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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
NATIONAL CONVENIENCE STORES INCORPORATED
(NAME OF SUBJECT COMPANY)
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DIAMOND SHAMROCK, INC.
(BIDDER)
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COMMON STOCK, $.01 PAR VALUE PER SHARE CUSIP NO. 635570500
(INCLUDING THE ASSOCIATED RIGHTS (WITH RESPECT TO THE COMMON STOCK)
TO PURCHASE PREFERRED STOCK) CUSIP NO. 635570112
WARRANTS TO PURCHASE COMMON STOCK (WITH RESPECT TO THE WARRANTS)
(TITLE OF CLASS OF SECURITIES) (CUSIP NUMBER OF CLASS OF SECURITIES)
</TABLE>
------------------------
TIMOTHY J. FRETTHOLD, ESQ.
DIAMOND SHAMROCK, INC.
9830 COLONNADE BLVD.
SAN ANTONIO, TEXAS 78230
(210) 641-6800
COPY TO:
ROBERT A. PROFUSEK, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION(1) AMOUNT OF FILING FEE(2)
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$197,849,405 $39,570
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1. For purposes of calculating the amount of the filing fee only. The amount
assumes the purchase of (i) all of the 6,865,389 (assuming the exercise of
all outstanding stock options) outstanding shares of Common Stock, $.01 par
value per share (the "Shares"), of National Convenience Stores Incorporated
(the "Company") together with the associated rights to purchase preferred
stock issued pursuant to the Rights Agreement, dated as of August 31, 1995,
between the Company and Boatmen's Trust Company, at $27.00 per Share, net to
the seller (pre-tax) in cash, and (ii) all of the 1,349,611 outstanding
Warrants to Purchase Common Stock at $9.25 per Warrant, net to the seller
(pre-tax) in cash.
2. 1/50th of 1% of transaction valuation.
/ / Check box if any part of the fee is offset as provided by Rules 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
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This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Shamrock Acquisition Corp. (the "Purchaser"), a wholly owned
subsidiary of Diamond Shamrock, Inc. ("Diamond Shamrock"), to purchase (i) all
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
National Convenience Stores Incorporated (the "Company"), together with the
associated rights to purchase preferred stock (the "Rights") issued pursuant to
the Rights Agreement, dated as of August 31, 1995, between the Company and
Boatmen's Trust Company, as Rights Agent, at the purchase price of $27.00 per
Share (and the associated Right), and (ii) all outstanding Warrants to purchase
Shares (the "Warrants") issued pursuant to the Warrant Agreement, dated as of
March 9, 1993, between the Company and Boatmen's Trust Company, as Warrant
Agent, at the purchase price of $9.25 per Warrant, in each case, net to the
tendering securityholder (pre-tax) in cash and without interest thereon, on the
terms and subject to the conditions set forth in the Offer to Purchase, dated
November 14, 1995 (the "Offer to Purchase"), and in the related Letters of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are filed as Exhibits
(a)(1), (a)(2) and (a)(3) hereto.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is National Convenience Stores
Incorporated and the address of its principal executive offices is 100 Waugh
Drive, Houston, Texas 77007.
(b) The information set forth in "Introduction" and Section 1 ("Terms of
the Offer; Extension of Tender Period; Termination; Amendments") of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 7 ("Price Ranges of Shares and
Warrants; Dividends") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) The information set forth in Section 11 ("Certain
Information Concerning Diamond Shamrock and the Purchaser") of the Offer to
Purchase and Annex I to the Offer to Purchase is incorporated herein by
reference.
(e) and (f) During the last five years, neither the Purchaser nor Diamond
Shamrock, nor to the Purchaser's knowledge, any of the executive officers or
directors of the Purchaser or Diamond Shamrock (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, United States federal or state securities laws or finding
any violation of such law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Introduction" and Section 13
("Contacts with the Company; Background of the Offer") 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 12 ("Source and Amount of
Funds") 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)-(g) The information set forth in "Introduction," Section 8 ("Possible
Effects of the Offer on the Market for Shares and Warrants; Stock Exchange
Listing; Registration Under the Exchange Act") and
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Section 14 ("Purpose of the Offer and the Merger; the Merger Agreement; Plans of
Diamond Shamrock and the Purchaser with Respect to the Company") 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 in "Introduction," Section 11 ("Certain
Information Concerning Diamond Shamrock and the Purchaser") and Section 13
("Contacts with the Company; Background of the Offer") 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 in "Introduction," Section 11 ("Certain
Information Concerning Diamond Shamrock and the Purchaser"), Section 13
("Contacts with the Company; Background of the Offer") and Section 14 ("Purpose
of the Offer and the Merger; the Merger Agreement; Plans of Diamond Shamrock and
the Purchaser with Respect to the Company") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The Purchaser is a newly formed corporation which has engaged in no
activities other than in connection with the Offer and the Merger (as defined in
the Offer to Purchase). Accordingly, the financial statements of the Purchaser
are not material to the decision by a securityholder of the Company to sell,
tender or hold securities being sought in the Offer. The information set forth
in (i) Section 11 ("Certain Information Concerning Diamond Shamrock and the
Purchaser") and (ii) the financial statements filed as Exhibit 13.2 to Diamond
Shamrock's Annual Report on Form 10-K for the year ended December 31, 1994 (the
"1994 Form 10-K"), which was filed with the Securities and Exchange Commission
(the "Commission") on March 27, 1995, are incorporated herein by reference. The
1994 Form 10-K and exhibits thereto are available for inspection at the public
reference facilities of the Commission located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and are also available for inspection and copying at the
regional offices of the Commission located at Citicorp Center, 500 W. Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of the 1994 Form 10-K may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, the 1994 Form 10-K should also be available for inspection at the
library of the New York Stock Exchange, Inc., 20 Broad Street, 7th Floor, New
York, New York 10005.
The incorporation herein by reference of the financial statements referred
to in the preceding paragraph does not constitute an admission that such
information is material to a decision by a securityholder of the Company whether
to sell or hold Shares (and the associated Rights) or Warrants being sought in
the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 8 ("Possible Effects of the Offer
on the Market for Shares and Warrants; Stock Exchange Listing; Registration
Under the Exchange Act") of the Offer to Purchase is incorporated herein by
reference.
3
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(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letters of
Transmittal, to the extent not otherwise set forth herein, is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase, dated November 14, 1995.
(a)(2) Letter of Transmittal to tender Shares of Common Stock.
(a)(3) Letter of Transmittal to tender Warrants to purchase Shares of Common Stock.
(a)(4) Letter, dated November 14, 1995, from the Dealer Manager to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Letter, dated November 14, 1995, to be sent by brokers, dealers, commercial
banks, trust companies and other nominees to their clients.
(a)(6) Notice of Guaranteed Delivery of tenders of Shares of Common Stock.
(a)(7) Notice of Guaranteed Delivery of tenders of Warrants to purchase Shares of Common
Stock.
(a)(8) IRS Guidelines to Substitute Form W-9.
(a)(9) Press release, dated November 8, 1995.
(a)(10) Form of summary newspaper advertisement, dated November 14, 1995.
(b)(1) Commitment letter, dated November 2, 1995, between Bank of America National Trust
and Savings Association and Diamond Shamrock.
(c)(1) Agreement and Plan of Merger, dated November 8, 1995, by and among Diamond
Shamrock, the Purchaser and the Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
4
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SIGNATURE
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.
SHAMROCK ACQUISITION CORP.
/s/ TIMOTHY J. FRETTHOLD
--------------------------------------
Name: Timothy J. Fretthold
Title: Vice President
DIAMOND SHAMROCK, INC.
/s/ TIMOTHY J. FRETTHOLD
--------------------------------------
Name: Timothy J. Fretthold
Title: Senior Vice President
Dated: November 14, 1995
5
<PAGE> 6
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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(a)(1) Offer to Purchase, dated November 14, 1995.
(a)(2) Letter of Transmittal to tender Shares of Common Stock.
(a)(3) Letter of Transmittal to tender Warrants to purchase Shares of Common Stock.
(a)(4) Letter, dated November 14, 1995, from the Dealer Manager to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Letter, dated November 14, 1995, to be sent by brokers, dealers, commercial
banks, trust companies and other nominees to their clients.
(a)(6) Notice of Guaranteed Delivery of tenders of Shares of Common Stock.
(a)(7) Notice of Guaranteed Delivery of tenders of Warrants to purchase Shares of
Common Stock.
(a)(8) IRS Guidelines to Substitute Form W-9.
(a)(9) Press release, dated November 8, 1995.
(a)(10) Form of summary newspaper advertisement, dated November 14, 1995.
(b)(1) Commitment letter, dated November 2, 1995, between Bank of America National
Trust and Savings Association and Diamond Shamrock.
(c)(1) Agreement and Plan of Merger, dated November 8, 1995, by and among Diamond
Shamrock, the Purchaser and the Company.
</TABLE>
6
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DIAMOND SHAMROCK, INC.
AT
$27.00 NET PER SHARE AND $9.25 NET PER WARRANT
*******************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY*
* TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS THE OFFER IS EXTENDED. *
* *
*******************************************************************************
THE BOARD OF DIRECTORS OF NATIONAL CONVENIENCE STORES INCORPORATED (THE
"COMPANY") HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT
THE TERMS OF THE OFFER AND THE MERGER ARE FAIR AND IN THE BEST INTERESTS OF THE
COMPANY'S SECURITYHOLDERS AND UNANIMOUSLY RECOMMENDS THAT ALL SECURITYHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES AND WARRANTS PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
AND WARRANTS REPRESENTING AT LEAST TWO-THIRDS OF THE TOTAL NUMBER OF OUTSTANDING
SHARES OF THE COMPANY ON A FULLY DILUTED BASIS AND (2) THE COMPANY'S RIGHTS TO
PURCHASE PREFERRED STOCK (THE "RIGHTS") HAVING BEEN REDEEMED BY THE BOARD OF
DIRECTORS OF THE COMPANY. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 6.
------------------------
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
November 14, 1995
<PAGE> 2
IMPORTANT
Any securityholder desiring to tender Shares or Warrants should either (i)
complete and sign the appropriate Letter of Transmittal (the GREEN Letter of
Transmittal in the case of the Shares and the BLUE Letter of Transmittal in the
case of the Warrants) (or a manually signed facsimile copy thereof) in
accordance with the instructions in the Letter of Transmittal, have such
securityholder's signature thereon guaranteed (unless an Agent's Message (as
defined herein) is utilized in connection with a book-entry transfer) as
required by Instruction 1 to the appropriate Letter of Transmittal, mail or
deliver it and any other required documents to the Depositary and either deliver
the certificates for such Shares or Warrants to the Depositary along with the
Letter of Transmittal or tender such Shares or Warrants pursuant to the
procedure for book-entry transfer set forth in Section 2 of this Offer to
Purchase or (ii) request such securityholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the securityholder.
Securityholders having Shares or Warrants registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender such Shares or Warrants.
A securityholder who desires to tender Shares or Warrants and whose
certificates for Shares or Warrants are not immediately available, or who cannot
comply with the procedures for book-entry transfer described in this Offer to
Purchase on a timely basis, may tender such Shares or Warrants by following the
procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be addressed to the Dealer
Manager or the Information Agent at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letters of Transmittal or other tender offer
materials may be obtained from the Information Agent. Holders of Shares or
Warrants may also contact brokers, dealers, commercial banks or trust companies
for assistance concerning the Offer.
<PAGE> 3
TABLE OF CONTENTS
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PAGE
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INTRODUCTION..................................................................... 1
THE TENDER OFFER................................................................. 3
1. Terms of the Offer; Extension of Tender Period; Termination;
Amendments.............................................................. 3
2. Procedure for Tendering Shares and Warrants............................. 5
3. Withdrawal Rights....................................................... 7
4. Acceptance for Payment and Payment of Purchase Price.................... 8
5. Certain Tax Consequences ............................................... 9
6. Certain Conditions of the Offer......................................... 10
7. Price Ranges of Shares and Warrants; Dividends ......................... 11
8. Possible Effects of the Offer on the Market for Shares and Warrants;
Stock Exchange Listing; Registration Under the Exchange Act............. 13
9. Dividends and Distributions ............................................ 15
10. Certain Information Concerning the Company.............................. 15
11. Certain Information Concerning Diamond Shamrock and the Purchaser....... 18
12. Source and Amount of Funds.............................................. 19
13. Contacts with the Company; Background of the Offer...................... 20
14. Purpose of the Offer and the Merger; the Merger Agreement;
Plans of Diamond Shamrock and the Purchaser with Respect to the
Company ................................................................ 21
15. Certain Legal Matters................................................... 28
16. Fees and Expenses....................................................... 30
17. Miscellaneous........................................................... 30
ANNEX I.......................................................................... I-1
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(i)
<PAGE> 4
To the Holders of Shares of Common Stock and Warrants of
National Convenience Stores Incorporated:
INTRODUCTION
Shamrock Acquisition Corp. (the "Purchaser"), a wholly owned subsidiary of
Diamond Shamrock, Inc. ("Diamond Shamrock"), hereby offers to purchase (i) all
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
National Convenience Stores Incorporated (the "Company"), together with the
associated rights to purchase preferred stock (the "Rights") issued pursuant to
the Rights Agreement, dated as of August 31, 1995 (the "Rights Agreement"),
between the Company and Boatmen's Trust Company, as Rights Agent, at the
purchase price of $27.00 per Share (and the associated Right) (the "Share Offer
Price"), and (ii) all outstanding Warrants to purchase Shares issued pursuant to
the Warrant Agreement, dated as of March 9, 1993 (the "Warrant Agreement"),
between the Company and Boatmen's Trust Company, as Warrant Agent (the
"Warrants"), at the purchase price of $9.25 per Warrant (the "Warrant Offer
Price"), in each case, without interest thereon, net to the tendering
securityholder (pre-tax) in cash, on the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letters of Transmittal (which
together constitute the "Offer"). All references herein to Rights shall include
all benefits that may inure to holders of the Rights pursuant to the Rights
Agreement. Unless the context otherwise requires, all references herein to
Shares shall include the Rights.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 8, 1995 (the "Merger Agreement"), by and among Diamond Shamrock,
the Purchaser and the Company. Pursuant to the Merger Agreement, as soon as
practicable after the completion of the Offer and the satisfaction or waiver of
certain conditions, the Purchaser will be merged with and into the Company (the
"Merger") and the Company, as the surviving corporation in the Merger (as such,
the "Surviving Corporation"), will become a wholly owned subsidiary of Diamond
Shamrock. Pursuant to the Merger Agreement and subject to the terms and
conditions thereof, each of Diamond Shamrock, the Purchaser and the Company has
agreed to use its reasonable best efforts to cause the Merger to occur within 90
days after the purchase of the Shares and Warrants pursuant to the Offer. The
Merger Agreement provides that, at the effective time of the Merger (the
"Effective Time"), each then-outstanding Share (other than Shares owned by
Diamond Shamrock, the Purchaser or any other direct or indirect subsidiary of
Diamond Shamrock or held in the treasury of the Company, all of which will be
cancelled, and Shares held by stockholders who comply with all of the relevant
provisions of Article IX of the Company's Restated Certificate of Incorporation
(the "Company Charter") and who perfect their appraisal rights under Section 262
of the Delaware General Corporation Law (the "DGCL")) will be converted into the
right to receive the Share Offer Price, or any higher price per Share paid
pursuant to the Offer, without interest thereon, net to the holder (pre-tax) in
cash (the "Merger Consideration"). Pursuant to the terms of the Warrant
Agreement, each then-outstanding Warrant will remain outstanding and, from and
after the Effective Time, holders of Warrants (the "Warrantholders") will have
the right to obtain upon exercise of each Warrant and payment of the exercise
price therefor, in lieu of the one Share theretofore issuable upon exercise of
such Warrant, the Merger Consideration, without interest thereon, net to the
holder (pre-tax) in cash. See Section 14 for additional information concerning
the Merger Agreement and the Merger.
The Offer will expire at 12:00 midnight, New York City time, on Wednesday,
December 13, 1995, unless extended.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR AND IN THE
BEST INTERESTS OF THE COMPANY'S SECURITYHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
ALL SECURITYHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES AND WARRANTS
PURSUANT TO THE OFFER.
Tendering securityholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 6 of the Letters of
Transmittal, transfer taxes on the purchase of Shares and Warrants by the
Purchaser pursuant to the Offer. However, any tendering securityholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included in
the Letters of Transmittal may be subject to a required
<PAGE> 5
backup federal income tax withholding of 31% of the gross proceeds payable to
the securityholder or other payee pursuant to the Offer. See Section 2. The
Purchaser will pay all charges and expenses of Wasserstein Perella & Co., Inc.,
as Dealer Manager (in such capacity, the "Dealer Manager"), KeyCorp Shareholder
Services, Inc., as Depositary (in such capacity, the "Depositary"), and
MacKenzie Partners, Inc., as Information Agent (in such capacity, the
"Information Agent"), incurred in connection with the Offer. For a description
of the fees and expenses to be paid by the Purchaser, see Section 16.
Certain federal income tax consequences of the sale of Shares or Warrants
pursuant to the Offer are described in Section 5.
The Purchaser is not offering to purchase (nor will tenders be accepted of)
any options to purchase Common Stock (the "Options") granted pursuant to the
Company's 1993 Non-Qualified Stock Option Plan (the "Option Plan"). Accordingly,
holders of Options desiring to tender Shares issuable upon exercise thereof must
exercise such Options in accordance with the terms thereof and then tender
Shares issued upon such exercise pursuant to the procedures set forth in Section
2. There can be no assurance that Shares issued upon such exercise will be
received in time to allow the holders thereof to tender such Shares pursuant to
the Offer. The Merger Agreement provides that all Options, whether or not
exercisable, will, subject to the prior written approval of the Option holder,
be cancelled and each Option holder will be entitled to receive promptly after
the acceptance of securities for payment in the Offer, in cancellation and
settlement of such Option, a cash payment from the Company in an amount equal to
the difference between the Share Offer Price and the per share exercise price of
such Option, multiplied by the number of Shares covered by such Option, in each
case after the deduction of all withholding and other applicable taxes. Pursuant
to the terms of the Merger Agreement, the Board of Directors of the Company has
fixed the Effective Time as the date on which Options granted under the Option
Plan which are not cancelled as provided in the preceding sentence will
terminate pursuant to the Option Plan.
The Offer is subject to the fulfillment of certain conditions described in
Section 6. These include the Minimum Condition (as defined below) and the Rights
Condition (as defined below), as well as other conditions.
Consummation of the Offer is conditioned upon there being validly tendered
and not withdrawn prior to the Expiration Date (as defined in Section 1 below)
that number of Shares and Warrants representing at least two-thirds of the total
number of outstanding Shares of the Company on a fully diluted basis (the
"Minimum Condition"). The Merger Agreement provides that, as of November 6,
1995, there were (i) 6,090,389 Shares outstanding, (ii) 1,349,611 Warrants
outstanding, and (iii) 775,000 Shares subject to issuance pursuant to
outstanding Options. Based on the foregoing, the Purchaser believes that there
are presently 8,215,000 Shares outstanding on a fully diluted basis. For
purposes of the Offer, "fully diluted basis" assumes (a) no dilution due to the
Rights, (b) the exercise of all outstanding Options and Warrants, (c) that no
Shares are issued (other than those reserved as of November 8, 1995 for Options
and Warrants then outstanding) or acquired by the Company after November 8, 1995
and no options, warrants, rights or other securities convertible or exercisable
or exchangeable for Shares are issued or granted after November 8, 1995, and (d)
as of the date of purchase there are no other obligations to issue Shares. As a
result, the Purchaser believes that the Minimum Condition would be satisfied if
at least an aggregate of 5,476,667 Shares and Warrants are validly tendered and
not withdrawn prior to the Expiration Date.
Consummation of the Offer is also conditioned upon the Rights having been
redeemed by the Board of Directors of the Company (the "Rights Condition").
According to the Company's Registration Statement on Form 8-A dated August 31,
1995 (the "Company's Form 8-A"), on August 31, 1995, the Board of Directors of
the Company declared a dividend to stockholders of record on September 11, 1995
of one Right for each outstanding Share. The Rights Agreement provides that,
until the close of business on the Distribution Date (as defined in the Rights
Agreement), the Rights will be evidenced by the certificates for Shares. The
Rights Agreement provides that, at any time prior to the close of business on
the earlier of (i) the tenth day following a public announcement that a person
has become an Acquiring Person (as defined in the Rights Agreement) and (ii) the
Final Expiration Date (as defined in the Rights Agreement), the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right, except as provided in
2
<PAGE> 6
the Rights Agreement. In the Merger Agreement, the Company agreed to (a) take
all action necessary to defer the Distribution Date to prevent the occurrence of
the Distribution Date as a result of the commencement of the Offer or the
consummation of the transactions contemplated by the Merger Agreement, and (b)
redeem the Rights effective immediately prior to the Purchaser's acceptance for
payment of Shares and Warrants pursuant to the Offer.
Certain other conditions to the Offer are described in Section 6. The
Purchaser expressly reserves the right to waive any one or more of the
conditions to the Offer (other than the Minimum Condition). See Section 6.
HOLDERS OF SHARES AND WARRANTS ARE URGED TO READ CAREFULLY THIS OFFER TO
PURCHASE AND THE APPLICABLE LETTER OF TRANSMITTAL BEFORE DECIDING TO TENDER
THEIR SHARES OR WARRANTS.
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
On 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), the Purchaser will accept for payment and pay for all Shares and
Warrants which are validly tendered on or prior to the Expiration Date (as
hereinafter defined) and not theretofore withdrawn as provided in Section 3. The
term "Expiration Date" means 12:00 midnight, New York City time, on Wednesday,
December 13, 1995, unless and until the Purchaser shall have extended the period
of time for 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 the
Purchaser, shall expire. Pursuant to the Merger Agreement, the Purchaser may not
extend the period of time for which the Offer is open unless one or more of the
conditions to the Offer is not satisfied.
CONSUMMATION OF THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE
SATISFACTION OF THE MINIMUM CONDITION AND THE RIGHTS CONDITION. See Section 6.
Pursuant to the Merger Agreement, the Purchaser has reserved the right (but
shall not be obligated) to waive any or all of such conditions (other than the
Minimum Condition). If by 12:00 midnight, New York City time, on Wednesday,
December 13, 1995 any or all of such conditions have not been satisfied or
waived, the Purchaser reserves the right (but shall not be obligated) (i) to
decline to purchase any of the Shares and Warrants tendered, subject to the
terms of the Merger Agreement, and to terminate the Offer and return all
tendered Shares and Warrants to tendering securityholders, (ii) to waive all of
the unsatisfied conditions (other than the Minimum Condition) and, to the extent
permitted by the provisions of the Merger Agreement and subject to complying
with applicable rules and regulations of the Securities and Exchange Commission
(the "Commission"), to purchase all Shares and Warrants validly tendered, or
(iii) to extend the Offer and, subject to the right of securityholders to
withdraw Shares and Warrants until the Expiration Date, retain the Shares and
Warrants which have been tendered during the period or periods for which the
Offer is extended. The Merger Agreement provides that if the conditions to the
Offer are not satisfied or waived by the Purchaser as of the initial Expiration
Date, the Purchaser will extend the Offer until the earlier of the consummation
of the Offer or the 60th calendar day from the day on which the Offer shall have
commenced.
Subject to the Merger Agreement, the Purchaser has expressly reserved the
right to (i) extend the period of time during which the Offer is open if any
condition thereto is not satisfied and thereby delay acceptance for payment of,
and the payment for, any Shares or Warrants, by giving oral or written notice of
such extension to the Depositary or (ii) increase the Share Offer Price or
Warrant Offer Price to be paid in the Offer by giving oral or written notice of
such amendment to the Depositary. Pursuant to the Merger Agreement, the
Purchaser has agreed that, without the prior written consent of the Company, the
Purchaser will not (a) decrease the Share Offer Price or the Warrant Offer
Price, (b) decrease the number of Shares or Warrants to be purchased in the
Offer, (c) change the form of consideration payable in the Offer, (d) add to or
change the conditions to the Offer as set forth in the Merger Agreement, (e)
change or waive the Minimum Condition, or (f) make any other change in the terms
and conditions of the Offer which is materially adverse to the holders of the
Shares or Warrants. The Purchaser's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 14e-1(c) under
the Securities
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<PAGE> 7
Exchange Act of 1934, as amended (the "Exchange Act"), which requires that a
tender offeror pay the consideration offered or return the tendered securities
promptly after the termination or withdrawal of a tender offer.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 6. Any extension,
amendment or termination will be followed as promptly as practicable by public
announcement, such 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, in accordance with the requirements of
Rule 14e-1(d) under the Exchange Act. (As used in this Offer to Purchase,
"business day" has the meaning set forth in Rule 14d-1(c)(6) under the Exchange
Act.) Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to securityholders in connection with the Offer be
promptly disseminated to securityholders in a manner reasonably designed to
inform securityholders of such change) and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser
currently intends to make announcements by issuing a release to the Dow Jones
News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares or Warrants tendered pursuant to the
Offer) is delayed in its payment for Shares or Warrants or is unable to pay for
Shares or Warrants pursuant to the Offer for any reason, then, without prejudice
to the Purchaser's right under the Offer, the Depositary may retain tendered
Shares or Warrants on behalf of the Purchaser, and such Shares or Warrants may
not be withdrawn except to the extent tendering securityholders are entitled to
withdrawal rights as described in Section 3. However, as described above, the
ability of the Purchaser to delay payment for Shares or Warrants which the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act.
If the 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,
the Purchaser will disseminate additional tender offer materials (including by
public announcement as set forth above) and extend the Offer to the extent
required by law. In general, the minimum period during which a tender offer must
remain open following a material change 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, including the
relative materiality of the changes in the terms or information. With respect to
a change in price or a change in percentage of securities sought, a minimum ten
business day period is generally required to allow for adequate dissemination to
stockholders and for investor response.
The Company has provided the Purchaser with the Company's stockholder and
Warrantholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares and Warrants. This Offer to
Purchase and the related Letters of Transmittal and other relevant materials
will be mailed by the Purchaser to record holders of Shares and Warrants and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the
securityholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares and Warrants.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995, as amended by the Form 10-K/A dated October 5, 1995 (the
"Company's 1995 10-K"), the Company's Employee Stock Ownership Plan (the "ESOP")
received 9,706 Shares and 16,179 Warrants and the Company's Profit Sharing Plan
(the "Profit Sharing Plan") received 33,005 Shares and 3,545 Warrants pursuant
to the Company's Plan of Reorganization (as defined in Section 10). The Offer is
being made to the Trustee of the ESOP and the Profit Sharing Plan (the
"Trustee") for Shares and Warrants held by the ESOP and the Profit Sharing Plan
at the same price and in accordance with the same terms as for Shares and
Warrants held by other securityholders. The Company has informed Diamond
Shamrock that the ESOP and the Profit Sharing Plan provide that the ESOP and
Profit Sharing Plan participants will have the right to determine whether to
tender such Shares and Warrants and that the Trustees shall endeavor to
distribute or cause to be distributed materials relating to the Offer to the
ESOP and Profit Sharing Plan participants.
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<PAGE> 8
Participants must give the Trustee written notice of their desire to accept the
Offer in a manner prescribed by the Profit Sharing and ESOP Committee of the
Company. A request is being made by the Company to the Trustee to transmit or
cause to be transmitted this Offer to Purchase and any required election
materials to ESOP and Profit Sharing Plan participants who are beneficial owners
of any Shares and Warrants owned of record by the Trustees.
Participants in the ESOP and the Profit Sharing Plan should receive with
the Offer to Purchase a letter and Direction Form to permit participants to
instruct the Trustee whether to tender the Shares or Warrants held in their ESOP
and the Profit Sharing Plan accounts. Participants may not use the Letters of
Transmittal to instruct the Trustee; instructions may only be delivered by
completing and returning the Direction Form in accordance with the instructions
set forth therein. Diamond Shamrock has been informed that participants may
contact Boatmen's Trust Company at (800) 456-9852 with questions regarding the
Direction Form.
Unless otherwise specified, all references to Sections herein are to
sections of this Offer to Purchase.
2. PROCEDURE FOR TENDERING SHARES AND WARRANTS.
VALID TENDER OF SHARES AND WARRANTS. For a holder validly to tender Shares
or Warrants pursuant to the Offer, a properly completed and duly executed Letter
of Transmittal (the GREEN Letter of Transmittal in the case of the Shares and
the BLUE Letter of Transmittal in the case of the Warrants) (or a manually
signed facsimile thereof), together with any required signature guarantees and
any other required documents (or, in the case of a book-entry transfer, an
Agent's Message), must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase, and either (i) certificates
for tendered Shares or Warrants must be received by the Depositary at one of
such addresses or such Shares or Warrants must be delivered pursuant to the
procedure for book-entry transfer set forth below (and a confirmation of receipt
of such delivery received by the Depositary), in each case prior to the
Expiration Date, or (ii) the tendering securityholder must comply with the
guaranteed delivery procedures set forth below.
SIGNATURE GUARANTEES. No signature guarantee on a Letter of Transmittal is
required if (i) the Letter of Transmittal is signed by the registered holder(s)
(which term, for purposes of the Offer, includes any participant in a Book-Entry
Transfer Facility (as defined below) whose name appears on a security position
listing as the owner of Shares or Warrants) of the Shares or Warrants tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the applicable Letter of Transmittal or (ii) such Shares or
Warrants are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is a
member of a signature guarantee program within the meaning of Rule 17Ad-15 under
the Exchange Act (collectively, "Eligible Institutions"). In all other cases,
all signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. If the certificates 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 any untendered or unpurchased Shares or Warrants are to be
issued to a person other than the registered holder, then the tendered
certificates for Shares or Warrants must be endorsed or accompanied by
appropriate 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 as described above. See
Instructions 1 and 5 of the applicable Letter of Transmittal.
The method of delivery of all documents, including certificates for Shares
or Warrants, is at the election and risk of the tendering securityholder. Shares
and Warrants will be deemed delivered only when actually received by the
Depositary including, in the case of a book-entry transfer, by Book-Entry
Confirmation (as defined below). 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 delivery.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish
accounts with respect to the Shares and Warrants at The Depository Trust
Company, the Midwest Securities Trust Company and the Philadelphia Depository
Trust Company (individually, 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'
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<PAGE> 9
systems may make book-entry delivery of Shares and Warrants by causing any
Book-Entry Transfer Facility to transfer such Shares and Warrants into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedure for such transfer. Although delivery of Shares and Warrants may be
effected through book-entry transfer at any Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof), 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, 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 securityholder must comply with
the guaranteed delivery procedures described below. The confirmation of a
book-entry transfer of Shares or Warrants into the Depositary's account at a
Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
BACKUP FEDERAL TAX WITHHOLDING. To prevent backup federal income tax
withholding on payments made to securityholders with respect to Shares or
Warrants purchased pursuant to the Offer, each tendering securityholder must,
unless an exemption applies, provide the Depositary with its correct taxpayer
identification number and certify that such securityholder is not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the applicable Letter of Transmittal. If a securityholder does not
provide a correct taxpayer identification number or fails to provide the
required certification, the Internal Revenue Service may impose a penalty on
such securityholder and payment of cash to such securityholder pursuant to the
Offer may be subject to backup withholding of 31%. See Instruction 10 of the
applicable Letter of Transmittal.
GUARANTEED DELIVERY. If a securityholder desires to tender Shares or
Warrants pursuant to the Offer and such securityholder's certificates for Shares
or Warrants are not immediately available or the procedures for book-entry
transfer cannot be completed on or prior to the Expiration Date or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such Shares or Warrants may nevertheless be tendered provided that all of
the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) the Depositary receives, on or prior to the Expiration Date, a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser;
(iii) in the case of Shares, the certificates for all tendered Shares,
in proper form for transfer, or a Book-Entry Confirmation, together with
the applicable 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 documents required by the applicable Letter of
Transmittal, are received by the Depositary within three New York Stock
Exchange, Inc. ("NYSE") trading days after the date of such Notice of
Guaranteed Delivery; and
(iv) in the case of Warrants, the certificates for all tendered
Warrants, in proper form for transfer, or a Book Entry Confirmation,
together with the applicable 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 documents required by such Letter of
Transmittal, are received by the Depositary within three NYSE trading days
after the date of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, telex, facsimile transmission or mail, to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision of the Offer, payment for Shares and
Warrants accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (i) either (a) certificates for
such Shares and Warrants or (b) a Book-Entry Confirmation with respect to
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<PAGE> 10
such Shares and Warrants, (ii) a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) or an Agent's Message in
connection with a book-entry transfer, and (iii) any other documents required by
the Letters of Transmittal. For purposes of the Offer, the term "Agent's
Message" means a message transmitted through electronic means by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the applicable Letter of Transmittal.
APPOINTMENT OF PROXY. By executing a Letter of Transmittal, a tendering
securityholder irrevocably appoints designees of the Purchaser as such
securityholder's proxies, in the manner set forth in the applicable Letter of
Transmittal, each with full power of substitution and resubstitution, to the
full extent of such securityholder's rights with respect to the Shares and
Warrants tendered by such securityholder (and any and all dividends on the
Shares or other shares, rights or other securities or distributions issued or
issuable in respect of such Shares or Warrants that are declared or paid on or
after November 8, 1995, including without limitation the amounts payable upon
redemption of the Rights), effective when, if and to the extent that the
Purchaser accepts such Shares or Warrants for payment pursuant to the Offer. All
such proxies are coupled with an interest in the tendered Shares or Warrants and
will therefore be irrevocable. Upon acceptance for payment, all prior proxies
given by such securityholder with respect to such Shares or Warrants accepted
for payment or other securities will, without further action, be revoked, and no
subsequent proxies may be given (and, if given, will not be deemed effective).
Such designees of the Purchaser will, with respect to such Shares or Warrants or
other securities be empowered to exercise all voting and other rights of such
securityholder as they in their sole discretion may deem proper in respect of
any annual, special or adjourned meeting of the Company's securityholders, by
consent in lieu of any such meeting or otherwise. In order for Shares or
Warrants to be deemed validly tendered, immediately after the Purchaser's
acceptance for payment of such Shares or Warrants, the Purchaser must be able to
exercise full voting and other rights with respect to such Shares or Warrants.
A tender of Shares or Warrants pursuant to any one of the procedures
described above will constitute the tendering securityholder's acceptance of the
terms and conditions of the Offer. The Purchaser's acceptance for payment of
Shares and Warrants tendered pursuant to any of the procedures described above
will constitute a binding agreement between the tendering securityholder and the
Purchaser on the terms and subject to the conditions of the Offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tendered Shares or Warrants will be
determined by the Purchaser in its sole discretion, and its determination will
be final and binding. The Purchaser reserves the absolute right to reject any or
all tenders that it determines are not in appropriate form or the acceptance for
payment of or payment for which may, in the opinion of the Purchaser's counsel,
be unlawful. The Purchaser also reserves the absolute right, subject to the
Merger Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to any particular Shares or Warrants or
any particular securityholder and, subject to the Merger Agreement, the
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letters of Transmittal and the Instructions thereto) will be final and
binding. No tender of Shares or Warrants will be deemed to have been validly
made until all defects or irregularities have been cured or expressly waived.
None of the Purchaser, Diamond Shamrock, the Dealer Manager, the Depositary, the
Information Agent or any other person will be obligated to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice.
3. WITHDRAWAL RIGHTS.
Tenders of Shares and Warrants made pursuant to the Offer will be
irrevocable, except that Shares or Warrants tendered may be withdrawn at any
time prior to the Expiration Date, and, unless theretofore accepted for payment
as provided herein, may also be withdrawn on or after January 13, 1996. Shares
or Rights may not be withdrawn unless the associated Rights or Shares, as the
case may be, are also withdrawn.
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<PAGE> 11
A withdrawal of Shares or Rights will also constitute a withdrawal of the
associated Rights or Shares, as the case may be.
For a withdrawal to be effective, a written, telegraphic, telex 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 notice of withdrawal must specify the name of the person who
tendered the Shares or Warrants to be withdrawn, the number of Shares or
Warrants to be withdrawn and the name in which the Shares or Warrants are
registered, if different from that of the person who tendered such Shares or
Warrants. If certificates for Shares or Warrants to be withdrawn have been
delivered or otherwise identified to the Depositary, the serial numbers shown on
the particular certificates evidencing such Shares or Warrants to be withdrawn
must also be furnished to the Depositary as aforesaid prior to the physical
release of the Shares or Warrants to be withdrawn, together with a signed notice
of withdrawal with signatures guaranteed by an Eligible Institution (except,
with respect to signature guarantees, in the case of Shares or Warrants tendered
by an Eligible Institution). If Shares or Warrants have been delivered pursuant
to the procedure for book-entry transfer set forth in Section 2, any notice of
withdrawal must specify the name and number of the account at the appropriate
Book-Entry Transfer Facility to be credited with such withdrawn Shares or
Warrants and must otherwise comply with such Book-Entry Transfer Facility's
procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of or payment for Shares or Warrants, or is unable to accept or pay for
Shares or Warrants for any reason, then, without prejudice to the Purchaser's
rights under the Offer, tendered Shares or Warrants may not be withdrawn except
to the extent that tendering securityholders are entitled to withdrawal rights
as set forth in this Section 3. Withdrawals may not be rescinded and any Shares
or Warrants withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares or Warrants may be retendered
by again following the procedures described in Section 2 at any time prior to
the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, subject to the Merger Agreement, and its determination will be final
and binding. No withdrawal of Shares or Warrants will be deemed to have been
properly made until all defects and irregularities have been cured and waived.
None of the Purchaser, Diamond Shamrock, the Dealer Manager, the Depositary, the
Information Agent or any other person will be obligated to give notice of any
defects or irregularities in any notice of withdrawal, nor shall any of them
incur any liability for failure to give any such notice.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF PURCHASE PRICE.
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares or
Warrants validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 3) as soon as practicable after the
Expiration Date. Any determination concerning the satisfaction of such terms and
conditions will be within the sole discretion of the Purchaser and such
determination will be final and binding on all tendering securityholders. See
Section 6. The Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares or Warrants in order to comply in whole or in
part with any applicable law, including without limitation the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If the Purchaser
desires to delay payment for Shares or Warrants purchased pursuant to the Offer,
and such delay would otherwise be in contravention of Rule 14e-1(c) of the
Exchange Act, the Purchaser will formally extend the Offer. In all cases,
payment for Shares or Warrants accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of certificates for such
Shares or Warrants (or a timely Book-Entry Confirmation with respect to such
Shares or Warrants into the Depositary's account at one of the Book-Entry
Transfer Facilities, as described in Section 2), a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof), together
with any required signature guarantees and any other documents (or, in the case
of a book-entry transfer, an Agent's Message) required by the applicable Letter
of Transmittal. See Section 2.
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<PAGE> 12
Diamond Shamrock filed a Notification and Report Form with respect to the
Offer under the HSR Act on November 8, 1995, and the required waiting period
under the HSR Act with respect to the Offer will expire at 11:59 p.m., New York
City time on November 23, 1995 (unless earlier terminated pursuant to a request
therefor). However, prior to such time, the Federal Trade Commission (the "FTC")
or the Antitrust Division of the Department of Justice (the "Antitrust
Division") may extend the waiting period by requesting additional information or
documentary material from Diamond Shamrock. If such a request is made, such
waiting period will expire at 11:59 p.m., New York City time, on the tenth day
after substantial compliance by Diamond Shamrock with such request. Thereafter,
such waiting period can only be extended by court order. See Section 15 for
additional information concerning the HSR Act.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares or Warrants validly tendered and not
withdrawn pursuant to the Offer when, as and if the Purchaser gives oral or
written notice to the Depositary of its acceptance for payment of such Shares or
Warrants. Payment for Shares or Warrants so accepted will be made by the deposit
of the purchase price therefor with the Depositary, which will act as agent for
the tendering securityholders for the purpose of receiving such payment from the
Purchaser and transmitting such payment to tendering securityholders. In no
circumstances will interest be paid on the purchase price by reason of any delay
in making such payment. Upon deposit of funds with the Depositary for the
purpose of making payments to tendering securityholders, the Purchaser's
obligation to make such payment shall be satisfied and tendering securityholders
must thereafter look solely to the Depositary for payment of amounts owed to
them by reason of the acceptance for payment of Shares or Warrants pursuant to
the Offer. The Purchaser will pay any transfer taxes incident to the transfer to
it of validly tendered Shares or Warrants, except as otherwise provided in
Instruction 6 of the Letters of Transmittal, as well as any other charges and
expenses of the Depositary and the Information Agent.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares or Warrants tendered pursuant to the Offer is delayed or the Purchaser is
unable to accept for payment or pay for tendered Shares or Warrants, then,
without prejudice to the Purchaser's rights under Section 6, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares or Warrants,
and such Shares or Warrants may not be withdrawn except to the extent that
tendering securityholders are entitled to withdrawal rights as described in
Section 3. If any tendered Shares or Warrants are not accepted for payment and
paid for pursuant to the Offer for any reason, or if certificates submitted
represent more Shares or Warrants than are tendered, certificates for such
Shares or Warrants not tendered or purchased will be returned (or, in the case
of Shares or Warrants delivered by book-entry transfer with any Book-Entry
Transfer Facility as permitted by Section 2, such Shares or Warrants will be
credited to an account maintained with such Book-Entry Transfer Facility)
without expense to the tendering securityholder as promptly as practicable
following the expiration or termination of the Offer, as the case may be. If,
prior to the Expiration Date, the Purchaser increases the consideration to be
paid for Shares or Warrants pursuant to the Offer, the Purchaser will pay such
increased consideration for all Shares or Warrants tendered pursuant to the
Offer, whether or not such Shares or Warrants have been tendered or accepted for
payment prior to such increase in the consideration.
Subject to the Merger Agreement, the Purchaser reserves the right to
transfer or assign in whole or from time to time in part to one or more
subsidiaries or affiliates of the Purchaser or Diamond Shamrock the right to
purchase Shares or Warrants tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer or prejudice the rights of tendering securityholders to receive
payment for Shares or Warrants validly tendered and accepted for payment
pursuant to the Offer.
5. CERTAIN TAX CONSEQUENCES.
The summary of federal income tax consequences set forth below is for
general information only. The tax treatment of each stockholder and
Warrantholder will depend in part upon his, her or its particular situation.
Special tax consequences not described in this Offer to Purchase may be
applicable to particular classes of taxpayers, such as financial institutions,
broker-dealers, persons who are not citizens or residents of the United States
and persons who received payments in respect of Options. ALL STOCKHOLDERS AND
WARRANTHOLDERS SHOULD
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<PAGE> 13
CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL AND FOREIGN TAX LAWS.
Sales of Shares and Warrants in response to the Offer will be taxable
transactions for federal income tax purposes and may also be taxable
transactions under applicable state, local or other laws. Generally, for federal
income tax purposes, a person who sells Shares or Warrants in response to the
Offer will recognize gain or loss in an amount equal to the difference between
the person's adjusted tax basis in the Shares and Warrants sold and the cash
received. That gain or loss will be a capital gain or loss if the Shares or
Warrants are a capital asset in the hands of the person, and a long-term capital
gain or loss if the stockholder's holding period is more than one year as of the
date the stockholder or Warrantholder accepts payment pursuant to the Offer.
There are limitations on the deductibility of capital losses.
If a Warrantholder has held a Warrant for more than one year, any gain or
loss recognized upon either the tendering of such Warrant pursuant to the Offer
or, assuming the Offer is completed, the Merger, would generally be treated as
long-term capital gain or loss. However, if such Warrantholder were to exercise
the Warrant, the Share acquired through the exercise of such Warrant would have
a holding period beginning as of the date on which the Warrant was exercised.
Therefore, any Shares so acquired and tendered pursuant to the Offer or the
Merger would not qualify for long-term capital gain or loss if the Warrantholder
were to become entitled to the receipt of cash within one year or less of the
date of the exercise of such Warrant. ACCORDINGLY, WARRANTHOLDERS WHO ARE
CONSIDERING EXERCISING SUCH WARRANTS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS
AS TO WHETHER OR NOT THEY WOULD BE FOREGOING A POSSIBLE LONG-TERM CAPITAL GAIN
OR LOSS BY NOT TENDERING SUCH WARRANTS PURSUANT TO THE OFFER AND INSTEAD
INCURRING A SHORT-TERM CAPITAL GAIN OR LOSS THROUGH THE EXERCISE OF SUCH
WARRANTS AND THE RECEIPT OF CASH WITHIN ONE YEAR FOLLOWING SUCH EXERCISE IN
EXCHANGE FOR THE SHARES RECEIVED UPON THE EXERCISE OF SUCH WARRANTS.
For federal income tax purposes, amounts paid to non-tendering stockholders
with respect to any redemption of the Rights may be treated as additional
consideration for the Shares in the Merger; however, these amounts may be
treated as a dividend or otherwise as ordinary income. See also "Backup Federal
Tax Withholding" in Section 2.
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to amend and extend the Offer in
any respect, at any time, and in its sole discretion (subject to the provisions
of the Merger Agreement), neither Diamond Shamrock nor the Purchaser will be
required to accept for payment, purchase or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
relating to the Purchaser's obligation to pay for or return tendered Shares or
Warrants after termination of the Offer, pay for any Shares or Warrants tendered
pursuant to the Offer, and may (subject to the provisions of the Merger
Agreement) amend, extend or terminate the Offer or postpone the Expiration Date,
the acceptance for payment of and/or the purchase or (subject to the applicable
rules and regulations aforesaid) payment for Shares and Warrants tendered if as
of the expiration of the Offer (and any extensions thereof) (i) the Minimum
Condition shall not have been satisfied, (ii) the waiting period applicable for
the purchase of securities pursuant to the Offer and the Merger under the HSR
Act shall not have expired or been terminated, or (iii) at any time on or after
November 8, 1995 and at or prior to the time of payment for any such Shares or
Warrants (whether or not any Shares or Warrants have been accepted for payment
or paid for pursuant to the Offer), any one or more of the following events
shall have occurred and be continuing:
(a) there has been any action taken, or any statute, rule, regulation,
judgment, order or injunction promulgated, enacted, entered or deemed
applicable to the Offer or the Merger, by any Governmental Entity (as
defined in the Merger Agreement) that in the sole judgment of Diamond
Shamrock (1) makes the acceptance for payment of or payment for Shares or
Warrants illegal, challenges the acquisition by Diamond Shamrock or the
Purchaser of the Shares or Warrants or otherwise seeks to restrain or
prohibit consummation of the Offer or the Merger, (2) renders Diamond
Shamrock unable to accept for payment, pay for or purchase Shares or
Warrants, (3) seeks to impose or imposes limitations
10
<PAGE> 14
on the ability of Diamond Shamrock to acquire or hold, transfer or dispose
of, or effectively to exercise any of its rights of ownership of, the
Shares or Warrants, including without limitation the right to vote the
Shares purchased by it on all matters properly presented to the
stockholders of the Company, (4) as a result of the Offer or the Merger,
seeks to require or requires Diamond Shamrock, the Company or any of their
respective Subsidiaries (as defined in the Merger Agreement) or affiliates
to dispose of or hold separate or otherwise limits or affects the exercise
of ordinary ownership or control rights in respect to all or any
significant portion of their respective businesses, assets or properties,
each taken as a whole, or imposing any limitations on the ability of any
such entities to conduct their respective businesses and own such assets
and properties, or (5) seeks to impose or imposes any limitations on the
ability of Diamond Shamrock or any of its Subsidiaries effectively to
control the business or operations of the Company or any of its
Subsidiaries as a result of the Offer or the Merger; or
(b) there has been instituted or pending any action, proceeding, claim
or counterclaim by or before any Governmental Entity, or any other person
or entity, seeking to restrain or prohibit the making of the Offer or the
Merger, seeking to obtain any significant damages from Diamond Shamrock or
its Subsidiaries, or the Company or its Subsidiaries or from any other
person or entity to whom or to which any of the foregoing has any indemnity
obligation arising from the Offer or the Merger or seeking to prohibit the
ownership by Diamond Shamrock or any of its Subsidiaries of the Shares or
Warrants or of any significant portion of their businesses or assets, taken
as a whole, or any significant portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or to compel Diamond
Shamrock, the Company or any of their affiliates to dispose of or hold
separate all or a significant portion of any of their business or assets,
in each case as a result of the Offer or the Merger; or
(c) there has occurred (1) any general suspension of, or limitation on
prices for, trading in securities on the NYSE or the over-the-counter
market, (2) a decline of at least 20% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 Index from November 8, 1995,
(3) the declaration of a banking moratorium or any limitation or suspension
of payments in respect of the extension of credit by banks or other lending
institutions in the United States, (4) any limitation by any Governmental
Entity on, or any other event which in the sole judgment of Diamond
Shamrock may have a material adverse effect on, the extension of credit by
banks or other lending institutions, (5) a commencement of war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, or (6) in the case of any of the
foregoing which exists at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(d) any material adverse change has occurred since September 30, 1995
in the business, assets, results of operations, financial condition or
prospects (not including a change in prospects arising from general
economic or industry conditions) of the Company and its Subsidiaries, taken
as a whole; or
(e) the Company has breached or failed to perform in any material
respect any of its obligations under the Merger Agreement, including
without limitation a failure to cause the Rights to be redeemed as provided
for therein; or
(f) any of the representations and warranties of the Company contained
in the Merger Agreement shall not have been true and correct when made or
have since ceased to be true and correct and remain incorrect at the
Expiration Date; or
(g) it shall have been publicly disclosed or Diamond Shamrock shall
have learned that any person or entity shall have entered into a definitive
agreement or an agreement in principle with the Company with respect to a
tender offer or exchange offer for any shares of capital stock of the
Company (including without limitation the Shares and Warrants) or a merger,
consolidation or other business combination or any acquisition or
disposition of any material assets or any comparable event with or
involving the Company or any of its Subsidiaries; or
(h) the Company's Board of Directors shall have failed to recommend
and approve, or shall no longer recommend and approve, the Offer or the
adoption of the Merger Agreement, or shall modify or
11
<PAGE> 15
amend its recommendation and approval with respect thereto, or shall have
resolved to do any of the foregoing; or
(i) the Merger Agreement has terminated in accordance with its terms;
or
(j) Diamond Shamrock and the Company agree that the Purchaser shall
amend or terminate the Offer;
which, in the sole judgment of Diamond Shamrock, and in each case regardless of
the circumstances (including without limitation any inaction by Diamond Shamrock
or its affiliates other than a material breach by Diamond Shamrock or its
affiliates of the Merger Agreement), with respect to each and every matter
referred to above makes it inadvisable to proceed with the Offer or with such
acceptance for payment or purchase of or such payment for the Shares and
Warrants.
The foregoing conditions (i) may be asserted by Diamond Shamrock or the
Purchaser regardless of the circumstances (including any action or inaction by
Diamond Shamrock or any of its affiliates other than a material breach by
Diamond Shamrock or the Purchaser of the Merger Agreement) giving rise to such
condition and (ii) other than the Minimum Condition, are for the sole benefit of
Diamond Shamrock and its affiliates. The foregoing conditions, except as
otherwise provided in the Merger Agreement, may be waived by Diamond Shamrock,
in whole or in part, at any time and from time to time in its sole discretion.
The failure by Diamond Shamrock at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right and each right will be deemed an
ongoing right which may be asserted by Diamond Shamrock at any time and from
time to time. Any determination by Diamond Shamrock concerning the events
described above will be final and binding upon all parties.
7. PRICE RANGES OF SHARES AND WARRANTS; DIVIDENDS.
Since November 16, 1994, the Shares have traded on the NYSE under the
symbol "NCS." According to the Company's 1995 10-K, from March 10, 1993 through
November 15, 1994, the Common Stock was traded on the NASDAQ National Market
System ("NASDAQ-NMS"). The following table sets forth, for the periods
indicated, the high and low sales prices of the Shares as reported by published
financial sources. Based on publicly available information, the Company has
never paid a dividend on its Common Stock, other than the Rights which were
distributed in the form of a dividend on September 11, 1995. The sales
quotations per Share include the associated Right for any prices after September
11, 1995.
PRICE RANGES FOR SHARES
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended June 30, 1994:
First Quarter...................................................... $16.75 $12.75
Second Quarter..................................................... 17.00 13.25
Third Quarter...................................................... 20.25 15.75
Fourth Quarter..................................................... 17.00 10.25
Fiscal Year Ended June 30, 1995:
First Quarter...................................................... 11.50 7.50
Second Quarter..................................................... 8.88 6.38
Third Quarter...................................................... 10.63 8.38
Fourth Quarter..................................................... 13.00 8.63
Fiscal Year Ended June 30, 1996:
First Quarter...................................................... 24.00 11.75
Second Quarter (through November 13, 1995)......................... 26.75 23.38
------ ------
</TABLE>
12
<PAGE> 16
On August 11, 1995, the last full trading day prior to the public
announcement of a $17.00 per Share acquisition proposal by The Circle K
Corporation ("Circle K"), the reported closing price of the Shares on the NYSE
Composite Tape was $13.75 per Share. On November 7, 1995, the last full trading
day prior to the announcement of the Merger Agreement, the reported closing
price of the Shares on the NYSE Composite Tape was $25.63 per Share. On November
13, 1995, the last full trading day prior to the commencement of the Offer, the
reported closing price of the Shares on the NYSE Composite Tape was $26.63 per
Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SHARES.
Diamond Shamrock has been informed by the Company that since April 15,
1993, the Warrants were traded on the NASDAQ-NMS under the symbol "NCSIW" and on
December 1, 1994, the Warrants ceased to trade on the NASDAQ-NMS and commenced
trading under such symbol on the NASDAQ Small-Cap Market (the "NASDAQ Stock
Market"). The following table sets forth, for the periods indicated, the high
and low sales prices for the periods before December 1, 1994, and the high and
low closing bid prices for the periods after December 1, 1994, in each case as
reported by published financial sources.
PRICE RANGES FOR WARRANTS
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Fiscal Year Ended June 30, 1994:
First Quarter........................................................ $4.75 $3.50
Second Quarter....................................................... 5.75 3.50
Third Quarter........................................................ 7.75 5.00
Fourth Quarter....................................................... 5.75 2.75
Fiscal Year Ended June 30, 1995:
First Quarter........................................................ 3.00 1.50
Second Quarter....................................................... 1.50 0.63
Third Quarter........................................................ 1.25 0.63
Fourth Quarter....................................................... 2.13 0.88
Fiscal Year Ended June 30, 1996:
First Quarter........................................................ 6.13 1.13
Second Quarter (through November 13, 1995)........................... 9.00 5.50
---- ----
</TABLE>
On August 11, 1995, the last full trading day prior to the public
announcement of a $17.00 per Share acquisition proposal by Circle K, the
reported closing bid price of the Warrants on the NASDAQ Stock Market was $2.38
per Warrant. On November 7, 1995, the last day on which the Warrants traded
prior to the announcement of the Merger Agreement, the reported closing bid
price of the Warrants on the NASDAQ Stock Market was $8.00 per Warrant. On
November 13, 1995, the last full trading day prior to the commencement of the
Offer, the reported closing bid price of the Warrants on the NASDAQ Stock Market
was $9.00 per Warrant. WARRANTHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE WARRANTS.
13
<PAGE> 17
8. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR SHARES AND WARRANTS; STOCK
EXCHANGE LISTING; REGISTRATION UNDER THE EXCHANGE ACT.
The purchase of Shares and Warrants pursuant to the Offer will reduce the
number of holders of Shares and Warrants and the number of Shares and Warrants
that might otherwise trade publicly. Consequently, depending upon the number of
Shares and Warrants purchased and the number of remaining holders of Shares and
Warrants, the purchase of Shares and Warrants pursuant to the Offer may
adversely affect the liquidity and market value of the remaining Shares and
Warrants held by the public.
QUOTATION -- SHARES
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing.
According to the NYSE's published guidelines, the NYSE would consider delisting
the Shares if, among other things, the number of record holders of at least 100
Shares should fall below 1,200, the number of publicly held Shares (exclusive of
management or other concentrated holdings) should fall below 600,000 or the
aggregate market value of publicly held Shares should not exceed $5,000,000. If
as a result of the purchase of Shares pursuant to the Offer, Shares no longer
meet the requirements of the NYSE for continued listing and the listing of the
Shares is discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or through
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or other sources. The extent of the public market for the Shares and
the availability of such quotations would, however, depend upon the number of
stockholders remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
under the Exchange Act, as described below, and other factors.
QUOTATION -- WARRANTS
Depending upon the number of Warrants and Shares purchased pursuant to the
Offer, the Warrants may no longer meet the requirements of the National
Association of Securities Dealers, Inc. (the "NASD") for continued inclusion of
a Warrant in the NASDAQ Stock Market, which require among other things, that the
common stock of the issuer of such Warrant continue to be listed on the
NASDAQ-NMS or a national securities exchange. If these requirements are not met,
the Warrants may nevertheless continue to be included in the NASDAQ Stock Market
with quotations published in the NASDAQ "additional list" or in one of the
"local lists." Depending upon the number of Warrants and Shares purchased
pursuant to the Offer, the Warrants may no longer be "qualified" for NASDAQ
Stock Market reporting and the NASDAQ Stock Market would cease to provide any
quotations. If, as a result of the purchase of Warrants or Shares pursuant to
the Offer or otherwise, the Warrants no longer meet the requirements of the NASD
for continued inclusion in the NASDAQ Stock Market, the market for the Warrants
could be adversely affected.
In the event that the Warrants no longer meet the requirements of the NASD
for continued inclusion in the NASDAQ Stock Market, it is possible that the
Warrants would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Warrants and the availability of such quotations would, however, depend
upon the number of holders of Warrants remaining at such time, the interests in
maintaining a market in the Warrants on the part of securities firms, the
possible termination of registration of the Warrants under the Exchange Act, as
described below, and other factors.
MARGIN REQUIREMENTS
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which designation has the effect, among other things, of allowing brokers to
extend credit on such Shares as collateral. Depending on factors such as the
number of record holders of Shares and the number and market value of publicly
held Shares following the purchase of Shares pursuant to the Offer, it is
possible the Shares would no longer constitute "margin
14
<PAGE> 18
securities" for purposes of the Federal Reserve Board's margin regulations and
therefore could no longer be used as collateral for margin loans made by
brokers. If registration of the Shares under the Exchange Act were terminated,
the Shares would no longer be "margin securities" or eligible for stock exchange
listing.
EXCHANGE ACT REGISTRATION
The Shares and Warrants are currently registered under the Exchange Act.
Such registration may be terminated upon application of the Company to the
Commission if such securities are not listed on a national exchange and there
are fewer than 300 holders of record of each of such securities. The termination
of the registration of the Shares or Warrants under the Exchange Act would
reduce the information required to be furnished by the Company to the holders
thereof 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) of the Exchange Act, the requirement of furnishing a proxy statement in
connection with stockholders' meetings pursuant to Section 14(a) or 14(c) of the
Exchange Act and the related requirement of an annual report to stockholders and
the requirements of Rule 13e-3 of the Exchange Act with respect to going private
transactions, no longer applicable with respect to the Shares or Warrants or the
Company. Furthermore, if a substantial number of Shares are acquired by the
Purchaser, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, may be
impaired or, with respect to certain persons, eliminated. If registration of the
Shares under the Exchange Act were terminated, the Shares would no longer be
margin securities or eligible for stock exchange listing or NASDAQ reporting.
The Purchaser believes that the purchase of the Shares and Warrants pursuant to
the Offer may result in the Shares and Warrants becoming eligible for
deregistration under the Exchange Act and it is the intention of the Purchaser
to cause the Company to make an application for termination of registration of
the Shares and Warrants as soon as possible after successful completion of the
Offer, if the Shares and Warrants are then eligible for such termination. If
registration of the Shares and Warrants under the Exchange Act is not terminated
prior to the Merger, registration of the Shares and Warrants under the Exchange
Act will be terminated following the consummation of the Merger.
9. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that, prior to the Effective Time, the
Company will not, and will not permit any of its Subsidiaries to, (i) issue,
reissue, sell or pledge or authorize or propose the issuance, reissuance, sale
or pledge of any shares of capital stock of any class, or securities convertible
into capital stock of any class, or any rights, warrants or options to acquire
any convertible securities or capital stock, other than the issuance of Shares
upon the exercise of Warrants and Options issued pursuant to the Option Plan
outstanding on the date of the Merger Agreement and identified therein, (ii)
declare, set aside or pay any dividend or other distribution (whether in cash,
securities or property or any combination thereof) in respect of any class or
series of its capital stock, except that any wholly owned Subsidiary of the
Company may pay dividends and make distributions to the Company or any of the
Company's wholly owned Subsidiaries, or (iii) adjust, split, combine, subdivide,
reclassify or redeem, purchase or otherwise acquire, or propose to redeem or
purchase or otherwise acquire, any shares of its capital stock, except that the
Company may redeem the Rights in accordance with the Merger Agreement.
Based on publicly available information, the Company has never paid a
dividend on its Common Stock, other than the Rights which were distributed in
the form of a dividend on September 11, 1995.
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL. According to the Company's 1995 10-K, the Company is a Delaware
corporation with its principal offices located at 100 Waugh Drive, Houston,
Texas. The following description of the Company's business has been taken from
the Company's 1995 10-K.
The Company is the largest operator of convenience stores in the state of
Texas and one of the 20 largest convenience store operators in the United
States. At June 30, 1995, the Company operated 661 specialty convenience stores
in four cities in the state of Texas under the name Stop N Go. Eighty-two
percent of the
15
<PAGE> 19
Company's stores are located in the Houston and San Antonio areas where the
Company is the largest convenience store operator. The Company was originally
organized as a Texas corporation in 1959 and was reincorporated in Delaware in
1979. The Company filed for voluntary Chapter 11 bankruptcy reorganization on
December 9, 1991 and emerged from such on March 9, 1993 as a result of the
confirmation of the Company's Revised Fourth Amended and Restated Joint Plan of
Reorganization (the "Plan of Reorganization"). In the fourth quarter of fiscal
1994, the Company divested its 80 operating convenience stores in the states of
California and Georgia and acquired 88 stores in the Houston and Dallas/Fort
Worth areas. With the consummation of that transaction the Company attained its
goal of geographically consolidating its operations within the state of Texas.
SUMMARY FINANCIAL INFORMATION. The following tables set forth certain
summary consolidated financial information with respect to the Company and its
consolidated subsidiaries derived from the audited financial statements
contained in the Company's 1995 10-K and the unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1995. Certain amounts reflected in the Company's 1995 10-K have
been reclassified to conform to the current year presentation. The summaries
below are qualified by reference to such documents (which may be inspected and
obtained as described below), including the financial statements and related
notes contained therein.
16
<PAGE> 20
THE COMPANY AND SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
REORGANIZED COMPANY
--------------------------------------------------------------- PREDECESSOR
COMPANY
THREE MONTHS ENDED PERIOD FROM ------------
YEAR ENDED JUNE 30, INCEPTION EIGHT MONTHS
SEPTEMBER 30, (MARCH 1, 1993) ENDED
-------------------- -------------------- TO JUNE 30, FEBRUARY 28,
1995 1994 1995 1994 1993 1993
-------- -------- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales......................................... $236,792 $235,281 $906,023 $880,447 $ 297,985 $580,867
Costs and Expenses:
Cost of sales............................... 175,421 175,354 683,037 658,845 222,639 429,019
Operating expenses.......................... 41,015 44,209 165,529 169,870 54,193 108,326
General and administrative expenses......... 10,241 11,448 40,756 34,204 10,982 20,793
Gain on sale of assets, net................. -- -- (360) (2,965) -- --
Other special charges....................... -- -- -- -- -- 6,561
-------- -------- -------- -------- -------- --------
226,677 231,011 888,962 859,954 287,814 564,699
-------- -------- -------- -------- -------- --------
Operating Income.............................. 10,115 4,270 17,061 20,493 10,171 16,168
Other Income (Expense):
Interest expense............................ (2,137) (2,380) (9,297) (10,598) (3,241) (1,547)
Interest income............................. 319 342 1,411 1,220 328 50
-------- -------- -------- -------- -------- --------
Income Before Reorganization Expenses,
Fresh-Start Adjustments, Income Tax Expense
and Extraordinary Gain...................... 8,297 2,232 9,175 11,115 7,258 14,671
Reorganization Expenses, net.................. -- -- -- -- -- (8,124)
Fresh-Start Adjustments....................... -- -- -- -- -- 382
-------- -------- -------- -------- -------- --------
Income Before Income Tax Expense and
Extraordinary Gain.......................... 8,297 2,232 9,175 11,115 7,258 6,929
Income Tax Expense............................ 3,468 1,089 3,883 4,280 2,869 133
-------- -------- -------- -------- -------- --------
Income Before Extraordinary Gain.............. 4,829 1,143 5,292 6,835 4,389 6,796
Extraordinary Gain............................ -- -- -- -- -- 61,493
-------- -------- -------- -------- -------- --------
Net Income.................................... $ 4,829 $ 1,143 $ 5,292 $ 6,835 $ 4,389 $ 68,289
======== ======== ======== ======== ======== ========
Earnings Per Share............................ $ 0.70 $ 0.19 $ 0.87 $ 1.09 $ 0.70 *
======== ======== ======== ======== ========
Weighted Average Common and Common Equivalent
Shares Outstanding.......................... 6,997 6,050 6,061 6,274 6,291 *
======== ======== ======== ======== ========
</TABLE>
- ---------------
* Not meaningful.
17
<PAGE> 21
THE COMPANY AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1995 1994
SEPTEMBER 30, -------- --------
1995
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents, $8,395, $9,093 and $14,083
reserved................................................ $ 40,633 $ 31,497 $ 48,797
Accounts receivable, net................................... 5,736 5,296 5,727
Inventories................................................ 35,685 36,555 39,626
Prepaid expenses........................................... 2,337 2,518 4,775
Deferred tax asset......................................... 5,610 5,610 4,259
-------- -------- --------
Total Current Assets............................... 90,001 81,476 103,184
Property and Equipment, net of Accumulated Depreciation...... 164,077 162,508 158,075
Other Assets:
Reorganization value in excess of amounts allocable to
identifiable assets, net................................ 23,600 23,939 34,542
Deferred tax asset, net.................................... 2,421 5,620 1,812
Other assets, net.......................................... 10,975 10,781 8,915
-------- -------- --------
Total Other Assets................................. 36,996 40,340 45,269
-------- -------- --------
$ 291,074 $284,324 $306,528
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses...................... $ 66,123 $ 61,625 $ 75,563
Current portion of long-term debt.......................... 10,953 12,061 12,103
-------- -------- --------
Total Current Liabilities.......................... 77,076 73,686 87,666
Long-Term Debt............................................... 88,360 90,256 107,204
Other Long-Term Liabilities.................................. 40,250 40,342 36,910
Commitments and Contingencies
Stockholders' Equity:
Common Stock, par value $.01 per share; 50,000,000 shares
authorized;
6,090,325, 6,050,075 and 6,050,069 shares issued and
outstanding............................................. 61 61 61
Series A Junior Participating Preferred Stock, par value
$1.00 per share; 100,000 shares authorized as of
September 11, 1995; 0 shares issued..................... -- -- --
Additional paid-in capital................................. 63,982 63,463 63,463
Retained earnings.......................................... 21,345 16,516 11,224
-------- -------- --------
Total Stockholders' Equity......................... 85,388 80,040 74,748
-------- -------- --------
$ 291,074 $284,324 $306,528
======== ======== ========
</TABLE>
OTHER INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, options granted to them, the principal holders of
the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in such proxy
statements or annual reports and distributed to the Company's securityholders
and filed with the Commission. Such reports, proxy statements and other
information is available for inspection at the public reference facilities of
the Commission located at 450 Fifth
18
<PAGE> 22
Street, N.W., Washington, D.C. 20549, and is also available for inspection and
copying at the regional offices of the Commission located at Citicorp Center,
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of this material may
also be obtained by mail, upon payment of the Commission's customary fees, from
the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, such material should also be available for inspection at the
library of the NYSE, 20 Broad Street, 7th Floor, New York, New York 10005.
CERTAIN PROJECTIONS. The Company does not as a matter of course make
public projections as to future operating results. However, in connection with
its discussions regarding a possible transaction with the Company, the Company
provided Diamond Shamrock certain projections for the Company. Diamond Shamrock,
the Purchaser and the Dealer Manager understand that such projections are based
on assumptions as to many matters which are beyond the control of the Company
and cannot be accurately predicted. BECAUSE SUCH PROJECTIONS ARE INHERENTLY
SUBJECT TO UNCERTAINTIES BEYOND THE CONTROL OF THE COMPANY, DIAMOND SHAMROCK,
THE PURCHASER AND THE DEALER MANAGER, AND ARE BASED UPON ASSUMPTIONS AS TO
FUTURE EVENTS, INCLUDING THOSE DISCUSSED BELOW, NONE OF DIAMOND SHAMROCK, THE
PURCHASER, THE COMPANY OR THE DEALER MANAGER ASSUMES ANY RESPONSIBILITY FOR
THEIR ACCURACY. There can be no assurance that such projections will be realized
and should not be relied on as such. The projections were not prepared with a
view toward public disclosure or compliance with published guidelines of the
Commission or the guidelines established by the American Institute of Certified
Public Accountants regarding projections. The information is being included
herein solely because it was furnished to Diamond Shamrock during its
discussions with the Company. There may well be variations between the Company's
actual future results of operations and the assumptions on which the following
projections are based and such variations could be material. Accordingly, there
can be no assurance that the Company's actual future results of operations will
not be materially greater or less than the following projections.
Set forth below is a summary of selected projected income statement and
other data which has been provided by the Company to Diamond Shamrock as
described above.
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30, (ESTIMATED)
----------------------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales........................ $ 936,462 $1,028,703 $1,117,549 $1,220,239 $1,296,516
Operating profit............. 28,237 38,350 50,012 63,611 75,156
EBITDA(1).................... 45,254 59,830 75,026 90,605 103,314
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30, (ESTIMATED)
----------------------------------------------------------------------
2001 2002 2003 2004 2005
---------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales........................ $1,376,802 $1,461,301 $1,550,213 $1,643,755 $1,742,152
Operating profit............. 87,948 101,746 116,663 133,397 152,713
EBITDA(1).................... 117,234 132,160 148,205 166,190 186,679
</TABLE>
- ---------------
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA").
EBITDA should not be construed as an alternative to operating profit
(determined in accordance with generally accepted accounting principles) or
as an indicator of the Company's operating performance or to cash flows from
operating activities as a measure of liquidity.
Diamond Shamrock has been informed by the Company that the principal
assumptions underlying the foregoing projections were as follows: (i) the
Company will operate 660 stores throughout the projection period, including 599
stores which sell gasoline, it being assumed that the number of new stores
opened and stores closed during the projection period will be equal; (ii) five
new stores will be opened in each year beginning 1996 through 1998 and ten new
stores will be opened in each year thereafter; (iii) per store merchandise
annual growth rates during the projection period range from 5.5% to 6.2% in the
case of merchandise revenue and 7.4% to 12.5% in the case of gasoline gallon
sales; (iv) merchandise gross margin is approximately 32% throughout the
projection period while gasoline profit (in cents per gallon) increases at 3%
19
<PAGE> 23
each year during the projection period; and (v) operating expenses grow at a
compound annual rate of approximately 4% and overhead expenses grow at an
assumed annual inflation rate of 2.5%.
Except as otherwise noted in this Offer to Purchase, all of the information
with respect to the Company set forth in this Offer to Purchase has been derived
from publicly available information. Although none of Diamond Shamrock, the
Purchaser or the Dealer Manager has any knowledge that any such information is
untrue, none of Diamond Shamrock, the Purchaser or the Dealer Manager takes
responsibility for the accuracy or completeness of information contained in this
Offer to Purchase with respect to the Company or for any failure by the Company
to disclose events which may have occurred or may affect the significance or
accuracy of any such information.
11. CERTAIN INFORMATION CONCERNING DIAMOND SHAMROCK AND THE PURCHASER.
Diamond Shamrock and the Purchaser are Delaware corporations with their
principal executive offices located at 9830 Colonnade Boulevard, San Antonio,
Texas 78230. The Purchaser is a newly formed corporation and a wholly owned
subsidiary of Diamond Shamrock. The Purchaser has not conducted any business
other than in connection with the Offer and the Merger. Diamond Shamrock is the
leading independent refiner and marketer of petroleum products in the
southwestern United States. Diamond Shamrock operates two crude oil refineries
located in Texas and is engaged in the wholesale and retail marketing of refined
petroleum products produced at its refineries as well as by other refining
companies in its marketing area. Diamond Shamrock sells gasoline and merchandise
through company-operated retail outlets concentrated in Texas, Colorado, New
Mexico and Louisiana, and distributes gasoline through independently owned
Diamond Shamrock branded outlets in Texas and nearby states. Diamond Shamrock
also stores and markets natural gas liquids, manufactures and markets anhydrous
ammonia and polymer-grade propylene and operates certain other related
businesses.
Diamond Shamrock is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, files reports and other information
with the Commission relating to its business, financial condition and other
matters. Information, as of particular dates, concerning Diamond Shamrock's
directors and officers, their remuneration, options granted to them, the
principal holders of Diamond Shamrock's securities and any material interest of
such persons in transactions with Diamond Shamrock is required to be disclosed
in proxy statements distributed to Diamond Shamrock's stockholders and filed
with the Commission. Such reports, proxy statements and other information is
available for inspection and copies may be obtained from the offices of the
Commission or the NYSE in the manner described in Section 10. Diamond Shamrock
hereby incorporates by this reference the financial statements filed as Exhibit
13.2 to Diamond Shamrock's Annual Report on Form 10-K for its fiscal year ended
December 31, 1994, which was filed with the Commission on March 27, 1995.
The name, citizenship, business address, present principal occupation or
employment and material positions held during the past five years of each of the
directors and executive officers of Diamond Shamrock and the Purchaser are set
forth in Annex I hereto.
Except for 65 Shares owned by Diamond Shamrock (which Shares represent less
than 0.1% of the outstanding Shares) and except as described in this Offer to
Purchase, (i) none of Diamond Shamrock or the Purchaser or, to the knowledge of
Diamond Shamrock or the Purchaser, any of the persons listed in Annex I hereto,
or any associate or majority-owned subsidiary of Diamond Shamrock or the
Purchaser or any of the persons so listed, beneficially owns any security of the
Company or has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any securities of the Company, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies and (ii) none of Diamond
Shamrock or the Purchaser or, to the knowledge of Diamond Shamrock or the
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 security of the Company during the past 60 days.
20
<PAGE> 24
Except as described in this Offer to Purchase, none of Diamond Shamrock or
the Purchaser or, to the knowledge of Diamond Shamrock or the Purchaser, any of
the persons listed in Annex I hereto, has had, since July 1, 1992, any business
relationships or transactions with the Company or any of its executive officers,
directors or affiliates that would require reporting under the rules of the
Commission. Except as set forth in this Offer to Purchase, there have been no
contacts, negotiations or transactions between the Purchaser or Diamond Shamrock
or their respective subsidiaries or, to the knowledge of the Purchaser and
Diamond Shamrock, any of the persons listed on Annex I, and the Company or its
affiliates, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets.
12. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase all Shares
and Warrants which may be tendered at the Share Offer Price and the Warrant
Offer Price and to pay related fees and expenses is estimated to be
approximately $205 million. Diamond Shamrock intends to obtain the funds from
loans to be provided by Bank of America National Trust and Savings Association
("BofA"). BofA has entered into a commitment letter with Diamond Shamrock, dated
November 2, 1995 (the "Commitment"), pursuant to which BofA has committed to
provide up to $340 million in borrowings under an unsecured senior credit
facility (the "Credit Facility") to finance the Offer, to pay related fees and
expenses and to refinance up to approximately $100 million of the Company's
existing indebtedness. It is anticipated that BofA will syndicate the Credit
Facility to a group of commercial banks.
BofA's obligations under the Commitment are subject to the following
conditions, among others: (i) the negotiation and execution of a definitive loan
agreement and other appropriate documentation relating to the Credit Facility
and (ii) there being no material adverse change in the financial condition,
business, operations, properties or prospects of Diamond Shamrock, its
subsidiaries and the Company, taken as a whole, since the date of the most
recent audited financial statements relating to those entities provided to BofA
prior to the date of the Commitment.
The Credit Facility is a revolving term facility, the amount of which is to
be reduced semi-annually by 25% of the amount of the Commitment, beginning
September 30, 1999. Its repayment will be guaranteed by the significant
subsidiaries of Diamond Shamrock. A commitment fee is payable quarterly in
arrears on unadvanced portions of the Commitment at rates ranging from 0.1% to
0.25% per annum, based on the ratings assigned to Diamond Shamrock's unsecured
senior long-term debt (the "Senior Debt Rating") by Standard & Poor's
Corporation and by Moody's Investor Service, Inc. Amounts advanced under the
Commitment will bear interest, at Diamond Shamrock's option, (i) at a variable
rate equal to the higher of BofA's prime rate or 0.5% over the rate obtainable
by BofA in the Federal Funds market or (ii) at a variable rate equal to the rate
offered by BofA as its London Interbank Offered Rate to major banks in the
London Interbank Market for one-, two-, three- or six-month dollar deposits,
adjusted for the cost of reserves and rounded to the nearest 1/16th percent,
plus a margin of between 0.30% and 0.75% per annum, based upon Diamond
Shamrock's Senior Debt Rating.
It is anticipated that the indebtedness incurred by Diamond Shamrock under
the Credit Facility will be repaid from funds generated internally by Diamond
Shamrock and its subsidiaries (including, after the Merger, if consummated,
funds generated by the Company and its subsidiaries), with the proceeds of
borrowings, capital markets transactions or through a combination of such
sources. No final decisions have been made concerning the method Diamond
Shamrock will employ to repay such indebtedness. Such decisions, when made, will
be based on Diamond Shamrock's review from time to time of the advisability of
particular actions, as well as on prevailing interest rates and financial and
other economic conditions.
13. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.
MERGER NEGOTIATIONS. On August 9, 1995, Roger R. Hemminghaus, Diamond
Shamrock's Chairman, President and Chief Executive Officer, met with V.H. Van
Horn, the President and Chief Executive Officer of the Company. In that meeting,
Mr. Hemminghaus informed Mr. Van Horn that Diamond Shamrock believed
21
<PAGE> 25
that a business combination transaction between the two companies might be
mutually advantageous and that Diamond Shamrock was interested in exploring that
possibility on a negotiated basis. Mr. Van Horn informed Mr. Hemminghaus that
the Company believed that its recent marketing strategies and capital spending
programs were beginning to result in significant improvements in the Company's
results of operations and indicated that the Company would prefer to remain
independent.
On August 18, 1995, following the public announcement that Circle K
proposed to acquire the Company for $17.00 per Share, Mr. Hemminghaus again
contacted Mr. Van Horn. Mr. Hemminghaus informed Mr. Van Horn that Diamond
Shamrock continued to be interested in exploring a possible business combination
transaction. Mr. Van Horn informed Mr. Hemminghaus that the Company was in the
process of analyzing Circle K's proposal and related matters and, therefore, was
unable to respond to Diamond Shamrock's interest at that time.
On September 14, 1995, following Circle K's earlier public announcement
that it had increased the price at which it proposed to acquire the Company to
$20.00 per Share, Mr. Hemminghaus contacted Mr. Van Horn and informed Mr. Van
Horn that Diamond Shamrock was prepared to make an alternative proposal at a
price higher than that proposed by Circle K. Later that day, Diamond Shamrock
sent the Company a written proposal indicating Diamond Shamrock's willingness to
pursue the possible acquisition of the Company at $23.50 per Share and $5.75 per
Warrant.
On October 2, 1995, Diamond Shamrock and the Company entered into a letter
agreement pursuant to which the Company agreed to provide Diamond Shamrock with
information regarding the Company. Thereafter, the Company and its
representatives furnished Diamond Shamrock with information regarding the
Company, including the projections described in Section 10.
On November 3, 1995, Diamond Shamrock submitted a proposal to acquire the
Company in accordance with the Company's bidding procedures. Thereafter, Diamond
Shamrock was contacted by representatives of the Company to clarify certain
matters relating to Diamond Shamrock's proposal. After clarification of these
matters, representatives of Diamond Shamrock and the Company entered into
negotiations of a definitive merger agreement.
On the evening of November 7, 1995, Diamond Shamrock was informed that the
Company's Board of Directors had met and approved the Merger Agreement.
Immediately thereafter, Diamond Shamrock, the Purchaser and the Company executed
the Merger Agreement pursuant to which the Purchaser agreed to make the Offer.
PROPOSED CONSULTING ARRANGEMENT. Following the execution of the Merger
Agreement, Mr. Hemminghaus informed Mr. Van Horn that Diamond Shamrock would be
interested in exploring the possibility of Mr. Van Horn becoming a consultant
following the consummation of the Merger to assist Diamond Shamrock in the
transition following the Merger and with respect to other matters related to
retail marketing. As of November 14, 1995, the specific terms of any such
consulting arrangement had not been agreed to by Diamond Shamrock and Mr. Van
Horn.
14. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT; PLANS OF DIAMOND
SHAMROCK AND THE PURCHASER WITH RESPECT TO THE COMPANY.
PURPOSE OF THE OFFER; PLANS FOR THE COMPANY. The purpose of the Offer and
the Merger and the Merger Agreement is for Diamond Shamrock to acquire control
of, and the entire equity interest in, the Company. The Offer is intended to
increase the likelihood that the Merger will be effected promptly. Following the
completion of the Merger, Diamond Shamrock presently intends to operate the
Company as a wholly owned subsidiary of Diamond Shamrock and to integrate the
Company's business into Diamond Shamrock's marketing operations.
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 thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Purchaser's Tender Offer
Statement on Schedule 14D-1 (the
22
<PAGE> 26
"Schedule 14D-1") filed with the Commission in connection with the Offer. The
Merger Agreement may be examined, and copies thereof may be obtained, in the
manner described in Section 17.
The Offer. The Merger Agreement provides for the commencement by the
Purchaser of the Offer. Pursuant to the Merger Agreement, the Purchaser has
expressly reserved the right to (i) waive any condition of the Offer (other than
the Minimum Condition), (ii) increase the Share Offer Price or the Warrant Offer
Price, or (iii) extend the Offer if any condition thereto is not satisfied, but
has agreed that it will not, without the prior written consent of the Company
(a) decrease the Share Offer Price or the Warrant Offer Price, (b) decrease the
number of Shares or Warrants sought to be purchased pursuant to the Offer, (c)
change the form of consideration to be paid pursuant to the Offer, (d) add to or
change the conditions to the Offer, (e) change or waive the Minimum Condition,
or (f) make any other change in the terms or conditions of the Offer which is
materially adverse to holders of Shares or Warrants. The Merger Agreement
provides that if all conditions of the Offer have not been satisfied or waived
prior to the initial Expiration Date, the Purchaser will extend the Offer until
the earlier of the consummation of the Offer or the 60th calendar day after
commencement of the Offer.
Recommendation. The Board of Directors of the Company, based in part on
the opinion of Merrill Lynch that the proposed consideration to be paid in the
Offer and the Merger is fair from a financial point of view to the holders of
Shares and Warrants, determined that the Offer and the Merger are in the best
interests of the Company's securityholders, approved the Merger Agreement and
the transactions contemplated thereby, and recommends that holders of Shares and
Warrants accept the Offer and tender their Shares and Warrants pursuant to the
Offer. The Merger Agreement provides that if the Board of Directors of the
Company, after consulting with its outside counsel and financial advisor,
determines in good faith, and based in part on a written opinion of outside
counsel, that its fiduciary duties require that it withdraw, modify or amend in
a manner adverse to Diamond Shamrock its favorable recommendation of the Offer
or the Merger in order to approve the execution of a definitive agreement with
respect to an Acquisition Transaction (as defined in the Merger Agreement) with
another party which the Board of Directors of the Company has determined in good
faith is financially superior to the transactions contemplated by the Merger
Agreement, such withdrawal, modification or amendment will not constitute a
breach of the Merger Agreement but will entitle the Purchaser to receive a
termination fee. See "-- Termination" below.
Board Representation. The Merger Agreement provides that, upon the
Purchaser's acceptance for payment of Shares and Warrants pursuant to the Offer,
the Purchaser will be entitled, subject to compliance with applicable law and
the Company Charter, to designate at its option up to that number of members,
rounded up to the nearest whole number, of the Company's Board of Directors as
will make the percentage of the Company's directors designated by the Purchaser
equal to the percentage of outstanding Shares held by Diamond Shamrock and any
of its wholly owned subsidiaries, and the Company has agreed that it will, upon
the request of the Purchaser, promptly increase the size of the Company's Board
of Directors and/or use its reasonable best efforts to secure the resignation of
such number of directors as is necessary to enable the Purchaser's designees to
be so elected and will use its reasonable best efforts to cause the Purchaser's
designees to be so elected, subject to Section 14(f) of the Exchange Act.
However, prior to the Effective Time, the Company will use its reasonable best
efforts to assure that the Company's Board of Directors has at least two members
who are directors of the Company as of November 8, 1995. At such times, the
Company will use its reasonable best efforts, subject to any limitations imposed
by applicable laws or rules of the NYSE, to cause persons designated by Diamond
Shamrock to constitute the same percentage as such persons represent on the
Company's Board of Directors of (i) each committee of the Board of Directors of
the Company, (ii) each board of directors or board of management of each
Subsidiary of the Company, and (iii) each committee of each such board.
The Merger. The Merger Agreement provides that, on the terms and subject
to the conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the DGCL, as soon as practicable following the
satisfaction or waiver, if permissible, of the conditions described below under
"-- Conditions to the Merger," at the Effective Time, the Purchaser will be
merged with and into the Company, with the Company, as the Surviving
Corporation, becoming a wholly owned subsidiary of Diamond Shamrock. At the
Effective Time, each Share issued and outstanding immediately prior to the
Effective Time (other than
23
<PAGE> 27
Shares owned by Diamond Shamrock, the Purchaser or any other direct or indirect
subsidiary of Diamond Shamrock or held in the treasury of the Company, all of
which will be cancelled, and Shares owned by stockholders who have complied with
all of the relevant provisions of Article IX of the Company Charter and who have
perfected their appraisal rights under the DGCL) will be converted into the
right to receive the Merger Consideration, without interest thereon, net to the
holder (pre-tax) in cash, and each share of common stock of the Purchaser issued
and outstanding immediately prior to the Effective Time will be converted into
and become one fully paid and nonassessable share of common stock of the
Surviving Corporation. Pursuant to the terms of the Warrant Agreement, each
then-outstanding Warrant (other than Warrants held in the treasury of the
Company, which shall be cancelled) will remain outstanding and, from and after
the Effective Time, each holder of Warrants will have the right to obtain upon
exercise of each Warrant and payment of the exercise price thereof, in lieu of
the one Share theretofore issuable upon exercise of such Warrant, the Merger
Consideration, without interest thereon, net to the holder (pre-tax) in cash.
Under the Merger Agreement and subject to the terms and conditions thereof, each
of Diamond Shamrock, the Purchaser and the Company agreed to use its reasonable
best efforts to cause the Merger to occur within 90 calendar days after the
purchase of the securities pursuant to the Offer. The Merger will become
effective at the time of filing of a certificate of merger, or certificate of
ownership and merger, as required by the DGCL.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law in order to consummate the Merger, the Company will, subject to
its fiduciary duties under applicable law as advised in the written opinion of
outside counsel to the Company, duly call a special meeting of its stockholders
(the "Special Meeting") as soon as practicable following the acceptance for
payment of Shares and Warrants in the Offer to consider and vote upon the
adoption of the Merger and the Merger Agreement. Diamond Shamrock and the
Purchaser have agreed to cause all Shares then owned by Diamond Shamrock, the
Purchaser or any other subsidiary of Diamond Shamrock to be voted at the Special
Meeting in favor of the adoption of the Merger Agreement. Diamond Shamrock has
also agreed that it or the Purchaser will, prior to the record date for the
Special Meeting, exercise such number of Warrants as may be necessary to assure
that no affirmative vote of any holder of Shares other than Diamond Shamrock or
the Purchaser is required for the adoption of the Merger Agreement. If the
Minimum Condition is satisfied and the Purchaser purchases Shares and Warrants
pursuant to the Offer, the Purchaser will be able to effect the adoption of the
Merger Agreement at a meeting of the Company's stockholders without the
affirmative vote or consent of any other stockholder of the Company. The Merger
Agreement provides that in the event that the Purchaser acquires at least 90% of
the outstanding Shares pursuant to the Offer or otherwise, Diamond Shamrock
will, subject to its termination rights under the Merger Agreement, take all
necessary and appropriate action (including the exercise of Warrants to the
extent necessary to achieve the 90% threshold) to cause the Merger to become
effective, as soon as practicable after the acceptance for payment of Shares and
Warrants in the Offer, but in no event later than 10 business days (or such
other time as the Company (acting through the directors of the Company then in
office who are directors of the Company on November 8, 1995) and Parent may
agree) thereafter in accordance with Section 253 of the DGCL.
Company Options. The Merger Agreement provides that all Options, whether
or not exercisable, will, subject to the prior written approval of the optionee,
be cancelled and each optionee will be entitled to receive promptly after the
acceptance of Shares and Warrants for payment in the Offer, in cancellation and
settlement of such Option, a cash payment from the Company in an amount equal to
the difference between the Share Offer Price and the per share exercise price of
such Option, multiplied by the number of Shares covered by such Option. Pursuant
to the Merger Agreement, the Board of Directors of the Company has fixed the
Effective Time as the date on which Options granted under the Option Plan which
are not cancelled as provided in the preceding sentence will terminate pursuant
to the Option Plan. Accordingly, holders of Options desiring to tender Shares
issuable upon exercise thereof must exercise such Options in accordance with the
terms thereof and then tender Shares issued upon such exercise pursuant to the
procedures set forth in Section 2. There can be no assurance that Shares issued
upon such exercise will be received in time to allow the holders thereof to
tender such Shares pursuant to the Offer.
24
<PAGE> 28
Representations and Warranties. The Merger Agreement contains
representations and warranties by the Company, relating to, among other things
(i) the organization of the Company and its subsidiaries and other corporate
matters, (ii) the capital structure of the Company, (iii) the authorization,
execution, delivery and consummation of the transactions contemplated by the
Merger Agreement, (iv) consents and approvals, (v) documents filed by the
Company with the Commission and the accuracy of the information contained
therein, (vi) the accuracy of the information contained in documents filed with
the Commission in connection with the Offer and the Merger, (vii) litigation,
(viii) absence of changes, (ix) conflicts, (x) taxes and (xi) receipt of an
opinion of a financial advisor. In addition, the Merger Agreement contains
representations and warranties by Diamond Shamrock and the Purchaser, relating
to, among other things, (a) the organization of Diamond Shamrock and the
Purchaser and other corporate matters, (b) the authorization, execution,
delivery and consummation of the transactions contemplated by the Merger
Agreement, (c) the accuracy of information contained in documents filed with the
Commission in connection with the Offer and the Merger, (d) required consents
and approvals, (e) conflicts and (f) receipt of a financing commitment.
Redemption of Rights. The Merger Agreement provides that (i) the Company
will redeem the Rights immediately prior to the Purchaser's acceptance for
payment of Shares and Warrants pursuant to the Offer and will not otherwise
redeem the Rights, or amend or terminate the Rights Agreement, unless required
to do so by a court of competent jurisdiction and (ii) the Board of Directors of
the Company will take all action necessary to defer the Distribution Date to
prevent the occurrence of the Distribution Date as a result of the commencement
of the Offer or the consummation of the transactions contemplated by the Merger
Agreement.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has agreed that, prior to the Effective Time, except as otherwise
provided in the Merger Agreement or with the prior written consent of Diamond
Shamrock, the Company will, and will cause each of its Subsidiaries to, conduct
its operations only in the ordinary and usual course of business consistent with
past practice. The Company has further agreed that it will use all reasonable
efforts, and will cause each of its Subsidiaries to use all reasonable efforts,
to (i) preserve intact the present business organization of the Company and its
Subsidiaries, (ii) keep available the services of the present officers and
employees of the Company and its Subsidiaries, and (iii) preserve the material
relationships of the Company and its Subsidiaries with licensors, licensees,
customers, suppliers, employees and any others having business dealings with the
Company or any of its Subsidiaries.
The Company has agreed that, except as expressly contemplated by the Merger
Agreement, the Company will not, and will not permit its Subsidiaries to, prior
to the Effective Time, (i) adopt any amendment to its certificate of
incorporation or by-laws or comparable organizational documents or the Rights
Agreement, (ii) take any of the actions with respect to dividends or
distributions of its Common Stock as described in Section 9, (iii) incur, assume
or pre-pay any long-term debt or incur or assume any short-term debt, except
that the Company and its Subsidiaries may incur or pre-pay debt in the ordinary
course of business consistent with past practice under existing lines of credit,
(iv) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person or entity, except in the ordinary course of business consistent with past
practice, (v) make any loans, advances or capital contributions to, or
investments in, any other person or entity except for loans, advances, capital
contributions or investments between the Company and any of its wholly owned
Subsidiaries or between wholly owned Subsidiaries of the Company in the ordinary
course of business consistent with past practice, (vi) settle or compromise any
suit or claim or threatened suit or claim relating to the transactions
contemplated by the Merger Agreement, (vii) except for increases in salary,
wages or benefits of employees of the Company or its Subsidiaries (other than
officers and directors of the Company) in accordance with past practice, and
except for increases in salary, wages and benefits granted to employees of the
Company or its Subsidiaries (other than officers and directors of the Company)
in conjunction with promotions or other changes in job status consistent with
past practice or required under existing agreements, increase the compensation
or fringe benefits payable or to become payable to its directors, officers or
employees (whether from the Company or any of its Subsidiaries) or pay any
benefit not required by any existing plan or arrangement (including the granting
of, or waiver of performance or other vesting criteria under, stock options,
25
<PAGE> 29
or grant any severance or termination pay to (except pursuant to existing
agreements or policies), or enter into any employment or severance agreement
with, any director, officer or other employee of the Company or any of its
Subsidiaries) or establish, adopt, enter into, terminate or amend any bonus,
profit sharing, thrift, compensation, stock option, pension, retirement,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees
(except as may be necessary to comply with applicable law), (viii) acquire
(except as permitted by clause (x) below), sell, lease or dispose of or pledge,
mortgage or encumber any assets (including licenses, permits and other rights)
of the Company and its Subsidiaries other than in the ordinary course of
business consistent with past practice and in each case not exceeding $250,000,
or enter into any commitment or transaction outside the ordinary course of
business consistent with past practice other than transactions between a wholly
owned Subsidiary of the Company and the Company or between wholly owned
Subsidiaries of the Company, (ix) (a) modify, amend or terminate any contract,
license or permit, (b) waive, release, relinquish or assign any contract
(including any insurance policy) or other license, permit, right or claim, or
(c) cancel or forgive any indebtedness owed to the Company or its Subsidiaries,
other than in each case in a manner in the ordinary course of business
consistent with past practice and which is not material to the business of the
Company and its Subsidiaries, (x) authorize, commit to or make any capital
expenditures except pursuant to and in accordance with the capital budget
previously provided to Diamond Shamrock, (xi) make any tax election not required
by law or settle or compromise any tax liability, in either case that is
material to the Company and its Subsidiaries, (xii) change any of the accounting
principles or practices used by it except as required by the Commission or the
Financial Accounting Standards Board, or (xiii) agree in writing or otherwise to
take any of the foregoing actions or any action which would make any
representation or warranty in the Merger Agreement untrue or incorrect in any
material respect.
Access. Pursuant to the Merger Agreement, the Company has agreed that it
will (i) give Diamond Shamrock and its authorized representatives reasonable
access to all stores, offices, warehouses and other facilities and to all books
and records of the Company and its Subsidiaries, (ii) permit Diamond Shamrock to
make such inspections as it may reasonably require, and (iii) cause its officers
and those of its Subsidiaries to furnish Diamond Shamrock such financial and
operating data and other information with respect to the business and properties
of the Company and its Subsidiaries as Diamond Shamrock may from time to time
reasonably request. In this regard, Diamond Shamrock has agreed to comply with
the terms of the Confidentiality Agreement between Diamond Shamrock and the
Company, dated October 2, 1995, which provides generally that confidential
information furnished by or on behalf of the Company will be used solely for the
purpose of evaluating a possible investment in the Company and that the
recipient of such information will take appropriate measures to safeguard the
confidentiality thereof.
Exclusivity. The Merger Agreement provides that until the earlier of the
termination of the Merger Agreement or the Effective Time, the Company will not,
and will cause its officers, directors, Subsidiaries, affiliates,
representatives or agents, directly or indirectly, not to, (i) negotiate,
undertake, authorize, propose or enter into, either as the proposed surviving,
merged, acquiring or acquired corporation, any transaction (other than the Offer
and the Merger) involving any sale, transfer or other disposition or other
change of ownership (whether by tender or exchange offer or otherwise) of any
securities of the Company or any of its Subsidiaries, or any assets of the
Company or any of its direct or indirect Subsidiaries constituting 1% or more of
the consolidated assets of the Company or 1% or more of the consolidated
revenues of the Company, whether in a single transaction or series of related
transactions (an "Acquisition Transaction"), (ii) solicit or initiate the
submission of a proposal or offer in respect of, or engage in negotiations
concerning, an Acquisition Transaction, or (iii) furnish or cause to be
furnished to any corporation, partnership, person or other entity or group
(other than Diamond Shamrock, the Purchaser and their representatives) any
non-public information concerning the business, operations, properties or assets
of the Company in connection with an Acquisition Transaction. The Merger
Agreement also provides that the Company will inform Diamond Shamrock promptly,
and in any event within one day, of its receipt of any proposal or bid in
respect of any Acquisition Transaction and provide Diamond Shamrock with copies
of any written proposal or bid. The Merger Agreement further provides that the
Company and its officers, directors, Subsidiaries, representatives and agents
may engage in discussions or negotiations with, and may furnish information to,
a third party or its
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<PAGE> 30
representative who makes a written proposal with respect to an Acquisition
Transaction if (a) the Company's Board of Directors determines in good faith
after consultation with its financial advisors that such proposal may reasonably
be expected to result in a transaction that is financially superior to the
transactions contemplated in the Merger Agreement and (b) the Board of Directors
of the Company determines in good faith after receipt of a written opinion of
outside counsel that such actions are required by its fiduciary duties under
applicable law.
Certain Other Agreements. Pursuant to the Merger Agreement and subject to
the terms and conditions thereof and to the fiduciary duties of their respective
Boards of Directors under applicable laws as advised in the written opinion of
outside counsel, each of the Company, the Purchaser and Diamond Shamrock has
agreed to use its reasonable best efforts to take, or cause to be taken, all
appropriate action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement, including all
action reasonably required under the HSR Act; provided however, that Diamond
Shamrock is not required, among other things, to waive any condition to the
Offer, including taking any action that would require Diamond Shamrock, the
Company or any of their respective Subsidiaries or affiliates to dispose of or
hold separate all or any significant portion of Diamond Shamrock's or the
Company's respective businesses, assets or properties. See Section 6.
Directors/Officers Indemnification and Insurance. The Merger Agreement
provides that the Company will defend, indemnify and hold harmless, and after
the Effective Time, the Parent and the Surviving Corporation, jointly and
severally, will defend, indemnify and hold harmless, certain present and former
directors and officers of the Company as identified in the Merger Agreement to
the full extent required or permitted under (i) Delaware law, (ii) as provided
in the Company Charter and Restated By-Laws of the Company, and (iii) as
otherwise provided for or permitted pursuant to any agreement in effect on
November 8, 1995 and identified therein. Pursuant to the Merger Agreement, such
rights to be defended, indemnified and held harmless will continue in full force
and effect without time limitation from and after the Effective Time and without
amendment or modification of the terms of any of the agreements referred to in
clause (iii) of the immediately preceding sentence.
The Merger Agreement further provides that the Company, after consultation
in good faith with Diamond Shamrock, or Diamond Shamrock will purchase, as
promptly as practicable and in any event prior to the Effective Time and without
any lapse in coverage, policies of directors' and officers' "run-off" liability
insurance (or policies which contain terms and conditions that are no less
advantageous to the directors and officers and former directors and officers of
the Company as the directors' and officers' liability insurance policies that
are in effect at the Company on November 8, 1995), which insurance will remain
in effect for a period of not less than six years from and after the Effective
Time; provided, however, that in the event any claim or claims are asserted or
made within such six-year period, Diamond Shamrock and the Surviving Corporation
will cause such insurance to be continued in respect of any such claim until
final disposition of any and all such claims.
Employee and Benefit Matters. The Merger Agreement provides that Diamond
Shamrock will honor, and cause the Surviving Corporation and its Subsidiaries to
honor (in accordance with the terms thereof), all contracts, agreements,
arrangements, policies, plans and commitments of the Company (or any of its
Subsidiaries) in effect as of November 8, 1995 that are applicable to any
officer or employee or former officer or employee or any director or former
director of the Company (or any of its Subsidiaries or former Subsidiaries) and
identified in the Merger Agreement (collectively, the "Agreements"). Pursuant to
the Merger Agreement, Diamond Shamrock has agreed to perform and pay, or cause
the Surviving Corporation and its Subsidiaries to perform and pay, when due any
and all amounts payable pursuant to the terms of the Agreements. The Merger
Agreement also provides that for a period of one year immediately following the
Effective Time, the Parent will cause the Surviving Corporation and its
Subsidiaries to continue to maintain (except as required by law) the employee
benefit plans for employees and former employees of the Company and its
Subsidiaries described in the Merger Agreement or other plans that, on a
plan-by-plan basis, provide benefits that are no less favorable to such
employees than the benefits currently in effect with respect to such employees
under the plans described in the Merger Agreement; provided, however, at Diamond
Shamrock's election, the Surviving Corporation may (i) elect to become a
nonsubscriber under the Texas Workers'
27
<PAGE> 31
Compensation Act and implement Diamond Shamrock's Work Injury Program and (ii)
implement Diamond Shamrock's Dialogue Dispute Resolution Program. The Merger
Agreement also provides that if any employee of the Company or any of its
Subsidiaries becomes a participant in any employee benefit plan, practice or
policy of Diamond Shamrock or the Surviving Corporation, such employee shall be
given credit under such plan for all service prior to the Effective Time with
the Company and its Subsidiaries, or any predecessor employer (to the extent
such credit was given by the Company), for purposes of eligibility and vesting
(but not for benefit accrual purposes) for which such service is either taken
into account or recognized.
Post-Merger Treatment of Warrants. The Surviving Corporation will,
following the Effective Time and subject to the conditions of the Warrant
Agreement, make available, as necessary, sufficient funds to pay, and will pay,
to holders of Warrants, upon the exercise thereof, the amount of cash, without
interest to which such holders would have been entitled pursuant to the Merger
if such holders had exercised their Warrants and acquired Shares immediately
prior to the Effective Time.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, where permissible, prior to the Effective Time of the following
conditions: (i) the Merger Agreement shall have been adopted by the requisite
vote of the stockholders of the Company in accordance with the Company Charter
and applicable law, if such vote is required, (ii) no United States or state
statute, rule, regulation, executive order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any Governmental Entity that is in
effect and has the effect of making the acquisition or ownership of the Shares
or Warrants illegal or otherwise prohibiting or materially restricting the
consummation of the Offer or the Merger or that would make the acquisition or
ownership by Diamond Shamrock or its Subsidiaries of the common stock of the
Surviving Corporation illegal, and (iii) the waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
The Merger Agreement also provides that the obligation of the Company to
effect the Merger is further subject to the satisfaction or waiver, where
permissible, at or prior to the Effective Time, of the following conditions: (i)
each of Diamond Shamrock and the Purchaser shall have performed in all material
respects its respective covenants in the Merger Agreement, to the extent such
covenants are to be performed prior to the Effective Time and (ii) the
representations and warranties of Diamond Shamrock and the Purchaser shall be
true and correct in all material respects at and as of the Effective Time as if
made as of the Effective Time. The Merger Agreement also provides that the
obligations of Diamond Shamrock and the Purchaser to effect the Merger are
further subject to the satisfaction or waiver, where permissible, at or prior to
the Effective Time, of the following conditions: (a) the Purchaser (or any
permitted assignee) shall have accepted for payment and paid for Shares and
Warrants tendered pursuant to the Offer, provided that this condition will be
deemed satisfied if the Purchaser (or any permitted assignee) fails to accept
for payment and pay for Shares and Warrants tendered pursuant to the Offer in
violation of the terms of the Offer or the Merger Agreement and (b) the Company
shall have performed in all material respects the covenants in the Merger
Agreement, to the extent such covenants are to be performed prior to the
Effective Time.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time (i) by mutual consent of Diamond Shamrock and the Company by
action of their respective Boards of Directors, (ii) by the Company if (a) the
Offer expires or its terminated without any Shares or Warrants being purchased
thereunder or (b) the Purchaser (or any permitted assignee) fails to purchase
Shares or Warrants validly tendered and not withdrawn in violation of the terms
and conditions of the Offer or the Merger Agreement, (iii) by either Diamond
Shamrock or the Company if the Purchaser (or any permitted assignee) has not
purchased the Shares or Warrants validly tendered and not withdrawn pursuant to
the Offer in accordance with the terms thereof within 120 calendar days after
the commencement of the Offer; provided, however, that the party seeking to
terminate the Merger Agreement pursuant to this clause (iii) is not in material
breach of the Merger Agreement (including without limitation any representation,
warranty or covenant therein contained), (iv) by either Diamond Shamrock or the
Company if the Merger is not consummated before March 31, 1996, despite the
reasonable good faith effort of such party to effect such consummation;
provided, however, that the party seeking to terminate the Merger Agreement
pursuant to this clause (iv) is not in material breach of the Merger Agreement
(including without limitation any representa-
28
<PAGE> 32
tion, warranty or covenant therein contained), (v) by either Diamond Shamrock or
the Company if any court of competent jurisdiction has issued an injunction
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Offer or the Merger, which injunction has become final and nonappealable,
(vi) by Diamond Shamrock if (a) the Board of Directors of the Company shall have
withdrawn, modified or amended in any respect adverse to Diamond Shamrock its
favorable recommendation of the Offer or the Merger or shall have resolved to do
any of the foregoing, (b) prior to the expiration of the Offer, any of the
representations and warranties of the Company contained in the Merger Agreement
were incorrect in any material respect when made or have since become, and at
the time of termination remain, incorrect in any material respect, or (c) there
has been a material breach on the part of the Company in the covenants of the
Company set forth herein, or any failure on the part of the Company to comply
with its material obligations hereunder, including without limitation the
obligation of the Company to redeem the Rights, and (vii) by the Company, prior
to the expiration of the Offer, if (a)(1) any of the representations and
warranties of Diamond Shamrock or the Purchaser contained in the Merger
Agreement were incorrect in any material respect when made or have since become,
and at the time of termination remain, incorrect in any material respect or (2)
there has been a material breach on the part of Diamond Shamrock or the
Purchaser in the covenants of Diamond Shamrock or the Purchaser set forth
therein, or any failure on the part of Diamond Shamrock or the Purchaser to
comply with its material obligations thereunder or (b) the Board of Directors of
the Company, after consulting with its outside counsel and financial advisor,
determines in good faith, and based in part on a written opinion of outside
counsel that its fiduciary duties require that it withdraw, modify or amend in a
manner adverse to Diamond Shamrock its favorable recommendation of the Offer or
the Merger in order to approve an Acquisition Transaction with another party
which the Board of Directors has determined in good faith is financially
superior to the transaction contemplated by the Merger Agreement; provided,
however, that the Company may not terminate the Merger Agreement pursuant to
this clause (vii) until the Company has paid to Diamond Shamrock in full the
amounts described under the caption "-- Fees and Expenses" below. In the event
of the termination of the Merger Agreement as described above, no party thereto
(or its directors or officers) will have any liability or further obligation
under the Merger Agreement to any other party to the Merger Agreement, except as
described under the caption "-- Fees and Expenses" below, and except any
liability resulting from the willful breach of the Merger Agreement.
Fees and Expenses. The Merger Agreement provides that, except as described
in the following paragraph, whether or not the Offer or the Merger is
consummated, all costs and expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses.
Pursuant to the Merger Agreement, (i) prior to the termination of the
Merger Agreement by the Company as described in clause (vii) under the paragraph
under the caption "-- Termination" above, or within two business days after any
termination of the Merger Agreement by Diamond Shamrock or the Purchaser as
described in clause (vi) of the paragraph under the caption "-- Termination"
above, the Company will pay to Diamond Shamrock $7,000,000 in cash and (ii)
after such termination (and in any event within two business days of receiving
Diamond Shamrock's or the Purchaser's documented invoice) the Company will
reimburse Diamond Shamrock and the Purchaser for the documented out-of-pocket
costs and expenses incurred by Diamond Shamrock or the Purchaser in connection
with the Offer and the other transactions contemplated by the Merger Agreement,
including without limitation the fees and expenses of the financial advisors and
counsel to Diamond Shamrock and the Purchaser and fees incurred by Diamond
Shamrock or the Purchaser to obtain financing commitments for the Offer and the
Merger.
Amendment. The Merger Agreement may be amended at any time, but only by
action taken by the Boards of Directors of Diamond Shamrock, the Purchaser and
the Company and, if required by applicable law, by the stockholders of the
Company.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company would
have certain rights to dissent and demand appraisal of, and payment in cash of
the fair value of, their Shares under the DGCL and Article IX of the Company's
Charter ("Article IX"). Under the DGCL, such rights, if the statutory procedures
were complied with, could lead to a judicial determination of the fair value
(excluding any element of value arising from the
29
<PAGE> 33
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than, or in addition
to, the price paid in the Offer 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 purchase price per Share pursuant to the Offer or
the consideration per Share to be paid in the Merger.
Article IX provides dissenting stockholders with certain rights in addition
to those provided under the DGCL. If the Offer is consummated, the Purchaser
will become an Interested Stockholder (as defined below). As a result,
dissenting stockholders will be entitled to the benefits of the provisions of
Article IX. Among other things, Article IX provides that the Company must pay
the costs and expenses incurred by stockholders in any appraisal proceeding and
that the minimum fair value of the Shares in any appraisal proceeding will be
the greater of (i) the highest price paid by the Interested Stockholder for any
Shares or (ii) the highest closing price of the Shares during the
30-calendar-day periods prior to (a) the date of the announcement of the Merger
and (b) the date on which the Interested Stockholder became an Interested
Stockholder. For purposes of Article IX, an Interested Stockholder is defined as
any person or entity who is (1) the beneficial owner of 15% or more of the
Shares or (2) an Affiliate (as defined in Rule 12b-2 promulgated under the
Exchange Act) of the Company who was the beneficial owner of 15% of more of the
Shares at any time during the two-year period preceding the date of the
announcement of a merger.
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with
applicable federal law. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions. The Purchaser does not believe that Rule
13e-3 will be applicable to the Merger unless the Merger is consummated more
than one year after termination of the Offer and the Purchaser has become an
affiliate of the Company as a result of the Offer, or the Merger provides for
the payment of consideration less than that paid pursuant to the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of such transaction and the consideration offered to minority
stockholders be filed with the Commission and distributed to minority
stockholders prior to the consummation of such transaction.
15. CERTAIN LEGAL MATTERS.
GENERAL. Except as described below, based on information provided by the
Company and other publicly available information concerning the Company, neither
Diamond Shamrock nor the Purchaser is aware of any license or regulatory permit
that appears to be material to the business of the Company and that might be
adversely affected by the Purchaser's acquisition of Shares or Warrants pursuant
to the Offer or the Merger, or of any approval or other action by any
governmental authority or public body, domestic or foreign, that would be
required for the acquisition or ownership of Shares or Warrants by the Purchaser
pursuant to the Offer or the Merger (as provided for in the Merger Agreement as
presently in effect) or any state takeover statute that is applicable to the
Offer or the Merger. Should any such approval or other action be required, or
any such state takeover statute be applicable, it is presently contemplated that
such approval or action could be sought or compliance with such takeover statute
would be effected, as applicable, except as described below under "State
Takeover Statutes." While the Purchaser does not currently intend to delay
acceptance for payment of Shares or Warrants tendered pursuant to the Offer
pending the outcome of any such matter, there can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the Company's
business or that certain parts of Diamond Shamrock's or the Company's business
might not have to be disposed of in the event that such approvals were not
obtained or such 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, the Purchaser could decline to accept
for payment or pay for any Shares or Warrants tendered (see Section 6) or extend
the period of time during which the Offer is open (see Section 1).
HSR ACT. Under the HSR Act, certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares or Warrants pursuant to the Offer is
subject to these requirements. See Section 6.
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<PAGE> 34
Under the HSR Act, the purchase of Shares pursuant to the Offer cannot be
made until the expiration of a 15-calendar-day waiting period after the
furnishing of certain required information and documentary material to the
Antitrust Division and the FTC with respect to the Offer (unless earlier
terminated pursuant to a request therefor). If, within such 15-calendar-day
waiting period, either the Antitrust Division or the FTC requests additional
information or documentary material relevant to the Offer from Diamond Shamrock
or the Purchaser, the waiting period will be extended for an additional period
of 10 calendar days following the date of substantial compliance with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the rules promulgated under the HSR Act.
Thereafter, such waiting period may be extended only by court order or by
agreement of the Purchaser. A request for additional information issued to the
Company cannot extend the waiting period. Diamond Shamrock filed a Notification
and Report Form with respect to the Offer under the HSR Act on November 8, 1995,
and the required waiting period with respect to the Offer will expire at 11:59
p.m., New York City time, on November 23, 1995, unless Diamond Shamrock or the
Purchaser receives a request for additional information or documentary material
prior thereto.
Federal and state antitrust enforcement agencies frequently scrutinize the
legality under the antitrust laws of transactions such as the proposed purchase
of the Shares and Warrants by the Purchaser pursuant to the Offer. At any time
before or after such purchase, any such agency could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the transaction or seeking divestiture of the Shares
and Warrants so acquired or divestiture of substantial assets of Diamond
Shamrock, the Purchaser or the Company. Litigation seeking similar relief could
be brought by private parties 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, what the result will be. See Section 6 for
certain conditions to the Offer, including conditions with respect to litigation
and certain governmental actions.
STATE TAKEOVER STATUTES. A number of states have adopted "takeover"
statutes that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets,
securityholders, employees, principal executive offices or places of business in
such states.
The Purchaser does not know of any state takeover statute which, by its
terms, purports to apply to the Offer, and has not complied with any such
statute. To the extent that certain provisions of these statutes purport to
apply to the Offer, the Purchaser believes that there are reasonable bases for
contesting the validity of such application under the United States
Constitution. If any person should seek to apply any state takeover statute, the
Purchaser would take such action as then appears desirable, which action may
include challenging the validity or applicability of any such statute in
appropriate court proceedings. If it is asserted that one or more takeover
statutes apply to the Offer, and it is not determined by an appropriate court
that such statute or statutes do not apply or are invalid as applied to the
Offer, the Purchaser might be required to file certain information with, or
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to purchase or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser
also may not be obligated to accept for payment or pay for Shares or Warrants
tendered.
16. FEES AND EXPENSES.
Under the terms of its engagement letter with Wasserstein Perella & Co.,
Inc. ("WP&Co."), Diamond Shamrock has agreed to pay WP&Co. a fee of $1,000,000
upon the acquisition by Diamond Shamrock of 66 2/3% of the Shares. WP&Co. has
received $125,000 of such fee in connection with financial advisory services
provided to Diamond Shamrock pursuant to its engagement, including acting as
Dealer Manager in connection with the Offer. Diamond Shamrock and the Purchaser
have also agreed to reimburse WP&Co. for out-of-pocket expenses, including
reasonable attorneys' fees, and WP&Co. will be indemnified against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and KeyCorp Shareholder Services, Inc. to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares or Warrants by mail, telephone, telex, telegraph and personal
interview and may
31
<PAGE> 35
request brokers, dealers and other nominee stockholders to forward the Offer
materials to beneficial owners. Each of the Information Agent and the Depositary
will receive reasonable and customary compensation for services relating to the
Offer. The Purchaser and Diamond Shamrock have also agreed to indemnify the
Information Agent and the Depositary against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares or Warrants pursuant to the
Offer (other than to the Dealer Manager and the Information Agent). Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares or Warrants. The Purchaser
is not aware of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to a valid statute. If the Purchaser
becomes aware of any valid statute prohibiting the making of the Offer, the
Purchaser will make a reasonable good faith effort to comply with such statute.
If, after such reasonable good faith effort, the Purchaser cannot comply with
such statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares or Warrants 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 made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Diamond Shamrock, the Purchaser or the Company not
contained in this Offer to Purchase or in the Letters of Transmittal and, if
given or made, such information or representation must not be relied upon as
having been authorized.
Diamond Shamrock and the Purchaser have filed the Schedule 14D-1, together
with all exhibits thereto, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such Tender Offer Statement and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the offices of the Commission in the manner set forth in Section 10 (except that
they will not be available at the regional offices of the Commission).
Shamrock Acquisition Corp.
November 14, 1995
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ANNEX I
1. DIRECTORS AND EXECUTIVE OFFICERS OF DIAMOND SHAMROCK
The following table sets forth the names, business addresses, present
principal occupations or employments and material occupations, positions,
offices or employments, during the last five years of the directors and
executive officers of Diamond Shamrock. Unless otherwise indicated, all
occupations, offices or positions of employment listed opposite an individual's
name have been or were held by such individual during the course of the past
five years. The principal address of Diamond Shamrock and the principal business
address for each individual listed below is 9830 Colonnade Boulevard, San
Antonio, Texas 78230. Unless otherwise indicated, each person identified below
is employed by Diamond Shamrock. All of the persons listed below are United
States citizens.
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
Roger R. Hemminghaus, Mr. Hemminghaus is Chairman of the Board, President and
Chairman of the Board, Chief Executive Officer of Diamond Shamrock. Mr.
President and Chief Executive Hemminghaus served as President of the refining and
Officer marketing unit of the Company's predecessor from March
1985 until April 1987. Mr. Hemminghaus is a director of
Luby's Cafeterias, Inc. and Southwestern Public Service
Co. and is the Deputy Chairman of the board of directors
of the Federal Reserve Bank of Dallas.
Robert C. Becker, Mr. Becker has served as Vice President and Treasurer of
Vice President and Treasurer Diamond Shamrock since April 1987.
W. Paul Eisman, Mr. Eisman became Vice President and Group
Vice President/Group Executive Executive -- Manufacturing in June 1995. During the five
years prior to that time, Mr. Eisman served in various
positions with Diamond Shamrock, including
Director -- Crude Oil Supply, Assistant to the Chairman
and Plant Manager of the McKee Refinery.
Timothy J. Fretthold, Mr. Fretthold is Senior Vice President and General Counsel
Senior Vice President and of Diamond Shamrock. He served as a Group Vice President
General Counsel and General Counsel of Diamond Shamrock from April 1987 to
June 1989 and as Senior Vice President/Group Executive and
General Counsel from June 1989 through February 1995.
Gary E. Johnson, Mr. Johnson has served as Vice President and Controller of
Vice President and Controller Diamond Shamrock since April 1987.
William R. Klesse, Mr. Klesse is Executive Vice President of Diamond
Executive Vice President Shamrock. He served as Group Vice President -- Development
and New Ventures of Diamond Shamrock from May 1988 to June
1989 and as Senior Vice President/Group Executive from
that date until February 1995. Mr. Klesse served as Group
Vice President -- Planning and Public Affairs of Diamond
Shamrock from April 1987 through May 1988.
J. Robert Mehall, Mr. Mehall is Executive Vice President of Diamond
Executive Vice President Shamrock. He served as Group Vice President -- Supply of
the Company from April 1987 to June 1989 and as Senior
Vice President/Group Executive from that date until
February 1995.
A.W. O'Donnell, Mr. O'Donnell is President/Marketing and Senior Vice
President/Marketing and President of Diamond Shamrock. He served as Group Vice
Senior Vice President President -- Marketing of Diamond Shamrock from April 1987
to June 1989 and as Senior Vice President/Group Executive
from that date until February 1995.
</TABLE>
I-1
<PAGE> 37
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
B. Charles Ames, Mr. Ames is a partner of Clayton & Dubilier, Inc. (an
Director investment firm). Mr. Ames served as Chairman and Chief
Executive Officer of The Uniroyal Goodrich Tire Company
until May 1990 and as Chairman and/or Chief Executive
Officer of Acme-Cleveland Corporation until October 1987.
Mr. Ames is a director of M.A. Hanna Company, The
Progressive Corporation and Warner-Lambert Company.
E. Glenn Biggs, Mr. Biggs is President of Biggs & Co., (a corporation
Director engaged in developmental projects and financial planning).
He was the Chairman and Chief Executive Officer of Gill
Companies until July 1989. Mr. Biggs served as the Vice
Chairman of the Board and Chairman of the Executive
Committee of InterFirst Bank, San Antonio, N.A. until May
1987. Mr. Biggs is a director of Central and Southwest
Corporation, Southwestern Bancorp, Inc., Zachry, Inc.,
Bolivian Power Corporation, Beacon Group and Bradford
National Life.
W.E. Bradford, Mr. Bradford is President and Chief Operating Officer of
Director Dresser Industries, Inc. Mr. Bradford has been with
Dresser Industries, Inc. since 1970 and has held various
positions in production and management. In 1988 Mr.
Bradford was appointed President and Chief Executive
Officer of Dresser-Rand Company. He was elected to his
present position in March 1992. Mr. Bradford serves on the
Board of Trustees of the Manufacturers' Alliance for
Productivity and Innovation, is a member of the Board of
Directors of the Petroleum Equipment Suppliers Association
and is a member of the American Petroleum Institute. Mr.
Bradford serves on the Board of Directors of Dresser
Industries, Inc. and on the Board of Directors of Oryx
Energy Company.
Lauro F. Cavazos, Dr. Cavazos is adjunct Professor of Community Health and
Director acting Chairman, Tufts University School of Medicine. He
has been a management and education consultant since 1991.
Dr. Cavazos was the United States Secretary of Education
from September 1988 to December 1990. Prior to being
appointed Secretary of Education, he served as President
and Chief Executive Officer of Texas Tech University and
Texas Tech University Health Sciences Center. Dr. Cavazos
is a director of Luby's Cafeterias, Inc.
W.H. Clark, Mr. Clark is the retired Chief Executive Officer and
Director Chairman of the Board of Directors of Nalco Chemical
Company. He was the President and Chief Executive Officer
of Nalco Chemical Company from 1982 until 1990, and
Chairman of the Board of Directors and Chief Executive
Officer from 1984 until 1994. Mr. Clark is a member of the
Board of Directors of NICOR, Inc. and its principal
subsidiary, Northern Illinois Gas Company; USG Corporation
and its subsidiary, United States Gypsum Co.; James River
Corporation; Bethlehem Steel Corporation; and Merrill
Lynch Corp.
William L. Fisher, Dr. Fisher is Professor and the Leonidas T. Banous Chair
Director in Mineral Resources at the University of Texas at Austin.
Dr. Fisher served as the Director of the Bureau of
Economic Geology from 1970 to 1994, with the exception of
1975-1977, when he served as Assistant Secretary for
Energy and Minerals in the Department of the Interior. Dr.
Fisher is a member of the National Academy of Engineering
and is a director of Pogo Producing Company.
</TABLE>
I-2
<PAGE> 38
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
Bob Marbut, Mr. Marbut has been Chairman and Chief Executive Officer
Director of Argyle Communications, Inc. since January 1992, Chief
Executive Officer of Argyle Television Holding, Inc. since
June 1993 and Chairman and Chief Executive Officer of
Argle Television Holding, II since August 1994. Prior to
1992, Mr. Marbut was President and Chief Executive Officer
of Harte-Hanks Communications, Inc. and served one year as
Vice Chairman of that Company. He is a director of Premark
International, Inc., Tracor, Inc., Argyle Television Hold-
ing, Inc., Argyle Television Holding II and Katz Media
Corporation.
Katherine D. Ortega, Ms. Ortega was an alternate representative of the United
Director States to the 45th General Assembly of the United Nations
1990-1991. She served as the 38th Treasurer of the United
States, from 1983 to 1989. Prior to joining the Treasury
Department as Treasurer, Ms. Ortega served as a
Commissioner on the Copyright Royalty Tribunal and was a
member of the President's Advisory Committee on Small and
Minority Business. Ms. Ortega is a director of Ralston
Purina Company, Long Island Lighting Company, The Paul
Revere Corporation, Rayonier, Inc. and Kroger Co. She also
serves as director of Catalyst, and is a member of the
United States Comptroller General's Consultant Panel.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The following table set forth the names, business addresses, present
principal occupations or employments and material occupations, positions,
offices or employments, during the last five years of the directors and
executive officers of the Purchaser. The principal address of the Purchaser and
the principal business address for each individual listed below is 9830
Colonnade Boulevard, San Antonio, Texas 78230. Unless otherwise indicated, each
person identified below is employed by Diamond Shamrock. All of the persons
listed below are United States citizens.
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
- --------------------------------- ----------------------------------------------------------
<S> <C>
Roger R. Hemminghaus See "Directors and Executive Officers of Diamond Shamrock"
Chairman of the Board and Chief above.
Executive Officer
A. W. O'Donnell See "Directors and Executive Officers of Diamond Shamrock"
President above.
J. Robert Mehall See "Directors and Executive Officers of Diamond Shamrock"
Executive Vice President above.
William R. Klesse See "Directors and Executive Officers of Diamond Shamrock"
Executive Vice President above.
Timothy J. Fretthold See "Directors and Executive Officers of Diamond Shamrock"
Vice President and Secretary above.
Robert C. Becker See "Directors and Executive Officers of Diamond Shamrock"
Treasurer above.
Jerry D. King Mr. King is Assistant General Counsel and Secretary of
Director and Assistant Diamond Shamrock. He has served as an attorney in the
Secretary Diamond Shamrock legal department since 1987.
</TABLE>
I-3
<PAGE> 39
Manually signed facsimile copies of the Letters of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares or Warrants should
be sent or delivered by each securityholder of the Company or his, her or its
broker, dealer, commercial bank or trust company to the Depositary at one of its
addresses set forth below:
The Depositary for the Offer is:
KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C>
By Mail: By Overnight Mail:
National Convenience Stores Inc. Tender Offer KeyCorp Shareholder Services, Inc.
c/o KeyCorp Shareholder Services, Inc. 4900 Tiedeman Road
P.O. Box 6477 Brooklyn, Ohio 44144
Cleveland, Ohio 44101-1477 Attn: ReOrg Department
By Hand:
KeyCorp Shareholder Services, Inc. KeyCorp Shareholder Services, Inc.
4900 Tiedeman Road c/o Society Trust Company of New York
Brooklyn, Ohio 44144 5 Hanover Square, 10th Floor
Attn: ReOrg Department New York, NY 10004
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(216) 813-4268
For Confirmation
(216) 813-4554
Questions and requests for assistance may be addressed to the Dealer
Manager or the Information Agent at their respective addresses and telephone
numbers set forth below. Additional copies of this Offer to Purchase, the
Letters of Transmittal or other tender offer materials, may be obtained from the
Information Agent at its address and telephone number set forth below. Holders
of Shares or Warrants may also contact brokers, dealers, commercial banks or
trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect:
(212) 969-2700
I-4
<PAGE> 1
LETTER OF TRANSMITTAL
TO
TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
NATIONAL CONVENIENCE STORES INCORPORATED
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 14, 1995
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
***************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW *
* YORK CITY TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS THE OFFER IS *
* EXTENDED. *
* *
***************************************************************************
The Depositary for the Offer is:
KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C>
By Mail: By Overnight Mail:
National Convenience Stores Inc. Tender Offer KeyCorp Shareholder Services, Inc.
c/o KeyCorp Shareholder Services, Inc. 4900 Tiedeman Road
P.O. Box 6477 Brooklyn, Ohio 44144
Cleveland, Ohio 44101-1477 Attn: ReOrg Department
By Hand:
KeyCorp Shareholder Services, Inc. KeyCorp Shareholder Services, Inc.
4900 Tiedeman Road c/o Society Trust Company of New York
Brooklyn, Ohio 44144 5 Hanover Square, 10th Floor
Attn: ReOrg Department New York, NY 10004
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(216) 813-4268
For Confirmation
(216) 813-4554
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN ONE
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR 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 used either if certificates for Shares
(as such term is defined below) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery
of the Shares is to be made by book-entry transfer to the account maintained by
the Depositary at The Depository Trust Company, the Midwest Securities Trust
Company or the Philadelphia Depository Trust Company (individually, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates or deliver confirmation of the book-entry
transfer of their Shares into the Depositary's account at a Book-Entry Transfer
Facility ("Book-Entry Confirmation") and all other documents required hereby to
the Depositary on or prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. See
Instruction 2. Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
______________________________________________________________________________________________________________________________
DESCRIPTION OF SHARES TENDERED
______________________________________________________________________________________________________________________________
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARES TENDERED
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
_____________________________________________________________________________________________________________________________
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
TOTAL SHARES
_____________________________________________________________________________________________________________________________
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares being delivered to the Depositary are being tendered.
See Instruction 4.
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
</TABLE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _______________________________________________
Check box of applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
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
Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to Shamrock Acquisition Corp. (the
"Purchaser"), a wholly owned subsidiary of Diamond Shamrock, Inc. ("Diamond
Shamrock"), the above-described shares of Common Stock, par value $.01 per share
(the "Shares"), of National Convenience Stores Incorporated (the "Company"),
together with an equal number of the associated rights to purchase preferred
stock (the "Rights") issued pursuant to the Rights Agreement, dated as of August
31, 1995 (the "Rights Agreement"), between the Company and Boatmen's Trust
Company, as Rights Agent, pursuant to the Purchaser's offer to purchase all of
the outstanding Shares at the purchase price of $27.00 per Share (and associated
Right), net to the tendering stockholder (pre-tax) in cash without interest, on
the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 14, 1995 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in accordance with this Letter of Transmittal (which, together
with any amendments or supplements thereto and the Letter of Transmittal to be
used to tender Warrants to purchase Shares, collectively constitute the
"Offer"). All references herein to Rights include all benefits that may inure to
stockholders of the Company pursuant to the Rights Agreement, and unless the
context requires otherwise, all references herein to Shares include the
associated Rights. The undersigned understands that the Purchaser reserves the
right to transfer or assign, in whole or from time to time in part, to Diamond
Shamrock or one or more direct or indirect subsidiaries or affiliates of Diamond
Shamrock the right to purchase Shares pursuant to this Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby (and any and all dividends on the Shares or other
shares, rights or other securities or distributions issued or issuable in
respect of such Shares that are declared or paid on or after November 8, 1995,
including without limitation the amounts payable upon redemption of the Rights
(collectively, "Distributions")), and irrevocably constitutes and appoints the
Depositary 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 and resubstitution (such power of attorney is an irrevocable power
coupled with an interest in the tendered Shares), to (i) deliver certificates
for such Shares (and any Distributions), or transfer ownership of such Shares
(and any Distributions) on the account books maintained by a Book-Entry Transfer
Facility, together, in either such case, with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser upon receipt
by the Depositary, as the undersigned's agent, of the purchase price (adjusted,
if appropriate, as provided in the Offer to Purchase), (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 of the
Offer.
The undersigned hereby irrevocably appoints J. Robert Mehall and Timothy J.
Fretthold, and each of them or any other designee of the Purchaser as the
attorney-in-fact and proxy of the undersigned, each with full power of
substitution and resubstitution, to vote in such manner as each such attorney
and proxy or his substitute shall in his sole discretion deem proper, and
otherwise act (including pursuant to written consent) with respect to all the
Shares tendered hereby which have been accepted for payment by the Purchaser
prior to the time of such vote or action (and any Distributions), which the
undersigned is entitled to vote at any meeting of stockholders (whether annual
or special and whether or not an adjourned meeting) of the Company, or consent
in lieu of any such meeting, or otherwise. This power of attorney and proxy is
coupled with an interest in the Company and in the Shares and is irrevocable and
is granted in consideration of, and is effective upon, the Purchaser's oral or
written notice to the Depositary of its acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall revoke
all prior proxies granted by the undersigned at any time with respect to such
Shares (and any Distributions) and no subsequent proxies will be given (and if
given will be deemed not to be effective) with respect thereto by the
undersigned. The undersigned acknowledges that the Purchaser expressly reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, the Purchaser or the
Purchaser's designee is able to exercise full voting and other rights of a
record and beneficial holder with respect to such Shares (and any
Distributions).
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
by the Purchaser, the Purchaser will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
the same will not be subject to any adverse claim. The undersigned, upon
request, will execute and deliver any signature guarantee and any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete or confirm the sale, assignment and transfer of the Shares tendered
hereby (and any Distributions). In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Purchaser any and
all Distributions issued or issuable in respect of the Shares declared or paid
on or after November 8, 1995, accompanied by appropriate documentation of
transfer, and, pending such remittance or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of such
Distributions and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by the Purchaser in
its sole discretion.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and personal and legal representatives of the undersigned. Except
as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the Purchaser's acceptance for payment of
Shares tendered pursuant to any one of the procedures described in Section 2 of
the Offer to Purchase and in the instructions hereto will constitute a binding
agreement between the undersigned and the Purchaser on the terms and subject to
the conditions of the Offer. Without limiting the foregoing, if the price to be
paid in the Offer is amended in accordance with the Offer, the price to be paid
to the undersigned will be the amended price notwithstanding the fact that a
different price is stated in the Letter of Transmittal.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or any certificates for Shares
not tendered or accepted for payment in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or any certificates for Shares not tendered or accepted for
payment in the name of, and deliver said check and/or return such certificates
to the person or persons so indicated. Unless otherwise indicated under "Special
Payment Instructions," in the case of a book-entry delivery of Shares, please
credit the account maintained at the Book-Entry Transfer Facility indicated
above with any Shares not accepted for payment. The undersigned recognizes that
the Purchaser has no obligation pursuant to the Special Payment Instructions to
transfer any Shares from the name of the registered holder thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
3
<PAGE> 4
________________________________________________________________________________
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 5, 6 and 7)
(SEE SUBSTITUTE FORM W-9
ON REVERSE SIDE)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment or the check for the purchase price of Shares
(including the associated Rights) purchased are to be issued in the name
of someone other than the undersigned, or if Shares delivered by
book-entry transfer which are not accepted for payment are to be returned
by credit to an account maintained at a Book-Entry Transfer Facility other
than the account indicated above.
Issue: / / Check / / Certificates to:
Name: _______________________________________________________________________
(PLEASE PRINT)
Address: ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
/ / Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
Check appropriate box:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
____________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
________________________________________________________________________________
________________________________________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 5, 6 and 7)
(SEE SUBSTITUTE FORM W-9
ON REVERSE SIDE)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
(including the associated Rights) purchased are to be sent to someone
other than the undersigned, or to the undersigned at an address other than
that shown above.
Mail: / / Check / / Certificates to:
Name: _______________________________________________________________________
(PLEASE PRINT)
Address: ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
________________________________________________________________________________
4
<PAGE> 5
________________________________________________________________________________
IMPORTANT
STOCKHOLDER SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:______________________________, 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for the Shares 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 of corporations or others acting
in a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s): _______________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________________________
(IF REQUIRED -- SEE INSTRUCTION 5)
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Tax Identification or
Social Security No.: ___________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
(PLEASE PRINT)
Title: _________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Dated:______________________________, 1995
________________________________________________________________________________
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if (i) this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of the Offer includes any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of the Shares tendered herewith, unless
such registered holder(s) has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" herein
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 member of a signature guarantee program within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(collectively, "Eligible Institutions"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. 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 certificates for any
untendered or unpurchased Shares are to be issued to a person other than the
registered holder, then the tendered certificates for Shares must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates with the
signatures on the certificates or stock powers guaranteed as aforesaid. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are to be
forwarded herewith or if tenders of Shares are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or any
Book-Entry Confirmation of Shares, as well as a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof), unless an
Agent's Message (as defined in Section 2 of the Offer to Purchase) is utilized,
together with any required signature guarantees and any other documents required
by this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase), or the tendering stockholder must comply
with the guaranteed delivery procedures set forth below. Stockholders whose
certificates for Shares are not immediately available or who cannot deliver
their certificates and all other required documents to the Depositary on or
prior to the Expiration Date, or who cannot complete the procedure for
book-entry transfer on or prior to the Expiration Date, may tender their Shares
by properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth in Section 2 of the
Offer to Purchase. Pursuant to such procedure, (i) such 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 provided by the
Purchaser, must be received by the Depositary on or prior to the Expiration
Date, and (iii) the certificates for all physically tendered Shares, in proper
form for transfer, or Book-Entry Confirmation of Shares, together with a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof), unless an Agent's Message is utilized, with any required
signature guarantees 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 execution of such Notice of
Guaranteed Delivery, as provided in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND,
EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, 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.
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 facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In any such case, new
certificate(s) for the remainder of the Shares that were evidenced by the old
certificate(s) will be sent to the registered holder, unless otherwise provided
in the appropriate box on this Letter of Transmittal, as soon as practicable
after the Expiration Date. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS 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 such owners must sign this Letter of Transmittal.
If any 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 stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made or certificates
for Shares
6
<PAGE> 7
not tendered or purchased are to be issued to a person other than the registered
owner(s). Signatures on such certificates or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificate(s) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If payment of the purchase price is to be made to, or if certificates for
Shares not tendered or purchased are to be registered in the name of, any
person(s) other than the registered holder, 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 stock transfer taxes (whether imposed
on the registered holder or such person) payable on account of the transfer to
such person(s) 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 CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates for unpurchased or untendered 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/or such certificates are to be 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.
Stockholders tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate under "Special Payment Instructions"
herein. If no such instructions are given, such Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility designated
above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Dealer Manager or the Information Agent at their
respective addresses and telephone numbers set forth below. Additional copies of
the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed
Delivery and the Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 may be obtained from the Information Agent at its address
and telephone number set forth below or from your broker, dealer, commercial
bank or trust company.
9. WAIVER OF CONDITIONS. The conditions of the Offer (except for the
Minimum Condition (as defined in the Offer to Purchase)) may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, in the case of any Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder (or other payee) is
required to provide the Depositary with a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, and to certify that the stockholder (or
other payee) is not subject to backup withholding of federal income tax. If a
tendering stockholder is subject to backup withholding, the stockholder must
cross out item (2) of the Certification box of the Substitute Form W-9. Failure
to provide the information on the Substitute Form W-9 may subject the tendering
stockholder to 31% federal income tax withholding on the payment of the purchase
price and to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
The box in Part 2 of the Substitute Form W-9 may be checked 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. If the stockholder does not provide a TIN by
the time of payment, 31% of all reportable payments made to such stockholder (or
other payee) will be withheld. However, such amounts will be refunded to the
stockholder (or other payee) if he or she provides a TIN within 60 days.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder 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 or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY EXECUTED FACSIMILE
THEREOF), TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
7
<PAGE> 8
IMPORTANT TAX INFORMATION
Backup Withholding. Under federal income tax law, a stockholder whose
tendered Shares are accepted for payment is required to provide the Depositary
with such stockholder's correct TIN on Substitute Form W-9, which in the case of
a surrendering stockholder who is an individual, is his or her social security
number, and to certify that the stockholder is not subject to backup
withholding. If the Depositary is not provided with the correct TIN, the
stockholder may be subject to a $50 penalty imposed by the IRS. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to these backup withholding
and reporting requirements and should indicate their status by writing "exempt"
across the face of the Substitute Form W-9. In order for a noncorporate foreign
stockholder to qualify as an exempt recipient, that stockholder must complete
and sign the main signature form and submit a Form W-8, Certificate of Foreign
Status, signed under penalties of perjury, attesting to that stockholder's
exempt status. A Form W-8 may be obtained from the Depositary. Exempt
stockholders, other than noncorporate foreign stockholders, should furnish their
TIN, write "Exempt" on the face of the Substitute Form W-9 below and sign, date
and return the Substitute Form W-9 to the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder or other payee. Backup withholding is
not an additional income tax. Rather, the 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 IRS.
If the stockholder does not provide a TIN by the time of payment, 31% of
all reportable payments made to such stockholder (or other payee) will be
withheld. However, such amounts will be refunded to the stockholder (or other
payee) if he or she provides a TIN within 60 days.
Purpose of Substitute Form W-9. To prevent backup withholding on payments
that are made to a stockholder or other payee with respect to Shares purchased
pursuant to the Offer, the stockholder is required to provide the Depositary
with his or her correct TIN (or the TIN of any other payee) by completing the
form below certifying that the TIN provided on the Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN) and that the stockholder is
not subject to backup withholding because (i) the stockholder is exempt from
backup withholding, (ii) the stockholder has not been notified by the IRS that
the stockholder is subject to backup withholding as a result of a failure to
report all interest or dividends, or (iii) the IRS has notified the stockholder
that the stockholder is no longer subject to backup withholding.
What Number to Give the Depositary. The stockholder is required to give
the Depositary the TIN (e.g., social security number or employer identification
number) of the record owner of the tendered Shares or of the most recent
transferee of the tendered Shares as evidenced by endorsements on the
certificates representing such Shares or any accompanying instruments of
transfer. 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 information on which
number to report.
8
<PAGE> 9
PAYOR'S NAME: KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C> <C>
__________________________________________________________________________________________________________________________________
SUBSTITUTE NAME: ______________________________________
FORM W-9 PART 1 - PLEASE PROVIDE YOUR NAME, ADDRESS
AND TIN IN THE BOX AT RIGHT AND CERTIFY BY ADDRESS: ___________________________________
SIGNING AND DATING BELOW.
TIN: _______________________________________
Social Security Number or
Employer Identification Number
__________________________________________________________________________________________
Department of the Treasury
Internal Revenue Service PART 2 -
Awaiting TIN / /
__________________________________________________________________________________________
PART 3 -- CERTIFICATION: Under penalties of perjury, I certify that (1) the number shown
on this form is my correct taxpayer identification number (or I am waiting for a number
to be issued to me) and (2) I am not subject to backup withholding because (a) I am
Payor's Request for exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Taxpayer Identification Service (the "IRS") that I am subject to backup withholding as a result of failure to
Number (TIN) and report all interest or dividends, or (c) the IRS has notified me that I am no longer
Certification subject to backup withholding. (You must cross out Item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being notified
by the IRS that you were subject to backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not cross out Item
(2)).
Signature: ____________________________________ Date: __________________________________
__________________________________________________________________________________________________________________________________
</TABLE>
________________________________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. 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 CHECKED
THE BOX IN PART 2 OF 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 (1) 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
(2) 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 reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I provide a taxpayer
identification number within 60 days from the date of this certificate.
______________________________________ ______________________________________
Signature Date
________________________________________________________________________________
9
<PAGE> 10
Questions and requests for assistance may be addressed to the Dealer
Manager or the Information Agent as set forth below. Additional copies of the
Offer to Purchase, this Letter of Transmittal and other tender offer materials
may be directed to the Information Agent as set forth below.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect:
(212) 969-2700
10
<PAGE> 1
LETTER OF TRANSMITTAL
TO
TENDER WARRANTS TO PURCHASE SHARES OF COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 14, 1995
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
***************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW *
* YORK CITY TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS THE OFFER IS *
* EXTENDED. *
* *
***************************************************************************
The Depositary for the Offer is:
KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C>
By Mail: By Overnight Delivery:
National Convenience Stores Inc. Tender Offer KeyCorp Shareholder Services, Inc.
c/o KeyCorp Shareholder Services, Inc. 4900 Tiedeman Road
P.O. Box 6477 Brooklyn, Ohio 44144
Cleveland, Ohio 44101-1477 Attn: ReOrg Department
</TABLE>
By Hand:
<TABLE>
<S> <C>
KeyCorp Shareholder Services, Inc. KeyCorp Shareholder Services, Inc.
4900 Tiedeman Road c/o Society Trust Company of New York
Brooklyn, Ohio 44144 5 Hanover Square, 10th Floor
Attn: ReOrg Department New York, NY 10004
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(216) 813-4268
For Confirmation
(216) 813-4554
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN ONE
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR 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 used either if certificates for Warrants
(as such term is defined below) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery
of the Warrants is to be made by book-entry transfer to the account maintained
by the Depositary at The Depository Trust Company, the Midwest Securities Trust
Company or the Philadelphia Depository Trust Company (individually, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase.
Warrantholders whose certificates for Warrants are not immediately available
or who cannot deliver their certificates or deliver confirmation of the
book-entry transfer of their Warrants into the Depositary's account at a
Book-Entry Transfer Facility ("Book-Entry Confirmation") and all other documents
required hereby to the Depositary on or prior to the Expiration Date (as defined
in Section 1 of the Offer to Purchase) must tender their Warrants according to
the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase. See Instruction 2. Delivery of documents to a Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
__________________________________________________________________________________________________________________________________
DESCRIPTION OF WARRANTS TENDERED
__________________________________________________________________________________________________________________________________
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) (PLEASE
FILL IN, IF BLANK, EXACTLY AS WARRANT(S) TENDERED
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
__________________________________________________________________________________________________________________________________
TOTAL NUMBER
OF WARRANTS NUMBER OF
CERTIFICATE REPRESENTED BY WARRANTS
NUMBER(S)* CERTIFICATE(S)* TENDERED**
__________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________
TOTAL WARRANTS
__________________________________________________________________________________________________________________________________
* Need not be completed by warrantholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Warrants being delivered to the Depositary are being tendered.
See Instruction 4.
__________________________________________________________________________________________________________________________________
</TABLE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _______________________________________________
Check box of applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
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
Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to Shamrock Acquisition Corp. (the
"Purchaser"), a wholly owned subsidiary of Diamond Shamrock, Inc. ("Diamond
Shamrock"), the above described warrants (the "Warrants") to purchase shares of
Common Stock, par value $.01 per share (the "Shares"), of National Convenience
Stores Incorporated (the "Company"), issued pursuant to the Warrant Agreement,
dated as of March 9, 1993 (the "Warrant Agreement"), between the Company and
Boatmen's Trust Company, as Warrant Agent, pursuant to the Purchaser's offer to
purchase all of the outstanding Warrants at the purchase price of $9.25 per
Warrant, net to the tendering warrantholder (pre-tax) in cash without interest,
on the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 14, 1995 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in accordance with this Letter of Transmittal (which, together
with any amendments or supplements thereto and the Letter of Transmittal to be
used to tender Shares, collectively constitute the "Offer"). The undersigned
understands that the Purchaser reserves the right to transfer or assign, in
whole or from time to time in part, to Diamond Shamrock or one or more direct or
indirect subsidiaries or affiliates of Diamond Shamrock the right to purchase
Warrants pursuant to this Offer.
Subject to, and effective upon, acceptance for payment of the Warrants
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Warrants
that are being tendered hereby (and any and all other warrants or other
securities or rights issued or issuable in respect of such Warrants on or after
November 8, 1995, (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Warrants (and any Distributions) with full
power of substitution and resubstitution (such power of attorney is an
irrevocable power coupled with an interest in the tendered Warrants) to (i)
deliver certificates for such Warrants (and any Distributions), or transfer
ownership of such Warrants (and any Distributions) on the account books
maintained by a Book-Entry Transfer Facility, together, in either such case,
with all accompanying evidences of transfer and authenticity to or upon the
order of, the Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (ii) present such Warrants (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 Warrants (and any Distributions), all
in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints J. Robert Mehall and Timothy J.
Fretthold and each of them or any other designee of the Purchaser as the
attorney-in-fact and proxy of the undersigned, each with full power of
substitution and resubstitution, to vote in such manner as each such attorney
and proxy or his substitute shall in his sole discretion deem proper, and
otherwise act (including pursuant to written consent) with respect to all the
Warrants tendered hereby which have been accepted for payment by the Purchaser
prior to the time of such vote or action (and any Distributions), which the
undersigned is entitled to vote at any meeting of stockholders (whether annual
or special and whether or not an adjourned meeting) of the Company, or consent
in lieu of any such meeting, or otherwise. This power of attorney and proxy is
coupled with an interest in the Company and in the Warrants and is irrevocable
and is granted in consideration of, and is effective upon, the Purchaser's oral
or written notice to the Depositary of its acceptance for payment of such
Warrants in accordance with the terms of the Offer. Such acceptance for payment
shall revoke all prior proxies granted by the undersigned at any time with
respect to such Warrants (and any Distributions) and no subsequent proxies will
be given (and if given will be deemed not to be effective) with respect thereto
by the undersigned. The undersigned acknowledges that the Purchaser expressly
reserves the right to require that, in order for Warrants to be deemed validly
tendered, immediately upon the acceptance for payment of such Warrants, the
Purchaser or the Purchaser's designee is able to exercise full voting and other
rights of a record and beneficial holder with respect to such Warrants (and any
Distributions).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Warrants tendered
hereby (and any Distributions) and that, when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
the same will not be subject to any adverse claim. The undersigned, upon
request, will execute and deliver any signature guarantee and any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete or confirm the sale, assignment and transfer of the Warrants (and
any Distributions) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Purchaser any and
all Distributions issued or issuable in respect of the Warrants on or after
November 8, 1995, accompanied by appropriate documentation of transfer, and,
pending such remittance or appropriate assurance thereof, the Purchaser shall be
entitled to all rights and privileges as owner of such other Distributions and
may withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by the Purchaser in its sole discretion.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and personal and legal representatives of the undersigned. Except
as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the Purchaser's acceptance for payment of
Warrants tendered pursuant to any one of the procedures described in Section 2
of the Offer to Purchase and in the instructions hereto will constitute a
binding agreement between the undersigned and the Purchaser on the terms and
subject to the conditions of the Offer. Without limiting the foregoing, if the
price to be paid in the Offer is amended in accordance with the Offer, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in the Letter of Transmittal.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or any certificates for
Warrants not tendered or accepted for payment in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates for
Warrants not tendered or accepted for payment (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or any certificates for Warrants not tendered or accepted for
payment in the name of, and deliver said check and/or return such certificates
to the person or persons so indicated. Unless otherwise indicated under "Special
Payment Instructions," in the case of a book-entry delivery of Warrants, please
credit the account maintained at the Book-Entry Transfer Facility indicated
above with any Warrants not accepted for payment. The undersigned recognizes
that the Purchaser has no obligation pursuant to the Special Payment
Instructions to transfer any Warrants from the name of the registered holder
thereof if the Purchaser does not accept for payment any of the Warrants so
tendered.
3
<PAGE> 4
________________________________________________________________________________
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 5, 6 and 7)
(SEE SUBSTITUTE FORM W-9
ON REVERSE SIDE)
To be completed ONLY if certificates for Warrants not tendered or not
accepted for payment or the check for the purchase price of Warrants
purchased are to be issued in the name of someone other than the
undersigned, or if Warrants delivered by book-entry transfer which are not
accepted for payment are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility other than the account indicated above.
Issue: / / Check / / Certificate(s) to:
Name: _______________________________________________________________________
(PLEASE PRINT)
Address: ____________________________________________________________________
_____________________________________________________________________________
(INCLUDE ZIP CODE)
_____________________________________________________________________________
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
/ / Credit unpurchased Warrants delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
Check appropriate box:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
_____________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
________________________________________________________________________________
________________________________________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 5, 6 and 7)
(SEE SUBSTITUTE FORM W-9
ON REVERSE SIDE)
To be completed ONLY if certificates for Warrants not tendered or not
accepted for payment and/or the check for the purchase price of Warrants
purchased are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Mail: / / Check / / Certificate(s) to:
Name: _______________________________________________________________________
(PLEASE PRINT)
Address: ____________________________________________________________________
_____________________________________________________________________________
(INCLUDE ZIP CODE)
_____________________________________________________________________________
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
________________________________________________________________________________
4
<PAGE> 5
_______________________________________________________________________________
IMPORTANT
WARRANTHOLDER SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF WARRANTHOLDER(S))
Dated: _____________________, 1995
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Warrants 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 of corporations
or others acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5.)
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _________________________________________________________
(IF REQUIRED -- SEE INSTRUCTION 5)
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Tax Identification or Social Security Number: __________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Title: _________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Dated: _____________________, 1995
________________________________________________________________________________
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if (i) this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of the Offer includes any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Warrants) of the Warrants tendered herewith,
unless such registered holder(s) has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" herein
or (ii) such Warrants are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a member of a signature guarantee program within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(collectively, "Eligible Institutions"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. 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 certificates for any
untendered or unpurchased Warrants are to be issued to a person other than the
registered holder, then the tendered certificates for Warrants must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear(s) on the certificates
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by warrantholders either if certificates are to
be forwarded herewith or if a tender of Warrants is to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Warrants, or any
Book-Entry Confirmation of Warrants, as the case may be, as well as a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof), unless an Agent's Message (as defined in Section 2 of the Offer to
Purchase) is utilized, together with any required signature guarantees and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or the
tendering warrantholder must comply with the guaranteed delivery procedures set
forth below. Warrantholders whose certificates for Warrants are not immediately
available or who cannot deliver their certificates and all other required
documents to the Depositary on or prior to the Expiration Date, or who cannot
complete the procedure for book-entry transfer on or prior to the Expiration
Date, may tender their Warrants by properly completing and duly executing the
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set
forth in Section 2 of the Offer to Purchase. Pursuant to such procedure, (i)
such 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 provided by the Purchaser, must be received by the Depositary on or prior
to the Expiration Date, and (iii) the certificates for all physically tendered
Warrants, in proper form for transfer, or Book-Entry Confirmation of Warrants,
as the case may be, together with a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof), unless an Agent's Message
is utilized, with any required signature guarantees 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
execution of such Notice of Guaranteed Delivery as provided in Section 2 of the
Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
WARRANTS AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
WARRANTHOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, 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.
No alternative, conditional or contingent tenders will be accepted and no
fractional Warrants will be purchased. All tendering warrantholders, by
execution of this Letter of Transmittal (or facsimile thereof), waive any right
to receive any notice of the acceptance of their Warrants for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Warrants should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to warrantholders who tender by
book-entry transfer.) If fewer than all the Warrants evidenced by any
certificate submitted are to be tendered, fill in the number of Warrants which
are to be tendered in the box entitled "Number of Warrants Tendered." In such
case, new certificate(s) for the remainder of the Warrants that were evidenced
by the old certificate(s) will be sent to the registered holder, unless
otherwise provided in the appropriate box on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Warrants represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Warrants
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 Warrants tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Warrants 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 stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Warrants listed and transmitted hereby,
6
<PAGE> 7
no endorsements of certificates or separate stock powers are required unless
payment is to be made or certificates for Warrants not tendered or purchased are
to be issued to a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Warrants listed, the certificate(s) must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. WARRANT TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of purchased Warrants to it or its order pursuant to the
Offer. If payment of the purchase price is to be made to, or if certificates for
Warrants not tendered or purchased are to be registered in the name of, any
person(s) other than the registered holder, 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 or such person) payable on account of the transfer to such
person(s) 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 CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates for unpurchased or untendered Warrants 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/or such certificates are to be 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.
Warrantholders tendering Warrants by book-entry transfer may request that
Warrants not purchased be credited to such account maintained at a Book-Entry
Transfer Facility as such warrantholder may designate under "Special Payment
Instructions" herein. If no such instructions are given, such Warrants not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Dealer Manager or the Information Agent at their
respective addresses and telephone numbers set forth below. Additional copies of
the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed
Delivery and the Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 may be obtained from the Information Agent at its address
and telephone number set forth below or from your broker, dealer, commercial
bank or trust company.
9. WAIVER OF CONDITIONS. The conditions of the Offer (except for the
Minimum Condition (as defined in the Offer to Purchase)) may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, in the case of any Warrants tendered.
10. SUBSTITUTE FORM W-9. The tendering warrantholder (or other payee) is
required to provide the Depositary with a correct Taxpayer Identification Number
("TIN"), generally the warrantholder's social security or federal employer
identification number, and with certain other information on Substitute Form W-9
which is provided under "Important Tax Information" below, and to certify that
the warrantholder (or other payee) is not subject to backup withholding of
federal income tax. If a tendering warrantholder is subject to backup
withholding, the warrantholder must cross out Item (2) of the Certification box
of the Substitute Form W-9. Failure to provide the information on the Substitute
Form W-9 may subject the tendering warrantholder to 31% federal income tax
withholding on the payment of the purchase price and to a $50 penalty imposed by
the Internal Revenue Service (the "IRS"). The box in Part 2 of the Substitute
Form W-9 may be checked if the tendering warrantholder has not been issued a TIN
and has applied for a TIN or intends to apply for a TIN in the near future. If
the warrantholder does not provide a TIN by the time of payment, 31% of all
reportable payments made to such warrantholder (or other payee) will be
withheld. However, such amounts will be refunded to the warrantholder (or other
payee) if he or she provides a TIN within 60 days.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Warrants has been lost, destroyed or stolen, the warrantholder
should promptly notify the Depositary. The warrantholder 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 or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY EXECUTED FACSIMILE
THEREOF), TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
7
<PAGE> 8
IMPORTANT TAX INFORMATION
Backup Withholding. Under federal income tax law, a warrantholder whose
tendered Warrants are accepted for payment is required to provide the Depositary
with such warrantholder's correct TIN on Substitute Form W-9 below, which in the
case of a surrendering warrantholder who is an individual, is his social
security number, and to certify that the warrantholder is not subject to backup
withholding. If the Depositary is not provided with the correct TIN, the
warrantholder may be subject to a $50 penalty imposed by the IRS. In addition,
payments that are made to such warrantholder with respect to Warrants purchased
pursuant to the Offer may be subject to 31% backup withholding.
Certain warrantholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to these backup
withholding and reporting requirements and should indicate their status by
writing "exempt" across the face of the Substitute Form W-9. In order for a
noncorporate foreign warrantholder to qualify as an exempt recipient, that
warrantholder must complete and sign the main signature form and submit a Form
W-8, Certificate of Foreign Status, signed under penalties of perjury, attesting
to that warrantholder's exempt status. A Form W-8 may be obtained from the
Depositary. Exempt warrantholders, other than noncorporate foreign
warrantholders, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the warrantholder or other payee. Backup withholding is
not an additional income tax. Rather, the 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 IRS. If
the warrantholder does not provide a TIN by the time of payment, 31% of all
reportable payments made to such warrantholder (or other payee) will be
withheld. However, such amounts will be refunded to the warrantholder (or other
payee) if he or she provides a TIN within 60 days.
Purpose of Substitute Form W-9. To prevent backup withholding on payments
that are made to a warrantholder or other payee with respect to Warrants
purchased pursuant to the Offer, the warrantholder is required to provide the
Depositary with his or her correct TIN (or the TIN of any other payee) by
completing the form below certifying that the TIN provided on the Substitute
Form W-9 is correct (or that such warrantholder is awaiting a TIN) and that the
warrantholder is not subject to backup withholding because (i) the warrantholder
is exempt from backup withholding, (ii) the warrantholder has not been notified
by the IRS that he or she is subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the IRS has notified the
warrantholder that the warrantholder is no longer subject to backup withholding.
What Number to Give the Depositary. The warrantholder is required to give
the Depositary the TIN (e.g., social security number or employer identification
number) of the record owner of the Warrants or of the most recent transferee of
the tendered Warrants as evidenced by endorsements on the Certificates
representing such Warrants or any accompanying instruments of transfer. If the
Warrants 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 information on which number to
report. If the tendering warrantholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, he or she
should check the box in Part 2 of the Substitute Form W-9.
8
<PAGE> 9
PAYOR'S NAME: KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C> <C>
__________________________________________________________________________________________________________________________________
SUBSTITUTE NAME: ______________________________________
FORM W-9 PART 1 - PLEASE PROVIDE YOUR NAME, ADDRESS
AND TIN IN THE BOX AT RIGHT AND CERTIFY BY ADDRESS: ___________________________________
SIGNING AND DATING BELOW.
TIN: _______________________________________
Social Security Number or
Employer Identification Number
__________________________________________________________________________________________
Department of the Treasury
Internal Revenue Service PART 2 -
Awaiting TIN / /
__________________________________________________________________________________________
PART 3 - CERTIFICATION: Under penalties of perjury, I certify that (1) the number shown
on this form is my correct taxpayer identification number (or I am waiting for a number
to be issued to me) and (2) I am not subject to backup withholding because (a) I am
Payor's Request for exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Taxpayer Identification Service (the "IRS") that I am subject to backup withholding as a result of a failure to
Number (TIN) and report all interest or dividends, or (c) the IRS has notified me that I am no longer
Certification subject to backup withholding. (You must cross out Item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being notified
by the IRS that you were subject to backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not cross out Item
(2)).
Signature: ___________________________________ Date: ___________________________________
__________________________________________________________________________________________________________________________________
</TABLE>
________________________________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. 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 CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
________________________________________________________________________________
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) 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 (2)
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 reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I provide a taxpayer identification number within 60
days from the date of this certificate.
______________________________________ ______________________________________
Signature Date
________________________________________________________________________________
9
<PAGE> 10
Questions and requests for assistance may be addressed to the Dealer
Manager or the Information Agent as set forth below. Additional copies of the
Offer to Purchase, this Letter of Transmittal and other tender offer materials
may be directed to the Information Agent as set forth below.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect:
(212) 969-2700
10
<PAGE> 1
WASSERSTEIN PERELLA & CO., INC.
31 WEST 52ND STREET
NEW YORK, NEW YORK 10019
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
AT
$27.00 NET PER SHARE
AND
$9.25 NET PER WARRANT
***************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW *
* YORK CITY TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS THE OFFER IS *
* EXTENDED. *
* *
***************************************************************************
To Brokers, Dealers, Commercial Banks, November 14, 1995
Trust Companies and Other Nominees:
We have been engaged to act as Dealer Manager in connection with the offer
by Shamrock Acquisition Corp. (the "Purchaser"), a wholly owned subsidiary of
Diamond Shamrock, Inc. ("Diamond Shamrock"), to purchase (i) all outstanding
shares of Common Stock, par value $.01 per share (the "Shares"), of National
Convenience Stores Incorporated (the "Company"), together with the associated
rights to purchase preferred stock (the "Rights") issued pursuant to the Rights
Agreement, dated as of August 31, 1995 (the "Rights Agreement"), between the
Company and Boatmen's Trust Company, as Rights Agent, at the purchase price of
$27.00 per Share (and the associated Right), and (ii) all outstanding Warrants
to purchase Shares (the "Warrants") issued pursuant to the Warrant Agreement,
dated as of March 9, 1993, between the Company and Boatmen's Trust Company, as
Warrant Agent, at the purchase price of $9.25 per Warrant, in each case, net to
the tendering securityholder (pre-tax) in cash without interest thereon, on the
terms and subject to the conditions set forth in the Offer to Purchase, dated
November 14, 1995 (the "Offer to Purchase"), and the related Letters of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Unless the context otherwise requires, all
references herein to Shares shall include the Rights.
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares or Warrants registered in your name or in the name of
your nominee.
Enclosed herewith for your information and forwarding to your clients for
whom you hold Shares or Warrants registered in your name or in the name of your
nominee or who hold Shares or Warrants registered in their own names, are copies
of the following documents:
<PAGE> 2
1. The Offer to Purchase, dated November 14, 1995;
2. The GREEN Letter of Transmittal for your use to tender Shares and
the BLUE Letter of Transmittal for your use to tender Warrants and for
information of your clients (manually signed facsimile copies of the
applicable Letter of Transmittal may be used to tender Shares or Warrants);
3. A printed form of a letter which may be sent to your clients for
whose accounts you hold Shares or Warrants in your name or in the name of a
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
4. The Notices of Guaranteed Delivery to be used to accept the Offer
if certificates for Shares or Warrants are not immediately available or
time will not permit all required documents to reach KeyCorp Shareholder
Services, Inc. (the "Depositary") prior to the Expiration Date (as defined
in the Offer to Purchase), or if the procedures for book-entry transfer
cannot be completed prior to the Expiration Date;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9;
6. The Letter to Securityholders of the Company from the President and
Chief Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9; and
7. A return envelope addressed to the Depositary.
The Offer is conditioned upon, among other things (i) there being validly
tendered and not withdrawn prior to the Expiration Date that number of Shares
and Warrants representing at least two-thirds of the total number of outstanding
Shares of the Company on a fully diluted basis and (ii) the Rights having been
redeemed by the Board of Directors of the Company. The Offer is also subject to
other terms and conditions contained in the Offer to Purchase. See Section 6 of
the Offer to Purchase. The Company has agreed to (a) take all action necessary
to defer the Distribution Date (as defined in the Rights Agreement) to prevent
the occurrence of the Distribution Date as a result of the commencement of the
Offer or the consummation of the transactions contemplated by the Merger
Agreement (as defined in the Offer to Purchase) and (b) redeem the Rights
effective immediately prior to the Purchaser's acceptance for payment of Shares
and Warrants pursuant to the Offer.
Neither Diamond Shamrock nor the Purchaser will pay any fees or commissions
to any broker or dealer or other person (other than the Dealer Manager as
described in the Offer to Purchase) in connection with the solicitation of
tenders of Shares or Warrants pursuant to the Offer. However, the Purchaser
will, upon request, reimburse brokers, dealers, commercial banks and trust
companies for customary mailing and handling expenses incurred by you in
forwarding the enclosed materials to your clients.
The Purchaser will pay or cause to be paid any transfer taxes payable on
the transfer of Shares or Warrants to it pursuant to the Offer, except as
otherwise provided in Instruction 6 of the enclosed Letters of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer of Shares or Warrants, and any other required documents
should be sent to the Depositary and certificates representing the tendered
Shares or Warrants should be delivered, or such Shares or Warrants should be
tendered by book-entry transfer, all in accordance with the instructions set
forth in the Letters of Transmittal and the Offer to Purchase.
2
<PAGE> 3
If holders of Shares or Warrants wish to tender their Shares or Warrants,
but it is impracticable for them to forward their certificates or other required
documents prior to the Expiration Date or if the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in Section 2
of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Wasserstein Perella & Co., Inc. (the "Dealer Manager") or to MacKenzie Partners,
Inc. (the "Information Agent"), at their respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase. Additional
copies of the enclosed materials may be obtained by calling the Information
Agent at (800) 322-2885 or from brokers, dealers, commercial banks or trust
companies.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE PURCHASER, DIAMOND SHAMROCK, ANY
AFFILIATE OF THE PURCHASER OR DIAMOND SHAMROCK, THE DEPOSITARY, THE INFORMATION
AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER, EXCEPT FOR THE DOCUMENTS ENCLOSED HEREWITH AND STATEMENTS EXPRESSLY MADE
IN THE OFFER TO PURCHASE OR THE LETTERS OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
AT
$27.00 NET PER SHARE
AND
$9.25 NET PER WARRANT
***************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW *
* YORK CITY TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS THE OFFER IS *
* EXTENDED. *
* *
***************************************************************************
To Our Clients:
Enclosed for your consideration is the Offer to Purchase, dated November
14, 1995 (the "Offer to Purchase"), and the related Letters of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer") relating to the offer by Shamrock Acquisition Corp. (the "Purchaser"),
a wholly owned subsidiary of Diamond Shamrock, Inc., to purchase for cash (i)
all outstanding shares of Common Stock, par value $.01 per share (the "Shares"),
of National Convenience Stores Incorporated (the "Company"), together with the
associated rights to purchase preferred stock (the "Rights") issued pursuant to
the Rights Agreement, dated as of August 31, 1995, between the Company and
Boatmen's Trust Company, as Rights Agent (the "Rights Agreement"), at the
purchase price of $27.00 per Share (and the associated Right), and (ii) all
outstanding Warrants to purchase Shares (the "Warrants") issued pursuant to the
Warrant Agreement, dated as of March 9, 1993, between the Company and Boatmen's
Trust Company, as Warrant Agent, at the purchase price of $9.25 per Warrant, in
each case, net to the tendering securityholder (pre-tax) in cash without
interest, on the terms and subject to the conditions set forth in the Offer.
Unless the context otherwise requires, all references herein to Shares shall
include the Rights. We are the holder of record of Shares or Warrants held by us
for your account. A TENDER OF SUCH SHARES OR WARRANTS CAN BE MADE ONLY BY US AS
THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTERS OF
TRANSMITTAL ARE FURNISHED TO YOU FOR YOUR INFORMATION ONLY BY US AS THE HOLDER
OF RECORD. THE LETTERS OF TRANSMITTAL CANNOT BE USED BY YOU TO TENDER SHARES OR
WARRANTS HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares or Warrants held by us for your
account, pursuant to the terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price for Shares is $27.00 per Share (and the associated
Right), net to you (pre-tax) in cash.
2. The tender price for Warrants is $9.25 per Warrant, net to you
(pre-tax) in cash.
<PAGE> 2
3. The Offer is being made for all outstanding Shares (including the
associated Rights) and all outstanding Warrants.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, December 13, 1995, unless the Offer is
extended.
5. The Offer is conditioned upon, among other things (i) there being
validly tendered and not withdrawn prior to the Expiration Date that number
of Shares and Warrants representing at least two-thirds of the total number
of outstanding Shares on a fully diluted basis and (ii) the Rights having
been redeemed by the Board of Directors of the Company. The Offer is also
subject to other terms and conditions contained in the Offer to Purchase.
See Section 6 of the Offer to Purchase. The Company has agreed to (a) take
all action necessary to defer the Distribution Date (as defined in the
Rights Agreement) to prevent the occurrence of the Distribution Date as a
result of the commencement of the Offer or the consummation of the
transactions contemplated by the Merger Agreement (as defined in the Offer
to Purchase) and (b) redeem the Rights effective immediately prior to the
Purchaser's acceptance for payment of Shares and Warrants pursuant to the
Offer.
6. Securityholders who tender Shares or Warrants will not be obligated
to pay brokerage fees or commissions or, except as set forth in Instruction
6 of the Letters of Transmittal, transfer taxes on the purchase of Shares
or Warrants by the Purchaser pursuant to the Offer.
7. The Board of Directors of the Company as presently constituted, (i)
has unanimously approved the Offer and the Merger (as defined in the Offer
to Purchase), (ii) has determined that the Offer and Merger are in the best
interests of the Company's securityholders, and (iii) unanimously
recommends that securityholders accept the Offer and tender their Shares
and Warrants pursuant to the Offer.
The Offer is being made to all holders of Shares or Warrants. The Purchaser
is not aware of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid statute. If the
Purchaser becomes aware of any valid statute prohibiting the making of the Offer
or the acceptance of the Shares or Warrants pursuant thereto, the Purchaser will
make a reasonable good faith effort to comply with any such statute or seek to
have such statute declared inapplicable to the Offer. If, after such reasonable
good faith effort, the Purchaser cannot comply with any such statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares or Warrants 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 the
Purchaser by Wasserstein Perella & Co., Inc. or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares or Warrants, please
so instruct us by completing, signing, detaching and returning the form attached
to this letter. An envelope to return your instructions to us is enclosed. Your
instructions to us should be forwarded promptly to permit us to submit a tender
on your behalf prior to the expiration of the Offer. If you authorize the tender
of your Shares or Warrants, all such Shares or Warrants will be tendered unless
otherwise specified on the form set forth on the reverse side of this letter.
2
<PAGE> 3
(Detach and Return)
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase of Shamrock Acquisition Corp. (the "Purchaser"), a wholly
owned subsidiary of Diamond Shamrock, Inc., dated November 14, 1995, and the
related Letters of Transmittal (which together constitute the "Offer") relating
to the offer by the Purchaser to purchase (i) all outstanding shares of Common
Stock, par value $.01 per share (the "Shares"), of National Convenience Stores
Incorporated at a purchase price of $27.00 per Share, together with the
associated rights to purchase preferred stock (the "Rights"), and (ii) all
outstanding Warrants to purchase Shares (the "Warrants") at the purchase price
of $9.25 per Warrant, in each case, net to the tendering securityholders
(pre-tax) in cash without interest.
This will instruct you to tender to the Purchaser the number of Shares (and
the associated Rights) or Warrants indicated below (or if no number is indicated
below, all Shares (and the associated Rights) or Warrants that are held by you
for the account of the undersigned), on the terms and subject to the conditions
set forth in the Offer.
<TABLE>
<S> <C>
Number of Shares (and the associated Rights) SIGN HERE
to be tendered:* _______________________________________________
_________ Shares _______________________________________________
Signature(s)
Number of Warrants to be tendered:* _______________________________________________
Account Number:
_______________________________________________
_________ Warrants Please print name(s) and address(es) here
_______________________________________________
Dated:_______________________________, 1995 Area Code and Telephone Number
_______________________________________________
Tax Identification or Social Security Number(s)
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all of your Shares (and
the associated Rights) or Warrants held by us for your account are to be
tendered.
3
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
NATIONAL CONVENIENCE STORES INCORPORATED
TO
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
(Not to be used for Signature Guarantee)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form, or one substantially equivalent hereto, must be used to accept the Offer
(as defined below) if certificates representing shares of Common Stock, par
value $.01 per share (the "Shares"), of National Convenience Stores Incorporated
(the "Company"), together with the associated rights to purchase preferred stock
(the "Rights") issued pursuant to the Rights Agreement, dated August 31, 1995,
between the Company and Boatmen's Trust Company, as Rights Agent, are not
immediately available, or if the procedure for book-entry transfer cannot be
completed on a timely basis, or if time will not permit all required documents
to reach the Depositary prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase). Such form may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a signature
guaranteed by an Eligible Institution (as defined below) in the form set forth
herein. See Section 2 of the Offer to Purchase. Unless the context otherwise
requires, all references herein to Shares shall include the associated Rights.
The Depositary for the Offer is:
KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C>
By Mail: By Overnight Mail:
National Convenience Stores Inc. Tender Offer KeyCorp Shareholder Services, Inc.
c/o KeyCorp Shareholder Services, Inc. 4900 Tiedeman Road
P.O. Box 6477 Brooklyn, Ohio 44144
Cleveland, Ohio 44101-1477 Attn: ReOrg Department
</TABLE>
By Hand:
<TABLE>
<S> <C>
KeyCorp Shareholder Services, Inc. KeyCorp Shareholder Services, Inc.
4900 Tiedeman Road c/o Society Trust Company of New York
Brooklyn, Ohio 44144 5 Hanover Square, 10th Floor
Attn: ReOrg Department New York, NY 10004
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(216) 813-4268
For Confirmation
(216) 813-4554
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal for Shares 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 for Shares.
Ladies and Gentlemen:
The undersigned hereby tenders to Shamrock Acquisition Corp., a wholly
owned subsidiary of Diamond Shamrock, Inc., on the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 14, 1995 (the
"Offer to Purchase"), and the related Letters of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
Shares indicated below pursuant to the guaranteed delivery procedures set forth
in Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: _________________________ Name(s) of Record Holder(s): _______________________
Certificate No(s). for Shares
(if available): ____________________________________________________
___________________________________________ ____________________________________________________
Please Type or Print
___________________________________________
Check ONE box if Shares will be tendered by Address: ___________________________________________
book-entry transfer:
____________________________________________________
/ / The Depository Trust Company Zip Code
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company Area Code and Tel. No.: ____________________________
Account Number: ___________________________ Signature(s): ______________________________________
Dated: _____________________________ , 1995 ____________________________________________________
</TABLE>
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a signature guarantee program within the
meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (as such, an "Eligible Institution"), hereby guarantees (i)
that the above named person(s) has a long position in the Shares being tendered
within the meaning of Rule 14e-4 promulgated under the Exchange Act, (ii) that
such tender of Shares complies with Rule 14e-4, and (iii) delivery to the
Depositary, at one of its addresses set forth above, of certificates
representing the Shares (and the associated Rights) tendered hereby in proper
form for transfer, or confirmation of book-entry transfer of such Shares into
the Depositary's accounts at The Depository Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depository Trust Company (pursuant
to the procedures set forth in Section 2 of the Offer to Purchase), in each case
with the delivery of a properly completed and duly executed Letter of
Transmittal for Shares (or manually signed facsimile thereof), and any other
required documents within three New York Stock Exchange, Inc. trading days after
the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal (for
Shares and associated Rights) and certificates for Shares to the Depositary
within the time period shown herein.
<TABLE>
<S> <C>
__________________________________ __________________________________
Name of Firm Authorized Signature
__________________________________ __________________________________
Address Name (Please Type or Print)
__________________________________ __________________________________
Zip Code Title
__________________________________ __________________________________
Area Code and Telephone Number Date
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
CERTIFICATES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF WARRANTS TO PURCHASE SHARES OF COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
TO
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
(Not to be used for Signature Guarantee)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form, or one substantially equivalent hereto, must be used to accept the Offer
(as defined below) if certificates representing Warrants to purchase shares of
Common Stock, par value $.01 per share, of National Convenience Stores
Incorporated (the "Company") issued pursuant to the Warrants Agreement, dated as
of March 9, 1993, between the Company and Boatmen's Trust Company, as Warrant
Agent (the "Warrants"), are not immediately available, or if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). Such form may be
delivered by hand or transmitted by facsimile transmission or mail to the
Depositary and must include a signature guaranteed by an Eligible Institution
(as defined below) in the form set forth herein. See Section 2 of the Offer to
Purchase.
The Depositary for the Offer is:
KEYCORP SHAREHOLDER SERVICES, INC.
<TABLE>
<S> <C>
By Mail: By Overnight Mail:
National Convenience Stores Inc. Tender Offer KeyCorp Shareholder Services, Inc.
c/o KeyCorp Shareholder Services, Inc. 4900 Tiedeman Road
P.O. Box 6477 Brooklyn, Ohio 44144
Cleveland, Ohio 44101-1477 Attn: ReOrg Department
</TABLE>
By Hand:
<TABLE>
<S> <C>
KeyCorp Shareholder Services, Inc. KeyCorp Shareholder Services, Inc.
4900 Tiedeman Road c/o Society Trust Company of New York
Brooklyn, Ohio 44144 5 Hanover Square, 10th Floor
Attn: ReOrg Department New York, NY 10004
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(216) 813-4268
For Confirmation
(216) 813-4554
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal for Warrants 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 for Warrants.
Ladies and Gentlemen:
The undersigned hereby tenders to Shamrock Acquisition Corp., a wholly
owned subsidiary of Diamond Shamrock, Inc., on the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 14, 1995 (the
"Offer to Purchase"), and the related Letters of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
Warrants indicated below pursuant to the guaranteed delivery procedures set
forth in Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Warrants: _______________________ Name(s) of Record Holder(s): _______________________
Certificate No(s). for Warrants
(if available): ____________________________________________________
___________________________________________ ____________________________________________________
Please Type or Print
___________________________________________
Check ONE box if Warrants will be tendered Address: ___________________________________________
by book-entry transfer:
____________________________________________________
/ / The Depository Trust Company Zip Code
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company Area Code and Tel. No.: ____________________________
Account Number: ___________________________ Signature(s): ______________________________________
Dated: _____________________________ , 1995 ____________________________________________________
</TABLE>
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a signature guarantee program within the
meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (as such, an "Eligible Institution"), hereby guarantees (i)
that the above named person(s) has a long position in the Warrants being
tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act,
(ii) that such tender of Warrants complies with Rule 14e-4, and (iii) delivery
to the Depositary, at one of its addresses set forth above, of certificates
representing the Warrants tendered hereby in proper form for transfer, or
confirmation of book-entry transfer of such Warrants into the Depositary's
accounts at The Depository Trust Company, the Midwest Securities Trust Company
or the Philadelphia Depository Trust Company (pursuant to the procedures set
forth in Section 2 of the Offer to Purchase), in each case with the delivery of
a properly completed and duly executed Letter of Transmittal for Warrants (or
manually signed facsimile thereof), and any other required documents within
three New York Stock Exchange, Inc. trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal (for
Warrants) and certificates for Warrants to the Depositary within the time period
shown herein.
<TABLE>
<S> <C>
__________________________________ __________________________________
Name of Firm Authorized Signature
__________________________________ __________________________________
Address Name (Please Type or Print)
__________________________________ __________________________________
Zip Code Title
__________________________________ __________________________________
Area Code and Telephone Number Date
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR WARRANTS WITH THIS NOTICE.
CERTIFICATES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
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
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<C> <S> <C>
- -------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor or
guardian or committee for a incompetent person(3)
designated ward, minor or
incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under state law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do
pension trust 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 The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. A broker or registered The broker or nominee
nominee
14. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison)
that receives agriculture
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 more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Section references are to the Internal Revenue Code.
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 local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also 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 United
States and that have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
Payments of interest generally not 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 provided 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 nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A and 6050N, and the regulations under such sections.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct taxpayer identification number to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your taxpayer identification number whether or not you are qualified to file a
tax return. 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. Certain 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 subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBER. If you disclose or use your
taxpayer identification number in violation of federal law, you may be subject
to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
FOR MORE INFORMATION CONTACT
DIAMOND SHAMROCK:
Katherine Hughes, Public Relations
210/641-8846
or
Mary Hartman, Investor Relations
210/641-8840
DIAMOND SHAMROCK REACHES AGREEMENT
TO ACQUIRE NATIONAL CONVENIENCE STORES
SAN ANTONIO, TEXAS -- November 8, 1995 -- Diamond Shamrock, Inc. (NYSE:DRM) and
National Convenience Stores Incorporated (NYSE:NCS) today jointly announced
that they have entered into a definitive merger agreement providing for the
acquisition of all shares of NCS' common stock at $27 per share in cash.
Pursuant to the agreement unanimously approved by the Board of Directors of
both companies, Diamond Shamrock will commence a tender offer to acquire all
outstanding shares of NCS' common stock for $27 per share in cash and all
outstanding warrants to purchase NCS common stock for $9.25 per warrant in
cash. The tender offer will be commenced as promptly as practicable and, in
any event, by Tuesday, November 14.
The tender offer will be conditioned upon Diamond Shamrock acquiring at least
two-thirds of NCS' fully diluted common shares, regulatory approvals, and other
customary conditions. The merger agreement provides that all remaining NCS
common stock will be acquired for the same $27 per share in cash in a merger in
which NCS will become a wholly owned subsidiary of Diamond Shamrock. Warrants
not tendered in the offer or not exercised prior to the completion of the
merger will remain outstanding, but upon exercise will represent only the right
to obtain $9.25 in cash rather than one share of common stock.
The total value of the transaction is approximately $260 million, which assumes
the cancellation of outstanding stock options for the spread over the exercise
prices and includes net debt. Diamond Shamrock has arranged to finance the
acquisition with Bank of America.
Diamond Shamrock Chairman, CEO, and President Roger R. Hemminghaus commented,
"The acquisition of NCS, with its 661 convenience stores, all of which are in
Texas and over 90 percent of which sell gasoline, continues Diamond Shamrock's
strategy of retail growth, as well as provides increased demand for our
Advanced Formula gasolines. Once the operations are fully integrated, we
anticipate that this acquisition will enhance Diamond Shamrock's financial
strength by contributing significantly to cash flow and improved earnings per
share."
NCS President and CEO V. H. Van Horn commented, "The focus of our management
team has been to maximize stockholder value while, to the extent consistent
therewith, providing continuing opportunities for our employees, and this
agreement with Diamond Shamrock fulfills those objectives. We are very pleased
that Diamond Shamrock recognizes the achievements of our employees and company
over the past several years."
Hemminghaus said that Diamond Shamrock currently plans to retain most NCS
personnel and foresees gaining many dedicated, experienced employees who will
become important to Diamond Shamrock's operations. Following the acquisition,
Diamond Shamrock will have over 10,000 employees and about 1,500 company
operated convenience stores, including nearly 1,300 in Texas.
Hemminghaus continued, "Stop N Go operates quality stores with high merchandise
sales volumes that complement our stores' growing merchandise sales and strong
gasoline sales volumes." He says that Diamond Shamrock plans to brand the NCS
gasoline facilities "Diamond Shamrock" and integrate the units into its system
<PAGE> 2
while retaining the Stop N Go store identification.
Nearly 600 of the NCS stores sell gasoline. Hemminghaus commented, "We believe
that providing quality `Diamond Shamrock' gasoline will increase per store
gasoline sales volumes and revenues and offer more convenient locations to
Diamond Shamrock customers. We have strong brand acceptance in Texas, loyal
customers, and a large credit card base in markets where Stop N Go stores are
located."
Diamond Shamrock also has two Texas refineries with a throughput of 210,000
barrels per day, producing over 5 million gallons of gasoline daily. Because
many of the stores will be directly supplied with gasoline from these
refineries, Hemminghaus expects the company's refining business to benefit
significantly from the acquisition.
Diamond Shamrock, Inc., headquartered in San Antonio, is a leading refiner and
marketer of petroleum products in the Southwest with a growing mix of related
businesses. With annual sales of over $2.6 billion, Diamond Shamrock refines
and markets gasoline through over 2,000 Diamond Shamrock branded locations,
including 835 company operated Corner Stores that sell a full range of
convenience items.
National Convenience Stores Incorporated, headquartered in Houston, is the
largest convenience store chain in Texas, operating primarily in the geographic
area known as the "Texas Triangle," which encompasses Houston, Dallas/Fort
Worth, and San Antonio. The company maintains its leading position through the
operation of approximately 660 Stop N Go stores throughout Texas and employs
approximately 5,000 people throughout the state. NCS sells gasoline at about
595 of its stores.
* * *
<PAGE> 1
Exhibit 99(a)(10)
<TABLE>
<S> <C>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES OR WARRANTS. THE OFFER IS MADE
SOLELY BY THE OFFER TO PURCHASE, DATED NOVEMBER 14, 1995, AND THE RELATED LETTERS OF TRANSMITTAL, AND IS BEING MADE TO
ALL HOLDERS OF SHARES AND WARRANTS. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF
OF) HOLDERS OF SHARES OR WARRANTS 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 THE
PURCHASER BY ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
</TABLE>
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
AND
ALL OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK
OF
NATIONAL CONVENIENCE STORES INCORPORATED
BY
SHAMROCK ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DIAMOND SHAMROCK, INC.
AT
$27.00 NET PER SHARE
AND
$9.25 NET PER WARRANT
Shamrock Acquisition Corp.(the "Purchaser"), a wholly owned subsidiary
of Diamond Shamrock, Inc. ("Diamond Shamrock"), is offering to purchase (i) all
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
National Convenience Stores Incorporated (the "Company"), together with the
associated rights to purchase preferred stock (the "Rights") issued pursuant to
the Rights Agreement, dated as of August 31, 1995 (the "Rights Agreement"),
between the Company and Boatmen's Trust Company, as Rights Agent, at the
purchase price of $27.00 per Share (and associated Right) (the "Share Offer
Price") and (ii) all outstanding Warrants to purchase Shares (the "Warrants")
issued pursuant to the Warrant Agreement, dated as of March 9, 1993 (the
"Warrant Agreement"), between the Company and Boatmen's Trust Company, as
Warrant Agent, at the purchase price of $9.25 per Warrant (the "Warrant Offer
Price"), in each case, net to the tendering securityholder (pre-tax) in cash,
without interest thereon, on the terms and subject to the conditions set forth
in the Offer to Purchase, dated November 14, 1995 (the "Offer to Purchase"), and
in the related Letters of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Unless the context
otherwise requires, all references herein to Shares shall include the Rights.
Tendering securityholders will not be obligated to pay brokerage commissions,
solicitation fees or, except as set forth in Instruction 6 of the Letters of
Transmittal, transfer taxes on the purchase of Shares or Warrants pursuant to
the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 13, 1995, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of November 8, 1995 (the "Merger Agreement"), by and among Diamond
Shamrock, the Purchaser and the Company pursuant to
<PAGE> 2
which, as soon as practicable after the completion of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger") and the Company will become a wholly owned
subsidiary of Diamond Shamrock. At the effective time of the Merger (the
"Effective Time"), each then-outstanding Share (other than Shares owned by
Diamond Shamrock, the Purchaser or any other direct or indirect subsidiary of
Diamond Shamrock or held in the treasury of the Company, all of which will be
cancelled, and Shares held by stockholders who comply with all of the relevant
provisions of Article IX of the company's Restated Certificate of Incorporation
and who perfect their appraisal rights under Section 262 of the Delaware General
Corporation Law) will be converted into the right to receive $27.00 per Share
without interest thereon, (or such greater amount paid per share pursuant to the
Offer), net to the holder (pre-tax) in cash (the "Merger Consideration").
Pursuant to the terms of the Warrant Agreement, at the Effective Time, each
then-outstanding Warrant will remain outstanding following the Merger and, from
and after the Effective Time, holders of Warrants (the "Warrantholders") will
have the right to obtain upon exercise of each Warrant, in lieu of the one Share
theretofore issuable upon exercise of such Warrant, the Merger Consideration,
net to the Warrantholder (pre-tax) in cash, without interest thereon.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED
EACH OF THE OFFER AND THE MERGER AND HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR AND IN THE BEST INTERESTS OF THE COMPANY'S SECURITYHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT SECURITYHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES AND WARRANTS PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS (I) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
BELOW) THAT NUMBER OF SHARES AND WARRANTS REPRESENTING AT LEAST TWO-THIRDS OF
THE TOTAL NUMBER OF OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS
AND (II) THE RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN
THE OFFER TO PURCHASE. SEE SECTION 6 OF THE OFFER TO PURCHASE.
In the Merger Agreement, the Company agreed to (i) take all action
necessary to defer the Distribution Date (as defined in the Rights Agreement)
to prevent the occurrence of the Distribution Date as a result of the
commencement of the Offer or the consummation of the transactions contemplated
by the Merger Agreement and (ii) redeem the Rights effective immediately prior
to the Purchaser's acceptance for payment of the Shares and the Warrants
pursuant to the Offer.
The term "Expiration Date" means 12:00 midnight, New York City time,
on Wednesday, December 13, 1995, unless and until the Purchaser, in its sole
discretion, 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 the Purchaser, shall expire.
Subject to the terms of the Merger Agreement, the Purchaser expressly reserves
the right to (i) extend the period of time during which the Offer is open if
any condition thereto is not satisfied and thereby delay acceptance for payment
of, and the payment for, any Shares or Warrants by giving oral or written
notice of such extension to KeyCorp Shareholder Services, Inc. (the
"Depositary") or (ii) increase the Share Offer Price or Warrant Offer Price to
be paid in the Offer by giving oral or written notice of such amendment to the
Depositary. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares or Warrants in the event the period of time
during which the Offer is open is extended for any reason. Any such extension
will be followed as promptly as practicable by a public announcement thereof 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. During any such extension, all
Shares or Warrants previously tendered and not withdrawn will remain subject to
the Offer, subject to the right of a tendering securityholder to withdraw such
securityholder's Shares or Warrants.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment (and thereby purchased) Shares or Warrants validly
tendered and not withdrawn pursuant to the Offer when, as and if the Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares or Warrants. In all cases, on the terms and subject to the
conditions of the Offer, payment for Shares and Warrants so accepted will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering securityholders for the purposes of receiving
payment from the Purchaser and transmitting payment to tendering
securityholders. In all cases, payment for Shares or Warrants accepted for
payment pursuant to the
-2-
<PAGE> 3
Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares or Warrants or a timely confirmation (a
"Book-Entry Confirmation") of book-entry transfer of such Shares or Warrants
into the Depositary's account at a Book-Entry Transfer Facility (as defined in
Section 2 of the Offer to Purchase) with respect to such Shares or Warrants;
(ii) a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) with any required signature guarantees (or in the
case of a book-entry transfer, an Agent's Message (as defined in Section 2 of
the Offer to Purchase)); and (iii) any other documents required by the
applicable Letter of Transmittal. See Section 2 of the Offer to Purchase.
Under no circumstances will interest be paid on the purchase price of the
Shares or Warrants to be paid by the Purchaser by reason of any delay in making
such payments.
If the Purchaser extends the Offer or if the Purchaser (whether before
or after its acceptance for payment of Shares and Warrants tendered pursuant to
the Offer) is delayed in its payment for Shares or Warrants or is unable to pay
for the Shares or Warrants tendered pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may
retain tendered Shares and Warrants on behalf of the Purchaser, and such Shares
and Warrants may not be withdrawn except to the extent tendering securityholders
are entitled to withdrawal rights as described in Section 3 of the Offer to
Purchase. Any such delay will be by an extension of the Offer to the extent
required by law.
If certain events occur, the Purchaser will not be obligated to accept
for payment or pay for any Shares or Warrants tendered pursuant to the Offer.
See Section 6 of the Offer to Purchase. If any tendered Shares or Warrants are
not purchased pursuant to the Offer for any reason or if certificates submitted
represent more Shares or Warrants than are tendered, certificates representing
unpurchased or untendered Shares or Warrants will be returned (or, in case of
Shares or Warrants delivered by book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility, as described in Section 2 of the
Offer to Purchase, such Shares or Warrants will be credited to an account
maintained with such Book-Entry Transfer Facility), without expense to the
tendering securityholder, as promptly as practicable following the expiration
or termination of the Offer, as the case may be.
Tenders of Shares or Warrants pursuant to the Offer will be
irrevocable, except that Shares and Warrants tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time on or after January 13, 1996. For a withdrawal to be
effective, a written, telegraphic, telex 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 the Offer to Purchase. Any notice of withdrawal
must specify the name of the person who tendered the Shares or Warrants to be
withdrawn, the number of Shares or Warrants to be withdrawn and the name in
which such Shares or Warrants are registered, if different from the name of the
person who tendered the Shares or Warrants. If certificates for Shares or
Warrants to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must also be furnished to the
Depositary and, unless such Shares or Warrants have been tendered by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares or Warrants have been tendered pursuant to the
procedures for book-entry transfer as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares or Warrants and must otherwise comply with such Book-Entry
Transfer Facility's procedures. Withdrawals of tenders of Shares or Warrants
may not be rescinded, and any Shares or Warrants properly withdrawn will
thereafter be deemed not validly tendered for any purposes of the Offer.
However, withdrawn Shares or Warrants may be retendered by again following one
of the procedures described in Section 2 of the Offer to Purchase at any time
on or prior to the Expiration Date. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser in its sole discretion, whose determination will be final and
binding.
The Company has provided the Purchaser with the Company's stockholder
list, its Warrantholder list and security position listings for the purpose of
disseminating the Offer to the holders of Shares and Warrants.
-3-
<PAGE> 4
The Offer to Purchase and the related Letters of Transmittal and other
relevant materials will be mailed by the Purchaser to record holders of Shares
and Warrants and furnished by the Purchaser to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list, Warrantholder 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 or Warrants.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) 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 LETTERS OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letters of
Transmittal and all other tender offer materials may be directed to the
Information Agent at its address and telephone number listed below, and copies
will be furnished promptly at the Purchaser's expense. Questions or requests
for assistance may be directed to the Information Agent or the Dealer Manager.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager and the Information Agent) for
soliciting tenders of Shares or Warrants pursuant to the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect:
(212) 969-2700
November 14, 1995
-4-
<PAGE> 1
Exhibit 99(b)(1)
BA
BankAmerica
CONFIDENTIAL
November 2, 1995
Diamond Shamrock, Inc.
9830 Colonnade Blvd.
San Antonio, TX 78230
Attn: Robert C. Becker
Gentlemen:
Bank of America NT & SA ("Bank of America") is pleased to advise you
that it is willing, subject to the terms and conditions contained in this
letter and in the Summary of Terms and Conditions attached to this letter as
Exhibit A (the "Term Sheet"), to commit the full $340,000,000 of a senior
unsecured credit facility (the "Facility") to Diamond Shamrock (the "Company")
to acquire all of the stock or the assets of the company we have previously
discussed Subject Company. Upon your acceptance of this commitment, Bank of
America's commitment will be in part syndicated by BA Securities, Inc. ("BA
Securities"), as arranger, to a group of financial institutions (together with
Bank of America, the "Banks") acceptable to the Company and to Bank of America
as agent ("Agent").
As previously discussed, BA Securities is a wholly-owned, direct
subsidiary of BankAmerica Corporation, the parent company of Bank of America,
and is a registered broker-dealer. Please refer to the attached "Special
Disclosure Statement" for important additional information on this
relationship.
The fees payable to BA Securities and to Agent in connection with the
Facility are set forth in a separate letter of even date herewith (the "Fee
Letter").
To assist BA Securities in its syndication efforts, you agree to
provide upon its request all information in your possession that is reasonably
deemed necessary by it to complete successfully the syndication of the
Facility, including but not limited to, information prepared by you or on your
behalf relating to the transactions contemplated hereby. You hereby agree to
actively assist BA Securities in achieving a syndication that
<PAGE> 2
is satisfactory to BA Securities, Bank of America and you and will authorize
the commencement of that effort as soon as reasonably practicable. BA
Securities, as arranger, reserves the right (in consultation with the Company
and Bank of America) to allocate the commitments offered by the Banks.
In addition to the conditions to funding or closing set forth in the
Term Sheet, Bank of America's commitment to provide financing hereunder is
subject to (i) the negotiation and execution of a definitive bank loan
agreement, and other related documentation, satisfactory to the Banks and
Agent, and (ii) there being no material adverse change in the consolidated
financial condition, business, operations, properties or prospects of the
Company and its subsidiaries (including for this purpose Subject Company and
its consolidated subsidiaries) taken as a whole from the date of the audited
financial statements most recently provided prior to the date hereof.
Whether or not the transactions contemplated hereby are consummated,
the Company hereby agrees to indemnify and hold harmless each of Bank of
America and BA Securities, and their respective directors, officers, employees
and affiliates (each, an "indemnified person") from and against any and all
losses, claims, damages, liabilities (or actions or other proceedings commenced
or threatened in respect thereof) and expenses that arise out of, result from
or in any way relate to this commitment letter, or the providing or syndication
of the Facility, and to reimburse each indemnified person, upon its demand, for
any legal or other expenses reasonably incurred in connection with
investigating, defending or participating in any such loss, claim, damage,
liability or action or other proceeding (whether or not such indemnified person
is a party to any action or proceeding out of which any such expenses arise),
other than any of the foregoing claimed by any indemnified person to the extent
incurred by reason of the gross negligence or willful misconduct, violation of
any law, breach of this agreement, or breach of any agreement under which the
Facility is syndicated of or by such person. Neither Bank of America nor BA
Securities shall be responsible or liable to the Company or any other person
for any consequential damages which may be alleged. The obligations contained
in this paragraph will survive the closing of the Facility. You may assume the
defense of any such matter with counsel reasonably acceptable to Bank of
America unless a conflict of interests would be presented in any such
representation (in which event one law firm reasonably acceptable to you may be
retained to represent all indemnified persons) and no indemnified person may
settle any claim, action or proceeding without your prior written consent,
which may not be unreasonably withheld.
In addition, the Company hereby agrees to reimburse Bank of America
and BA Securities from time to time upon demand for their reasonable
out-of-pocket costs and expenses and reasonable legal expenses and fees
incurred by Bank of America or BA Securities in connection with the Facility,
regardless of whether the credit agreement is executed or the Facility closes.
The Commitment may be satisfied by the execution and delivery of final
loan documentation by Bank of America, or, in the alternative, by Bank of
America Illinois, a subsidiary of Bank of America ("BAI"), as Bank of America
and BAI may determine in
2
<PAGE> 3
their discretion. If BAI elects to assume the role of lender hereunder, it
shall, upon execution and delivery of such final loan documentation, be deemed
to replace Bank of America for purposes of this letter and the Fee Letter (and
Bank of America shall be released thereby) and shall be entitled to all rights
and privileges accorded Bank of America herein and therein; provided, however,
that Bank of America may at its option, notwithstanding such replacement,
remain as "Agent" and shall, to such extent, continue to be entitled to the
rights and privileges accorded it as Agent under this letter and the Fee
Letter. The Company hereby consents to the sharing, among Bank of America, BAI
and their affiliates, of financial and other information regarding the Company
and its affiliates.
If the foregoing is satisfactory to you, please indicate your
agreement and acceptance below and return a copy of this letter to us. Upon
your delivery to us of a signed copy of this letter and the Fee Letter and
payment of the initial installment of the arrangement fee as set forth in the
Fee Letter, this letter agreement shall become a binding agreement, under New
York law, as of the date so accepted.
All non-public information furnished by the Company or Subject Company
hereunder or in connection with the transactions contemplated hereby will be
maintained by BofA in confidence, subject to standard loan syndication
procedures and to such disclosures as BofA may determine on the advice of legal
counsel may be required by law or legal process, and no such information will
be furnished or otherwise made available to any person employed by BofA with
discretionary authority over trading in securities of the Company or Subject
Company.
The terms contained in this letter and the Term Sheet and the Fee
Letter are confidential and, except for disclosure to your board of directors,
officers and employees, to professional advisors retained by you in connection
with this transaction, or as may be required by law based on the advice of
counsel, may not be disclosed in whole or in part to any other person or entity
without our prior written consent which may not be unreasonably withheld;
provided however, that no disclosure of the Fee Letter or information relating
to fees will be disclosed without reviewing such disclosure with Bank of
America and BA Securities.
To the extent disclosure is required by law based on the advice of
your counsel, we hereby consent to your disclosure of the terms and conditions
set forth in this letter and the Term Sheet, or to your disclosure of a copy of
this letter and the Term Sheet, in filings required to be made by the Company
with the Securities and Exchange Commission, provided that no information
relating to fees is disclosed without reviewing such disclosure with Bank of
America and BA Securities. No consent by us shall create any third-party
beneficiary as to our commitment.
This offer will terminate on November 28, 1995 unless on or before
that date you sign and return an enclosed counterpart of this letter and the
Fee Letter and pay the initial installment of the arrangement fee described
above. If accepted, this commitment will expire on March 31, 1996 if a credit
agreement has not been executed on or before
3
<PAGE> 4
that date, provided, however, that the commitment hereunder may be terminated
at any time by the Company upon written notice to Bank of America.
We are pleased to have this opportunity and look forward to working
with you.
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
-----------------------------------
Title: Vice President
BA SECURITIES, INC.,
as Arranger
By:
-----------------------------------
Title: Managing Director
ACCEPTED AND AGREED TO:
this day of , 1995
------ -------------
DIAMOND SHAMROCK, INC.
By:
----------------------------------------
Title:
-------------------------------------
4
<PAGE> 5
CONFIDENTIAL
DIAMOND SHAMROCK, INC.
SUMMARY OF TERMS AND CONDITIONS
$340 MILLION REVOLVING CREDIT FACILITY
BORROWER: Diamond Shamrock, referred herein as "DSI"
or the "Borrower".
GUARANTORS: Guarantors of the Credit Agreement dated as
of April 14, 1987 and amended as of March
31, 1995.
ARRANGER: BA Securities, Inc. ("BASI").
AGENT: Bank of America NT & SA ("BofA"), in such
capacity, the "Agent".
AMOUNT: Up to $340,000,000.
FACILITY: Reducing revolving line of credit (the
"Facility"). The commitment and any
corresponding outstandings shall be reduced
in four equal semi- annual installments
beginning on September 30, 1999 (assumes a
March 31, 1996 closing date).
PURPOSE: The Facility will be used for acquiring the
common stock or 100% of the assets of
Subject Company and to pay related fees and
expenses.
MATURITY: Five (5) years from closing.
COLLATERAL: Unsecured.
PRICING: The LIBOR and Base Rate margins are
specified in the Pricing Chart attached as
Annex I to this Summary of Terms and
Conditions. The margins shall vary based
on the Borrower's senior unsecured
long-term debt ratings ("Senior Debt
Rating") by Standard & Poor's Corporation
("S&P") and Moody's Investor Service, Inc.
("Moody's"), as set forth in the Pricing
Chart attached as Annex I to this Summary
of Terms and Conditions.
<PAGE> 6
CONFIDENTIAL
COMMITMENT FEE: A Commitment Fee shall be payable on the
unused amount of the Facility commitment
during the revolving period payable
quarterly in arrears, on a 360-day basis,
to the Banks pro rata on their respective
shares of the Facility. The Commitment Fee
will be based on the Borrower's Senior Debt
Rating by S&P and Moody's as set forth in
the Pricing Chart attached as Annex I to
this Summary of Terms and Conditions.
BORROWING OPTIONS: BASE RATE: the higher of (a) the rate as
publicly announced from time to time by
Bank of America as its Reference Rate and
(b) the Federal Funds Rate + 1/2% p.a.
Interest on Base Rate advances shall accrue
on the basis of a 365/366-day year and
actual days elapsed and shall be payable
quarterly in arrears.
LIBOR: the London Interbank Offered Rate
for 1-, 2-, 3- or 6-month offshore dollar
deposits as offered by Bank of America to
major banks in the London Interbank Market,
rounded upwards or downwards, if necessary,
to the nearest 1/16%, and adjusted for the
cost of reserves, if any. Interest on
LIBOR advances shall accrue on the basis of
a 360-day year and shall be payable at the
end of each applicable interest period or
at the end of each quarter, whichever
occurs sooner.
PREPAYMENT: Prepayments during LIBOR periods will be
subject to reimbursement to the Banks for
any funding losses. Base Rate loans may be
prepaid at any time.
OPTIONAL COMMITMENT REDUCTION: At the option of the Borrower, the Facility
may be permanently reduced in a minimum
amount of $10 million at any time, subject
to the Prepayment section above, provided
that any outstandings which would exceed
the reduced commitment must be prepaid
together with any relevant funding losses.
DOCUMENTATION & LEGAL COUNSEL: Butler & Binion, L.L.P., Theresa Einhorn,
Partner (cap to be established).
REPRESENTATIONS & WARRANTIES: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995.
-2-
<PAGE> 7
CONFIDENTIAL
CONDITIONS PRECEDENT: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995.
AFFIRMATIVE COVENANTS: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995.
-3-
<PAGE> 8
CONFIDENTIAL
NEGATIVE COVENANTS: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995, summarized as follows:
Indebtedness - Funded Debt shall not exceed
63% of Funded Debt plus Consolidated
Tangible Net Worth.
Negative Pledge - Borrower is permitted a
lien basket equal to 10% of the difference
between Consolidated Net Tangible Assets
and debt secured by purchase money liens on
acquired or newly constructed property.
Asset Disposition - Sale of assets
exceeding 10% of Consolidated Net Tangible
Assets in any 12-month period is prohibited
unless approved by the Required Banks, with
the exception of the sale of up to $100
million of accounts receivable outstanding
at any one time on a non-recourse basis and
assets sold as part of the consolidation of
Subject Company and the Company.
Investments, Loans and Advances - Borrower
shall be permitted an investment basket
equal to 10% of Consolidated Net Tangible
Assets, along with Permitted Investments
and Subsidiaries, and certain additional
investments limited by dollar value of
initial investment in certain foreign
entities.
Restricted Payments - Limited to the sum of
(a) 50% (or minus 100% in the event of a
deficit) of Consolidated Net Income since
12/31/94, (b) proceeds from the issuance or
sale of capital stock and debt converted to
capital stock, and (c) $200,000,000.
Consolidated Tangible Net Worth - Shall at
all times exceed the sum of $350,000,000
plus 50% of Consolidated Net Income since
12/31/94.
Interest Coverage Ratio - Borrower's EBITDA
for the latest four calendar quarters must
cover interest during the same period by a
minimum of 3.0 times.
Current Ratio - Borrower shall at all times
maintain a ratio of Current Assets to
Current Liabilities of no less than 1.25:1.
-4-
<PAGE> 9
CONFIDENTIAL
EVENTS OF DEFAULT: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995.
ASSIGNMENTS AND PARTICIPATIONS: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995.
COST AND YIELD PROTECTION: Substantially the same as provided in
Diamond Shamrock's Credit Agreement dated
as of April 14, 1987 and amended as of
March 31, 1995.
EXPENSES: All reasonable legal and out-of-pocket
expenses of Agent are for the account of
the Borrower.
LAW: New York.
This Summary of Terms and Conditions is not meant to be, nor should it be
construed as, an attempt to define all of the terms and conditions of the
transaction contemplated hereby, nor is intended to reflect specific document
phrasing that will exist in the Credit Agreement. It is intended only to
outline the basic points of business understanding around which binding legal
documentation will be structured.
-5-
<PAGE> 10
ANNEX I
DIAMOND SHAMROCK
PRICING CHART
(EXPRESSED IN BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
==================================================================================================
Pricing Level Level 1 Level 2 Level 3 Level 4 Level 5
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIBOR Margin 30.0 37.5 42.5 47.5 75.0
- --------------------------------------------------------------------------------------------------
Base Rate Margin 0 0 0 0 0
- --------------------------------------------------------------------------------------------------
Commitment Fee 10.0 12.5 14.0 17.5 25.0
==================================================================================================
</TABLE>
Pricing Level Description:
<TABLE>
<CAPTION>
S&P Moody's
--- -------
<S> <C> <C>
Level 1: Means: Greater Than A- Greater Than A3
Equal to Equal To
Level 2: Means: BBB+ Baa1
Level 3: Means: BBB Baa2
Level 4: Means: BBB- Baa3
Level 5: Means: Less Than BB+ Less Than Ba1
Equal To Equal To
</TABLE>
DEFAULT INTEREST: Interest will accrue at a premium of 200 basis points p.a.
above the Base Rate plus any margin over the Base Rate during any period of
default.
In the event of a split rating, the committed pricing and Facility Fee will be
based on the lower of the two ratings. If the Borrower's senior unsecured
long-term debt is unrated by either rating Agency, the Facility Fee will be
that corresponding to Level 5. Any change in the pricing shall be effective as
of the date on which the applicable rating agency announces the applicable
change in ratings.
-6-
<PAGE> 1
_________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 8, 1995
BY AND AMONG
DIAMOND SHAMROCK, INC.
SHAMROCK ACQUISITION CORP.
AND
NATIONAL CONVENIENCE STORES INCORPORATED
_______________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
THE TENDER OFFER
<TABLE>
<S> <C> <C>
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Consent and Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Dissemination of Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE MERGER
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Certificate of Incorporation and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Conversion of Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Commit to Vote Shares in Favor of Merger; Exercise of Warrants . . . . . . . . . . . . . . . . . . . 7
2.11 Merger Without Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.13 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SECURITIES
3.1 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Payment for Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Commission Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Information in Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 No Material Adverse Change; Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 DGCL Section 203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND SUB
5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Offer Documents; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6 Status as an Interested Stockholder or an Acquiring Person . . . . . . . . . . . . . . . . . . . . . 21
5.7 Interim Operations of the Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
COVENANTS
6.1 Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Certain Agreements, Employee Benefits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Post Merger Treatment of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
6.11 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . 29
7.2 Conditions to Obligations of the Company to Effect the Merger . . . . . . . . . . . . . . . . . . . . 29
7.3 Conditions to Obligations of the Parent and Sub to Effect the Merger . . . . . . . . . . . . . . . . 29
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Certain Termination Fees; Certain Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
MISCELLANEOUS
9.1 Non-survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.10 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.11 Entire Agreement; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ANNEX I Conditions to the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
ANNEX II Amended and Restated Certificate of Incorporation of National Convenience Stores Incorporated... 40
</TABLE>
-iv-
<PAGE> 6
SCHEDULE OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Location
- ------------ --------
<S> <C>
Acquiring Person Section 5.6
Acquisition Transaction Section 6.9(a)
Agreement Preamble
Agreements Section 6.5(a)
Article IX Section 3.1
Certificates Section 3.2(b)
Claims Section 6.4
Closing Section 2.13
Code Section 4.8
Commission Section 1.1
Common Stock Preamble
Company Preamble
Confidentiality Agreement Section 6.2(b)
Continuing Directors Section 9.2
DGCL Section 2.1
Disclosure Schedule Section 4.1(a)
Dissenting Shares Section 3.1
Distribution Date Section 4.11
Effective Time Section 2.2
Environmental Laws Section 4.4(c)
Exchange Act Section 1.2
Governmental Entity Section 4.4(a)
HSR Act Section 4.4(a)
Indemnified Parties Section 6.4
Instrument of Merger Section 2.2
Interested Stockholder Section 5.6
IRS Section 4.9(a)
Merger Section 2.1
Merger Consideration Section 2.7(a)
Minimum Condition Annex I
NYSE Section 1.5
Offer Preamble
Offer Documents Section 1.2
Offer to Purchase Section 1.1
Option Plan Section 2.12
Options Section 2.12
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Parent Preamble
Paying Agent Section 3.2(a)
Payment Fund Section 3.2(a)
Per Share Amount Preamble
Person Section 6.9(a)
Proxy Statement Section 4.6(b)
Rights Section 4.2
Rights Agreement Section 4.2
Schedule 14D-1 Section 1.2
Schedule 14D-9 Section 1.3
SEC Documents Section 4.5
Securities Act Section 4.5
Securities Preamble
Special Meeting Section 2.9(a)(i)
Sub Preamble
Subsidiary Section 4.1(a)
Surviving Corporation Section 2.1
Taxes Section 4.9(b)
Tax Returns Section 4.9(b)
Voting Debt Section 4.2
Warrant Agreement Preamble
Warrants Preamble
</TABLE>
-ii-
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 8, 1995 (this
"Agreement"), by and among Diamond Shamrock, Inc., a Delaware corporation
("Parent"), Shamrock Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of the Parent ("Sub"), and National Convenience Stores
Incorporated, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent and the Company
have determined that the acquisition of the Company by the Parent would be
advantageous and beneficial to their respective corporations and stockholders,
and that such transaction is consistent with and in furtherance of such
entities' respective long-term business strategies;
WHEREAS, in furtherance thereof, it is proposed that the Parent and the
Sub will make a cash tender offer to acquire (a) all of the outstanding shares
of the Company's Common Stock, par value $.01 per share (the "Common Stock"),
together with the attached Rights (as defined in Section 4.2), for $27.00 per
share of Common Stock (and attached Right) net to the seller (pre-tax) in cash
(such amount, or any greater amount per share of Common Stock (and attached
Right) pursuant to such cash tender offer, being hereinafter referred to as the
"Per Share Amount") and (b) all of the outstanding Warrants to Purchase Common
Stock (the "Warrants") issued pursuant to the Warrant Agreement dated as of
March 9, 1993, between the Company and Boatmen's Trust Company, as Warrant
Agent (the "Warrant Agreement"), for $9.25 per Warrant net to the seller
(pre-tax) in cash (such amount, or any greater amount per Warrant pursuant to
such cash tender offer, being hereinafter referred to as the "Per Warrant
Amount") (the Common Stock (and attached Rights) and the Warrants being
hereinafter collectively referred to as the "Securities"), in accordance with
the terms and subject to the conditions provided herein and in the Offer
Documents (as defined in Section 1.2) (the "Offer");
WHEREAS, it is proposed that, following consummation of the Offer, there
be a merger of the Sub with and into the Company with the Company surviving as
a subsidiary of the Parent;
WHEREAS, for convenience and simplicity, references to the "Parent" in
Article I of this Agreement shall be deemed to include the "Sub", unless the
context otherwise requires;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
<PAGE> 9
ARTICLE I
THE TENDER OFFER
1.1 The Offer. Provided that this Agreement has not been terminated
in accordance with Section 8.1, the Parent will commence the Offer as promptly
as practicable after the date hereof, but in no event later than November 14,
1995. The Offer will have an initial expiration date which is 20 business days
(as defined in the relevant rules of the Securities and Exchange Commission
(the "Commission")) after the commencement thereof. The obligation of the
Parent to accept for payment any Securities tendered pursuant to the Offer will
be subject only to the satisfaction of the conditions set forth in Annex I
hereto. The Parent expressly reserves the right to increase the Per Share
Amount and the Per Warrant Amount to be paid in the Offer or to extend the
Offer if any condition thereto is not satisfied. Without the prior written
consent of the Company, the Parent will not (a) decrease the Per Share Amount
or the Per Warrant Amount, (b) decrease the number of Securities to be
purchased in the Offer, (c) change the form of consideration payable in the
Offer, (d) add to or change the conditions to the Offer set forth in Annex I
hereto, (e) change or waive the Minimum Condition (as defined in Annex I
hereto) or (f) make any other change in the terms or conditions of the Offer
which is materially adverse to the holders of the Securities. The conditions
set forth in Annex I are for the benefit of the Parent, and may be asserted by
the Parent or, subject to the immediately preceding sentence, may be waived by
the Parent, in whole or in part, at any time and from time to time in its
discretion and regardless of the circumstances relating thereto. The Offer
will be made by means of an offer to purchase (the "Offer to Purchase")
containing the terms set forth in this Agreement and only the conditions set
forth in Annex I hereto. Subject to the terms of the Offer and this Agreement
and the satisfaction of all the conditions of the Offer set forth in Annex I
hereto as of any expiration date of the Offer, the Parent will accept for
payment and pay for all Securities validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after such expiration date of the Offer.
Subject to Section 8.1, if the conditions set forth in Annex I hereto are not
satisfied or, to the extent permitted by this Agreement, waived by the Parent,
as of the date the Offer would otherwise have expired, the Parent will extend
the Offer from time to time until the earlier of the consummation of the Offer
or the date which is 60 days from the commencement of the Offer.
1.2 Offer Documents. On the date of commencement of the Offer, the
Parent will file with the Commission a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Schedule 14D-1 will contain (including as an
exhibit) or will incorporate by reference the Offer to Purchase and forms of
the related letters of transmittal and summary advertisement (which Schedule
14D-1, Offer to Purchase and other documents, together with any supplements or
amendments
-2-
<PAGE> 10
thereto, are referred to herein collectively as the "Offer Documents"). The
Parent will disseminate the Offer to Purchase, related letters of transmittal
and other related Offer Documents to holders of the Securities. Each of the
Parent and the Company will promptly correct any information provided by it for
use in the Offer Documents that becomes false or misleading in any material
respect and the Parent will promptly take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the Commission and the other
Offer Documents as so corrected to be disseminated to holders of the
Securities, in each case as and to the extent required by applicable law. The
Parent will provide the Company and its counsel in writing with any comments
the Parent or its counsel may receive from the Commission or its staff with
respect to the Offer Documents promptly after the receipt of such comments. To
the extent reasonably practicable, the Parent and its counsel will provide the
Company and its counsel with a reasonable opportunity to participate in all
material communications with the Commission and its staff, including any
meetings and telephone conferences relating to the Offer Documents, the Offer,
the Merger (as defined in Section 2.1) or this Agreement.
1.3 Consent and Recommendation. The Company's Board of Directors
has determined that the Offer and the Merger are fair to, and are in the best
interests of, the holders of the Securities. Accordingly, the Company hereby
approves and consents to the Offer. The Company will file with the Commission,
as promptly as practicable after the filing by the Parent of the Schedule 14D-1
(but in any event on the same business day), a Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") pursuant to the Exchange
Act, reflecting the recommendation of the Company's Board of Directors that
holders of Securities tender their Securities pursuant to the Offer and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act, all subject to the fiduciary duties of the Board of Directors of
the Company under applicable laws as advised in the written opinion of outside
counsel to the Company. Each of the Company and the Parent will promptly
correct any information provided by it for use in the Schedule 14D-9 that
becomes false or misleading in any material respect, and the Company will
promptly take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the Commission and disseminated to holders of the Securities,
in each case as and to the extent required by applicable law. The Company will
provide the Parent and its counsel in writing with any comments the Company or
its counsel may receive from the Commission or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments. To the extent
reasonably practicable, the Company and its counsel will provide the Parent and
its counsel with a reasonable opportunity to participate in all material
communications with the Commission and its staff, including any meetings and
telephone conferences relating to the Schedule 14D-9, the Merger or this
Agreement.
-3-
<PAGE> 11
1.4 Dissemination of Offer Documents.
(a) The Company will (i) promptly furnish the Parent with
mailing labels containing the names and addresses of all record holders of
Securities as of a recent date and of those persons becoming record holders
after such date, together with copies of all security position listings and
computer files and all other information in the Company's control regarding the
beneficial owners of Securities that the Parent may reasonably request and (ii)
furnish to the Parent such other assistance as the Parent or its agents may
reasonably request in communicating the Offer to holders of Securities.
(b) Subject to the requirements of law, and except for such
steps as are necessary to disseminate the Offer Documents, the Parent shall,
and shall cause each of its Subsidiaries (as defined in Section 4.1(a)) to,
hold in confidence the information contained in any of such labels and lists,
use such information only in connection with the Offer and, if this Agreement
is terminated, deliver to the Company all copies of, and extracts or summaries
from, such information then in their possession.
1.5 Directors. Effective upon the acceptance for payment by the
Parent of the Securities pursuant to the Offer, and from time to time
thereafter so long as the Parent and/or any of its wholly owned Subsidiaries
(as defined in Section 4.1(a)) (including the Sub) owns a majority of the
outstanding shares of Common Stock, the Parent will be entitled, subject to
compliance with applicable law, the Restated Certificate of Incorporation of
the Company and the provisions of the next sentence, to designate at its option
up to that number of directors, rounded up to the nearest whole number, of the
Company's Board of Directors as will make the percentage of the Company's
directors designated by the Parent equal to the percentage of outstanding
shares of Common Stock held by the Parent and any of its wholly owned
Subsidiaries (including the Sub), including shares of Common Stock accepted for
payment pursuant to the Offer. The Company will, upon the request of the
Parent, promptly increase the size of its Board of Directors and/or use its
reasonable best efforts to secure the resignation of such number of directors
as is necessary to enable the Parent's designees to be elected to the Company's
Board of Directors and will use its reasonable best efforts to cause the
Parent's designees to be so elected, subject in all cases to Section 14(f) of
the Exchange Act, it being understood that the Company agrees to comply with
such Section of the Exchange Act as promptly as practicable after the date
hereof, provided that, prior to the Effective Time (as defined in Section 2.2),
the Company will use its reasonable best efforts to assure that the Company's
Board of Directors always has at least two members who are directors of the
Company as of the date hereof. At such times, the Company will use its
reasonable best efforts, subject to any limitations imposed by applicable laws
or rules of the New York Stock Exchange, Inc. (the "NYSE"), to cause persons
designated by the Parent to constitute the same percentage as such persons
represent on the Company's Board of Directors of (a) each
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committee of the Board of Directors of the Company, (b) each board of directors
or board of management of each Subsidiary of the Company and (c) each committee
of each such board.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Delaware General
Corporation Law (the "DGCL"), the Sub shall be merged with and into the Company
(the "Merger") as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VII hereof. Subject to the
terms and conditions hereof (including the qualifications in Section 6.3), each
of the parties will use its reasonable best efforts to cause the Merger to
occur within 90 days after the purchase of the Securities pursuant to the
Offer. Following the Merger, the Company shall continue as the surviving
corporation (the "Surviving Corporation") under the name "National Convenience
Stores Incorporated" and shall continue its existence under the laws of
Delaware, and the separate corporate existence of the Sub shall cease.
2.2 Effective Time. The Merger shall be consummated by filing with
the Secretary of State of the State of Delaware a certificate of merger or a
certificate of ownership and merger, as appropriate (the "Instrument of
Merger"), in such form as is required by, and executed in accordance with, the
relevant provisions of, the DGCL (the time of such filing or such other time
specifically set forth therein being the "Effective Time").
2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
2.4 Certificate of Incorporation and By-Laws.
(a) The Restated Certificate of Incorporation of the Company in
effect at the Effective Time will be amended in its entirety to read as set
forth in Annex II hereto, and, as such, will be the Restated Certificate of
Incorporation of the Surviving Corporation, until amended in accordance with
applicable law to the extent permitted by Section 2.4(c).
(b) The Restated By-Laws of the Company in effect at the
Effective Time will be the By-Laws of the Surviving Corporation until amended
in accordance with applicable law to the extent permitted by Section 2.4(c).
(c) The Company, the Parent and the Sub each agrees that, as
long as the Company, the Parent or the Surviving Corporation has any liability
pursuant to Section 6.4 to
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defend, indemnify and hold harmless any Indemnified Parties (as defined in
Section 6.4), it will not amend or permit the amendment of Article XI of the
Company's Restated Certificate of Incorporation or Article VII of the Company's
Restated By-Laws, in each case as in effect on the date of this Agreement.
2.5 Directors. The directors of the Sub at the Effective Time shall
be the directors of the Surviving Corporation until their successors are duly
elected and qualified or until their earlier death, resignation or removal in
accordance with the terms of Surviving Corporation's Certificate of
Incorporation and By-Laws and the DGCL.
2.6 Officers. The officers of the Company at the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the terms of Surviving Corporation's
Certificate of Incorporation and By-Laws and the DGCL.
2.7 Conversion of Securities.
(a) Each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares owned by the Parent,
the Sub or any other direct or indirect Subsidiary of the Parent or held in the
treasury of the Company, all of which shall be cancelled, and Dissenting Shares
(as defined in Section 3.1)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the Per Share Amount without interest thereon, net (pre-tax) to the
holder in cash (sometimes, the "Merger Consideration") payable to the holder
thereof upon surrender of the certificate representing such share.
(b) Each Warrant issued and outstanding immediately prior to
the Effective Time (other than Warrants held in the treasury of the Company,
which shall be cancelled) shall remain outstanding following, and be unaffected
by, the Merger, except that, as provided in Section 10.1(a) of the Warrant
Agreement, from and after the Effective Time each holder of Warrants shall have
the right to obtain upon the exercise of each Warrant, in lieu of the one share
of Common Stock theretofore issuable upon exercise of such Warrant, the Per
Share Amount without interest thereon, net to the holder in cash.
2.8 Conversion of Sub Common Stock. Each share of common stock, par
value $0.01 per share, of the Sub issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into one share of common stock of the
Surviving Corporation.
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2.9 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable law and the Company's Restated Certificate of
Incorporation and Restated By-Laws:
(i) subject to its fiduciary duties under applicable
law as advised in the written opinion of outside counsel to the Company, duly
call, give notice of, convene and hold a special meeting (the "Special
Meeting") of the holders of Common Stock as soon as practicable following the
acceptance for payment of Securities in the Offer solely for the purpose of
considering and taking action on this Agreement and the transactions
contemplated hereby;
(ii) subject to its fiduciary duties under applicable
law as advised in the written opinion of outside counsel to the Company,
include in the Proxy Statement (as defined in Section 4.6(b)) the
recommendation of its Board of Directors that holders of Common Stock vote in
favor of the approval and adoption of this Agreement and the transactions
contemplated hereby; and
(iii) (x) as promptly as practicable after the date
hereof, obtain and furnish the information required to be included by it in the
Proxy Statement, and after consultation with the Parent, respond promptly to
any comments made by the Commission or its staff with respect to the Proxy
Statement and any preliminary version thereof, (y) cause the Proxy Statement to
be mailed to its stockholders at the earliest practicable time following the
acceptance for payment of Securities in the Offer, and (z) subject to the
fiduciary duties of the Board of Directors under applicable law as advised in
the written opinion of outside counsel to the Company, use its best efforts to
obtain the necessary approval of the Merger by its stockholders.
2.10 Commit to Vote Shares in Favor of Merger; Exercise of Warrants.
The Parent and the Sub each agrees that, at the Special Meeting, all of the
shares of Common Stock acquired directly or indirectly pursuant to the Offer or
otherwise by the Parent, the Sub or any other Subsidiary of the Parent will be
voted in favor of the approval and adoption of this Agreement and the Merger.
The Parent also agrees that it or the Sub will, prior to the record date for
the Special Meeting, exercise such number of Warrants as may be necessary to
assure that no affirmative vote of any holder of Common Stock other than the
Parent or the Sub is required for adoption of this Agreement.
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<PAGE> 15
2.11 Merger Without Meeting of Stockholders. Notwithstanding the
matters set forth in Section 2.9, in the event that the Sub shall acquire at
least 90 percent of the outstanding shares of Common Stock pursuant to the
Offer or otherwise, the Parent agrees, subject to Sections 7.1 and 7.3, to take
all necessary and appropriate action (including the exercise of Warrants to the
extent necessary to achieve the 90 percent threshold) to cause the Merger to
become effective as soon as practicable after the acceptance for payment of
Securities in the Offer, but in no event later than 10 business days (or such
other time as the Company (acting through the Continuing Directors (as that
term is defined in Section 9.2)) and Parent may agree) thereafter in accordance
with Section 253 of the DGCL.
2.12 Stock Options. Each option ("Option") to acquire shares of
Common Stock that has been granted pursuant to the Company's 1993 Non-Qualified
Stock Option Plan dated as of March 9, 1993 (the "Option Plan") whether or not
otherwise exercisable, shall, subject to the prior written approval of each
optionee, be cancelled and each optionee shall be entitled to receive promptly
after the acceptance of Securities for payment in the Offer, in cancellation
and settlement of such Option, a cash payment from the Company in an amount
equal to the difference between the Per Share Amount and the per share exercise
price of such option, multiplied by the number of shares of Common Stock
covered by such Option. The Board of Directors has taken all necessary action
under the Option Plan to fix the Effective Time as the date on which Options
granted under the Option Plan which are not cancelled as provided in the
preceding sentence shall terminate pursuant to Section 10.2 of the Option Plan,
and the Company will give prompt notice thereof to the holders of such Options.
2.13 Closing. Upon the terms and subject to the conditions hereof,
as soon as practicable after consummation of the Offer, and if required by law,
after the vote of the holders of the Common Stock in favor of the adoption of
this Agreement has been obtained, the Company and the Sub shall execute in the
manner required by the DGCL and deliver to the Secretary of State of the State
of Delaware a duly executed and verified Instrument of Merger, as required by
the DGCL, and the parties shall take all such other and further actions as may
be required by law to make the Merger effective. Prior to the filing referred
to in this Section 2.13, a closing (the "Closing") will be held at the office
of the Company, 100 Waugh Drive, Houston, Texas 77007 (or such other place as
the parties may agree) for the purpose of confirming all the foregoing.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SECURITIES
3.1 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock that are issued and outstanding
immediately prior to the Effective
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Time and that are held by holders of Common Stock who did not vote in favor of
the Merger, and owned of record by the holders who comply with all of the
relevant provisions of Article IX of the Company's Restated Certificate of
Incorporation ("Article IX") and Section 262 of the DGCL (the "Dissenting
Shares"), shall not be converted into the right to receive the Merger
Consideration for such shares, unless and until such holders shall have failed
to perfect or shall have effectively withdrawn or lost their rights to
appraisal under Article IX and the DGCL. If any such holder shall have failed
so to perfect or shall have effectively withdrawn or lost such right, such
holder's Dissenting Shares shall thereupon be deemed to have been converted
into the right to receive, as of the Effective Time, the Merger Consideration
for such Dissenting Shares without any interest thereon.
3.2 Payment for Securities.
(a) Prior to the Effective Time, the Parent shall designate
KeyCorp Shareholder Services, Inc. or a United States bank or trust company
reasonably satisfactory to the Company to act as paying agent in the Merger
(the "Paying Agent"). At the Effective Time, the Parent shall deposit in trust
with the Paying Agent cash in an aggregate amount necessary to make the
payments pursuant to Section 2.7(a) hereof to holders (other than the Parent or
the Sub or any of their respective Subsidiaries) of shares of Common Stock that
are issued and outstanding immediately prior to the Effective Time (such
amounts being hereinafter referred to as the "Payment Fund"), and will deposit
from time to time thereafter cash sufficient to make the appropriate cash
payments, if any, to holders of Dissenting Shares. Promptly following the date
which is six months after the Effective Time, the Paying Agent shall return to
the Surviving Corporation all cash in its possession that constitutes any
portion of the Payment Fund, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate (as defined in Section 3.2(b)) may
surrender such certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without interest, but shall have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under applicable law.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each record holder, as of
the Effective Time, of an outstanding certificate or certificates that
immediately prior to the Effective Time represented shares of Common Stock (the
"Certificates"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent)
and instructions for use in effecting the surrender of the Certificate(s) and
payment therefor. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed, the holder of such
Certificate shall be paid in exchange therefor cash in an amount equal to the
product of the
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number of shares of Common Stock formerly represented by such Certificate
multiplied by the Merger Consideration, and such Certificate shall forthwith be
cancelled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If payment is to be made to a person other than
the person in whose name the Certificate surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.2(b), each
Certificate (other than Certificates representing shares of Common Stock owned
by the Parent, the Sub or any other Subsidiary of the Parent, and Dissenting
Shares) shall represent for all purposes the right to receive an amount in cash
equal to the Merger Consideration multiplied by the number of shares of Common
Stock formerly evidenced by such Certificate, without any interest thereon.
From and after the Effective Time, holders of Certificates immediately prior to
the Effective Time will have no right to vote or to receive any dividends or
other distributions with respect to any shares of Common Stock which were
theretofore represented by such Certificates, and will have no other rights
other than as provided herein or by applicable law.
(c) After the Effective Time, there shall be no transfers of
shares of Common Stock that were outstanding immediately prior to the Effective
Time on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for cash as provided in this Article III. At
the close of business on the day of the Effective Time, the stock ledger of the
Company with respect to Common Stock shall be closed.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to the Parent and the Sub
as follows:
4.1 Organization.
(a) Each of the Company and its Subsidiaries (as defined in
this Section 4.1(a)) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing or in good standing or to have such
power and authority would not, individually or in the aggregate, have a
material adverse effect on the
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Company and its Subsidiaries. As used in this Agreement, the word "Subsidiary"
means, with respect to the Company or the Parent, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party, by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. A list of all direct or indirect
Subsidiaries of the Company, including their jurisdiction of incorporation or
organization, capitalization and equity owners is set forth in Section 4.1(a)
of the Disclosure Schedule delivered by the Company to the Parent pursuant to
this Agreement (the "Disclosure Schedule"). Except as set forth in Section
4.1(a) of the Disclosure Schedule, the Company does not own, directly or
indirectly, or have any voting rights with respect to, any capital stock or
other securities of any corporation or any direct or indirect equity or other
ownership interest in any business. References to a wholly owned Subsidiary of
an entity include a Subsidiary all of the common equity of which is owned
directly or through "wholly owned" Subsidiaries by such entity. As used in
this Agreement, any reference to any event, change or effect being material or
having a material adverse effect on or with respect to an entity (or such
entity and its Subsidiaries) means such event, change or effect which is
materially adverse to the business, assets, prospects, results of operations or
financial condition of such entity (or, if with respect to such entity and its
Subsidiaries, such group of entities taken as a whole), but does not include
any adverse change or effect on the prospects of such entity or group of
entities resulting from general economic or industry conditions. Each of the
Company and its Subsidiaries is duly qualified or licensed to do business and
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries.
(b) The Company has heretofore provided to the Parent a
complete and correct copy of the charter and by-laws, each as amended to date,
of the Company and each of its Subsidiaries. Such charters and by-laws are in
full force and effect. Neither the Company nor any of its Subsidiaries is in
violation of any provision of its charter or by-laws, except for such
violations that would not, individually or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries.
4.2 Capitalization. The authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock of which, as of November 6,
1995, 6,090,389 shares were
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issued and outstanding and no shares were held in the Company's treasury and
(ii) 1,000,000 shares of Preferred Stock, $1.00 par value, of which, as of
November 6, 1995, 100,000 shares had been designated as the Company's Series A
Junior Participating Preferred Stock, none of which was then issued and
outstanding but all of which had been reserved for issuance upon the exercise
of the Company's Rights to Purchase Preferred Stock (the "Rights") pursuant to
the Rights Agreement, dated as of August 31, 1995, between the Company and
Boatmen's Trust Company, as Rights Agent (the "Rights Agreement"). Also, as of
November 6, 1995, the Company had reserved for issuance (a) 1,349,611 shares of
Common Stock upon exercise of the Warrants, (b) 775,000 shares of Common Stock
upon exercise of then-outstanding Options under the Option Plan and (c) 35,000
shares of Common Stock in respect of future grants of Options pursuant to the
Option Plan. Since March 9, 1993, the Company has not issued any shares of its
capital stock, except for issuances of Common Stock upon the exercise of
Warrants or Options granted under the Option Plan, and has not repurchased,
redeemed or otherwise retired any shares of its capital stock. All the
outstanding shares of the Company's capital stock are, and all shares which may
be issued pursuant to the Warrant Agreement, the Rights Agreement and the
Option Plan will be, when issued and paid for in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and nonassessable
and not subject to any preemptive rights of third parties in respect thereto.
No bonds, debentures, notes or other indebtedness having the right to vote
under ordinary circumstances (or convertible into securities having such right
to vote) ("Voting Debt") of the Company or any of its Subsidiaries are issued
or outstanding. Except as set forth above, as disclosed in the SEC Documents
(as defined in Section 4.5) filed prior to November 1, 1995 or as set forth in
Section 4.2 of the Disclosure Schedule, there are no existing options,
warrants, calls, subscriptions, rights, commitments or other agreements of any
character obligating the Company or any of its Subsidiaries to issue, transfer
or sell or cause to be issued, transferred or sold any shares of capital stock,
Voting Debt or other interests of the Company or of any of its Subsidiaries or
securities convertible into or exchangeable for such shares or other securities
or interests or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription, right,
agreement or commitment. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its Subsidiaries.
Each of the outstanding shares of capital stock of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid, nonassessable and
free of any preemptive rights in respect thereto (and in the case of
partnership interests, not subject to current or future capital calls), and,
except as set forth in Section 4.2 of the Disclosure Schedule or as disclosed
in the SEC Documents filed prior to November 1, 1995, such shares and other
interests are owned by the Company or by a Subsidiary of the Company free and
clear of any lien, claim, option, charge, security interest, limitation on
voting or transfer rights and encumbrance of any kind, except which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries.
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4.3 Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than any adoption of this Agreement by
the holders of such shares of Common Stock as may be required by applicable
law). The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated, other than, with respect to the Merger, any
required stockholder action as noted above, and the filing and recordation of
the Instrument of Merger with the Secretary of State of the State of Delaware.
This Agreement has been duly executed and delivered by the Company and,
assuming this Agreement constitutes a valid and binding obligation of the
Parent and the Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
4.4 Consents and Approvals; No Violations.
(a) Except as set forth in Section 4.4(a) of the Disclosure
Schedule and except for filings, permits, authorizations, notices, consents and
approvals as may be required under, and other applicable requirements of, the
Exchange Act and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the filing and recordation of the Instrument of
Merger in accordance with the DGCL, neither the execution, delivery or
performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby and compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any
breach of any provisions of the charter documents or by-laws of the Company or
any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") (except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not prevent consummation of the Offer or the Merger and would
not, individually or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, or result in the creation of any lien or other encumbrance on any
property or asset of the Company or any of its Subsidiaries pursuant to, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
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of its Subsidiaries is bound, except, in the case of clauses (iii) and (iv),
for violations, breaches, defaults or other occurrences which would not prevent
consummation of the Offer or the Merger and would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries.
(b) Except as disclosed in the SEC Documents filed prior to
November 1, 1995 or as set forth in Section 4.4(b) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries is in default under or in
violation of (i) any order, writ, injunction, decree, statute, rule or
regulation of any Governmental Entity applicable to the Company or any of its
Subsidiaries or by which any of them or any of their properties or assets may
be bound or (ii) any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, except in each case for any such defaults or violations
which, individually or in the aggregate, would not have a material adverse
effect on the Company and its Subsidiaries.
(c) Except as disclosed in the SEC Documents filed prior
November 1, 1995 or as set forth in Section 4.4(c) of the Disclosure Schedule,
(i) the Company and its Subsidiaries are in compliance with all applicable
statutes, ordinances, rules and regulations of any Governmental Entity relating
to protection of the environment and human health including, without
limitation, with respect to air, surface water, ground water, land and
subsurface strata (collectively, "Environmental Laws") except for
non-compliance which, individually or in the aggregate, would not have a
material adverse effect on the Company and its Subsidiaries and (ii) neither
the Company nor any of its Subsidiaries has received written notice of, or is
the subject of, any action, cause of action, claim, investigation, demand or
notice by any person or entity alleging liability under or non-compliance by
the Company or any of its Subsidiaries with any Environmental Law which,
individually or in the aggregate, would have a material adverse effect on the
Company and its Subsidiaries.
(d) Skipper Beverage Company, Inc. is in compliance in all
material respects with the rules and regulations of the Texas Liquor Control
Board.
4.5 Commission Reports and Financial Statements. Since June 30,
1993, the Company has filed with the Commission all forms, reports and
documents required to be filed by it under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act"), and has heretofore provided to
the Parent true and complete copies of all such forms, reports and documents
(as they have been amended since the time of their filing and prior to the date
hereof, collectively, the "SEC Documents"). The SEC Documents, including
without limitation any financial statements or schedules included therein, at
the time filed, and any forms, reports or other documents filed by the Company
with the Commission after the date of this
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<PAGE> 22
Agreement, (i) did not at the time they were filed, or will not at the time
they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and (ii) complied or will be prepared in compliance,
in each case in all material respects, with the applicable requirements of the
Exchange Act or the Securities Act, as the case may be. The financial
statements of the Company included in the SEC Documents have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, to normal
audit adjustments) and fairly present (subject, in the case of the unaudited
statements, to normal audit adjustments) the consolidated financial position of
the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Except as reflected, reserved against or otherwise disclosed in the
financial statements of the Company included in the SEC Documents or as
otherwise disclosed in the SEC Documents, in each case filed prior to November
1, 1995, or as set forth in Section 4.5 of the Disclosure Schedule, as of the
date hereof, neither the Company nor any of its Subsidiaries had any
liabilities or obligations (absolute, accrued, fixed, contingent or otherwise)
that would be required to be reflected on a balance sheet, or the notes
thereto, prepared in accordance with generally accepted accounting principles,
other than liabilities incurred in the ordinary course of business consistent
with past practice.
4.6 Information in Other Documents.
(a) Neither the Schedule 14D-9 nor any of the information
supplied by the Company and any of its affiliates specifically for inclusion in
the Offer Documents will, at the respective times the Schedule 14D-9 or the
Offer Documents are filed with the Commission or are first published, sent or
given to stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Schedule 14D-9 will comply as to form in all material
respects with the applicable requirements of the Exchange Act and the rules and
regulations thereunder.
(b) Any proxy or information statement used in connection
with the Special Meeting and the Merger (as it may be amended from time to
time, the "Proxy Statement") will not, at the date mailed to the Company's
stockholders and at the time of the Special Meeting, contain any statement,
which at the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the statements therein not
false and misleading. The Proxy Statement will, when filed with the Commission
by the Company, comply as to form
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in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
(c) Notwithstanding the foregoing, the Company makes no
representation with respect to statements made in any of the foregoing
documents based on information supplied by the Parent or the Sub specifically
for inclusion therein.
4.7 Litigation. Except as disclosed in the SEC Documents filed
prior to November 1, 1995 or in Section 4.7 of the Disclosure Schedule, there
is no suit, claim, action, proceeding or investigation pending or, to the best
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries which, individually or in the aggregate, would have a material
adverse effect on the Company and its Subsidiaries or affect adversely in any
material respect the ability of the Company to consummate the transactions
contemplated by this Agreement. Except as disclosed in the SEC Documents filed
prior to November 1, 1995 or in Section 4.7 of the Disclosure Schedule, neither
the Company nor any of its Subsidiaries is subject to any outstanding order,
writ, injunction or decree which, individually or in the aggregate, would have
a material adverse effect on the Company and its Subsidiaries or affect
adversely in any material respect the ability of the Company to consummate the
transactions contemplated hereby.
4.8 No Material Adverse Change; Material Agreements. Except as
disclosed in the SEC Documents filed prior to November 1, 1995 or as set forth
in Section 4.8 of the Disclosure Schedule, (a) since June 30, 1995, there has
not been (i) any action which would be prohibited under Section 6.1 were it to
occur after the date of this Agreement nor (ii) any material adverse change in
the assets, business, prospects (other than changes in prospects arising from
general economic or industry conditions), results of operations or financial
condition of the Company and its Subsidiaries, and (b) neither the Company nor
any of its Subsidiaries has become a party to any agreement or amendment to an
existing agreement which would be required to be filed by the Company as an
exhibit to its next Annual Report on Form 10-K other than this Agreement.
Except as disclosed in the SEC Documents filed prior to November 1, 1995 or as
set forth in Section 4.8 of the Disclosure Schedule, the transactions
contemplated by this Agreement will not constitute a "change of control" under,
require the consent from or the giving of notice to a third party pursuant to,
or accelerate vesting or repurchase rights under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of its properties or
assets may be bound, except where the adverse consequences resulting from such
change of control or where the failure to obtain such consents or provide such
notices would not, individually or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries; provided, however, that the
immediately preceding exception will not be
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applicable to any employment, compensation, termination or severance agreement,
or other instrument or obligation of the Company or any of its Subsidiaries.
Section 4.8 of the Disclosure Schedule sets forth a good faith estimate of the
total amounts payable to officers and directors of the Company as a result of
the transactions contemplated by this Agreement and/or any subsequent
employment termination (excluding any consideration received for Common Stock
and Warrants and any cash-out or acceleration of options but including any
"gross-up" payments applicable to "excess parachute payments" pursuant to
Section 280G of the Internal Revenue Code of 1986, as amended ("Code"), with
respect thereto); and such amounts (x) are based on compensation data
applicable as of the date hereof, calculated assuming effective tax rates of
41.05%, and including, without limitation, amounts payable pursuant to
employment agreements, bonus plans and retirement plans and any "gross-up"
payments applicable to "excess parachute payments" pursuant to Section 280G of
the Code, and (y) will not exceed the amounts set forth in Section 4.8 of the
Disclosure Schedule, except to the extent noted therein.
4.9 Taxes.
(a) The Company and its Subsidiaries each has duly filed all
federal, state, local and foreign Tax Returns (as defined in Section 4.9(b))
required to be filed by it, and, except as set forth in Section 4.9 of the
Disclosure Schedule, the Company has duly paid or caused to be paid all Taxes
(as defined in Section 4.9(b)) shown to be due on such Tax Returns in respect
of the periods covered by such returns and has made adequate provision in the
Company's financial statements included in the SEC Documents for payment of all
Taxes anticipated to be payable in respect of all taxable periods or portions
thereof ending on or before the date hereof. Section 4.9 of the Disclosure
Schedule lists the periods through which the Tax Returns required to be filed
by the Company have been examined by the Internal Revenue Service (the "IRS")
or other appropriate taxing authority, or the period during which any
assessments may be made by the IRS or other appropriate taxing authority has
expired. Except as set forth in Section 4.9 of the Disclosure Schedule, all
material deficiencies and assessments asserted as a result of such examinations
or other audits by federal, state, local or foreign taxing authorities have
been paid, fully settled or adequately provided for in the Company's financial
statements included in the SEC Documents, and no issue or claim has been
asserted in writing for Taxes by any taxing authority for any prior period, the
adverse determination of which would result in a deficiency which, individually
or in the aggregate, would have a material adverse effect on the Company and
its Subsidiaries, other than those heretofore paid or provided for in the
Company's financial statements included in the SEC Documents filed prior to
November 1, 1995. Except as set forth in Section 4.9 of the Disclosure
Schedule, there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of the Company or
its Subsidiaries. Neither the Company nor any of its Subsidiaries has made an
election, pursuant to Section 382(l)(5)(H)
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of the Code, not to have the provisions of Section 382(l)(5) apply. Since
March 9, 1993, an "ownership change" within the meaning of Section 382(g) of
the Code has not occurred with respect to the ownership of the stock of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any of its Subsidiaries. Except as set forth in
Section 4.9 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that could
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code or any payment that
will not be deductible under Section 162(m) of the Code. Except as set forth
in Section 4.9 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries (i) has been a member of a group filing consolidated returns for
federal income tax purposes, or (ii) is a party to a tax sharing or tax
indemnity agreement or any other agreement of a similar nature that remains in
effect.
(b) For purposes of this Agreement, the term "Taxes" means
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, use, transfer,
license, payroll, withholding, capital stock, franchise, employment, severance,
stamp, custom duties, profits, withholding, social security (or similar)
unemployment, disability, alternative or minimum, estimated or other similar
obligation imposed by the United States or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions thereto. For purposes of this Agreement, the term "Tax Return"
means any report, return or other information or document required to be
supplied to a taxing authority in connection with Taxes.
4.10 Opinion of Financial Advisor. The Company has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, its financial
advisor, to the effect that, as of the date of such opinion, the cash
consideration to be received pursuant to the Offer and the Merger, as the case
may be, by the holders of the Securities is fair to such holders from a
financial point of view.
4.11 Company Rights Agreement. Assuming the accuracy of the Parent's
representation contained in Section 5.6 (without giving effect to the knowledge
qualification thereof) and the redemption of the Rights as provided in Section
6.6 hereof, none of the transactions contemplated in this Agreement will result
in a "Distribution Date" as defined in the Rights Agreement, nor shall the
Rights become exercisable as a result of the Offer, the Merger or any other
transactions contemplated by this Agreement.
4.12 DGCL Section 203. Assuming the accuracy of the Parent's
representation contained in Section 5.6 (without giving effect to the knowledge
qualification thereof), the
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Board of Directors of the Company has approved the transactions to be effected
in accordance with this Agreement pursuant to Section 203(a)(1) of the DGCL,
and determined that such approval satisfies the requirements of Section
203(a)(1) of the DGCL and, as a result, renders the other provisions of Section
203(a) of the DGCL inapplicable to the Offer, the Merger and this Agreement.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND SUB
The Parent and the Sub, jointly and severally, represent, warrant and
covenant to the Company as follows:
5.1 Organization and Qualification. Each of the Parent and the Sub
is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite
corporate power to carry on its business as it is now being conducted.
5.2 Authority Relative to this Agreement. Each of the Parent and
the Sub has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
respective Boards of Directors of the Parent and the Sub, and by the Parent as
the sole stockholder of the Sub, and no other corporate proceedings on the part
of the Parent or the Sub are necessary to authorize this Agreement, to commence
the Offer or to consummate the transactions so contemplated by this Agreement
(including the Offer and the Merger). This Agreement has been duly and validly
executed and delivered by each of the Parent and the Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of each of the Parent and
the Sub, enforceable against each of the Parent and the Sub in accordance with
its terms.
5.3 Offer Documents; Proxy Statement. (a) None of the Offer
Documents nor any of the information supplied by the Parent, the Sub or any of
the Parent's other Subsidiaries specifically for inclusion in the Schedule
14D-9 will, at the respective times the Offer Documents (including any
amendments or supplements thereto) or the Schedule 14D-9 are filed with the
Commission or are first published, sent or given to stockholders, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements included therein, in
the light of the circumstances under which they were made, not misleading. The
Offer Documents and the Offer will comply as to form
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in all material respects with the applicable requirements of the Exchange Act
and the rules and regulations promulgated thereunder.
(b) The information supplied by the Parent and its affiliates
specifically for inclusion or incorporation by reference in the Proxy
Statement, if required, will not, at the time the Proxy Statement is mailed to
the Company's stockholders and at the time of the Special Meeting, contain any
statement, which at the time and in the light of the circumstances under which
it is made, is false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the statements
therein not false and misleading.
(c) Notwithstanding the foregoing, the Parent and the Sub
make no representation with respect to statements made in any of the foregoing
documents based on information supplied by the Company specifically for
inclusion therein.
5.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by the Parent and the Sub nor the consummation of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective certificates of incorporation or
by-laws of the Parent or the Sub or any of the Parent's other Subsidiaries; (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (i) in
connection with the HSR Act, (ii) pursuant to the Exchange Act, (iii) the
filing of the Instrument of Merger pursuant to the DGCL or (iv) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not (x) prevent the consummation of the
Offer or the Merger, (y) have a material adverse effect on the terms of the
Offer or the Merger or (z) individually or in the aggregate have a material
adverse effect on the financial condition, business or results of operations of
the Parent and its Subsidiaries; (c) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement or other instrument or
obligation to which the Parent, the Sub or the Parent's other Subsidiaries is a
party or by which the Parent, the Sub or the Parent's other Subsidiaries, or
any of their respective assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or that would not (x) prevent the
consummation of the Offer or the Merger, (y) have a material adverse effect on
the terms of the Offer or the Merger or (z) individually or in the aggregate
have a material adverse effect on the financial condition, business or results
of operations of the Parent and its Subsidiaries; or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Parent,
the Sub and the Parent's other Subsidiaries or any of their respective assets,
except for violations that would not (x) prevent the consummation of the Offer
or the Merger, (y) have a material adverse effect on the terms of the Offer or
the Merger or (z) individually or in the
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aggregate have a material adverse effect on the financial condition, business
or results of operations of the Parent and its Subsidiaries.
5.5 Financing. The Parent has received a firm written commitment
from a financially responsible third party to obtain the funds necessary to
consummate the Offer and the Merger, and to pay related fees and expenses.
5.6 Status as an Interested Stockholder or an Acquiring Person. As
of the date of this Agreement, neither the Parent nor the Sub nor, to the best
knowledge of the Parent, any of the Parent's affiliates is an "Interested
Stockholder" as such term is defined in Section 203 of the DGCL, or an
"Acquiring Person" as such term is defined in the Rights Agreement.
5.7 Interim Operations of the Sub. The Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
ARTICLE VI
COVENANTS
6.1 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior written consent of the Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will
use all reasonable efforts, and will cause each of its Subsidiaries to use all
reasonable efforts, to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
material relationships with licensors, licensees, customers, suppliers,
employees and any others having business dealings with it. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, without the prior written consent of the Parent, the Company
will not, and will not permit any of its Subsidiaries to, prior to the
Effective Time:
(a) adopt any amendment to its certificate of incorporation
or by-laws or comparable organizational documents or to the Rights Agreement;
(b) issue, reissue, sell or pledge or authorize or propose
the issuance, reissuance, sale or pledge of any shares of capital stock of any
class, or securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or capital
stock, other than the issuance of shares of Common Stock (and attached Rights)
upon the exercise of Warrants and Options issued pursuant to the Option Plan
outstanding on the
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date of this Agreement and identified in Section 6.1(b) of the Disclosure
Schedule, in each case in accordance with their present terms;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except that
any wholly owned Subsidiary of the Company may pay dividends and make
distributions to the Company or any of the Company's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, except that the Company may redeem
the Rights in accordance with Section 6.6;
(e) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and its Subsidiaries may
incur or pre-pay debt in the ordinary course of business consistent with past
practice under existing lines of credit, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity except in the
ordinary course of business consistent with past practice, or (iii) make any
loans, advances or capital contributions to, or investments in, any other
person or entity except for loans, advances, capital contributions or
investments between the Company and any of its wholly owned Subsidiaries or
between wholly owned Subsidiaries of the Company in the ordinary course of
business consistent with past practice;
(f) settle or compromise any suit or claim or threatened suit
or claim relating to the transactions contemplated hereby;
(g) except for (i) increases in salary, wages and benefits of
employees of the Company or its Subsidiaries (other than officers and directors
of the Company) in accordance with past practice and (ii) increases in salary,
wages and benefits granted to employees of the Company or its Subsidiaries
(other than officers and directors of the Company) in conjunction with
promotions or other changes in job status consistent with past practice or
required under existing agreements, increase the compensation or fringe
benefits payable or to become payable to its directors, officers or employees
(whether from the Company or any of its Subsidiaries), or pay any benefit not
required by any existing plan or arrangement (including, the granting of, or
waiver of performance or other vesting criteria under, stock options, or grant
any severance or termination pay to (except pursuant to existing agreements or
policies), or enter into any employment or severance agreement with, any
director, officer or employee of the Company or any of its Subsidiaries) or
establish, adopt, enter into, terminate or amend any bonus, profit sharing,
thrift, compensation, stock option, pension, retirement, welfare, deferred
compensation, employment, termination, severance or other employee benefit
plan, agreement,
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trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except to the extent such termination
or amendment is required by applicable law; provided, however, that nothing
herein will be deemed to prohibit the payment of benefits as they become
payable under existing plans, agreements, trusts, funds, policies or
arrangements in accordance with their terms;
(h) acquire (except as otherwise permitted by clause (j)
below), sell, lease, or dispose of or pledge, mortgage or encumber any assets
(including licenses, permits and other rights) of the Company and its
Subsidiaries other than in the ordinary course of business consistent with past
practice and in each case not exceeding $250,000, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice other than transactions between a wholly owned Subsidiary of the
Company and the Company or between wholly owned Subsidiaries of the Company;
(i) (i) modify, amend or terminate any contract, license or
permit, (ii) waive, release, relinquish or assign any contract (including any
insurance policy) or other license, permit, right or claim, or (iii) cancel or
forgive any indebtedness owed to the Company or its Subsidiaries, other than in
each case in a manner in the ordinary course of business consistent with past
practice and which is not material to the business of the Company and its
Subsidiaries;
(j) authorize, commit to or make any capital expenditures
except pursuant to and in accordance with the capital budget previously
provided to the Parent;
(k) make any tax election not required by law or settle or
compromise any tax liability, in either case that is material to the Company
and its Subsidiaries;
(l) change any of the accounting principles or practices used
by it except as required by the Commission or the Financial Accounting
Standards Board; or
(m) agree in writing or otherwise to take any of the
foregoing actions or any action which would make any representation or warranty
in this Agreement untrue or incorrect in any material respect.
6.2 Access.
(a) Between the date of this Agreement and the Effective
Time, the Company will (i) give the Parent and its authorized representatives
reasonable access during regular business hours upon reasonable notice to all
stores, offices, warehouses and other facilities and to all books and records
of the Company and its Subsidiaries, (ii) permit the Parent to make
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such inspections as it may reasonably require and (iii) cause its officers and
those of its Subsidiaries to furnish the Parent with such financial and
operating data and other information with respect to the business and
properties of the Company and its Subsidiaries as the Parent may from time to
time reasonably request, provided that no investigation pursuant to this
Section 6.2 or otherwise will affect or be deemed to modify any of the
representations and warranties made by the Company in this Agreement.
(b) Information obtained by the Parent pursuant to this
Section 6.2 shall be subject to the provisions of the Confidentiality Agreement
between the Parent and the Company dated October 2, 1995 (the "Confidentiality
Agreement"), which Confidentiality Agreement remains in full force and effect;
provided, however, that (i) the Company will not request that the Parent return
the Evaluation Materials (as that term is defined in the Confidentiality
Agreement) prior to 30 calendar days after the date that this Agreement is
terminated in accordance with Section 8.1 and (ii) effective as of the date
hereof, the Confidentiality Agreement is hereby amended to delete Sections 4, 6
and 8 thereof in their entirety.
6.3 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, and to the fiduciary duties of their respective Boards of
Directors under applicable laws as advised in the written opinion of their
outside counsel, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including taking all action reasonably required
under the HSR Act. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take
all such necessary action. Notwithstanding the foregoing, neither the Company,
the Parent nor the Sub shall be obligated to waive any of its rights under this
Agreement, including without limitation those specified in Article VII of this
Agreement or in Annex I hereto. All actions, judgments and determinations of
the parties hereto required or permitted hereby or by the Offer Documents or
otherwise contemplated by this Agreement shall be made in good faith.
6.4 Indemnification and Insurance. It is understood and agreed that
the Company shall defend, indemnify and hold harmless, and after the Effective
Time, the Surviving Corporation and the Parent shall, jointly and severally,
defend, indemnify and hold harmless, each person listed under "Indemnity
Agreements" in Section 6.5(a) of the Disclosure Schedule (the "Indemnified
Parties") to the full extent required or permitted under (a) Delaware law, (b)
as provided in the Restated Certificate of Incorporation and Restated By-Laws
of the Company and (c) as otherwise provided for or permitted pursuant to any
agreement in effect at the date hereof listed in Section 6.5(a) of the
Disclosure Schedule. The rights to be defended,
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indemnified and held harmless pursuant to this Section 6.4 shall survive the
Merger and shall continue in full force and effect without time limitation from
and after the Effective Time and without amendment or modification of the terms
of any of the agreements referred to in clause (c) above. Without limiting the
foregoing, the Company, and after the Effective Time the Surviving Corporation
and the Parent, will periodically advance expenses as incurred with respect to
the foregoing, to the fullest extent permitted by applicable law; provided the
person to whom the expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification. The Company, after consultation in good faith with the Parent
so as to minimize the cost thereof, or the Parent shall purchase, as promptly
as practicable and in any event prior to the Effective Time and without any
lapse in coverage, policies of directors' and officers' "run-off" liability
insurance (or policies which contain terms and conditions that are no less
advantageous to the directors and officers and former directors and officers of
the Company as the directors' and officers' liability insurance policies that
are in effect at the Company on the date hereof), which insurance shall remain
in effect for a period of not less than six years from and after the Effective
Time; provided that, in the event that any claim or claims (a "Claim" or
"Claims") are asserted or made within such six-year period, the Parent and the
Surviving Corporation shall cause such insurance to be continued in respect of
any such Claim or Claims until final disposition of any and all such Claims.
6.5 Certain Agreements, Employee Benefits, etc..
(a) The Parent hereby agrees to honor, and to cause the
Surviving Corporation and its Subsidiaries to honor (in accordance with the
terms thereof), all contracts, agreements, arrangements, policies, plans and
commitments of the Company (or any of its Subsidiaries) in effect as of the
date hereof that are applicable to any officer or employee or former officer or
employee or any director or former director of the Company (or any of its
Subsidiaries or former Subsidiaries) (collectively, the "Agreements"). A list
of all Agreements is set forth in Section 6.5(a) of the Disclosure Schedule.
Without limiting the generality of the foregoing, the Parent hereby
unconditionally agrees to perform and pay, or cause the Surviving Corporation
and its Subsidiaries to perform and pay, when due any and all amounts payable
pursuant to the terms of the Agreements.
(b) The Parent hereby agrees that for a period of one year
immediately following the Effective Time, it shall cause the Surviving
Corporation and its Subsidiaries to continue to maintain (except as required by
law) the employee benefit plans for employees and former employees of the
Company and its Subsidiaries listed under Section 6.5(b) of the Disclosure
Schedule, or other plans that, on a plan-by-plan basis, provide benefits that
are no less favorable to such employees than the benefits currently in effect
with respect to such employees under the plans listed under Section 6.5(b) of
the Disclosure Schedule.
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Notwithstanding anything contained in this Agreement to the contrary, at the
Parent's election, the Surviving Corporation (i) may elect to become a
nonsubscriber under the Texas Workers' Compensation Act and implement the
Parent's Work Injury Program, and (ii) implement the Parent's Dialogue Dispute
Resolution Program.
(c) If any employee of the Company or any of its Subsidiaries
becomes a participant in any employee benefit plan, practice or policy of the
Parent or the Surviving Corporation, such employee shall be given credit under
such plan for all service prior to the Effective Time with the Company and its
Subsidiaries, or any predecessor employer (to the extent such credit was given
by the Company), for purposes of eligibility and vesting (but not for benefit
accrual purposes) for which such service is either taken into account or
recognized.
(d) Notwithstanding anything to the contrary contained
herein, from and after the Effective Time, the Surviving Corporation shall have
sole discretion over the hiring, promotion, retention, firing and other terms
and conditions of the employment of officers and employees of the Surviving
Corporation.
6.6 Rights Agreement. The Board of Directors of the Company shall
take all action necessary to defer the Distribution Date (as that term is
defined in the Rights Agreement) to prevent the occurrence of the Distribution
Date as a result of the commencement of the Offer, this Agreement or the
consummation of the transactions contemplated hereby (including the Offer and
the Merger). The Company will redeem the Rights effective immediately prior to
the Parent's acceptance for payment of Securities pursuant to the Offer and
will not otherwise redeem the Rights, or amend or terminate the Rights
Agreement unless required to do so by a court of competent jurisdiction. The
record date for determining holders of record of Common Stock entitled to
receive the redemption price for the Rights shall be established in accordance
with the regulations of the NYSE.
6.7 Public Announcements. The initial press release announcing this
Agreement will be a joint press release and thereafter the Parent, the Sub and
the Company will use reasonable efforts to consult with each other before
issuing any press release or similar public announcement with respect to the
Offer, the Merger or the other transactions contemplated hereby and in
connection with making any filings with the Commission or any other
Governmental Entity or the NYSE and shall not issue any such press release or
make any such public announcement or filing prior to such consultation without
providing the other party with notice and a reasonable opportunity to comment
thereon, except as may be required by law or by obligations pursuant to any
listing agreement with any national securities exchange.
6.8 Post Merger Treatment of Warrants. Following the Effective Time
and subject to the terms and conditions of the Warrant Agreement, the Parent
will cause the Surviving
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Corporation to make available, as necessary, sufficient funds to pay, and will
pay, to holders of Warrants, upon the exercise thereof, the amount of cash,
without interest, to which such holders would have been entitled pursuant to
the Merger if such holders had exercised their Warrants and acquired shares of
Common Stock immediately prior to the Effective Time.
6.9 Exclusivity.
(a) Except as provided in Section 6.9(b), until the earlier
of the termination of this Agreement pursuant to Section 8.1 or the Effective
Time, the Company will not, and will cause its officers, directors,
Subsidiaries, affiliates, representatives or agents, directly or indirectly,
not to, do any of the following: (i) negotiate, undertake, authorize, propose
or enter into, either as the proposed surviving, merged, acquiring or acquired
corporation, any transaction (other than the Offer and the Merger) involving
any sale, transfer or other disposition or other change of ownership (whether
by tender or exchange offer or otherwise) of any securities of the Company or
any of its Subsidiaries, or any assets of the Company or any of its direct or
indirect Subsidiaries constituting one percent or more of the consolidated
assets of the Company or one percent or more of the consolidated revenues of
the Company, whether in a single transaction or series of related transactions
(an "Acquisition Transaction"); (ii) solicit or initiate the submission of a
proposal or offer in respect of, or engage in negotiations concerning, an
Acquisition Transaction; or (iii) furnish or cause to be furnished to any
corporation, partnership, person or other entity or group (other than the
Parent, the Sub and their representatives) (a "Person") any non-public
information concerning the business, operations, properties or assets of the
Company in connection with an Acquisition Transaction; provided nothing herein
will prohibit the Company's Board of Directors from taking and disclosing to
the Company's securityholders a position with respect to a tender offer
pursuant to Rule 14d-9 promulgated under the Exchange Act. The Company will
inform the Parent by telephone (confirmed in writing) promptly, and in any
event within one day of its receipt of any proposal or bid in respect of any
Acquisition Transaction and provide the Parent with copies of any written
proposals or bids. Nothing in this Section 6.9(a) will (i) permit the Company
to enter into any agreement with respect to an Acquisition Transaction for so
long as this Agreement remains in effect (it being agreed that for as long as
this Agreement remains in effect, the Company will not enter into any agreement
with any Person that provides for, or in any way facilitates, an Acquisition
Transaction), or (ii) affect any other obligation of the Company under this
Agreement.
(b) Notwithstanding anything else contained in this Section
6.9, the Company and its officers, directors, Subsidiaries, representatives and
agents may engage in discussions or negotiations with, and may furnish
information to, a third party or its representative who makes a written
proposal with respect to an Acquisition Transaction if (i) the Company's Board
of Directors determines in good faith after consultation with its financial
advisors that such
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<PAGE> 35
proposal may reasonably be expected to result in a transaction that is
financially superior to the transactions contemplated by this Agreement, and
(ii) the Board of Directors of the Company determines in good faith after
receipt of a written opinion of outside counsel that such actions are required
by its fiduciary duties under applicable law.
6.10 Fees and Expenses. Except as provided in Section 8.3, whether
or not the Offer or the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby will
be paid by the party incurring such expenses.
6.11 Brokers or Finders. Each of the Parent and the Company
represents and warrants, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any brokers' or finders' fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement except Merrill Lynch, Pierce, Fenner & Smith
Incorporated, whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm, a copy of which has been provided
to the Parent, and Wasserstein Perella & Co. Inc., whose fees and expenses will
be paid by the Parent in accordance with the Parent's agreement with such firm,
a copy of which has been provided to the Company.
6.12 Notification of Certain Matters. The Company will give prompt
notice to the Parent and the Parent will give prompt notice to the Company of
(a) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in any material respect, (b) any
failure of the Company or the Parent or the Sub, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder in any material respect, (c) any written notice or
other written communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement and (d) any written notice or other written
communication from the Commission or any other Governmental Entity in
connection with the transactions contemplated by this Agreement; provided,
however, that the delivery of any notice pursuant to this Section 6.12 will not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) this Agreement shall have been adopted by the affirmative
vote of the stockholders of the Company by the requisite vote in accordance
with the Company's Restated Certificate of Incorporation and applicable law, if
such vote is required;
(b) no United States or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any Governmental Entity that is in effect and has
the effect of making the acquisition or ownership of the Securities illegal or
otherwise prohibiting or materially restricting the consummation of the Offer
or the Merger or that would make the acquisition or ownership by the Parent or
its Subsidiaries of the common stock of the Surviving Corporation illegal; and
(c) the waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.2 Conditions to Obligations of the Company to Effect the Merger.
The obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver, where permissible, at or prior to the Effective Time,
of the following conditions:
(a) each of the Parent and the Sub shall have performed in
all material respects its respective covenants in this Agreement, to the extent
such covenants are to be performed prior to the Effective Time; and
(b) the representations and warranties of the Parent and the
Sub shall be true and correct in all material respects at and as of the
Effective Time as if made as of the Effective Time.
7.3 Conditions to Obligations of the Parent and Sub to Effect the
Merger. The obligations of the Parent and the Sub to effect the Merger are
further subject to the satisfaction or waiver, where permissible, at or prior
to the Effective Time, of the following conditions:
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(a) the Sub (or any permitted assignee) shall have accepted
for payment and paid for Securities tendered pursuant to the Offer, provided
that this condition will be deemed satisfied if the Sub (or any permitted
assignee) fails to accept for payment and pay for Securities tendered pursuant
to the Offer in violation of the terms hereof or thereof; and
(b) the Company shall have performed in all material respects
the covenants in this Agreement, to the extent such covenants are to be
performed prior to the Effective Time.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after any required adoption of this
Agreement by the stockholders of the Company:
(a) by mutual consent of the Parent and the Company by action
of their respective Boards of Directors;
(b) by the Company if (i) the Parent and the Sub fail to
commence the Offer as provided in Section 1.1, (ii) the Offer expires or is
terminated without any Securities being purchased thereunder, or (iii) the Sub
(or any permitted assignee) fails to purchase Securities validly tendered and
not withdrawn in violation of the terms and conditions of the Offer or this
Agreement;
(c) by either the Parent or the Company if the Sub (or any
permitted assignee) has not purchased the shares of Common Stock validly
tendered and not withdrawn pursuant to the Offer in accordance with the terms
hereof within 120 calendar days after the commencement of the Offer; provided
however, that the party (in the case of the Parent, together with the Sub)
seeking to terminate this Agreement pursuant to this Section 8.1(c) is not in
material breach of this Agreement (including without limitation any
representation, warranty or covenant herein contained);
(d) by either the Parent or the Company if the Merger is not
consummated before March 31, 1996, despite the reasonable good faith effort of
such party to effect such consummation; provided, however, that the party (in
the case of the Parent, together with the Sub) seeking to terminate this
Agreement pursuant to this Section 8.1(d) is not in material breach of this
Agreement (including without limitation any representation, warranty or
covenant herein contained);
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<PAGE> 38
(e) by either the Parent or the Company if any court of
competent jurisdiction has issued an injunction permanently restraining,
enjoining or otherwise prohibiting the consummation of the Offer or the Merger,
which injunction has become final and non-appealable;
(f) by the Parent if (i) the Board of Directors of the
Company shall have withdrawn, modified or amended in any respect adverse to the
Parent its favorable recommendation of the Offer or the Merger or shall have
resolved to do any of the foregoing, (ii) prior to the expiration of the Offer,
any of the representations and warranties of the Company contained in this
Agreement were incorrect in any material respect when made or have since
become, and at the time of termination remain, incorrect in any material
respect or (iii) there has been a material breach on the part of the Company in
the covenants of the Company set forth herein, or any failure on the part of
the Company to comply with its material obligations hereunder, including
without limitation the obligation under Section 6.6 to redeem the Rights; or
(g) by the Company, prior to the expiration of the Offer, if
(i) (x) any of the representations and warranties of the Parent or the Sub
contained in this Agreement were incorrect in any material respect when made or
have since become, and at the time of termination remain, incorrect in any
material respect, or (y) there has been a material breach on the part of the
Parent or the Sub in the covenants of the Parent or the Sub set forth herein,
or any failure on the part of the Parent or the Sub to comply with its material
obligations hereunder, or (ii) the Board of Directors of the Company, after
consulting with its outside counsel and financial advisor, determines in good
faith, and based in part on a written opinion of outside counsel, that its
fiduciary duties require that it withdraw, modify or amend in a manner adverse
to the Parent its favorable recommendation of the Offer or the Merger in order
to approve the execution of a definitive agreement with respect to an
Acquisition Transaction with another party which the Board of Directors has
determined in good faith is financially superior to the transactions
contemplated by this Agreement; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 8.1(g)(ii) until the Company
has paid to the Parent in full the amount referred to in Section 8.3(a).
8.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or the Parent in accordance with Section 8.1,
no party hereto (or its directors or officers) will have any liability or
further obligation to any other party to this Agreement, except for obligations
pursuant to Sections 6.2(b) and 8.3 and any liability resulting from the
willful breach of any other covenant or agreement set forth herein.
8.3 Certain Termination Fees; Certain Costs and Expenses. (a) Prior
to any termination of this Agreement by the Company pursuant to Section
8.1(g)(ii) or within two
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business days after any termination of this Agreement by the Parent or the Sub
pursuant to Section 8.1(f)(i), the Company will pay to the Parent $7,000,000 in
cash and (b) after such termination (and in any event within two business days
of receiving the Parent or the Sub's documented invoice) the Company will
reimburse the Parent and the Sub for the documented out-of-pocket costs and
expenses incurred by the Parent or the Sub in connection with the Offer and the
other transactions contemplated by this Agreement, including without limitation
the fees and expenses of the financial advisors and counsel to the Parent and
the Sub and fees incurred by the Parent or the Sub to obtain financing
commitments for the Offer and the Merger.
ARTICLE IX
MISCELLANEOUS
9.1 Non-survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement will survive the Effective Time. The covenants and
agreements herein will survive termination of this Agreement and the Effective
Time.
9.2 Amendment. This Agreement may be amended by the parties hereto
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company, but, after any such approval, no
amendment will be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Notwithstanding anything contained in this Agreement to the contrary,
any action by the Company (a) to terminate this Agreement, (b) to waive or
amend any provision of this Agreement and (c) to extend the time for the
performance of any obligation under this Agreement, in each case following
consummation of the Offer will require the approval of a majority of the
directors of the Company then in office who are directors of the Company on the
date hereof (the "Continuing Directors").
9.3 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements of the other parties
hereto or conditions to their own obligations contained herein, other than
satisfaction of the Minimum Condition. Any
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agreement on the part of a party hereto to any such extension or waiver will be
valid only if set forth in a written instrument signed on behalf of such party.
9.4 Notices. All notices and other communications hereunder will be
in writing and will be deemed given if delivered personally, telecopied (which
is confirmed) or mailed by registered or certified (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as is specified by like notice):
<TABLE>
<S> <C>
(a) if to the Parent or the Sub:
Diamond Shamrock, Inc.
9830 Colonnade Blvd.
San Antonio, Texas 78230
Attention: Chairman and Chief Executive Officer
Telecopy No.: 210/641-8885
with a copy to:
Timothy J. Fretthold, Esq.
Diamond Shamrock, Inc.
9830 Colonnade Blvd.
San Antonio, Texas 78230
Telecopy No.: 210/641-8885
and
Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Telecopy No.: 212/755-7306
</TABLE>
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<PAGE> 41
<TABLE>
<S> <C>
and
(b) if to the Company, to:
National Convenience Stores Incorporated
100 Waugh Drive
Houston, Texas 77007
Attention: Chief Executive Officer
Telecopy No.: 713/880-0579
with a copy to:
A. J. Gallerano
Senior Vice President, General Counsel and Secretary
National Convenience Stores Incorporated
100 Waugh Drive
Houston, Texas 77007
Telecopy No.: 713/880-0579
and
Edgar J. Marston III
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana
Houston, Texas 77002-2871
Telecopy No.: 713/221-1212
</TABLE>
9.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference will be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement they will be deemed to be followed by
the words "without limitation." The phrases "the date of this Agreement," "the
date hereof" and terms of similar import, unless the context otherwise
requires, will be deemed to refer to November 8, 1995.
9.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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9.7 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware regardless of the laws
that might otherwise govern under principles of conflict of laws applicable
thereto.
9.8 Specific Performance. The parties hereto agree that if any
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached, irreparable damage would occur, no adequate
remedy at law would exist and damages would be difficult to determine, and
that, subject to the provisions of Article VIII, the parties will be entitled
to specific performance of the terms hereof, in addition to any other remedy at
law or equity.
9.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that the Sub may assign, in its sole discretion, any
or all rights, interests and obligations hereunder to the Parent or any direct
or indirect wholly owned Subsidiary of the Parent incorporated under the laws
of the State of Delaware. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
9.10 Validity. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforcement of any other
provisions hereof, which will remain in full force and effect. If any term or
other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other terms and provisions of
this Agreement will nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner that is adverse to any party which is entitled to the
benefit thereof and which has not been waived by such party. Upon any such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
9.11 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the Disclosure Schedules, the Annexes and the other documents and
the instruments referred to herein), and the Confidentiality Agreement (as
hereby amended pursuant to Section 6.2(b)) (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matters hereof, and (b) other
than Sections 6.4 and 6.5 of this Agreement are not intended to confer upon any
person other than the parties hereto and thereto any rights or remedies
hereunder or thereunder. The
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<PAGE> 43
covenants of the Parent and the Sub in Sections 6.4 and 6.5 of this Agreement
may be enforced after the Effective Time by any of the Indemnified Parties.
IN WITNESS WHEREOF, the Parent, the Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
DIAMOND SHAMROCK, INC.
By: /s/ A. W. O'DONNELL
_____________________________________
A. W. O'Donnell
Senior Vice President
SHAMROCK ACQUISITION CORP.
By: /s/ A.W. O'DONNELL
_____________________________________
A.W. O'Donnell
President
NATIONAL CONVENIENCE STORES
INCORPORATED
By: /s/ V.H. VAN HORN III
_____________________________________
V.H. Van Horn III
President and Chief Executive Officer
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<PAGE> 44
ANNEX I
Conditions to the Offer
Notwithstanding any other provision of the Offer, neither the Parent nor
the Sub will be required to accept for payment, purchase or, subject to
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, to pay for any Securities tendered pursuant to the
Offer, and may, subject to the provisions of Section 1.1 of this Agreement,
amend, extend or terminate the Offer or postpone the expiration date, the
acceptance for payment of and/or the purchase or (subject to the applicable
rules and regulations aforesaid) payment for Securities tendered, if as of the
expiration of the Offer (as the Offer may have been extended pursuant to
Section 1.1 of this Agreement) (i) at least two-thirds of the shares of the
Common Stock on a fully-diluted basis (after giving effect to the exercise of
all Warrants validly tendered pursuant to the Offer and not withdrawn) have not
been validly tendered pursuant to the Offer and not withdrawn (the "Minimum
Condition"), (ii) the waiting periods under the HSR Act applicable to the Offer
and the Merger have not expired or been terminated or (iii) at any time on or
after the date of this Agreement and at or prior to the time of payment for the
Securities (whether or not any Securities have been accepted for payment or
paid for pursuant to the Offer) any one or more of the events listed in the
paragraphs below have occurred and are continuing;
(a) there has been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, enacted, entered or
deemed applicable to the Offer or the Merger, by any Governmental Entity
that in the sole judgment of the Parent (i) makes the acceptance for
payment of or payment for Securities illegal, challenges the acquisition
by the Parent or the Sub of the Securities or otherwise seeks to restrain
or prohibit the consummation of the Offer or the Merger, (ii) renders the
Parent unable to accept for payment, pay for or purchase the Securities,
(iii) seeks to impose or imposes limitations on the ability of the Parent
to acquire or hold, transfer or dispose of, or effectively to exercise any
of its rights of ownership of, the Securities, including, without
limitation, the right to vote the shares of Common Stock purchased by it
on all matters properly presented to the stockholders of the Company, (iv)
as a result of the Offer or the Merger, seeks to require or requires the
Parent, the Company, or any of their respective Subsidiaries or affiliates
to dispose of or hold separate or otherwise limits or affects the exercise
of ordinary ownership or control rights in respect of all or any
significant portion of the Company's or the Parent's respective
businesses, assets or properties, each taken as a whole, or imposing any
limitations on the ability of any such entities to conduct their
respective businesses and own such assets and properties, or (v) seeks to
impose or imposes any limitations on the ability of the Parent or any of
its Subsidiaries effectively
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<PAGE> 45
to control the business or operations of the Company or any of its
Subsidiaries as a result of the Offer or the Merger; or
(b) there has been instituted or pending any action,
proceeding, claim or counterclaim by or before any Governmental Entity, or
any other person or entity seeking to restrain or prohibit the making of
the Offer or the Merger, seeking to obtain any significant damages from
the Parent or its Subsidiaries, or the Company or its Subsidiaries or from
any other person or entity to whom or to which any of the foregoing has an
indemnity obligation arising from the Offer or the Merger or seeking to
prohibit the ownership by the Parent or any of its Subsidiaries of the
Securities or of any significant portion of their businesses or assets,
taken as a whole or any significant portion of the business or assets of
the Company and its Subsidiaries taken as a whole, or to compel the
Parent, the Company or any of their affiliates to dispose of or hold
separate all or a significant portion of any of their business or assets,
taken as a whole, in each case as a result of the Offer or the Merger; or
(c) there has occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE or the
over-the-counter market, (ii) a decline of at least 20% in either the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 Index from
the date of this Agreement, (iii) the declaration of a banking moratorium
or any limitation or suspension of payments in respect of the extension of
credit by banks or other lending institutions in the United States, (iv)
any limitation by any Governmental Entity on, or any other event which in
the sole judgment of the Parent may have a material adverse effect on the
extension of credit by banks or other lending institutions, (v) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or (vi) in the
case of any of the foregoing which exists at the time of the commencement
of the Offer, a material acceleration or worsening thereof; or
(d) any material adverse change has occurred since September
30, 1995 in the business, assets, results of operations, or financial
condition or prospects (not including a change in prospects arising from
general economic or industry conditions) of the Company and its
Subsidiaries taken as a whole; or
(e) the Company has breached or failed to perform in any
material respect any of its obligations under this Agreement, including
without limitation a failure to cause the Rights to be redeemed as
provided for therein; or
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<PAGE> 46
(f) any of the representations and warranties of the Company
contained in this Agreement shall not have been true and correct when made
or have since ceased to be true and correct and remain incorrect at the
expiration date of the Offer; or
(g) it shall have been publicly disclosed or the Parent shall
have learned that any person or entity shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any shares of capital
stock of the Company (including without limitation the shares of Common
Stock) or a merger, consolidation or other business combination or any
acquisition or disposition of any material assets or any comparable event
with or involving the Company or any of its Subsidiaries; or
(h) the Company's Board of Directors shall have failed to
recommend and approve, or shall no longer recommend and approve, the Offer
or the adoption of this Agreement, or shall modify or amend its
recommendation and approval with respect thereto, or shall have resolved
to do any of the foregoing; or
(i) this Agreement has terminated in accordance with its
terms; or
(j) the Parent and the Company agree that the Parent will
amend or terminate the Offer;
which, in the sole judgment of the Parent, and in each case regardless of the
circumstances (including without limitation any inaction by the Parent or its
affiliates other than a material breach by the Parent or its affiliates of this
Agreement), with respect to each and every matter referred to above makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
purchase of or such payment for the Securities.
The foregoing conditions (i) may be asserted by the Parent or the Sub
regardless of the circumstances (including any action or inaction by the Parent
or any of its affiliates other than a material breach by the Parent or the Sub
of this Agreement) giving rise to such condition and (ii) other than the
Minimum Condition, are for the sole benefit of the Parent and its affiliates.
The foregoing conditions, except or as otherwise provided in this Agreement,
may be waived by the Parent in whole or in part at any time and from time to
time in its sole discretion. The failure by the Parent at any time to exercise
any of the foregoing rights will not be deemed a waiver of any right and each
right will be deemed an ongoing right which may be asserted by the Parent at
any time and from time to time. Any determination by the Parent concerning the
events described in this Section will be final and binding upon all parties.
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<PAGE> 47
ANNEX II
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL CONVENIENCE STORES INCORPORATED
National Convenience Stores Incorporated, a Delaware corporation (the
"Corporation"), does hereby certify that this Amended and Restated Certificate
of Incorporation of National Convenience Stores Incorporated was duly adopted
in accordance with Section 245 of the General Corporation Law of the State of
Delaware; the Corporation was originally incorporated under the name of NCS
Merging Corporation; and the Corporation's original Certificate of
Incorporation was filed with the Delaware Secretary of State on June 21, 1979.
The text of the Corporation's Restated Certificate of Incorporation as
heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:
FIRST: The name of the Corporation (the "Corporation") is
National Convenience Stores Incorporated.
SECOND: The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation
shall have authority to issue is 10,000,000 shares of Common Stock, par value
$.01 per share.
FIFTH: Elections of directors need not be by written
ballot except and to the extent provided in the by-laws of the Corporation.
<PAGE> 48
SIXTH: (1) Notwithstanding any contrary provision of
Section 262(b) of the General Corporation Law of the State of Delaware, as in
effect on August 1, 1983, any stockholder of the Corporation who complies with
the requirements of Section 262 of the General Corporation Law of the State of
Delaware, as in effect on August 1, 1983 ("Section 262"), shall be entitled to
an appraisal by the Court of Chancery of the fair value of his shares of Common
Stock (as hereinafter defined) and Preferred Stock (as hereinafter defined)
under each of the circumstances described in subparagraphs (a), (b) and (c)
below (an "Article Sixth Transaction"), all upon the terms and conditions set
forth in this Article Sixth and in Section 262:
(a) the merger or consolidation of the Corporation
with (1) any Interested Stockholder (as hereinafter defined) or
(2) any other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder; or
(b) the sale, lease or exchange of all or
substantially all of the property and assets of the Corporation
(in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(c) any amendment of the Certificate of
Incorporation of the Corporation which effects a
reclassification of securities (including any reverse stock
split) or a recapitalization of the Corporation, which has the
effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of Voting Stock (as
hereinafter defined) which is beneficially owned (as hereinafter
defined) by any Interested Stockholder or any Affiliate of any
Interested Stockholder.
(2) For the purposes of this Article Sixth:
(a) The term "person" shall mean any individual, firm,
corporation, partnership or other entity.
(b) The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than any profit
sharing, employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciary with respect to
any such plan when acting in such capacity) who or which:
(1) is the beneficial owner (as hereinafter defined)
of 15 percent or more of the Voting Stock; or
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(2) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to an
Announcement Date (as hereinafter defined) was the beneficial
owner of 15 percent or more of the Voting Stock; or
(3) is the assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to an Announcement Date
beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933, as
amended.
(c) A specified person shall be a "beneficial owner" of and
shall be deemed to "beneficially own" any Voting Stock:
(1) which such specified person or any of its
Affiliates or Associates (as hereinafter defined), directly or indirectly,
through contract, arrangement, understanding, relationship or otherwise
has or shares (A) voting power, which includes the power to vote, or to
direct the voting of, such stock and/or (B) investment power, which
includes the power to dispose of, or to direct the disposition of, such
stock; or
(2) which such specified person or any of its
Affiliates or Associates has, directly or indirectly, the right to acquire
(whether such right is then exercisable or becomes exercisable at some
future time by the passage of time or upon the occurrence of a specified
event) pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants, options or
otherwise; or
(3) which is subject to the exercise, directly or
indirectly, of sole or shared voting and/or investment power as described
in clause (1) above by any other person with which such specified person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of any shares of Voting Stock.
(d) For the purpose of determining whether a specified person
is an Interested Stockholder pursuant to subparagraph (b) of this paragraph 2,
the number of shares of Voting Stock deemed to be outstanding shall include
unissued or issued but not outstanding shares deemed beneficially owned by such
specified person through application of subparagraph (c) of this paragraph 2
but shall not include any other unissued or issued but not outstanding shares
of Voting Stock which may be issuable or deliverable pursuant to any agreement,
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arrangement or upon exercise of conversion rights, exchange rights, warrants,
options or otherwise.
(e) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations, as in effect on August 1, 1983, promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended.
(f) The term "Subsidiary" shall mean any corporation of which
all the shares of each class of capital stock are beneficially owned, directly
or indirectly, by the Corporation.
(g) The term "Fair Market Value" shall mean (1) in the case
of stock, the highest closing sale price during the 30-day period immediately
preceding and including a Determination Date of a share of such stock on the
Composite Tape for New York Stock Exchange - Listed Stock, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period immediately preceding and including a
Determination Date on the National Association of Securities Dealers, Inc.
Automated Quotation System or any system then in use, or, if no such quotations
exist or are otherwise available, the fair market value on a Determination Date
of a share of such stock as determined in good faith by an investment banking
firm of national reputation retained by the Corporation following such firm's
selection by a committee of at least three stockholders of the Corporation
(other than the Interested Stockholder and any of its Affiliates and
Associates) who shall beneficially own in the aggregate at least 5% of the then
outstanding Common Stock and who shall be appointed by the Board of Directors
of the Corporation ("Independent Advisor") and (2) in the case of property
other than stock or cash, the fair market value of such property on a
Determination Date as determined in good faith by an Independent Advisor.
(h) The term "Voting Stock" shall include (1) each then
outstanding share of Common Stock and (2) each then outstanding share of
Preferred Stock which is entitled to vote in the election of the directors of
the Corporation.
(i) The term "Common Stock" shall mean any stock of any class
of the Corporation which is entitled to vote in the election of directors of
the Corporation, which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation and which is not subject to redemption by the
Corporation.
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(j) The term "Preferred Stock" shall mean any class of
capital stock of the Corporation (other than Common Stock) which may be from
time to time authorized in or by the Certificate of Incorporation of the
Corporation.
(k) The term "Corporation" shall refer to the corporation
created pursuant to this Certificate of Incorporation and any successor by
merger, consolidation or otherwise.
(l) The term "Determination Date" shall mean the date as of
which a determination is made pursuant to subparagraph (g) of paragraph 2 of
this Article Sixth concerning the Fair Market Value of any stock or other
property.
(3) (a) If within 115 days after the effective date of an Article
Sixth Transaction no stockholder of the Corporation, who has complied with the
provisions of Section 262 and is otherwise entitled to appraisal rights, shall
have filed a petition in the Court of Chancery demanding a determination of the
fair value of the Common Stock and/or Preferred Stock owned by all stockholders
similarly situated, the Corporation shall promptly, and in any event within 120
days after the effective date of an Article Sixth Transaction, file such a
petition. In any appraisal proceeding initiated by a stockholder or by the
Corporation pursuant to Section 262 relating to an Article Sixth Transaction,
the Corporation shall file appropriate pleadings which confirm and at all
stages of the proceeding vigorously assert (1) that the fair value of each
share of Common Stock subject to such proceeding, exclusive of interest, if
any, is not less than the highest amount determined pursuant to subparagraph
(b) below ("Minimum Fair Value Per Share of the Common Stock") and (2) that the
fair value of each share of each class or series of Preferred Stock subject to
such proceeding, exclusive of interest, if any, is not less than the highest
amount determined pursuant to subparagraph (c) below for the shares of each
such class of series ("Minimum Fair Value Per Share of Each Class or Series of
Preferred Stock").
(b) The Minimum Fair Value Per Share of the Common Stock
shall be equal to the higher amount determined under clauses (1) and (2) below:
(1) (if applicable) the highest per share price
(including brokerage commissions, placement agent fees, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any share
of Common Stock acquired by it (A) within the two-year period immediately
prior to the first public announcement of the proposed Article Sixth
Transaction ("Announcement Date") or (B) in the transaction in which it
became an Interested Stockholder, whichever is higher; and
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(2) the Fair Market Value per share of Common Stock
(A) as of the Announcement Date or (B) as of the date on which the
Interested Stockholder became an Interested Stockholder ("Inception
Date"), whichever is higher.
(c) The Minimum Fair Value Per Share of Each Class or Series
of Preferred Stock shall be equal to the higher amount determined under
clauses (1) and (2) below:
(1) (if applicable) the highest per share price
(including brokerage commissions, placement agent fees, transfer taxes,
and soliciting dealers' fees) paid by an Interested Stockholder for any
shares of such class or series of Preferred Stock acquired by it (A)
within the two-year period immediately prior to the Announcement Date or
(B) in the transaction in which it became an Interested Stockholder,
whichever is higher; and
(2) the Fair Market Value per share of such class or
series of Preferred Stock as of the (A) Announcement Date or (B) Inception
Date, whichever is higher.
(d) If the Court of Chancery determines in any appraisal
proceeding relating to an Article Sixth Transaction that the fair value,
exclusive of interest, if any, of any share of Common Stock or Preferred
Stock is less than the Minimum Fair Value Per Share of the Common Stock or
the Minimum Fair Value Per Share of Each Class or Series of Preferred
Stock, respectively, the Corporation shall nevertheless pay to
stockholders who are entitled to receive the fair value of their shares in
such appraisal proceeding an amount per share, before giving effect to any
interest awarded by the Court of Chancery, equal to the Minimum Fair Value
Per Share of the Common Stock or the Minimum Fair Value Per Share of Each
Class or Series of Preferred Stock, as the case may be.
(e) All per share amounts determined pursuant to this
paragraph 3 shall be appropriately adjusted to reflect all stock
dividends, property distributions, stock splits and combinations, and
subdivisions and reclassifications of the outstanding capital stock of the
Corporation.
(4) The Corporation hereby acknowledges that it is equitable in the
circumstances, and accordingly the Corporation shall pay all costs and expenses
(including the reasonable fees and expenses of attorneys, the reasonable fees
and expenses of experts and the costs of the proceeding) incurred by any
stockholder of the Corporation in any appraisal proceeding involving an Article
Sixth Transaction wherein the Fair Market Value of the per share consideration
offered to stockholders of the Corporation in the Article Sixth Transaction is,
in the opinion of the Court of Chancery, less than the Minimum Fair Value Per
Share of the Common Stock or the Minimum Fair Value Per Share of Each Class or
Series of Preferred Stock, as the case may be.
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(5) Notwithstanding any other provisions of this Certificate of
Incorporation or the by-laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the by-laws of the Corporation), the affirmative vote of the
holders of 66-2/3 percent or more of the shares of stock of the Corporation
otherwise entitled to vote thereon and not beneficially owned by any Interested
Stockholder or any of its Affiliates and Associates, voting as a class, shall
be required to amend or repeal, or adopt any provisions inconsistent with, this
Article Sixth.
SEVENTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director; provided, however, that the foregoing clause
shall not apply to any liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. This Article Seventh shall not eliminate or limit
the personal liability of a director for any act or omission occurring prior to
the date this Article Seventh becomes effective.
EIGHTH: In furtherance and not in limitation of the rights,
powers, privileges, and discretionary authority granted or conferred by the
General Corporation Law of the State of Delaware or other statutes or laws of
the State of Delaware, the Board of Directors is expressly authorized to make,
alter, amend or repeal the by-laws of the Corporation, without any action on
the part of the stockholders, but the stockholders may make additional by-laws
and may alter, amend or repeal any by-law whether adopted by them or otherwise.
The Corporation may in its by-laws confer powers upon its Board of Directors in
addition to the foregoing and in addition to the powers and authorities
expressly conferred upon the Board of Directors by applicable law.
NINTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed herein or by applicable law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Certificate
of Incorporation in its present form or as hereafter amended are granted
subject to this reservation.
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IN WITNESS WHEREOF, I the undersigned, being a duly authorized
officer of the Corporation, do hereby execute this Amended and Restated
Certificate of Incorporation this _____ day of _________________, 1995.
_______________________________________________
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