENTLY WITH
THIS OFFER TO PURCHASE.
<PAGE>
The Offer is conditioned upon, among other things, (i) a number of Shares
representing a majority of all outstanding Shares on a fully diluted basis
being validly tendered and not withdrawn prior to the Expiration Date (as
defined in Section 1 hereof) (the "Minimum Tender Condition"); and (2) the
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and receipt of
any required regulatory consents and approvals. See Sections 1 and 14, which
set forth the conditions of the Offer, and Section 15, which discusses certain
legal matters and regulatory consents and approvals.
The Company has represented and warranted to Purchaser that, as of April 6,
1998, 1,202,502 Shares were issued and outstanding and that no Company
preferred stock was issued and outstanding. The number of outstanding shares
does not include 91,436 Shares to be issued pursuant to certain outstanding
options to acquire Shares.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Stockholders. Under the DGCL, the
stockholder vote necessary to approve the Merger will be the affirmative vote
of at least a majority of the outstanding Shares, including Shares held by
Purchaser and its affiliates. If the Minimum Tender Condition is satisfied and
Purchaser purchases at least a majority of the outstanding Shares in the
Offer, Purchaser will be able to effect the Merger without the affirmative
vote of any other Stockholders. If Purchaser acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, Purchaser will be able
to effect the Merger pursuant to the "short-form" merger provisions of
Section 253 of the DGCL, without prior notice to, or any action by, any other
Stockholder. In that event, Purchaser intends to effect the Merger as promptly
as practicable following the purchase of Shares in the Offer. See Section 12.
The Merger Agreement is more fully described in Section 12. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
Purchaser is not tendering for, and the Offer does not encompass, the
preferred share purchase rights (the "Rights") issued by the Company pursuant
to the Rights Agreement, dated as of February 17, 1998 (the "Rights
Agreement"), between the Company and The Bank of New York, as rights agent.
The Company has represented and warranted to Parent and Purchaser that the
Company's Board of Directors has (i) determined that the Distribution Date (as
defined in the Rights Agreement) that would otherwise occur by virtue of the
commencement of the Offer shall be indefinitely postponed, and (ii) approved
the redemption of the Rights pursuant to the Rights Agreement in connection
with the Offer and the Merger. The Company shall cause such redemption to
occur immediately prior to Purchaser's purchase of Shares pursuant to the
Offer.
Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer or
the Merger. Purchaser will pay all charges and expenses of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), in its capacity as the dealer manager
(the "Dealer Manager"), First Union National Bank, as the depositary (the
"Depositary"), and Corporate Investor Communications, Inc., as the information
agent (the "Information Agent"), in connection with the Offer. See Section 16.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) all
Shares that are validly tendered and not withdrawn in accordance with Section
4 below prior to the Expiration Date. As used in the Offer, the term
"Expiration Date" means 12:00 midnight, New York City time, on Tuesday, May
12, 1998, unless and until Purchaser, in accordance with the terms of the
Offer and the Merger Agreement, shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" means the
latest time and date at which the Offer, as so extended, expires. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-
1(c)(6) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
In the event that the Offer is not consummated, Purchaser may seek to
acquire additional Shares through open market purchases, privately negotiated
transactions or otherwise, upon such terms and conditions and at such prices
as it shall determine, which may be more or less than the Offer Price and
could be for cash or other consideration.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Tender Condition and the expiration or termination of all waiting
periods imposed by the HSR Act. The Offer is also subject to certain other
conditions that are set forth in Section 14 below. Pursuant to the terms of
the Merger Agreement, Purchaser expressly reserves the right (but will not be
obligated) to waive any or all of the conditions of the Offer in its sole
discretion (other than the Minimum Tender Condition, which Purchaser may not
waive).
The Merger Agreement provides that Purchaser may not extend the Expiration
Date (except as required by law or the applicable rules and regulations of the
Commission), provided, however, that (i) the Offer may be extended in
connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the Commission,
(ii) Purchaser may extend the Offer for up to ten (10) business days after the
initial Expiration Date if fewer than 90% of the Shares outstanding as of such
date have been tendered at such date, so long as, in connection with such
extension, Purchaser irrevocably waives the conditions to the Offer described
in clauses (b), (c), (f), (g)(1) and (h) of Section 14 (Conditions to the
Offer) hereof, and (iii) Purchaser shall extend the Offer from time to time
until June 30, 1998, if, and to the extent that, at the initial expiration of
the Offer, or any subsequent extension thereof, all conditions to the Offer
have not been satisfied or waived and the failure of a condition to be
satisfied is not due to the failure of the Company to fulfill any of its
obligations under the Merger Agreement. Purchaser will give oral or written
notice of any such extension to the Depositary and by making a public
announcement of such extension. There can be no assurance that Purchaser will
exercise any optional right to extend the Offer.
Purchaser expressly reserves the right, subject to applicable law (including
applicable rules and regulations of the Commission promulgated under the
Exchange Act) and the terms of the Merger Agreement, at any time or from time
to time, to (i) delay acceptance for payment of, or payment for, any Shares,
regardless of whether the Shares were theretofore accepted for payment, or to
terminate the Offer and not accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the occurrence of any of
the conditions specified in Section 14 below, by giving oral or written notice
of such delay in payment or termination to the Depositary, and (ii) waive any
conditions or otherwise amend the Offer in any respect, by giving oral or
written notice to the Depositary. Any extension, delay in payment, termination
or amendment will be followed as promptly as practicable by public
announcement, the announcement in the case of an extension to be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser will have no
obligation to publish, advertise or otherwise communicate any such
announcement, other than by issuing a release to the Dow Jones News Service or
as otherwise required by law. The reservation by Purchaser
3
<PAGE>
of the right to delay acceptance for payment of or payment for Shares is
subject to the provisions ofRule 14e-1(c) under the Exchange Act, which
requires that Purchaser pay the consideration offered or return the Shares
deposited by or on behalf of Stockholders promptly after the termination or
withdrawal of the Offer.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right to increase the price per Share payable in the Offer or to make any
other changes in the terms and conditions of the Offer, except that, without
the prior written consent of the Company, Purchaser shall not (i) decrease or
change the form of the Offer Price or decrease the number of Shares sought
pursuant to the Offer, (ii) impose additional conditions to the Offer, (iii)
extend the expiration date for the Offer (except as described above) or (iv)
amend any term of the Offer in any manner adverse to Stockholders. Assuming
the prior satisfaction or waiver of the conditions to the Offer, Purchaser
shall accept for payment, and pay for, in accordance with the terms of the
Offer, all Shares validly tendered and not withdrawn pursuant to the Offer as
soon as practicable after the Expiration Date.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. If
Purchaser decides to increase or, subject to the consent of the Company, to
decrease the consideration in the Offer, or to change or waive the Minimum
Tender Condition and if, at the time that notice of any such change or waiver
is first published, sent or given to Stockholders, the Offer is scheduled to
expire at anytime earlier than the tenth business day after (and including)
the date of that notice, the Offer will be extended at least until the
expiration of that period of ten business days.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Merger Agreement and the
Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment, and will pay for, all Shares that are validly tendered on or prior to
the Expiration Date, and not properly withdrawn in accordance with Section 4
below, as soon as practicable after the Expiration Date. All questions as to
the satisfaction of such terms and conditions will be determined by Purchaser
in its sole discretion, which determination will be final and binding. Subject
to the applicable rules of the Commission, Purchaser expressly reserves the
right to delay acceptance for payment of or payment for Shares in order to
comply, in whole or in part, with any applicable law or government regulation.
Any such delays will be effected in compliance with Rule 14e-1(c) under the
Exchange Act (relating to a bidder's obligation to pay for or return tendered
securities promptly after the termination or withdrawal of such bidder's
offer). See Section 15 below.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
evidencing (or a timely Book-Entry Confirmation (as defined in Section 3
below) with respect to) such Shares, (ii) a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees, or, in the case of a book-entry transfer,
an Agent's Message (as defined below) and (iii) any other documents required
by the Letter of Transmittal. See Section 3 below.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as defined in Section 3 below) to, and received by, the
Depositary and forming part of a Book-Entry Confirmation, which
4
<PAGE>
states that (i) such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering Shares that are the subject of such Book-Entry Confirmation,
(ii) such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and (iii) Purchaser may enforce such agreement against
such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares properly tendered to Purchaser and not
withdrawn, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering Stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering Stockholders.
If, for any reason, acceptance for payment of any Shares tendered pursuant
to the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under the Offer (but subject to Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn, except to the extent that the tendering
Stockholders are entitled to exercise, and do exercise, withdrawal rights as
described in Section 4 below. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE OFFER PRICE BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason or if certificates are submitted for more Shares than are tendered,
certificates for Shares not purchased or tendered will be returned pursuant to
the instructions of the tendering Stockholder without expense to the tendering
Stockholder (or, in the case of Shares delivered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3 below, the Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility) as
promptly as practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all Shares purchased pursuant to the Offer, whether or not
the Shares were tendered prior to the increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to Parent or to one or more of its affiliates, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering Stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For a Stockholder to tender validly pursuant to the Offer,
either: (i) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (a) certificates evidencing Shares must be received
by the Depositary at any such address prior to the Expiration Date, or (b) the
Shares must be delivered pursuant to the procedures for book-entry transfer
set forth below and a Book-Entry Confirmation (as defined below) must be
received by the Depositary prior to the Expiration Date; or (ii) the tendering
Stockholder must comply with the guaranteed delivery procedures set forth
below. No alternative, conditional or contingent tenders will be accepted.
5
<PAGE>
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at the Depository Trust Company, Midwest Securities Trust Company
and Philadelphia Depository Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a Book-
Entry Transfer Facility to transfer the Shares into the Depositary's account
at the Book-Entry Transfer Facility in accordance with that Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of the Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message,
and any other required documents, must, in any case, be transmitted to, and
received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
Stockholder must comply with the guaranteed delivery procedures described
below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-
ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal: (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal. If the
certificates evidencing Shares are registered in the name of a person other
than the signer of the Letter of Transmittal or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates evidencing Shares must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name (or names) of the registered holder or owners appears on the
certificates, with the signatures on the certificates or stock powers
guaranteed as described above and as provided in the Letter of Transmittal.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a Stockholder wishes to tender Shares pursuant to
the Offer and the Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to reach the Depositary prior
to the Expiration Date, such Stockholder's tender may be effected if all of
the following conditions are met:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary (as provided below) prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer (or a Book-Entry Confirmation with respect to all such tendered
Shares), together with a properly completed and duly executed Letter of
6
<PAGE>
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other documents, are received by the Depositary within
three trading days after the date of execution of the Notice of Guaranteed
Delivery. A "trading day" is any day on which the New York Stock Exchange,
Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mailed to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a manually signed facsimile), properly completed and duly executed, with
any required signature guarantees and any other documents required by the
Letter of Transmittal (or in the case of a book-entry transfer, an Agent's
Message).
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall
be final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive any defect or
irregularity in any tender of any Shares of any particular Stockholder whether
or not similar defects or irregularities are waived in the case of other
Stockholders. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and its instructions) will be final
and binding on all parties. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of Parent, Purchaser, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to
give any such notification.
Backup Federal Income Tax Withholding. To prevent backup federal income tax
withholding of 31% of the payments made to Stockholders with respect to the
purchase price of Shares purchased pursuant to the Offer or the Merger, a
Stockholder must provide the Depositary with his or her correct taxpayer
identification number ("TIN") and certify that he or she is not subject to
backup federal income tax withholding by completing the substitute Form W-9
included in the Letter of Transmittal. See Instruction 10 of the Letter of
Transmittal and Section 5 below.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering Stockholder's acceptance of the terms and conditions
of the Offer, as well as the tendering Stockholder's representation and
warranty to Purchaser that (i) the Stockholder has a net long position in the
Shares being tendered, within the meaning of Rule 14e-4 under the Exchange
Act, and (ii) the tender of the Shares complies with Rule 14e-4. It is a
violation of Rule 14e-4 for a person, directly or indirectly, to tender Shares
for his or her own account, unless, at the time of tender, the person so
tendering (i) has a net long position equal to or greater than the amount of
(a) Shares tendered, or (b) other securities immediately convertible into or
exchangeable or exercisable for the Shares tendered and that person will
acquire the Shares for tender by conversion, exchange or exercise, and (ii)
will cause Shares to be delivered in accordance with the terms of the Offer.
Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person. Purchaser's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering Stockholder and Purchaser upon the terms and
conditions of the Offer.
7
<PAGE>
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his or her
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of the
Stockholder's rights with respect to the Shares tendered by the Stockholder
and purchased by Purchaser and with respect to any and all other Shares or
other securities issued or issuable in respect of those Shares, on or after
the date of the Offer. All such powers of attorney and proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, Purchaser accepts the
Shares for payment. Upon acceptance for payment, all prior powers of attorney
and proxies given by the Stockholder with respect to the Shares (and any other
Shares or other securities so issued in respect of such purchased Shares) will
be revoked, without further action, and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective) by the
Stockholder. The designees of Purchaser will be empowered to exercise all
voting and other rights of the Stockholder with respect to such Shares (and
any other Shares or securities so issued in respect of such purchased Shares)
as they in their sole discretion may deem proper, including, without
limitation, in respect of any annual or special meeting of the Stockholders,
or any adjournment or postponement of any such meeting, or in connection with
any action by written consent in lieu of any such meeting or otherwise
(including any such meeting or action by written consent to approve the
Merger). Purchaser reserves the absolute right to require that, in order for
Shares to be validly tendered, immediately upon Purchaser's acceptance for
payment of the Shares, Purchaser must be able to exercise full voting and
other rights with respect to the Shares, including voting at any meeting of
Stockholders then scheduled.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after Saturday, June 13, 1998. If Purchaser extends the Offer, is delayed in
its purchase of or payment for Shares or is unable to purchase or pay for
Shares for any reason, then, without prejudice to the rights of Purchaser,
tendered Shares may be retained by the Depositary on behalf of Purchaser and
may not be withdrawn, except to the extent that tendering Stockholders are
entitled to withdrawal rights as set forth in this Section 4. The reservation
by Purchaser of the right to delay the acceptance or purchase of or payment
for Shares is subject to the provisions of Rule 14e-1(c) under the Exchange
Act, which requires Purchaser to pay the consideration offered or return
Shares deposited by or on behalf of Stockholders promptly after the
termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the persons who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered the Shares. If certificates evidencing Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
the certificates, the tendering Stockholder must also submit to the Depositary
the serial numbers shown on the particular certificates that evidence the
Shares to be withdrawn, and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares tendered
for the account of an Eligible Institution). If Shares have been tendered
pursuant to the procedure for book-entry transfer set forth in Section 3
above, the notice of withdrawal must also specify the name and number of the
account at the applicable Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failing to give such
notification.
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Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3
above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to Stockholders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
the Merger Consideration in the Merger (including any cash amounts received by
dissenting Stockholders pursuant to the exercise of appraisal rights). This
discussion is based upon the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), the applicable Treasury Regulations promulgated and
proposed thereunder, judicial authority and administrative rulings and
practice. Legislative, judicial or administrative changes or interpretations
are subject to change, possibly on a retroactive basis, at any time and
therefore could alter or modify the statements and conclusions set forth
below. This discussion assumes that the Stockholders hold the Shares as
"capital assets" within the meaning of Section 1221 of the Code (i.e.,
property held for investment). This discussion does not address all aspects of
federal income taxation that may be relevant to a particular Stockholder in
light of such Stockholder's personal investment circumstances, or those
Stockholders subject to special treatment under the federal income tax laws
(for example, life insurance companies, tax-exempt organizations, foreign
corporations and nonresident alien individuals) or to Stockholders who
acquired their Shares through the exercise of employee stock options or other
compensation arrangements. In addition, the discussion does not address any
aspect of foreign, state, local or estate and gift taxation that may be
applicable to a Stockholder.
Consequences of the Offer and the Merger to Stockholders. The receipt of the
Offer Price and the Merger Consideration will be a taxable transaction for
federal income tax purposes (and also may be a taxable transaction under
applicable state, local and other income tax laws). In general, for federal
income tax purposes, a Stockholder will recognize gain or loss equal to the
difference between his or her adjusted tax basis in the Shares sold pursuant
to the Offer or converted to cash in the Merger and the amount of cash
received therefor. Gain or loss must be determined separately for each block
of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted to cash in the Merger. For federal
income tax purposes, such gain or loss will be a capital gain or loss if the
Shares are a capital asset in the hands of the stockholder. Capital gains of
individuals, estates and trusts generally are subject to a maximum federal
income tax rate of (i) 39.6% if, at the time the Purchaser accepts the Shares
for payment pursuant to the Offer or the effective date of the Merger, as the
case may be, the Stockholder held the Shares for not more than one year, (ii)
28% if the Stockholder held such Shares for more than one year but not more
than 18 months at such time, and (iii) 20% if the Stockholder held such Shares
for more than 18 months at such time. Capital gains of corporations generally
are taxed at the federal income tax rates applicable to ordinary income.
Ordinary income is taxable at a maximum rate of 39.6% for individuals and 35%
for corporations. There are significant limitations on the deductibility of
capital losses by individuals and corporations. Capital losses can offset
capital gains on a dollar-for-dollar basis and, in the case of an individual
Stockholder, capital losses in excess of capital gains can be deducted to the
extent of $3,000 annually. An individual can carry forward unused capital
losses indefinitely. A corporation can utilize capital losses only to offset
capital gain income; a corporation's unused capital losses can be carried back
three years and forward five years.
The receipt of cash pursuant to a Stockholder's exercise of Option rights or
of dissenter's rights in connection with the Merger will be a taxable
transaction for federal income tax purposes. Any Stockholders considering the
exercise of Option rights or of dissenter's rights are urged to consult their
individual tax advisors regarding the tax consequences of the exercise of such
rights.
Backup Tax Withholding. Under the Code, a Stockholder may be subject, under
certain circumstances, to "backup withholding" at a 31% rate with respect to
payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Stockholder (i) fails to furnish his or her Social
Security Number or employer identification number ("TIN"), (ii) furnishes an
incorrect TIN, (iii) fails properly to report interest or
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<PAGE>
dividends or (iv) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is his or
her correct number and that he or she is not subject to backup withholding.
Backup withholding is not an additional tax but merely an advance payment,
which may be refunded to the extent it results in an overpayment of tax.
Certain persons generally are exempt from backup withholding, including
corporations and financial institutions. Certain penalties apply for failure
to furnish correct information and for failure to include the reportable
payments in income. Each Stockholder should consult with his or her own tax
advisor as to his or her qualifications for exemption from withholding and the
procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
TO DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1997 (the "Company 10-K"), the principal trading market for
the Shares is The Nasdaq National Market ("Nasdaq"), where the trading symbol
is "DART." The following table sets forth, for the periods indicated, the high
and low intraday sales prices per Share (and, for periods prior to February
17, 1998, the predecessor shares of the Company's Class A Common Stock), as
reported by Nasdaq:
<TABLE>
<CAPTION>
QUARTER ENDED: HIGH LOW
<S> <C> <C>
April 30, 1995.............................................. $ 98.00 $ 73.00
July 31, 1995............................................... 96.00 83.75
October 31, 1995............................................ 100.00 79.00
January 31, 1996............................................ 96.75 88.25
April 30, 1996.............................................. $ 95.125 $ 81.75
July 31, 1996............................................... 96.75 75.00
October 31, 1996............................................ 100.50 87.75
January 31, 1997............................................ 101.00 84.00
April 30, 1997.............................................. $108.00 $ 88.50
July 31, 1997............................................... 112.875 96.50
October 31, 1997............................................ 118.00 99.25
January 31, 1998............................................ 119.50 104.00
</TABLE>
On April 8, 1998, the last full trading day before the public announcement
by Parent and the Company of the execution of the Merger Agreement and
Purchaser's intention to commence the Offer, the last reported sale price on
Nasdaq was $140.00 per Share. On April 14, 1998, the last full trading day
before the commencement of the Offer, the last reported sale price on Nasdaq
was $161.00 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
According to published financial sources, the Company has paid a quarterly
dividend of $0.0333 on the Shares for each of the periods presented above.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING,
EXCHANGE ACT REGISTRATION AND STATUS AS MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of
holders of Shares, which could adversely affect the liquidity and market value
of the remaining Shares held by Stockholders other than Purchaser. Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer Price.
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<PAGE>
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of Nasdaq for continued listing and
may, therefore, be delisted from such exchange. According to Nasdaq's
published guidelines, Nasdaq would consider delisting the Shares if, among
other things, (i) the number of Shares held by persons who are not officers,
directors or beneficial owners of 10% of the outstanding Shares is less than
750,000, (ii) the market value of such Shares is less than $5.0 million, (iii)
less than 400 shareholders hold a block of 100 Shares or more, (iv) the number
of market makers making a market in the Shares is less than two or (v) the net
tangible assets of the Company is less than $4.0 million. The Company has
represented that, as of April 6, 1998, there were 1,202,502 Shares issued and
outstanding and no Shares held in the Company's treasury. If, as a result of
the purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of Nasdaq for continued listing and the listing of Shares is
discontinued, the market for the Shares could be adversely affected.
If Nasdaq were to delist the Shares (which Purchaser intends to cause the
Company to seek if it acquires control of the Company and the Shares no longer
meet Nasdaq listing requirements), it is possible that the Shares would trade
on a securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported by such exchange or other sources.
The extent of the public market for the Shares and availability of such
quotations would, however, depend upon such factors as the number of holders
and/or the aggregate market value of the publicly held Shares at such time,
the interest in maintaining a market in the Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act and other factors.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the Shares are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of the registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain of the provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with a stockholders' meeting and the related requirement of an
annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer
applicable to the Company. Furthermore, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Securities Act"). If registration
of the Shares under the Exchange Act were terminated, the Shares would no
longer be "margin securities" or eligible for inclusion on Nasdaq. Purchaser
intends to seek to cause the Company to terminate registration of the Shares
under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Shares. Depending upon factors similar
to those described above regarding listing and market quotations, upon
consummation of the Offer the Shares might no longer constitute "margin
securities" for the purposes of the Federal Reserve Board's margin regulations
and, therefore, could no longer be used as collateral for loans made by
brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation formed in 1960 with its principal
executive offices located at 3300 75th Avenue, Landover, MD 20785. According
to the Company 10-K,, the Company operates retail discount auto parts stores
through Trak Auto Corporation ("Trak Auto"), retail discount book stores
through Crown Books Corporation ("Crown Books"), a retail discount grocery
business through Shoppers Food Warehouse Corp. ("Shoppers") and retail
discount beverage stores through Total Beverage Corporation ("Total
Beverage"). The Company, Trak Auto, Crown Books, Shoppers, Total Beverage and
the Company's other direct and indirect wholly-owned and majority-owned
subsidiaries and majority-owned partnerships are referred to
11
<PAGE>
collectively as the "Company." The Company owns 67.0% of the outstanding
common stock of Trak Auto, 52.3% of the outstanding common stock of Crown
Books and 100% of the outstanding common stock of Shoppers and Total Beverage.
Since fiscal 1989, the Company has owned at least 50% of the outstanding
common stock of Shoppers. On February 6, 1997, the Company acquired the shares
of Shoppers' outstanding common stock that it did not already own and Shoppers
became a wholly-owned subsidiary of the Company. On January 31, 1998, there
were 181 Trak Auto, 179 Crown Books, 37 Shoppers and five Total Beverage
stores. The Shares are traded on Nasdaq under the symbol DART and the common
stocks of Trak Auto and Crown Books are quoted on Nasdaq under the symbols
TRKA and CRWN, respectively.
Set forth below is certain selected consolidated financial data with respect
to the Company and its subsidiaries excerpted from the Company 10-K and the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended October
31, 1997 (the "Company 10-Q"). More comprehensive financial information is
included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by
reference to such reports and other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents are available for inspection and copies are obtainable in the
manner set forth below under "Available Information."
COMPANY SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY NINE MONTHS
31,(*) ENDED OCTOBER 31,(*)
------------------------------ -----------------------
1997 1996 1995 1997 1996
<S> <C> <C> <C> <C> <C>
Revenues............... $668,089 $ 678,136 $ 967,428 $ 1,120,265 $ 481,930
(Loss) before
extraordinary item and
cumulative effect of
accounting change..... (16,693) (13,424) (73,792) (24,616) (1,929)
Extraordinary item and
cumulative effect of
accounting change:
Loss on early
extinguishment of
debt, net of income
taxes of $2,150...... -- -- -- (3,126) --
Cumulative effect of
Shoppers accounting
change, net of taxes
of $1,334............ -- -- -- 1,729 --
-------- --------- --------- ----------- ---------
Net (loss)............. $(16,693) $ (13,424) $ (73,792) $ (26,013) $ (1,929)
======== ========= ========= =========== =========
PER SHARE DATA:
(Loss) before
extraordinary item and
cumulative effect of
accounting change..... $ (8.73) $ (7.88) $ (39.57) $ (11.91) $ (1.33)
Extraordinary item and
cumulative effect of
accounting change:
Loss on early
extinguishment of
debt,
net of tax .......... -- -- -- (1.51) --
Cumulative effect of
Shoppers accounting
change, net of tax... -- -- -- .84 --
-------- --------- --------- ----------- ---------
Net (loss)............. $ (8.73) $ (7.36) $ (39.57) $ (12.58) $ (1.33)
======== ========= ========= =========== =========
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY NINE MONTHS
31, ENDED
-------------------------- ----------------
1997 1996 1995 OCTOBER 31, 1997
<S> <C> <C> <C> <C>
Working capital..................... $ 90,262 $119,101 $180,415 $113,663
Total assets........................ 450,172 470,565 706,489 686,831
Long-term obligations............... 58,067 67,641 170,417 295,291
Stockholders' Equity................ 118,356 134,576 199,363 71,887
</TABLE>
12
<PAGE>
- --------
(1) On February 6, 1997, the Company acquired the 50% equity interest in
Shoppers that it did not already own, in a transaction accounted for as a
purchase. The following unaudited pro forma consolidated financial
information for the Company reflects such acquisition as if had occurred
at the beginning of the earliest period presented. Such pro forma
financial results are not necessarily indicative of future operating
results or of what would have occurred had the acquisition been
consummated as of such date:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS
JANUARY 31, ENDED OCTOBER 31,
---------------------- ----------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Pro forma revenues............ $1,526,377 $1,515,002 $1,120,265 $1,111,170
Pro forma net income (loss)... (9,233) (24,618) (26,013) 3,457
</TABLE>
Certain Company Projections. During the course of discussions between Parent
and the Company that led to the execution of the Merger Agreement (see Section
11 below), the Company discussed with representatives of Parent certain
limited non-public business and financial information about the Company.
Subsequently, the Company provided Parent with certain limited written, non-
public business and financial information concerning Shoppers. The written
information provided to Parent included Shoppers' budgeted fiscal 1999 sales
and earnings before interest, taxes, depreciation and amortization ("EBITDA")
of $906.6 million and $41.6 million, respectively, compared to the Company's
estimate of fiscal 1998 sales and EBITDA for Shoppers of $855.8 million and
$38.6 million, respectively.
THE COMPANY DOES NOT AS A MATTER OF COURSE MAKE PUBLIC ANY PROJECTIONS AS TO
FUTURE PERFORMANCE OR EARNINGS, AND THE PROJECTIONS SET FORTH ABOVE ARE
INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THE INFORMATION WAS PROVIDED
TO PURCHASER AND PARENT. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO
PUBLIC DISCLOSURE OR FOR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE
COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS. THE COMPANY
HAS ADVISED PURCHASER AND PARENT THAT ITS INTERNAL FINANCIAL FORECASTS (UPON
WHICH THE PROJECTIONS PROVIDED TO PARENT WERE BASED IN PART) ARE, IN GENERAL,
PREPARED SOLELY FOR INTERNAL USE AND CAPITAL BUDGETING AND OTHER MANAGEMENT
DECISIONS, AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO
INTERPRETATION AND PERIODIC REVISION BASED ON ACTUAL EXPERIENCE AND BUSINESS
DEVELOPMENTS. NONE OF THE COMPANY, PURCHASER OR PARENT OR THEIR RESPECTIVE
FINANCIAL ADVISORS OR ANY OF THEIR RESPECTIVE DIRECTORS OR OFFICERS ASSUMES
ANY RESPONSIBILITY FOR THE ACCURACY OF ANY OF THE PROJECTIONS. BECAUSE THE
ESTIMATES AND ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE INHERENTLY SUBJECT TO
SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES THAT ARE
DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE BEYOND THE COMPANY'S,
PURCHASER'S AND PARENT'S CONTROL, THERE CAN BE NO ASSURANCE THAT THE
PROJECTIONS WILL BE REALIZED. ACCORDINGLY, IT IS EXPECTED THAT THERE WILL BE
DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE
MATERIALLY HIGHER OR LOWER THAN THOSE PROJECTED.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with
the Commission that relates to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of those persons
in transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also are available for inspection and
copying at the regional offices of the Commission located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies
may be obtained upon payment of the Commission's prescribed fees by writing to
its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a World Wide Web site (http/www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
13
<PAGE>
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained in this Offer to Purchase has been taken from
or based upon publicly available documents on file with the Commission and
other publicly available information. Although Purchaser and Parent do not
have any knowledge that any such information is untrue in any material
respect, neither Purchaser nor Parent takes any responsibility for the
accuracy or completeness of such information or for any failure by the Company
to disclose events that may have occurred and may affect the significance or
accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
outstanding Shares pursuant to the Offer and has not conducted any unrelated
activities since its organization. Purchaser's principal executive offices are
located at 4860 Cox Road, Suite 300, Glen Allen, Virginia 23060, telephone
(804) 915-6000.
Parent is the leading wholesale food distributor in its Mid-Atlantic
operating region and the fourth largest wholesale food distributor in the
United States. Parent's Wholesale Division supplies a comprehensive selection
of national brand and private label grocery products, dairy products, frozen
foods, fresh produce items, meats, delicatessen and bakery products and non-
food items primarily from two modern, highly efficient distribution centers.
Parent's distribution centers are strategically located within its operating
region and have capacity to accommodate additional growth. The Wholesale
Division services more than 1,400 retail grocery stores, including leading
regional chains and smaller independent retailers throughout the Mid-Atlantic
region, offering its customers a dependable supply and prompt delivery of over
37,000 grocery and non-grocery items at competitive prices. With the recent
completion of the Farm Fresh Acquisition (as defined below), Parent's Retail
Grocery Division operates sixty-two retail grocery stores, primarily under the
Farm Fresh and Metro tradenames. On a pro forma basis, after giving effect to
the Farm Fresh Acquisition, Parent's Wholesale Division and Retail Grocery
Division would have accounted for approximately 75.5% and 24.5%, respectively,
of Parent's sales (before intersegment sales eliminations) during its fiscal
year ended May 3, 1997.
WHOLESALE DIVISION
Parent's management believes that, as a result of its strategic focus on
cost control, logistics and distribution, Parent is now one of the most
efficient wholesale food distributors in the United States. Over the past five
fiscal years, Parent has reduced and controlled costs by (i) capitalizing on
its size to improve its purchasing power, (ii) rationalizing product
purchasing and pricing systems, (iii) implementing a pricing system that
encourages efficient use of Parent's services and (iv) instituting
productivity-based incentives for distribution center associates. Over the
same period, Parent has significantly improved the efficiency of its logistics
and distribution functions by, among other things, implementing state-of-the-
art computer systems related to purchasing, inventory management and fleet
loading and routing. These improvements have permitted Parent to drive
substantially increased volume through its distribution system and to increase
capacity utilization significantly, thereby benefiting from its operating
leverage.
Parent's Wholesale Division has increased sales to existing customers and
attracted new customers by using Parent's purchasing power, low cost structure
and efficient distribution system to provide products to its customers at the
lowest available prices, while offering its customers a wide variety of
services to support their competitive position. The Wholesale Division has
benefitted from the growth of the leading regional chains and smaller
independent retail grocers that it serves.
Parent's Wholesale Division consists of: Richfood/Virginia, which operates a
1.3 million square foot distribution center located in Richmond, Virginia;
Richfood/Pennsylvania, which operates two distribution facilities totaling
approximately 1.0 million square feet in Harrisburg, Pennsylvania, and a
150,000 square foot produce distribution center in Norristown, Pennsylvania;
and the Richfood Dairy, which is the largest fluid dairy in Virginia
consisting of a 65,000 square foot facility capable of processing and
packaging over 800,000 gallons per week of milk and other dairy products,
fruit juices, bottled water and related items.
14
<PAGE>
RETAIL DIVISION
Parent's Retail Grocery Division, which was acquired in connection with its
acquisition of Super Rite Corporation in October 1995, operates fifteen 45,000
to 60,000 square foot "superstores" under the Metro tradename, and two smaller
traditional supermarkets under the Basics tradename, in the metropolitan
Baltimore, Maryland and Dover, Delaware markets. In addition, on March 4,
1998, Parent acquired substantially all of the assets and assumed certain
liabilities of Farm Fresh, Inc. ("Farm Fresh"), a privately held retail
supermarket chain headquartered in Norfolk, Virginia (the "Farm Fresh
Acquisition"). Farm Fresh currently operates 45 supermarkets in the Hampton
Roads, metropolitan Richmond and Shenandoah Valley areas of Virginia primarily
under two distinct tradenames and formats: (i) Farm Fresh, thirty-three
traditional supermarkets averaging approximately 33,000 square feet, offering
a full line of grocery items and selected specialty departments; and (ii) Rack
& Sack, eleven super warehouse stores averaging approximately 55,000 square
feet, featuring price sensitive grocery items at discounted prices. The
remaining store is operated under a separate name and format. According to a
May 1997 study by Dakota Worldwide Corporation, Farm Fresh is the second
largest supermarket chain in the Hampton Roads region of Virginia (consisting
of the cities of Norfolk, Hampton, Chesapeake and Virginia Beach), its
principal operating area, commanding a 34.5% market share.
The Farm Fresh Acquisition represents a further step in Parent's ongoing
strategy of pursuing strategic acquisitions in its Mid-Atlantic operating
region. Parent expects that it will be able to leverage its core competencies
in logistics and distribution to serve the Farm Fresh stores effectively,
while increasing efficiency through the utilization of excess warehouse space.
In addition, Parent's ownership of the Farm Fresh stores will result in
increased purchasing power with retail vendors, which should benefit customers
of the Company's Wholesale Division as well as Parent's own Metro and Basics
retail stores. As a result of the acquisition, Parent's Wholesale Division
will also maintain its existing business with Farm Fresh, formerly its third
largest customer, and is expected to gain incremental business via the
replacement of a portion of Farm Fresh's supply that was previously self-
distributed.
STRATEGIC ACQUISITIONS
Parent's substantial growth since 1990 is largely attributable to strategic
acquisitions. Parent considers strategic acquisition targets that are well
run, established operations, with modern facilities and the capacity to
accommodate anticipated growth, and that complement Parent's existing
operations and geographic service area.
Parent is a Virginia corporation formed in 1987. Parent's principal
executive offices are located at 4860 Cox Road, Suite 300, Glen Allen,
Virginia 23060, telephone (804) 915-6000.
Except as described in this Offer to Purchase, during the last five years,
none of Purchaser, Parent or, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I hereto (i) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors),
or (ii) was a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws. The name, business address, present principal
occupation or employment, five-year employment history and citizenship of each
director and executive officer of Purchaser and Parent are set forth in
Schedule I.
15
<PAGE>
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted from Parent's Annual Report
on Form 10-K for the fiscal year ended May 3, 1997, and Parent's Quarterly
Report on Form 10-Q for the quarterly period ended January 10, 1998, in each
case filed with the Commission by Parent. More comprehensive financial
information is included in such reports and other documents filed with the
Commission by Parent, and the following summary is qualified in its entirety
by reference to such reports and other documents and all financial information
(including any related notes) contained therein. Such reports and other
documents should be available for inspection and copies should be obtainable
in the manner set forth with respect to information about the Company in
Section 8.
PARENT SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED/(1)/ 36 WEEKS ENDED/(1)/
-------------------------------- ----------------------
MAY 3, APRIL 27, APRIL 29, JANUARY 10, JANUARY 4,
1997 1996 1995 1998 1997
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Sales................... $3,411,625 $3,250,868 $2,992,735 $2,202,550 $2,300,295
Earnings before income
taxes and extraordinary
loss................... 101,947 68,529 66,643 76,692 66,720
Net earnings............ 59,469 37,051 39,218 47,096 40,017
PER SHARE DATA:
Net earnings............ $ 1.26 $ 0.79 $ 0.84 $ 0.99 $ 0.85
Net earnings--assuming
dilution............... 1.25 0.79 0.83 0.99 0.84
Weighted average common
shares outstanding..... 47,290 46,825 46,711 47,492 47,258
Weighted average common
shares outstanding--
assuming dilution...... 47,558 47,190 47,006 47,720 47,617
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
36 WEEKS
FISCAL YEAR ENDED ENDED
---------------------------- -----------
MAY 3, APRIL 27, APRIL 29, JANUARY 10,
1997 1996 1995 1998
-------- --------- --------- -----------
<S> <C> <C> <C> <C>
Working capital...................... $ 21,868 $ 40,828 $ 72,780 $ 55,733
Total assets......................... 581,480 564,261 580,770 612,721
Total debt........................... 42,725 97,743 178,531 32,108
Shareholders' equity................. 258,650 199,562 160,330 303,921
</TABLE>
- --------
/(1)/ All historical financial data presented has been restated to reflect
Parent's October 15, 1995, acquisition of Super Rite Corporation which was
accounted for as a pooling of interests. All references to common share
and per common share data for previously reported periods have been
adjusted to reflect the 3-for-2 common stock split in fiscal 1997.
Parent's fiscal year ended May 3, 1997, consisted of 53 weeks, while
Parent's fiscal years ended April 27, 1996, and April 29, 1995, consisted
of 52 weeks.
Except as described in this Offer to Purchase, (i) none of Purchaser, Parent
or, to the best knowledge of Purchaser and Parent, any of the persons listed
in Schedule I or any associate or majority-owned subsidiary of any such
person, beneficially owns or has a right to acquire any equity security of the
Company, and (ii) none of Purchaser, Parent or, to the best knowledge of
Parent and Purchaser, any of the other persons referred to above, or any of
the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days. To the best knowledge of the Purchaser and Parent,
there are no contracts, arrangements, understandings or relationships of any
kind between the Purchaser or Parent and any person with respect to any
securities of the Company.
16
<PAGE>
10. SOURCE AND AMOUNT OF FUNDS
Neither the Offer nor the Merger is conditioned upon any financing
arrangements. Purchaser estimates that the total amount of funds required to
consummate the Offer and the Merger, to pay related fees and expenses and to
pay outstanding indebtedness of the Company that may become due as a result of
the Offer and the Merger is approximately $228 million. Purchaser expects to
obtain these funds from Parent by means of a capital contribution, loan or
combination thereof. Parent, in turn, expects to obtain these funds from
available cash, marketable securities and borrowing capacity under its
committed credit facilities.
In contemplation of the Offer, Parent entered into a commitment letter with
First Union National Bank ("First Union") pursuant to which First Union
agreed, on the terms and subject to the conditions set forth therein, to
provide credit facilities to the Parent in an aggregate amount of $450
million, $250 million of which will be a five-year revolving credit facility
and $200 million of which will be an eighteen-month term loan. Borrowings
under the facilities will initially bear interest at a variable rate per annum
equal to LIBOR plus 1%. The representations, warranties and covenants set
forth in the credit facilities will be substantially similar to those set
forth in Parent's existing credit facilities with First Union, as lender and
administrative agent for a syndicate of banks, except that the new credit
facilities will be secured by a pledge of the stock of certain subsidiaries of
Parent and unconditionally guaranteed by certain subsidiaries of Parent, which
pledges and guarantees will be released at such time as Parent's senior debt
rating is reaffirmed as investment grade. The new credit facilities will
contain provisions requiring early repayment of the term loan with the net
proceeds of new offerings of equity securities or senior debt by Parent, and
with the net proceeds of any sale of the Company's interests in Trak, Crown or
certain real estate assets, which dispositions occur after consummation of the
Merger. Parent anticipates repaying a portion of the new credit facilities
with the net proceeds of any such sales, as well as with the net proceeds of a
possible equity offering.
11. BACKGROUND OF THE OFFER
Since late 1996, Parent has been interested in acquiring Shoppers, a retail
supermarket chain which currently operates 37 price impact grocery stores in
the Greater Washington, D.C. market. Prior to February 1997, each of the
Company and Mr. Kenneth Herman, one of Shoppers' founders and its former Chief
Executive Officer, owned 50% of the outstanding common stock of Shoppers.
Under the "buy-sell" provisions of a stockholders agreement, as amended,
between the Company and Mr. Herman, each party had the right to offer to sell
its interest in Shoppers to the other at a specified price; if the offeree did
not purchase the offered interest at the specified price, the offeror was
obligated to purchase (and the offeree was obligated to sell) the offeree's
interest at such price.
In October 1996, representatives of Parent and Mr. Herman entered into
discussions regarding Parent's purchase of all of the outstanding equity
interests in Shoppers through an offer to Mr. Herman that would extend to the
shares of Shoppers common stock owned by the Company by virtue of the buy-sell
provisions of the stockholders agreement. In November 1996, Parent delivered a
preliminary expression of interest to representatives of Mr. Herman and
commenced a due diligence investigation related to Shoppers' business and
assets. On December 16, 1996, the Company announced that it had delivered an
offer to Mr. Herman under the buy-sell provisions of the stockholders
agreement and, on February 6, 1997, the Company purchased Mr. Herman's 50%
interest in Shoppers and Shoppers became a wholly-owned subsidiary of the
Company.
In March 1997, representatives of the Company contacted several prospective
buyers of Shoppers, including Parent, to ascertain their interest in a
possible acquisition of Shoppers. On April 15, 1997, Parent delivered its
preliminary expression of interest to representatives of the Company
reflecting a preliminary valuation of approximately $300 million (less assumed
debt and assumed capital leases) for substantially all of the assets of
Shoppers. Following receipt of such expression of interest, the Company
determined not to proceed with a possible sale of Shoppers at that time.
Parent remained interested in a possible acquisition of Shoppers and, in
August and September 1997, began an evaluation of a possible acquisition of
all of the stock, or substantially all of the assets, of the Company. At a
17
<PAGE>
meeting held on November 13, 1997, Parent's Board of Directors authorized
Parent's management to contact senior management of the Company to explore a
possible business combination. In early December 1997, Mr. John E. Stokely,
President, Chief Executive Officer and a Director of Parent, called Mr.
Richard B. Stone, the Acting Chief Executive Officer and a Director of the
Company, and requested a meeting. On December 17, 1997, Mr. Stokely met with
Mr. Stone and Mr. William White, President of Shoppers, to discuss the
potential for and the feasibility of a business combination involving Parent
and the Company. No decisions or commitments were made at that meeting. Over
the remainder of December 1997 and the first week of January 1998, Messrs.
Stokely and Stone had several additional telephone conversations regarding the
process that the Company would follow in the event it decided to request and
evaluate any possible expression of interest from Parent.
During January 1998, DLJ began informally advising the Company with respect
to the possible business combination with the Company. On February 3, 1998,
Parent and the Company entered into a confidentiality agreement governing
Parent's due diligence investigation of the business and assets of the
Company. Because the Company was still completing the final transactions
connected to settlements of certain litigation with members of the Haft
family, and was in the process of completing changes to its corporate
governance structure, the Company did not pursue discussions about terms of a
potential agreement and no formal diligence review process was begun at that
time.
On February 4, 1998, management of Parent, together with Parent's legal
advisors and representatives of DLJ, made presentations to Parent's Board of
Directors regarding a possible business combination between Parent and the
Company.
In early February 1998, a group of investors advised the Company of its
desire to acquire Shoppers from the Company for $360 million in cash. The
group's proposed offer was reported in the Washington Post on February 11,
1998. The letter did not indicate any source of financing and was contingent
upon a due diligence review. The letter also did not address how various
intercompany liabilities would be handled.
By letter delivered to the Company on February 12, 1998, Mr. Stokely advised
Mr. Stone of Parent's continued interest in acquiring Shoppers at a value
superior to the group's purported proposal. Mr. Stokely also advised Mr. Stone
that Parent was prepared to make an offer to acquire all of the Company,
rather than Shoppers alone, permitting the Company's Board of Directors to
maximize value for the Company's stockholders in a single transaction. Later
on February 12, 1998, Messrs. Stokely and Stone had a telephone conversation
to clarify certain aspects of Parent's letter, and Parent held an informal
telephonic meeting of its Board of Directors concerning the status of
discussions with the Company.
On February 13, 1998, Mr. Stone called Mr. Stokely to discuss the
preliminary materials related to the Company's business that would be required
by Parent to evaluate a business combination involving all of the Company.
On February 26, 1998, Parent formally retained DLJ as its financial advisor
in connection with the possible business combination with the Company.
On March 2, 1998, Mr. Stokely and Mr. John C. Belknap, Executive Vice
President and Chief Financial Officer of Parent, met with Senator Stone and
Mr. Harry Linowes, a Director of the Company, to discuss the possible business
combination. Their discussion included exploration of the rationale for the
possible transaction and the expected benefits to the constituent companies
and their respective stockholders. Mr. Stokely advised Messrs. Stone and
Linowes that, based on its preliminary review of materials available at that
time, Parent was interested in acquiring the Company in a stock-for-stock
merger valued by Parent at $147.00 per share of Company common stock. No
agreements were reached at that meeting.
On March 4, 1998, Mr. Stone called Mr. Stokely and discussed the possibility
of receiving written confirmation of Parent's expression of interest, and the
timing for disclosure of any such written expression of
18
<PAGE>
interest. Later that day, Mr. Stokely advised Mr. Stone, in writing, of
Parent's view that any expression of interest must be confidential and include
a termination date, and would be subject to the completion of due diligence.
In a telephone conversation later on March 4, 1998, Messrs. Stone and Stokely
agreed that Parent would be afforded an opportunity to conduct a due diligence
review of the business and assets of the Company before submitting a written
expression of interest.
From March 9 through March 22, 1998, representatives of Parent, its legal
and accounting advisors, and DLJ conducted an on-site due diligence review of
the business and assets of the Company and its significant subsidiaries.
On March 23, 1998, representatives of Parent, its legal advisors and DLJ met
at the Company's headquarters with the Company's Board of Directors, the
Company's legal advisors and representatives of Wasserstein. Parent delivered
and reviewed a letter proposing a stock-for-stock merger of the Company with a
subsidiary of Parent, valued by Parent at $147.00 per share of Company common
stock, together with a draft agreement to effect such transaction.
From March 23, 1998, through April 2, 1998, representatives of DLJ and
Wasserstein took part in a number of telephonic discussions regarding the
valuation and form of consideration contemplated in Parent's bid. On April 2,
1998, representatives of Wasserstein indicated their belief that the Board of
Directors of the Company might view favorably an offer by Parent to acquire
all of the Company's common stock through a tender offer and second step
merger, each at no less than $157.00 per share in cash. DLJ relayed this
information to Parent and, after informal discussions with most members of
Parent's Board of Directors, Mr. Stokely authorized DLJ to advise Wasserstein
that Parent was prepared to explore a possible all-cash transaction at $157.00
per share of Company common stock.
Over the course of April 3, 1998, representatives of DLJ and Wasserstein had
several telephonic conversations related to the value and structure of
Parent's proposal, and the Boards of Directors of the Company and Parent held
separate telephonic meetings to consider the proposal. Wasserstein informed
the Company's Board that Parent had increased its offer to $157.00 in cash per
share of Company common stock, and the Company's Board instructed Wasserstein
to seek a further increase in price. After further discussions, management of
Parent instructed DLJ to advise Wasserstein that Parent would raise its bid to
$160.00 in cash per share of Company common stock, if definitive documentation
could be executed promptly. Thereafter, representatives of Wasserstein advised
DLJ that the Company desired to negotiate and execute a definitive agreement
reflecting such value as soon as practicable.
On the morning of Sunday, April 5, 1998, Parent's legal counsel provided a
draft Merger Agreement related to the proposed transaction to representatives
of the Company. From the evening of Sunday, April 5, through the morning of
Thursday, April 9, 1998, representatives of Parent, its legal advisors and DLJ
met daily either telephonically or in person with representatives of the
Company, its legal advisors and Wasserstein to negotiate and finalize the
Merger Agreement. On Monday, April 6, 1998, the Board of Directors of Parent
met and received presentations from its legal advisers and DLJ with respect to
the proposed transaction.
On Tuesday, April 7, 1998, the Board of Directors of Parent met and received
additional information from Parent's legal advisers, and was advised that DLJ
was prepared to deliver its opinion that the proposed consideration to be paid
by Parent pursuant to the Merger Agreement was fair to Parent and its
shareholders from a financial point of view. At the conclusion of such
meeting, the Board of Directors of Parent unanimously approved the proposed
transaction, subject to certain authorized officers' satisfaction with the
resolution of the few remaining issues.
In the morning and again in the late evening of April 8, 1998, the Board of
Directors of the Company met and received presentations from the Company's
legal advisers and Wasserstein. During the morning meeting, Wasserstein
advised the Board that it was prepared to deliver its opinion that the
proposed transaction was fair to the Company and its stockholders from a
financial point of view. At the conclusion of such meeting, the Board of
Directors of the Company unanimously approved the proposed transaction.
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The draft Merger Agreement was finalized over the evening of April 8 and the
early morning of April 9, 1998. The Merger Agreement was executed, and the
transaction was publicly announced, before the opening of business on April 9,
1998.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; OTHER AGREEMENTS
Purpose of the Offer and the Merger
The purpose of the Offer and the Merger is to enable Purchaser to acquire,
in one or more transactions, control of the Company and the entire equity
interest in the Company. The Offer is intended to increase the likelihood that
the Merger will be completed promptly.
Plans for the Company
Parent intends, from time to time after completion of the Offer, to evaluate
and review the Company's operations and consider what, if any, changes would
be desirable in light of circumstances that then exist. Parent intends, as
soon as practicable following consummation of the Offer, to cause the Company
to divest its non-core assets, including its ownership of Trak, Crown and
Total Beverage. In addition, Parent intends, following consummation of the
Offer, to suspend the Company's practice of declaring regular quarterly
dividends. Except as noted in this Offer to Purchase, Purchaser and Parent
have no present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation or sale
or transfer of a material amount of assets involving the Company or any
subsidiary or any other material changes in the Company's capitalization,
dividend policy, corporate structure, business or composition of its
management or Board.
The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is incorporated by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Merger Agreement may be examined, and copies obtained, as set forth in
Section 8 above.
The Offer. The Merger Agreement provides for the commencement of the Offer.
Purchaser has expressly reserved the right to increase the price per Share
payable in the Offer or to make any other changes in the terms and conditions
of the Offer, except that without the prior written consent of the Company,
Purchaser has agreed that it will not (i) decrease or change the form of the
Offer Consideration or decrease the number of Shares sought pursuant to the
Offer, (ii) impose additional conditions to the Offer, (iii) extend the
Expiration Date of the Offer (except as required by law or the applicable
rules and regulations of the Commission and except that Purchaser (x) may
extend the Expiration Date of the Offer for up to ten (10) business days after
the initial Expiration Date if fewer than 90% of the Shares outstanding as of
such date have been tendered as of such date, so long as, in connection with
such extension, Purchaser irrevocably waives the conditions to the Offer
described in clauses (b), (c), (f), (g)(1) and (h) of Item 14 (Conditions to
the Offer) hereof, and (y) Purchaser shall extend the Offer from time to time
until June 30, 1998, if, and to the extent that, at the initial expiration of
the Offer, or any subsequent extension thereof, all conditions to the Offer
have not been satisfied or waived and the failure of a condition to be
satisfied is not due to the failure of the Company to fulfill any of its
obligations under the Merger Agreement, or (iv) amend any term of the Offer in
any manner adverse to Stockholders; provided, however, that, except as set
forth above, Purchaser may waive any condition to the Offer in its sole
discretion (other than the Minimum Condition); and provided, further, that the
Offer may be extended in connection with an increase in the consideration to
be paid pursuant to the Offer so as to comply with applicable rules and
regulations of the Commission. Assuming the prior satisfaction or waiver of
the conditions to the Offer, Purchaser will accept for payment, and pay for,
in accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the Expiration
Date thereof.
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Payment for Shares. Prior to the Effective Time, Parent will deposit or
shall cause to be deposited with the Depositary in a separate fund established
for the benefit of the holders of Shares, for payment in accordance with the
Merger Agreement (the "Payment Fund"), immediately available funds in amounts
necessary to make the payments pursuant to the Merger Agreement to holders of
Shares (other than the Company or any wholly-owned subsidiary of the Company
or Parent, Purchaser or any other wholly-owned Subsidiary of Parent, or
holders of Dissenting Shares (as defined below)). The Depositary shall,
pursuant to irrevocable instructions, pay the Merger Consideration out of the
Payment Fund. Parent shall provide or cause to be provided to Purchaser all of
the funds necessary to purchase any Shares that Purchaser becomes obligated to
purchase pursuant to the Offer.
Any portion of the Payment Fund which remains undistributed to the holders
of Shares for one year after the Effective Time shall be delivered to the
Company, upon demand, and any holders of Shares who have not theretofore
complied with the Merger Agreement and the Instructions set forth in the
Letter of Transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Company for payment of the Merger Consideration to
which they are entitled; provided that if, but only if, the Company shall have
defaulted in its obligation to make such payment within a reasonable period of
time after receipt of written request therefor from any such holder, such
holder may thereafter look to Parent for payment of the Merger Consideration
to which they are entitled. All interest accrued in respect of the Payment
Fund shall inure to the benefit of and be paid to Parent.
Board Representation. The Merger Agreement provides that promptly upon the
purchase pursuant to the Offer by Parent and any of its subsidiaries
(including Purchaser) of such number of Shares that represents at least a
majority of the Shares outstanding, and from time to time thereafter, Parent
will be entitled to designate such number of directors, rounded up to the next
whole number, on the Board that equals the product of (x) the number of
directors (the "Parent Designees") on the Board (giving effect to any increase
in the number of directors pursuant to the Merger Agreement), and (y) the
percentage that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being the "Board Percentage"), and
the Company will, subject to Parent's having theretofore provided the Company
with the information with respect to Parent's Designees required pursuant to
compliance with Section 14(f) of the Exchange Act, promptly satisfy the Board
Percentage by (i) increasing the size of the Board, or (ii) securing the
resignations of such number of directors as is necessary to enable Parent's
Designees to be elected to the Board (and the Company shall use its best
efforts to cause the then-remaining members of the Board to promptly so elect
Parent's Designees). At the request of Parent, the Company will take, at the
Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to the Stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, unless such information has previously been provided to the
Company's Stockholders in the Schedule 14D-9. Following the election or
appointment of Parent's Designees pursuant to the Merger Agreement and prior
to the Effective Time, any amendment or termination of the Merger Agreement,
extension for the performance or waiver of the obligations or other acts of
Parent or Purchaser, or waiver of the Company's rights under the Merger
Agreement will require the concurrence of a majority of directors of the
Company then in office who are directors on the date of the Merger Agreement
and who voted to approve the Merger Agreement; provided that if there are no
such directors, such actions may be effected by majority vote of the entire
Board; and provided, further, that after the approval of the Merger Agreement
by the stockholders of the Company, no such amendment, termination,
modification or supplement shall reduce or change the Merger Consideration or
adversely affect the rights of the Company's stockholders under the Merger
Agreement without the approval of such stockholders.
Consideration to be Paid in the Merger. The Merger Agreement provides that,
upon the terms and subject to the conditions set forth in the Merger
Agreement, and in accordance with the DGCL, Purchaser will be merged with and
into the Company at the Effective Time. At the Effective Time, the separate
corporate existence of Purchaser will cease, and the Company will continue as
the Surviving Corporation. At the Effective Time, by virtue of the Merger,
each Share issued and outstanding immediately prior to the Effective Time
(excluding Shares owned, directly or indirectly, by the Company or any wholly-
owned subsidiary of the Company or by
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Parent, Purchaser or any other wholly-owned subsidiary of Parent and excluding
Dissenting Shares) will be converted into the right to receive the Merger
Consideration, without any interest thereon, upon surrender and exchange of a
certificate which immediately prior to the Effective Time represented such
Shares (each, a "Certificate"). Each share of the capital stock of Purchaser
issued and outstanding immediately prior to the Effective Time will be
converted into one fully paid and nonassessable share of common stock, par
value $.10 per share, of the Surviving Corporation, which will thereupon
become a direct, wholly-owned subsidiary of Parent. Each Share and all other
shares of capital stock of the Company that are owned by the Company and all
Shares and other shares of capital stock of the Company owned by Parent,
Purchaser or any other wholly-owned subsidiary of Parent or the Company will
be canceled and retired and will cease to exist and no consideration will be
delivered or deliverable in exchange therefor. The Merger will become
effective upon the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware or at such time thereafter as is provided in
the Certificate of Merger.
Options and Other Purchase Rights. After the Effective Time, each holder of
(i) a then-outstanding option (collectively, the "Employee Options") to
purchase Shares under the Company's 1992 Stock Option Plan and the Option
Agreements between the Company and certain of its officers, directors,
employees and consultants thereunder (the "Stock Option Plan"), or (ii) any
other option, warrant or other right to acquire (upon purchase, exchange,
conversion or otherwise) Shares of the Company's Common Stock (collectively,
the "Other Options" and, together with the Employee Options, the "Options"),
will be entitled to receive for each Share subject to such Option, in
settlement and cancellation thereof, an amount (subject to any applicable
withholding tax) in cash equal to the difference between the Merger
Consideration and the per Share exercise price of such Option, to the extent
such difference is a positive number (such amount being hereinafter referred
to as, the "Option Consideration"). In addition, in the alternative, each
holder of an Option outstanding at the commencement of the Offer may tender
such Option and thereby be entitled to receive for each Share subject to such
Option, upon consummation of the Offer and in settlement and cancellation of
such Option, an amount (subject to any applicable withholding tax) in cash
equal to the Option Consideration. Notwithstanding the foregoing provisions,
with respect to any Person subject to Section 16(a) of the Exchange Act, any
such Option Consideration shall be paid as soon as practicable after the first
date payment can be made without liability to such Person under Section 16(b)
of the Exchange Act. The Company has represented and warranted to Parent and
Purchaser that the Stock Option Plan has been amended to give effect to the
foregoing as of the commencement of the Offer. Upon receipt of the related
Option Consideration, the Option shall be canceled. The surrender of an Option
to the Company in exchange for the Option Consideration shall be deemed a
release of any and all rights the holder had or may have had in respect of
such Option.
Dissenting Shares. Shares that are outstanding immediately prior to the
Effective Time and which are held by Stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such shares in accordance with
Section 262 of the DGCL (collectively, the "Dissenting Shares") will not be
converted into or represent the right to receive the Merger Consideration.
Such Shares instead will, from and after the Effective Time, represent only
the right to receive payment of the appraised value of such Shares held by
them in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by Stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
Shares under such Section 262 shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right
to receive, without any interest thereon, the Merger Consideration upon
surrender, in the manner provided in the Merger Agreement, of the Certificate
or Certificates that, immediately prior to the Effective Time, evidenced such
Shares.
Stockholders' Meeting. The Merger Agreement provides that the Company will,
if required by applicable law in order to consummate the Merger, as soon as
practicable following the acceptance for payment of and payment for Shares by
Purchaser in the Offer, duly call, give notice of, convene and hold a
stockholders' meeting (the "Company Stockholders' Meeting") for the purpose of
approving the Merger Agreement and the transactions contemplated thereby. At
the Company Stockholders' Meeting, the Board will, subject to the
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fiduciary duties of the Board of Directors, recommend to its stockholders the
adoption and approval of the Merger Agreement and the transactions
contemplated thereby. Parent has agreed that it will vote, or cause to be
voted, all of the Shares then owned by it, Purchaser or any of its other
subsidiaries in favor of approval of the Merger and the Merger Agreement.
Following the acceptance for payment of and payment for Shares by Purchaser in
the Offer, the Company and Parent will prepare and file with the Commission a
proxy statement, if necessary. The Company will use its reasonable best
efforts to respond to all Commission comments with respect to the proxy
statement and to cause the proxy statement and the form of proxy, which will
comply as to form with all applicable laws, to be mailed to the Stockholders.
Notwithstanding the preceding paragraph, in the event that Parent, Purchaser
and any other subsidiary of Parent acquire at least 90% of the outstanding
Shares in the Offer, the parties to the Merger Agreement have agreed to take
all necessary and appropriate action to cause the Merger to become effective
as soon as practicable after acceptance for payment of Shares by Purchaser
pursuant to the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties. These include representations
and warranties by the Company to the Parent and Purchaser with respect to (i)
organization and authority, (ii) capitalization, (iii) authority relative to
the Merger Agreement, (iv) consents and approvals; no violations, (v) reports,
(vi) absence of certain events, (vii) litigation, (viii) title to and
sufficiency of assets, (ix) contracts, (x) labor matters, (xi) employee
benefit plans, (xii) tax matters, (xiii) transactions with affiliates, (xiv)
fees and expenses of brokers and others, (xv) absence of undisclosed
liabilities; guarantees and (xvi) information supplied.
Parent and Purchaser also have made certain representations and warranties
to the Company with respect to (i) organization and authority, (ii) authority
relative to the Merger Agreement, (iii) consents and approvals, (iv) no
violations, (v) information supplied, (vi) financial capability and (vii) fees
and expenses of brokers and others.
Conduct of Business Pending the Merger. Except as provided in the Merger
Agreement, the Company has agreed that during the period from the date of the
Merger Agreement and continuing until the Effective Time, the Company and its
wholly-owned subsidiaries will carry on their respective operations according
to their ordinary and usual course of business and consistent with past
practice, and will use their respective reasonable best efforts to preserve
intact their respective business organizations, to keep available the services
of their officers and employees and to maintain satisfactory relationships
with licensors, licensees, suppliers, contractors, distributors, customers and
others having material business relationships with them. Except as provided in
the Merger Agreement, the Company has further agreed that from the date of the
Merger Agreement through the Effective Time, neither it, nor any of its
wholly-owned subsidiaries, will: (i) amend its Articles or Certificate of
Incorporation, bylaws, partnership or joint venture agreements or other
organizational documents; (ii) authorize for issuance or issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities or interests, except as required by the terms of
any Company benefit plan existing on the date thereof, or any options,
warrants, rights or other securities outstanding as of the date thereof and
disclosed pursuant to the Merger Agreement; (iii) split, combine or reclassify
any shares of its capital stock or declare, set aside or pay any dividend or
other distribution or redemption (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or otherwise
acquire any of its securities or any securities of their respective
subsidiaries and partnerships; (iv) (A) incur or assume any Funded Debt (as
defined in the Merger Agreement) not outstanding on the date of the Merger
Agreement, except for borrowings in the ordinary course of business under
revolving credit agreements in effect on the date thereof, or permit any
modifications or amendments of any agreements related to Funded Debt, (B)
assume, guarantee, endorse or otherwise become liable or responsible for the
obligations of any person (including, without limitation, the obligations of
any other company affiliated with the Company), or permit the renewal or
extension of any contract or other obligation that is the subject of a
guarantee or similar obligation, other than the endorsement of checks for
deposit in the ordinary course of business, (C) make any loans, advances or
capital contributions to, or investments in, any other person (including,
without
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limitation, any company affiliated with the Company), (D) enter into any
contract, or alter, amend, modify or exercise any option under any existing
contract, other than in the ordinary course of business or in connection with
the transactions contemplated by the Merger Agreement, (E) enter into, or
alter, amend, modify or exercise any option under, any supply or requirements
agreement or (F) authorize any capital expenditures other than capital
expenditures pursuant to contracts entered into prior to the date thereof,
capital expenditures related to necessary maintenance in the ordinary course
of business or capital expenditures reflected in Shoppers' fiscal 1999 capital
budget; (v) adopt or amend (except as may be required by law or as provided in
the Merger Agreement) any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreements, trusts, plans, funds or other arrangements for
the benefit or welfare of any director, officer or employee, or (except for
normal increases to non-executive employees in the ordinary course of business
that are consistent with past practices and that, in the aggregate, do not
result in a material increase in benefits or compensation expense) increase in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing; (vi) acquire, sell, lease or dispose of any material assets outside
the ordinary course of business; (vii) take any action other than in the
ordinary course of business and in a manner consistent with past practice with
respect to accounting policies or practices; (viii) make any material tax
election or settle or compromise any material federal, state, local or foreign
income tax liability; (ix) except for the payment of professional fees, pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the Company's audited
consolidated balance sheet as of January 31, 1997, included in the Company 10-
K, or incurred in the ordinary course of business since the date thereof; (x)
hold any meeting of its stockholders except to the extent required by the
request of the stockholders entitled to call a meeting under the Company's
bylaws or the DGCL; (xi) take any action that would or is reasonably likely to
result in any of the conditions to consummation of the Offer not being
satisfied as of the Closing Date; or (xii) agree in writing or otherwise to
take any of the foregoing actions.
The Merger Agreement also provides that, during the period from the date of
the Merger Agreement to the Effective Time: (i) Parent and the Company will
cause representatives of their respective companies to meet, no less
frequently than monthly, to discuss the operations and business prospects of
the Company and its subsidiaries; (ii) the Company will promptly advise Parent
of the occurrence of any event having a Material Adverse Effect (as defined in
the Merger Agreement) on the Company and its subsidiaries, or any event that
would constitute a breach by the Company of any of its representations,
warranties, covenants or agreements set forth in the Merger Agreement; and
(iii) Parent will promptly advise the Company of the occurrence of any event
that would constitute a breach by Parent of any of its representations,
warranties, covenants or agreements set forth in the Merger Agreement.
Other Agreements. The Company, Purchaser and Parent have agreed to use their
best efforts to comply promptly with all legal requirements which may be
imposed on such party with respect to the Offer, the Merger (including
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other governmental authority) to cooperate
with and furnish information to each other. Without limiting the generality or
effect of the foregoing, the Company will, and will cause its subsidiaries to,
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any governmental authority or other public or private third
party, required to be obtained or made by the Company, Parent or any of their
subsidiaries in connection with the Offer, the Merger, the Merger Agreement,
or the taking of any action contemplated hereby or thereby.
No Solicitation. The Merger Agreement provides that from and after the date
of the Merger Agreement and before the Effective Time, the Company shall not,
directly or indirectly, through any officer, director, employee, agent or
otherwise, (i) solicit, initiate or encourage submission of proposals, offers
or expressions of interest from any person relating to any acquisition or
purchase of all or (other than in the ordinary course of
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business) a substantial portion of the assets of, or any equity interest in
(including by way of a tender offer), any company affiliated with the Company
or any business combination involving any company affiliated with the Company
(any of the foregoing proposals, offers or expressions of interest being
referred to herein as an "Acquisition Proposal") or (ii) participate in any
negotiations or discussions regarding, or furnish to any person any nonpublic
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any Acquisition Proposal;
provided, however, that prior to the consummation of the Offer, the Company
may participate in negotiations or discussions with, and provide nonpublic
information to, any person concerning an Acquisition Proposal submitted in
writing by such person to the Board of Directors of the Company after the date
of the Merger Agreement if (A) such Acquisition Proposal was not solicited,
initiated or encouraged in violation of the Merger Agreement, and (B) the
Board of Directors of the Company, in its good faith judgment, believes that
such Acquisition Proposal is reasonably likely to result in a Superior
Proposal (as defined below).
Until such time, if any, that Parent makes its first offer to the Company in
response to a notice that the Company's Board of Directors has determined that
an Acquisition Proposal constitutes a Superior Proposal, the Company is
required to notify Parent as promptly as practicable (and in any event within
48 hours) if any Acquisition Proposal is made and shall in such notice
indicate in reasonable detail the identity of the person making such
Acquisition Proposal and the terms and conditions of such Acquisition
Proposal, and shall keep Parent promptly advised of all material developments
relating to such Acquisition Proposal which could reasonably be expected to
culminate in the Board of Directors of the Company withdrawing, modifying or
amending its recommendation of the Offer, the Merger and the other
transactions contemplated in the Merger Agreement in a manner adverse to
Purchaser.
If, as permitted above, the Company provides nonpublic information to any
person who makes an Acquisition Proposal, the Company shall require such
person to enter into a confidentiality agreement on terms substantially
similar to the Confidentiality Agreement, dated as of February 3, 1998,
besides Parent and the Company (the "Confidentiality Agreement"), as a
condition to and before providing any such information (except as to the
standstill provisions thereof, provided that if under the aforementioned
circumstances the Company enters into any confidentiality agreement without
standstill provisions substantially similar to those contained in the
Confidentiality Agreement, then Parent shall to the extent of the difference
be relieved of compliance with the Confidentiality Agreement's standstill
provisions).
The Merger Agreement requires that the Company immediately cease and cause
to be terminated any then-existing discussions or negotiations with any
persons (other than Parent and Purchaser) conducted theretofore with respect
to any Acquisition Proposal. The Company may waive the provisions of any
"standstill" agreements between the Company and any party to the extent
necessary to permit such party to submit an Acquisition Proposal that the
Board of Directors of the Company believes, in its good faith judgment, is
reasonably likely to result in a Superior Proposal; provided, that such waiver
(i) does not violate or conflict with terms of the Merger Agreement, and (ii)
would not, in any event, permit such person to acquire any direct or indirect
beneficial ownership of Shares or participate in any tender offer or proxy
solicitation relating to the Company that would otherwise be prohibited by
such "standstill" agreement.
Fees and Expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expense.
Conditions to the Merger. The respective obligation of each party to
consummate the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions precedent: (a) the Merger Agreement
and the Merger shall have been approved and adopted by the affirmative vote of
the holders of a majority of Shares entitled to vote thereon if such vote is
required under the DGCL; (b) no order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any United States court of
competent jurisdiction or any United States governmental authority which
prohibits the consummation of the Merger; provided, however, that the parties
hereto shall use their best efforts to have any such order, decree or
injunction vacated or reversed;
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and (c) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, all applicable requirements of the Exchange Act
shall have been satisfied and any applicable filings under state securities,
"Blue Sky" or takeover laws shall have been made.
The obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of the following
conditions precedent: (a) the representations and warranties of Parent and
Purchaser, when read without exception or qualification as to materiality or
Material Adverse Effect, shall be true and correct when made and at and as of
the consummation of the Offer with the same force and effect as if those
representations and warranties had been made at and as of such time (except to
the extent such representations and warranties speak as of a specified earlier
date, in which event such representations and warranties must be true and
correct as of such specified date), except where the failure to be so true and
correct would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent; and (b) Parent and Purchaser shall,
in all material respects, have performed all obligations and complied with all
covenants necessary to be performed or complied with by them on or before the
consummation of the Offer.
The obligations of Parent and Purchaser to consummate the Merger are subject
to the satisfaction or waiver at or prior to the Effective Time of the
following conditions precedent: (a) the representations and warranties of the
Company, when read without exception or qualification as to materiality or
Material Adverse Effect on the Company, shall be true and correct when made
and at and as of the consummation of the Offer with the same force and effect
as if those representations and warranties had been made at and as of such
time (except to the extent such representations and warranties speak as of a
specified earlier date, in which event such representations and warranties
must be true and correct as of such specified date), except where the failure
to be so true and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company; and
(b) the Company shall, in all material respects, have performed all
obligations and complied with all covenants necessary to be performed or
complied with by it on or before the consummation of the Offer.
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time notwithstanding approval
thereof by the respective shareholders of the Company and Purchaser, but prior
to the Effective Time: (a) by mutual written consent of the Company and
Parent; (b) by the Company or Parent, if either (i) the purchase of Shares
pursuant to the Offer has not been consummated on or before June 30, 1998, or
(ii) the Effective Time shall not have occurred on or before December 31, 1998
(provided that the right to terminate the Merger Agreement under the forgoing
clause (b) provision shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of or has
resulted in the failure of the consummation of the Offer or Effective Time to
occur on or before the applicable date set forth above); (c) by the Company if
there has been a material breach by Parent of any representation, warranty,
covenant or agreement set forth in the Merger Agreement, which breach has not
been cured within twenty (20) business days following notice to Parent of such
breach; (d) by Parent if (i) any of the events described in clauses (b) or (c)
of Section 14 hereof (Conditions to the Offer) has occurred, which event has
not been cured by the Company within twenty (20) business days following
notice to the Company of such event; or (ii) the Board of Directors of the
Company should fail to recommend to its stockholders approval of the
transactions contemplated by the Merger Agreement, including, without
limitation, the Offer and the Merger, or such recommendation shall have been
made and subsequently withdrawn, modified or amended in any manner adverse to
Parent; (e) by the Company if, prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide
Acquisition Proposal that the Board of Directors of the Company believes, in
good faith after consultation with its financial advisors, is more favorable,
from a financial point of view, to the stockholders of the Company than the
proposal set forth in the Merger Agreement (a "Superior Proposal"); provided,
that (i) if a component of such Superior Proposal is cash consideration, then
the party making such Superior Proposal has cash on hand or financing in place
to provide such cash consideration, which financing is committed and/or
underwritten substantially to the same extent as Parent's financing was on the
date of the Merger Agreement, (ii) the Board of Directors of the Company
intends to enter into a definitive agreement relating to such Superior
Proposal immediately following the termination of the Merger Agreement
pursuant to
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such provision, and (iii) Parent does not make, within two (2) business days
of receiving the first notice from the Company specifying that the Board of
Directors of the Company has determined that an Acquisition Proposal
constitutes a Superior Proposal giving rise to a potential right of
termination under this provision, an offer that the Board of Directors of the
Company believes, in good faith after consultation with its financial
advisors, is more favorable, from a financial point of view, to the Company's
stockholders than such Superior Proposal; or (f) by the Company or Parent, if
any court of competent jurisdiction in the United States or other United
States governmental authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable.
Termination Fee. If the Merger Agreement is terminated (i) by Parent
pursuant to clause (b)(i) of the preceding paragraph, and the failure of the
consummation of the Offer has been caused by or is attributable to the failure
of those conditions to the Offer described in clauses (b), (c), (e) or (g)(2)
of Section 14 hereof (Conditions to the Offer) being satisfied, (ii) by Parent
pursuant to clause (d) of the preceding paragraph, or (iii) by the Company
pursuant to clause (e) of the preceding paragraph, and, in the case of any of
the foregoing, if the Company is not entitled to terminate the Merger
Agreement by reason of clause (c) of the preceding paragraph, then the Company
shall promptly (and in any event within two days of receipt by the Company of
written notice from Parent) pay to Parent (by wire transfer of immediately
available funds to an account designated by Parent): (A) a termination fee of
$6.0 million, plus (B) Parent's actual out-of-pocket expenses (including all
fees and expenses of its counsel, advisors, accountants and consultants)
incurred by Parent or on its behalf in connection with the transactions
contemplated in the Merger Agreement, not to exceed $500,000 in the aggregate.
Indemnification and Insurance. From and after the consummation of the Offer
and for a period of six (6) years thereafter, Parent shall cause the Company
and its wholly-owned subsidiaries to maintain all rights of indemnification
(including rights to advancement of expenses and exculpation from liability)
existing in favor of the present and former directors, officers, employees and
agents of the Company and such subsidiaries (collectively, the "Indemnified
Parties") on terms no less favorable than those provided in the certificates
of incorporation and bylaws of such entities on the date of the Merger
Agreement with respect to matters occurring prior to the Effective Time. In
addition, Parent shall and shall cause each of the Company and its
subsidiaries (or any of their successors) to perform all of their respective
obligations under certain Indemnification Agreements entered into prior to the
date of the Merger Agreement. Further, Parent shall cause to be maintained in
effect for six (6) years from the consummation of the Offer the current
policies for directors' and officers' liability insurance maintained by the
Company for the benefit of the Indemnified Parties (provided that Parent may
substitute therefor policies of at least the same coverage containing terms
and conditions that are not materially less advantageous) with respect to
matters occurring prior to the Effective Time, to the extent such insurance is
available to Parent in the market. If such insurance is not available to
Parent in the market, Parent will provide such level of insurance as is then
provided to directors and officers of Parent. These obligations will continue
in the event that Parent or the Company or any of their respective successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity in such consolidation or
merger, or (ii) transfers all or substantially all of its properties and
assets to any person.
Shoppers Senior Notes. In the event that any of the 9 3/4% Senior Notes due
2004 (the "Senior Notes") issued by Shoppers pursuant to that certain
Indenture, dated as of June 6, 1997, between Shoppers, as issuer, SFW Holding
Corp., as guarantor, and Norwest Bank Minnesota, N.A., as trustee (the
"Indenture"), are tendered to Shoppers (the "Tendered Notes") by the holders
thereof as a result of the transactions contemplated in the Merger Agreement,
Parent will (i) cause Shoppers to comply with its obligations under the
Indenture, and (ii) if necessary, lend to Shoppers all amounts required to
repurchase any Tendered Notes on commercially reasonable terms and in
accordance with lending conditions then available in arms-length transactions.
Amendment. The Merger Agreement may be amended by action taken by the
parties thereto at any time before or after approval of the Merger by the
stockholders of the Company but, after any such approval, no amendment shall
be made that would have any of the effects specified in DGCL Section 251(d)
without the
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approval of the stockholders of the Company. This Merger Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties thereto.
Brokers or Finders Fees. No broker, finder or investment banker (other than
Wasserstein, whose fees shall be paid by the Company) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by the Merger Agreement based upon arrangements made
by or on behalf of the Company; and no broker, finder or investment banker
(other than DLJ, whose fees shall be paid by Parent) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by the Merger Agreement based upon arrangements made
by or on behalf of Parent or Purchaser.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms and subject to the conditions
set forth above, there can be no assurance as to the timing of the Merger.
Appraisal Rights. No appraisal rights are available to Stockholders in
connection with the Offer. However, if the Merger is consummated, a
Stockholder will have certain rights under Section 262 of the DGCL to dissent
and to demand appraisal of, and payment in cash for the fair value of, that
Stockholder's Shares. Those rights, if the statutory procedures are complied
with, could lead to a judicial determination of the fair value (excluding any
value arising from the Merger) required to be paid in cash to dissenting
Stockholders for their Shares. Any judicial determination of the fair value of
Shares could be based upon considerations other than or in addition to the
Offer Price and the market value of the Shares, including asset values and the
investment value of the Shares. The value so determined could be more or less
than the Offer Price or the Merger Consideration.
If a Stockholder who demands appraisal under Section 262 of the DGCL fails
to perfect, or effectively withdraws or loses, his or her right to appraisal,
as provided in the DGCL, the Shares of that Stockholder will be converted into
rights to receive the Merger Consideration in accordance with the Merger
Agreement. A Stockholder may withdraw his or her demand for appraisal by
delivering to Purchaser a written withdrawal of such demand for appraisal and
acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of those rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger unless, among other things, the Merger
is completed more than one year after termination of the Offer. If applicable,
Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the
fairness of the Merger and the consideration offered to minority Stockholders
be filed with the Commission and disclosed to minority Stockholders prior to
consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or (iii) issue or sell additional Shares, shares
of any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14
below, Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company declares or
pays any cash dividend on the Shares, makes other distributions on the Shares
or issues, with respect to the Shares, any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or
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options, conditional or otherwise, to acquire, any of the foregoing, payable
or distributable to Stockholders of record prior to the transfer of the Shares
purchased pursuant to the Offer to Purchaser or its nominee or transferee on
the Company's stock transfer records, then, subject to Section 14 below, (i)
the Offer Price may, in the sole discretion of Purchaser, be reduced by the
amount of any cash dividend or cash distribution and (ii) the whole of any
non-cash dividend, distribution or issuance to be received by the tendering
Stockholders will (a) be received and held by the tendering Stockholders for
the account of Purchaser and will be required to be remitted promptly and
transferred by each tendering Stockholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer or (b) at the
direction of Purchaser, exercised for the benefit of Purchaser, in which case
the proceeds of exercise promptly will be remitted to Purchaser. Pending the
remittance and subject to applicable law, Purchaser will be entitled to all
rights and privileges as owner of any non-cash dividend, distribution,
issuance or proceeds and may withhold the entire Offer Price or deduct from
the Offer Price the amount or value of the non-cash dividend, distribution,
issuance or proceeds, as determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing in this Offer to Purchase shall constitute a waiver by Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to Purchaser or Parent for any breach of the Merger
Agreement, including termination of the Merger Agreement.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after expiration or termination of the Offer), to pay for any Shares
tendered unless the following conditions have been satisfied: (i) there have
been validly tendered and not withdrawn prior to the time the Offer shall
otherwise expire a number of Shares which constitutes a majority of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a fully-
diluted basis" for purposes hereof meaning, as of any date, the number of
Shares outstanding, together with Shares that the Company is or may be
required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans, options, warrants or convertible
or exchangeable securities, or otherwise) (the "Minimum Condition"); (ii) any
applicable waiting periods under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer; and (iii) if, at any time on
or after the date of the Merger Agreement and before acceptance for payment
of, or payment for, such Shares any of the following events shall occur:
(a) any Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect and which (1) materially
restricts, prevents or prohibits consummation of the Offer or the Merger or
results in the obligation to pay damages as a result of or in connection
with the transactions contemplated by the Merger Agreement in amounts that
would have a Material Adverse Effect on the Company, (2) prohibits or
limits materially the ownership or operation by the Company, Parent or any
of their subsidiaries of all or any material portion of the business or
assets of the Company and its subsidiaries taken as a whole or compels the
Company, Parent, or any of their subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of Parent or
any of its subsidiaries, or of the Company and its subsidiaries taken as a
whole, (3) imposes material limitations on the ability of Parent, Purchaser
or any other subsidiary of Parent to acquire or hold, or to exercise
effectively full rights of ownership of, any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
the Merger Agreement and the transactions contemplated thereby or (4)
requires divestitures by Parent, Purchaser or any other affiliate of Parent
of any Shares;
(b) any of the representations and warranties of the Company set forth in
the Merger Agreement, when read without any exception or qualification as
to materiality or Material Adverse Effect on the Company, shall not be true
and correct as if such representations and warranties were made at the time
of such
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determination (except as to any such representation or warranty which
speaks as of a specific date, which must be untrue or incorrect as of such
specific date) except where the failure to be so true and correct would
not, individually or in the aggregate, reasonably be expected to (i) have a
Material Adverse Effect on the Company, (ii) prevent the consummation of
the Offer or (iii) have a material adverse effect on the benefits to Parent
of the transactions contemplated by the Merger Agreement;
(c) (i) the Company shall not have performed, in all material respects,
all obligations and complied with all covenants necessary to be performed
or complied with by it, or (ii) an event shall have occurred relating to a
non-wholly owned subsidiary or partnership of the Company that would be
prohibited by certain covenants set forth the Merger Agreement if such
subsidiary or partnership had been wholly owned by the Company and which
event has a material adverse effect on the benefits to Parent of the
transactions contemplated by the Merger Agreement;
(d) the Merger Agreement shall have been terminated in accordance with
its terms;
(e) the Board of Directors of the Company shall have (i) withdrawn or
materially modified or changed (including by amendment of the Schedule 14D-
9) in a manner adverse to the Purchaser its recommendation of the Offer,
the Merger Agreement or the Merger, or (ii) the Board of Directors of the
Company shall have approved or recommended an Acquisition Proposal;
(f) other than the filing of the Certificate of Merger with respect to
the Merger, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any governmental authority
requisite to consummation of the Merger and the transactions contemplated
thereby, shall have been filed, occurred or been obtained, as the case may
be, except any of the foregoing the absence of which would not result in a
Material Adverse Effect on the Company;
(g) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or any
group of which any of them is a member, shall have (1) acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of any class or series of capital stock of the
Company or shall have been granted an option, right or warrant, conditional
or otherwise, to obtain more than 20% of any class or series of capital
stock of the Company (including the Shares); or (2) without the prior
consent of Parent, entered into any binding agreement or understanding with
the Company with respect to (A) a merger, consolidation or other business
combination with, or acquisition of a material portion of the assets of,
the Company, or (B) a tender or exchange offer for Shares; or
(h) there shall have occurred and be continuing (i) any general
suspension of trading in securities on any national securities exchange or
in the over-the-counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) any indirect limitation (whether
or not mandatory) by a United States governmental authority or agency on
the extension of credit by banks or other financial institutions or (iv) a
decline in the Dow Jones Industrial Average in excess of 25%, measured from
the date of the Merger Agreement.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and, subject to the terms of the Merger Agreement, may be asserted
by the Purchaser regardless of the circumstances (including, without
limitation, any action or inaction by Purchaser or any of its affiliates)
giving rise to any such condition or may be waived by Purchaser, in whole or
in part, from time to time in its sole discretion, except as otherwise
provided in the Merger Agreement. The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears
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to be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by Purchaser's acquisition of Shares
as contemplated in this Offer to Purchase or of any approval or other action
by any governmental authority that would be required for the acquisition or
ownership of Shares by Purchaser as contemplated in this Offer to Purchase.
Should any such approval or other action be required, Purchaser and Parent
presently contemplate that such approval or other action will be sought,
except as described below under "State Takeover Laws." There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions, or that failure to obtain
any such approval or other action might not result in consequences adverse to
the Company's business, or that certain parts of the Company's business might
not have to be disposed of if such approvals were not obtained or other
actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment or pay
for any Shares tendered. See Section 14 above for certain conditions to the
Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in those
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and was therefore unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that the laws were applicable only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval of either the business combination or the
transaction that resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and has taken all necessary steps to
render Section 203 of the DGCL inapplicable to the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
state takeover statutes apply to the Offer or the Merger. Neither Purchaser
nor Parent has currently complied with any state takeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Merger
and nothing in this Offer to Purchase or any action taken in connection with
the Offer or the Merger is intended to be a waiver of that right. If it is
asserted that any state takeover statute is applicable to the Offer or the
Merger and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer or the Merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant
state authorities, and Purchaser might be unable to accept for payment or pay
for Shares tendered pursuant to the Offer, or be delayed in consummating the
Offer or the Merger. In such case, Purchaser may not be obligated to accept
for payment or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar day waiting period that follows the filing by Purchaser of a
Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division of the Department of Justice (the "Antitrust Division") or
the Federal Trade Commission (the "FTC") or unless early termination of the
waiting period is granted. Purchaser expects that such filing will be made on
April 16, 1998, and that such waiting period will expire at 11:59 p.m. on May
1, 1998. If, within the initial 15-day waiting period, either the Antitrust
Division
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or the FTC requests additional information or documentary material from
Purchaser concerning the Offer, the waiting period will be extended and would
expire at 11:59 P.M., New York City time, on the tenth calendar day after the
date of substantial compliance by Purchaser with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, the waiting period may
be extended only by court order or with the consent of Purchaser. In practice,
complying with a request for additional information or documentary material
can take a significant amount of time. In addition, if the Antitrust Division
or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while the negotiations
continue. Moreover, subject to the terms of the Merger Agreement, (i)
Purchaser may extend the Offer for up to ten (10) business days after the
initial expiration date if fewer than 90% of the Shares outstanding as of such
date have been tendered at such date, and (ii) Purchaser shall extend the
Offer from time to time until June 30, 1998, if all conditions to the Offer
have not been satisfied or waived and the failure of a condition to be
satisfied is not due to the failure of the Company to fulfill any of its
obligations under the Merger Agreement.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or the consummation of the Merger or seeking the divestiture of
Shares acquired by Purchaser or the divestiture of substantial assets of
Purchaser or its subsidiaries, or of the Company or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result of that challenge.
16. FEES AND EXPENSES
Except as set forth below, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer.
Parent has engaged DLJ as the Dealer Manager in connection with the Offer
and as exclusive financial advisor to Parent in connection with the proposed
acquisition of the Company. Pursuant to the terms of DLJ's engagement, Parent
will pay DLJ $2,750,000 if Parent or any of its affiliates consummates a
merger, consolidation or any other business combination with the Company
(collectively, a "Transaction"). In the event that a Transaction is not
consummated and Parent receives a termination fee in connection therewith,
Parent shall pay to DLJ 20% of any such termination fee less fees previously
paid. Parent will also reimburse DLJ for travel and other out-of-pocket
expenses related to DLJ's engagement, whether or not the Offer or any other
Transaction is consummated, including reasonable legal fees and expenses, and
DLJ and certain related parties will be indemnified against certain
liabilities, including liabilities under the federal securities laws, arising
out of DLJ's engagement. DLJ has rendered various investment banking and other
advisory services to Parent and its affiliates in the past and is expected to
continue to render such services in the future, for which it has received and
will continue to receive customary compensation from Parent and its
affiliates. In the ordinary course of business, DLJ and its affiliates may
actively trade or hold Shares for their own account or for the account of
customers and, accordingly, may at any time hold a long or short position in
Shares.
Purchaser has retained Corporate Investor Communications, Inc. to act as the
Information Agent, and First Union National Bank to act as the Depositary, in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding the offering materials to their customers.
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17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares who reside in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of the jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and to extend the Offer to holders of Shares in that
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
Purchaser has filed the Schedule 14D-1 with the Commission containing
certain additional information with respect to the Offer pursuant to Rule 14d-
1 under the Exchange Act. The Schedule and any amendments to the Schedule,
including exhibits, may be examined and copies may be obtained from the
principal office of the Commission in the manner set forth in Section 8 above
(except that they will not be available at the regional offices of the
Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER THAT IS NOT CONTAINED IN THE OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
DGC ACQUISITION, INC.
April 15, 1998
33
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the business address of each such person is 4860
Cox Road, Suite 300, Glen Allen, Virginia 23060, and each such person is a
citizen of the United States.
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT DURING LAST FIVE YEARS SINCE AGE
<S> <C> <C> <C>
John C. Belknap Executive Vice President and Chief Financial Officer of N/A 50
Parent (since 1997); Executive Vice President and Chief
Financial Officer, OfficeMax, Inc. (1995-1997); Executive
Vice President and Chief Financial Officer, Zale
Corporation (1994-1995); independent financial consultant
(1990-1994).
Donald D. Bennett Chairman of the Board of Parent (since 1995); former 1990 61
Chief Executive Officer (1995-1996) and President and
Chief Executive Officer (1990-1995) of Parent.
Gary W. Bittner President and Chief Operating Officer of Parent's N/A 49
Richfood/Virginia Division (since 1997); Regional Vice
President, McLane Company (1992-1997).
Christopher A. Brown Executive Vice President--Procurement of Parent (since N/A 34
1997); Senior Executive Vice President, Super Rite Foods,
Inc. (1996-1997); President and Chief Operating Officer,
Rotelle, Inc. (1995-1996); Executive Vice President and
Chief Operating Officer, Rotelle, Inc. (1994-1995);
Executive Vice President--Procurement and Marketing,
Richfood, Inc. (1993-1994); Senior Vice President--
Procurement, Richfood, Inc. (1992-1993); Vice President--
Procurement, Richfood, Inc. (1991-1992).
Dale S. Conklin President and Chief Operating Officer of Parent's N/A 49
Richfood/Pennsylvania Division (since 1998); Operating
Group President of The Minneapolis, Minnesota, LaCrosse,
Wisconsin, and Superior, Wisconsin, divisions of Fleming
Companies, Inc. (1996-1997); Division President of the
Columbus, Ohio, division of Fleming Companies,
Inc./Scrivner Group (1991-1996).
Alec C. Covington President--Wholesale Operations of Parent (since November N/A 40
1997); Executive Vice President and Chief Operating
Officer--Wholesale Operations of Parent (April 1997-
November 1997); President and Chief Operating Officer,
Richfood, Inc. (1996); Executive Vice President and Chief
Operating Officer, Richfood, Inc. (1995-1996); President
and Chief Operating Officer, Houchens Industries, Inc.
(1993-1995); President, Quincy Florida division of
SuperValu Inc. and President, Greenville, Kentucky
division of Wetterau, Inc. (1990-1993).
Ronald E. Dennis President of Parent's Farm Fresh Retail Division (since N/A 53
1998); President of Kash n' Karry Supermarkets (1997);
Division Vice President of the Florida division of
Albertsons, Inc. (1977-1997).
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT DURING LAST FIVE YEARS SINCE AGE
<C> <S> <C> <C>
Roger L. Gregory Managing Partner, Wilder & Gregory Law Office. Address: 1994 44
Gregory & Wilder, P.O. Box 518, Richmond, Virginia 23218
Wilbur E. Hatcher Corporate Vice President--Information Systems of Parent N/A 41
(since 1996); Vice President Information Systems, Books-
A-Million, Inc. (1994-1996); Manager of Information
Systems Development, Publix Supermarkets, Inc. (1992-
1994).
Grace E. Harris Provost and Vice President for Academic Affairs, Virginia 1994 64
Commonwealth University. Address: Virginia Commonwealth
University, P.O. Box 2527, Richmond, Virginia 23284
David W. Hoover Vice President--Finance of Parent (since 1993); N/A 34
Director--Planning and Analysis, Parent (1990-1993).
John C. Jamison Chairman, Mallardee Associates, a corporate financial 1990 63
advisory service, and Limited Partner, Goldman, Sachs &
Co., an investment banking and brokerage firm; former
President and Chief Executive Officer, The Mariner's
Museum, an international maritime museum (1990-1992);
Director, Hershey Foods Corporation. Address: 3703 Brick
Bat Road, Williamsburg, Virginia 23888
G. Gilmer Minor, III Chairman of the Board (since 1994), President and Chief 1988 56
Executive Officer, Owens & Minor, Inc., a wholesale
distributor of medical and surgical supplies; Director,
Crestar Financial Corporation. Address: Owens & Minor,
P.O. Box 27626, Richmond, Virginia 23261
Claude B. Owen, Jr. Chairman of the Board and Chief Executive Officer, DIMON 1988 52
Incorporated (successor to Dibrell Brothers,
Incorporated), an importer and exporter of leaf tobacco
and fresh cut flowers; former Chairman of the Board,
Chief Executive Officer and President, Dibrell Brothers,
Incorporated; Director, American National Bankshares Inc.
Address: DIMON, Inc., P.O. Box 681, Danville, Virginia
24543
John F. Rotelle Chairman (since 1995) and former President of Rotelle, 1994 61
Inc. Address: Richfood of PA, P.O. Box 370, West Point,
Pennsylvania 19486
John D. Ryder President and Chief Operating Officer of Parent's N/A 49
METRO/BASICS Retail Division (since 1995); President and
Chief Operating Officer, retail division of Super Rite
Foods, Inc. (1990-1995).
Albert F. Sloan Former Chairman of the Board of Lance, Inc., a 1990 67
manufacturer of cookies, crackers and snack foods;
Director, Basset Furniture Industries, Inc., Cato
Corporation and PCA International, Inc. Address: 3826
Silver Bell Road, Charlotte, North Carolina 28211
John E. Stokely President and Chief Executive Officer of Parent (since 1995 44
1996); former President and Chief Operating Officer
(1995-1996), Executive Vice President Finance and
Administration (1993-1995) and Senior Vice President--
Finance and Chief Financial Officer (1991-1993) of
Parent.
George H. Thomazin Chief Executive Officer, Thomazin Enterprises, Inc., a 1990 57
business investment firm; former Chief Executive Officer,
Continental Brokers Co., a food brokerage firm (1989-
1992). Address: 1401 Forrest Court, Marco Island, Florida
34145
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
James E. Ukrop Vice-Chairman and Chief Executive Officer (since 1994), 1987 60
Ukrop's Super Markets, Inc., a retail grocery chain;
former President and Chief Executive Officer, Ukrop's
Super Markets, Inc.; Director, Legg Mason, Inc. and Owens
& Minor, Inc. Address: Ukrop's Super Markets, 600
Southlake Boulevard, Richmond, Virginia 23236
Edward Villanueva Financial Consultant; Director, Circuit City Stores, Inc. 1990 62
Address: 10466 Cherokee Road, Richmond, Virginia 23235
</TABLE>
<PAGE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser. The
business address of each such person is 4860 Cox Road, Suite 300, Glen Allen,
Virginia 23060, and each such person is a citizen of the United States.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT DURING LAST FIVE YEARS SINCE AGE
<C> <S> <C> <C>
John C. Belknap Executive Vice President and Chief Financial Officer of 1998 50
Purchaser since its organization in contemplation of the
Offer; Executive Vice President and Chief Financial
Officer of Parent (since 1997); Executive Vice President
and Chief Financial Officer, OfficeMax, Inc. (1995-1997);
Executive Vice President and Chief Financial Officer,
Zale Corporation (1994-1995); independent financial
consultant (1990-1994).
John E. Stokely President and Chief Executive Officer of Purchaser since 1998 44
its organization in contemplation of the Offer; President
and Chief Executive Officer of Parent (since 1996);
former President and Chief Operating Officer (1995-1996),
Executive Vice President Finance and Administration
(1993-1995) and Senior Vice President--Finance and Chief
Financial Officer (1991-1993) of Parent.
</TABLE>
S-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depository, at one of the addresses set forth
below:
<TABLE>
<CAPTION>
The Depositary for the Offer is:
First Union National Bank
By Mail: By Overnight Delivery: By Hand:
<S> <C> <C>
First Union Corporate First Union Corporate First Union Corporate
Information Center Information Center Information Center
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
Attention: Reorganization Attention: Reorganization Attention: Reorganization
Department Department Department
1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd.
Building 3C3 Building 3C3 Building 3C3
Charlotte, NC 28288-1153 Charlotte, NC 28262 Charlotte, NC 28288-1153
</TABLE>
By Facsimile Transmission: (704) 590-7628
Information and Confirm by Telephone: Reorganization Department
(704) 590-7408
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF CORPORATE INVESTOR COMMUNICATIONS, INC. APPEARS HERE]
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
(877) 893-0576 (toll free)
(212) 892-8017
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
DART GROUP CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 15, 1998
BY
DGC ACQUISITION, INC.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
RICHFOOD HOLDINGS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, MAY 12, 1998, UNLESS THE OFFER IS EXTENDED.
<TABLE>
<CAPTION>
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
First Union Corporate First Union Corporate (9:00 a.m.-5:00 p.m
Information Center Information Center New York City Time)
Corporate Trust Operations Corporate Trust Operations First Union Corporate
Attention: Reorganization Dept. Attention: Reorganization Dept. Information Center
1525 West W.T. Harris 1525 West W.T. Harris Corporate Trust Operations
Boulevard, Building 3C3 Boulevard, Building 3C3 Attention: Reorganization Dept.
Charlotte, NC 28288-1153 Charlotte, NC 28262 1525 West W.T. Harris
Boulevard, Building 3C3
Charlotte, NC 28288-1153
</TABLE>
By Facsimile
Transmission:
(704) 590-7628
Information and
Confirmation
by Telephone:
Reorganization Department
(704) 590-7408
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Dart Group Corporation (the "Stockholders") if certificates
evidencing Shares ("Certificates") are to be forwarded with this Letter of
Transmittal or if delivery of Shares is to be made by book-entry transfer to
an account maintained by First Union National Bank (the "Depositary") at The
Depository Trust Company ("DTC"), the Midwest Securities Trust Company
("MSTC") or the Philadelphia Depository Trust Company ("PDTC") (each, a "Book-
Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to, their Shares
and all other required documents to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) may tender their
Shares according to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. See Instruction 2 hereof. Delivery of documents to a
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
<PAGE>
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution: ________________________________________________
Check Box of Book-Entry Transfer Facility:
[_] DTC [_] MSTC [_] PDTC
Account Number: ______________________ Transaction Code Number: _____________
[_]CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): ______________________________________________
Window Ticket Number (if any): ________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Name of Institution that Guaranteed Delivery: _________________________________
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
[_] DTC [_] MSTC [_] PDTC
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S)
ON THE CERTIFICATE(S))
- ---------------------------------------------------------------------------------------------------------------
SHARE NUMBER OF SHARES
CERTIFICATES REPRESENTED BY NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES
-----------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY STOCKHOLDERS DELIVERING SHARES BY BOOK-ENTRY
TRANSFER.
(2) UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES REPRESENTED
BY CERTIFICATES DELIVERED TO THE DEPOSITARY ARE BEING TENDERED. SEE
INSTRUCTION 4.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to DGC Acquisition, Inc., a Delaware
corporation ("Purchaser"), and a direct wholly-owned subsidiary of Richfood
Holdings, Inc., a Virginia corporation ("Parent"), the above-described shares
of common stock, $1.00 par value per share (the "Shares"), of Dart Group
Corporation, a Delaware corporation (the "Company"), for $160.00 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated April 15, 1998 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Offer to Purchase and any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to any newly formed direct or
indirect wholly-owned subsidiary of Purchaser, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer or prejudice the rights of tendering Stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered with this Letter of Transmittal in accordance with the terms
and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchaser, all right, title and interest in and to all of the
Shares that are being tendered hereby and any and all other Shares or other
securities issued or issuable in respect of such Shares on or after April 15,
1998 (a "Distribution") and irrevocably constitutes and appoints the
Depositary as the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver Certificates
evidencing such Shares (and any Distributions), or transfer ownership of such
Shares (and all Distributions) on the account books maintained by a Book-Entry
Transfer Facility together, in any such case, with all accompanying evidences
of transfer and authenticity to, or upon the order of, Purchaser, upon receipt
by the Depositary as the undersigned's agent, of the purchase price with
respect to such Shares; (ii) present such Shares (and any Distributions) for
transfer on the books of the Company; and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
Distributions), all in accordance with the terms and subject to the conditions
of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to
all Shares tendered hereby and accepted for payment and paid for by Purchaser
(and any Distributions) including, without limitation, the right to vote such
Shares (and any Distributions) in such manner as each such attorney and proxy
or his substitute shall, in his sole discretion, deem proper. All such powers
of attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of
Transmittal. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by the undersigned
with respect to such Shares (and any Distributions) will be revoked, without
further action, and no subsequent powers of attorneys and proxies may be given
with respect thereto (and, if given, will be deemed ineffective). The
designees of Purchaser will, with respect to the Shares (and any
Distributions) for which such appointment is effective, be empowered to
exercise all voting and other rights of the undersigned with respect to such
Shares (and any Distributions) as they in their sole discretion may deem
proper. Purchaser reserves the absolute right to require that, in order for
Shares to be deemed validly tendered, immediately upon the acceptance for
payment of such Shares, Purchaser or its designees are able to exercise full
voting rights with respect to such Shares (and any Distributions), including
voting at any meeting of Stockholders then scheduled.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the
3
<PAGE>
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of Shares tendered hereby (and any Distributions). In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of Purchaser any and all Distributions issued to the
undersigned on or after April 15, 1998, in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of any such Distributions and
may withhold the entire purchase price or deduct from the purchase price the
amount of value thereof, as determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the instructions to this Letter of Transmittal will constitute a binding
agreement between the undersigned and Purchaser with respect to such Shares,
upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and
return any Certificates evidencing Shares not tendered or not accepted for
payment in the name(s) of the registered holder(s) appearing under
"Description of Shares Tendered." Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail the check for the purchase price
and return any Certificates evidencing Shares not tendered or not accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the "Special Payment Instructions" and the "Special Delivery
Instructions" are completed, please issue the check for the purchase price and
return any such Certificates evidencing Shares not tendered or not accepted
for payment (and accompanying documents, as appropriate) in the name(s) of,
and deliver such check and return such Certificates (and accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated in this Letter of Transmittal under "Special Payment Instructions,"
in the case of a book-entry delivery of Shares, please credit the account
maintained at the Book-Entry Facility indicated above with respect to any
Shares not accepted for payment. The undersigned recognizes that Purchaser has
no obligation pursuant to the "Special Payment Instructions" to transfer any
Shares from the name of the registered holder if Purchaser does not accept for
payment any of the Shares tendered hereby.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN
HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed Certificates:
-------------------------------
4
<PAGE>
-------------------------------------- -------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if To be completed ONLY if
certificates for Shares not Certificates for Shares not
tendered or not accepted for tendered or not accepted for
payment and/or the check for the payment and the check for the
purchase price of Shares accepted purchase price of shares accepted
for payment are to be issued in the for payment are to be sent to
name of someone other than the someone other than the undersigned
undersigned, or if Shares delivered or to the undersigned at an address
by book-entry transfer that are not other than that shown above.
accepted for payment are to be
returned by credit to an account Mail Check/Certificate(s) to:
maintained at a Book-Entry Transfer
Facility, other than to the account Name:_______________________________
indicated above. (Please Type or Print)
Issue Check/Certificate(s) to: Address:____________________________
Name: ______________________________ ------------------------------------
(Please Type or Print) (Include Zip Code)
Address: ___________________________ ------------------------------------
(TAX IDENTIFICATION OR SOCIAL
------------------------------------ SECURITY NO.)
(Include Zip Code)
------------------------------------
(TAX IDENTIFICATION OR SOCIAL
SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[_] Credit unpurchased Shares
delivered by book-entry transfer
to the Book-Entry Transfer
Facility account set forth below:
(Check One)
[_] DTC [_] MSTC [_] PDTC
(DTC/MSTC/PDTC Account Number)______
-------------------------------------- -------------------------------------
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no signature
guarantee is required on this Letter of Transmittal if (i) this Letter of
Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Transfer Facilities' systems whose name appears on a security position listing
as the owner of the Shares) of Shares tendered herewith and such registered
holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on this
Letter of Transmittal, or (ii) such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
If the Certificates are registered in the name of a person other than the
signer of this Letter of Transmittal, or if payment is to be made or delivered
to, or Certificates evidencing unpurchased Shares are to be issued or returned
to, a person other than the registered owner, then the tendered Certificates
must be endorsed or accompanied by duly executed stock powers, in either case
signed exactly as the name or names of the registered owner or owners appear
on the Certificates, with the signatures on the Certificates or stock powers
guaranteed by an Eligible Institution as provided in this Letter of
Transmittal. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Stockholders if Certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase. For a Stockholder to validly tender Shares pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile), with any required signature guarantees and any
other required documents, must be received by the Depositary at one of its
addresses set forth in this Letter of Transmittal on or prior to the
Expiration Date (as defined in the Offer to Purchase) and either (a)
Certificates for tendered Shares must be received by the Depositary at one of
those addresses on or prior to the Expiration Date, or (b) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth in
Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary on or prior to the Expiration Date or, (ii) the
tendering Stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 3 of the Offer to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
or complete the procedures for book-entry transfer on or prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) tender must be made by or through an Eligible Institution, (ii)
a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, must be received by the
Depositary prior to the Expiration Date and (iii) Certificates representing
all tendered Shares in proper form for transfer, or a Book-Entry Confirmation
with respect to all the tendered Shares, together with a Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in Section 2 of the Offer to Purchase) in connection with a book-entry
transfer and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three New York Stock Exchange, Inc.
trading days after the date of such Notice of Guaranteed Delivery. If
Certificates are forwarded separately to the Depositary, a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile) must
accompany each delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
6
<PAGE>
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Stockholders, by execution
of this Letter of Transmittal (or a facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are
to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In such cases, a new Certificate for
the remainder of the Shares that were evidenced by your old Certificate(s)
will be sent, without expense, to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by Certificate(s) delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, that person should so indicate when signing, and
proper evidence satisfactory to Purchaser of that person's authority to so act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures
on the Certificate(s) or instruments of transfer must be guaranteed by an
Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will
pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment
of the purchase price is to be made to, or (in the circumstances permitted
hereby) if Certificates for Shares not tendered or not purchased are to be
registered in the name of, any person other than the registered holder(s), or
if tendered Certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any transfer
taxes (whether imposed on the registered holder(s) or such person) payable on
account of the transfer to such person will be deducted from the purchase
price unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter
of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be
7
<PAGE>
returned to someone other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter
of Transmittal should be completed. If any tendered Shares are not purchased
for any reason and the Shares are delivered by Book-Entry Transfer Facility,
the Shares will be credited to an account maintained at the appropriate Book-
Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent (as defined below) at its
address or telephone number set forth below and requests for additional copies
of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent or brokers,
dealers, commercial banks and trust companies and such materials will be
furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser (subject to certain limitations in the Merger Agreement (as defined
in the Offer to Purchase)), in whole or in part, at any time or from time to
time, in Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN")
on Substitute Form W-9, which is provided under "Important Tax Information"
below, and to certify that the Stockholder is not subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering Stockholder to a penalty and 31% backup federal income
tax withholding on the payment of the purchase price for the Shares. If the
tendering Stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the tendering Stockholder
should check the box in Part 3 of the Substitute Form W-9 and sign and date
both the Substitute Form W-9 and the "Certificate of Awaiting Taxpayer
Identification." If the Stockholder has indicated in the box in Part 3 that a
TIN has been applied for and the Depositary is not provided with a TIN by the
time of payment, the Depositary will withhold 31% of all payments of the
purchase price, if any, made thereafter pursuant to the Offer until a TIN is
provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost, destroyed or stolen, the Stockholder should promptly
notify the Depositary by checking the box immediately preceding the Special
Payment/Special Delivery Instructions and indicating the number of Shares so
lost, destroyed or stolen. The Stockholders will then be instructed as to the
steps that must be taken in order to replace the Certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, destroyed or stolen Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE THEREOF
(TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS), OR A NOTICE OF GUARANTEED DELIVERY, MUST BE
RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such Stockholder's correct TIN on Substitute Form W-9 below. If such
Stockholder is an individual, the TIN is his Social Security Number. If the
tendering Stockholder has not been issued a TIN and has applied for a TIN, or
intends to apply for a TIN in the near future, the Stockholder should so
indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is
not provided with the correct TIN, the Stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that
are made to the Stockholder with respect to Shares purchased pursuant to the
Offer may be subject to backup federal income tax withholding at a 31% rate.
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
8
<PAGE>
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on the Substitute Form W-9 is
correct (or that the Stockholder is awaiting a TIN) and that (i) the
Stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of failure to report all interest or
dividends, or (ii) the Internal Revenue Service has notified the Stockholder
that he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the Social Security
Number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
9
<PAGE>
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON FOLLOWING PAGE
- --------------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
- --------------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
(MUST BE SIGNED BY THE REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
THE CERTIFICATE OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO
BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH.
IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-
IN-FACT, AGENTS, OFFICERS OR CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION. SEE
INSTRUCTION 5.)
Dated: ___________________________________________________________________, 1998
Name(s): _______________________________________________________________________
- --------------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title): _________________________________________________________
(See Instruction 5)
Address(es): ___________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
Daytime Area Code and Telephone Number: ________________________________________
(Home)
--------------------------------------------------
(Business)
Taxpayer Identification or
Social Security No.: ___________________________________________________________
(See Substitute Form W-9 on Following Page)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s): _______________________________________________________
Name: __________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
(Including Zip Code)
Area Code and Telephone No.: ___________________________________________________
Dated: ___________________________________________________________________, 1998
10
<PAGE>
- --------------------------------------------------------------------------------
PAYER'S NAME: FIRST UNION NATIONAL BANK
- -------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND
DATING BELOW.
PART 2--For Payees exempt from backup
withholding, see the enclosed
Guidelines for Certification of
Taxpayer Identification Number on
Substitute Form W-9 and complete as
instructed therein.
PART 3--Social
DEPARTMENT OF THE Security
TREASURY, Number or
INTERNAL REVENUE Employer
SERVICE Identification
Number
________________
----------------------------------------
Certifications--Under penalties of (If awaiting
perjury, I certify that: TIN write
PAYER'S REQUEST FOR (1)The number shown on this form is "Applied for")
TAXPAYER my correct Taxpayer Identification
IDENTIFICATION Number (or I am waiting for a
NUMBER ("TIN") number to be issued to me); and
(2)I am not subject to backup
withholding either because I have
not been notified by the Internal
Revenue Service ("IRS") that I am
subject to backup withholding as a
result of a failure to report all
interest or dividends, or the IRS
has notified me that I am no longer
subject to backup withholding.
---------------------------------------------------------
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you are subject to backup withholding, you
receive another notification from the IRS that you
were no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the
enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9).
---------------------------------------------------------
SIGNATURE __________________________ DATE: ____________
Note: Failure to complete and return this Substitute
Form W-9 may result in backup withholding of 31% of
any payments made to you pursuant to the Offer to
Purchase. Please review the enclosed Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional details.
You must complete the following certificate if you
wrote "applied for" in the box in Part 3 of the
substitute form W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(ii) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by the
time of payment, 31% of all payments of the purchase price pursuant to the
Offer made to me thereafter will be withheld until I provide a Taxpayer
Identification Number.
Signature _____________________________
Date __________________________________
11
<PAGE>
The Information Agent for the Offer is:
[LOGO OF CORPORATE INVESTOR COMMUNICATIONS, INC. APPEARS HERE]
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
(877) 893-0576 (toll free)
(212) 892-8017
April 15, 1998
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DART GROUP CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
NEW YORK CITY TIME, ON TUESDAY, MAY 12, 1998, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a notice substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, $1.00 par value per share (the "Shares"),
of Dart Group Corporation, a Delaware corporation, are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach First
Union National Bank (the "Depositary") prior to the Expiration Date (as
defined in the Offer to Purchase). This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase.
<TABLE>
<CAPTION>
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
First Union Corporate First Union Corporate (9:00 a.m.--5:00 p.m.
Information Center Information Center New York City Time)
Corporate Trust Operations Corporate Trust Operations First Union Corporate
Attention: Reorganization Dept. Attention: Reorganization Dept. Information Center
1525 West W.T. Harris Boulevard 1525 West W.T. Harris Boulevard Corporate Trust Operations
Building 3C3 Building 3C3 Attention: Reorganization Dept.
Charlotte, NC 28288-1153 Charlotte, NC 28262 1525 West W.T. Harris Boulevard
Building 3C3
Charlotte, NC 28288-1153
</TABLE>
By Facsimile Transmission:
(704) 590-7628
Information and Confirmation
by Telephone:
(704) 590-7408
---------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to DGC Acquisition, Inc., a Delaware
corporation ("Purchaser") and a direct wholly-owned subsidiary of Richfood
Holdings, Inc., a Virginia corporation ("Parent"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated April 15, 1998
(the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
- -------------------------------------- ---------------------------------------
Number of Shares: _________________ Name(s) of Record Holder(s):_______
Certificate Nos. (if available): -----------------------------------
----------------------------------- -----------------------------------
(Please Type or Print)
Check ONE box if Shares will be Address(es): ______________________
tendered by book-entry transfer:
-----------------------------------
[_] The Depository Trust Company (Zip Code)
[_] Midwest Securities Trust
Company Area Code and Tel. No.: ___________
[_] Philadelphia Depository Trust
Company Signature(s): _____________________
Account Number:____________________ -----------------------------------
Date: _____, 1998
- -------------------------------------- ---------------------------------------
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as such term is defined in Section
3 of the Offer to Purchase), hereby guarantees to deliver to the Depositary
the certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in Section 3 of the Offer
to Purchase) with respect to such Shares, in either case together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any required signature guarantees or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and any other documents required by the
Letter of Transmittal, all within three New York Stock Exchange, Inc. trading
days after the date hereof.
Name of Firm: _______________________ -------------------------------------
(Authorized Signature)
Address: ____________________________
- ------------------------------------- Name: _______________________________
(Zip Code) (Please Type or Print)
Area Code and Tel. No.: _____________ Title: ______________________________
Date: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD ONLY BE SENT TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DART GROUP CORPORATION
AT
$160.00 NET PER SHARE
BY
DGC ACQUISITION, INC.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
RICHFOOD HOLDINGS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, MAY 12, 1998, UNLESS THE OFFER IS EXTENDED.
April 15, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by DGC Acquisition, Inc., a Delaware corporation and a
direct wholly-owned subsidiary of Richfood Holdings, Inc. ("Purchaser"), to
act as Dealer Manager in connection with Purchaser's offer to purchase for
cash all of the outstanding shares of common stock, $1.00 par value per share
(the "Shares"), of Dart Group Corporation, a Delaware corporation (the
"Company"), for $160.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated April
15, 1998 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with the Offer to Purchase and any amendments or supplements
thereto, collectively constitute the "Offer") enclosed herewith. Please
furnish copies of the enclosed materials to those of your clients for whose
accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated April 15, 1998.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from Richard B. Stone,
Chairman and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in
the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
regarding the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
1
<PAGE>
7. A return envelope addressed to First Union National Bank (the
"Depositary").
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, MAY 12, 1998, UNLESS THE
OFFER IS EXTENDED.
Please note the following:
1. The tender price is $160.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not properly
withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) a majority of the outstanding Shares (on a fully diluted basis)
and certain other conditions. See the Introduction and Sections 1, 14 and
15 of the Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, backup federal income tax withholding at a
rate of 31% may be required, unless an exemption applies or unless the
required taxpayer identification information is provided. See Instruction
10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, May 12, 1998, unless the Offer is extended.
6. The board of directors of the Company has unanimously determined that
the Offer and the Merger (as defined in the Offer to Purchase) are fair to,
and in the best interests of, the Company and its stockholders; has
approved the Merger Agreement (as defined in the Offer to Purchase) and the
transactions contemplated by the Merger Agreement, including the Offer and
the Merger; and recommends that the Company's stockholders accept the Offer
and tender all of their Shares pursuant thereto.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates for (or a timely
Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase)
with respect to) such Shares, (ii) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with any
required signature guarantees or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry transfer, and (iii) any
other documents required by the Letter of Transmittal. Accordingly, payment
to all tendering stockholders may not be made at the same time depending
upon when certificates for Shares or Book-Entry Confirmation with respect
to Shares are actually received by the Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and
any required signature guarantees or other required documents should be sent
to the Depositary, and (ii) certificates representing the tendered Shares or a
timely Book-Entry Confirmation with respect to such Shares should be delivered
to the Depositary in accordance with the instructions set forth in the Letter
of Transmittal and in the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase), a tender may be effected by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person for soliciting tenders of Shares pursuant to the
Offer (other than the Dealer Manager, the Depositary and the Information Agent
as described in the Offer to Purchase). Purchaser will, however, upon request,
reimburse you
2
<PAGE>
for customary mailing and handling expenses incurred by you in forwarding any
of the enclosed materials to your clients. Purchaser will pay or cause to be
paid any transfer taxes payable on the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Donaldson, Lufkin & Jenrette Securities Corporation, the Dealer Manager for
the Offer, at 277 Park Avenue, New York, New York 10172, (877) 893-0576 (toll
free) or (212) 892-8017, or Corporate Investor Communications, Inc., the
Information Agent for the Offer, at 111 Commerce Road, Carlstad, New Jersey
07072-2586, (201) 896-1900 (call collect).
Requests for copies of the enclosed materials may also be directed to the
Dealer Manager or the Information Agent at the above addresses and telephone
numbers.
Very truly yours,
Donaldson, Lufkin & Jenrette
Securities Corporation,
as Dealer Manager
277 Park Avenue
New York, New York 10172
(877) 893-0576 (toll free)
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE COMPANY, THE DEALER MANAGER,
THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DART GROUP CORPORATION
AT
$160.00 NET PER SHARE
BY
DGC ACQUISITION, INC.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
RICHFOOD HOLDINGS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, MAY 12, 1998, UNLESS THE OFFER IS EXTENDED.
April 15, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated April 15,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer") relating to the offer by DGC Acquisition,
Inc., a Delaware corporation ("Purchaser") and a direct wholly-owned
subsidiary of Richfood Holdings, Inc., a Virginia corporation ("Parent"), to
purchase all of the outstanding shares of common stock, $1.00 par value per
share (the "Shares"), of Dart Group Corporation, a Delaware corporation (the
"Company"), at a purchase price of $160.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer.
Holders of Shares whose certificates for such Shares are not immediately
available or who cannot deliver their certificates and all other required
documents to First Union National Bank (the "Depositary") or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instruction as to whether you wish to have us
tender, on your behalf, any or all Shares held by us for your account pursuant
to the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $160.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not properly
withdrawn prior to the Expiration Date a majority of the outstanding Shares
(on a fully diluted basis) and certain other conditions. See the
Introduction and Sections 1, 14 and 15 of the Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, backup federal income tax withholding at a
rate of 31% may be required, unless an exemption applies or unless the
required taxpayer identification information is provided. See Instruction
10 of the Letter of Transmittal.
1
<PAGE>
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, May 12, 1998, unless the Offer is extended.
6. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS; HAS
APPROVED THE MERGER AGREEMENT (AS DEFINED IN THE OFFER TO PURCHASE), AND
THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER
AND THE MERGER; AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates for (or a timely
Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase)
with respect to) such Shares, (ii) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with any
required signature guarantees or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry transfer, and (iii) any
other documents required by the Letter of Transmittal. Accordingly, payment
to all tendering stockholders may not be made at the same time depending
upon when certificates for Shares or Book-Entry Confirmation with respect
to Shares are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth below. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified below. An envelope to return your instructions to us is enclosed
herewith. Your instructions should be forwarded to us in ample time to permit
us to submit a tender on your behalf prior to the expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer to holders of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DART GROUP CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated April 15, 1998, and the related Letter of Transmittal (which,
together with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer") in connection with the offer by DGC
Acquisition, Inc., a Delaware corporation ("Purchaser") and a direct wholly-
owned subsidiary of Richfood Holdings, Inc., a Virginia corporation
("Parent"), to purchase all outstanding shares of common stock, par value
$1.00 per share ("Shares"), of Dart Group Corporation, a Delaware corporation.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or if no number is indicated below, all Shares) which are held by you
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
NUMBER OF SHARES TO BE TENDERED*
SHARES
Dated: , 1998
SIGN HERE
-------------------------------------
Signature(s)
-------------------------------------
-------------------------------------
Print Name(s)
-------------------------------------
-------------------------------------
Print Address(es)
-------------------------------------
Area Code and Telephone Number(s)
-------------------------------------
Tax ID or Social Security Number(s)
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ----------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ----------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor
guardian or committee for a or incompetent
designated ward, minor or person(3)
incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- ----------------------------------------------------
<S> <C>
9. A valid trust, estate or The legal entity
pension trust (do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district or prison) that
receives agricultural
program payments
- ----------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the office of
the Social Security Administration or the Internal Revenue Service (the "IRS")
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) or an individual re-
tirement plan or a custodial account under Section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust under Section 664 or a non-exempt
trust described in section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under sections 6041, 6041A(a), 6045,
and 6050A and 6050N of the code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, inter-
est or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identifica-
tion purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure, unless there is clear and convinc-
ing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVE-
NUE SERVICE
<PAGE>
Exhibit (A)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated April
15, 1998, and the related Letter of Transmittal and any amendments or
supplements thereto, and is being made to all holders of Shares. The Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of DGC Acquisition, Inc., by Donaldson, Lufkin & Jenrette Securities
Corporation or one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Dart Group Corporation
at
$160.00 Net Per Share
by
DGC Acquisition, Inc.
a direct wholly-owned subsidiary of
Richfood Holdings, Inc.
DGC Acquisition, Inc., a Delaware corporation ("Purchaser") and a
direct wholly-owned subsidiary of Richfood Holdings, Inc., a Virginia
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock, $1.00 par value per share (the "Shares"), of Dart Group Corporation, a
Delaware corporation (the "Company"), at a price of $160.00 per Share (the
"Offer Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated April 15, 1998, and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Tendering
stockholders will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. The purpose of the Offer
is to acquire for cash as many outstanding Shares as possible as a first step in
acquiring the entire equity interest in the Company. Following consummation of
the Offer, Purchaser intends to effect the merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, MAY 12, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (1) a number of the
Shares representing a majority of all outstanding Shares on a fully diluted
basis being validly tendered and not withdrawn prior to the expiration of the
Offer, and (2) the expiration of certain waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of April 9, 1998 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that after the
purchase of Shares pursuant to the Offer, subject to the satisfaction or waiver
of certain conditions, Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a direct wholly-owned
subsidiary of Parent. At the effective time of the Merger, each outstanding
Share (other than Shares owned by the Company or any wholly-owned subsidiary of
the Company or by Parent, Purchaser or any other wholly-owned subsidiary of
Parent, and Shares owned by stockholders who shall have properly exercised their
appraisal rights under Delaware law) will be converted into the right to receive
$160.00 in cash or any greater amount paid pursuant to the Offer, without
interest.
The Board of Directors of the Company (the "Board") has unanimously
determined that the Offer and the Merger are fair to, and in the best interests
of, the Company and its stockholders, has approved the Merger Agreement and the
transactions contemplated by the Merger Agreement, including the Offer and the
Merger,
<PAGE>
and recommends that the Company's stockholders accept the Offer and tender all
of their Shares pursuant thereto.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment (and thereby purchased) tendered Shares as, if and when Purchaser
gives oral or written notice to First Union National Bank (the "Depositary") of
its acceptance of such Shares for payment pursuant to the Offer. Upon the terms
and subject to the conditions of the Offer, payment for Shares purchased
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purposes of receiving payment from Purchaser and transmitting payment to
tendering stockholders whose Shares have theretofore been accepted for payment.
In all cases, payment for Shares purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates for (or a timely
Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with
respect to) such Shares, (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees or an agent's message, and (iii) all other documents
required by the Letter of Transmittal. Under no circumstances will interest be
paid on the purchase price for Shares to be paid by Purchaser, regardless of any
delay in making such payment.
The term "Expiration Date" shall mean 12:00 midnight, New York City
time, on Tuesday, May 12, 1998, unless and until Purchaser, in accordance with
the terms of the Offer and the Merger Agreement, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. Subject to the terms of the Merger Agreement and
applicable law, Purchaser expressly reserves the right, at any time or from time
to time, to extend the period of time during which the Offer is open and, in
certain circumstances, may be required to extend the Offer until June 30, 1998,
and thereby delay acceptance for payment of, or payment for, any Shares by
giving oral or written notice of such extension to the Depositary and by making
a public announcement of such extension. Purchaser shall not have any obligation
to pay interest on the purchase price for tendered Shares whether or not
Purchaser exercises its right to extend the period of time during which the
Offer is open. Any such extension will be followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. Without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a release to
the Dow Jones News Service or as otherwise may be required by law.
Except as otherwise provided in the Offer to Purchase, tenders of
Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment by Purchaser as provided for in the Offer to Purchase, may also be
withdrawn at any time after Saturday, June 13, 1998. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at its address set forth on the back
cover of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder, if different from that of
the person who tendered such Shares. If certificates evidencing Shares have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the tendering stockholder must also submit the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn, and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, as defined in Section 3 of the Offer to Purchase
(except in the case of Shares tendered for the account of an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3 of the Offer to Purchase, the notice
of withdrawal must specify the name and number of the account at the applicable
Book-Entry Transfer Facility (as defined in Section 3 of the Offer to Purchase)
to be credited with the withdrawn Shares. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by Purchaser, in its sole discretion, whose determination shall be final and
binding on all parties. Any Shares properly withdrawn will be deemed not validly
tendered for purposes of the Offer, but may be tendered at any subsequent time
prior to the Expiration Date by following any of the procedures described in
Section 3 of the Offer to Purchase.
<PAGE>
The Company has provided Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and,
if required, any other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the name of whose nominees, appear
on the Company's stockholders list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares by Purchaser.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and other tender offer documents may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at Purchaser's expense.
Questions or requests for assistance may be directed to the Information Agent or
the Dealer Manager. Neither Purchaser nor Parent will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager, the Depositary and the Information Agent) in connection with the
solicitation of tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, NJ 07072-2586
Banks and Brokers call collect (201) 896-1900
All others call toll free: (888) 520-2226
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
(877) 893-0576 (toll free)
(212) 892-8017
April 15, 1998
<PAGE>
Exhibit (A)(8)
- ----
NEWS
- ----
[LETTERHEAD OF RICHFOOD HOLDINGS, INC. APPEARS HERE]
FOR IMMEDIATE RELEASE
RICHFOOD HOLDINGS, INC. AGREES TO ACQUIRE
DART GROUP CORPORATION, OWNER OF
SHOPPERS FOOD WAREHOUSE
Richmond, Virginia, April 9, 1998 - Richfood Holdings, Inc. (NYSE: RFH)
announced today the signing of a definitive merger agreement pursuant to which
Richfood will acquire all of the outstanding common stock of Dart Group
Corporation for $160 per share in cash, or approximately $207 million. Dart's
Board of Directors has unanimously approved the agreement and recommended that
Dart's shareholders accept the Richfood offer.
To implement the agreement, Richfood will commence a cash tender offer within
five business days. The completion of the tender offer is not subject to
financing, which has been committed by First Union National Bank, but is subject
to other customary conditions, including the acquisition of a majority of Dart's
outstanding common stock on a fully diluted basis and the expiration of the
waiting period under the Hart-Scott-Rodino Act. Shares not purchased under the
tender offer will be acquired in a subsequent merger, at the same price, as soon
as practicable after completion of the tender offer. Following the transaction,
Dart will become a wholly-owned subsidiary of Richfood.
Dart Group, headquartered in Landover, Maryland, comprises Shoppers Food
Warehouse, a 100% owned chain of 37 price-impact supermarkets operating in the
Greater Washington, D.C. market; Trak Auto, a publicly owned retailer of auto
parts, 67% owned by Dart; Crown Books, a publicly owned retailer of popular
books, 52% owned by Dart; and Total Beverage, a 100% owned discount beverage
retailer based in Washington, D.C.
"The acquisition of Shoppers Food Warehouse fits perfectly into Richfood's
strategy of selectively expanding its retail presence in the Mid-Atlantic
market," said John Stokely, President and Chief Executive Officer of Richfood.
"Shoppers is located squarely in the middle of our core market," Stokely added,
"flanked by our Metro stores to the north in Baltimore and Farm Fresh to the
south in Tidewater, with virtually no overlap between its locations and those of
Richfood's other customers. We believe that combining Shoppers' highly
productive retail format with the full range of Richfood's distribution and
logistic capabilities will create significant economics benefiting customers and
shareholders alike. With this acquisition, Richfood will own approximately 100
supermarkets stretching from Delaware to southern Virginia, achieving a critical
mass that will permit us to optimize operating leverage, particularly in the
areas of distribution, technology and shared administrative services. As with
our recent Farm Fresh acquisition, the acquisition of Shoppers will be
immediately accretive to Richfood."
<PAGE>
DART GROUP CORPORATION
3300 75TH AVENUE
LANDOVER, MARYLAND 20785
April 15, 1998
Dear Stockholder:
We are pleased to report that Dart Group Corporation (the "Company") has
entered into a merger agreement with Richfood Holdings, Inc. ("Richfood") and
one of its subsidiaries that provides for the acquisition of the Company by
Richfood at a price of $160.00 per share in cash. Under the terms of the
proposed transaction, a Richfood subsidiary is today commencing a cash tender
offer for all outstanding shares of the Company's common stock at $160.00 per
share. Following the successful completion of the tender offer, the Richfood
subsidiary will be merged into the Company and all shares not purchased by the
Richfood subsidiary in the tender offer will be converted into the right to
receive $160.00 per share in cash in the merger.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE RICHFOOD TENDER OFFER
AND DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE MERGER, TAKEN
TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
ACCEPTANCE OF THE RICHFOOD TENDER OFFER AND APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT BY THE STOCKHOLDERS OF THE COMPANY.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion dated
April 8, 1998, of Wasserstein Perella & Co., Inc. ("Wasserstein Perella"),
financial advisor to the Company, to the effect that, as of such date and
based upon and subject to certain matters stated in such opinion, the cash
consideration of $160.00 per share to be received by Company stockholders
(other than Richfood and its affiliates) in the offer and the merger was fair
from a financial point of view to such stockholders.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Richfood's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read carefully the
enclosed materials, including Wasserstein Perella's opinion, which is attached
to the Schedule 14D-9.
The management and directors of Dart Group Corporation thank you for the
support you have given the Company.
Sincerely,
/s/ Richard B. Stone
Richard B. Stone
Chairman of the Board
and Chief Executive Officer
<PAGE>
Exhibit (B)
[LOGO OF FIRST UNION APPEARS HERE]
April 8, 1998
Richfood Holdings, Inc.
4860 Cox Road
Glen Allen, Virginia 23060
Attention: Mr. John C. Belknap
Executive Vice President and
Chief Financial Officer
Re: Commitment for Credit Facilities
--------------------------------
Gentlemen:
Richfood Holdings, Inc. (the "Company") has advised First Union National
Bank ("First Union") that the Company intends to make a tender offer to acquire
Dart Group Corporation ("Dart") by merger or stock acquisition (the "Dart
Acquisition") pursuant to merger or stock acquisition documents (the
"Acquisition Documents") to be negotiated and entered into between the Company
and Dart. Based on First Union's present understanding of the proposed
transaction, First Union anticipates that the Company would enter into a Credit
Agreement with certain financial institutions (the "Bank Credit Facility"),
having substantially the terms set forth on the summary of terms and conditions
attached hereto (the "Term Sheet"), providing for credit facilities in an
aggregate amount of $450 million, $250 million of which would be a revolving
credit facility and $200 million of which would be a term loan facility.
First Union understands that the borrowings under the Bank Credit Facility
will provide funds sufficient to enable the Company to consummate the Dart
Acquisition, to refinance certain existing indebtedness of the Company and of
Dart, to finance capital expenditures and other permitted acquisitions, to pay
related fees and expenses and to provide for working capital and other general
corporate purposes.
Based upon and subject to the foregoing and to the terms and conditions set
forth below and in the Term Sheet, First Union is pleased to confirm its
commitment (this "Commitment") to provide the Bank Credit Facility to the
Company. First Union's obligation to provide the Bank Credit Facility pursuant
to this Commitment is subject to (i) the Company's written acceptance of the
letter from First Union and First Union Capital Markets, a division of Wheat
First Securities, Inc. ("Capital Markets" or the "Arranger") to the Company of
even date herewith (the
<PAGE>
Richfood Holdings, Inc.
April 8, 1998
Page 2
"Fee Letter"), pursuant to which the Company agrees to pay First Union and
Capital Markets certain fees in connection with the Bank Credit Facility as more
particularly set forth therein, (ii) the completion of a definitive credit
agreement and related documentation for the Bank Credit Facility, customary for
transactions of this type, in form and substance satisfactory to First Union,
(iii) completion of all documentation relating to the Dart Acquisition including
the Acquisition Documents in form and substance reasonably satisfactory to First
Union; (iv) compliance with all applicable laws and regulations (including
compliance of this Commitment and the transactions described herein with
Regulation U of the Federal Reserve Board and all other applicable federal
banking laws, rules and regulations), and (v) the satisfaction of all other
conditions described herein, in the Term Sheet and in such definitive
documentation. Further, this Commitment is subject to there not having occurred
any material adverse disruption or other change in the financial, banking or
capital markets that has had or could have a materially adverse effect, in First
Union's sole opinion, on the syndication of the Bank Credit Facility.
It is agreed that First Union will act as the sole administrative agent
(the "Administrative Agent") for any other Lenders under the Bank Credit
Facility. First Union, through Capital Markets, will also serve as sole
arranger and manager of the syndication effort to form a syndicate of financial
institutions (collectively with First Union, the "Lenders") reasonably
satisfactory to the Company and Capital Markets and to exercise its reasonable
good faith efforts to syndicate all or a portion of the Bank Credit Facility.
In connection with such syndication effort, First Union will manage all aspects
of the syndication, including without limitation making decisions as to the
selection and number of institutions to be approached and when such institutions
will be approached, the award of titles (if any), when commitments will be
accepted, which institutions will participate, the allocations of commitments
among syndicate Lenders and the amount and distribution of fees payable to
syndicate Lenders. As part of this process, First Union will consult with the
Company regarding the selection and number of institutions to be approached.
First Union reserves the right, prior to or after the execution of
definitive documentation with respect to the Bank Credit Facility, and as part
of any syndication thereof or otherwise, to arrange for the assignment of a
portion of this Commitment, in accordance with the Term Sheet, to one or more
mutually acceptable financial institutions that will become Lenders and party to
such definitive documentation. In addition, in connection with any such
syndication, the Company acknowledges that First Union may allocate a portion of
the fees payable under the Fee Letter to such other Lenders. It is agreed,
however, that no Lender will receive compensation from or on behalf of the
Company outside the terms contained herein and the Fee Letter in order to obtain
its commitment to participate in the Bank Credit Facility.
The Company understands that First Union intends to immediately commence
the syndication efforts upon the signing of this letter by the Company. The
Company agrees to assist First Union in promptly completing a mutually
satisfactory syndication including, without limitation: (a) to provide, upon the
Arranger's reasonable request, financial and organizational information for
syndication purposes (including proforma financial projections covering the term
<PAGE>
Richfood Holdings, Inc.
April 8, 1998
Page 3
of the Bank Credit Facility); (b) to make available the relevant management
personnel related to the financing or operations of the Company or Dart for
meetings with potential syndicate members upon reasonable notification; and (c)
any other reasonable request by the Arranger to facilitate the syndication of
the Bank Credit Facility. The syndication will be accomplished by a variety of
means including direct contact during the syndication between senior management
of the Company and its subsidiaries and First Union and Capital Markets and
their respective affiliates and advisors. First Union reserves the right to
engage the services of Capital Markets and other of its affiliates in furnishing
services to be performed by First Union as contemplated herein and to allocate
(in whole or in part) to any such affiliates any fees payable to it in such
manner as First Union and its affiliates may agree in their sole discretion. The
Company agrees that First Union may share with any of its affiliates and
advisors any information related to the transaction or any other matter
contemplated hereby, on a confidential basis.
The Company also agrees that First Union and its affiliates will be
afforded during the term of the Bank Credit Facility an opportunity to offer
proposals to provide (i) any capital markets transactions, including equity
underwriting and debt placement, to be entered into by the Company, any of its
subsidiaries, or any of their respective affiliates, (ii) any interest rate
caps, currency swaps and other hedging transactions to be entered into by the
Company, any of its subsidiaries, or any of their respective affiliates and
(iii) cash management, funds transfer, trade, corporate trust and securities
services to be obtained by the Company, any of its subsidiaries or their
respective affiliates.
By executing this letter, the Company agrees to reimburse First Union and
Capital Markets from time to time on demand for all reasonable out-of-pocket
fees, syndication expenses and other expenses (including, but not limited to,
the reasonable fees, disbursements and other charges of Mays & Valentine,
L.L.P., as counsel to First Union and Capital Markets) incurred in connection
with the Bank Credit Facility, including the preparation of definitive
documentation for the Bank Credit Facility and the transactions contemplated
hereby. By executing this letter, the Company further agrees to indemnify and
hold harmless First Union, Capital Markets, each other Lender and each director,
officer, employee, attorney and affiliate of First Union, Capital Markets and
each other Lender (each such person or entity referred to hereafter as an
"Indemnified Person") from any losses, claims, costs, damages, expenses or
liabilities (or actions, suits or proceedings, including any inquiry or
investigation, with respect thereto) to which any Indemnified Person may become
liable to any third party, insofar as such losses, claims, costs, damages,
expenses or liabilities (or actions, suits or proceedings, including any inquiry
or investigation, with respect thereto) arise out of, in any way relate to, or
result from, this letter, the Bank Credit Facility or the transactions
contemplated hereby and thereby and to reimburse upon demand each Indemnified
Person for any and all legal and other expenses incurred in connection with
investigating, preparing to defend or defending any such loss, claim, cost,
damage, expense or inquiry or investigation with respect thereto; provided that
the Company shall have no obligation under this indemnity provision for
liabilities resulting from the gross negligence or willful misconduct of any
Indemnified Person. The foregoing provisions of this paragraph shall be in
addition to any right that an Indemnified Person shall have at
<PAGE>
Richfood Holdings, Inc.
April 8, 1998
Page 4
common law or otherwise. No Indemnified Person shall be responsible or liable
for consequential damages which may be alleged as a result of this letter or any
of the transactions referred to herein. The provisions of this paragraph shall
remain in full force and effect until the definitive documentation shall be
executed and delivered and notwithstanding the termination of this letter or the
commitment of First Union or Capital Markets hereunder or the failure of the
Bank Credit Facility to close.
The Company acknowledges and agrees that the services of Capital Markets as
Arranger will be on an exclusive basis during the term of this letter and that,
during such term, no other bank or other financial institution will be engaged
by the Company or any of its subsidiaries regarding any other proposed senior
bank facility for the Company or its subsidiaries.
Except as required by applicable law, this letter, the Term Sheet, the Fee
Letter and the contents hereof and thereof will not be disclosed by the Company
or any of its subsidiaries to any third person or entity without the prior
consent of First Union and Capital Markets, such consent not to be unreasonably
withheld, other than to the Company's attorneys, financial advisors and
accountants, in each case in connection with the Company's evaluation hereof and
to the extent necessary in the Company's reasonable judgment. The Company
acknowledges and agrees that First Union and Capital Markets may share with
their respective affiliates, on a confidential basis, any information relating
to the Bank Credit Facility and the Company and its subsidiaries. First Union
and Capital Markets may disclose information relating to the Bank Credit
Facility to Gold Sheets and other similar bank trade publications, with such
-----------
information to consist of deal terms and other information customarily found in
such publications, with the consent of the Company, such consent not to be
unreasonably withheld.
This Commitment shall terminate at 5:00 p.m. (Charlotte time) on April 10,
1998, unless this Commitment is accepted by the Company in writing prior to such
time and, if accepted prior to such time, shall expire at the earlier of (i)
consummation of the Dart Acquisition or another transaction or series of
transactions in which the Company acquires all or a substantial portion of the
assets or stock of Dart, (ii) termination of the Acquisition Documents regarding
the Acquisition, (iii) the occurrence of any event that has, or could be
expected to have, a material adverse effect on the business, properties,
operations or conditions (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, or Dart, and (iv) 5:00 p.m. (Charlotte time) on
July 31, 1998, if the closing of the Dart Acquisition shall not have occurred by
such time.
This Commitment, the Term Sheet and the Fee Letter shall be governed by and
construed in accordance with the internal laws of the Commonwealth of Virginia
without reference to conflict of law principles thereof, and together constitute
the entire agreement between the parties relating to the subject matter hereof
and thereof and supersede any previous agreement, written or oral, between the
parties with respect to the subject matter hereof and thereof. This Commitment
supersedes any prior or contemporaneous agreement or understanding between any
parties hereto with respect to the subject matter hereof. No party or person
has been authorized
<PAGE>
Richfood Holdings, Inc.
April 8, 1998
Page 5
by First Union or Capital Markets to make any oral or written statements
inconsistent with this letter. This Commitment may not be assigned without the
prior written consent of First Union.
This letter may be executed in any number of counterparts by the parties
hereto, each of which so executed shall be deemed to be an original binding on
such parties, and all of which taken together shall constitute one and the same
instrument.
[Remainder of page intentionally left blank]
<PAGE>
Richfood Holdings, Inc.
April 8, 1998
Page 6
If the Company is in agreement with the foregoing, please sign the enclosed
copy of this Commitment and return it to First Union and Capital Markets,
together with an executed copy of the Fee Letter and the Acceptance Fee (as
defined in the Fee Letter), by no later than 5:00 p.m. (Charlotte time) on
April 10, 1998.
Sincerely,
FIRST UNION NATIONAL BANK
By: /s/ Douglas T. Davis
-----------------------
Name: Douglas T. Davis
---------------------
Title: Vice President
---------------------
FIRST UNION CAPITAL MARKETS, a
division of Wheat First Securities, Inc.
By: /s/ Andrew J. Gamble
-----------------------
Name: Andrew J. Gamble
---------------------
Title: Managing Director
---------------------
Agreed to and accepted this
8th day of April, 1998.
- ---
RICHFOOD HOLDINGS, INC.
By: /s/ John C. Belknap
----------------------
Name: John C. Belknap
--------------------
Title: EVP/CFO
--------------------
<PAGE>
RICHFOOD HOLDINGS, INC.
SUMMARY OF TERMS AND CONDITIONS
-------------------------------
Borrower: Richfood Holdings, Inc. ("Richfood" or the "Company")
Administrative Agent: First Union National Bank ("First Union" or the
"Agent")
Arranger: First Union Capital Markets, a division of Wheat First
Securities, Inc.
Lenders: First Union and a group of lenders to be selected by
the Company, the Arranger and First Union.
Facilities/Amounts: (1) $250 million five-year revolving credit facility (the
"Revolving Credit Facility"), which will include a $25
million letter of credit subfacility and a $30 million
swing line facility provided by First Union.
Availability under the Revolving Credit Facility will
be reduced by the aggregate amount of the letters of
credit outstanding under the letter of credit
subfacility (and unreimbursed draws thereunder) and
the aggregate amount of loans outstanding under the
swing line facility.
(2) $200 million 18 month term loan (the "Term Loan
Facility").
Purpose: (1) The proceeds of the Revolving Credit Facility will be
used by the Company to finance the acquisition (the
"Dart Acquisition") of Dart Group Corporation
("Dart"), to refinance certain existing indebtedness
of Richfood and Dart, to finance capital expenditures
and other permitted acquisitions, to provide working
capital and for other general corporate purposes.
(2) The proceeds of the Term Loan Facility will be used by
the Company to finance the Dart Acquisition, to
refinance certain existing indebtedness of Richfood
and Dart, and to pay related fees and expenses.
Maturity: (1) The Revolving Credit Facility will mature five years
after the date of closing.
(2) The Term Loan Facility will mature 18 months after the
date of closing.
Security: The Company's obligations under the Revolving Credit
Facility and the Term Loan Facility will be secured by
a pledge of and a first priority, perfected security
interest in the stock of all
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc. - Summary of Terms and Conditions 2
- --------------------------------------------------------------------------------
subsidiaries of the Company (other than any one or
more such subsidiaries which is subject to legal,
regulatory or contractual restrictions which restrict
the pledge of such stock), now owned or hereafter
acquired, pursuant to one or more stock pledge
agreements in form and substance satisfactory to First
Union. The pledge of the stock of the Company's
subsidiaries will be released at such time as the
Company's senior debt rating is reaffirmed as
investment grade (BBB- or higher from Standard &
Poor's Ratings Group, a division of McGraw-Hill
Companies, Inc. ("S&P") or the equivalent from Moody's
Investors Service, Inc. ("Moody's")) by S&P and by
Moody's, if Moody's is then providing a senior debt
rating for the Company.
Guaranties: The Company's obligations under the Revolving Credit
Facility and the Term Loan Facility will be
unconditionally guaranteed by all subsidiaries of the
Company (other than any one or more such subsidiaries
which is restricted from providing such a guarantee as
a result of legal, regulatory or contractual
restrictions), now owned or hereafter acquired,
pursuant to one or more guaranty agreements in form
and substance satisfactory to First Union. The
guarantees of the Company's subsidiaries will be
released at the same time as the pledge of the stock
of the Company's subsidiaries is released as provided
above.
Mandatory
Prepayments: The Credit Agreement will contain provisions which
require the Company to prepay the outstanding
principal balance of the Term Loan Facility with the
net proceeds of new equity offerings and new issuances
of senior debt and with the net proceeds of any sale
of Trak Auto Corporation, Crown Books Corporation,
Total Beverage Corporation or any real estate assets
of Dart which occurs after the Dart Acquisition.
Optional
Prepayments: (1) The Company may prepay amounts outstanding under the
Revolving Credit Facility, without premium or penalty
(other than breakage costs in the event that any such
prepayment occurs during a LIBOR interest period), and
reborrow such amounts up to the maximum amount of the
Revolving Credit Facility upon the terms and subject
to the conditions to be set out in the Credit
Agreement.
(2) The Company may prepay amounts outstanding under the
Term Loan Facility, without premium or penalty (other
than breakage costs in the event that any such
prepayment occurs during a
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc. - Summary of Terms and Conditions 3
- --------------------------------------------------------------------------------
LIBOR interest period), upon the terms and subject to
the conditions to be set out in the Credit Agreement.
Voluntary Reduction
of Revolving Credit
Commitment: The Company will have the option from time to time
during the term of the Revolving Credit Facility to
reduce the maximum amount available under the
Revolving Credit Facility (with a corresponding
reduction in the facility fees due under the Credit
Agreement) upon the terms and subject to the
conditions to be set out in the Credit Agreement,
without premium or penalty (other than breakage costs
in the event that any such reduction causes a
prepayment to occur during a LIBOR interest period).
Interest Rate Options: Principal advances under the Revolving Credit Facility
and the outstanding principal balance of the Term Loan
Facility will bear interest, at the option of the
Company, at either (i) the Base Rate plus the
Applicable Margin, or (ii) Adjusted one, two, three or
six-month LIBOR plus the Applicable Margin. The
Company will also have a competitive bid interest rate
option under the Revolving Credit Facility upon the
terms and conditions to be specified in the Credit
Agreement.
The Base Rate means the higher of (i) First Union's
Prime Rate, or (ii) the Federal Funds Rate plus 0.50%.
Adjusted LIBOR means the London Interbank Offered
Rate, as reported by Telerate, adjusted for applicable
reserves, if any.
Swing line loans will bear interest at the Base Rate
as it exists from time to time, minus 1-1/2% per
annum, with such rate to change as of the date of each
change in such Base Rate.
Interest rates will be selected and set, and accrued
interest will be due and payable, as provided in the
Credit Agreement.
Interest Rate Margins: The Applicable Margin for Loans when bearing interest
based upon the Base Rate will be 0%. The Applicable
Margin for Loans when bearing interest based upon
Adjusted LIBOR will vary based on the ratio of the
Company's Total Funded Debt to EBITDA Ratio (as
defined below) in effect from time to time during the
term of the Revolving Credit Facility and the Term
Loan Facility (see Appendix A attached hereto for
Applicable Category and Applicable Margin
definitions).
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 4
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Default Rate: After the occurrence and during the existence of an Event of
Default under the Credit Agreement, interest on the
Revolving Credit Facility and the Term Loan Facility will
accrue at a rate equal to the then highest rate (including
the Applicable Margin) which may be applicable plus 2.0%.
Facility Fee: The Company will pay to the Agent for the account of the
Lenders a facility fee with respect to the Revolving Credit
Facility based on the maximum amount thereof, which facility
fee will vary based on the Company's Total Funded Debt to
EBITDA Ratio in effect from time to time during the term of
the Revolving Credit Facility (see Appendix A for Applicable
Category and facility fee definitions). The facility fee
will be payable quarterly in arrears.
Letter of Credit
Fees: With respect to each letter of credit issued under the
letter of credit subfacility under the Revolving Credit
Facility, the Company will pay (1) to the Agent for the
account of the Lenders an annual letter of credit fee equal
to the daily average Applicable Margin for Libor Loans under
the Revolving Credit Facility (or 30% of such Applicable
Margin in the case of trade letters of credit), as it exists
during the applicable period, multiplied by the daily
average face amount of the letter of credit during the
applicable period, and (2) to the Agent for its own account
an annual facing fee equal to 1/8th of 1% of the face amount
of the letter of credit. The letter of credit fees will be
payable quarterly in arrears.
Representations
and Warranties: The Credit Agreement will contain the same representations
and warranties as are contained in the existing Credit
Agreements, each dated February 27, 1998, by and among the
Company, the lenders party thereto and First Union as
Administrative Agent (the "Existing Credit Agreements"), and
such other representations and warranties as First Union
determines to be necessary or advisable to accommodate and
reflect the Dart Acquisition. The Existing Credit Agreements
contain representations and warranties relating to the
following:
(a) Organization, Power, Qualification
(b) Ownership
(c) Authorization of Agreement, Loan Documents and
Borrowing
(d) Compliance of Agreement, Loan Documents and Borrowing
with Laws
(e) Compliance with Law, Governmental Approvals
(f) Tax Returns and Payments
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 5
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(g) Intellectual Property Matters
(h) Environmental Matters
(i) ERISA
(j) Margin Stock
(k) Government Regulation
(l) Material Contracts
(m) Employee Relations
(n) Burdensome Provisions
(o) Financial Statements
(p) No Material Adverse Change
(q) Solvency
(r) Title to Properties
(s) Liens
(t) Debt and Guaranty Obligations
(u) Litigation
(v) Absence of Defaults
(w) Accuracy and Completeness of Information
Affirmative
Covenants: The Credit Agreement will contain the same affirmative
covenants as are contained in the Existing Credit
Agreements, and such other affirmative covenants as First
Union determines to be necessary or advisable to accommodate
and reflect the Dart Acquisition. The Existing Credit
Agreements contain affirmative covenants relating to the
following:
(a) Provision of periodic financial reports and information
with respect to the Company and its subsidiaries
(b) Preservation of Corporate Existence and Related Matters
(c) Maintenance of Property
(d) Insurance
(e) Accounting Methods and Financial Records
(f) Payment and Performance of Obligations
(g) Compliance with Laws and Approvals
(h) Environmental Laws
(i) Compliance with ERISA
(j) Compliance with Agreements
(k) Conduct of Business
(l) Visits and Inspections
(m) Year 2000 Compatibility
(n) Further Assurances
Negative Covenants: The Credit Agreement will contain the same negative
covenants which are contained in the Existing Credit
Agreements, and such other negative covenants as First Union
determines to be necessary or advisable to accommodate and
reflect the Dart Acquisition. The
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 6
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Existing Credit Agreements contain negative covenants
relating to the following:
(a) Limitations on Debt
(b) Limitations on Liens
(c) Limitations on Mergers and Liquidation
(d) Limitations on Sale of Assets
(e) Prohibition against Limitations on Dividends and
Distributions
(f) Transactions with Affiliates
(g) Certain Accounting Changes
(h) Amendments, Payments and Prepayments of Subordinated
Debt
Financial
Covenants: The Credit Agreement will contain the following financial
covenants:
(a) Total Funded Debt to EBITDA Ratio: the ratio, measured
quarterly, of (i) the consolidated funded debt of the
Company and its subsidiaries (indebtedness for borrowed
money, capital lease obligations, obligations under
synthetic leases and other funded debt), to (ii) the
Consolidated EBITDA (as defined below) of the Company
and its subsidiaries for the four quarter period ending
on the date of measurement, must not exceed (i) 4.25 to
1 at any time through and including May 1, 1999, (ii)
3.5 to 1 at any time thereafter through and including
October 16, 1999, or (iii) 3.0 to 1 at any time
thereafter.
(b) Fixed Charge Coverage Ratio: the ratio, measured
quarterly, of (a) the Consolidated EBITDAR (as defined
below) of the Company and its subsidiaries for the four
fiscal quarter period ending on the date of measurement,
to (b) the consolidated fixed charges of the Company and
its subsidiaries (interest, current maturities of long-
term debt, net rent, current obligations under synthetic
leases and other fixed charges) for such four quarter
period, must not be less than 1.5 to 1.
For purposes hereof, (1) "Consolidated EBITDA" means,
without duplication, the consolidated net income of the
Company and its subsidiaries for the applicable period plus
the aggregate amount deducted in determining such
consolidated net income for such period with respect to
interest, taxes, depreciation and amortization, plus the
proforma EBITDA for any entity acquired
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 7
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during the applicable four quarter period, but excluding any
non-cash gains or losses resulting from the sale, conversion
or other disposition of assets, any gains or losses
resulting from the write-up or write-down of assets, any
equity in the unremitted earnings of any company which is
not a wholly-owned subsidiary and any other non-cash
extraordinary items; and (2) "Consolidated EBITDAR" means,
without duplication, the consolidated net income of the
Company and its subsidiaries for the applicable period plus
the aggregate amount deducted in determining such
consolidated net income for such period with respect to
interest, taxes, depreciation, amortization and net rent,
plus the proforma EBITDAR for any entity acquired during the
applicable four quarter period, but excluding any non-cash
gains or losses resulting from the sale, conversion or other
disposition of assets, any gains or losses resulting from
the write-up or write-down of assets, any equity in the
unremitted earnings of any company which is not a wholly-
owned subsidiary and any other non-cash extraordinary items.
Events of Default: The Credit Agreement will contain the same events of
default as are contained in the Existing Credit Agreements,
and such other events of default as First Union determines
to be necessary or advisable to accommodate and reflect the
Dart Acquisition. The Existing Credit Agreements contain
events of default relating to the following:
(a) Default in Payment of Principal of Loans and
Reimbursement Obligations
(b) Other Payment Defaults
(c) Misrepresentation
(d) Default in Performance of Certain Covenants
(e) Default in Performance of Other Covenants and
Conditions
(f) Hedging Agreements
(g) Debt Cross-Default
(h) Change in Control
(i) Voluntary Bankruptcy Proceeding
(j) Involuntary Bankruptcy Proceeding
(k) Failure of Agreements
(l) Termination Events
(m) Judgments
Conditions
Precedent: The Credit Agreement will contain conditions precedent
usual and customary for borrowers of this size and type or
usual and customary for credit facilities of this size, type
and purpose, including but not limited to, the following:
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 8
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(a) Consummation of the Dart Acquisition on terms
consistent with the draft acquisition documents dated
as of April 8, 1998, provided by the Company to First
Union
(b) Repayment and cancellation of existing Bank lines of
credit
(c) Corporate certificates and resolutions and legal
opinions reasonably satisfactory to the Agent and its
counsel
(d) Required approvals and consents
(e) Representations and warranties are true and correct as
of closing in all material respects
(f) Payment of fees due at closing
(g) No event or condition in the financial or capital
markets that could reasonably be expected to have a
material adverse effect on the primary syndication
Expenses: The Company will pay all reasonable out-of-pocket costs and
expenses (including, but not limited to, syndication
expenses and the reasonable fees and disbursements of
counsel) incurred by the Agent in connection with the
Revolving Credit Facility and the Term Loan Facility and the
enforcement and maintenance of the respective rights of the
Agent and the Lenders under the Credit Agreement and related
documents.
Majority Lenders: 51%
Participations and
Assignments: Lenders will be permitted to assign their commitments in
minimum amounts of $5,000,000 subject to the Agent's and (as
long as no default or event of default has occurred) the
Company's consent, which consent will not be unreasonably
withheld. An assignment fee of $3,500 will be paid to the
Agent by the assigning Lender with respect to each such
assignment. Participations will also be permitted upon the
terms and subject to the conditions to be contained in the
Credit Agreement; provided that no participant may be
granted voting rights except with respect to matters that
require the consent of all Lenders.
Governing Law: Commonwealth of Virginia
Agent's Counsel: Mays & Valentine, L.L.P., Richmond, Virginia
Miscellaneous: This summary of terms and conditions is intended as a
summary only and does not purport to set forth all of the
conditions, covenants, representations, warranties and other
provisions which will be contained in the Credit Agreement
and the other related
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 9
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documentation for the Revolving Credit Facility and the Term
Loan Facility described herein.
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First Union Capital Markets Group
<PAGE>
Richfood Holdings, Inc.-Summary of Terms and Conditions 10
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APPENDIX A
----------
<TABLE>
<CAPTION>
Revolving Credit Term Loan Facility Fee for
Total Funded Debt Applicable Facility LIBOR Facility LIBOR Revolving
to EBITDA Ratio Category Applicable Margin* Applicable Margin* Credit Facility*
- --------------- -------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Less than or equal to Category 1 .25% .75% .15%
2.0 to 1
Greater than 2.0 to 1 Category 2 .35% .75% .15%
but less than or
equal to 2.5 to 1
Greater than 2.5 to 1 Category 3 .425% .75% .20%
but less than or
equal to 3.0 to 1
Greater than 3.0 to 1 Category 4 .525% .75% .225%
but less than or
equal to 3.5 to 1
Greater than 3.5 to 1 Category 5 .75% 1.0% .25%
</TABLE>
* The Revolving Credit Facility LIBOR Applicable Margin, the Term Loan Facility
LIBOR Applicable Margin and the Facility Fee will be fixed at Category 5 levels
until the Agent has received the compliance certificate as outlined more fully
in the definitive Credit Agreement covering the first full quarter ending after
the closing date, and thereafter will be based on the table above.
#511739v6
- --------------------------------------------------------------------------------
First Union Capital Markets Group
<PAGE>
Exhibit (C)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RICHFOOD HOLDINGS, INC.,
DGC ACQUISITION, INC.
AND
DART GROUP CORPORATION
-----------------------------------
Dated as of April 9, 1998
-----------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.1. Agreement................................................ 2
Section 1.2. Certificates............................................. 2
Section 1.3. Closing; Closing Date.................................... 2
Section 1.4. Code..................................................... 3
Section 1.5. Confidentiality Agreement................................ 3
Section 1.6. Contracts................................................ 3
Section 1.7. Crown.................................................... 3
Section 1.8. Crown Common Stock....................................... 3
Section 1.9. Dart..................................................... 3
Section 1.10. Dart Common Stock........................................ 3
Section 1.11. Dart Companies........................................... 3
Section 1.12. Dart Group Fiscal 1998 Financial Statements.............. 4
Section 1.13. Dart Group SEC Reports................................... 4
Section 1.14. DGCL..................................................... 5
Section 1.15. DLJ...................................................... 5
Section 1.16. Effective Time........................................... 5
Section 1.17. ERISA.................................................... 5
Section 1.18. Exchange Act............................................. 5
Section 1.19. GAAP..................................................... 5
Section 1.20. Governmental Authority................................... 5
Section 1.21. HSR Act.................................................. 6
Section 1.22. IRS...................................................... 6
Section 1.23. Knowledge of Dart........................................ 6
Section 1.24. Law...................................................... 6
Section 1.25. Material Adverse Effect.................................. 6
Section 1.26. Merger................................................... 7
Section 1.27. Merger Consideration..................................... 7
Section 1.28. Merger Subsidiary........................................ 7
Section 1.29. Nasdaq................................................... 7
Section 1.30. Offer; Offer Consideration............................... 7
Section 1.31. Offer Documents.......................................... 7
Section 1.32. Partnership; Partnerships................................ 8
Section 1.33. Paying Agent............................................. 8
Section 1.34. Permits.................................................. 8
Section 1.35. Richfood................................................. 8
Section 1.36. Rights; Rights Agreement................................. 8
Section 1.37. Schedule 14D-1........................................... 8
Section 1.38. Schedule 14D-9........................................... 9
Section 1.39. SEC...................................................... 9
Section 1.40. Securities Act........................................... 9
Section 1.41. Shares................................................... 9
Section 1.42. Shoppers................................................. 9
Section 1.43. Subsidiary; Subsidiaries................................. 9
Section 1.44. Tax Returns.............................................. 10
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 1.45. Taxes.................................................... 10
Section 1.46. Trak..................................................... 10
Section 1.47. Trak Common Stock........................................ 11
Section 1.48. Wasserstein.............................................. 11
<CAPTION>
ARTICLE II
THE OFFER
<S> <C> <C>
Section 2.1. The Offer................................................ 11
Section 2.2. Offer Documents.......................................... 13
Section 2.3. Dart Actions............................................. 15
Section 2.4. Directors................................................ 18
<CAPTION>
ARTICLE III
THE MERGER
<CAPTION>
<S> <C> <C>
Section 3.1. The Merger............................................... 20
Section 3.2. Closing.................................................. 21
Section 3.3. Effective Time of the Merger............................. 21
Section 3.4. Effects of the Merger.................................... 21
Section 3.5. Stockholders' Meeting.................................... 22
Section 3.6. Merger Without Meeting of Shareholders................... 24
<CAPTION>
ARTICLE IV
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
<S> <C> <C>
Section 4.1. Effect on Capital Stock.................................. 24
Section 4.2. Conversion of Securities................................. 25
Section 4.3. Payment for Shares....................................... 26
Section 4.4. Stock Transfer Books..................................... 31
Section 4.5. Stock Options............................................ 31
Section 4.6. Dissenting Shares........................................ 32
<CAPTION>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RICHFOOD
AND MERGER SUBSIDIARY
<S> <C> <C>
Section 5.1. Organization and Authority............................... 33
Section 5.2. Authority Relative to this Agreement..................... 34
Section 5.3. Consents and Approvals; No Violations.................... 35
Section 5.4. Information Supplied..................................... 36
Section 5.5. Financial Capability..................................... 37
Section 5.6. Fees and Expenses of Brokers and Others.................. 37
</TABLE>
- ii -
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF DART
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 6.1. Organization and Authority of the Dart Companies......... 38
Section 6.2. Capitalization........................................... 39
Section 6.3. Authority Relative to this Agreement..................... 42
Section 6.4. Consents and Approvals; No Violations.................... 43
Section 6.5. Reports.................................................. 45
Section 6.6. Absence of Certain Events................................ 47
Section 6.7. Litigation............................................... 48
Section 6.8. Title to and Sufficiency of Assets....................... 49
Section 6.9. Contracts................................................ 49
Section 6.10. Labor Matters............................................ 51
Section 6.11. Employee Benefit Plans................................... 52
Section 6.12. Tax Matters.............................................. 54
Section 6.13. Compliance with Law...................................... 58
Section 6.14. Transactions With Affiliates............................. 58
Section 6.15. Fees and Expenses of Brokers and Others.................. 59
Section 6.16. Absence of Undisclosed Liabilities; Guarantees........... 60
Section 6.17. Information Supplied..................................... 61
<CAPTION>
ARTICLE VII
COVENANTS
<S> <C> <C>
Section 7.1. Conduct of the Business of Dart.......................... 62
Section 7.2. No Solicitation.......................................... 69
Section 7.3. Access to Information; Confidentiality Agreements........ 71
Section 7.4. Best Efforts............................................. 72
Section 7.5. Consents................................................. 73
Section 7.6. Public Announcements..................................... 73
Section 7.7. Dart Group Fiscal 1998 Financial Statements.............. 73
Section 7.8. Indemnification; Insurance............................... 74
Section 7.9. Shoppers Senior Notes.................................... 76
<CAPTION>
ARTICLE VIII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
<S> <C> <C>
Section 8.1. Conditions Precedent to Each Party's Obligation to
Effect the Merger........................................ 76
Section 8.2. Conditions Precedent to Obligations of Dart.............. 77
Section 8.3. Conditions Precedent to Obligations of Richfood and
Merger Subsidiary........................................ 78
</TABLE>
- iii -
<PAGE>
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 9.1. Termination.............................................. 79
Section 9.2. Effect of Termination.................................... 82
Section 9.3. Termination Fee.......................................... 82
Section 9.4. Amendment................................................ 83
Section 9.5. Extension; Waiver........................................ 83
<CAPTION>
ARTICLE X
MISCELLANEOUS
<S> <C> <C>
Section 10.1. Survival of Representations and Warranties............... 84
Section 10.2. Brokerage Fees and Commissions........................... 84
Section 10.3. Entire Agreement; Assignment............................. 85
Section 10.4. Notices.................................................. 85
Section 10.5. Governing Law; Consent to Jurisdiction................... 86
Section 10.6. Descriptive Headings..................................... 87
Section 10.7. Parties in Interest...................................... 87
Section 10.8. Counterparts............................................. 87
Section 10.9. Specific Performance..................................... 88
Section 10.10. Fees and Expenses........................................ 88
Section 10.11. Severability............................................. 88
</TABLE>
- iv -
<PAGE>
ANNEXES AND EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Annex I Conditions to the Offer
Annex II Certificate of Incorporation of Surviving Corporation
Annex III Bylaws of Surviving Corporation
Exhibit 1.23 Knowledge of Dart
Exhibit 6.1A Dart Subsidiaries
Exhibit 6.1B Dart Partnerships
Exhibit 6.2 Dart Companies' Outstanding Options, Warrants, Subscriptions or Other Rights
Exhibit 6.4 Dart Required Consents
Exhibit 6.5 Certain SEC Reports
Exhibit 6.6 Adverse Changes Affecting Dart Companies
Exhibit 6.7 Dart Litigation
Exhibit 6.8 Certain Permitted Liens
Exhibit 6.10 Dart Labor Matters
Exhibit 6.11 Dart Benefit Plans
Exhibit 6.12 Tax Matters Concerning Dart
Exhibit 6.14 Transactions With Affiliates by Dart
Exhibit 6.16 Dart Company Guarantees
Exhibit 7.1A Conduct of the Business of Dart
Exhibit 7.1B Shoppers Fiscal 1999 Capital Expenditure Budget
Exhibit 7.1C Representatives
Exhibit 7.8 Indemnification Agreements
</TABLE>
- v -
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 9, 1998, by and among
RICHFOOD HOLDINGS, INC., a Virginia corporation ("Richfood"), DGC ACQUISITION,
INC., a Delaware corporation ("Merger Subsidiary"), and DART GROUP CORPORATION,
a Delaware corporation ("Dart").
RECITALS
--------
WHEREAS, the respective Boards of Directors of Richfood, Merger Subsidiary
and Dart have unanimously approved the acquisition of Dart by Richfood, by means
of the merger of Merger Subsidiary with and into Dart (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, to effectuate the acquisition, Richfood and Dart each desire that
Richfood cause Merger Subsidiary to commence a cash tender offer to purchase all
of the outstanding shares of common stock, par value $1.00 per share, of Dart
("Shares" or "Dart Common Stock"), upon the terms and subject to the conditions
set forth in this Agreement and the Offer Documents (as defined in Section 2.2
-----------
hereof), and the Board of Directors of Dart has unanimously approved such tender
offer and has resolved to recommend to its stockholders that they accept the
tender offer and tender their shares of Dart Common Stock pursuant thereto; and
<PAGE>
WHEREAS, Richfood, Merger Subsidiary and Dart desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to consummation
thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Agreement. "Agreement" shall mean this Agreement, together
---------
with the Annexes and Exhibits attached hereto, as amended from time to time in
accordance with the terms hereof.
Section 1.2. Certificates. "Certificates" shall have the meaning given
------------
in Section 4.3.(b) hereof.
---------------
Section 1.3. Closing; Closing Date. "Closing" shall mean the closing
---------------------
held pursuant to Section 3.2 hereof, and "Closing Date" shall mean the date on
-----------
which the Closing occurs.
- 2 -
<PAGE>
Section 1.4. Code. "Code" shall mean, as appropriate, the Internal
----
Revenue Code of 1954 or of 1986, each as amended.
Section 1.5. Confidentiality Agreement. "Confidentiality Agreement"
-------------------------
shall mean the letter agreement, dated as of February 3, 1998, between Dart and
Richfood.
Section 1.6. Contracts. "Contracts" shall mean contracts, agreements,
---------
leases, licenses, arrangements, understandings, relationships and commitments,
written or oral.
Section 1.7. Crown. "Crown" shall mean Crown Books Corporation, a
-----
Delaware corporation and Subsidiary of Dart.
Section 1.8. Crown Common Stock. "Crown Common Stock" shall mean the
------------------
common stock, $0.01 par value, of Crown.
Section 1.9. Dart. "Dart" shall mean Dart Group Corporation, a Delaware
----
corporation.
Section 1.10. Dart Common Stock. "Dart Common Stock" shall mean the
-----------------
common stock, par value $1.00 per share, of Dart.
Section 1.11. Dart Companies. "Dart Companies" shall mean Dart, its
--------------
Subsidiaries and the Partnerships in which it has an interest.
- 3 -
<PAGE>
Section 1.12. Dart Group Fiscal 1998 Financial Statements. "Dart Group
-------------------------------------------
Fiscal 1998 Financial Statements" shall mean the audited consolidated balance
sheets of Dart, Crown, Shoppers and Trak, each as of January 31, 1998, or
February 1, 1998, as the case may be, and the related audited consolidated
statements of earnings, stockholders' equity and cash flows for the fiscal years
then ended, together with the notes thereto, to be delivered to Richfood by Dart
in accordance with Section 7.7 hereof.
-----------
Section 1.13. Dart Group SEC Reports. "Dart Group SEC Reports" shall mean
----------------------
(a) the Annual Reports on Form 10-K of Dart, Crown and Trak for their respective
fiscal years ended January 31, 1997, or February 1, 1997, as the case may be,
(b) the Registration Statement on Form S-4 of Shoppers (Reg. No. 333-32825), as
amended through the date hereof, and (c) all documents filed by Dart, Crown,
Shoppers or Trak with the SEC pursuant to Sections 13(a) and 13(c) of the
Exchange Act, any definitive proxy statements filed pursuant to Section 14 of
the Exchange Act and any report filed pursuant to Section 15(d) of the Exchange
Act, in each case following the filing of such Annual Reports on Form 10-K (or,
in the case of Shoppers, the effective date of such registration statement) and
prior to the date hereof.
- 4 -
<PAGE>
Section 1.14. DGCL. "DGCL" shall mean the Delaware General Corporation
----
Law, as amended.
Section 1.15. DLJ. "DLJ" shall mean Donaldson, Lufkin & Jenrette
---
Securities Corporation, financial advisors to Richfood.
Section 1.16. Effective Time. "Effective Time" shall have the meaning
--------------
given in Section 3.3 hereof.
-----------
Section 1.17. ERISA. "ERISA" shall mean the Employee Retirement Income
-----
Security Act of 1974, as amended.
Section 1.18. Exchange Act. "Exchange Act" shall mean the Securities
------------
Exchange Act of 1934, as amended.
Section 1.19. GAAP. "GAAP" shall mean generally accepted accounting
----
principles as in effect in the United States of America at the time of the
preparation of the subject financial statement.
Section 1.20. Governmental Authority. "Governmental Authority" shall mean
----------------------
any federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, or any court, in each case
whether of the United States, any of its possessions or territories, or of any
foreign nation.
- 5 -
<PAGE>
Section 1.21. HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino
-------
Antitrust Improvements Act of 1976, as amended.
Section 1.22. IRS. "IRS" shall mean the Internal Revenue Service.
---
Section 1.23. Knowledge of Dart. "Knowledge of Dart" shall mean the
-----------------
actual knowledge, after due inquiry, of those officers of the Dart Companies
identified on Exhibit 1.23 attached hereto.
------------
Section 1.24. Law. "Law" shall mean any federal, state, provincial, local
---
or other law or governmental requirement of any kind, and the rules, regulations
and orders promulgated thereunder.
Section 1.25. Material Adverse Effect. "Material Adverse Effect" shall
-----------------------
mean, with respect to any entity or group of entities, a material adverse effect
on the business, operations, assets, liabilities, financial condition or results
of operations of such entity or group of entities taken as a whole, other than
any change, circumstance or effect (i) relating to the economy or securities
markets in general, (ii) relating to the industries in which Dart or Richfood
operate and not specifically relating to Dart or Richfood, (iii) set forth or
described in the Dart Group SEC Reports, (iv) resulting from the execution of
this Agreement, the announcement of this Agreement and the transactions
- 6 -
<PAGE>
contemplated hereby or any change in the value of Dart Common Stock relating to
such execution or announcement or (v) in the case of Dart, resulting in a
diminution in the value after the date hereof of the shares of Crown common
stock held by Dart.
Section 1.26. Merger. "Merger" shall mean the merger of Merger Subsidiary
------
with and into Dart at the Effective Time.
Section 1.27. Merger Consideration. "Merger Consideration" shall have the
--------------------
meaning given in Section 4.2.(a) hereof.
---------------
Section 1.28. Merger Subsidiary. "Merger Subsidiary" shall mean DGC
-----------------
Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of
Richfood.
Section 1.29. Nasdaq. "Nasdaq" shall mean The Nasdaq National Market.
------
Section 1.30. Offer; Offer Consideration. "Offer" and "Offer
--------------------------
Consideration" shall have the respective meanings given in Section 2.1.(a)
---------------
hereof.
Section 1.31. Offer Documents. "Offer Documents" shall have the meaning
---------------
given in Section 2.2 hereof.
-----------
- 7 -
<PAGE>
Section 1.32. Partnership; Partnerships. "Partnership" shall mean any
-------------------------
limited or general partnership, joint venture or other business association,
other than a Subsidiary, in which any party has a direct or indirect interest
(collectively, "Partnerships").
Section 1.33. Paying Agent. "Paying Agent" shall mean First Union
------------
National Bank of North Carolina.
Section 1.34. Permits. "Permits" shall mean permits, licenses and
-------
governmental authorizations, registrations and approvals.
Section 1.35. Richfood. "Richfood" shall mean Richfood Holdings, Inc., a
--------
Virginia corporation.
Section 1.36. Rights; Rights Agreement. "Rights" shall mean the preferred
------------------------
share purchase rights issued by Dart pursuant to the Rights Agreement, dated as
of February 17, 1998 (the "Rights Agreement"), between Dart and The Bank of New
York, as rights agent.
Section 1.37. Schedule 14D-1. "Schedule 14D-1" shall have the meaning
--------------
given in Section 2.2 hereof.
-----------
- 8 -
<PAGE>
Section 1.38. Schedule 14D-9. "Schedule 14D-9" shall have the meaning
--------------
given in Section 2.3 hereof.
-----------
Section 1.39. SEC. "SEC" shall mean the Securities and Exchange
---
Commission.
Section 1.40. Securities Act. "Securities Act" shall mean the Securities
--------------
Act of 1933, as amended.
Section 1.41. Shares. "Shares" shall mean shares of Dart Common Stock.
------
Section 1.42. Shoppers. "Shoppers" shall mean Shoppers Food Warehouse
--------
Corporation, a Delaware corporation and indirect wholly-owned Subsidiary of
Dart.
Section 1.43. Subsidiary; Subsidiaries. "Subsidiary" shall mean (i) each
------------------------
corporate entity with respect to which a party has the right to vote (directly
or indirectly through one or more other entities or otherwise) shares
representing 50% or more of the votes eligible to be cast in the election of
directors of such entity, and (ii) each other corporate entity which constitutes
a "significant subsidiary," as defined in Rule 1-02 of Regulation S-X adopted
under the Exchange Act (collectively, "Subsidiaries").
- 9 -
<PAGE>
Section 1.44. Tax Returns. "Tax Returns" shall mean any report, return,
-----------
information statement, payee statement or other information required to be
provided to any federal, state, local or foreign Governmental Authority, or
otherwise retained, with respect to Taxes or the Dart Benefit Plans (as defined
in Section 6.11 hereof).
------------
Section 1.45. Taxes. "Taxes" shall mean any and all taxes, levies,
-----
imposts, duties, assessments, charges and withholdings imposed or required to be
collected by or paid over to any federal, state, local or foreign Governmental
Authority or any political subdivision thereof, including without limitation
income, gross receipts, ad valorem, value added, minimum tax, franchise, sales,
-- -------
use, excise, license, real or personal property, unemployment, disability, stock
transfer, mortgage recording, estimated, withholding or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, and including any
interest, penalties, fines, assessments or additions to tax imposed in respect
of the foregoing, or in respect of any failure to comply with any requirement
regarding Tax Returns.
Section 1.46. Trak. "Trak" shall mean Trak Auto Corporation, a Delaware
----
corporation and Subsidiary of Dart.
- 10 -
<PAGE>
Section 1.47. Trak Common Stock. "Trak Common Stock" shall mean the
-----------------
common stock, $0.01 par value per share, of Trak.
Section 1.48. Wasserstein. "Wasserstein" shall mean Wasserstein Perella &
-----------
Co., Inc., financial advisors to Dart.
ARTICLE II
THE OFFER
Section 2.1. The Offer. (a) Provided that this Agreement shall not have
---------
been terminated pursuant to Article IX, as promptly as practicable (but in any
----------
event not later than five business days after the public announcement of the
execution and delivery of this Agreement), Richfood shall cause Merger
Subsidiary to commence (within the meaning of Rule 14d-2 under the Exchange Act)
an offer to purchase (the "Offer") all outstanding shares of Dart Common Stock
at a price of $160.00 per share, net to the seller in cash (such amount, or any
greater amount per Share paid pursuant to the Offer, being hereinafter referred
to as the "Offer Consideration"). The obligation of Richfood and Merger
Subsidiary to commence the Offer, consummate the Offer, accept for payment and
to pay for shares of Dart Common Stock validly tendered in the Offer and not
withdrawn shall be subject only to those conditions set forth in Annex I
-------
hereto, including the condition that a number of Shares representing a majority
of all outstanding Shares on a fully-
- 11 -
<PAGE>
diluted basis shall have been validly tendered and not withdrawn prior to the
expiration of the Offer. The initial expiration date of the Offer will be
midnight on the twentieth business day after the Offer is commenced.
(b) Merger Subsidiary expressly reserves the right to increase the price
per share payable in the Offer or to make any other changes in the terms and
conditions of the Offer, except that without the prior written consent of Dart,
Merger Subsidiary shall not (i) decrease or change the form of the Offer
Consideration or decrease the number of Shares sought pursuant to the Offer,
(ii) impose additional conditions to the Offer, (iii) extend the expiration date
of the Offer (except as required by Law or the applicable rules and regulations
of the SEC) or (iv) amend any term of the Offer in any manner adverse to holders
of shares of Dart Common Stock; provided, however, that, except as set forth
-------- -------
above, Merger Subsidiary may waive any condition to the Offer in its sole
discretion (other than the Minimum Condition, as defined in Annex I, which
-------
Merger Subsidiary may not waive); and provided further, that the Offer may be
-------- -------
extended in connection with an increase in the consideration to be paid pursuant
to the Offer so as to comply with applicable rules and regulations of the SEC;
and provided, further, that the Offer may be extended by Merger Subsidiary for
-------- -------
up to ten (10) business days after the initial expiration date if fewer than 90%
of the Shares outstanding as of such date have been tendered at such date, so
- 12 -
<PAGE>
long as, in connection with such extension, Merger Subsidiary irrevocably waives
the conditions to the Offer set forth in clauses (b), (c), (f), (g)(1) and (h)
of Annex I. Assuming the prior satisfaction or waiver of the conditions to the
-------
Offer, Merger Subsidiary shall accept for payment, and pay for, in accordance
with the terms of the Offer, all shares of Dart Common Stock validly tendered
and not withdrawn pursuant to the Offer as soon as practicable after the
expiration date thereof. Notwithstanding the foregoing, Merger Subsidiary
shall, and Richfood agrees to cause Merger Subsidiary to, extend the Offer from
time to time until June 30, 1998, if, and to the extent that, at the initial
expiration date of the Offer, or any subsequent extension thereof, all
conditions to the Offer have not been satisfied or waived; provided, however,
-------- -------
that Richfood and Merger Subsidiary shall have no obligation to extend the Offer
if Dart's failure to fulfill any obligation under this Agreement has been the
cause of or has resulted in the failure of any such condition being satisfied.
(c) Richfood shall provide or cause to be provided to Merger Subsidiary all
of the funds necessary to purchase any Shares of Dart Common Stock that Merger
Subsidiary becomes obligated to purchase pursuant to the Offer.
Section 2.2. Offer Documents. On the date of commencement of the Offer,
---------------
Richfood and Merger Subsidiary shall file or cause
- 13 -
<PAGE>
to be filed with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer which shall contain the offer to
purchase and related letter of transmittal (such Schedule 14D-1, letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents") and shall contain (or shall be amended in a
timely manner to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable Law, and shall conform in all material
respects with the requirements of the Exchange Act and any other applicable Law;
provided, however, that no agreement or representation is hereby made or shall
- -------- -------
be made by Richfood or Merger Subsidiary with respect to information supplied by
Dart in writing expressly for inclusion in, or with respect to Dart information
derived from the Dart Group SEC Reports which is included or incorporated by
reference in, the Offer Documents. Richfood, Merger Subsidiary and Dart each
agrees promptly to correct any information provided by them for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and Merger Subsidiary further agrees to take all lawful
action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Dart Common Stock, in
each case as and to the extent required by applicable Law. Dart and its counsel
- 14 -
<PAGE>
shall be given the opportunity to review and comment upon the Offer Documents to
be filed with the SEC prior to any such filing. In addition, Richfood and
Merger Subsidiary agree to provide Dart and its counsel in writing with any
comments or other communications that Richfood, Merger Subsidiary or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments or other
communications.
Section 2.3. Dart Actions. (a) Dart hereby approves of and consents to
------------
the Offer and represents and warrants that (i) Dart's Board of Directors (at a
meeting duly called and held) has (A) unanimously determined that each of this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of Dart and its stockholders, (B)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, (C) resolved to elect not to be subject to any state
takeover law that is or purports to be applicable to the Offer, the Merger or
the transactions contemplated by this Agreement, (D) taken all steps necessary
to render Section 203 of the DGCL inapplicable to this Agreement, and the
transactions contemplated hereby and thereby, including the Offer and the Merger
and (E) subject to the fiduciary duties of the Board of Directors applicable
from time to time, resolved to recommend that the holders of Dart Common Stock
accept the Offer and tender all of their Shares
- 15 -
<PAGE>
pursuant thereto and approve the Merger, and (ii) Wasserstein has delivered to
the Board of Directors of Dart its written opinion that the Offer Consideration
to be received by the holders of Dart Common Stock in the Offer and the Merger
Consideration to be received by the holders of Dart Common Stock in the Merger
as contemplated in this Agreement is fair, from a financial point of view, to
such holders, and Wasserstein has consented to the inclusion of such opinion in
the Offer Documents. Dart hereby consents to the inclusion in the Offer
Documents of the recommendation of its Board of Directors referred to in this
Section 2.3. Dart hereby agrees to file with the SEC simultaneously with the
- -----------
filing by Richfood and Merger Subsidiary of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") which will contain
(subject to the fiduciary duties of the Board of Directors as advised by
counsel) such recommendation of the Board of Directors of Dart in favor of the
Offer and Merger and otherwise complying with Rule 14d-9 under the Exchange Act.
Dart covenants that the Schedule 14D-9 shall comply in all material respects
with the Exchange Act and any other applicable Law and shall contain (or shall
be amended in a timely manner to contain) all information which is required to
be included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable Law. Dart, Richfood and Merger
Subsidiary each agree promptly to correct any information provided by them for
use in the Schedule
- 16 -
<PAGE>
14D-9 if and to the extent that it shall have become false or misleading in any
material respect and Dart further agrees to take all lawful action necessary to
cause the Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Dart Common Stock, in each case as and to the
extent required by applicable Law. Richfood, Merger Subsidiary and their
counsel shall be given an opportunity to review and comment upon the Schedule
14D-9 and any amendments thereto prior to the filing thereof with the SEC. In
addition, Dart agrees to provide Richfood, Merger Subsidiary and their counsel
in writing with any comments or other communications that Dart or its counsel
may receive from time to time from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments or other
communications. In connection with the Offer, Dart shall (or shall cause its
transfer agent to) promptly furnish Richfood with mailing labels, security
position listings and all available listings or computer files containing the
names and addresses of the record holders of Dart Common Stock as of the latest
practicable date and shall furnish Richfood with such information and assistance
(including updated lists of stockholders, mailing labels and lists of security
positions) as Richfood or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Dart Common Stock. Subject to the
requirements of applicable Law, and except for such actions as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the
- 17 -
<PAGE>
Offer and the Merger, Richfood and Merger Subsidiary shall hold in confidence
the information contained in such labels and lists, shall use such information
only in connection with the Offer and the Merger, and, if the Offer or this
Agreement is terminated in accordance with its terms, shall deliver promptly to
Dart (or destroy and certify to Dart the destruction of) all copies of such
information then in their possession.
(b) The Board of Directors of Dart has (i) determined, pursuant to Section
-------
3(a)(ii) of the Rights Agreement, that the Distribution Date (as defined in the
- --------
Rights Agreement) that would otherwise occur by virtue of the commencement of
the Offer shall be indefinitely postponed, and (ii) approved the redemption of
the Rights pursuant to Section 23(a) of the Rights Agreement in connection with
-------------
the Offer and the Merger and shall cause such redemption to occur immediately
prior to Merger Subsidiary's purchase of Shares pursuant to the Offer.
Section 2.4. Directors. (a) Promptly upon the purchase by Richfood or
---------
any of its Subsidiaries (including Merger Subsidiary) of such number of shares
of Dart Common Stock which represents at least a majority of the outstanding
shares of Dart Common Stock, and from time to time thereafter, Richfood shall be
entitled to designate such number of directors ("Richfood's Designees"), rounded
up to the next whole number, as will give Richfood representation on the Board
of Directors of Dart equal
- 18 -
<PAGE>
to the product of (x) the number of directors on the Board of Directors of Dart
(giving effect to any increase in the number of directors pursuant to this
Section 2.4), and (y) the percentage that such number of Shares so purchased
- -----------
bears to the aggregate number of Shares outstanding (such number being, the
"Board Percentage"), and Dart shall, subject to Richfood's having theretofore
provided Dart with the information with respect to Richfood's Designees required
pursuant to Section 14(f) of the Exchange Act, promptly satisfy the Board
Percentage by (i) increasing the size of the Board of Directors of Dart, or (ii)
securing the resignations of such number of directors as is necessary to enable
Richfood's Designees to be elected to the Board of Directors of Dart (and Dart
shall use its best efforts to cause the then-remaining members of the Dart's
Board of Directors to promptly so elect Richfood's Designees). At the request
of Richfood, Dart shall take, at Dart's expense, all lawful action necessary to
effect any such election, including, without limitation, mailing to Dart's
stockholders the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, unless such information has previously been
provided to Dart's stockholders in the Schedule 14D-9.
(b) Following the election or appointment of Richfood's Designees pursuant
to this Section 2.4 and prior to the Effective Time of the Merger, any amendment
-----------
or termination of this
- 19 -
<PAGE>
Agreement by Dart, extension for the performance or waiver of the obligations or
other acts of Richfood or Merger Subsidiary hereunder by Dart or waiver of
Dart's rights hereunder shall require the concurrence of a majority of directors
of Dart then in office who are directors on the date hereof and who voted to
approve this Agreement; provided, that if there shall be no such directors, such
--------
actions may be effected by majority vote of the entire Board of Directors of
Dart; and provided, further, that after the approval of this Agreement by the
-------- -------
stockholders of Dart, no such amendment, termination, modification or supplement
shall reduce or change the Merger Consideration or adversely affect the rights
of Dart's stockholders hereunder without the approval of such stockholders.
ARTICLE III
THE MERGER
Section 3.1. The Merger. Upon the terms and subject to the conditions
----------
set forth in this Agreement, and in accordance with the DGCL, Merger Subsidiary
shall be merged with and into Dart at the Effective Time. At the Effective
Time, the separate corporate existence of Merger Subsidiary shall cease, and
Dart shall continue as the surviving corporation and a direct wholly-owned
subsidiary of Richfood (Merger Subsidiary and Dart are sometimes hereinafter
referred to as "Constituent Corporations" and, as the context requires, Dart is
sometimes hereinafter
- 20 -
<PAGE>
referred to as the "Surviving Corporation"), and shall continue under the name
"DART GROUP CORPORATION."
Section 3.2. Closing. Unless this Agreement shall have been terminated
-------
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.1, the closing of the Merger (the "Closing") shall take place at 10:00
- -----------
a.m., local time, on the third business day following satisfaction or waiver of
the conditions set forth in Article VIII (the "Closing Date"), at the offices of
------------
Hunton & Williams, 951 East Byrd Street, Richmond, Virginia 23219, unless
another date, time or place is agreed to in writing by the parties hereto.
Section 3.3. Effective Time of the Merger. Subject to the provisions of
----------------------------
this Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become effective
upon such filing or at such time thereafter as is provided in the Certificate of
Merger (the "Effective Time").
Section 3.4. Effects of the Merger. (a) The Merger shall have the
---------------------
effects as set forth in the applicable provisions of the DGCL.
- 21 -
<PAGE>
(b) The directors and the officers of Merger Subsidiary immediately prior
to the Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Dart immediately prior to the
Effective Time shall be amended by virtue of the Merger to read in its entirety
as set forth in Annex II attached hereto, until thereafter duly amended in
--------
accordance with the terms thereof and the DGCL.
(d) The Bylaws of Dart as in effect immediately prior to the Effective Time
shall be amended by virtue of the Merger to read in its entirety as set forth in
Annex III attached hereto, until thereafter duly amended in accordance with the
- ---------
terms thereof, the Certificate of Incorporation and the DGCL.
Section 3.5. Stockholders' Meeting. (a) If required by applicable Law
---------------------
in order to consummate the Merger, Dart, acting through its Board of Directors,
shall, in accordance with applicable Law and Dart's Certificate of Incorporation
and Bylaws:
- 22 -
<PAGE>
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as soon as practicable following the
acceptance for payment of Shares by Merger Subsidiary pursuant to the Offer for
the purpose of considering and taking action upon the Merger and this Agreement;
(ii) prepare and file with the SEC a preliminary proxy statement
relating to the Merger and this Agreement, and use its reasonable best efforts
(x) to obtain and furnish the information required to be included by the SEC in
the Proxy Statement (as hereinafter defined) and, after consultation with
Richfood, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy statement and cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders, and (y) to obtain the
necessary approvals of the Merger and this Agreement by its stockholders; and
(iii) subject to the fiduciary duties of the Board of Directors as
advised by counsel, include in the Proxy Statement the recommendation of Dart's
Board of Directors that stockholders of Dart vote in favor of the approval of
the Merger and this Agreement.
(b) Richfood agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, Merger Subsidiary or
- 23 -
<PAGE>
any of its other Subsidiaries in favor of the approval of the Merger and this
Agreement.
Section 3.6. Merger Without Meeting of Shareholders. Notwithstanding
--------------------------------------
Section 3.5 hereof, in the event that Richfood, Merger Subsidiary and any other
- -----------
Subsidiary of Richfood shall acquire at least 90% of the outstanding Shares
pursuant to the Offer, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of Shares by Merger Subsidiary
pursuant to the Offer without a meeting of stockholders of Dart, in accordance
with Section 253 of the DGCL.
ARTICLE IV
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 4.1. Effect on Capital Stock. At the Effective Time, by virtue
-----------------------
of the Merger and without any action on the part of the holder of any shares of
Dart Common Stock or the holder of any capital stock of Merger Subsidiary:
(a) Capital Stock of Merger Subsidiary. Each share of the capital stock of
----------------------------------
Merger Subsidiary issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and nonassessable shares of
common stock, par value $0.10 per share, of the Surviving Corporation.
- 24 -
<PAGE>
(b) Cancellation of Treasury Stock and Richfood-Owned Stock. Each share of
-------------------------------------------------------
Dart Common Stock and all other shares of capital stock of Dart that are owned
by Dart and all shares of Dart Common Stock and other shares of capital stock of
Dart owned by Richfood, Merger Subsidiary or any other wholly-owned Subsidiary
of Richfood or Dart shall be canceled and retired and shall cease to exist and
no consideration shall be delivered or deliverable in exchange therefor.
Section 4.2. Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Merger Subsidiary, Dart or
the holders of any of the shares thereof:
(a) Subject to the other provisions of this Section 4.2, each share of Dart
-----------
Common Stock issued and outstanding immediately prior to the Effective Time
(excluding shares owned, directly or indirectly, by Dart or any wholly-owned
Subsidiary of Dart or by Richfood, Merger Subsidiary or any other wholly-owned
Subsidiary of Richfood and excluding Dissenting Shares (as defined in Section
-------
4.6)) shall be converted into the right to receive the Offer Consideration,
- ---
payable to the holder thereof, without any interest thereon (the "Merger
Consideration"), upon surrender and exchange of the Certificates (as defined in
Section 4.3.(b)).
- ---------------
- 25 -
<PAGE>
(b) All shares of Dart Common Stock, when converted as provided in Section
-------
4.2.(a), no longer shall be outstanding and shall automatically be canceled and
- -------
retired and shall cease to exist, and each Certificate previously evidencing
such Shares shall thereafter represent only the right to receive the Merger
Consideration. The holders of Certificates previously evidencing Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to Dart Common Stock except as otherwise provided herein or
by Law and, upon the surrender of Certificates in accordance with the provisions
of Section 4.3 (but subject to Section 4.6), such Certificates shall represent
----------- -----------
only the right to receive for their Shares the Merger Consideration, without any
interest thereon.
Section 4.3. Payment for Shares. (a) Paying Agent. Prior to the
------------------ ------------
Effective Time, Richfood shall deposit or shall cause to be deposited with the
Paying Agent in a separate fund established for the benefit of the holders of
shares of Dart Common Stock, for payment in accordance with this Article IV,
----------
through the Paying Agent (the "Payment Fund"), immediately available funds in
amounts necessary to make the payments pursuant to Section 4.2.(a) and this
---------------
Section 4.3 to holders of shares of Dart Common Stock (other than Dart or any
- -----------
wholly-owned Subsidiary of Dart or Richfood, Merger Subsidiary or any other
wholly-owned Subsidiary of Richfood, or holders of Dissenting Shares). The
Paying Agent shall, pursuant to irrevocable
- 26 -
<PAGE>
instructions, pay the Merger Consideration out of the Payment Fund. From time
to time at or after the Effective Time, Richfood shall take all lawful action
necessary to make or cause to be made the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Richfood shall enter
into such appropriate commercial arrangements, if any, as may be necessary to
ensure effectuation of the immediately preceding sentence. The Paying Agent
shall invest portions of the Payment Fund as Richfood directs in obligations of
or guaranteed by the United States of America, in commercial paper obligations
receiving the highest investment grade rating from both Moody's Investors
Services, Inc. and Standard & Poor's Corporation, or in certificates of deposit,
bank repurchase agreements or banker's acceptances of commercial banks with
capital exceeding $100,000,000 (collectively, "Permitted Investments");
provided, however, that the maturities of Permitted Investments shall be such as
- -------- -------
to permit the Paying Agent to make prompt payment to former holders of Dart
Common Stock entitled thereto as contemplated by this Section. All earnings on
Permitted Investments shall be paid to Richfood. If for any reason (including
losses) the Payment Fund is inadequate to pay the amounts to which holders of
shares of Dart Common Stock shall be entitled under this Section 4.3, Richfood
-----------
shall promptly restore such amount of the inadequacy to the Payment Fund, and in
any event shall be liable for payment thereof. The Payment Fund
- 27 -
<PAGE>
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
------------------
Effective Time, Richfood shall instruct the Paying Agent to mail to each holder
of record (other than Dart or any wholly-owned Subsidiary of Dart or Richfood,
Merger Subsidiary or any other wholly-owned Subsidiary of Richfood) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Dart Common Stock (the "Certificates"), (i) 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 shall be in such
form and have such other provisions as Richfood reasonably may specify), and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment therefor. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
the holder of such Certificate shall be entitled to receive in respect thereof
cash in an amount equal to the product of (x) the number of shares of Dart
Common Stock represented by such Certificate, and (y) the Merger Consideration,
and the Certificate so surrendered shall forthwith be canceled. No interest
shall be paid or accrued on the Merger
- 28 -
<PAGE>
Consideration payable upon the surrender of any Certificate. If payment is to
be made to a Person (as defined below) other than the Person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or 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 surrendered Certificate 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
-------
4.3, after the Effective Time each Certificate (other than Certificates
- ---
representing Shares owned by Dart or any wholly-owned Subsidiary of Dart or
Richfood, Merger Subsidiary or any other wholly-owned Subsidiary of Richfood)
shall represent for all purposes only the right to receive the Merger
Consideration. For purposes of this Agreement, "Person" means an individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) Termination of Payment Fund; Interest. Any portion of the Payment Fund
-------------------------------------
which remains undistributed to the holders of Dart Common Stock for one year
after the Effective Time shall be delivered to Dart, upon demand, and any
holders of Dart Common Stock who have not theretofore complied with this Article
--------
IV and
- --
- 29 -
<PAGE>
the instructions set forth in the letter of transmittal mailed to such holder
after the Effective Time shall thereafter look only to Dart for payment of the
Merger Consideration to which they are entitled; provided that if, but only if,
--------
Dart shall have defaulted in its obligation to make such payment within a
reasonable period of time after receipt of written request therefor from any
such holder, such holder may thereafter look to Richfood for payment of the
Merger Consideration to which they are entitled. All interest accrued in
respect of the Payment Fund shall inure to the benefit of and be paid to
Richfood.
(d) No Liability. Neither Richfood nor the Surviving Corporation shall be
------------
liable to any holder of shares of Dart Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(e) Withholding Rights. Richfood or Dart shall be entitled to deduct and
------------------
withhold, or cause the Paying Agent to deduct and withhold, from the
consideration otherwise payable pursuant to this Agreement to any holder of
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld, (i) such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the
- 30 -
<PAGE>
Certificates in respect of which such deduction and withholding was made, and
(ii) Richfood or Dart shall provide, or cause the Paying Agent to provide, to
the holders of such Certificates written notice of the amounts so deducted or
withheld.
Section 4.4. Stock Transfer Books. At the Effective Time, the stock
--------------------
transfer books of Dart shall be closed and there shall be no further
registration of transfers of shares of Dart Common Stock thereafter on the
records of Dart.
Section 4.5. Stock Options. After the Effective Time, each holder of (i)
-------------
a then outstanding option (collectively, the "Employee Options") to purchase
Shares under Dart's 1992 Stock Option Plan and the Option Agreements between
Dart and certain of its officers, directors, employees and consultants
thereunder (the "Stock Option Plan"), or (ii) any other option, warrant or other
right to acquire (upon purchase, exchange, conversion or otherwise) shares of
Dart Common Stock (collectively, the "Other Options" and, together with the
Employee Options, the "Options"), shall be entitled to receive for each Share
subject to such Option, in settlement and cancellation thereof, an amount
(subject to any applicable withholding tax) in cash equal to the difference
between the Merger Consideration and the per Share exercise price of such
Option, to the extent such difference is a positive number (such amount being
hereinafter referred to as, the "Option Consideration"). In addition, in the
alternative,
- 31 -
<PAGE>
each holder of an Option outstanding at the commencement of the Offer may tender
such Option and thereby be entitled to receive for each Share subject to such
Option, upon consummation of the Offer and in settlement and cancellation of
such Option, an amount (subject to any applicable withholding tax) in cash equal
to the Option Consideration. Notwithstanding the foregoing provisions of this
Section 4.5, with respect to any Person subject to Section 16(a) of the Exchange
- -----------
Act, any such Option Consideration shall be paid as soon as practicable after
the first date payment can be made without liability to such Person under
Section 16(b) of the Exchange Act. Dart represents and warrants to Richfood and
Merger Subsidiary that the Stock Option Plan has been or will be amended to the
extent necessary to give effect to the foregoing as of the commencement of the
Offer. Upon receipt of the related Option Consideration, the Option shall be
canceled. The surrender of an Option to Dart in exchange for the Option
Consideration shall be deemed a release of any and all rights the holder had or
may have had in respect of such Option.
Section 4.6. Dissenting Shares. Notwithstanding any other provisions of
-----------------
this Agreement to the contrary, shares of Dart Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for
- 32 -
<PAGE>
such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such shares instead shall, from and after the
Effective Time, represent only the right to receive payment of the appraised
value of such shares of Dart Common Stock held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such shares of Dart Common Stock
under such Section 262 shall thereupon be deemed to have been converted into and
to have become exchangeable, as of the Effective Time, for the right to receive,
without any interest thereon, the Merger Consideration upon surrender, in the
manner provided in Section 4.3, of the Certificate or Certificates that,
-----------
immediately prior to the Effective Time, evidenced such shares of Dart Common
Stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RICHFOOD
AND MERGER SUBSIDIARY
Richfood and Merger Subsidiary represent and warrant to Dart as follows:
Section 5.1. Organization and Authority. Each of Richfood and Merger
--------------------------
Subsidiary is duly organized, validly existing and in
- 33 -
<PAGE>
good standing under the laws of its jurisdiction of organization. Merger
Subsidiary was formed solely for the purpose of engaging in the transactions
contemplated hereby and has not engaged in any business activities or conducted
any operations other than in connection with the transactions contemplated
hereby.
Section 5.2. Authority Relative to this Agreement. The execution,
------------------------------------
delivery and performance of this Agreement and of all of the other documents and
instruments required hereby by Richfood and Merger Subsidiary are within the
corporate power of Richfood and Merger Subsidiary. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the respective Boards of Directors of Richfood and
Merger Subsidiary, and by Richfood as the sole shareholder of Merger Subsidiary,
and no other corporate or shareholder proceedings on the part of Richfood or
Merger Subsidiary are necessary to authorize this Agreement or to consummate the
transactions contemplated herein. This Agreement and all of the other documents
and instruments required hereby have been or will be duly and validly executed
and delivered by Richfood or Merger Subsidiary and (assuming the due
authorization, execution and delivery hereof and thereof by Dart) constitute or
will constitute valid and binding agreements of Richfood and Merger Subsidiary,
enforceable against them in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency,
- 34 -
<PAGE>
reorganization, moratorium and similar laws relating to or affecting creditors
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
Section 5.3. Consents and Approvals; No Violations. Except for (i) any
-------------------------------------
applicable requirements of the Securities Act, the Exchange Act, the HSR Act and
any applicable filings under state securities, "Blue Sky" or takeover laws, and
(ii) the filing of the Certificate of Merger as required by the DGCL, no filing
or registration with, and no permit, authorization, consent or approval of, any
public body or authority is necessary or required in connection with the
execution and delivery of this Agreement by Richfood or Merger Subsidiary, or
for the consummation by Richfood or Merger Subsidiary of the transactions
contemplated by this Agreement. Assuming that all filings, registrations,
Permits, authorizations, consents and approvals contemplated by the immediately
preceding sentence have been duly made or obtained, neither the execution,
delivery and performance of this Agreement nor the consummation of the
transactions contemplated hereby by Richfood and Merger Subsidiary will (i)
conflict with or result in any breach of any provision of the Articles or
Certificate of Incorporation or Bylaws of Richfood or Merger Subsidiary, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both)
- 35 -
<PAGE>
a default under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, Contract or other instrument or obligation to
which Richfood or any of its Subsidiaries is a party or by which it or any of
them or any of their properties or assets may be bound or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Richfood or any of its Subsidiaries or any of their properties or assets except,
in the case of subsections (ii) and (iii) above, for violations, breaches or
defaults that would not have a Material Adverse Effect on Richfood and that will
not prevent or delay the consummation of the transactions contemplated hereby.
Section 5.4. Information Supplied. None of the information relating to
--------------------
Richfood and its affiliates supplied in writing by Richfood specifically for
inclusion in the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed
with the SEC, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time, Richfood
should become aware of any event relating to Richfood or any of its Subsidiaries
that is required under applicable Law to be disclosed in an amendment or
supplement to the Schedule 14D-9, Richfood shall promptly so inform Dart and
will furnish to Dart
- 36 -
<PAGE>
all information relating to such event that is required under applicable Law to
be disclosed in an amendment or supplement to the Schedule 14D-9. The Schedule
14D-1 will comply as to form in all material respects with the requirements of
the Exchange Act, and shall not, when filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
-------- -------
that no agreement or representation hereby is made or shall be made by Richfood
or Merger Subsidiary with respect to information supplied by Dart in writing
expressly for inclusion in the Schedule 14D-1, or with respect to information
derived from the Dart Group SEC Reports which is included or incorporated by
reference in the Schedule 14D-1.
Section 5.5. Financial Capability. Richfood has sufficient available
--------------------
cash, marketable securities and borrowing capacity under its committed credit
facilities which are permitted to be used for the Offer and the Merger to
consummate the transactions contemplated hereby.
Section 5.6. Fees and Expenses of Brokers and Others. Neither Richfood
---------------------------------------
nor any of its affiliates (a) has had any dealings, negotiations or
communications with any broker or other intermediary in connection with the
transactions contemplated by
- 37 -
<PAGE>
this Agreement, (b) is committed to any liability for any brokers' or finders'
fees or any similar fees in connection with the transactions contemplated by
this Agreement or (c) has retained any broker or other intermediary to act on
its behalf in connection with the transactions contemplated by this Agreement,
except that Richfood has engaged DLJ to represent it in connection with such
transactions and shall pay all of DLJ's fees and expenses in connection with
such engagement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF DART
Dart represents and warrants to Richfood and Merger Subsidiary as follows:
Section 6.1. Organization and Authority of the Dart Companies. Each of
------------------------------------------------
the Dart Companies is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. Each of the Dart Companies
has full corporate or partnership power to carry on its respective business as
it is now being conducted and to own, operate and hold under lease its assets
and properties as, and in the places where, such properties and assets now are
owned, operated or held. Each of the Dart Companies is duly qualified as a
foreign entity to do business, and is in good standing, in each jurisdiction
where the failure to be so qualified would have a Material Adverse Effect
- 38 -
<PAGE>
on the Dart Companies. Exhibit 6.1A constitutes a true and complete list of all
------------
of the Subsidiaries of Dart, and Exhibit 6.1B constitutes a true and complete
------------
list of all of the Partnerships in which Dart has an interest. The copies of
the Amended and Restated Certificate of Incorporation and By-laws of Dart which
have been delivered to Richfood are complete and correct and in full force and
effect on the date hereof.
Section 6.2. Capitalization. (a) Dart's authorized equity
--------------
capitalization consists of 3,500,000 shares of Dart Common Stock, par value
$1.00 per share, and 3,500 shares of Series A Junior Participating Preferred
Stock, par value $.00005 per Share. As of the close of business on April 6,
1998, 1,202,502 shares of Dart Common Stock and no shares of Dart preferred
stock were issued and outstanding. Such shares of Dart Common Stock constituted
all of the issued and outstanding shares of capital stock of Dart as of such
date. All issued and outstanding shares of Dart Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable, are not
subject to and have not been issued in violation of any preemptive rights and
have not been issued in violation of any federal or state securities laws.
Except as set forth on Exhibit 6.2 attached hereto, Dart has not, subsequent to
-----------
January 31, 1997, declared or paid any dividend on, or declared or made any
distribution with respect to, or authorized or effected any split-up or any
other recapitalization of, any of the Dart Common Stock, or directly or
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<PAGE>
indirectly redeemed, purchased or otherwise acquired any of its outstanding
capital stock or agreed to take any such action and will not take any such
action during the period between the date of this Agreement and the Effective
Time. As of the date hereof, all outstanding shares of Dart Common Stock are
duly included for trading on Nasdaq.
(b) All of the outstanding shares of capital stock of Dart's Subsidiaries
are validly issued, fully paid and nonassessable. Except as disclosed on
Exhibit 6.1A or Exhibit 6.1B hereto, all of the outstanding shares of capital
- ------------ ------------
stock of Dart's Subsidiaries and all of Dart's interests in Dart's Partnerships
are owned by Dart, directly or indirectly, free and clear of all liens, claims,
charges or encumbrances. Except as set forth on Exhibit 6.2 attached hereto,
-----------
there are no outstanding securities, options, warrants, calls, subscriptions,
rights or Contracts to which any Dart is a party or by which any Dart Company is
bound, granting to any third party the right to purchase or acquire any capital
stock of or any partnership or membership interests in any of the Dart
Companies, and there are no put rights or Contracts pursuant to which any of the
Dart Companies is bound to repurchase any shares of its capital stock or
partnership or membership interests.
(c) Crown's authorized equity capitalization consists of 20,000,000 shares
of Crown Common Stock, par value $0.01 per
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<PAGE>
share. As of the close of business on April 6, 1998, 5,288,473 shares of Crown
Common Stock were issued and outstanding. Such shares of Crown Common Stock
constituted all of the issued and outstanding shares of capital stock of Crown
as of such date. All issued and outstanding shares of Crown Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable,
are not subject to and have not been issued in violation of any preemptive
rights and have not been issued in violation of any federal or state securities
laws. Except as set forth on Exhibit 6.2 attached hereto and except for the
-----------
declaration and payment of dividends in the ordinary course of business, Crown
has not, subsequent to February 1, 1997, declared or paid any dividend on, or
declared or made any distribution with respect to, or authorized or effected any
split-up or any other recapitalization of, any of the Crown Common Stock, or
directly or indirectly redeemed, purchased or otherwise acquired any of its
outstanding capital stock or agreed to take any such action and will not take
any such action during the period between the date of this Agreement and the
Effective Time. As of the date hereof, all outstanding shares of Crown Common
Stock are duly included for trading on Nasdaq.
(d) Trak's authorized equity capitalization consists of 15,000,000 shares
of Trak Common Stock, par value $0.01 per share. As of the close of business on
April 6, 1998, 5,909,179 shares of Trak Common Stock were issued and
outstanding. Such
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<PAGE>
shares of Trak Common Stock constituted all of the issued and outstanding shares
of capital stock of Trak as of such date. All issued and outstanding shares of
Trak Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable, are not subject to and have not been issued in violation
of any preemptive rights and have not been issued in violation of any federal or
state securities laws. Except as set forth on Exhibit 6.2 attached hereto and
-----------
except for the declaration and payment of dividends in the ordinary course of
business, Trak has not, subsequent to February 1, 1997, declared or paid any
dividend on, or declared or made any distribution with respect to, or authorized
or effected any split-up or any other recapitalization of, any of the Trak
Common Stock, or directly or indirectly redeemed, purchased or otherwise
acquired any of its outstanding capital stock or agreed to take any such action
and will not take any such action during the period between the date of this
Agreement and the Effective Time. As of the date hereof, all outstanding shares
of Trak Common Stock are duly included for trading on Nasdaq.
Section 6.3. Authority Relative to this Agreement. The execution,
------------------------------------
delivery and performance of this Agreement and of all of the other documents and
instruments required hereby by Dart are within the corporate power of Dart. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the
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<PAGE>
Board of Directors of Dart and no other corporate or shareholder proceedings on
the part of Dart are necessary to authorize this Agreement or to consummate the
transactions contemplated herein (other than, with respect to the Merger, the
approval of the Merger and of this Agreement by a majority of the outstanding
shares of Dart Common Stock at the Special Meeting, unless the Merger is
effected without a meeting of stockholders pursuant to Section 253 of the DGCL).
This Agreement and all of the other documents and instruments required hereby
have been or will be duly and validly executed and delivered by Dart and
(assuming the due authorization, execution and delivery hereof and thereof by
Richfood) constitute or will constitute valid and binding agreements of Dart,
enforceable against Dart in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally, by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
Section 6.4. Consents and Approvals; No Violations. (a) Except for (i)
-------------------------------------
any applicable requirements of the Securities Act, the Exchange Act, the HSR
Act, and any applicable filings under state securities, "Blue Sky" or takeover
laws, (ii) the filing of the Certificate of Merger as required by the DGCL and
(iii) those required filings, registrations, consents and
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<PAGE>
approvals listed on Exhibit 6.4 attached hereto, no material filing or
-----------
registration with, and no material Permit, authorization, consent or approval
of, any public body or authority is necessary or required in connection with the
execution and delivery of this Agreement by Dart or for the consummation by Dart
of the transactions contemplated by this Agreement. Assuming that all filings,
registrations, Permits, authorizations, consents and approvals contemplated by
the immediately preceding sentence have been duly made or obtained, neither the
execution, delivery and performance of this Agreement nor the consummation of
the transactions contemplated hereby by Dart will (i) conflict with or result in
any breach of any provision of the Certificates of Incorporation, by-laws,
partnership or joint venture agreements or other organizational documents of any
of the Dart Companies, (ii) 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, cancellation or acceleration) under, or otherwise
result in any diminution of any of the rights of the Dart Companies with respect
to, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, Contract or other instrument or obligation to which any of
the Dart Companies is a party or by which it or any of them or any of their
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to any of the Dart Companies or
any of their
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<PAGE>
properties or assets except, in the case of subsections (ii) or (iii) above, for
violations, breaches or defaults that would not have a Material Adverse Effect
on the Dart Companies and that will not prevent or materially delay the
consummation of the transactions contemplated hereby.
(b) The Board of Directors of Dart, prior to the execution hereof, has
approved the execution and delivery of this Agreement, the purchase of Shares by
Merger Subsidiary pursuant to the Offer and the consummation of the Merger and
the other transactions contemplated herein, and such approval is sufficient to
render inapplicable to this Agreement, the purchase of Shares by Merger
Subsidiary pursuant to the Offer, the Merger and the other transactions
contemplated herein the restrictions of Section 203(a) of the DGCL.
Section 6.5. Reports. The Dart Group SEC Reports complied, as of their
-------
respective dates of filing, in all material respects with all applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations of the SEC. As of their respective dates, none of such forms,
reports or documents, including without limitation any financial statements or
schedules included therein, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading in light of the
circumstances under which
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<PAGE>
they were made. Each of the balance sheets (including the related notes and
schedules) included in the Dart Group SEC Reports fairly presented in all
material respects the consolidated financial position of the Dart Companies as
of the respective dates thereof, and the other related financial statements
(including the related notes and schedules) included therein fairly presented in
all material respects the consolidated results of operations and cash flows of
the Dart Companies for the respective fiscal periods or as of the respective
dates set forth therein. Each of the financial statements (including the
related notes and schedules) included in the Dart Group SEC Reports (i) complied
as to form with the applicable accounting requirements and rules and regulations
of the SEC, and (ii) was prepared in accordance with GAAP consistently applied
during the periods presented, except as otherwise noted therein and subject to
normal year-end and audit adjustments in the case of any unaudited interim
financial statements. Except for Dart, Crown, SFW Holding Corp., Shoppers and
Trak, none of the Dart Companies is required to file any forms, reports or other
documents with the SEC, Nasdaq, the New York Stock Exchange or any other foreign
or domestic securities exchange or Governmental Authority with jurisdiction over
securities laws. Except as set forth in Exhibit 6.5 attached hereto, since
-----------
January 31, 1997, each of Dart, Crown, SFW Holding Corp., Shoppers and Trak has
timely filed all reports,
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<PAGE>
registration statements and other filings to be filed by it with the SEC.
Section 6.6. Absence of Certain Events. Except as set forth in the Dart
-------------------------
Group SEC Reports filed prior to the date of this Agreement or as otherwise
specifically disclosed in Exhibit 6.6 attached hereto, since January 31, 1997,
-----------
none of the Dart Companies has suffered any change in its business, financial
condition or results of operations that has had or will have a Material Adverse
Effect upon the Dart Companies. Except as disclosed in the Dart Group SEC
Reports or in Exhibit 6.6 hereto, or as otherwise specifically contemplated by
-----------
this Agreement, there has not been since January 31, 1997: (i) any entry into
any binding agreement or understanding or any amendment of any binding agreement
or understanding between any of the Dart Companies on the one hand, and any of
their respective directors, officers or employees on the other hand, providing
for employment of any such director, officer or employee or any general or
material increase in the compensation, severance or termination benefits payable
or to become payable by any of the Dart Companies to any of their respective
directors, officers or employees (except for normal increases in the ordinary
course of business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense), or any adoption of or increase in any bonus, insurance, pension or
other employee benefit plan, payment
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<PAGE>
or arrangement (including, without limitation, the granting of stock options or
stock appreciation rights or the award of restricted stock) made to, for or with
any such director, officer or employee; (ii) any labor dispute that has had or
is expected to have a Material Adverse Effect upon the Dart Companies; (iii) any
entry by any of the Dart Companies into any material commitment, agreement,
license or transaction (including, without limitation, any borrowing, capital
expenditure, sale of assets or any mortgage, pledge, lien or encumbrances made
on any of the properties or assets of any of the Dart Companies) other than in
the ordinary and usual course of business; (iv) any material change in the
accounting policies or practices of any of the Dart Companies; (v) any damage,
destruction or loss, whether covered by insurance or not, which has had or will
have a Material Adverse Effect upon the Dart Companies; or (vi) any agreement to
do any of the foregoing.
Section 6.7. Litigation. Except as set forth in Exhibit 6.7 attached
---------- -----------
hereto, there is no action, suit, proceeding or, to the Knowledge of Dart,
investigation pending or, to the Knowledge of Dart, threatened against or
relating to any of the Dart Companies at law or in equity, or before any
federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, whether in the United
States or otherwise, that is expected, in the reasonable judgment of Dart, to
have a Material Adverse Effect on
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<PAGE>
the Dart Companies or that seeks restraint, prohibition, material damages or
other extraordinary relief in connection with this Agreement or the consummation
of the transactions contemplated hereby.
Section 6.8. Title to and Sufficiency of Assets. As of the date hereof
----------------------------------
the Dart Companies own, and as of the Effective Time the Dart Companies will
own, good and marketable title to all of their assets (excluding, for purposes
of this sentence, assets held under leases), free and clear of any and all
mortgages, liens, encumbrances, charges, claims, restrictions, pledges, security
interests or impositions, except as disclosed on Exhibit 6.8 attached hereto.
-----------
Such assets, together with all assets held or used by the Dart Companies under
leases, include all tangible and intangible assets, Contracts and rights
necessary or required for the operation of the businesses of the Dart Companies
in accordance with past practice.
Section 6.9. Contracts. Prior to the date hereof, Dart has provided
---------
Richfood with access to true and correct copies of all of the Contracts to which
any Dart Company (with the exception of Trak) is a party that constitute: (i) a
lease of any interest in any real property; (ii) a lease of any personal
property with aggregate annual rental payments in excess of $100,000; (iii) an
option to acquire or lease any interest in real property or a right of first
refusal with respect thereto;
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<PAGE>
(iv) an agreement to purchase or sell a capital asset or an interest in any
business entity for a price in excess of $100,000 or a right of first refusal
with respect thereto; (v) an agreement relating to the borrowing or lending of
money or the purchase or sale of securities; (vi) a guaranty, contribution
agreement or other agreement that includes any indemnification, contribution or
support obligation; (vii) an agreement limiting in any respect the ability of
any Dart Company to compete in any line of business or with any person; (viii) a
supply or requirements agreement or an agreement with a vendor to which any of
the Dart Companies is a party or by which any of the Dart Companies is bound;
(ix) an employment or material consulting agreement to which any of the Dart
Companies is a party or by which any of the Dart Companies is bound; and (x) any
other agreement with a remaining term in excess of one year or involving an
amount over its term in excess of $100,000. The Dart Companies have performed
in all material respects and, to the Knowledge of Dart, every other party has
performed in all material respects, each material term, covenant and condition
of each of the Contracts to which any Dart Company is a party that is to be
performed by any of them at or before the date hereof. No event has occurred
that would, with the passage of time or compliance with any applicable notice
requirements or both, constitute a material default by any Dart Company or, to
the Knowledge of Dart, any other party under any of the Contracts to which any
Dart Company is a party, and, to the Knowledge of Dart,
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<PAGE>
no party to any of the Contracts to which any Dart Company is a party intends to
cancel, terminate or exercise any option under any of such Contracts.
Section 6.10. Labor Matters. (a) Except as set forth in Exhibit 6.10
------------- ------------
attached hereto, with respect to employees of the Dart Companies: (i) to the
Knowledge of Dart, no current officer, senior executive or key employee has
announced any plans to terminate employment with any of the Dart Companies; (ii)
there is no unfair labor practice charge or complaint against any Dart Company
pending or, to the Knowledge of Dart, threatened before the National Labor
Relations Board or any other comparable authority; (iii) no material grievance
or any material arbitration proceeding arising out of or under collective
bargaining agreements is pending and, to the Knowledge of Dart, no claims
therefor exist or have been threatened; and (iv) there is no material
litigation, arbitration proceeding, governmental investigation, administrative
charge, citation or action of any kind pending or, to the Knowledge of Dart,
proposed or threatened against any Dart Company relating to employment,
employment practices, terms and conditions of employment or wages and hours.
(b) Except as described in Exhibit 6.10 attached hereto, no Dart Company
------------
has any collective bargaining relationship or duty to bargain with any Labor
Organization (as such term is defined in Section 2(5) of the National Labor
Relations Act, as amended),
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<PAGE>
and no Dart Company has recognized any Labor Organization as the collective
bargaining representative of any of its employees.
Section 6.11. Employee Benefit Plans. (a) For purposes of this Section,
----------------------
the term "Dart Benefit Plans" shall mean all pension, retirement, profit-
sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, and all other employee
programs, arrangements or agreements, whether arrived at through collective
bargaining or otherwise, all medical, vision, dental and other health plans, all
life insurance plans, and all other employee benefit plans or fringe benefit
plans, including, without limitation, any "employee benefit plan," as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any of the Dart Companies or
affiliates thereof for the benefit of employees, retirees, dependents, spouses,
directors or other beneficiaries and under which employees, retirees,
dependents, spouses, directors or other beneficiaries are eligible to
participate. Any of the Dart Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Dart ERISA Plan."
(b) Except as set forth on Exhibit 6.11 hereto, no Dart Benefit Plan is or
------------
has been a multiemployer plan within the meaning of Section 3(37) of ERISA. As
to any multiemployer plan
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<PAGE>
set forth on Exhibit 6.11 hereto, and except as otherwise specified in such
------------
Exhibit, Dart has provided to Richfood an estimate of the "withdrawal liability"
that would arise if Dart were to withdraw or cause a withdrawal from each such
plan. All Dart Benefit Plans are in compliance with the applicable provisions
(including, without limitation, any funding requirements or limitations) of
ERISA, the Code and any other applicable Laws, the breach or violation of which
would have a Material Adverse Effect on the Dart Companies. No Dart Benefit
Plan provides for post-retirement medical benefit obligations (without regard to
COBRA obligations). Except as set forth on Exhibit 6.11 hereto, no Dart ERISA
------------
Plan which is a defined benefit pension plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
present fair market value of the assets of any such plan exceeds the plan's
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements.
(c) Exhibit 6.11 hereto is a true and correct list of all Dart Benefit
------------
Plans. Dart has made available to Richfood and will provide to Richfood before
the consummation of the Offer true and correct copies of each governing document
for each Dart Benefit Plan, together with the most recent summary plan
description, annual report and audited financial statement for each such plan
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<PAGE>
and the actuarial report for any Dart Benefit Plan that is a defined benefit
pension plan or funded welfare benefit plan.
Section 6.12. Tax Matters. (a) Except as set forth on Exhibit 6.12:
----------- ------------
(i) Dart, Crown and Trak and each of their respective Subsidiaries
that is incorporated under the laws of the United States or of any of the United
States are members of affiliated groups, within the meaning of Section 1504(a)
of the Code, of which Dart, Crown or Trak, respectively, is the common parent,
such affiliated groups file consolidated federal income tax returns and none of
Dart, Crown or Trak nor any of their respective Subsidiaries has ever filed a
consolidated federal income tax return with (or been included in a consolidated
return of) a different affiliated group;
(ii) each of the Dart Companies has timely filed or caused to be filed
all Tax Returns required to have been filed by or for it, and all information
set forth in such Tax returns is accurate and complete in all material respects;
(iii) each of the Dart Companies has paid or made adequate provision
on its books and records in accordance with GAAP for all Taxes covered by such
Tax Returns;
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<PAGE>
(iv) each of the Dart Companies is in material compliance with, and
its records contain all information and documents (including, without
limitation, properly completed IRS Forms W-8 and Forms W-9) necessary to comply
in all material respects with, all applicable information reporting and tax
withholding requirements under federal, state, local and foreign Laws, and such
records identify with specificity all accounts subject to withholding under
Section 1441, 1442 or 3406 of the Code or similar provisions of state, local or
foreign laws;
(v) there is not a material amount of unpaid Taxes due and payable by
any of the Dart Companies or by any other person that is or could become a lien
on any asset of, or otherwise have a Material Adverse Effect on, the Dart
Companies;
(vi) each of the Dart Companies has collected or withheld all Taxes
required to be collected or withheld by it, and all such Taxes have been paid to
the appropriate Governmental Authority or set aside in appropriate accounts for
future payment when due;
(vii) none of the Dart Companies has granted (or is subject to) any
waiver, which is currently in effect, of the period of limitations for the
assessment of any Tax; no material unpaid Tax deficiency has been assessed or
asserted against or with respect to any of the Dart Companies by any
Governmental
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<PAGE>
Authority; no power of attorney relating to Taxes that is currently in effect
has been granted by or with respect to any of the Dart Companies; there are no
currently pending administrative or judicial proceedings, or any deficiency or
refund litigation, with respect to Taxes of any of the Dart Companies, the
adverse outcome of which would have a Material Adverse Effect on the Dart
Companies; and any such assertion, assessment, proceeding or litigation
disclosed on Exhibit 6.12 hereto is being contested in good faith through
------------
appropriate measures, and its status is described in Exhibit 6.12 hereto;
------------
(viii) none of the Dart Companies has made or entered into, or holds
any asset subject to, a consent filed pursuant to Section 341(f) of the Code and
the regulations thereunder or a "safe harbor lease" subject to former Section
168(f)(8) of the Code and the regulations thereunder;
(ix) none of the Dart Companies is required to include in income any
amount from an adjustment pursuant to Section 481 of the Code or the regulations
thereunder or any similar provision of state or local Law, and Dart has no
Knowledge that any Governmental Authority has proposed any such adjustment;
(x) none of the Dart Companies has made or is obligated to make any
payments, or has been or is a party to any Contract is reasonably likely to
obligate it to make any
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<PAGE>
payments, that would not be deductible by reason of sections 162(m) or 280G of
the Code;
(xi) there are no excess loss accounts or deferred intercompany gains
with respect to any member of the affiliated group of which Dart is the common
parent which would have a Material Adverse Effect on the Dart Companies if taken
into account; and
(xii) the most recent audited consolidated balance sheet included in
the Dart Group SEC Reports fully and properly reflects, as of the date thereof,
the liabilities of Dart and its Subsidiaries for all accrued Taxes and deferred
liability for Taxes and, for periods ending after such date, the books and
records of each such corporation fully and properly reflect its liability for
all accrued Taxes.
(b) Dart has made available to Richfood its tax records that (i) contain
all material and continuing Tax elections, consents and agreements made by or
affecting any of the Dart Companies, (ii) reflect all types of material Taxes
paid and Tax Returns filed by or on behalf of any of the Dart Companies and
(iii) reflect each Tax with respect to which any of the Dart Companies is or has
been included in a consolidated, unitary or combined return.
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<PAGE>
Section 6.13. Compliance with Law. The conduct of the businesses of the
-------------------
Dart Companies and their use of their assets does not violate or conflict, and
has not violated or conflicted, with any Law, which violation or conflict would
reasonably be expected to have a Material Adverse Effect on the Dart Companies.
Section 6.14. Transactions With Affiliates. For purposes of this Section,
----------------------------
the term "Affiliate" shall mean (a) any person who, to the Knowledge of Dart, is
the beneficial owner of 5% or more of the voting securities of Dart, Crown or
Trak, (b) any director, officer or employee of any of the Dart Companies, (c)
any person, firm or corporation that directly or indirectly controls, is
controlled by or is under common control with any of the Dart Companies, (d)
Herbert H. Haft, Robert M. Haft, Ronald S. Haft, Gloria G. Haft and Linda G.
Haft (collectively, the "Hafts"), and any person, firm or corporation that
directly or indirectly controls, is controlled by or is under common control
with any of the Hafts; and (e) any member of the immediate family of any of the
foregoing persons. Except as set forth in Exhibit 6.14 attached hereto or
------------
previously provided in writing to Richfood, since January 31, 1997, the Dart
Companies have not, in the ordinary course of business or otherwise, (a)
purchased, leased or otherwise acquired any material property or assets or
obtained any material services from, (b) sold, leased or otherwise disposed of
any material property or assets or provided any material services to (except
with respect to remuneration for
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<PAGE>
services rendered in the ordinary course of business as a director, officer or
employee of one or more of the Dart Companies), (c) entered into or modified in
any manner any Contract with, or (d) borrowed any money from, or made or
forgiven any loan or other advance to, any Affiliate. Except as set forth in
Exhibit 6.14 or previously provided in writing to Richfood, (a) the Contracts of
- ------------
the Dart Companies do not include any obligation or commitment between any of
the Dart Companies and any Affiliate, (b) the assets of the Dart Companies do
not include any receivable or other obligation or commitment from an Affiliate
to any of the Dart Companies and (c) the liabilities of the Dart Companies do
not include any payable or other obligation or commitment from any of the Dart
Companies to any Affiliate. To the Knowledge of Dart and except as set forth in
Exhibit 6.14 hereto or previously provided in writing to Richfood, no Affiliate
- ------------
of any of the Dart Companies is a party to any Contract with any customer or
supplier of any Dart Company that materially and adversely affects in any manner
the business, financial condition or results of operation of any of the Dart
Companies.
Section 6.15. Fees and Expenses of Brokers and Others. None of the Dart
---------------------------------------
Companies (a) has had any dealings, negotiations or communications with any
broker or other intermediary in connection with the transactions contemplated by
this Agreement, (b) is committed to any liability for any brokers' or finders'
fees or any similar fees in connection with the transactions
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<PAGE>
contemplated by this Agreement or (c) has retained any broker or other
intermediary to act on its behalf in connection with the transactions
contemplated by this Agreement, except that Dart has engaged Wasserstein to
represent it in connection with such transactions, and shall pay all of
Wasserstein's fees and expenses in connection with such engagement.
Section 6.16. Absence of Undisclosed Liabilities; Guarantees. (a) None
----------------------------------------------
of the Dart Companies has, as of the date hereof, or will have, as of the
Effective Time, any liabilities or obligations of any kind, whether absolute,
accrued, asserted or unasserted, contingent or otherwise, that would be required
to be disclosed on a consolidated balance sheet of Dart prepared as of such
date, in accordance with GAAP, except liabilities, obligations or contingencies
that were (a) reflected on or accrued or reserved against in the consolidated
balance sheet of Dart as of January 31, 1997, included in the Dart Group SEC
Reports or reflected in the notes thereto, or (b) incurred after the date of
such balance sheet in the ordinary course of business and consistent with past
practices and which, individually or in the aggregate, would not have a Material
Adverse Effect on the Dart Companies. None of the Dart Companies is a party to
any Contract, or subject to any charter or other corporate or partnership
restriction, or subject to any judgment, order, writ, injunction, decree, rule
or regulation, which could reasonably be expected to have a Material Adverse
Effect on the Dart Companies.
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<PAGE>
(b) Attached hereto as Exhibit 6.16 is a true and correct list of all
------------
obligations, contingent or otherwise, of any Dart Company pursuant to which such
entity has guaranteed the payment or performance of any debt or contractual
obligation of any other person (including, without limitation, any other Dart
Company, and including any obligation to keep well, to purchase assets or
securities, to take-or-pay, or to maintain financial condition).
Section 6.17. Information Supplied. None of the information relating to
--------------------
Dart and its affiliates supplied in writing by Dart specifically for inclusion
in the Offer Documents will, at the respective times the Offer Documents are
filed with the SEC, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time Dart should
become aware of any event relating to any Dart Company that is required by
applicable Law to be set forth in an amendment of, or supplement to, the Offer
Documents, Dart shall promptly so inform Richfood and Merger Subsidiary and will
furnish to Richfood and Merger Subsidiary all information relating to such event
that is required under applicable Law to be disclosed in an amendment or
supplement to the Offer Documents. The Schedule 14D-9 will comply as to form in
all material respects with the Exchange Act, and shall not, when filed with the
SEC, contain any untrue
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<PAGE>
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
-------- -------
that no agreement or representation hereby is made or shall be made by Dart with
respect to information supplied by Richfood or Merger Subsidiary in writing
expressly for inclusion in the Schedule 14D-9.
ARTICLE VII
COVENANTS
Section 7.1. Conduct of the Business of Dart. (a) Except as set forth
-------------------------------
in Exhibit 7.1A attached hereto, or as otherwise expressly provided in this
------------
Agreement, during the period from the date of this Agreement to the Effective
Time, Dart shall, and shall cause each of its wholly-owned Subsidiaries and
Partnerships to, conduct their respective operations according to their ordinary
and usual course of business and consistent with past practice, and to use their
respective reasonable best efforts to preserve intact their respective business
organizations, to keep available the services of their officers and employees
and to maintain satisfactory relationships with licensors, licensees, suppliers,
contractors, distributors, customers and others having material business
relationships with them. Without limiting the generality of the foregoing, and
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<PAGE>
except as otherwise expressly provided in this Agreement, prior to the Effective
Time, neither Dart nor any of Dart's wholly-owned Subsidiaries or Partnerships
will, without the prior written consent of Richfood:
(i) amend its Articles or Certificate of Incorporation, bylaws,
partnership or joint venture agreements or other organizational documents;
(ii) authorize for issuance or issue, sell or deliver (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any other securities
or interests, except as required by the terms of any Dart Benefit Plan existing
on the date hereof, or any options, warrants, rights or other securities
outstanding as of the date hereof and disclosed pursuant to this Agreement;
(iii) split, combine or reclassify any shares of its capital stock or
declare, set aside or pay any dividend or other distribution or redemption
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, or redeem or otherwise acquire any of its securities or any
securities of their respective Subsidiaries and Partnerships;
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(iv) (A) incur or assume any Funded Debt (as defined below) not
currently outstanding, except for borrowings in the ordinary course of business
under revolving credit agreements in effect on the date hereof, or permit any
modifications or amendments of any agreements related to Funded Debt, (B)
assume, guarantee, endorse or otherwise become liable or responsible for the
obligations of any person (including, without limitation, the obligations of any
other Dart Company), or permit the renewal or extension of any contract or other
obligation that is the subject of a guarantee or similar obligation, other than
the endorsement of checks for deposit in the ordinary course of business, (C)
make any loans, advances or capital contributions to, or investments in, any
other person (including, without limitation, any other Dart Company), (D) enter
into any Contract, or alter, amend, modify or exercise any option under any
existing Contract, other than in the ordinary course of business or in
connection with the transactions contemplated by this Agreement, (E) enter into,
or alter, amend, modify or exercise any option under, any supply or requirements
agreement or (F) authorize any capital expenditures other than capital
expenditures pursuant to Contracts entered into prior to the date hereof,
capital expenditures related to necessary maintenance in the ordinary course of
business or capital expenditures reflected in Shoppers' fiscal 1999 capital
budget attached hereto as Exhibit 7.1B;
------------
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<PAGE>
(v) adopt or amend (except as may be required by Law or as provided in
this Agreement) any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee, or (except for normal increases to
non-executive employees in the ordinary course of business that are consistent
with past practices and that, in the aggregate, do not result in a material
increase in benefits or compensation expense) increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or enter into any Contract, agreement,
commitment or arrangement to do any of the foregoing;
(vi) acquire, sell, lease or dispose of any material assets outside
the ordinary course of business;
(vii) take any action other than in the ordinary course of business
and in a manner consistent with past practice with respect to accounting
policies or practices;
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(viii) make any material Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability;
(ix) except for the payment of professional fees, pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities reflected or
reserved against in Dart's audited consolidated balance sheet as of January 31,
1997, included in the Dart Group SEC Reports, or incurred in the ordinary course
of business since the date thereof; or
(x) hold any meeting of its stockholders except to the extent required
by the request of the stockholders entitled to call a meeting under Dart's
bylaws or the DGCL;
(xi) take any action that would or is reasonably likely to result in
any of the conditions set forth in Article VIII not being satisfied as of the
------------
Closing Date; or
(xii) agree in writing or otherwise to take any of the foregoing
actions.
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<PAGE>
For purposes of this Section, "Funded Debt" shall mean, without
duplication, (i) all indebtedness for borrowed money or which has been incurred
in connection with the acquisition of assets, in each case having a final
maturity of one or more than one year from the date of origin thereof (or which
is renewable or extendible at the option of the obligor for a period or periods
more than one year from the date of origin), but excluding all payments in
respect thereof that are required to be made within one year from the date of
any determination of Funded Debt to the extent the obligation to make such
payments shall constitute a current liability of the obligor under GAAP, (ii)
all rentals payable under capitalized or synthetic leases, and (iii) all
guaranties of Funded Debt of others.
(b) Richfood and Dart agree that, during the period from the date of this
Agreement to the Effective Time: (i) they will cause representatives of their
respective companies to meet, no less frequently than monthly, to discuss the
operations and business prospects of the Dart Companies; (ii) Dart will promptly
advise Richfood of the occurrence of any event having a Material Adverse Effect
on the Dart Companies, or any event that would constitute a breach by Dart of
any of its representations, warranties, covenants or agreements set forth in
this Agreement; and (iii) Richfood will promptly advise Dart of the occurrence
of any event that would constitute a breach by Richfood of any of
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its representations, warranties, covenants or agreements set forth in this
Agreement.
(c) Richfood hereby designates the two officers of Richfood identified on
Exhibit 7.1C attached hereto, or such other officers as Richfood may designate
- ------------
from time to time upon written notice to Dart ("Richfood's Representatives"), to
be responsible for determining whether consent to any action prohibited by
Section 7.1.(a) shall be given by Richfood. Dart hereby designates the two
- ---------------
officers of Dart identified on Exhibit 7.1C attached hereto, or such other
------------
officers as Dart may designate upon written notice to Richfood ("Dart's
Representatives"), to contact Richfood's Representatives with any requests for
consent to any action prohibited by Section 7.1.(a). Richfood's Representatives
---------------
shall respond promptly (either orally or in writing) to any request for consent
(which may be oral or written) to the taking of any action under
Section 7.1.(a). If Richfood's Representatives do not respond to any request
- ---------------
within three business days of its receipt, such consent will be deemed to have
been given. Dart may rely on any consent given orally or in writing by either of
Richfood's Representatives. The time periods within which Richfood's
Representatives must respond shall commence on the date either of Richfood's
Representatives receive an oral or written request for consent.
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<PAGE>
Section 7.2. No Solicitation. (a) Dart agrees that it shall not, after
---------------
the date hereof and before the Effective Time, directly or indirectly, through
any officer, director, employee, agent or otherwise, (i) solicit, initiate or
encourage submission of proposals, offers or expressions of interest from any
person relating to any acquisition or purchase of all or (other than in the
ordinary course of business) a substantial portion of the assets of, or any
equity interest in (including by way of a tender offer), any Dart Company or any
business combination involving any Dart Company (any of the foregoing proposals,
offers or expressions of interest being referred to herein as an "Acquisition
Proposal") or, (ii) participate in any negotiations or discussions regarding, or
furnish to any person any nonpublic information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any Acquisition Proposal; provided, however, that prior to the consummation of
-------- -------
the Offer, Dart may participate in negotiations or discussions with, and provide
nonpublic information to, any person concerning an Acquisition Proposal
submitted in writing by such person to the Board of Directors of Dart after the
date of this Agreement if (A) such Acquisition Proposal was not solicited,
initiated or encouraged in violation of this Agreement and (B) the Board of
Directors of Dart, in its good faith judgment, believes that such Acquisition
Proposal is reasonably likely to result in a Superior Proposal.
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<PAGE>
(b) Until such time, if any, that Richfood makes its first offer after
receipt from Dart of notice pursuant to Section 9.1.(e)(iii) that Dart's Board
--------------------
of Directors has determined that an Acquisition Proposal constitutes a Superior
Proposal, Dart shall notify Richfood as promptly as practicable (and in any
event within 48 hours) if any Acquisition Proposal is made and shall in such
notice indicate in reasonable detail the identity of the person making such
Acquisition Proposal and the terms and conditions of such Acquisition Proposal,
and shall keep Richfood promptly advised of all material developments relating
to such Acquisition Proposal which could reasonably be expected to culminate in
the Board of Directors of Dart withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the other transactions contemplated
in this Agreement in a manner adverse to Merger Subsidiary.
(c) If, pursuant to Section 7.2.(a), Dart provides nonpublic information to
---------------
any person who makes an Acquisition Proposal, Dart shall require such person to
enter into a confidentiality agreement on terms substantially similar to the
Confidentiality Agreement as a condition to and before providing any such
information (except as to the standstill provisions thereof, provided that if
under the aforementioned circumstances Dart enters into any confidentiality
agreement without standstill provisions substantially similar to those contained
in the Confidentiality Agreement, then Richfood shall to the extent of
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the difference be relieved of compliance with the Confidentiality Agreement's
standstill provisions).
(d) Dart shall immediately cease and cause to be terminated any existing
discussions or negotiations with any persons (other than Richfood and Merger
Subsidiary) conducted heretofore with respect to any Acquisition Proposal. Dart
may waive the provisions of any "standstill" agreements between Dart and any
party to the extent necessary to permit such party to submit an Acquisition
Proposal that the Board of Directors of Dart believes, in its good faith
judgment, is reasonably likely to result in a Superior Proposal; provided, that
--------
such waiver (i) does not violate or conflict with subsection (a) of this Section
-------
7.2, and (ii) would not, in any event, permit such person to acquire any direct
- ---
or indirect beneficial ownership of Shares or participate in any tender offer or
proxy solicitation relating to Dart that would otherwise be prohibited by such
"standstill" agreement.
Section 7.3. Access to Information; Confidentiality Agreements.
-------------------------------------------------
(a) Between the date of this Agreement and the Effective Time, Dart will
give Richfood and its authorized representatives reasonable access during normal
business hours to all plants, offices, warehouses and other facilities and to
all books and records of the Dart Companies, will permit Richfood to make such
inspections as it may reasonably request and will cause
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its officers and those of its Subsidiaries and Partnerships to furnish such
financial and operating data and other information with respect to their
businesses and properties as may from time to time reasonably be requested by
Richfood. Subject to Section 7.6 hereof, all such information shall be kept
-----------
confidential by Richfood in accordance with the Confidentiality Agreement.
(b) Notwithstanding the execution of this Agreement, the Confidentiality
Agreement shall remain in full force and effect through the Effective Time, at
which time the Confidentiality Agreement shall terminate and be of no further
force and effect.
Section 7.4. Best Efforts. Subject to the terms and conditions herein
------------
provided and subject to fiduciary obligations under applicable Law as advised by
counsel, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper and advisable under applicable Law, to consummate and make
effective the transactions contemplated by this Agreement. 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. Richfood and Dart
will execute any additional instruments necessary to consummate the transactions
contemplated hereby.
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<PAGE>
Section 7.5. Consents. Dart and Richfood each will use its best efforts
--------
to obtain consents of all third parties and governmental authorities necessary
to the consummation of the transactions contemplated by this Agreement.
Section 7.6. Public Announcements. The parties hereto have agreed upon
--------------------
the text of their respective press releases announcing, among other things, the
execution of this Agreement, which press releases shall be disseminated promptly
following the execution hereof. Dart and Richfood will consult with each other
before issuing any additional press releases or otherwise making any additional
public statement with respect to this Agreement, the Offer, the Merger or the
transactions contemplated herein and shall not issue any such press release or
make any such public statement prior to such consultation or as to which the
other party promptly and reasonably objects, except as may be required by Law
based on the advice of such party's counsel or by obligations pursuant to any
listing agreement with any national securities exchange or inter-dealer
quotation system, in which case the party proposing to issue such press release
or make such public announcement shall use its best efforts to consult in good
faith with the other party before issuing any such press release or making any
such public announcements.
Section 7.7. Dart Group Fiscal 1998 Financial Statements. Dart
-------------------------------------------
covenants and agrees to deliver the Dart Group Fiscal 1998
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<PAGE>
Financial Statements to Richfood as soon as practicable after the date hereof,
but in any event no later than May 1, 1998. The audited consolidated financial
statements of each of Dart, Crown, Shoppers and Trak included in the Dart Group
Fiscal 1998 Financial Statements shall be accompanied by the respective opinions
of Arthur Andersen LLP thereon.
Section 7.8. Indemnification; Insurance. (a) From and after the
--------------------------
consummation of the Offer and for a period of six (6) years thereafter, Richfood
shall cause Dart and its wholly-owned Subsidiaries to maintain all rights of
indemnification (including rights to advancement of expenses and exculpation
from liability) existing in favor of the present and former directors, officers,
employees and agents of Dart and such Subsidiaries (collectively, the
"Indemnified Parties") on terms no less favorable than those provided in the
certificates of incorporation and bylaws of such entities on the date of this
Agreement with respect to matters occurring prior to the Effective Time. In
addition, Richfood shall and shall cause each of Dart and its Subsidiaries (or
any of their successors) to perform all of their respective obligations under
those Indemnification Agreements listed on Exhibit 7.8 attached hereto. Richfood
-----------
acknowledges that all directors, officers and employees of Subsidiaries of Dart
that are not wholly-owned Subsidiaries who are also directors, officers or
employees of Dart are serving in their capacities at such Subsidiaries at the
direction and request of Dart.
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<PAGE>
(b) Richfood shall cause to be maintained in effect from the consummation
of the Offer until six (6) years thereafter the current policies for directors'
and officers' liability insurance maintained by Dart for the benefit of the
Indemnified Parties, including coverage with respect to claims arising from
facts or events that occurred at or prior to the consummation of the Offer
(provided that Richfood may substitute therefor policies of at least the same
coverage containing terms and conditions that are not materially less
advantageous), with respect to matters occurring prior to the Effective Time, to
the extent such insurance is available to Richfood in the market. If such
insurance is not available to Richfood in the market, Richfood will provide such
level of insurance as is then provided to directors and officers of Richfood.
(c) In the event Richfood or Dart or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger, or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each case, proper provision shall be made so that
the successors and assigns of Richfood or Dart, as the case may be, honor the
indemnification obligations set forth in this Section 7.8.
-----------
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<PAGE>
(d) The obligations of Dart and Richfood under this Section 7.8 shall not
-----------
be terminated, modified or assigned in such a manner so as to adversely affect
any Indemnified Party without the consent of such Indemnified Party (it being
expressly agreed that the Indemnified Parties shall be third-party beneficiaries
of this Section 7.8).
-----------
Section 7.9. Shoppers Senior Notes. In the event that any of the 9-3/4%
---------------------
Senior Notes due 2004 (the "Senior Notes") issued by Shoppers pursuant to that
certain Indenture, dated as of February 6, 1997, between Shoppers, as issuer,
SFW Holding Corp., as guarantor, and Norwest Bank Minnesota, N.A., as trustee
(the "Indenture") are tendered to Shoppers (the "Tendered Notes") by the holders
thereof as a result of the transactions contemplated herein, Richfood will (i)
cause Shoppers to comply with its obligations under the Indenture, and (ii) if
necessary, lend to Shoppers all amounts required to repurchase any Tendered
Shares on commercially reasonable terms and in accordance with lending
conditions then available in arms-length transactions.
ARTICLE VIII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
Section 8.1. Conditions Precedent to Each Party's Obligation to Effect
---------------------------------------------------------
the Merger. The respective obligation of each party to consummate the Merger is
- ----------
subject to the
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<PAGE>
satisfaction at or prior to the Effective Time of the following conditions
precedent:
(a) this Agreement and the Merger shall have been approved and adopted by
the affirmative vote of the holders of a majority of Shares entitled to vote
thereon if such vote is required under the DGCL;
(b) no order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any United States court of competent jurisdiction or
any United States Governmental Authority which prohibits the consummation of the
Merger; provided, however, that the parties hereto shall use their best efforts
-------- -------
to have any such order, decree or injunction vacated or reversed; and
(c) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, all applicable requirements of the Exchange Act
shall have been satisfied and any applicable filings under state securities,
"Blue Sky" or takeover laws shall have been made.
Section 8.2. Conditions Precedent to Obligations of Dart. The
-------------------------------------------
obligations of Dart to consummate the Merger are subject to the satisfaction or
waiver at or prior to the Effective Time of the following conditions precedent:
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(a) the representations and warranties of Richfood and Merger Subsidiary
contained in Article V, when read without exception or qualification as to
---------
materiality or Material Adverse Effect, shall be true and correct when made and
at and as of the consummation of the Offer with the same force and effect as if
those representations and warranties had been made at and as of such time
(except to the extent such representations and warranties speak as of a
specified earlier date, in which event such representations and warranties must
be true and correct as of such specified date), except where the failure to be
so true and correct would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Richfood; and
(b) Richfood and Merger Subsidiary shall, in all material respects, have
performed all obligations and complied with all covenants necessary to be
performed or complied with by them on or before the consummation of the Offer.
Section 8.3. Conditions Precedent to Obligations of Richfood and Merger
----------------------------------------------------------
Subsidiary. The obligations of Richfood and Merger Subsidiary to consummate the
- ----------
Merger are subject to the satisfaction or waiver at or prior to the Effective
Time of the following conditions precedent:
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(a) the representations and warranties of Dart contained in Article VI,
----------
when read without exception or qualification as to materiality or Material
Adverse Effect on Dart, shall be true and correct when made and at and as of the
consummation of the Offer with the same force and effect as if those
representations and warranties had been made at and as of such time (except to
the extent such representations and warranties speak as of a specified earlier
date, in which event such representations and warranties must be true and
correct as of such specified date), except where the failure to be so true and
correct would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Dart; and
(b) Dart shall, in all material respects, have performed all obligations
and complied with all covenants necessary to be performed or complied with by it
on or before the consummation of the Offer.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
Section 9.1. Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the respective shareholders of Dart and Merger Subsidiary, but prior
to the Effective Time:
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(a) by mutual written consent of Dart and Richfood;
(b) by Dart or Richfood, if either (i) the purchase of Shares pursuant to
the Offer has not been consummated on or before June 30, 1998, or (ii) the
Effective Time shall not have occurred on or before December 31, 1998 (provided
that the right to terminate this Agreement under this Section 9.1.(b) shall not
---------------
be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or has resulted in the failure of the
consummation of the Offer or Effective Time to occur on or before the applicable
date set forth above);
(c) by Dart if there has been a material breach by Richfood of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within twenty (20) business days following
notice to Richfood of such breach;
(d) by Richfood if (i) any of the events described in clauses (b) or (c) of
Annex I has occurred, which event has not been cured by Dart within twenty (20)
- -------
business days following notice to Dart of such event; or (ii) the Board of
Directors of Dart should fail to recommend to its stockholders approval of the
transactions contemplated by this Agreement, including, without limitation, the
Offer and the Merger, or such recommendation shall have been made and
subsequently withdrawn, modified or amended in any manner adverse to Richfood;
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(e) by Dart if, prior to the Effective Time, a corporation, partnership,
person or other entity or group shall have made a bona fide Acquisition Proposal
---- ----
that the Board of Directors of Dart believes, in good faith after consultation
with its financial advisors, is more favorable, from a financial point of view,
to the stockholders of Dart than the proposal set forth in this Agreement (a
"Superior Proposal"); provided, that (i) if a component of such Superior
--------
Proposal is cash consideration, then the party making such Superior Proposal has
cash on hand or financing in place to provide such cash consideration, which
financing is committed and/or underwritten substantially to the same extent as
Richfood's financing is on the date hereof, (ii) the Board of Directors of Dart
intends to enter into a definitive agreement relating to such Superior Proposal
immediately following the termination of this Agreement pursuant to this Section
-------
9.1.(e), and (iii) Richfood does not make, within two business days of receiving
- -------
the first notice from Dart specifying that the Board of Directors of Dart has
determined that an Acquisition Proposal constitutes a Superior Proposal giving
rise to a potential right of termination under this Section 9.1.(e), an offer
---------------
that the Board of Directors of Dart believes, in good faith after consultation
with its financial advisors, is more favorable, from a financial point of view,
to Dart's stockholders than such Superior Proposal; or
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<PAGE>
(f) by Dart or Richfood, if any court of competent jurisdiction in the
United States or other United States Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable.
Section 9.2. Effect of Termination. If this Agreement is so terminated
---------------------
and the Merger is not consummated, this Agreement shall forthwith become void
and have no effect, without any liability on the part of either party or its
directors, officers or shareholders, other than the provisions of Section
-------
7.3.(b), this Section 9.2, Section 9.3 and Article X.
- -------- ----------- ----------- ---------
Section 9.3. Termination Fee. (a) If this Agreement is terminated (i)
---------------
by Richfood pursuant to Section 9.1.(b)(i) hereof, and the failure of the
------------------
consummation of the Offer has been caused by or is attributable to the failure
of the conditions to the Offer set forth in clauses (b), (c), (e) or (g)(2) of
Annex I to be satisfied, (ii) by Richfood pursuant to Section 9.1.(d) hereof, or
- ------- ---------------
(iii) by Dart pursuant to Section 9.1.(e) hereof, and, in the case of any of the
---------------
foregoing, if Dart is not entitled to terminate this Agreement by reason of
Section 9.1.(c) hereof, then Dart shall promptly (and in any event within two
- ---------------
days of receipt by Dart of written notice from Richfood) pay to Richfood (by
wire transfer of immediately available funds to an account
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<PAGE>
designated by Richfood): (A) a termination fee of $6.0 million, plus (B)
Richfood's actual out-of-pocket expenses (including all fees and expenses of its
counsel, advisors, accountants and consultants) incurred by Richfood or on its
behalf in connection with the transactions contemplated in this Agreement, not
to exceed $500,000 in the aggregate.
(b) This Section 9.3 shall be the sole remedy of the parties hereto in the
-----------
event of any termination of this Agreement; provided, however, that nothing in
-------- -------
this Section 9.3 shall relieve any party from liability for any material breach
-----------
of this Agreement.
Section 9.4. Amendment. This Agreement may be amended by action taken by
---------
the parties hereto at any time before or after approval of the Merger by the
stockholders of Dart but, after any such approval, no amendment shall be made
that would have any of the effects specified in DGCL Section 251(d) without the
approval of the stockholders of Dart. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
Section 9.5. Extension; Waiver. At any time prior to the Effective Time,
-----------------
Richfood and Merger Subsidiary on the one hand, and Dart on the other hand, may
(i) extend the time for the performance of any of the obligations or other acts
of the other
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party hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto by the other party hereto or (iii) waive compliance with any of the
agreements or conditions contained herein by the other party hereto. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
MISCELLANEOUS
Section 10.1. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties made herein shall not survive beyond the
Effective Time.
Section 10.2. Brokerage Fees and Commissions. No broker, finder or
------------------------------
investment banker (other than Wasserstein, whose fees shall be paid by Dart) is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Dart; and no broker, finder or investment banker (other
than DLJ, whose fees shall be paid by Richfood) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement
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<PAGE>
based upon arrangements made by or on behalf of Richfood or Merger Subsidiary.
Section 10.3. Entire Agreement; Assignment. This Agreement (a)
----------------------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Section 7.1.(b) hereof, all
---------------
other prior agreements and understandings, both written and oral, between the
parties or any of them with respect to the subject matter hereof, and (b) shall
not be assigned by operation of law or otherwise.
Section 10.4. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex, by nationally recognized overnight delivery
service, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to Richfood:
Richfood Holdings, Inc.
4860 Cox Road, Suite 300
Glen Allen, Virginia 23060
Attention: John E. Stokely
President & Chief
Executive Officer
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<PAGE>
with a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: Gary E. Thompson, Esq.
if to Dart:
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
Attention: Richard B. Stone
Chairman & Chief
Executive Officer
with a copy to:
O'Melveny & Myers LLP
555 13th Street, N.W.
Washington, D.C. 20004-1109
Attention: David G. Pommerening, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 10.5. Governing Law; Consent to Jurisdiction. This Agreement
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shall be governed by and construed in accordance with the laws of the State of
Delaware regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the
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transactions contemplated by this Agreement, and, in connection with any such
matter, to service of process by notice as otherwise provided herein, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of Delaware or a Delaware state court.
Section 10.6. Descriptive Headings. The descriptive headings herein are
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inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 10.7. Parties in Interest. This Agreement shall be binding upon
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and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement, except as provided in Section 7.8.
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Section 10.8. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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Section 10.9. Specific Performance. The parties hereto agree that
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irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 10.10. Fees and Expenses. All costs and expenses incurred in
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connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated.
Section 10.11. Severability. If any term or other provision of this
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Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
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
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall 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 hereby are fulfilled to the extent
possible.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed on its behalf by its officer thereunto duly authorized, all as
of the day and year first above written.
RICHFOOD HOLDINGS, INC.
By:
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John E. Stokely
President & Chief
Executive Officer
DGC ACQUISITION, INC.
By:
--------------------------------
John E. Stokely
President & Chief
Executive Officer
DART GROUP CORPORATION
By:
--------------------------------
Richard B. Stone
Chairman & Chief
Executive Officer
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ANNEX I
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CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Subsidiary shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Merger Subsidiary's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered
unless the following conditions have been satisfied: (i) there have been validly
tendered and not withdrawn prior to the time the Offer shall otherwise expire a
number of Shares which constitutes a majority of the Shares outstanding on a
fully-diluted basis on the date of purchase ("on a fully-diluted basis" for
purposes hereof meaning, as of any date, the number of Shares outstanding,
together with Shares that Dart is or may be required to issue pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans, options, warrants or convertible or exchangeable securities, or
otherwise) (the "Minimum Condition"); (ii) any applicable waiting periods under
the HSR Act shall have expired or been terminated prior to the expiration of the
Offer; and (iii) if, at any time on or after the date of the Agreement and
before acceptance for payment of, or payment for, such Shares any of the
following events shall occur:
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(a) any Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order which is in effect and which (1)
materially restricts, prevents or prohibits consummation of the Offer or
the Merger or results in the obligation to pay damages as a result of or in
connection with the transactions contemplated by this Agreement in amounts
that would have a Material Adverse Effect on Dart, (2) prohibits or limits
materially the ownership or operation by Dart, Richfood or any of their
Subsidiaries of all or any material portion of the business or assets of
Dart and its Subsidiaries taken as a whole or compels Dart, Richfood, or
any of their Subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of Richfood or any of its
Subsidiaries, or of Dart and its Subsidiaries taken as a whole, (3) imposes
material limitations on the ability of Richfood, Merger Subsidiary or any
other Subsidiary of Richfood to acquire or hold, or to exercise effectively
full rights of ownership of, any Shares, including, without limitation, the
right to vote any Shares acquired by Merger Subsidiary pursuant to the
Offer or otherwise on all matters properly presented to Dart's
stockholders, including, without limitation, the approval and adoption of
the Agreement and the transactions contemplated thereby or (4) requires
divestitures by Richfood, Merger Subsidiary or any other affiliate of
Richfood of any Shares;
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(b) any of the representations and warranties of Dart set forth in the
Agreement, when read without any exception or qualification as to
materiality or Material Adverse Effect on Dart, shall not be true and
correct as if such representations and warranties were made at the time of
such determination (except as to any such representation or warranty which
speaks as of a specific date, which must be untrue or incorrect as of such
specific date) except where the failure to be so true and correct would
not, individually or in the aggregate, reasonably be expected to (i) have a
Material Adverse Effect on Dart, (ii) prevent the consummation of the Offer
or (iii) have a material adverse effect on the benefits to Richfood of the
transactions contemplated by this Agreement;
(c) (i) Dart shall not have performed, in all material respects, all
obligations and complied with all covenants necessary to be performed or
complied with by it, or (ii) an event shall have occurred relating to a
non-wholly owned Subsidiary or Partnership of Dart that would be prohibited
by the covenants set forth in Section 7.1.(a) hereof if such Subsidiary or
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Partnership had been wholly owned by Dart and which event has a material
adverse effect on the benefits to Richfood of the transactions contemplated
by this Agreement;
(d) the Agreement shall have been terminated in accordance with its
terms;
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(e) the Board of Directors of Dart shall have (i) withdrawn or
materially modified or changed (including by amendment of the Schedule 14D-
9) in a manner adverse to Merger Subsidiary its recommendation of the
Offer, the Agreement or the Merger, or (ii) the Board of Directors of Dart
shall have approved or recommended an Acquisition Proposal;
(f) other than the filing of the Certificate of Merger with respect to
the Merger as provided for by Section 3.3 of the Agreement, all licenses,
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permits, authorizations, consents, orders, qualifications or approvals of,
or declarations or filings with, or expirations of waiting periods imposed
by, any Governmental Authority requisite to consummation of the Merger and
the transactions contemplated thereby, shall have been filed, occurred or
been obtained, as the case may be, except any of the foregoing the absence
of which would not result in a Material Adverse Effect on Dart;
(g) it shall have been publicly disclosed or Merger Subsidiary shall
have otherwise learned that any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Richfood or its affiliates or any
group of which any of them is a member, shall have (1) acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of any class or series of capital stock of Dart or
shall have been granted an option,
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right or warrant, conditional or otherwise, to obtain more than 20% of any
class or series of capital stock of Dart (including the Shares); or (2)
without the prior consent of Richfood, entered into any binding agreement
or understanding with Dart with respect to (A) a merger, consolidation or
other business combination with, or acquisition of a material portion of
the assets of, Dart, or (B) a tender or exchange offer for Shares; or
(h) there shall have occurred and be continuing (i) any general
suspension of trading in securities on any national securities exchange or
in the over-the-counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) any indirect limitation (whether
or not mandatory) by a United States Governmental Authority or agency on
the extension of credit by banks or other financial institutions or (iv) a
decline in the Dow Jones Industrial Average in excess of 25%, measured from
the date hereof.
The foregoing conditions are for the sole benefit of Merger Subsidiary and
its affiliates and, subject to the terms of the Agreement, may be asserted by
Merger Subsidiary regardless of the circumstances (including, without
limitation, any action or inaction by Merger Subsidiary or any of its
affiliates) giving rise to any such condition or may be waived by Merger
Subsidiary, in
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whole or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Agreement
among Richfood, Merger Subsidiary and Dart to which this Annex I is attached.
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ANNEX II
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CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION
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ANNEX III
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BYLAWS OF SURVIVING CORPORATION
III-1
