<PAGE>
EXHIBIT INDEX APPEARS ON PAGE 6
PAGE 1 OF 6
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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)
CIRCLE K ACQUISITION, INC.
A WHOLLY-OWNED INDIRECT SUBSIDIARY OF
THE CIRCLE K CORPORATION
(BIDDERS)
COMMON STOCK, $.01 PAR VALUE PER SHARE (INCLUDING THE ASSOCIATED RIGHTS TO
PURCHASE PREFERRED STOCK) WARRANTS TO PURCHASE COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
CUSIP NO. 635570500 (WITH RESPECT TO THE COMMON STOCK)
CUSIP NO. 63557011
(WITH RESPECT TO THE WARRANTS)
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
COPY TO:
GEHL P. BABINEC, ESQ. RICHARD M. RUSSO, ESQ.
THE CIRCLE K CORPORATION GIBSON, DUNN & CRUTCHER
PHOENIX CORPORATE CENTER 1801 CALIFORNIA STREET, SUITE 4200
3003 NORTH CENTRAL AVENUE DENVER, COLORADO 80202
PHOENIX, ARIZONA 85012 (303) 298-5700
(602) 437-0600
(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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<CAPTION>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE**
----------- ------------
<S> <C>
$139,738,880.00 $27,947.78
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</TABLE>
* For purposes of calculating the amount of the filing fee only. The amount
assumes the purchase of (i) all of the 6,835,069 (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") (as reported in the Company's Annual Report on Form 10-K for
its fiscal year ended June 30, 1994) 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 Boatman's Trust Company, at
$20.00 per Share, net to the seller in cash, and (ii) all of the 1,350,000
outstanding Warrants to Purchase Common Stock at a price of $2.25 per
Warrant, net to the Seller in cash.
** 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.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: Not Applicable Filing party: Not Applicable
Form or registration no.: Not Applicable Date filed: Not Applicable
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<PAGE>
This Statement relates to the offer by CIRCLE K ACQUISITION, INC., a
Delaware corporation (the "Purchaser") indirectly wholly-owned by The Circle K
Corporation, a Delaware corporation ("Circle K"), to purchase all outstanding
shares of Common Stock, par value $.01 per share (the "Shares"), of NATIONAL
CONVENIENCE STORES INCORPORATED, a Delaware corporation (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 Boatman's Trust Company, as Rights Agent, at the purchase
price of $20.00 per Share (and associated Right), and all outstanding Warrants
to purchase Shares (the "Warrants") issued pursuant to the Warrant Agreement,
dated as of March 9, 1993, between the Company and Boatman's Trust Company, as
Warrant Agent, at the purchase price of $2.25 per Warrant, in each case, net
to the tendering securityholder in cash and without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
September 7, 1995, (the "Offer to Purchase") and in the related Letters of
Transmittal (which together constitute the "Offer"), copies of which are filed
as Exhibits (a)(1), (a)(2) and (a)(3) hereto, respectively.
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 Range of Shares and
Warrants; Dividends") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The information set forth in Section 11 ("Certain Information
Concerning Circle K 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 Circle K,
nor to the best of the Purchaser's knowledge, Investcorp S.A., SIPCO Limited,
or any of the executive officers or directors of the Purchaser, Circle K or
SIPCO Limited (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 Section 14
PAGE 2 OF 6
<PAGE>
("Purpose of the Offer and the Proposed Merger; Plans of Circle K 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 Circle K 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 Circle K and the Purchaser"), Section 13 ("Contacts
with the Company; Background of the Offer") and Section 14 ("Purpose of the
Offer and the Proposed Merger; Plans of Circle K 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 Proposed 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
Circle K and the Purchaser"), and (ii) the financial statements contained in
Circle K's Annual Report on Form 10-K at pages 48-70, which was filed with the
Securities and Exchange Commission on July 26, 1995, are incorporated herein
by reference.
The incorporation by reference herein of the above referenced financial
information does not constitute an admission that such information is material
to a decision by a stockholder or warrantholder of the Company whether to sell
or hold Shares, Rights or Warrants being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in "Introduction" and 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") and Section 15 ("Certain Legal Matters") of the Offer
to Purchase is incorporated herein by reference.
(e) The information set forth in Section 15 ("Certain Legal Matters") is
incorporated herein by reference.
(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.
(a)(1) Offer to Purchase, dated September 7, 1995.
(2) Letter of Transmittal to tender Shares of Common Stock.
PAGE 3 OF 6
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(3) Letter of Transmittal to tender Warrants to purchase Shares of Common
Stock.
(4) Letter, dated September 7, 1995, from the Dealer Manager to brokers,
dealers, commercial banks, trust companies and nominees.
(5) Letter, dated September 7, 1995, to be sent by brokers, dealers,
commercial banks, trust companies and nominees to their clients.
(6) Notice of Guaranteed Delivery of tenders of Shares of Common Stock.
(7) Notice of Guaranteed Delivery of tenders of Warrants to purchase Shares
of Common Stock.
(8) IRS Guidelines to Substitute Form W-9.
(9) Press Release, dated September 7, 1995.
(10) Form of summary newspaper advertisement, dated September 7, 1995.
(11) Press Release, dated September 5, 1995.
(b) Commitment Letter, dated as of August 7, 1995, among Chemical Bank,
Chemical Securities, Inc., Circle K Stores, Inc. and Circle K
Properties, Inc.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint in The Circle K Corporation v. National Convenience Stores
Incorporated et al., filed in the United States District Court for the
District of Delaware on September 5, 1995.
(2) Complaint in The Circle K Corporation v. National Convenience Stores
Incorporated et al., filed in the Chancery Court of the State of
Delaware In and For New Castle County on September 5, 1995.
</TABLE>
PAGE 4 OF 6
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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.
Circle K Acquisition, Inc.
/s/ Gehl P. Babinec
_____________________________________
Name:Gehl P. Babinec
Title: Senior Vice President,
General Counsel and Secretary
The Circle K Corporation
/s/ Gehl P. Babinec
_____________________________________
Name:Gehl P. Babinec
Title: Senior Vice President,
General Counsel and Secretary
Dated: September 7, 1995.
PAGE 5 OF 6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<C> <S>
(a)(1) Offer to Purchase, dated September 7, 1995.
(2) Letter of Transmittal to tender Shares of Common Stock.
(3) Letter of Transmittal to tender Warrants to purchase Shares of
Common Stock.
(4) Letter, dated September 7, 1995, from the Dealer Manager to
brokers, dealers, commercial banks, trust companies and nominees.
(5) Letter, dated September 7, 1995, to be sent by brokers, dealers,
commercial banks, trust companies and nominees to their clients.
(6) Notice of Guaranteed Delivery of tenders of Shares of Common
Stock.
(7) Notice of Guaranteed Delivery of tenders of Warrants to purchase
Shares of Common Stock.
(8) IRS Guidelines to Substitute Form W-9.
(9) Press Release, dated September 7, 1995.
(10) Form of Summary newspaper advertisement, dated September 7, 1995.
(11) Press Release, dated September 5, 1995.
(b) Commitment Letter, dated as of August 7, 1995, among Chemical
Bank, Chemical Securities, Inc., Circle K Stores, Inc. and Circle
K Properties, Inc.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint in The Circle K Corporation v. National Convenience
Stores Incorporated et al., filed in the United States District
Court for the District of Delaware on September 5, 1995.
(2) Complaint in The Circle K Corporation v. National Convenience
Stores Incorporated et al., filed in the Chancery Court of the
State of Delaware In and For New Castle County on September 5,
1995.
</TABLE>
PAGE 6 OF 6
<PAGE>
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
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
at
$20.00 NET PER SHARE
and
$2.25 NET PER WARRANT
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, OCTOBER 4, 1995, UNLESS THE OFFER IS EXTENDED.
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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 THREE-FOURTHS OF THE TOTAL NUMBER OF
OUTSTANDING SHARES OF NATIONAL CONVENIENCE STORES INCORPORATED (THE "COMPANY")
ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"), (2) THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT SECTION 203 OF THE DELAWARE GENERAL
CORPORATION LAW HAS BEEN COMPLIED WITH OR THAT ITS RESTRICTIONS ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (THE "SECTION 203
CONDITION"), (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT
THE OFFER AND THE PROPOSED MERGER COMPLY WITH THE REQUIREMENTS CONTAINED IN
ARTICLE FIFTH OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION (THE
"ARTICLE FIFTH CONDITION"), (4) THE COMPANY'S RIGHTS TO PURCHASE PREFERRED
STOCK (THE "RIGHTS") HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE
COMPANY OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND
THE PROPOSED MERGER (THE "RIGHTS CONDITION") AND (5) THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT IT HAS RECEIVED SUFFICIENT PROXIES
PURSUANT TO THE PROXY SOLICITATION TO INCREASE THE SIZE OF THE COMPANY'S BOARD
OF DIRECTORS AND TO ELECT THE CIRCLE K NOMINEES AS A MAJORITY OF THE COMPANY'S
BOARD OF DIRECTORS (THE "BOARD CONDITION"). THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND
SECTION 6.
--------------
IMPORTANT
Any securityholder desiring to tender Shares (and the associated Rights) or
Warrants should either (1) complete and sign the appropriate Letter of
Transmittal (the YELLOW Letter of Transmittal in the case of the Shares and
the BLUE Letter of Transmittal in the case of the Warrants), or a facsimile
copy thereof, in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other required documents to the
Depositary and either deliver the certificates for such Shares (and, if
separate, the certificate(s) representing the associated Rights) or Warrants
to the Depositary along with the Letter of Transmittal or tender such Shares
(and Rights, if applicable) or Warrants pursuant to the procedure for book-
entry transfer set forth in Section 2 of this Offer to Purchase or (2) request
such securityholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for the securityholder. Securityholders
having Shares (and Rights, if applicable) 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 (and Rights, if applicable) or Warrants.
Unless and until the Purchaser declares that the Rights Condition is
satisfied, stockholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares.
A securityholder who desires to tender Shares (and Rights, if applicable) or
Warrants and whose certificates for Shares (and Rights, if applicable) 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 (and Rights, if applicable) 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.
--------------
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
September 7, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
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INTRODUCTION............................................................. 1
The Offer............................................................. 1
Summary Background of the Offer....................................... 2
Certain Conditions to the Offer....................................... 3
THE TENDER OFFER......................................................... 6
1. Terms of the Offer; Extension of Tender Period; Termination;
Amendments...................................................... 6
2. Procedure for Tendering Shares and Warrants...................... 8
3. Withdrawal Rights................................................ 12
4. Acceptance for Payment and Payment of Purchase Price............. 12
5. Certain Tax Consequences......................................... 14
6. Certain Conditions of the Offer.................................. 14
7. Price Range of Shares and Warrants; Dividends.................... 18
8. Possible Effects of the Offer on the Market for Shares and
Warrants; Stock Exchange Listing; Registration Under the
Exchange Act.................................................... 19
9. Dividends and Distributions...................................... 21
10. Certain Information Concerning the Company....................... 21
11. Certain Information Concerning Circle K and the Purchaser........ 26
12. Source and Amount of Funds....................................... 27
13. Contacts with the Company; Background of the Offer............... 28
14. Purpose of the Offer and the Proposed Merger; Plans of Circle K
and the Purchaser with Respect to the Company................... 31
15. Certain Legal Matters............................................ 35
16. Fees and Expenses................................................ 37
17. Miscellaneous.................................................... 38
ANNEX I
</TABLE>
i
<PAGE>
TO THE HOLDERS OF SHARES OF COMMON STOCK AND WARRANTS OF
NATIONAL CONVENIENCE STORES INCORPORATED
INTRODUCTION
THE OFFER
Circle K Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned indirect subsidiary of The Circle K Corporation, a Delaware
corporation ("Circle K"), hereby offers to purchase all outstanding shares of
Common Stock, par value $.01 per share ("Shares"), of National Convenience
Stores Incorporated, a Delaware corporation (the "Company"), together with
(unless and until the Purchaser declares that the Rights Condition is
satisfied) 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 Boatman's Trust Company, as
Rights Agent (the "Rights Agent"), at the purchase price of $20 per Share (and
associated Right), and all outstanding Warrants to purchase Shares issued
pursuant to the Warrant Agreement, dated as of March 9, 1993, between the
Company and Boatman's Trust Company, as Warrant Agent (the "Warrants"), at the
purchase price of $2.25 per Warrant, in each case, net to the tendering holder
in cash without interest thereon, upon 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 purpose of the Offer and the Proposed Merger (as defined below) is to
enable the Purchaser to acquire control of, and the entire equity interest in,
the Company. The Offer, as the first step in the acquisition of the Company,
is intended to facilitate the acquisition of all outstanding Shares. The
Purchaser may consider, among other things, changes to the material terms of
the Offer and intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company by the Purchaser. The Purchaser
currently intends, as soon as practicable following the consummation of the
Offer, to seek to have the Company consummate a merger or similar business
combination with the Purchaser or another direct or indirect wholly-owned
subsidiary of Circle K (the "Proposed Merger"), pursuant to which each then
outstanding Share (other than Shares owned by the Purchaser, Circle K or any
of their subsidiaries, Shares held by the Company or any of its subsidiaries,
and Shares held by stockholders who perfect any available appraisal rights
under Section 262 of the Delaware General Corporation Law (the "DGCL") and/or
Article Ninth of the Company's Restated Certificate of Incorporation (the
"Company Charter")) would be converted into the right to receive in cash the
same amount as received per Share in the Offer (without interest) and the
Company would become a wholly-owned indirect subsidiary of Circle K. If the
Purchaser acquires 90% or more of the outstanding Shares in the Offer, the
Purchaser will have the right to effect the Proposed Merger as a "short form"
merger under the DGCL, without a vote of the Company's stockholders or the
Board of Directors of the Company. See Section 14.
The Offer is subject to the fulfillment of certain conditions described
under "Certain Conditions to the Offer," below, and in Section 6.
The Offer will expire at 12:00 midnight, New York City time, on Wednesday,
October 4, 1995, unless extended.
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 backup
federal income tax withholding of 31% of the gross proceeds payable to such
securityholder or other payee pursuant to the Offer. See Section 2. The
Purchaser will pay all charges and expenses of Bear, Stearns & Co. Inc., as
Dealer Manager (in such capacity, the "Dealer Manager"), Chemical Bank, as
Depositary (in such capacity, the "Depositary"), and Georgeson & Company,
Inc., as Information Agent (in such capacity, the
1
<PAGE>
"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.
The Purchaser intends to file preliminary proxy solicitation materials with
the Securities and Exchange Commission (the "Commission") for use in
connection with the solicitation of proxies from stockholders of the Company
(the "Proxy Solicitation") for use at the Company's 1995 Annual Meeting of
Stockholders scheduled for November 7, 1995 (the "Annual Meeting") or any
subsequent meeting for the following purposes: (i) to amend the By-laws of the
Company (the "Company By-laws") to fix the number of directors of the Company
at 17 and to permit holders of 25% or more of the Shares to call special
meetings of stockholders, (ii) to elect nine individuals (together with any
replacement nominees who may be proposed by Circle K, the "Circle K Nominees")
to serve as directors of the Company, and (iii) to repeal each provision of
the Company By-laws or amendment thereto adopted subsequent to January 1, 1994
and prior to the effectiveness of the proposals made pursuant to the Proxy
Solicitation, including the amendment to the Company By-laws adopted by the
Company's Board of Directors on August 10, 1995 requiring an affirmative vote
of stockholders holding 75% of the outstanding Shares to amend the Company By-
laws to change the size of the Board of Directors (the "August 10 By-law
Amendment"), although Circle K has initiated a lawsuit contesting the validity
of such amendment. The Circle K Nominees will be committed to a sale of the
Company at a price which is not lower than that specified in the Offer, and
(a) in the absence of a credible offer for the Company at a higher price,
intend to redeem the Rights (or amend the Rights Agreement to make the Rights
inapplicable to the Offer and the Proposed Merger) and approve the Offer and
the Proposed Merger under Section 203 of the DGCL ("Section 203"), which would
satisfy the Section 203 Condition, and take such other actions as may be
required to expedite the prompt consummation of the Offer and the Proposed
Merger or (b) if any other transaction offering more value to the Company's
stockholders is proposed, to act in accordance with their fiduciary duties as
directors of the Company. Accordingly, adoption of the proposals to be made
pursuant to the Proxy Solicitation would expedite the prompt consummation of
the Offer and the Proposed Merger.
In connection with the foregoing, on August 11, 1995, Circle K delivered to
the Company the requisite notice under the Company's advance notice by-law
provision to permit Circle K to nominate the Circle K Nominees.
SUMMARY BACKGROUND OF THE OFFER
In early 1994, Mr. John Antioco, the Chairman of the Board, President and
Chief Executive Officer of Circle K, raised with Mr. V.H. Van Horn, the
President and Chief Executive Officer of the Company, the possibility of a
strategic alliance between Circle K and the Company. In late March 1994, Mr.
Van Horn met with Mr. Antioco and other representatives of Circle K to discuss
a possible combination of, or a strategic alliance between, the two companies,
but stated that the Company was not for sale and that it was premature to
discuss a business combination with Circle K.
On the morning of August 8, 1995, Mr. Antioco met with Mr. Van Horn and
informed him that Circle K desired to acquire all of the outstanding equity of
the Company for a cash price of $17 per share of common stock and that Circle
K intended to file the required notice to nominate directors for election to
the Board of Directors of the Company at the Annual Meeting by August 14,
1995.
In the afternoon of August 8, 1995, Mr. Antioco delivered to Mr. Van Horn a
letter confirming their earlier discussion and reiterating Circle K's proposed
acquisition of the Company pursuant to which all holders of Shares would
receive $17.00 per Share in cash. In the letter, Circle K requested a prompt
response and indicated its willingness to consider any additional information
that the Company believed would support a higher price. The text of this
letter is set forth in Section 14 below.
On August 11, 1995, Circle K delivered to the Company the notice required by
the Company's advance notice by-law provision of its intention to nominate
nine individuals for election as directors of the Company at the Annual
Meeting and indicated its intention to seek approval of certain matters at the
Annual Meeting, including the expansion of the Company's Board of Directors
from eight directors to seventeen directors.
2
<PAGE>
On August 14, 1995 the Company publicly announced that it had received
Circle K's acquisition proposal and that its Board of Directors was in the
process of considering it. The Company also announced that it had received two
sets of director nominees for consideration at the Annual Meeting, the Circle
K Nominees and a set of director nominees from Bedford Falls Investors, L.P.,
and that Circle K had submitted proposals to amend the Company By-laws to
increase the number of directors from eight to seventeen and to repeal any
amendment to the Company By-laws adopted since January 1, 1994. On August 14,
1995, the Company filed a Current Report on Form 8-K in which the Company
disclosed that on August 10, 1995, its Board of Directors had adopted the
August 10 By-law Amendment which provided that the Company By-laws would
thereafter require a vote of 75% of its stockholders, rather than a majority
of stockholders, to change the number of directors constituting the Company's
Board of Directors.
On August 31, 1995, the Company publicly announced that its Board of
Directors had rejected Circle K's acquisition proposal and issued the Rights.
In light of the Company's response, on September 5, 1995, Circle K announced
its intention to commence the Offer. To ensure that the Company's Board of
Directors fulfills its fiduciary obligations and to resolve certain other
issues, on September 5, 1995, Circle K commenced litigation against the
Company and its directors in the Chancery Court of Delaware, New Castle County
(the "Delaware Chancery Litigation"), and in the United States District Court
for the District of Delaware. For a description of this litigation, see
Section 15. On September 7, 1995, the Purchaser commenced the Offer.
The Purchaser intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Circle K, the
consideration to be received by holders of Shares could include or consist of
cash, securities or a combination thereof. Accordingly, such negotiations
could result in, among other things, termination of the Offer and submission
of a different acquisition proposal to the Company's stockholders for their
approval. In the event that Circle K is unable to negotiate a definitive
merger agreement with the Company or the Company does not approve the
acquisition of Shares pursuant to the Offer for purposes of Section 203 and
does not redeem the Rights, Circle K intends to seek through the Proxy
Solicitation sufficient representation on the Company's Board of Directors to
approve the Offer and the Proposed Merger, to satisfy the Section 203
Condition and the Rights Condition, and to take any other necessary actions to
permit the Offer and the Proposed Merger to be consummated.
In addition, the Purchaser reserves the right to acquire Shares and Warrants
after consummation of the Offer in open market purchases, through a tender
offer, in privately negotiated transactions or otherwise, in order to obtain a
sufficient a number of Shares and Warrants to approve the transactions
contemplated hereby. After consummation of the Offer, whether or not the
Purchaser acquires additional Shares and Warrants, the Purchaser currently
intends to enter into the Proposed Merger with the Company.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH CIRCLE K MIGHT MAKE
(INCLUDING THE PROXY SOLICITATION) WOULD BE MADE ONLY PURSUANT TO SEPARATE
PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
CERTAIN CONDITIONS TO THE OFFER
The Offer is subject to the fulfillment of certain conditions described in
Section 6. These include the following:
Minimum Condition. 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
THREE-FOURTHS OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF THE COMPANY ON A
FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
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According to the Company's Annual Report on Form 10-K for its fiscal year
ended June 30, 1994 (the "Company's 1994 10-K"), as of June 30, 1994, there
were (i) 6,050,069 Shares outstanding, (ii) 1,349,931 Warrants outstanding at
an exercise price of $17.75 per Share, and (iii) 785,000 Shares subject to
issuance pursuant to stock options under the Company's stock option plan (the
"Options").
Based on the foregoing, the Purchaser believes that there are presently
8,185,000 Shares outstanding on a fully diluted basis. For purposes of the
Offer, "fully diluted basis" assumes (i) no dilution due to the Rights, (ii)
the exercise of all outstanding Options and Warrants, (iii) that no Shares
were issued (other than those reserved as of June 30, 1994 for Options and
Warrants then outstanding) or acquired by the Company after June 30, 1994 and
no options, warrants, rights or other securities convertible or exercisable or
exchangeable for Shares were issued or granted after June 30, 1994 (other than
the Rights), and (iv) 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 6,138,750
Shares and Warrants were validly tendered and not withdrawn prior to the
Expiration Date.
The Purchaser is not offering to purchase (nor will tenders be accepted of)
Options pursuant to the Offer. Holders of Options who desire to tender Shares
issuable upon exercise thereof must exercise such Options and tender such
Shares pursuant to the procedures set forth in Section 2.
Section 203 Condition. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT SECTION 203 OF THE
DGCL HAS BEEN COMPLIED WITH OR THAT ITS RESTRICTIONS ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (THE "SECTION 203
CONDITION").
The provisions of Section 203, which may be applicable to the Company, would
purport to prohibit, among other transactions, the consummation of the
Proposed Merger for a period of three years after the consummation of the
Offer unless: (i) prior to the purchase of Shares pursuant to the Offer, the
Company's Board of Directors approved either the Proposed Merger or the
purchase of Shares pursuant to the Offer, (ii) upon the purchase of Shares
pursuant to the Offer, the Purchaser owned at least 85% of the outstanding
Shares (excluding Shares owned by the Company's directors who are also
officers of the Company and employee stock plans in which employee
participants do not have the right to determine confidentially whether Shares
held by such plan will be tendered pursuant to the Offer (the "Excluded
Shares")), or (iii) on or after the consummation of the Offer the Company's
Board of Directors approves the Proposed Merger and the Proposed Merger is
approved by two-thirds of the Shares not held by the Purchaser. See Section
14.
The Section 203 Condition would be satisfied if, prior to the consummation
of the Offer, the Board of Directors of the Company approved the Proposed
Merger or the acquisition of the Shares by the Purchaser pursuant to the Offer
or, upon consummation of the Offer, the Purchaser owned at least 85% of the
total voting stock of the Company outstanding (excluding the Excluded Shares),
or if the Purchaser, in its sole discretion, were satisfied that the
restrictions of Section 203 were otherwise inapplicable to the Purchaser in
connection with the Proposed Merger for any reason, including, without
limitation, those specified in Section 203. In the event that the Circle K
Nominees are elected to, and constitute a majority of, the Company's Board of
Directors prior to the purchase of Shares pursuant to the Offer, the Circle K
Nominees intend to approve the purchase of Shares pursuant to the Offer and
the Proposed Merger. In addition, assuming that there are presently 6,050,069
Shares outstanding and that, since June 30, 1994, no Shares have been acquired
or issued (whether upon exercise of Options or Warrants or otherwise) by the
Company, the Purchaser believes that, upon the purchase of at least 5,142,559
Shares pursuant to the Offer, the Purchaser would own at least 85% of the
total voting stock of the Company outstanding at the time the Offer commenced
(before excluding the Excluded Shares) as provided in Section 203 and the
Section 203 Condition would be satisfied.
The Purchaser believes that, under applicable law and under the
circumstances of the Offer, the Company's Board of Directors is obligated by
its fiduciary responsibilities to approve the Offer and the Proposed Merger
for purposes of Section 203.
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Article Fifth Condition. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE OFFER AND THE
PROPOSED MERGER COMPLY WITH THE REQUIREMENTS CONTAINED IN ARTICLE FIFTH OF THE
COMPANY CHARTER (THE "ARTICLE FIFTH CONDITION").
Article Fifth of the Company Charter prohibits any transfer of Shares to any
person who either (i) before such transfer owned, or (ii) as a result of such
transfer would own, 5% or more of the outstanding Shares unless, among other
reasons, a bona fide third party purchaser makes a tender offer, within the
meaning of the Exchange Act, to purchase at least sixty-six and two thirds
percent (66 2/3%) of the outstanding Shares and the offeror (x) agrees to
effect, within ninety (90) days of the consummation of the tender offer, a
back end merger in which all non-tendering stockholders would receive the same
consideration as paid in the tender offer, and (y) has received the tender of
sufficient Shares to effect such merger.
As described under "Introduction," the Purchaser currently intends, as soon
as practicable following the consummation of the Offer, to consummate the
Proposed Merger pursuant to which each then outstanding Share (other than
Shares owned by the Purchaser, Circle K or any of their subsidiaries, Shares
held by the Company or any of its subsidiaries, and Shares held by
stockholders who perfect any available appraisal rights under Section 262 of
the DGCL and/or Article Ninth of the Company Charter) would be converted into
the right to receive in cash the same amount as received per Share in the
Offer (without interest) and the Company would become a wholly-owned indirect
subsidiary of Circle K.
Rights Condition. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE RIGHTS
HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED
OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (THE
"RIGHTS CONDITION"). THE RIGHTS ARE DESCRIBED IN THE COMPANY'S REGISTRATION
STATEMENT ON FORM 8-A DATED AUGUST 31, 1995 (THE "COMPANY'S FORM 8-A"), AND A
SUMMARY OF THAT DESCRIPTION IS PROVIDED BELOW AND IN SECTION 10.
According to 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 Section 10), the Rights will be evidenced by the certificates
for Shares. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Shares will
also constitute the surrender for transfer of the Rights associated with the
Shares represented by such certificates. The Rights Agreement further provides
that, as soon as practicable following the Distribution Date, separate
certificates representing the Rights are to be mailed by the Company or the
Rights Agent to holders of record of Shares as of the close of business on the
Distribution Date.
The Rights Agreement provides that, at any time prior to the close of
business on the earlier of (a) the tenth day following a public announcement
that a person has become an Acquiring Person (as defined in Section 10) and
(b) the Final Expiration Date (as defined in Section 10), the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"), except as provided in the
Rights Agreement.
Based on publicly available information, the Purchaser believes that, as of
September 7, 1995, the Rights were not exercisable, certificates for Rights
had not been issued and the Rights were evidenced by the certificates for
Shares. The Purchaser believes that, as a result of Circle K's announcement on
September 5, 1995 of the intention to commence the Offer, the Distribution
Date may occur as early as September 20, 1995, unless prior to such date the
Company's Board of Directors redeems the Rights, amends the Rights Agreement
to make the Rights inapplicable to the Offer and the Proposed Merger or delays
the Distribution Date.
UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS
SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE
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TENDERED IN ORDER TO EFFECT A VALID TENDER OF SHARES IN ACCORDANCE WITH THE
PROCEDURES SET FORTH IN SECTION 2. UNLESS THE DISTRIBUTION DATE OCCURS, A
TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
The Purchaser believes that, under the circumstances of the Offer and under
applicable law, the Board of Directors of the Company has a fiduciary
obligation to redeem the Rights (or amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger), and that its
failure to do so is a violation of law. Purchaser is hereby requesting that
the Company's Board of Directors redeem the Rights. However, there can be no
assurance that the Board of Directors of the Company will redeem the Rights
(or amend the Rights Agreement). Circle K has commenced the Delaware Chancery
Litigation which seeks a ruling that the Rights Agreement is void and/or
enjoining enforcement of the Rights Agreement.
Pursuant to the Proxy Solicitation, the Purchaser expects to seek to elect
the Circle K Nominees to the Company's Board of Directors. The Circle K
Nominees intend to redeem the Rights (or amend the Rights Agreement to make
the Rights inapplicable to the Offer and the Proposed Merger), subject to the
fulfillment of the fiduciary duties that they would have as directors of the
Company. Redemption of the Rights (or such an amendment of the Rights
Agreement) would satisfy the Rights Condition.
Board Condition. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT IT HAS RECEIVED SUFFICIENT
PROXIES PURSUANT TO THE PROXY SOLICITATION TO INCREASE THE SIZE OF THE
COMPANY'S BOARD OF DIRECTORS AND TO ELECT THE CIRCLE K NOMINEES AS A MAJORITY
OF THE COMPANY'S BOARD OF DIRECTORS (THE "BOARD CONDITION").
As discussed above, the Company's Board of Directors adopted the August 10
By-Law Amendment which purported to increase the vote required to change the
number of directors constituting the Company's Board of Directors. The
Purchaser intends to solicit proxies to amend the Company's By-laws to
increase the number of directors and to elect the Circle K Nominees. See
Introduction and Section 15. If the Purchaser receives proxies representing at
least 75% of the outstanding Shares entitled to vote at the Annual Meeting and
the Purchaser is able to increase the number of directors and elect the Circle
K Nominees, the Board Condition will be satisfied. On September 5, 1995,
Circle K commenced the Delaware Chancery Litigation which seeks a ruling that
the August 10 By-Law Amendment is an illegal attempt to entrench the Company's
current directors and officers. If Circle K is successful in challenging the
August 10 By-Law Amendment, the Purchaser receives proxies representing more
than 50% of the outstanding Shares entitled to vote at the Annual Meeting and
the Purchaser is able to increase the number of directors and elect the Circle
K Nominees, the Board Condition will be satisfied.
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. See Sections 4 and 6.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION;
AMENDMENTS. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), 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" shall mean 12:00 midnight,
New York City time, on Wednesday, October 4, 1995, unless and until the
Purchaser, in its sole discretion, 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.
Consummation of the Offer is conditioned upon, among other things, the
satisfaction of the Minimum Condition, the Section 203 Condition, the Article
Fifth Condition, the Rights Condition and the Board Condition. The Purchaser
reserves the right (but shall not be obligated) to waive any or all of such
conditions. If
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by 12:00 midnight, New York City time, on Wednesday, October 4, 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 and to terminate the Offer and return all
tendered Shares and Warrants to tendering securityholders, (ii) to waive all
of the unsatisfied conditions 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. In
the event that the Purchaser waives any of the conditions set forth in Section
6, the Commission may, if the waiver is deemed to constitute a material change
to the information previously provided to the stockholders, require that the
Offer remain open for an additional period of time and/or that the Purchaser
disseminate information concerning such waiver.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time prior to the Purchaser's acceptance of any Shares or
Warrants for payment and regardless of whether or not any of the events set
forth in Section 6 shall have occurred or shall have been determined by the
Purchaser to have occurred, (i) to extend the period of time during which the
Offer is open 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, (ii) to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of Shares or Warrants or by decreasing the
number of Shares or Warrants being sought in the Offer or both) by giving oral
or written notice of such amendment to the Depositary, and (iii) to accept for
payment either (a) the Shares whether or not the Purchaser accepts for payment
the Warrants or (b) the Warrants whether or not the Purchaser accepts for
payment the Shares. The Purchaser confirms that its reservation of the right
to delay payment for Shares or Warrants which it has accepted for payment is
limited by Rule 14e-1(c) under 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 public
announcement requirements of Rule 14e-1(d) 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 stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders 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 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 rights 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 stockholders 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
(including a waiver of the Minimum Condition, the Section 203 Condition, the
Article Fifth Condition, the Rights Condition or the Board Condition), 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 the rules promulgated under the Exchange Act. Such rules generally
provide that the minimum period during which an 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
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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. As used in this Offer to Purchase, "business day" has the
meaning set forth in Rule 14d-1(c)(6) under the Exchange Act.
According to the Company's Proxy Statement dated September 27, 1994, the
Company's Employee Stock Ownership Plan (the "ESOP") received 9,706 Shares and
16,179 Warrants pursuant to the Company's Plan of Reorganization (as defined
in Section 10). The Offer is being made to the trustees of the ESOP (the
"Trustees") for Shares and Warrants held by the ESOP at the same price and in
accordance with the same terms as for Shares and Warrants held by other
securityholders. Based on the ESOP in the form most recently filed with the
Commission, the ESOP provides that the ESOP participants will have the right
to determine whether to tender such Shares and Warrants and that the Trustees
shall endeavor to distribute materials relating to the Offer to the ESOP
participants. Participants must give the Trustees written notice of their
desire to accept the Offer.
A request is being made to the Company for the use of its 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 Letter of Transmittal and other relevant materials will be
mailed 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, the list of
holders of Rights 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. A request is also being made to the
Trustees to transmit this Offer to Purchase and any required election
materials to ESOP participants who are beneficial owners of any Shares and
Warrants owned of record by the Trustees.
2. PROCEDURE FOR TENDERING SHARES AND WARRANTS.
Valid Tender of Shares and Warrants.
For a holder validly to tender Shares (and, if applicable, Rights) or
Warrants pursuant to the Offer, a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase, and either certificates for tendered Shares (and, if applicable,
Rights) or Warrants must be received by the Depositary at one of such
addresses or such Shares (and, if applicable, Rights) 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 the tendering securityholder
must comply with the guaranteed delivery procedures set forth below.
Separate Delivery of Rights Certificates.
UNLESS AND UNTIL THE PURCHASER DECLARES THE RIGHTS CONDITION IS SATISFIED,
STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN
ORDER TO EFFECT A VALID TENDER OF SHARES. ACCORDINGLY, STOCKHOLDERS WHO SELL
THEIR RIGHTS SEPARATELY FROM THEIR SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS
MAY NOT BE ABLE TO SATISFY THE REQUIREMENTS OF THE OFFER FOR A VALID TENDER OF
SHARES. As further described in Section 10, the Rights Agreement provides that
until the close of business on the Distribution Date, the Rights will be
evidenced by the certificates for the Shares and may be transferred with and
only with the Shares. The Rights Agreement further provides that, as soon as
practicable following the Distribution Date, separate certificates
representing the Rights are to be mailed by the Company or the Rights Agent to
holders of record of Shares as of the close of business on the Distribution
Date. The Purchaser believes that, as a result of Circle K's commencement of
the Offer on September 7, 1995, the Distribution Date may occur as early as
September 20, 1995, unless prior to such date the Company's Board of Directors
redeems the Rights, amends the Rights Agreement to make the Rights
inapplicable to the Offer or delays the Distribution Date. UNLESS THE
DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF
THE ASSOCIATED RIGHTS.
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If the Distribution Date occurs and separate certificates representing the
Rights are distributed by the Company or the Rights Agent to holders of Shares
prior to the time a holder's Shares are tendered pursuant to the Offer,
certificates representing a number of Rights equal to the number of Shares
tendered must be delivered to the Depositary, or, if available, a Book-Entry
Confirmation (as defined below) received by the Depositary with respect
thereto, in order for such Shares to be validly tendered. If the Distribution
Date occurs and separate certificates representing the Rights are not
distributed prior to the time Shares are tendered pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving the certificates for
Rights by use of the guaranteed delivery procedure described below. A tender
of Shares constitutes an agreement by the tendering stockholder to deliver
certificates representing a number of Rights equal to the number of Shares
tendered pursuant to the Offer to the Depositary prior to expiration of the
period permitted by such guaranteed delivery procedures for delivery of
certificates for, or a Book-Entry Confirmation with respect to, Rights (the
"Rights Delivery Period"). However, after expiration of the Rights Delivery
Period, the Purchaser may elect to reject as invalid a tender of Shares with
respect to which certificates for, or a Book-Entry Confirmation with respect
to, an equal number of Rights have not been received by the Depositary.
Nevertheless, the Purchaser will be entitled to accept for payment Shares
tendered by a stockholder prior to receipt of the certificates for the Rights
required to be tendered with such Shares, or a Book-Entry Confirmation with
respect to such Rights, and either (a) subject to complying with applicable
rules and regulations of the Commission, withhold payment for such Shares
pending receipt of the certificates for, or a Book-Entry Confirmation with
respect to, such Rights or (b) make payment for Shares accepted for payment
pending receipt of the certificates for, or a Book-Entry Confirmation with
respect to, such Rights in reliance upon the agreement of a tendering
stockholder to deliver Rights and such guaranteed delivery procedures. Any
determination by the Purchaser to make payment for Shares in reliance upon
such agreement and such guaranteed delivery procedures or, after expiration of
the Rights Delivery Period, to reject a tender as invalid will be made in the
sole and absolute discretion of the Purchaser.
Signature Guarantees.
No guarantee of signatures on a Letter of Transmittal is required (i) if the
Letter of Transmittal is signed by the registered holder(s) (which term, for
purposes of this document, shall include 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 (and, if applicable,
Rights) 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", or (ii) if such Shares (and, if
applicable, Rights) 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 participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (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 unpurchased
Shares (and, if applicable, Rights) or Warrants are to be issued to a person
other than the registered holder, then the tendered certificates 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
(AND, IF APPLICABLE, RIGHTS) OR WARRANTS, IS AT THE ELECTION AND RISK OF THE
TENDERING SECURITYHOLDER. 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
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Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in any of the Book-Entry Transfer Facilities' 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), with any
required signature guarantees 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 guaranteed delivery procedures described below must be complied
with.
If the Distribution Date occurs, the Depositary will also make a request to
establish an account with respect to the Rights at each of the Book-Entry
Transfer Facilities, but no assurance can be given that book-entry delivery of
Rights will be available. If book-entry delivery of Rights is available, the
foregoing book-entry transfer procedures will also apply to Rights. If book-
entry delivery of Rights is not available and the Distribution Date occurs, a
tendering stockholder will be required to tender Rights by means of physical
delivery to the Depositary of certificates for Rights (in which event
references in this Offer to Purchase to Book-Entry confirmations with respect
to Rights will be inapplicable). The confirmation of a book-entry transfer of
Shares, Warrants or Rights 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.
Back-Up Federal Tax Withholding.
To prevent backup federal income tax withholding on payments made to holders
with respect to Shares or Warrants purchased pursuant to the Offer, each
tendering securityholder must provide the Depositary with his correct taxpayer
identification number and certify that he is not subject to backup federal
income tax withholding by completing the Substitute Form W-9 included in the
Letters of Transmittal. See Instruction 10 of the applicable Letter of
Transmittal.
Guaranteed Delivery.
If a holder desires to tender Shares, Rights or Warrants pursuant to the
Offer and such holder's certificates for Shares, Rights or Warrants are not
immediately available (including because certificates for Rights have not yet
been distributed) 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, Rights or Warrants may nevertheless be tendered provided that all of
the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) 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;
(c) in the case of Shares, the certificates for all tendered Shares, in
proper form for transfer, or a Book-Entry Confirmation, together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), unless an Agent's Message (as defined below) in
connection with a book-entry transfer is utilized, and any other documents
required by the 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;
(d) in the case of Rights, the certificates for all tendered Rights, in
proper form for transfer, or a Book-Entry Transfer Confirmation with
respect to such Rights, if available, together with a properly completed
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and a duly executed Letter of Transmittal (or a manually signed facsimile
thereof), unless an Agent's Message in connection with a book-entry
transfer is utilized, and any other documents required by such Letter of
Transmittal, are received by the Depositary not later than the later of (x)
three NYSE trading days after the date of such Notice of Guaranteed
Delivery, or (y) three business days after the date certificates for the
Rights are distributed to the stockholders of the Company; and
(e) in the case of Warrants, the certificates for all tendered Warrants,
in proper form for transfer, or a Book-Entry Transfer Confirmation with
respect to such Warrants, if available, together with a properly completed
and a duly executed Letter of Transmittal (or a manually signed facsimile
thereof), unless an Agent's Message in connection with a book-entry
transfer is utilized, 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 securities
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, Warrants and, if the Distribution Date has occurred, certificates for
the associated Rights, or (b) a Book-Entry Confirmation has been made with
respect to such Shares, Warrants or Rights, if available (unless the Purchaser
elects to make payment for such Shares pending receipt of the certificates
for, or a Book-Entry Confirmation with respect to, such Rights), (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 Letter of Transmittal.
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 acknowledgment from the participant
in such Book-Entry Transfer Facility tendering the Shares, Warrants or Rights
that such participant has received and agrees to be bound by the 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, to the full extent of such securityholder's rights with
respect to the Shares (including the Rights associated with the Shares) and
Warrants tendered by such securityholder (and any and all other Shares,
Warrants or Rights or other securities or rights issued or issuable in respect
of such Shares, Warrants and Rights on or after September 7, 1995), effective
when, if and to the extent that, the Purchaser accepts such Shares, Warrants
or Rights for payment pursuant to the Offer. All such proxies shall be
considered coupled with an interest in the tendered Shares, Warrants or
Rights. Upon acceptance for payment, all prior proxies given by such
securityholder with respect to such Shares, Warrants or Rights accepted for
payment or other securities will, without further action, be revoked, and no
subsequent proxies may be given. Such designees of the Purchaser will, with
respect to such Shares, Warrants or Rights 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, Warrants or Rights to be deemed
validly tendered, immediately after the Purchaser's acceptance for payment of
such Shares, Warrants or Rights, the Purchaser must be able to exercise full
voting and other rights with respect to such Shares, Warrants or Rights.
The Purchaser's acceptance for payment of Shares (and, if applicable,
Rights) and Warrants tendered pursuant to any of the procedures described
above will constitute a binding agreement between the tendering securityholder
and the Purchaser upon 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
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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 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 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,
Circle K, 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
November 6, 1995. Shares or Rights may not be withdrawn unless the associated
Rights or Shares, as the case may be, are also withdrawn. 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 certificates representing such 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 and Warrants, or is unable to accept or pay for
Shares and Warrants for any reason, then, without prejudice to the Purchaser's
rights under the Offer, tendered Shares and Warrants may be retained by the
Depositary on behalf of the Purchaser and such Shares and Warrants may not be
withdrawn except to the extent that tendering stockholders 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, and its determination will be final and binding. None of the
Purchaser, Circle K, 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. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), the
Purchaser will accept for payment and pay for all Shares and Warrants validly
tendered prior to the Expiration Date (and not properly withdrawn in
accordance with Section 3 above) as soon as practicable
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<PAGE>
after the Expiration Date. Any determination concerning the satisfaction of
such terms and conditions shall be within the sole discretion of the Purchaser
and such determination shall be final and binding on all tendering
stockholders. See Section 6. The Purchaser expressly reserves the right to
delay acceptance for payment of, or payment for, Shares and 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
and 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 and 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) or an Agent's Message in
connection with a book-entry transfer and any other documents required by the
Letter of Transmittal.
Circle K expects to file a Notification and Report Form with respect to the
Offer under the HSR Act on September 8, 1995 and in such event the waiting
period under the HSR Act with respect to the Offer will expire at 11:59 p.m.,
New York City time on September 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 Circle K. 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 the Purchaser 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, validly tendered and not withdrawn Shares and
Warrants when, as and if the Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Shares and Warrants. Payment
for Shares and 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 and
Warrants pursuant to the Offer. The Purchaser will pay any transfer taxes
incident to the transfer to it of validly tendered Shares and Warrants, except
as otherwise provided in Instruction 6 of the Letter 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 Sections 6, the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares and
Warrants, and such Shares and 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 or both pursuant to the Offer, the Purchaser
will pay such increased consideration for all securities as to which
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such consideration is increased, whether or not such securities have been
tendered or accepted for payment prior to such increase in the consideration.
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
Circle K 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 receipt of cash for Shares or Warrants
pursuant to the Offer or the Proposed Merger will be a taxable transaction for
federal income tax purposes (and may also be a taxable transaction under
applicable state, local, foreign and other tax laws). Accordingly, a holder
will recognize gain or loss for federal income tax purposes equal to the
difference between the amount of cash received and such holder's tax basis for
the Shares or Warrants. Such gain or loss will be capital gain or loss if the
Shares or Warrants were held as a capital asset.
IN VIEW OF THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, SECURITYHOLDERS ARE
URGED TO CONSULT THEIR OWN ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO
THEM OF THE OFFER.
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, the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) relating to the Purchaser's obligation to pay for or return
tendered securities after termination of the Offer, pay for any securities not
theretofore accepted for payment or paid for, and may delay the acceptance for
payment of, or payment for, any tendered securities, and may, in its sole
discretion, terminate the Offer, as to any securities not then paid for if in
the sole judgment of the Purchaser (i) any of the Minimum Condition, the
Section 203 Condition, the Article Fifth Condition, the Rights Condition or
the Board Condition shall not have been satisfied, (ii) the waiting period
applicable for the purchase of securities pursuant to the Offer under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer (and any extensions thereof), or (iii) at any time on or after September
1, 1995 and before the time of payment for any such Shares or Warrants
(whether or not any Shares or Warrants have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following events shall
occur or shall be determined by the Purchaser to have occurred:
(a) there shall have been threatened, instituted or pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, or by any other
person (whether brought by the Company, an affiliate of the Company or any
other person), before any court or governmental, regulatory or
administrative agency, authority or tribunal, domestic or foreign, which
(i) challenges or seeks to challenge the acquisition by the Purchaser or
any of its affiliates of the Shares or Warrants, restrains or prohibits or
seeks to restrain or prohibit the making or consummation of the Offer or
the Proposed Merger or other subsequent business combination, restrains or
prohibits or seeks to restrain or prohibit the performance of any of the
contracts or other arrangements entered into by the Purchaser or any of its
affiliates in connection with the acquisition of the Company, or obtains or
seeks to obtain any material damages, or otherwise relates directly or
indirectly to the transactions contemplated by the Offer (including the
Proposed Merger), (ii) makes or seeks to make the acceptance for payment,
purchase of, or payment for, some or all of the Shares or Warrants pursuant
to the Offer or the Proposed Merger illegal or results in a delay in,
restricts the ability of the Purchaser, or renders the Purchaser unable, to
accept for payment, purchase or pay for some or all of the Shares or
Warrants or to consummate the Proposed Merger, (iii) prohibits or limits or
seeks to prohibit or limit the ownership or operation by the Purchaser or
any of its affiliates of all or any portion of the business or assets of
the Company and its subsidiaries or of Circle K and its affiliates or
compels or seeks to compel the Purchaser, or any of its affiliates, to
dispose of or hold separate all or any portion of their own or the
Company's business or assets
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(including without limitation the business or assets of their respective
affiliates and subsidiaries) or imposes or seeks to impose any limitation
on the ability of the Purchaser or any of its affiliates to conduct their
business or own such assets, (iv) imposes or seeks to impose limitations on
the ability of the Purchaser or any of its affiliates to acquire or hold or
to exercise full rights of ownership of the Shares or Warrants, including,
but not limited to, the right to vote the Shares purchased by them on all
matters properly presented to the stockholders of the Company, (v) in the
sole judgment of the Purchaser, might result in a limitation of the
benefits expected to be derived by the Purchaser as a result of the
transactions contemplated by the Offer or the value of the Shares or
Warrants to the Purchaser, (vi) imposes or seeks to impose any material
condition to the Offer unacceptable to the Purchaser, or (vii) otherwise
directly or indirectly relates to the Offer, the Proposed Merger or any
other business combination with the Company or which otherwise, in the sole
judgment of the Purchaser, might adversely affect the Company or any of its
subsidiaries or the Purchaser or any of its affiliates; or
(b) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated,
entered, enforced or deemed applicable to the Offer, the Proposed Merger or
other subsequent business combination between the Purchaser or any of its
affiliates and the Company or any affiliate of the Company, or any other
action shall have been taken, proposed or threatened, by any government,
governmental authority or other regulatory or administrative agency or
commission or court, domestic, foreign or supranational, or any other
person, domestic, foreign or supranational, other than the routine
application to the Offer, the Proposed Merger or other subsequent business
combination of waiting periods under the HSR Act, that, in the sole
judgment of the Purchaser, might, directly or indirectly, result in any of
the consequences referred to in clauses (i) through (vii) of paragraph (a)
above; or
(c) there shall have occurred any of the following events: (i) any state
of war, armed hostility, international crisis or national emergency
affecting, directly or indirectly, the United States, (ii) a declaration of
any banking moratorium or suspension of payments by banks in the United
States or any limitation on the extension of credit by lending institutions
in the United States (whether or not mandatory), (iii) any general
suspension of trading or limitation of prices on any national securities
exchange or in the over-the-counter securities markets or quotations for
shares traded thereon as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or otherwise, (iv) any
significant adverse change in the market price of the Shares or Warrants or
in the securities or financial markets in the United States or abroad,
including, without limitation, a decline of more than 15% in either the Dow
Jones Average of Industrial Stocks or the Standard and Poor's 500 Index
from that existing at the close of business on September 5, 1995, (v) any
change in the general political, market, economic or financial conditions
in the United States or abroad that could have a material adverse effect
upon the business or operations of the Company or the trading in the Shares
or Warrants, or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof; or
(d) a tender or exchange offer with respect to some or all of the Shares
or Warrants, or in the case of a tender or exchange offer commenced on or
prior to the date hereof, any material change in such offer, including, but
not limited to, an increase in the consideration offered pursuant to such
offer, or a merger or acquisition proposal for the Company, shall have been
proposed, announced or made by another person (including the Company or its
subsidiaries or affiliates), or it shall have been publicly disclosed or
the Purchaser shall have otherwise learned that (i) any person, other than
the Purchaser, including the Company or its subsidiaries or affiliates, or
"group" (as such term is used in Section 13(d)(3) of the Exchange Act),
shall have acquired or proposed to acquire or be attempting to acquire
beneficial ownership of more than 5% of any class or series of capital
stock of the Company (including the Shares and Warrants) or shall have been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 5% of any class of capital stock of the
Company (including the Shares and Warrants), other than acquisitions for
bona fide arbitrage purposes and other than acquisitions by any person or
group who has publicly disclosed such ownership in a Schedule 13D or 13G
(or amendments thereto) on file with the Commission on or prior to January
1, 1995, (ii) any such person or group who had publicly disclosed in a
Schedule 13D or 13G any such ownership of more than 5% of any class or
series of capital stock of the Company (including the Shares and Warrants)
prior to such date shall have thereafter acquired or proposed
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to acquire additional capital stock constituting more than 1% of any class
or series of capital stock of the Company (including the Shares and
Warrants) or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire more than 1% of any class or series of
capital stock of the Company (including the Shares and Warrants), (iii) any
person shall have filed a Notification and Report Form under the HSR Act or
made a public announcement reflecting an intent to acquire the Company or
assets or securities of the Company, or (iv) any new group was or is formed
which beneficially owns more than 5% of any class or series of capital
stock of the Company (including the Shares and Warrants); or
(e) any change shall have occurred or been threatened (or any condition,
event or development shall have occurred or been threatened involving a
prospective change) in the business, properties, assets, liabilities,
capitalization (excluding the redemption of the Rights in accordance with
their terms as disclosed on the Company's Form 8-A), stockholders' equity,
financial condition, results of operation or prospects of the Company or
any of its subsidiaries or affiliates, which, in the sole judgment of the
Purchaser, is or may be materially adverse to, or the Purchaser shall
become aware of any facts which, in the sole judgment of the Purchaser,
have or may have materially adverse significance with respect to, either
the value of the Company or any of its subsidiaries or the value of the
Shares or Warrants to the Purchaser, Circle K or any of their affiliates;
or
(f) other than the redemption of the Rights at the Redemption Price, the
Company or any of its subsidiaries shall have (i) issued, distributed, sold
or pledged, or authorized, proposed or announced the issuance,
distribution, sale or pledge of, (A) any shares of capital stock of any
class (including, without limitation, the Shares) or any securities
convertible into any such shares, or rights, warrants or options to acquire
any such shares (including, without limitation, the Warrants) or
convertible securities (other than (1) the Rights and (2) Shares issued
pursuant to, and in accordance with the terms in effect on January 1, 1995
of, Options or Warrants issued prior to such date), or (B) any other
securities or rights in respect of, in lieu of, or in substitution for
capital stock of the Company outstanding on January 1, 1995; (ii)
purchased, acquired or otherwise caused a reduction in, or proposed to
purchase, acquire or otherwise cause a reduction in any outstanding Shares,
Warrants or other securities; (iii) declared or paid, or proposed to
declare or pay any dividend or distribution on any class or series of
capital stock of the Company (including the Shares and Warrants); (iv)
entered into an agreement for, or authorized, recommended, proposed or
effected, or announced its intention to enter into an agreement for, or to
authorize, recommend, propose or effect, any merger (other than the
Proposed Merger), consolidation, liquidation, dissolution or business
combination or any acquisition of assets, disposition of assets, change in
its capitalization, waiver, release or relinquishment of any contractual
right or other rights or any comparable event not in the ordinary course of
business; (v) entered into an agreement for, or authorized, recommended,
proposed or effected, or announced its intention to enter into an agreement
for, or to authorize, recommend, propose or effect, any transaction which
would substantially affect the value of the Shares or Warrants to the
Purchaser; (vi) altered or proposed to alter any material term of any
outstanding security; (vii) issued, sold or authorized or announced its
intention to issue or sell, any debt securities, or securities convertible
into or exchangeable for, or rights, warrants or options to acquire, any
debt securities, or incurred, or announced its intention to incur, any debt
other than in the ordinary course of business and consistent with past
practice; or (viii) authorized, recommended, proposed or entered into, or
announced its intention to enter into, any other agreement or arrangement
with any other person, entity or group which, in the sole judgment of the
Purchaser, could adversely affect either the value of the Shares or
Warrants or the value of the Company or any of its subsidiaries, to the
Purchaser, Circle K or any of their affiliates; or
(g) the Company or any of its subsidiaries shall have proposed or adopted
any amendment to any of their certificates of incorporation or bylaws or
similar organizational documents (other than the amendments to the Company
By-laws for which the Purchaser intends to solicit proxies); or
(h) the Company or any of its subsidiaries shall have entered into any
employment, severance or similar agreement or plan with any of its
employees other than in the ordinary course of business or entered into or
amended any agreements, arrangements or plans so as to provide for
increased compensation or benefits to its employees as a result of or in
connection with the transactions contemplated by the Offer or any other
change in control of the Company; or
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(i) the Purchaser shall have learned that any material contractual right
of the Company or any of its subsidiaries or affiliates shall be impaired
or otherwise adversely affected or that any material amount of indebtedness
of the Company or any of its subsidiaries shall become accelerated or
otherwise due prior to its stated due date, in either case with or without
notice or the lapse of time or both, as a result of the transactions
contemplated by the Offer; or
(j) the Purchaser shall become aware of any covenant, term or condition
in any of the Company's instruments or agreements that in the Purchaser's
sole judgment is or may be (whether considered alone or in the aggregate
with any other covenants, terms or conditions) materially adverse to the
value of the Shares or Warrants or the value of the Company or any of its
subsidiaries to the Purchaser, Circle K or any of their affiliates
(including, but not limited to, any event of default that may ensue as a
result of the consummation of the Offer, consummation of the Proposed
Merger or any other business combination, or the acquisition of control of
the Company); or
(k) the Purchaser shall become aware that any report, document,
instrument, financial statement or schedule of the Company filed with the
Commission contained, when filed, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading; or
(l) the Purchaser, Circle K or any of their subsidiaries and the Company
shall have reached any agreement or understanding providing for the
termination of the Offer or the Purchaser or Circle K (or one of their
respective affiliates) shall have entered into a definitive agreement or an
agreement in principle to acquire the Company by merger or other similar
business combination or to purchase Shares or assets of the Company; or
(m) the provisions of Article Ninth of the Company Charter shall cause
the consummation of the Proposed Merger to adversely affect the value of
the Company, as determined in the Purchaser's sole discretion; or
(n) the funds required by the Purchaser to purchase tendered Shares and
Warrants and to pay its related fees and expenses shall for any reason not
be available under the terms specified in the Financing Commitment (as
defined in Section 12);
which, in the sole judgment of the Purchaser, in any such case, and regardless
of the circumstances (including any action or inaction by the Purchaser or any
of its affiliates) giving rise to any such condition, makes it inadvisable to
proceed with the Offer or with such acceptance for payment of or payment for
the Shares and Warrants.
The foregoing conditions are for the sole benefit of the Purchaser and may
be waived by the Purchaser, in whole or in part, at any time and from time to
time in its sole discretion. The failure by the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
rights and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Purchaser
concerning the events described above will be final and binding on all
parties.
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
The Purchaser acknowledges that the Commission believes that (a) if the
Purchaser is delayed in accepting the Shares and Warrants it must either
extend the Offer or terminate the Offer and promptly return the Shares and
Warrants, and (b) the circumstances in which a delay in payment is permitted
are limited and do not include unsatisfied conditions of the Offer, except
with respect to any approval required under the HSR Act and most other
regulatory approvals.
17
<PAGE>
7. PRICE RANGE OF SHARES AND WARRANTS; DIVIDENDS. Since November 16, 1994, the
Shares have traded on the New York Stock Exchange (the "NYSE") under the
symbol "NCS". According to the Company's 1994 10-K, since March 10, 1993 and
continuing until 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 in
the Company's 1994 10-K with respect to its fiscal years ended June 30, 1993
and 1994, and as reported by published financial sources, with respect to
periods after June 30, 1994. Based on publicly available information, the
Company has never paid a dividend on its Common Stock, other than the Rights
which are to be distributed in the form of a dividend on September 11, 1995.
NATIONAL CONVENIENCE STORES INCORPORATED
COMMON STOCK
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED JUNE 30, 1993:
Third Quarter.................................................. $16.13 $14.00
Fourth Quarter................................................. 16.75 14.25
YEAR ENDED JUNE 30, 1994:
First Quarter.................................................. 16.75 13.25
Second Quarter................................................. 16.75 14.25
Third Quarter.................................................. 20.00 16.25
Fourth Quarter................................................. 17.00 10.25
YEAR ENDED JUNE 30, 1995:
First Quarter.................................................. 11.50 7.75
Second Quarter................................................. 8.88 6.50
Third Quarter.................................................. 10.38 8.50
Fourth Quarter................................................. 12.63 8.63
YEAR ENDED JUNE 30, 1996:
First Quarter (through September 6, 1995)...................... 21.00 12.13
</TABLE>
On August 7, 1995, the last full trading day prior to Circle K's
communication to the Company of its offer to purchase all of the Shares, the
last sale price of the Shares on the NYSE Composite Tape was $13.00 per Share.
On September 1, 1995, the last full trading day prior to the announcement of
the Offer, the last sales price of the Shares on the NYSE Composite Tape was
$19.13 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
Based on publicly available information, the Purchaser believes that the
Rights will not be issued until September 11, 1995. Until the Distribution
Date, the Rights will be attached to the Shares and not traded separately. As
a result, the sales quotations per Share will include associated Right for any
prices after September 11, 1995. Upon the occurrence of the Distribution Date,
the Rights are to detach, and may trade separately, from the Shares. See
Section 10. The Purchaser believes that, as a result of Circle K's
announcement on September 5, 1995 of its intention to commence the Offer, the
Distribution Date may occur as early as September 15, 1995, unless prior to
such date the Company's Board of Directors redeems the Rights, amends the
Rights Agreement to make the Rights inapplicable to the Offer and the Proposed
Merger or delays the Distribution Date. IF THE DISTRIBUTION DATE OCCURS AND
THE RIGHTS BEGIN TO TRADE SEPARATELY FROM THE SHARES, STOCKHOLDERS SHOULD ALSO
OBTAIN A CURRENT MARKET QUOTATION FOR THE RIGHTS.
18
<PAGE>
According to the Company's 1994 10-K, since April 15, 1993, the Warrants
were traded on the NASDAQ-NMS under the symbol "NCSIW". 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 of the Warrants as reported by the Company in the Company's 1994 10-K
with respect to its fiscal years ended June 30, 1993 and 1994, and as reported
by published financial sources, with respect to periods after June 30, 1994.
NATIONAL CONVENIENCE STORES INCORPORATED
WARRANTS
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
YEAR ENDED JUNE 30, 1993:
Fourth Quarter................................................... $4.75 $3.50
YEAR ENDED JUNE 30, 1994:
First Quarter.................................................... 4.75 3.50
Second Quarter................................................... 5.75 3.50
Third Quarter.................................................... 7.38 5.00
Fourth Quarter................................................... 5.75 2.75
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................................................... 2.25 1.00
YEAR ENDED JUNE 30, 1996:
First Quarter (through September 6, 1995)........................ 3.63 1.75
</TABLE>
On July 31, 1995, the last day on which the Warrants traded prior to Circle
K's communication to the Company of its offer to purchase all of the Shares
and Warrants, the last sale price of the Warrants on the NASDAQ Stock Market
was $2.00 per Warrant. On September 1, 1995, the last full trading day prior
to the announcement of the Offer, the last sales price of the Warrants on the
NASDAQ Stock Market was $2.50 per Warrant. WARRANTHOLDERS ARE URGED TO OBTAIN
A CURRENT MARKET QUOTATION FOR THE WARRANTS.
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 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.
19
<PAGE>
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 might 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 has the effect, among other things, of allowing brokers to extend credit
on such Shares as collateral. Depending on factors similar to those described
above regarding listing and market quotations, it is possible the Shares would
no longer constitute "margin securities" for purposes of the Federal Reserve
Board's margin regulations and therefore could no longer be used as collateral
for 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), the requirement of furnishing a proxy statement in connection
with stockholders' meetings pursuant to Section 14(a) or 14(c) and the related
requirement of an annual report to stockholders, and the requirements of Rule
13e-3 with respect to going private transactions, no longer applicable with
respect to 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.
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 would be 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
20
<PAGE>
terminated prior to the Proposed Merger, registration of the Shares and
Warrants under the Exchange Act will be terminated following the consummation
of the Proposed Merger.
9. DIVIDENDS AND DISTRIBUTIONS. If, on or after September 1, 1995, the Company
should or should publicly announce that it has or will (i) split, combine or
otherwise change the Shares or Warrants or its capitalization (excluding the
redemption of the Rights in accordance with their terms as disclosed on the
Company's Form 8-A), (ii) acquire presently outstanding Shares or Warrants or
otherwise cause a reduction in the number of outstanding Shares or Warrants,
or (iii) issue or sell any shares of any class or series or any securities
convertible into any such Shares or Warrants, or any rights, warrants or
options to acquire any such shares or convertible securities (other than
Shares issued pursuant to, and in accordance with the terms in effect on
September 1, 1995, of Options and Warrants issued prior to August 28, 1995)
then, without prejudice to the Purchaser's rights under Sections 6 and 15, the
Purchaser, in its sole discretion, may make such adjustments in the purchase
price and other terms of the Offer as it deems appropriate, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after September 1, 1995, the Company should or should publicly
announce that it has or will declare or pay any cash or stock dividend or
other distribution on, or issue any rights with respect to, the Shares or
Warrants, payable or distributable to stockholders of record on a date prior
to the transfer to the name of the Purchaser or its nominees or transferees on
the Company's transfer records of the Shares or Warrants purchased pursuant to
the Offer, then, without prejudice to the Purchaser's rights under Sections 6
and 15, (i) the purchase price per Share or Warrant payable by the Purchaser
pursuant to the Offer may, in the sole discretion of the Purchaser, be reduced
by the amount of any such cash dividend or distribution, and (ii) any non-cash
dividend, distribution or right to be received by the tendering
securityholders will (a) be received and held by the tendering securityholders
for the account of the Purchaser and will be required to be promptly remitted
and transferred by each tendering securityholder to the Depositary for the
account of the Purchaser, accompanied by appropriate documentation of
transfer, or (b) at the direction of the Purchaser, be exercised for the
benefit of the Purchaser, in which case the proceeds of such exercise will
promptly be remitted to the Purchaser. Pending such remittance, the Purchaser
will be entitled to all rights and privileges as owner of any such non-cash
dividend, distribution or right or such proceeds 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.
10. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the Company's
1994 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 1994 10-K:
The Company is the largest operator of convenience stores in the state of
Texas and one of the twenty largest convenience store operators in the United
States. At June 30, 1994, the Company operated 709 specialty convenience
stores in four cities in the state of Texas under the name Stop N Go (SM).
Eighty percent of the Company's stores are located in the Houston and San
Antonio, Texas areas where the Company is the largest convenience store
operator. The stores sell fresh foods, traditional fast foods, alcoholic and
nonalcoholic beverages, tobacco products, groceries, lotto/lottery tickets,
health and beauty aids and other nonfood merchandise, specialty items and
incidental services. Approximately 90% of the Company's stores are equipped
with self-serve gasoline dispensing facilities. The Company 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/Forth Worth areas. With the consummation of this transaction the
Company attained its goal of geographically consolidating its operations to
within the state of Texas.
Summary Financial Information. The following table sets 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 1994 10-K and its Quarterly Report on Form 10-Q for
the period ending March 31, 1995. The summary below is qualified by reference
to such documents (which may be inspected and obtained as described below),
including the financial statements and related notes contained therein.
21
<PAGE>
THE COMPANY AND SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
REORGANIZED COMPANY PREDECESSOR COMPANY
-------------------------------------------------- -----------------------
NINE MONTHS ENDED PERIOD FROM
MARCH 31, INCEPTION EIGHT MONTHS YEAR ENDED
------------------ YEAR ENDED (MARCH 31, 1993) FEBRUARY 28, JUNE 30,
1995 1994 JUNE 30, 1994 TO JUNE 30, 1993 1993 1992
-------- -------- ------------- ---------------- ------------ ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Sales................... $669,425 $652,645 $880,524 $297,985 $580,867 $ 958,519
Costs and Expenses:
Cost of sales.......... 501,753 483,267 658,845 222,639 429,019 728,322
Operating expenses..... 127,693 127,053 169,947 54,193 108,326 205,516
General and
administrative
expenses.............. 30,589 27,426 34,204 10,982 20,793 38,181
Restructuring and other
special charges....... -- -- -- -- 6,561 168,106
-------- -------- -------- -------- -------- ---------
660,035 637,746 862,996 287,814 564,699 1,140,125
-------- -------- -------- -------- -------- ---------
Operating Income
(Loss)................. 9,390 14,899 17,528 10,171 16,168 (181,606)
Other Income (Expense):
Interest expense....... (7,103) (8,069) (10,598) (3,241) (1,547) (11,475)
Interest income........ 1,083 896 1,220 328 50 153
Gain on sale of
assets................ 360 -- 2,965 -- -- --
-------- -------- -------- -------- -------- ---------
Earnings (Loss) Before
Reorganization
Expenses, Fresh- Start
Adjustments, Income
Taxes and Extraordinary
Gain................... 3,730 7,726 11,115 7,258 14,671 (192,928)
Reorganization Expenses,
net.................... -- -- -- -- 8,124 3,361
-------- -------- -------- -------- -------- ---------
Earnings (Loss) Before
Fresh-Start
Adjustments, Income
Taxes and Extraordinary
Gain 3,730 7,726 11,115 7,258 6,547 (196,289)
Fresh-Start
Adjustments............ -- -- -- -- 382 --
-------- -------- -------- -------- -------- ---------
Earnings (Loss) Before
Income Taxes and
Extraordinary Gain..... 3,730 7,726 11,115 7,258 6,929 (196,289)
Income Tax Expense
(Benefit).............. 1,565 3,010 4,280 2,869 133 (10,851)
-------- -------- -------- -------- -------- ---------
Earnings (Loss) Before
Extraordinary Gain..... 2,165 4,716 6,835 4,389 6,796 (185,438)
Extraordinary Gain...... -- -- -- -- 61,493 --
-------- -------- -------- -------- -------- ---------
Net Earnings (Loss)..... $ 2,165 $ 4,716 $ 6,835 $ 4,389 $ 68,289 $(185,438)
-------- -------- -------- -------- -------- ---------
Earnings Per Share...... $ 0.36 $ 0.75 $ 1.07 $ 0.68
-------- -------- -------- --------
Weighted Average Common
and Common Equivalent
Shares Outstanding..... 6,052 6,309 6,555 6,581
-------- -------- -------- --------
</TABLE>
22
<PAGE>
THE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, -----------------
1995 1994 1993
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents, $12,545, $13,557 and
$6,254 reserved............................... $ 29,551 $ 41,142 $ 46,032
Accounts receivable, net....................... 3,959 5,449 4,474
Inventories.................................... 36,493 39,626 37,308
Prepaid expenses............................... 2,734 4,775 2,697
Other Current Assets........................... 4,259 -- --
-------- -------- --------
Total Current Assets......................... 76,996 90,992 90,511
Property and Equipment, net...................... 158,713 158,075 156,528
Reorganization Value in Excess of Amounts
Allocable to Identifiable Assets, net........... 24,278 34,542 39,587
Deferred Tax Asset, net.......................... 9,737 6,071 6,065
Other Assets, net................................ 12,009 9,842 5,737
-------- -------- --------
$281,733 $299,522 $298,428
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued expenses.......... $ 56,141 $ 69,611 $ 68,395
Current portion of long-term debt.............. 12,065 12,103 10,373
-------- -------- --------
Total Current Liabilities.................... 68,206 81,714 78,768
Long-Term Debt................................... 94,440 106,976 131,559
Other Long-Term Liabilities...................... 42,174 36,084 20,839
Commitments and Contingent Liabilities........... -- -- --
Stockholders' Equity:
Common Stock, par value $.01 per share;
50,000,000 shares authorized; 6,050,075,
6,050,069 and 6,000,000 shares issued and
outstanding................................... 61 61 60
Additional paid-in capital..................... 63,463 63,463 62,813
Retained earnings.............................. 13,389 11,224 4,389
-------- -------- --------
Total Stockholders' Equity................... 76,913 74,748 67,262
-------- -------- --------
$281,733 $299,522 $298,428
======== ======== ========
</TABLE>
23
<PAGE>
The Rights. Set forth below is a summary description of certain provisions
of the Rights derived from the Company's Form 8-A.
On August 31, 1995, the Board of Directors of the Company declared a
dividend of one Right for each Share. The dividend will be payable as of the
close of business on September 11, 1995 to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $1.00 per share (the "Preferred Shares"), of the Company at a price
of $55 per one one-hundredth of a Preferred Share, subject to adjustment (the
"Purchase Price").
Until the earlier to occur of (a) ten days following a public announcement
that a person or group of affiliated or associated persons has acquired
beneficial ownership of 10% or more of the outstanding Shares (an "Acquiring
Person") or (b) ten business days (or such later date as may be determined by
action of the Board of Directors of the Company prior to the time that a
person or group has become an Acquiring Person) following the commencement of
a tender offer or exchange offer, the consummation of which would result in a
person or group becoming an Acquiring Person (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced by the
certificates for Shares.
The Rights Agreement provides that, until the Distribution Date (or the
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Shares will also constitute the surrender for transfer of
the Rights associated with the Shares represented by such certificates. The
Rights Agreement further provides that, as soon as practicable following the
Distribution Date, separate certificates for Rights will be mailed by the
Company or the Rights Agent to holders of record of the Shares as of the close
of business on the Distribution Date.
The Rights are not exercisable until the Distribution Date and will expire
on August 31, 2005 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed by the Company, in
each case as described below.
The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time as provided in the Rights Agreement.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a preferential quarterly
dividend payment of the greater of $1 per share or 100 times the dividend
declared per Share. In the event of liquidation, the holders of the Preferred
Shares will be entitled to a minimum preferential liquidation payment of the
greater of $100 per share or 100 times the payment made per Share. Each
Preferred Share will have 100 votes, voting together as a single class with
the Shares. Finally, in the event of any merger, consolidation or other
transaction in which Shares are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per Share. Because of the
nature of the Preferred Shares' dividend, liquidation and voting rights, the
value of the one one-hundredth interest in a Preferred Share purchasable upon
exercise of each Right should, according to the Company's Form 8-A,
approximate the value of one Share.
If any person becomes an Acquiring Person, then the Rights Agreement
requires that proper provision be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person and certain affiliated
or associated persons (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of Shares (or, in certain
circumstances, other securities or cash) having a market value of two times
the Purchase Price. In the event that, following the public announcement that
a person has become an Acquiring Person, the Company is acquired in a merger
or other business combination transaction or rights, assets, properties or
interests in properties accounting for 50% or more of the fair market value of
the assets or more than 50% of the revenues of the Company and its
subsidiaries are sold, the Rights Agreement requires that proper provisions be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price, that number of
shares of common stock of the acquiring company that at the time of such
transaction will have a market value of two times the Purchase Price.
24
<PAGE>
The Rights Agreement provides that, at any time prior to the close of
business on the earlier of (a) the tenth day following the public announcement
that a person has become an Acquiring Person and (b) the Final Expiration
Date, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at the Redemption Price of $.01 per Right. The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Rights are not exercisable at any time following a public announcement that a
person has become an Acquiring Person and during which the Company's right to
redeem is in effect.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. Thereafter,
the provisions of the Rights Agreement may be amended by the Board of
Directors in order to cure any ambiguity, defect or inconsistency, to make
changes that do not materially adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person and certain related
parties), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to lengthen the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
and the other documents included in the Company's Form 8-A. The Company's Form
8-A should be available for inspection and copies thereof should be obtainable
in the manner set forth below under "Other Information."
PURSUANT TO THE RIGHTS CONDITION, CONSUMMATION OF THE OFFER IS CONDITIONED
UPON THE RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY
OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE
BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED
MERGER.
UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS
SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE
TENDERED IN ORDER TO EFFECT A VALID TENDER OF SHARES IN ACCORDANCE WITH THE
PROCEDURES SET FORTH IN SECTION 2. UNLESS THE DISTRIBUTION DATE OCCURS, A
TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
The Purchaser believes that under the circumstances of the Offer, and under
applicable law, the Board of Directors of the Company has a fiduciary
obligation to redeem the Rights (or amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger), and that its
failure to do so is a violation of law. Purchaser is hereby requesting that
the Company's Board of Directors redeem the Rights. However, there can be no
assurance that the Board of Directors of the Company will redeem the Rights
(or amend the Rights Agreement). The Purchaser has commenced the Delaware
Chancery Litigation against the Company and its directors seeking, among other
things, an order declaring void and/or enjoining enforcement of the Rights
Agreement.
Pursuant to the Proxy Solicitation, the Purchaser expects to seek to elect
the Circle K Nominees to the Board of Directors of the Company. The Circle K
Nominees intend to redeem the Rights (or amend the Rights Agreement to make
the Rights inapplicable to the Offer and the Proposed Merger, subject to the
fulfillment of the fiduciary duties that they would have as directors of the
Company. Redemption of the Rights (or such an amendment of the Rights
Agreement) would satisfy the Rights Condition.
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
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is required to be disclosed in such proxy statements and distributed to the
Company's securityholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission located in Washington
Headquarters Office, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be 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.
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 each of Circle K and the
Purchaser has no knowledge that any such information is untrue, neither Circle
K nor the Purchaser 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 CIRCLE K AND THE PURCHASER. The Purchaser
is a Delaware corporation with its principal executive offices located at 3003
North Central Avenue, Phoenix, Arizona 85012. The Purchaser is a newly formed
corporation and a wholly-owned subsidiary of Circle K Stores Inc., which is a
wholly-owned subsidiary of Circle K. The Purchaser has not conducted any
business other than in connection with the Offer and the Proposed Merger.
Circle K and Circle K Stores Inc. are Delaware corporations with their
principal executive offices located at 3003 North Central Avenue, Phoenix,
Arizona 85012. Circle K is the largest operator of company-owned convenience
stores in the United States and the second largest convenience store operator
in the country. At April 30, 1995, Circle K operated or franchised 2,469
stores in 28 states. Circle K's stores are primarily located in the "sunbelt"
region of the United States which provides attractive opportunities for
convenience retailing due to its relatively high population growth and warm
climate. A typical Circle K store has approximately 2,400 square feet of
selling space and offers over 2,500 popular consumer items for sale.
Approximately 85% of Circle K's stores sell gasoline (as compared to a
convenience store industry average of approximately 72%).
Circle K 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 the Circle K's directors and
officers, their remuneration, options granted to them, the principal holders
of the Purchaser's securities and any material interest of such persons in
transactions with the Purchaser is required to be disclosed in proxy
statements distributed to the Purchaser's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection and copies may be obtained from the offices of the
Commission or the NYSE in the manner described in Section 10. Circle K hereby
incorporates by this reference the financial statements contained in its
Annual Report on Form 10-K for its fiscal year ended April 30, 1995 at pages
48-70, which was filed with the Commission on July 26, 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 Circle K and the Purchaser are set
forth in Annex I hereto.
Investcorp S.A. ("Investcorp") does not directly own any Common Stock of
Circle K or the Purchaser, but under the beneficial ownership rules of the
Commission Investcorp could be deemed to share beneficial ownership of
approximately 31.3% of Circle K's outstanding Common Stock. SIPCO Limited
("SIPCO") does not directly own any Common Stock of Circle K or the Purchaser,
but under the above-referenced beneficial ownership rules could be deemed to
control Investcorp. Additional information regarding Investcorp, SIPCO and the
executive officers and directors of SIPCO is set forth in Annex I hereto.
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Except for 85 Shares owned by Circle K (which Shares represent less than
0.1% of the outstanding Shares), and as described in the Introduction and
Section 13 of this Offer to Purchase, (a) none of Circle K or the Purchaser
or, to the best knowledge of Circle K or the Purchaser, any of the persons
listed in Annex I hereto, or any associate or majority-owned subsidiary of
Circle K 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 (b) none of Circle K or the Purchaser or, to the
best knowledge of Circle K 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.
Except as described in this Offer to Purchase, none of Circle K or the
Purchaser or, to the best knowledge of Circle K or the Purchaser, any of the
persons listed in Annex I hereto, has had, since July 1, 1991, 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 Circle
K or their respective subsidiaries or, to the best knowledge of the Purchaser
and Circle K, 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 and to pay
related fees and expenses will be approximately $150,000,000. Circle K intends
to obtain the funds from loans to be provided by Chemical Bank ("Bank"). Bank
has entered into a commitment letter with Circle K Stores Inc. and Circle K
Properties, Inc. (collectively, the "Borrowers") dated August 7, 1995 (the
"Financing Commitment") pursuant to which it has committed to provide
$500,000,000 in a senior bank credit facility (the "Credit Facility") to
finance the Offer, to pay related fees and expenses, to refinance the existing
credit facility of the Borrowers which initially provided for credit
facilities up to an aggregate principal amount of $300,000,000 and to
refinance approximately $100,000,000 of the Company's existing indebtedness.
It is anticipated that affiliates of Bank will syndicate the Credit Facility
to a group of commercial banks.
Bank's commitments under the Financing Commitment is subject to the
following conditions, among others: (i) the negotiation, execution and
delivery of definitive documentation with respect to the Credit Facility
satisfactory in form and substance to Bank and its counsel; (ii) satisfaction
by Bank with the form and substance of the Offer and the definitive
documentation therefor; (iii) there shall not have occurred any change in or
disruption of financial or capital market conditions that in the good faith
opinion of Bank could materially and adversely affect the satisfactory
syndication of the Credit Facility; and (iv) Bank not discovering any
information with respect to the Company which is inconsistent in a material
and adverse manner with the information provided to Bank by the Borrowers.
The Credit Facility will consist of three facilities. Two of these
facilities are term loan facilities. One term loan will have a principal
amount of $100,000,000, repayable over 10 semiannual installments commencing
on June 30, 1996, and will bear interest at a rate equal to, at the option of
the Borrowers, either (i) the Eurodollar rate plus a margin or (ii) Bank's
prime rate plus a margin, in either case the margin will vary between 0.75%
and 1.50% (with respect to the Eurodollar rate) and between 0.0% and 0.25%
(with respect to the prime rate) and will be determined with reference to the
ratio of Borrowers' consolidated total indebtedness to consolidated earnings
before interest, taxes, depreciation and amortization (the "Variable Rate").
The second term loan will have a principal amount of $200,000,000, repayable
over 14 semiannual installments commencing on June 30, 1996, and will bear
interest at a rate equal to, at the option of the Borrowers, either (i) Bank's
prime rate plus a margin of 0.75%, or (ii) the Eurodollar rate plus a 2%
margin. The third facility will be a revolving credit facility
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of up to $200,000,000, which will bear interest at the Variable Rate, and will
terminate on December 31, 2000. The Credit Facility will be secured by the
capital stock of certain subsidiaries of the Borrowers, the accounts
receivable, inventory and equipment of the Borrowers and certain subsidiaries
of the Borrowers, and substantially all of the tangible and intangible assets
of the Borrowers and certain subsidiaries of the Borrowers. The obligation
under the Credit Facility will be guaranteed by Circle K and such guarantee
will be secured by a pledge of the shares of Circle K Stores Inc.
It is anticipated that the indebtedness incurred by the Borrowers under the
Credit Facility will be repaid from funds generated internally by Circle K and
its subsidiaries (including, after the Proposed Merger, if consummated, funds
generated by the Company and its subsidiaries), through additional borrowings,
or through a combination of such sources. No final decisions have been made
concerning the method Circle K will employ to repay such indebtedness. Such
decisions when made will be based on Circle K'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.
In approximately September 1991, Mr. John Antioco, Chairman of the Board,
President and Chief Executive Officer of Circle K, and Mr. V.H. Van Horn,
President and Chief Executive Officer of the Company, discussed, in general
terms, the potential advantages of some form of exchange of store locations
between Circle K and the Company. No actions were taken at that time and
neither party raised the issue again until sporadic discussions commenced in
mid 1993 and intensified in late 1993.
While these discussions regarding an exchange of store locations continued
into early 1994, Mr. Antioco also pursued discussions regarding a broader
combination of Circle K and the Company. In late February 1994, at a
conference sponsored by the National Association of Convenience Stores, Mr.
Antioco raised with Mr. Van Horn the possibility of some form of strategic
arrangement between Circle K and the Company. Although Mr. Van Horn
acknowledged that such an arrangement might be possible, he also stated that
he did not think it was productive to pursue the discussion any further at
that time.
In mid March 1994, Mr. Antioco telephoned Mr. Van Horn and suggested that a
meeting be held to discuss a strategic alliance or possible combination
between Circle K and the Company. Mr. Van Horn responded that the Company was
not interested in pursuing such discussions and that a meeting was not
warranted. Several days later, Mr. Antioco telephoned Mr. Van Horn and again
suggested the possibility of a meeting between them to explore a strategic
alliance. At this meeting, which included Mr. Van Horn, Mr. Antioco and other
representatives of Circle K, Mr. Antioco discussed, in general terms, the
current status of Circle K and its operating locations and the potential
advantages of a business combination between Circle K and the Company. Mr. Van
Horn responded that he believed, at some time in the future, a combination or
other strategic alliance between the two companies might occur, that it was
"logical" in view of the synergies which could be achieved, particularly in
Texas; but that then was not the appropriate time for the Company to consider
such a combination. Mr. Van Horn indicated that the Company was then involved
in a detailed evaluation of its management and operations. Therefore, Mr. Van
Horn stated that it was premature to discuss a business combination with
Circle K. Mr. Van Horn also made it clear that the Company was not for sale.
Approximately one week after such meeting, Mr. Van Horn telephoned Mr.
Antioco and advised Mr. Antioco that he had spoken to certain of his fellow
Board members of the Company and that they concurred in his conclusion that
there was no interest in selling the Company or otherwise combining with
Circle K at that time and that further discussions would be premature.
Although the broader discussions did not result in an agreement, the
simultaneous discussions regarding an exchange of store locations resulted in
the execution by Circle K and the Company in early 1994 of an Asset Exchange
Agreement dated as of April 20, 1994 and an Asset Purchase Agreement dated as
of April 20, 1994.
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The Asset Exchange Agreement provided for the exchange of 88 Circle K
convenience stores and adjacent properties in Texas (primarily in the Houston
and Dallas metropolitan areas) for 53 of the Company's convenience stores in
California. The 88 locations transferred by Circle K were occupied pursuant to
leases and were subleased by Circle K to the Company. The 53 locations
transferred by the Company consisted of 44 leased locations and 9 locations in
which fee ownership was transferred to Circle K. As the value of the
properties conveyed by each of the parties were approximately equal, no cash
consideration was received by either party. The Asset Purchase Agreement
provided for the purchase from the Company by Circle K of 27 operating
convenience stores in the state of Georgia for $9,150,000 in cash. Both of
these transactions closed on April 29, 1994.
On June 26, 1995, Circle K purchased 85 Shares at a price per share of
$11.875.
On August 7, 1995, Mr. Antioco telephoned Mr. Van Horn and requested a
meeting with him on August 8, 1995. At such meeting, Mr. Antioco described
Circle K's desire to purchase all the outstanding equity of the Company for a
cash price of $17 per share and its intention to submit the names of directors
for election at the Company's upcoming annual meeting of stockholders. Mr.
Antioco also indicated that Circle K would have to act to nominate such
director candidates by August 14, 1995, because the advance notice provision
of the Company By-laws required such action by that date, but that if such by-
law were amended to postpone such deadline, Circle K would be willing to delay
its submission. Mr. Van Horn indicated that he believed Circle K was "heading
down the wrong path" and was otherwise unreceptive. Later that evening, Mr.
Antioco met briefly with Mr. Van Horn and delivered the following letter:
August 8, 1995
Personal & Confidential
To Be Opened by Addressee Only
VIA HAND DELIVERY
Mr. V.H. Van Horn
President and Chief Executive Officer
National Convenience Stores Incorporated
100 Waugh DriveHouston,
Texas 77007
Dear Pete:
As I mentioned when we met earlier today, I am writing to formally
confirm The Circle K Corporation's offer to acquire all of the
outstanding equity of National Convenience Stores Incorporated ("NCS")
at a price of $17 per share of common stock, net to the sellers, in
cash.
We believe that this proposal presents an extremely attractive
opportunity for your stockholders at a price which provides them a
significant premium. We hope that you and your Board of Directors will
view this offer, as we do, as an excellent opportunity for the
stockholders of NCS to realize full value for their shares to an extent
not likely to be available to them in the marketplace.
The complementary nature of NCS's strong market position in Houston,
San Antonio and Dallas, where we do not have a significant presence,
with Circle K's strong operations in other markets in the Southwest
will make the combination a strong one. We also believe that a
significant opportunity exists to improve the performance of NCS's
assets through the economies of scale and operating efficiencies which
will result from a combination with Circle K.
We are prepared to complete a definitive acquisition agreement very
swiftly. Our lead lending institution, Chemical Bank, has already
advised us that it will provide the financing necessary to complete
this transaction.
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Our valuation of NCS is based upon a careful review of publicly
available information. We are, of course, willing to consider any
additional information that you may wish to provide to us if you
believe it would support a higher price.
Should you have any questions concerning this offer, please feel free
to contact me at any time. Our financial advisor, David Glaser of Bear,
Stearns & Co. Inc. (212-272-3763), is also available to address any
issues that may arise.
We trust that you and your Board of Directors will give our offer
prompt and serious consideration so that we may move forward, in our
preferred course, to a negotiated transaction. Thus, we would
appreciate your response to our proposal as soon as practicable.
Sincerely yours,
John F. Antioco
President and Chief Executive Officer
The Circle K Corporation
cc: Board of Directors of National Convenience Stores Incorporated
On August 10, 1995, Mr. Van Horn called Mr. Antioco and informed him that
the Company's Board of Directors had reviewed the letter delivered by Mr.
Antioco on August 8, 1995 and it was being taken under consideration. Mr.
Antioco informed Mr. Van Horn that Circle K would be proceeding as outlined in
their conversation on August 8, 1995, to submit nominees for election as
Directors at the upcoming annual meeting of the Company's stockholders.
On August 11, 1995, Circle K delivered to the Company the notice required by
the Company's advance notice by-law declaring its intention to nominate nine
individuals for election at the Annual Meeting. In addition, Circle K
indicated its intention to seek to have the Company's Board of Directors
expanded at the Annual Meeting from 8 directors to 17 directors and to repeal
any amendment to the Company By-laws adopted since January 1, 1994.
On August 14, 1995, the Company publicly announced that it had received
Circle K's acquisition proposal and that its Board of Directors was in the
process of considering it. The Company also announced that it had received two
sets of director nominees for consideration at the Annual Meeting, the Circle
K Nominees and a set of director nominees from Bedford Falls Investors, L.P.,
and that Circle K had submitted proposals to amend the Company By-laws to
increase the number of directors from eight to seventeen and to repeal any
amendment to the Company By-laws adopted since January 1, 1994. In the
Company's August 14, 1995 announcement, the Company indicated that the Company
By-laws provide that any change in the number of directors constituting the
Company's Board of Directors would require the approval of 75% of the Shares.
In addition, on August 14, 1995, the Company filed a Current Report on Form
8-K with the Commission in which the Company disclosed that, on August 10,
1995, its Board of Directors adopted the August 10 By-law Amendment which
provides for the above-referenced 75% supermajority stockholder vote in order
to change the number of Company directors, rather than a majority vote as
previously provided for in the Company By-laws.
On August 15, 1995, a stockholder of the Company commenced a class action
lawsuit in the Chancery Court of Delaware seeking, among other things, the
invalidation of the August 10 By-law Amendment and asserting that the members
of the Company's Board of Directors had breached their fiduciary duties to the
Company's stockholders as a result of their conduct in connection with Circle
K's acquisition proposal and the adoption of the August 10 By-law Amendment.
On August 18, 1995, a second class action suit was filed by a stockholder of
the Company in the Chancery Court of Delaware asserting claims that are
substantially identical to the claims asserted in the class action litigation
filed on August 15, 1995.
On August 31, 1995, the Company publicly rejected Circle K's acquisition
proposal and announced that its Board of Directors had adopted the Rights
Agreement and declared a dividend of one Right for each outstanding
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Share. In light of the Company's response, on September 5, 1995, Circle K
announced its intention to commence the Offer and, to ensure that the
Company's Board of Directors fulfill its fiduciary obligation and to resolve
certain other issues, Circle K commenced the Delaware Chancery Litigation and
the litigation in the United States District Court for the District of
Delaware. On September 6, 1995, Circle K submitted to the Company a request
under the DGCL to be provided with a list of stockholders of the Company for
purposes of the Proxy Solicitation. On September 7, 1995, the Purchaser
commenced the Offer and submitted to the Company a request under Rule 14d-5 of
the Exchange Act to be provided with a list of stockholders for purposes of
the dissemination of this Offer to Purchase and the related Letter of
Transmittal.
Except as set forth above, there have been no contacts, negotiations or
transactions between the Purchaser, Circle K, Circle K Stores Inc., or any of
their respective subsidiaries or, to the best knowledge of the Purchaser and
Circle K, any of Investcorp, SIPCO or the persons listed in Annex I, on the
one hand, and the Company or its affiliates, on the other hand, 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.
14. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS OF CIRCLE K AND THE
PURCHASER WITH RESPECT TO THE COMPANY.
Purpose of the Offer; Plans for the Company. The purpose of the Offer and
the Proposed Merger is to acquire control of, and the entire equity interest
in, the Company. As soon as practicable following the purchase of Shares and
Warrants pursuant to the Offer, the Purchaser intends to seek the maximum
representation obtainable on the Company's Board of Directors and to propose
and seek to have the Company consummate the Proposed Merger, if such maximum
representation and the approval of the Proposed Merger have not been obtained
as a result of the Proxy Solicitation and the actions of the Company's Board
of Directors. The Proposed Merger, if so consummated, would involve the
conversion of each of the then outstanding Shares, other than Shares owned by
Circle K, the Purchaser or any of their subsidiaries and other than Shares
held by stockholders who perfect any available dissenters' rights they may
have under the DGCL and Article Ninth of the Company Charter, into the right
to receive cash in an amount equal to the price per Share in the Offer.
Although it is the Purchaser's current intention to seek to consummate the
Proposed Merger as promptly as practicable following consummation of the
Offer, such consummation depends upon a number of factors and circumstances
and there can be no assurance that the Proposed Merger will be consummated,
or, if consummated, the timing thereof.
Consummation of the Proposed Merger would require the approval of a
definitive merger agreement by the Company's Board of Directors and the
affirmative vote of the holders of a 66 2/3% of the outstanding Shares, unless
the Purchaser acquires at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, in which event the Proposed Merger could be consummated
pursuant to the "short form" merger provisions of the DGCL without any action
by the Company's Board of Directors and without the vote of any other of the
Company's stockholders. As described below, certain provisions of the Company
Charter and the Company By-laws may delay the ability of the Purchaser to
obtain a majority of the Board of Directors and, unless the Purchaser owns 90%
of the Shares, to consummate the Proposed Merger.
Until the Company's Board of Directors enters into a merger agreement or
similar type of business combination agreement with Circle K and the
Purchaser, the Purchaser intends to continue to seek to negotiate with the
Company with respect to the acquisition of the Company by the Purchaser,
whether pursuant to the Offer and the Proposed Merger or otherwise. If such
negotiations result in a definitive merger agreement between the Company and
Circle K, the consideration to be received by holders of Shares could include
or consist of consideration other than cash. Accordingly, such negotiations
could result in, among other things, amendment or termination of the Offer
(see Section 6) and submission of a different acquisition proposal to the
Company's stockholders for their approval.
In the event that Circle K is unable to negotiate a definitive merger
agreement with the Company or the Company does not approve the acquisition of
Shares pursuant to the Offer for purposes of Section 203 of the DGCL, Circle K
intends to seek through the Proxy Solicitation a reconstitution of the
Company's Board of Directors sufficient to have the Offer and the Proposed
Merger approved, to have the Section 203 Condition and
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the Rights Condition satisfied and to have any other necessary actions taken
to permit the Offer and the Proposed Merger to be consummated. See "--
Constraints on the Purchaser's Ability to Consummate the Proposed Merger."
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH THE PURCHASER OR
CIRCLE K MIGHT MAKE WOULD BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS
COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT.
In connection with the Offer and during its pendency, or in the event the
Offer is terminated or not consummated, or after the expiration of the Offer
and pending the consummation of the Proposed Merger, in accordance with the
applicable law, Circle K and the Purchaser may explore any and all options
which may be available to them and Circle K may, in addition to attempting to
seek control of the Company through the Proxy Solicitation, after expiration
or termination of the Offer, seek to acquire additional Shares and Warrants
through open market purchases, privately negotiated transactions, a tender
offer or exchange offer or otherwise, upon such terms and at such prices as it
may determine, which may be more or less than the price to be paid pursuant to
the Offer and could be for cash or other consideration.
Whether or not the Offer is consummated, the Purchaser reserves the right,
subject to applicable legal restrictions, to sell or otherwise dispose of any
or all Shares or Warrants acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices as it shall determine,
which may be more or less than the price to be paid pursuant to the Offer and
could be for cash or other consideration.
If the Purchaser acquires control of the Company, it intends to conduct a
review of the Company and its assets, corporate structure, capitalization,
operations, policies, management and personnel. After such review, the
Purchaser will determine what actions or changes, if any, would be desirable
in light of the circumstances which then exist, and reserves the right to
effect such actions or changes.
Except as described in this Offer to Purchase, neither Circle K nor the
Purchaser has any present plans or proposals that would relate to or result in
any extraordinary corporate transaction, such as merger, reorganization or
liquidation involving the Company or any of its subsidiaries, a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's Board of Directors or management,
any material change in the Company's capitalization or dividend policy, or any
other material change in the Company's corporate structure or business.
Constraints on the Purchaser's Ability to Consummate the Proposed
Merger. The Company Charter and the Company By-laws contain several provisions
that may delay a change in control of the Company following the purchase of
Shares and Warrants by the Purchaser pursuant to the Offer, including, among
others, (i) a provision that provides for a classified Board of Directors,
with each class elected for a term of three years and one class elected each
year at the Company's annual meeting of stockholders, (ii) a provision that
directors may not be removed without cause, (iii) a provision requiring
advance notice to the Company of any stockholder nominations for directors at
an annual meeting of stockholders, (iii) a provision that no action of
stockholders may be taken by written consent in lieu of a meeting, and (iv) a
provision that special meetings of stockholders may be called only by the
Board of Directors, the Executive Committee of the Board of Directors, if any,
or the President of the Company.
Pursuant to Article Tenth of the Company Charter, the Company's Board of
Directors is divided into three classes, with each class elected for a term of
three years and one class elected at the Company's annual meeting of
stockholders each year. The number of members of the Company's Board of
Directors is currently limited to eight members pursuant to Article II,
Section 1 of the Company By-laws. There are currently eight members of the
Company's Board of Directors. Pursuant to Article II, Section 7 of the Company
By-laws, directors of the Company may be removed only for cause. In addition,
as a result of the adoption by the Company's Board of Directors of the August
10 By-law Amendment, any change in the number of directors as provided in the
32
<PAGE>
Company By-laws must be approved by an affirmative vote of stockholders
holding 75% of the Shares entitled to vote at a meeting of the Company's
stockholders, although Circle K has initiated the Delaware Chancery Litigation
challenging the validity of such amendment.
If, following the consummation of the Offer, the members of the Company's
Board of Directors in office at such time were to refuse to approve the
Proposed Merger (or any other transaction or corporate action proposed by the
Purchaser that required the approval of the Company's Board of Directors), the
Purchaser, in order to consummate the Proposed Merger (or any such other
transaction or corporate action), would first have to replace at least a
majority of the Company's Board of Directors with its own designees. As a
result of the classified board provisions contained in the Company Charter and
the Company By-laws, at least two annual meetings of the Company's
stockholders could be required to enable nominees of the Purchaser to comprise
a majority of the Company's Board of Directors.
If the current Board of Directors of the Company opposes the Offer or the
Proposed Merger, Circle K intends to solicit proxies from the Company's
stockholders for use at the Annual Meeting or any subsequent meeting of the
Company's stockholders for the purpose of electing the Circle K Nominees, in
order to facilitate the actions necessary to consummate the Offer and the
Proposed Merger. In connection with the foregoing, Circle K has delivered the
requisite notice under the Company's advance notice by-law provision to permit
the Circle K Nominees to be considered for election as directors of the
Company at the Annual Meeting, currently scheduled for November 7, 1995. In
addition, Circle K has notified the Company of its intention to propose for
consideration at the Annual Meeting the amendment of Article II, Section 1 of
the Company By-laws to increase the size of the Company's Board of Directors
to 17 and the repeal of any amendment to the Company By-laws adopted
subsequent to January 1, 1994 (which would include the August 10 By-law
Amendment).
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH THE PURCHASER OR
CIRCLE K MIGHT MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN
COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT.
The foregoing description of the Company Charter and the Company By-laws is
qualified in its entirety by reference to the text of the Company Charter and
the Company By-laws, copies of which have been filed by the Company as
exhibits to documents filed with the Commission and may be obtained in the
manner described in Section 10 (except that copies may not be available at
regional offices of the Commission).
Restraints on Certain Business Combinations. In addition to the general
requirements under the DGCL for approval of a merger, the Company Charter
requires the affirmative vote of the holders of two-thirds of the voting
power of the then outstanding Shares in connection with the merger of the
Company. See "Introduction--Certain Conditions to the Offer--Article Fifth
Condition."
Vote Required to Amend or Repeal Certain Provisions of the Certificate of
Incorporation. Under the Company Charter, the affirmative vote of the
holders of at least two-thirds of the voting power of the then outstanding
Shares is required to amend, repeal or adopt any provision inconsistent
with the provisions of the Company Charter.
Short-Form Merger. Section 253 of the DGCL would permit the Proposed
Merger to occur without a vote of the Company's stockholders (a "Short-Form
Merger") only if the Purchaser were to acquire at least 90% of the
outstanding Shares in the Offer.
Certain Statutory Requirements. Section 203 of the DGCL purports to
regulate certain "business combinations" of a "resident domestic
corporation" with an "interested shareholder" after the "stock acquisition
date", each as defined in Section 203. In general, Section 203 provides
that a Delaware corporation shall not engage in any business combination
with any interested shareholder within three years of such shareholder
becoming an interested shareholder unless: (i) prior to the purchase of
such shares, the company's Board of Directors approved either the merger or
the purchase of such shares, (ii) upon the purchase of such shares, the
purchaser owns at least 85% of the shares (other than Excluded Shares), or
(iii) after the consummation of such acquisition the board approves the
merger and the merger is approved by two-thirds of the shares not held by
such interested shareholder.
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<PAGE>
Section 203 defines a "business combination" as (i) any merger or
consolidation of the corporation with (a) an interested shareholder or (b)
any other corporation which is, or after such merger or consolidation would
be, an affiliate or associate of such interested shareholder, (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in
one transaction or a series of transactions), except proportionately as a
stockholder of such corporation, to or with the interested stockholder,
whether as part of a dissolution or otherwise, or assets of the corporation
or of any direct or indirect majority-owned subsidiary of the corporation
which assets have an aggregate market value equal to 10% or more of either
the aggregate market value of all the assets of the corporation determined
on a consolidated basis or the aggregate market value of all the
outstanding stock of the corporation, and (iii) other specified self-
dealing transactions between such resident domestic corporation and an
interested shareholder or any affiliate or associate thereof. An
"interested shareholder" is defined generally as any person that is the
owner, directly or indirectly, of 15% or more of the outstanding voting
stock of such Delaware corporation.
If Section 203 applies to the Company, and if Section 203 is not
inapplicable on its face or as applied to the Proposed Merger, Section 203
would prohibit, among other transactions, consummation of the Proposed
Merger for a period of three years after consummation of the Offer unless:
(i) prior to the purchase of Shares pursuant to the Offer, the Company's
Board of Directors approved either the Proposed Merger or the purchase of
Shares pursuant to the Offer, (ii) upon the purchase of Shares pursuant to
the Offer, the Purchaser owns 85% of the Shares (other than Excluded
Shares), or (iii) after the consummation of the Offer the Board approves
the Proposed Merger and the Proposed Merger is approved by two-thirds of
the Shares not held by the Purchaser.
The Offer is subject to the Section 203 Condition. As more fully
described in the Introduction, the Section 203 Condition would be satisfied
if (i) the Company's Board of Directors approved the Offer and the Proposed
Merger prior to consummation of the Offer, or (ii) the Purchaser, in its
sole discretion, was satisfied that the restrictions of Section 203 were
otherwise inapplicable to the Purchaser in connection with the Proposed
Merger for any reason, including, without limitation, those specified in
Section 203. The Purchaser has requested the Company's Board of Directors
to approve the Offer and the Proposed Merger prior to the consummation of
the Offer. In addition, in the event that the Circle K Nominees are elected
to, and constitute a majority of, the Company's Board of Directors prior to
the purchase of Shares pursuant to the Offer, the Circle K Nominees,
subject to the fulfillment of their fiduciary duties as directors of the
Company, intend to approve the purchase of Shares pursuant to the Offer and
the Proposed Merger for purposes of Section 203, which would satisfy the
Section 203 Condition. See "Introduction" and Section 13.
The Purchaser has reserved the right, in its sole discretion, to waive
any or all of the conditions to the Offer. Any such waiver would generally
require the consent of the sources of financing for the Offer. In the event
the Purchaser waives the Section 203 Condition and consummates the Offer,
the Purchaser may elect to disregard Section 203 on the basis of the belief
that it is inapplicable, may take action to attempt to avoid the effects of
Section 203 or may abandon or postpone the Proposed Merger.
Rights Agreement. As described in Section 10, the Company adopted the
Rights Agreement on August 31, 1995. If the Rights are not redeemed or the
Rights Condition is not otherwise satisfied, Circle K may not be able to
consummate the Offer or the Proposed Merger.
Appraisal Rights. No appraisal rights are available in connection with
the Offer. However, if the Proposed 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 Ninth of the Company's Charter ("Article Ninth"). 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 accomplishment or expectation of the Proposed 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 Proposed Merger.
34
<PAGE>
In addition, several decisions by Delaware courts have held that, in
certain instances, a controlling stockholder of a corporation involved in a
merger has a fiduciary duty to the other stockholders that requires the
merger to be fair to such other stockholders. In determining whether a
merger is fair to minority stockholders, the Delaware courts have
considered, among other things, the type and amount of consideration to be
received by the stockholders and whether there were fair dealings among the
parties.
Article Ninth of the Company Charter provides dissenting shareholders
with certain rights in addition to those provided under the DGCL. In
particular, if the Proposed Merger is determined to be a merger of the
Company with an Interested Stockholder (as defined below), then dissenting
shareholders would receive the benefit of the provisions of Article Ninth.
Among other things, Article Ninth 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 shall
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-day periods prior to (x) the date of the announcement of the Proposed
Merger or (y) the date on which the Interested Stockholder became an
Interested Stockholder. For purposes of Article Ninth, an Interested
Stockholder is defined as any person who is, or is affiliated with a
corporation which is, the beneficial owner of 15 percent or more of the
Shares.
Going Private Transactions. The Proposed 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 Proposed Merger unless the Proposed
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 Proposed 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 its examination of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Circle K 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 pursuant to the Offer or the Proposed
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 by the Purchaser pursuant to the Offer or the Proposed
Merger. Should any such approval or other action be required, it is presently
contemplated that such approval or action would be sought, except as described
below under "Other State Takeover Statutes." While the Purchaser does not
currently intend to delay acceptance for payment of Shares 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 Circle K'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 tendered. See Section 6.
Pending Litigation. On September 5, 1995, Circle K filed a complaint (the
"Delaware Complaint") in the Chancery Court of Delaware, New Castle County,
captioned The Circle K Corporation v. National Convenience Stores
Incorporated, et al. The Delaware Complaint names the Company and the members
of its Board as defendants. It alleges that the directors of the Company have
breached their fiduciary duties under Delaware law by acting to entrench
themselves and current management through their adoption of the August 10 By-
law Amendment and the Rights Agreement and by their refusal to negotiate in
good faith with Circle K over the terms of its proposal to acquire the
Company. The Delaware Complaint seeks, among other things, an order declaring
void and enjoining enforcement of the August 10 By-law Amendment and the
Rights Agreement.
35
<PAGE>
Circle K also commenced litigation on September 5, 1995, against the Company
and its directors, in the United States District Court for the District of
Delaware, alleging that the press release made by the Company on August 14,
1995, was materially misleading because in stating the effect of the August 10
By-law Amendment it failed to state (i) that there is great legal uncertainty
as to whether such an amendment can ever be validly adopted by a director vote
and whether it can be valid when adopted as part of a program to entrench
incumbent directors and management in breach of directors' fiduciary duties,
(ii) the fact that such amendment had been adopted on August 10, 1995,
following receipt of Circle K's acquisition proposal on August 8, 1995, and
(iii) that Circle K was proposing to have this amendment rescinded at the
Annual Meeting. Circle K's complaint also alleges that the Form 8-K filed by
the Company on August 14, 1995, was materially misleading in that it failed to
accurately describe the intentions of another shareholder of the Company
beside Circle K to seek to gain control of the Company's Board of Directors.
Such litigation seeks, among other things, to have such misleading statements
corrected and to enjoin the Company from soliciting proxies until there is
adequate dissemination of the corrective disclosure.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, 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 pursuant to the Offer is subject to such requirements.
See Section 6.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, purchases 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-day waiting period, either the Antitrust
Division or the FTC requests additional information or documentary material
relevant to the Offer from 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. The
Purchaser expects to file a Notification and Report Form with respect to the
Offer and under the HSR Act on September 8, 1995, and, in such event, the
required waiting period with respect to the Offer will expire at 11:59 p.m.,
New York City time, on September 23, 1995, unless Circle K 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
Circle K, the Purchaser or the Company. Litigation seeking similar relief
could be brought by private parties under certain circumstances.
Based on its examination of publicly available information relating to the
businesses in which Circle K and its subsidiaries and the Company and its
subsidiaries are engaged, the Purchaser does not believe that consummation of
the Offer will result in violation of any applicable antitrust laws. However,
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.
Other State Takeover Statutes. A number of states in addition to Delaware
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, security holders, employees, principal executive offices
or places of business in such states.
36
<PAGE>
In 1982 the Supreme Court of the United States, in Edgar v. MITE
Corporation, invalidated on constitutional grounds the Illinois Business
Takeover Act, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. In 1987, however, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that a state
may, as a matter of corporate law and, in particular, those laws concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without prior approval of the
remaining stockholders, provided that such laws were applicable under certain
conditions, in particular, that the corporation has a substantial number of
stockholders in the state and is incorporated there. Subsequently, in Tyson
Foods, Inc. v. Holly Farms Corp., the United States Court of Appeals for the
Sixth Circuit ruled that four Tennessee statutes violated the Commerce Clause
of the United States Constitution to the extent that they applied to
corporations incorporated outside Tennessee. Similarly, in TLX Acquisition
Corp. v. Telex Corp., a Federal district court in Oklahoma ruled that the
Oklahoma Control Shares Acquisition Act was unconstitutional insofar as it
applies to corporations located outside Oklahoma. In December 1988, a Federal
district court in Florida held in Grand Metropolitan PLC v. Butterworth that
the provisions of the Florida Affiliated Transactions Act and the Florida
Control Share Acquisition Act were unconstitutional as applied to corporations
incorporated outside of Florida.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer, and has not complied with any such statutes.
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 such statutes. 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 may not be obligated to accept for payment or pay
for Shares tendered.
Alcoholic Beverages Control. The Company holds a substantial number of
alcoholic beverage licenses in connection with its operation of retail
outlets. In general, purchase of the Shares and Warrants may require the
Company to obtain approval from state or local licensing authorities. The
Purchaser believes that such approvals can be obtained in due course after the
purchase of the Shares and Warrants, that the Company will continue to conduct
its retail liquor sales operations substantially in the same manner as before
the transfer and that no materially adverse consequence to the Company will
result from the failure to obtain any such approval.
16. FEES AND EXPENSES. Bear, Stearns & Co. Inc. ("Bear Stearns") is acting as
financial advisor to Circle K and the Purchaser in connection with the Offer
and is also acting as Dealer Manager for the Offer. Under the terms of its
engagement letter with Circle K, Bear Stearns has received an initial fee of
$100,000 in connection with its engagement by the Company and a fee of
$400,000 is payable to Bear Stearns for its services as Dealer Manager in
connection with the Offer. Circle K has agreed to pay Bear Stearns an
additional fee of $400,000 upon the execution by Circle K and the Company of a
letter of intent, an agreement in principle or a definitive agreement which
provides for the acquisition of the Company by Circle K (including the
purchase of all or substantially all of the Company's assets) (a
"Transaction"). In addition, upon the consummation of a Transaction, Circle K
has agreed to pay Bear Stearns a fee equal to .75% of the aggregate
consideration (including the amount of Company indebtedness assumed or repaid
by the Purchaser) paid by it in connection with such Transaction (less the
previously paid initial fee, Dealer Manager fee and any fee previously paid in
connection with the execution of a letter of intent, an agreement in principle
or a definitive agreement with respect to the acquisition of the Company by
Circle K). Circle K and the Purchaser have also agreed to reimburse Bear
Stearns for out-of-pocket expenses, including reasonable attorneys' fees, and
Bear Stearns will be indemnified against certain liabilities in connection
with the Offer, including certain liabilities under the federal securities
laws.
37
<PAGE>
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and Chemical Bank to act as the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telegraph and personal interview and may request brokers,
dealers and other nominee stockholders to forward the Offer materials to
beneficial owners. The Information Agent will receive a fee for services as
Information Agent of $25,000. The Depositary will receive reasonable and
customary compensation for services relating to the Offer and will be
reimbursed for certain out-of-pocket expenses. The Purchaser and Circle K 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 state where the making of the
Offer is prohibited by administrative or judicial action pursuant to a valid
state statute. If the Purchaser becomes aware of any valid state 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 state. 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 Circle K, the Purchaser or the Company not
contained in this Offer to Purchase or in the Letter of Transmittal and, if
given or made, such information or representation must not be relied upon as
having been authorized.
Circle K and the Purchaser have filed with the Commission a Tender Offer
Statement on 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).
Circle K Acquisition, Inc.
September 7, 1995
38
<PAGE>
ANNEX I
1. DIRECTORS AND EXECUTIVE OFFICERS OF CIRCLE K
The following table sets forth the names, resident or principal 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 each of Circle K and the Purchaser. 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 Circle K and the
principal business address for each individual listed below is 3003 North
Central Avenue, Phoenix, Arizona 85012. Unless otherwise indicated, each
person identified below is employed by Circle K. All of the persons listed
below are United States citizens.
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
----------------- ---------------------------------
<S> <C>
John F. Antioco, Mr. Antioco joined the Circle K's predecessor as President and
Chairman of the Board, Chief Operating Officer in September 1991, and became the
President and Chief President and Chief Executive Officer of the Circle K in July
Executive Officer 1993 and the Chairman of the Board in August 1995. Mr. Antioco
was Chief Operating Officer of Pearle Vision Centers, Inc.
from June 1990 to August 1991. From 1970 to 1990, Mr. Antioco
held various positions with The Southland Corporation ("South-
land"). At the time he left Southland, he was Senior Vice
President of U.S. Store Operations. Subsequent to Mr.
Antioco's departure, Southland commenced proceedings under
Chapter 11 of the Bankruptcy Code in October 1990.
Mitchel E. Telson, Mr. Telson joined the Circle K's predecessor as Executive Vice
Executive Vice President of Operations in December 1991, and served as the
President Chief Operating Officer of the Circle K from July 1993 until
September 1995. Mr. Telson was Vice President, Western Divi-
sion, of Pearle Vision Centers, Inc. from January 1991 to De-
cember 1991. He was President of Petco, Inc. from November
1988 to May 1990. Mr. Telson held various positions with
Southland from 1967 to 1988. At the time he left Southland, he
was Vice President of the Western Region. Mr. Telson has an-
nounced that he intends to retire from Circle K at the end of
fiscal 1996.
Larry J. Zine, Mr. Zine joined Circle K's predecessor in June 1981. Since
Executive Vice June 1988 he has held the position of Executive Vice President
President and Chief Financial Officer.
and Chief Financial
Officer
Bruce Krysiak, Mr. Krysiak joined Circle K in April 1995 and became an Execu-
Executive Vice tive Vice President in July 1995 and the Chief Operating Offi-
President cer in September 1995. Prior to joining Circle K, Mr. Krysiak
and Chief Operating was Chairman of the Giant Russian/American Joint Venture, a
Officer food distribution joint venture, since 1991. From 1988 until
1991 Mr. Krysiak was Chairman of the Board of Retail Planning
Associates, an international retail consulting firm, and its
parent company, Meret, Inc. Mr. Krysiak is a director of Pre-
ferred Entertainment, Inc.
Gehl P. Babinec, Mr. Babinec joined Circle K's predecessor in 1986 as Senior
Senior Vice President, Vice President and General Counsel.
General Counsel and
Secretary
Bart A. Brown, Jr., Mr. Brown joined the Circle K's predecessor in June 1990 as
Director Chairman of the Board and held that position until August
1995. He also served as Chief Executive Officer from June 1991
through July 1993. Prior to joining Circle K's predecessor,
Mr. Brown was an attorney practicing in the Cincinnati, Ohio
law firms of Keating, Muething & Klekamp and Brown & Gardner
for over 30 years. Mr. Brown is Chairman of the Board of
Spreckles Industries, Inc. and Color Tile, Inc. and is a di-
rector of Barry's Jewelers, Inc.
</TABLE>
ANNEX I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
----------------- ---------------------------------
<S> <C>
E. Garrett Bewkes, III, Mr. Bewkes has been an executive of Investcorp since March
Director 1994. Prior to joining Investcorp, Mr. Bewkes had been Vice
Chairman and Co-Head of the investment banking department of
Bear, Stearns & Co. Inc. since 1986. Mr. Bewkes is a director
of Tatham Offshore, Inc., Color Tile, Inc., Primeco Inc. and
Bear, Stearns Companies, Inc., the parent company of Bear,
Stearns & Co. Inc.
Charles J. Philippin, Mr. Philippin has been an executive of Investcorp since July
Director 1994. Prior to joining Investcorp, Mr. Philippin had been a
partner in the accounting firm of Coopers & Lybrand since
1982. Mr. Philippin is a director of Color Tile, Inc. and
Primeco Inc.
Henry F. Frigon, Mr. Frigon is a private investor and consultant. He served as
Director Executive Vice President--Corporate Development & Strategy and
Chief Financial Officer of Hallmark Cards, Inc. from December
1990 until December 1994 and Chief Executive Officer and Pres-
ident of BATUS, Inc. from 1980 until his retirement in 1990.
Mr. Frigon is a director of Pulte Corporation, H&R Block,
Inc., Group Technologies, Inc. and Dibrell Brothers, Inc.
Bob Martinez, Mr. Martinez is a founder and principal of the economic con-
Director sulting firm of Bob Martinez & Company, Inc. Prior to founding
that firm in 1993, Mr. Martinez served on the Executive Staff
of the President of the United States as Drug Czar from 1991
until 1993, and was the Governor of the State of Florida from
1987 until 1991. Mr. Martinez is on the board of trustees of
Collins Center for Public Policy and is a director of the Na-
tional League of Cities.
</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,
officers 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 3003
North Central Avenue, Phoenix, Arizona 85012. Unless otherwise indicated, each
person identified below is employed by Circle K. All of the persons listed
below are United States citizens.
<TABLE>
<CAPTION>
NAME AND POSITION OCCUPATION AND EMPLOYMENT HISTORY
----------------- ---------------------------------
<S> <C>
John F. Antioco, (see Section 1 to Annex I, above)
Director and President
Larry J. Zine, (see Section 1 to Annex I, above)
Director, Executive
Vice President and
Treasurer
Gehl P. Babinec, (see Section 1 to Annex I, above)
Director, Senior Vice
President, General
Counsel and Secretary
Joel A. Sterrett, Mr. Sterrett has been Secretary and Associate General Counsel
Assistant Secretary of Circle K Stores Inc. and its predecessor since prior to
1990, and has been Assistant Secretary of The Circle K Corpo-
ration since July 1993.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF SIPCO LIMITED
The following table set forth the names, business addresses, present
principal occupations or employments and material occupations, positions,
officers or employments, during the last five years of the directors of SIPCO,
ANNEX I-2
<PAGE>
which is a Cayman Islands corporation. SIPCO is a holding company and as a
Cayman Islands corporation its directors perform the functions traditionally
performed by directors and executive officers. The principal address of SIPCO
is P.O. Box 1111 West Wind Building, George Town, Grand Cayman, Cayman
Islands, British West Indies.
<TABLE>
<CAPTION>
NAME, POSITION
AND BUSINESS ADDRESS OCCUPATION AND EMPLOYMENT HISTORY
-------------------- ---------------------------------
<S> <C>
H.E. Abdul-Rahman Salim H.E. Abdul-Rahman Salim Al-Ateeqi is and has been for the last
Al-Ateeqi, five years an advisor to the Emir of Kuwait. He is a citizen
Director, of Kuwait.
P.O. Box 848
Safat
Kuwait
Ahmed Ali Kanoo, Ahmed Ali Kanoo is and has been the Group Chairman of Yusif
Director, Bin Ahmed Kanoo Group and Chairman of the National Bank of
P.O. Box 45 Bahrain BSC for the last five years. He is a citizen of
Manama Bahrain.
Bahrain, Arabian Gulf
Hussain Ibrahim Al- Hussain Ibrahim Al-Fardan is and has been the Chairman of Al-
Fardan, Fardan Group of Companies for the last five years. He is a
Director, citizen of Qatar.
P.O. Box 63
Doha
Qatar
Mohammed Yousef Jalal, Mohammed Yousef Jalal is and has been for the last five years
Director, Chairman of Mohammed Y Jalal Group of Companies. He is a citi-
c/o Mohammed Jalal & zen of Bahrain.
Sons,
P.O. Box 113
Manama
Bahrain, Arabian Gulf
Nemir A. Kirdar, Nemir A. Kirdar is and has been for the last five years Presi-
Director, dent and Chief Operating Officer of Investcorp Bank E.C. and
P.O. Box 5340 Investcorp S.A. He is a citizen of Turkey.
Manama
Bahrain, Arabian Gulf
Elias N. Hallak, Elias N. Hallak is and has been the Co-Chief Operating Officer
Director, of Investcorp Bank E.C. and Investcorp S.A. since January of
P.O. Box 5340 1993. Prior to January 1993, he was a member of the Management
Manama Committee of those entities. Mr. Hallak is a citizen of the
Bahrain, Arabian Gulf United Kingdom.
Michael L. Merritt, Michael L. Merritt is and has been the Co-Chief Operating Of-
Director, ficer of Investcorp Bank E.C. and Investcorp S.A. since Janu-
P.O. Box 5340 ary of 1993. Prior to January 1993, he was a member of the
Manama Management Committee of those entities. Mr. Merritt is a citi-
Bahrain, Arabian Gulf zen of the United States of America.
</TABLE>
4. INVESTCORP S.A.
Investcorp, through its subsidiaries, acts as a principal and intermediary
in international investment transactions. It is a Luxembourg corporation with
its principal address at 37 Rue Notre Dame, Luxembourg.
ANNEX I-3
<PAGE>
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
broker, dealer, commercial bank or trust company to the Depositary at one of
its addresses set forth below:
The Depositary for the Offer is:
CHEMICAL BANK
By Mail: By Facsimile Transmission:
Chemical Bank (201) 296-4293
Reorganization Department (for Eligible Institutions Only)
P. O. Box 817 Confirm fax ONLY
Midtown Station by Telephone
New York, New York 10018 (201) 296-4209
By Hand: By Overnight Courier:
Chemical Bank Chemical Bank
Reorganization Department Reorganization Department
120 Broadway, 13th Floor 85 Challenger Road
New York, New York 10271 Ridgefield Park, New Jersey 07660
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 the Offer is:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
88 Pine Street
New York, New York 10005
(212) 440-9800 (call collect)
or
Call Toll Free (800) 223-2064
The Dealer Manager for the the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-4054
(call collect)
<PAGE>
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 September 7, 1995
by
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, OCTOBER 4, 1995, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
The Depositary for the Offer is:
CHEMICAL BANK
By Mail: By Facsimile Transmission:
CHEMICAL BANK (201) 296-4293
Reorganization Department (for Eligible Institutions Only)
P.O. Box 817 Confirm fax ONLY
Midtown Station by Telephone
New York, New York 10018 (201) 296-4209
By Hand: By Overnight Courier:
CHEMICAL BANK CHEMICAL BANK
Reorganization Department Reorganization Department
120 Broadway, 13th Floor 85 Challenger Road
New York, New York 10271 Ridgefield Park, New Jersey 07660
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA 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
and/or Rights (as such terms are 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 and/or Rights is to be made by book-entry
transfer (in the case of Rights, if available) 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")
<PAGE>
pursuant to the procedures set forth in Section 2 of the Offer to Purchase.
Unless the Rights Condition (as defined in the Offer to Purchase) is
satisfied, stockholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of shares. Unless the Distribution
Date (as defined in the Offer to Purchase) occurs, a tender of Shares will
also constitute a tender of the associated Rights. Stockholders whose
certificates for Shares and/or Rights are not immediately available (including
because certificates for Rights have not yet been distributed) or who cannot
deliver their certificates or deliver confirmation of the book-entry transfer
of their Shares and/or Rights 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 and/or Rights
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.
[_]CHECK HERE IF TENDERED SHARES AND/OR RIGHTS 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 AND/OR RIGHTS 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 Transfer Facility:
[_]The Depository Trust Company
[_]Midwest Securities Trust Company
[_]Philadelphia Depository Trust Company
Account Number __________________________________________________
Transaction Code Number _________________________________________
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------------------------------
<S> <C>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK,
EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -----------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARES
REPRESENTED NUMBER
CERTIFICATE BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL SHARES
- -----------------------------------------------------------------------------------
</TABLE>
* 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>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF RIGHTS TENDERED/(1)/
- ---------------------------------------------------------------------------------------------------------
<S> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED RIGHTS TENDERED
HOLDER(S) PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
RIGHTS REPRESENTED
CERTIFICATE BY NUMBER OF RIGHTS
NUMBER(S)/(2)(3)/ CERTIFICATE(S)/(3)/ TENDERED/(4)/
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
TOTAL RIGHTS
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed if the Rights are not represented by separate
certificates.
(2) If the tendered Rights are represented by separate certificates,
complete using the certificate numbers of such certificates for Rights.
Stockholders tendering Rights that are not represented by separate
certificates should retain a copy of this description in order to
accurately complete the Notice of Guaranteed Delivery if the
Distribution Date occurs.
(3) Need not be completed by Book-Entry Stockholders who are delivering
Rights by Book-Entry Transfer.
(4) Unless otherwise indicated, it will be assumed that all Rights
associated with Shares tendered herein are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
GENTLEMEN AND LADIES:
The undersigned hereby tenders to Circle K Acquisition, Inc., a Delaware
corporation (the "Purchaser"), and a wholly-owned indirect subsidiary of The
Circle K Corporation, a Delaware corporation ("Circle K"), the above-described
shares (the "Shares") of Common Stock, par value $.01 per share (the "Common
Stock"), of National Convenience Stores Incorporated, a Delaware corporation
(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 Boatman's Trust Company, as Rights Agent (the "Rights Agent"),
pursuant to the Purchaser's offer to purchase all of the outstanding Shares at
the purchase price of $20.00 per Share (and associated Right),
<PAGE>
net to the tendering stockholder in cash without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated September
7, 1995 (the "Offer to Purchase"), receipt of which is hereby acknowledged,
and in accordance with this Letter of Transmittal (which together 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 one
or more direct or indirect subsidiaries or affiliates of Circle K the right to
purchase Shares and Rights pursuant to this Offer.
Subject to, and effective upon, acceptance for payment of the Shares and
Rights 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 and Rights that are being tendered hereby (and any and all
other Shares and Rights or other securities or rights issued or issuable in
respect of such Shares and Rights on or after September 7, 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 Shares and Rights (and any Distributions) with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with
an interest in the tendered Shares and Rights), to (a) deliver certificates
for such Shares and Rights (and any Distributions), or transfer ownership of
such Shares and Rights (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), (b) present such Shares and Rights (and any Distributions) for
transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and
Rights (and any Distributions), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Gehl P. Babinec and Joel A.
Sterrett, 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, 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 and
Rights 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 Rights 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 and Rights 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 Rights (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 and Rights to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares and Rights, 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
Rights (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 and Rights
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 and Rights 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 and Rights on or after September 7, 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
<PAGE>
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable, provided that Shares and Rights tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date.
THE UNDERSIGNED UNDERSTANDS THAT, UNLESS AND UNTIL THE PURCHASER DECLARES
THAT THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 2 OF THE OFFER
TO PURCHASE. If the Distribution Date occurs and separate certificates
representing the Rights are distributed to holders of Shares prior to the time
Shares are tendered herewith, certificates representing a number of Rights
equal to the number of Shares being tendered herewith must be delivered to the
Depositary or, if available, a Book-Entry Confirmation must be received by the
Depositary with respect thereto, in order for such Shares tendered herewith to
be validly tendered. If the Distribution Date occurs and separate certificates
representing the Rights are not distributed prior to the time Shares are
tendered herewith, Rights may be tendered prior to a stockholder receiving
separate certificates for Rights by use of the guaranteed delivery procedures
described in Section 2 of the Offer to Purchase. A tender of Shares
constitutes an agreement by the tendering stockholder to deliver certificates
representing a number of Rights equal to the number of Shares tendered
pursuant to the Offer to the Depositary prior to expiration of the period
permitted by such guaranteed delivery procedures for delivery of certificates
for, or a Book-Entry Confirmation with respect to, Rights (the "Rights
Delivery Period"). However, after expiration of the Rights Delivery Period,
the Purchaser may elect to reject as invalid a tender of Shares with respect
to which certificates for, or a Book-Entry Confirmation with respect to, an
equal number of Rights has not been received by the Depositary. Nevertheless,
the Purchaser will be entitled to accept for payment Shares tendered by the
undersigned prior to the receipt of the certificates for the Rights required
to be tendered with such Shares, or a Book-Entry Confirmation with respect to
such Rights, and either (a), subject to complying with the applicable rules
and regulations of the Securities and Exchange Commission, withhold payment
for such Shares pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights or (b) make payment for Shares
accepted for payment pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights in reliance upon the agreement of a
tendering stockholder to deliver Rights and such guaranteed delivery
procedures. Any determination by the Purchaser to make payment for Shares in
reliance upon such agreement and such guaranteed delivery procedures or, after
the expiration of the Rights Delivery Period, to reject a tender as invalid
will be made in the sole and absolute discretion of the Purchaser.
The undersigned understands that the Purchaser's acceptance for payment of
Shares and Rights 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 upon
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 or Rights 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 or Rights 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 or Rights 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 or Rights, please credit the
account maintained at the Book-Entry Transfer Facility indicated above with
any Shares or Rights not accepted for payment. The undersigned recognizes that
the Purchaser has no obligation pursuant to the Special Payment Instructions
to transfer any Shares or Rights from the name of the registered holder
thereof if the Purchaser does not accept for payment any of the Shares or
Rights so tendered.
<PAGE>
- ------------------------------------- ---------------------------------------
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares or Rights not cates for Shares or Rights not
tendered or not accepted for pay- tendered or not accepted for pay-
ment or the check for the pur- ment and/or the check for the
chase price of Shares (including purchase price of Shares (includ-
the associated Rights) purchased ing the associated Rights) pur-
are to be issued in the name of chased are to be sent to someone
someone other than the under- other than the undersigned, or to
signed, or if Shares or Rights the undersigned at an address
delivered by book-entry transfer other than that shown above.
which are not accepted for pay-
ment are to be returned by credit
to an account maintained at a Mail: [_] Check [_] Certificates to:
Book-Entry Transfer Facility
other than the account indicated Name _____________________________
above. (PLEASE PRINT)
Address __________________________
Issue: [_] Check [_] Certificates to:
__________________________________
(INCLUDE ZIP CODE)
Name _____________________________ __________________________________
(PLEASE PRINT) (TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
Address __________________________
__________________________________ (SEE SUBSTITUTE FORM W-9 ON
(INCLUDE ZIP CODE) REVERSE SIDE)
__________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
[_] Credit unpurchased Shares or
Rights 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 Depositary Trust
Company
__________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
- ------------------------------------- ---------------------------------------
<PAGE>
IMPORTANT
STOCKHOLDER SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
____________________________________________________
____________________________________________________
(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
Rights 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.__________________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
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
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No guarantee of signature on this Letter of
Transmittal is required if (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares or Rights (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares or
Rights) 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 reverse hereof, or (ii) such Shares or
Rights are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is
a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (collectively, "Eligible Institutions"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. If the certificate is 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 unpurchased Shares or Rights are to be issued to a person
other than the registered holder, then the tendered certificate must be
enforced 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 certificate with the signatures on the certificate 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 and/or Rights 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 and Rights, or any Book-Entry Confirmation of Shares and Rights, 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, 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 or Rights are not
immediately available (including, in the case of Rights, because certificates
for Rights have not yet been distributed by the Company or the Rights Agent)
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 or Rights 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 and/or Rights, in proper form for transfer, or
Book-Entry Confirmation of Shares and/or Rights, 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 (as defined in the Offer
to Purchase) is utilized, and any other documents required by this Letter of
Transmittal, must be received by the Depositary within (a), in the case of
Shares, three New York Stock Exchange Inc. ("NYSE") trading days after the
date of execution of such Notice of Guaranteed Delivery or (b), in the case of
Rights, a period ending on the later of (1) three NYSE trading days after the
date of execution of such Notice of Guaranteed Delivery or (2) three business
days after the date certificates for Rights are distributed to stockholders by
the Company or the Rights Agent, all as provided in Section 2 of the Offer to
Purchase. Stockholders may not extend the foregoing time period for delivery
of Rights to the Depositary by providing a second Notice of Guaranteed
Delivery with respect to such Rights.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES. Unless the Distribution Date occurs, a tender of Shares will also
constitute a tender of the associated Rights. The Rights are currently
represented by the certificates for the Shares with respect to which the
Rights were issued. The Rights Agreement provides that until the close of
business on the Distribution Date, the Rights will be evidenced by the
certificates for the Shares and may be transferred with and only with the
Shares. The Rights Agreement further provides that, as soon as practicable
following the Distribution Date, separate certificates representing the Rights
are to be mailed by the Company or the Rights Agent to holders of record of
Shares as of the close of business on the Distribution Date. If the
Distribution Date occurs and separate certificates representing the Rights are
distributed prior to the time Shares are tendered herewith, certificates
<PAGE>
representing a number of Rights equal to the number of Shares being tendered
herewith must be delivered to the Depositary or, if available, a Book-Entry
Confirmation must be received by the Depositary with respect thereto, in order
for such Shares tendered herewith to be validly tendered. If the Distribution
Date occurs and separate certificates representing the Rights are not
distributed prior to the time Shares are tendered herewith, Rights may be
tendered prior to a stockholder receiving separate certificates for Rights by
use of the guaranteed delivery procedures described above.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND RIGHTS 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
INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares or Rights 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 or Rights for
payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares or Rights 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 or Rights evidenced by any certificate
submitted are to be tendered, fill in the number of Shares or Rights which are
to be tendered in the box entitled "Number of Shares Tendered" or "Number of
Rights Tendered," as appropriate. In any such case, new certificate(s) for the
remainder of the Shares or Rights 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 and Rights 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
and Rights 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 or Rights 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 or Rights 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 and Rights listed and transmitted hereby, no endorsements of
certificates or separate stock powers are required unless payment is to be
made or certificates for Shares or Rights 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 and Rights 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 or Rights 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 or Rights 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.
<PAGE>
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 or Rights 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 or Rights by book-entry transfer may
request that Shares or Rights not purchased be credited to such account
maintained at a Book-Entry Transfer Facility as such stockholder may designate
hereon. If no such instructions are given, such Shares or Rights 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 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 or Rights 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"), generally the stockholder'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 whether the stockholder (or other payee) is 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").
If the Shares or Rights are held 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 and Substitute Form W-9" for additional
guidance on which number to report. If the tendering stockholder 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 write "Applied For" in the space provided
for the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied
For" is written in Part I and the Depositary is not provided with a TIN within
60 days, the Depositary will withhold 31% on all payments of the purchase
price until a TIN is provided to the Depositary.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares or Rights 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.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares or Rights
are accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his social security number. If a tendering
stockholder is subject to backup withholding, he must cross out item (2) of
the Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made
to such stockholder with respect to Shares and Rights purchased pursuant to
the Offer may be subject to backup withholding.
<PAGE>
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to these backup withholding
and reporting requirements. In order for a noncorporate foreign stockholder to
qualify as an exempt recipient, that stockholder must complete and sign the
main signature form and a Form W-8, Certificate of Foreign Status, attesting
to that stockholder's exempt status. Such statements 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 upon
filing an income tax return.
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 and Rights purchased pursuant to the Offer,
the stockholder is required to notify the Depositary of his 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).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares or
Rights. If the Shares or Rights are registered in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidelines on which number to report. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future, he should write "Applied For" in the space
provided for in the TIN in Part I, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part I and the Depositary is not provided with
a TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price until a TIN is provided to the Depositary.
<PAGE>
PAYER'S NAME: CHEMICAL BANK
- -------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR Social security number
SUBSTITUTE TIN IN THE BOX AT RIGHT AND or Employer
FORM W-9 CERTIFY BY SIGNING AND identification number
DEPARTMENT OF DATING BELOW.
THE TREASURY ----------------------
INTERNAL (IF AWAITING TIN
REVENUE WRITE "APPLIED FOR")
SERVICE --------------------------------------------------------
PART II--For Payees exempt from backup withholding,
see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9
and complete as instructed therein.
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
- -------------------------------------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or a Taxpayer Identification Number has not been issued to me
and either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue
Service ("IRS") or Social Security Administration office or (b) I
intend to mail or deliver an application in the near future). (I
understand that if I do not provide a Taxpayer Identification Number
within (60) days, 31% of all reportable payments made to me thereafter
will be withheld until I provide a number); and
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, (b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you 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). (Also see
instructions in the enclosed Guidelines.)
- -------------------------------------------------------------------------------
SIGNATURE ______________________________________ DATE ______________ 1995
- -------------------------------------------------------------------------------
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.
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, THE LETTERS 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:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
88 Pine Street
New York, New York 10005
(212) 440-9800 (call collect)
or
Call Toll Free (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-4054
(call collect)
<PAGE>
LETTER OF TRANSMITTAL
To Tender Warrants to Purchase Shares Of Common Stock
of
NATIONAL CONVENIENCE STORES INCORPORATED
Pursuant to the Offer to Purchase Dated September 7, 1995
by
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, OCTOBER 4, 1995, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
CHEMICAL BANK
By Mail: By Facsimile Transmission:
CHEMICAL BANK (201) 296-4293
Reorganization Department (for Eligible Institutions Only)
P. O. Box 817 Confirm Fax ONLY
Midtown Station by Telephone
New York, New York 10018 (201) 296-4209
By Hand: By Overnight Courier:
CHEMICAL BANK CHEMICAL BANK
Reorganization Department Reorganization Department
120 Broadway, 13th Floor 85 Challenger Road
New York, New York 10271 Ridgefield Park, New Jersey 07660
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA 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
<PAGE>
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.
[_]CHECK HERE IF TENDERED WARRANTS 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 WARRANTS 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
Transfer Facility:
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Company
Account Number __________________________________________________
Transaction Code Number _________________________________________
DESCRIPTION OF WARRANTS TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTER HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) WARRANT(S) TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF
NECESSARY)
- -------------------------------------------------------------------------------
TOTAL NUMBER OF
WARRANTS NUMBER
CERTIFICATE REPRESENTED BY OF WARRANTS
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C>
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
TOTAL WARRANTS
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
* 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.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Gentlemen and Ladies:
The undersigned hereby tenders to Circle K Acquisition, Inc., a Delaware
corporation (the "Purchaser"), and a wholly-owned indirect subsidiary of The
Circle K Corporation, a Delaware corporation ("Circle K"), the above described
warrants (the "Warrants") to purchase shares of Common Stock, par value $.01
per share (the "Common Stock"), of National Convenience Stores Incorporated, a
Delaware corporation (the "Company"), pursuant to the Purchaser's offer to
purchase all of the outstanding Warrants at the purchase price of $2.25 per
Warrant, net to the tendering warrantholder in cash without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
September 7, 1995 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in accordance with this Letter of Transmittal (which
together 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 one or more direct or indirect subsidiaries or affiliates of
Circle K 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 September 7, 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 (such power of attorney being
deemed to be an irrevocable power coupled with an interest in the tendered
Warrants), to (a) 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), (b) present such Warrants
(and any Distributions) for transfer on the books of the Company and (c)
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 Gehl P. Babinec and Joel A.
Sterrett, 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, 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 September 7, 1995, accompanied by
appropriate
<PAGE>
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, provided that Warrants tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date.
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 upon 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.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Warrants not tendered cates for Warrants not tendered
or not accepted for payment or or not accepted for payment
the check for the purchase price and/or the check for the purchase
of Warrants purchased are to be price of Warrants purchased are
issued in the name of someone to be sent to someone other than
other than the undersigned, or if the undersigned, or to the under-
Warrants delivered by book-entry signed at an address other than
transfer which are not accepted that shown above.
for payment are to be returned by
credit to an account maintained Mail: [_] Check [_] Certificate(s)
at a Book-Entry Transfer Facility to:
other than the account indicated Name______________________________
above. PLEASE PRINT)
Issue: [_] Check [_] Certificate(s) Address __________________________
to: __________________________________
(INCLUDE ZIP CODE)
Name _____________________________ _________________________________,
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
(PLEASE PRINT)
Address __________________________ (SEE SUBSTITUTE FORM W-9 ON
__________________________________ REVERSE SIDE)
(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 Depositary Trust
Company
__________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
<PAGE>
IMPORTANT
WARRANTHOLDER SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
____________________________________________________
____________________________________________________
(SIGNATURE(S) OF WARRANTHOLDER(S))
Dated: _______________________________________, 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s)
on 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 No._________________________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
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
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No guarantee of signature on this Letter of
Transmittal is required if (i) this Letter of Transmittal is signed by the
registered holder(s) of the Warrants (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of 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 reverse hereof, 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
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (collectively, "Eligible Institutions"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. If the certificate is 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 unpurchased Warrants are to be issued to a person other
than the registered holder, then the tendered certificate must be enforced 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 certificate
with the signatures on the certificate 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, 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 (as defined in the Offer to Purchase) is utilized, 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
INSURE 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
<PAGE>
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, 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 hereon. 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 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.
<PAGE>
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 whether the warrantholder (or other payee) is 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").
If the Warrants are held 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 and Substitute Form W-9" for additional guidance 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 write "Applied For" in the space provided for the TIN
in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
until a TIN is provided to the Depositary.
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.
<PAGE>
IMPORTANT TAX INFORMATION
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. If such
warrantholder is an individual, the TIN is his social security number. If a
tendering warrantholder is subject to backup withholding, he must cross out
item (2) of the Certification box on the Substitute Form W-9. If the
Depositary is not provided with the correct TIN, the warrantholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such warrantholder with respect to Warrants
purchased pursuant to the Offer may be subject to 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. In order for a noncorporate foreign
warrantholder to qualify as an exempt recipient, that warrantholder must
complete and sign the main signature form and a Form W-8, Certificate of
Foreign Status, attesting to that warrantholder's exempt status. Such
statements 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 upon
filing an income tax return.
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 notify the Depositary of his 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).
WHAT NUMBER TO GIVE THE DEPOSITARY
The warrantholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Warrants.
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 additional
guidelines 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 should write "Applied For" in the space provided
for in the TIN in Part I, and sign and date the Substitute Form W-9. If
"Applied For" is written in Part I and the Depositary is not provided with a
TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price until a TIN is provided to the Depositary.
<PAGE>
PAYER'S NAME: CHEMICAL BANK
PART I--PLEASE PROVIDE YOUR Social Security Number
SUBSTITUTE TIN IN THE BOX AT RIGHT AND or Employer
FORM W-9 CERTIFY BY SIGNING AND Identification Number
DEPARTMENT OF DATING BELOW.
THE TREASURY ----------------------
INTERNAL (IF AWAITING TIN
REVENUE WRITE "APPLIED FOR")
SERVICE --------------------------------------------------------
PART II--For Payees exempt from backup withholding,
see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W 9
and complete as instructed therein.
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
- -------------------------------------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or a Taxpayer Identification Number has not been issued to me
and either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue
Service ("IRS") or Social Security Administration office or (b) I in-
tend to mail or deliver an application in the near future). (I under-
stand that if I do not provide a Taxpayer Identification Number within
(60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number); and
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, (b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you 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). (Also see
instructions in the enclosed Guidelines.)
- -------------------------------------------------------------------------------
SIGNATURE ______________________________________ DATE: __________________ 1995
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.
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, THE LETTERS 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:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
88 Pine Street
New York, New York 10005
(212) 440-9800 (call collect)
or
Call Toll Free (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-4054
(call collect)
<PAGE>
[Bear, Stearns & Co. Inc. Letterhead]
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
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
at
$20.00 NET PER SHARE
and
$2.25 NET PER WARRANT
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, OCTOBER 4, 1995, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
To Brokers, Dealers, Commercial Banks, September 7, 1995
Trust Companies And Other Nominees:
We have been engaged to act as Dealer Manager in connection with the offer
by Circle K Acquisition, Inc., a Delaware corporation (the "Purchaser"), and a
wholly-owned indirect subsidiary of The Circle K Corporation, a Delaware
corporation ("Circle K"), to purchase all outstanding shares of Common Stock,
par value $.01 per share (the "Shares"), of National Convenience Stores
Incorporated, a Delaware corporation (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 Boatman's Trust Company, as Rights Agent, at the
purchase price of $20.00 per Share (and associated Right), and all outstanding
Warrants to purchase Shares (the "Warrants") issued pursuant to the Warrant
Agreement, dated as of March 9, 1993, between the Company and Boatman's Trust
Company, as Warrant Agent, at the purchase price of $2.25 per Warrant, in each
case, net to the tendering securityholder in cash without interest thereon,
upon the terms
<PAGE>
and subject to the conditions set forth in the Offer to Purchase dated
September 7, 1995 (the "Offer to Purchase") and the related Letters of
Transmittal (which together 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.
Unless the Rights Condition (as defined in the Offer to Purchase) is
satisfied, stockholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares in accordance with the
procedures set forth in Section 2 of the Offer to Purchase. Unless the
Distribution Date (as defined in the Offer to Purchase) has occurred, a tender
of Shares will also constitute a tender of the associated Rights.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated September 7, 1995;
2. The Yellow 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
Letters 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 (and Rights, if applicable) or Warrants are not
immediately available or time will not permit all required documents to
reach Chemical Bank, (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; and
6. A return envelope addressed to the Depositary.
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 three-fourths of the total number of
outstanding Shares on a fully diluted basis, (2) the Purchaser being
satisfied, in its sole discretion, that Section 203 of the Delaware General
Corporation Law has been complied with or that its restrictions are otherwise
inapplicable to the Offer and the Proposed Merger (as defined in the Offer to
Purchase), (3) the Purchaser being satisfied, in its sole discretion, that the
Offer and the Proposed Merger comply with the requirements contained in
Article Fifth of the Company's Restated Certificate of Incorporation, (4) the
Rights having been redeemed by the Board of Directors of the Company or the
Purchaser being satisfied, in its sole discretion, that the Rights have been
invalidated or are otherwise inapplicable to the Offer and the Proposed Merger
and (5) the Purchaser being satisfied, in its sole discretion, that it has
received sufficient proxies pursuant to the Proxy Solicitation (as defined in
the Offer to Purchase) to increase the size of the Company's Board of
Directors and to elect the Circle K Nominees (as defined in the Offer to
Purchase) as a majority of the Company's Board of Directors. The Offer is also
subject to other terms and conditions contained in the Offer to Purchase. See
Introduction and Section 6 of the Offer to Purchase.
Neither Circle K 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 you 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, OCTOBER 4, 1995, UNLESS EXTENDED.
<PAGE>
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 delivery 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.
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
Bear, Stearns & Co. Inc. or to Georgeson & Company Inc., 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, Georgeson & Company Inc., at (800) 223-2064 or
from brokers, dealers, commercial banks or trust companies.
Very truly yours,
Bear, Stearns & Co. Inc.
as Dealer Manager
245 Park Avenue
New York, New York 10167
(212) 272-4054
(call collect)
ENCLOSURES
- -------------------------------------------------------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON AS AN AGENT OF PURCHASER, CIRCLE K, ANY AFFILIATE
OF THE PURCHASER OR CIRCLE K, 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 STATEMENTS EXPRESSLY MADE IN THE OFFER TO PURCHASE OR THE
LETTERS OF TRANSMITTAL.
- -------------------------------------------------------------------------------
<PAGE>
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
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary of
THE CIRCLE K CORPORATION
at
$20.00 NET PER SHARE
and
$2.25 NET PER WARRANT
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, OCTOBER 4, 1995, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is the Offer to Purchase dated September 7,
1995 (the "Offer to Purchase") and the related Letters of Transmittal (which
together constitute the "Offer") relating to the offer by Circle K
Acquisition, Inc., a Delaware corporation (the "Purchaser") and a wholly-owned
indirect subsidiary of The Circle K Corporation, a Delaware corporation, to
purchase for cash all outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of National Convenience Stores Incorporated, a Delaware
corporation (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 Boatman's Trust Company, as
Rights Agent, at the purchase price of $20.00 per Share (and associated
Right), and all outstanding Warrants to purchase Shares (the "Warrants")
issued pursuant to the Warrant Agreement, dated as of March 9, 1993, between
the Company and Boatman's Trust Company, as Warrant Agent, at the purchase
price of $2.25 per Warrant, in each case, net to the tendering securityholder
in cash without interest, upon 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 FOR 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 AND PURSUANT TO YOUR
INSTRUCTIONS. 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 $20.00 per Share (and associated Right),
net to the seller in cash.
<PAGE>
2. The tender price for Warrants is $2.25 per Warrant, net to the seller
in cash.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York time, on Wednesday, October 4, 1995, unless the Offer is extended.
4. 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 three-fourths of the total
number of outstanding Shares on a fully diluted basis, (2) the Purchaser
being satisfied, in its sole discretion, that Section 203 of the Delaware
General Corporation Law has been complied with or that its restrictions are
otherwise inapplicable to the Offer and the Proposed Merger (as defined in
the Offer to Purchase), (3) the Purchaser being satisfied, in its sole
discretion, that the Offer and the Proposed Merger comply with the
requirements contained in Article Fifth of the Company's Restated
Certificate of Incorporation, (4) the Rights having been redeemed by the
board of directors of the Company or the Purchaser being satisfied, in its
sole discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger and (5) the Purchaser
being satisfied, in its sole discretion, that it has received sufficient
proxies pursuant to the Proxy Solicitation (as defined in the Offer to
Purchase) to increase the size of the Company's Board of Directors and to
elect the Circle K Nominees (as defined in the Offer to Purchase) as a
majority of the Company's Board of Directors. The Offer is also subject to
other terms and conditions contained in the Offer to Purchase. See
Introduction and Section 6 of the Offer to Purchase.
5. Unless the Rights Condition (as defined in the Offer to Purchase) is
satisfied, stockholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares in accordance with the
procedures set forth in Section 2 of the Offer to Purchase. Unless the
Distribution Date (as defined in the Offer to Purchase) has occured, a
tender of Shares will also constitute a tender of the associated Rights.
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 Letter of Transmittal, transfer taxes on the purchase of Shares or
Warrants by the Purchaser pursuant to the Offer.
The Offer is being made to all holders of Shares or Warrants. The Purchaser
is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state 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
state 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 state 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
state. 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 Bear, Stearns & 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 and returning the form set forth on the
reverse side of 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.
<PAGE>
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
CIRCLE K ACQUISITION, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase of Circle K Acquisition, Inc., a Delaware corporation (the
"Purchaser"), and a wholly-owned indirect subsidiary of The Circle K
Corporation dated September 7, 1995, and the related Letters of Transmittal
(which together constitute the "Offer") relating to the offer by Purchaser to
purchase all outstanding shares of Common Stock, par value $.01 per share (the
"Shares"), of National Convenience Stores Incorporated, a Delaware
corporation, at a purchase price of $20.00 per Share, together with the
associated rights to purchase preferred stock (the "Rights") and all
outstanding warrants to purchase Shares (the "Warrants") at the purchase price
of $2.25 per Warrant, in each case, net to the tendering securityholders in
cash without interest.
This will instruct you to tender to the Purchaser the number of Shares or
Warrants indicated below (or if no number is indicated below, all Shares 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.
- --------------------------------- SIGN HERE
Number of Shares to be tendered:*
____Shares ---------------------------------------
- ---------------------------------
---------------------------------------
- ---------------------------------- Signatures(s)
Number of Rights to be tendered:**
_____Rights
- ----------------------------------
---------------------------------------
---------------------------------------
Please print name(s) and address(es)
here
- -----------------------------------
Number of Warrants to be tendered:* ---------------------------------------
____Warrants
- ----------------------------------- Area Code and Telephone Number
Account Number: _________________ ---------------------------------------
Tax Identification or Social Security
Dated: ____________________, 1995 Number(s)
- --------
* UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL OF YOUR SHARES OR
WARRANTS HELD BY US FOR YOUR ACCOUNT ARE TO BE TENDERED.
** UNLESS THE RIGHTS CONDITION (AS DEFINED IN THE OFFER TO PURCHASE) IS
SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE
TENDERED TO EFFECT A VALID TENDER OF SHARES. UNLESS THE DISTRIBUTION DATE
(AS DEFINED IN THE OFFER TO PURCHASE) OCCURS, A TENDER OF SHARES WILL ALSO
CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
<PAGE>
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
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
(Not to be used for Signature Guarantee)
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, a Delaware corporation, and/or certificates for the associated
rights to purchase preferred stock (the "Rights") issued pursuant to the
Rights Agreement, dated August 31, 1995, between the Company and Boatman's
Trust Company, as Rights Agent, are not immediately available, (including
because certificates for Rights have not yet been distributed by the Company)
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. See Section 2 of the Offer to
Purchase.
The Depositary for the Offer is:
CHEMICAL BANK
By Mail: By Facsimile Transmission:
Chemical Bank (201) 296-4293
Reorganization Department (for Eligible Institutions Only)
P. O. Box 817 Confirm fax ONLY
Midtown Station by Telephone
New York, New York 10018 (201) 296-4209
By Hand: By Overnight Courier:
Chemical Bank Chemical Bank
Reorganization Department Reorganization Department
120 Broadway, 13th Floor 85 Challenger Road
New York, New York 10271 Ridgefield Park, New Jersey 07660
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.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal for Shares (and associated Rights) 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 (and associated Rights).
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Circle K Acquisition, Inc., a Delaware
corporation and a wholly-owned indirect subsidiary of The Circle K
Corporation, a Delaware corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated September 7, 1995 and the
related Letters of Transmittal (which together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Shares and/or Rights
indicated below pursuant to the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase.
Number of Shares ____________________ Name(s) of Record Holder(s) _________
Number of Rights ____________________ _____________________________________
Certificate No(s) for Shares and/or _____________________________________
Rights Please Type or Print
(if available) ______________________
_____________________________________ Address _____________________________
Check ONE box if Shares and/or _____________________________________
Rights will be tendered by book- Zip Code
entry transfer:
[_] The Depository Trust Company Area Code and Tel. No. ______________
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Signature(s) ________________________
Company _____________________________________
Account Number ______________________
Dated ___________________________1995
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees (a) that the above
named person(s) has a long position in the Shares and/or Rights being tendered
within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended, (b) that such tender of Shares and/or Rights complies
with Rule 14e-4 and (c) 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 and/or Rights into the Depositary's accounts at
The Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company, in each case with the delivery of a
properly completed and duly executed Letter of Transmittal (for Shares and
associated Rights) (or manually signed facsimile thereof), and any other
required documents, (a) in the case of Shares, within three New York Stock
Exchange, Inc. ("NYSE") trading days after the date hereof and (b) in the case
of Rights, within a period ending on the later of (i) three NYSE trading days
after the date hereof or (ii) three business days after the date certificates
for Rights are distributed to the Company's stockholders.
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 and/or Rights to the
Depositary within the time period shown herein.
_____________________________________ _____________________________________
Name of Firm Authorized Signature
_____________________________________ _____________________________________
Address Title
_____________________________________ Name ________________________________
Zip Code Please Type or Print
Area Code and Tel. No. ______________ Date ____________________________1995
NOTE: DO NOT SEND CERTIFICATES FOR SHARES AND/OR RIGHTS WITH THIS NOTICE.
CERTIFICATES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
Tender of Warrants to Purchase Shares of Common Stock
of
NATIONAL CONVENIENCE STORES INCORPORATED
to
Circle K Acquisition, Inc.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
(Not to be used for Signature Guarantee)
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 (the "Warrants"), par value $.01 per share, of National
Convenience Stores Incorporated, a Delaware corporation (the "Company") issued
pursuant to the Warrant Agreement, dated as of March 9, 1993, between the
Company and Boatman's Trust Company, as Warrant 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. See Section 2 of the Offer to
Purchase.
The Depositary for the Offer is:
CHEMICAL BANK
By Mail: By Facsimile Transmission:
Chemical Bank (201) 296-4293
Reorganization Department (for Eligible Institutions Only)
P. O. Box 817 Confirm fax ONLY
Midtown Station by Telephone
New York, New York 10018 (201) 296-4209
By Hand: By Overnight Courier:
Chemical Bank Chemical Bank
Reorganization Department Reorganization Department
120 Broadway, 13th Floor 85 Challenger Road
New York, New York 10271 Ridgefield Park, New Jersey 07660
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.
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.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Circle K Acquisition, Inc., a Delaware
corporation and a wholly-owned indirect subsidiary of The Circle K
Corporation, a Delaware corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated September 7, 1995, 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.
Number of Warrants __________________ Name(s) of Record Holder(s) _________
Certificate No(s) for Warrants (if _____________________________________
available) __________________________ _____________________________________
_____________________________________ Please Type or Print
_____________________________________
_____________________________________ Address _____________________________
Check ONE box if Warrants will be _____________________________________
tendered by book-entry transfer: Zip Code
[_] The Depository Trust Company
[_] Midwest Securities Trust Company Area Code and Tel. No. ______________
[_] Philadelphia Depository Trust
Company
Signature(s) ________________________
_____________________________________
Account Number ______________________
Dated ___________________________1995
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees (a) 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 Securities Exchange Act of 1934,
as amended, (b) that such tender of Warrants complies with Rule 14e-4 and (c)
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, 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 and
certificates for Warrants to the Depositary within the time period shown
herein.
_____________________________________ _____________________________________
Name of Firm Authorized Signature
_____________________________________ _____________________________________
Address Title
_____________________________________ Name ________________________________
Zip Code Please Type or Print
Area Code and Tel. No. ______________ Date ____________________________1995
NOTE: DO NOT SEND CERTIFICATES FOR WARRANTS WITH THIS NOTICE.
CERTIFICATES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payor--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payor.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the account or,
(joint account) individual on the account/1/
3. Custodian account of a minor The minor/2/
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee/1/
trust (grantor is also trustee)
b. So-called trust account that The actual owner/1/
is not a legal or valid trust
under State law
5. Sole proprietorship The owner/3/
6. Sole proprietorship The owner/3/
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------------------------------
<S> <C> <C>
7. A valid trust, estate or pension trust The legal entity/4/
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational or
other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. 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
agricultural program payments
- --------------------
</TABLE>
/1/ List first and circle the name of the person whose number you furnish.
/2/ Circle the minor's name and furnish the minor's social security number.
/3/ Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
/4/ List first and circle the name of the valid trust, estate or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER (TIN) ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE)
PAGE 2
NAME
If you are an individual, you must generally provide the name shown on your
social security card. However, if you have changed your last name, for in-
stance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card, and your new last name.
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN"), apply for one im-
mediately. To apply, obtain Form SS-5, Application for a Social Security Card,
from your local office of the Social Security Administration, or Form SS-4,
Application for Employer Identification Number, from your local Internal Reve-
nue Service (the "IRS") office.
PAYEES AND PAYMENTS 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 cor-
poration that provides medical and health care services or bills and collects
payments for such services is not exempt from backup withholding or informa-
tion reporting.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 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 instrumentali-
ties.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
(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 Invest-
ment 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 Secre-
taries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends generally not subject to backup withholding include the
following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and that have at least one nonresident partner.
. 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 PAYOR'S TRADE OR BUSINESS AND YOU
HAVE NOT PROVIDED YOUR CORRECT TIN TO THE PAYOR.
. 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 those sections.
PRIVACY ACT NOTICE.--Section 6109 requires you to furnish your correct TIN 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, 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 TIN whether or
not you are qualified to file a tax return. Payors must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a TIN to a payor. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN.--If you fail to furnish your correct TIN to a re-
quester (the person asking you to furnish your TIN), you are subject to a pen-
alty 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 certi-
fications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS
<PAGE>
FOR: The Circle K Corporation
APPROVED BY: Judy States
The Circle K Corporation
602-530-5153
CONTACT: Investor Relations:
Naomi Rosenfeld/Edward Nebb
212-850-5600
Media:
Brian Maddox
212-850-5600
Miriam Adler
415-296-7383
Morgen-Walke Associates
THE CIRCLE K CORPORATION COMMENCES TENDER OFFER FOR NATIONAL CONVENIENCE
STORES INCORPORATED SHARES AND WARRANTS
Phoenix, Arizona, September 7, 1995 - The Circle K Corporation (NYSE:CRK)
announced that it has commenced today its tender offer for all outstanding
shares of common stock and stock purchase warrants of National Convenience
Stores Incorporated (NYSE:NCS). Circle K is offering $20.00 in cash for each
share of NCS common stock and $2.25 in cash for each NCS warrant.
Bear, Stearns & Co. Inc. is the dealer manager for the tender offer.
Georgeson & Company Inc. is the information agent.
The transaction has a value of approximately $232 million, which includes
the assumption of NCS's existing debt of approximately $100 million. Circle K
has received a commitment from its lead lender, Chemical Bank, regarding the
necessary financing for this transaction.
-more-
<PAGE>
-2-
The Circle K Corporation is the largest operator of company-owned
convenience stores and the largest independent gasoline retailer in the United
States. It operates or franchises over 2,500 stores in 28 states, primarily in
the Sunbelt. Additionally, there are over 2,600 stores operating under the
Circle K name in 19 foreign countries.
# # #
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares, Rights or Warrants. The Offer is made solely by the Offer to
Purchase dated September 7, 1995 and the related Letters of Transmittal and any
supplements thereto and is being made to all holders of Shares, Rights or
Warrants. The Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of the Shares, Rights or Warrants
pursuant thereto, the Purchaser will make a reasonable good faith effort to
comply with any such state 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 state statute, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders of Shares,
Rights or Warrants in such state. 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 Bear, Stearns
& Co. Inc. or one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(including the Associated Rights to Purchase Preferred Stock)
and
All Outstanding Warrants to Purchase Common Stock
of
NATIONAL CONVENIENCE STORES INCORPORATED
by
CIRCLE K ACQUISITION, INC.
a wholly-owned indirect subsidiary
of
THE CIRCLE K CORPORATION
at
$20.00 Net Per Share
and
$2.25 Net Per Warrant
Circle K Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned indirect subsidiary of The Circle K Corporation, a Delaware
corporation ("Circle K"), is offering to purchase all outstanding shares of
Common Stock, par value $0.01 per share (the "Shares"), of National Convenience
Stores Incorporated, a Delaware corporation (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 Boatman's Trust Company, as Rights Agent (the "Rights
Agent"), at the purchase price of $20.00 per share (and associated Right), and
all outstanding Warrants to purchase Shares (the "Warrants") issued pursuant to
the Warrant Agreement, dated as of March 9, 1993, between the Company and
Boatman's Trust Company, as Warrant Agent, at the purchase price of $2.25 per
Warrant, in each case, net to the tendering securityholder in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated September 7, 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, subject to Instruction 6 of the Letters of Transmittal, transfer taxes
on the purchase of Shares or Warrants pursuant to the Offer. Unless the Rights
are redeemed or the Purchaser is satisfied, in its sole discretion, that the
Rights have been invalidated or are otherwise inapplicable to the Offer and the
Proposed Merger (as defined in the Offer to Purchase), stockholders are required
to tender one Right for each Share tendered in order to effect a valid tender of
Shares in accordance with the procedures set forth in Section 2 of the Offer to
Purchase. Unless the Distribution Date (as defined in Section 10 of the Offer to
Purchase) has occurred, a tender of Shares will also constitute a tender of the
associated Rights.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, OCTOBER 4, 1995, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
<PAGE>
The purpose of the Offer is to enable the Purchaser to acquire control of,
and the entire equity interest in, the Company. The Offer, as a first step in
the acquisition of the Company, is intended to facilitate the acquisition of all
outstanding Shares and Warrants. The Purchaser may consider, among other things,
changes to the terms of the Offer and intends to continue to seek to negotiate
with the Company with respect to the acquisition of the Company by the
Purchaser. The Purchaser currently intends, as soon as practicable following the
consummation of the Offer, to seek to have the Company consummate a merger or
similar business combination with the Purchaser or another direct or indirect
wholly-owned subsidiary of Circle K (the "Proposed Merger"), pursuant to which
each then outstanding Share (other than Shares owned by the Purchaser, Circle K
or any of their subsidiaries, Shares held by the Company or any of its
subsidiaries and Shares held by stockholders who perfect any available appraisal
rights under Section 262 of the Delaware General Corporation Law (the "DGCL")
and/or Article Ninth of the Company's Restated Certificate of Incorporation (the
"Company Charter")) would be converted into the right to receive in cash the
same amount as received per Share in the Offer (without interest) and the
Company would become a wholly-owned indirect subsidiary of Circle K.
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 THREE-FOURTHS OF THE TOTAL NUMBER OF
OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS, (2) THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT SECTION 203 OF THE DGCL HAS BEEN
COMPLIED WITH OR THAT ITS RESTRICTIONS ARE OTHERWISE INAPPLICABLE TO THE OFFER
AND THE PROPOSED MERGER, (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE OFFER AND THE PROPOSED MERGER COMPLY WITH THE REQUIREMENTS
CONTAINED IN ARTICLE FIFTH OF THE COMPANY CHARTER, (4) THE RIGHTS HAVING BEEN
REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE
OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER, AND (5) THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT IT HAS RECEIVED
SUFFICIENT PROXIES PURSUANT TO THE PROXY SOLICITATION (AS DEFINED IN THE
INTRODUCTION TO THE OFFER TO PURCHASE) TO INCREASE THE SIZE OF THE COMPANY'S
BOARD OF DIRECTORS AND TO ELECT THE CIRCLE K NOMINEES (AS DEFINED IN THE
INTRODUCTION OF THE OFFER TO PURCHASE) AS A MAJORITY OF THE COMPANY'S BOARD OF
DIRECTORS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN
THE OFFER TO PURCHASE. SEE INTRODUCTION AND SECTION 6 OF THE OFFER TO PURCHASE.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, October 4, 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. The
Purchaser expressly reserves the right, in its sole discretion, at any time or
from time to time, prior to its acceptance of any Shares or Warrants for payment
and regardless of whether or not any of the events set forth in Section 6 of the
Offer to Purchase shall have occurred or shall have been determined by the
Purchaser to have occurred, to extend the period of time during which the Offer
is open 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. 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. The Purchaser expressly reserves the right
in its sole discretion, to accept for payment either (a)the Shares whether or
not the Purchaser accepts for payments the Warrants or (b)the Warrants whether
or not the Purchaser accepts for payment the Shares.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) validly tendered and not withdrawn Shares or
Warrants when, as and if the Purchaser gives oral or written notice to Chemical
Bank (the "Depositary") of its acceptance for payment of such Shares or
Warrants. 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 Offer will
be made only after timely receipt by the Depositary of (i) certificates for such
Shares, Warrants and, if the Distribution Date has occurred, certificates for
the associated Rights, or a timely confirmation of book-entry transfer of such
Shares, Warrants or, if available, Rights into the Depositary's account at a
Book-Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase)
as described in Section 2 of the Offer to Purchase (a "Book-Entry Confirmation")
with respect to such Shares, Warrants, or Rights, if available (unless the
Purchaser elects to make payment for such securities pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, the Rights);
(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. Under no circumstances will interest be paid
on the purchase price of the Shares, Warrants or Rights to be paid by the
Purchaser, by reason of any delay in making such payments.
<PAGE>
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 and Warrants or is unable to pay for
the Shares and Warrants 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 and Warrants tendered pursuant to the Offer. 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 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 and 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 November 6, 1995. Shares or Rights may not be withdrawn unless
the associated Rights or Shares, as the case may be, are also withdrawn. 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 addressees
set forth on the back cover of the Offer to Purchase. Any notice of withdrawal
must specify the name of the person having tendered the Shares or Warrants to be
withdrawn, the number of Shares or Warrants to be withdrawn and the name in
which the certificates representing 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 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.
A request is being made to the Company pursuant to Rule 14d-5 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for the use of
the Company's stockholder list, its list of holders of Warrants, if any, and
security position listings for the purpose of disseminating the Offer to the
holders of Shares and Warrants.
The Offer to Purchase and the related Letters of Transmittal and other
relevant materials will be mailed 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
warrantholder list, stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares and Warrants.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Exchange Act is contained in the Offer
to Purchase and is incorporated herein by reference.
The Offer to Purchase and the Letters of Transmittal contain important
information which should be read before any decision is made with respect to the
Offer.
<PAGE>
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 numbers listed below, and copies will be furnished
promptly at the Purchaser's expense. The Purchaser will not pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager) for soliciting tenders of Shares or Warrants pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON
& Company Inc.
--------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(212) 272-4054
(call collect)
September 7, 1995
<PAGE>
(BW)(THE-CIRCLE-K-CORP)((CRK) THE CIRCLE K CORPORATION ANNOUNCES TENDER
OFFER TO NATIONAL CONVENIENCE STORES INCORPORATED SHAREHOLDERS AND WARRANT
HOLDERS
Business Editors
PHOENIX, Ariz.--Sept. 5, 1995--(BUSINESS WIRE)--The Circle K Corporation
(NYSE:CRK) announced today that it intends to commence a tender offer for all
outstanding shares of common stock of National Convenience Stores Incorporated
(NYSE:NCS) at $20.00 per share in cash and all outstanding stock purchase
warrants of NCS at $2.25 per warrant in cash.
Details of the tender offer will be mailed to NCS shareholders shortly.
Circle K also expects to file with the Securities and Exchange Commission
preliminary proxy materials intended to expedite the consummation of the tender
offer. The tender offer will be conditioned on the tender of a minimum number of
outstanding shares and warrants, as well as certain other conditions.
The tender offer is being made following a proposal on August 8, 1995 by
Circle K to acquire NCS in a negotiated transaction at $17.00 per share. The
original offer was rejected by NCS's Board of Directors on August 31, 1995.
The transaction has a value of approximately $232 million, which includes
the assumption of NCS's existing debt of approximately $100 million. Circle K
has received a commitment from its lead lender, Chemical Bank, regarding the
necessary financing for this transaction.
John Antioco, Chairman, President and Chief Executive Officer of Circle K,
commented, "It is our belief that this strategic combination is in the best
interests of the shareholders of both companies. However, NCS rejected our offer
of a negotiated transaction and its management and directors have entrenched
themselves by adopting a poison pill and changing the voting requirements for
expansion of the Board. Consequently, by initiating this tender offer, we are
giving the NCS shareholders an opportunity to determine the outcome for
themselves."
Circle K has filed litigation in Federal Court and Delaware Chancery Court
in response to the entrenchment actions taken by the Board of Directors of NCS.
Bear, Stearns & Co. Inc. is acting as dealer manager for the tender offer.
Georgeson & Company Inc. will be the information agent.
The Circle K Corporation is the largest operator of company-owned
convenience stores and the largest independent gasoline retailer in the United
States. It operates or franchises over 2,500 stores in 28 states, primarily in
the Sunbelt.
Additionally, there are over 2,600 stores operating under the Circle K name
in 19 foreign countries.
CONTACT: Judy States
The Circle K Corporation
602-530-5153
OR
Investor Relations: Naomi Rosenfeld/Edward Nebb
212-850-5600
Media: Brian Maddox
212-850-5600
Miriam Adler
415-296-7383
Morgen-Walke Associates
<PAGE>
CHEMICAL BANK
270 Park Avenue
New York, New York 10017
CHEMICAL SECURITIES INC.
270 Park Avenue
New York, New York 10017
August 7, 1995
Commitment Letter
$500,000,000 Credit Facilities
------------------------------
Circle K Stores, Inc.
Circle K Properties, Inc.
3003 North Central Avenue
Phoenix, Arizona 85012
Attention: Chief Financial Officer
Dear Sirs:
You have advised Chemical Bank ("Chemical") and Chemical Securities
--------
Inc. ("CSI") that Circle K Stores, Inc., a Texas corporation (formerly named The
---
Circle K Corporation)(the "Company"), intends to acquire (the "Acquisition") all
------- -----------
of the outstanding equity interests in National Convenience Stores, Inc., a
Delaware corporation ("National"), by means of a tender offer, a merger or other
--------
transaction. In addition, you have advised Chemical that, concurrently with the
consummation of the Acquisition, you intend to refinance the Company's Amended
and Restated Credit Agreement, dated as of August 12, 1994, among the Company,
Circle K Properties, Inc. (the "Real Property Subsidiary"), the leaders parties
------------------------
thereto, Chemical as administrative agent and The CIT Group/Business Credit,
Inc., as collateral agent (as amended, supplemented or otherwise modified, the
"Existing Credit Agreement"), which Existing Credit Agreement provided for
-------------------------
senior credit facilities in an aggregate principal amount of $300,000,000, and
to refinance approximately $100,000,000 of existing indebtedness of National.
You have requested Chemical to provide the $500,000,000 senior credit facilities
(collectively, the "Credit Facilities") required to finance in part the purchase
-----------------
price of the Acquisition and fees, expenses and financing costs in
<PAGE>
2
Circle K. Stores, Inc. August 7, 1995
Circle K. Properties, Inc.
connection therewith, to refinance the Existing Credit Agreement, to refinance
existing indebtedness of National, and to finance the continuing operations of
the Company and its subsidiaries (including, following the Acquisition,
National).
Chemical is pleased to advise you that it is willing to provide the
Credit Facilities. Attached as Exhibit A to this letter (which shall form a part
hereof) is a statement of Terms and Conditions (the "Term Sheet") setting forth
----------
the principal terms and conditions on and subject to which Chemical is willing
to make the Credit Facilities available.
Although Chemical is committing to provide all of the Credit
Facilities on the terms set forth in the Term Sheet, Chemical expects to act as
agent for a syndicate of financial institutions (together with Chemical, the
"Lenders") to provide all or a portion of the Credit Facilities. It is agreed
-------
that Chemical will act as the sole agent (acting in the capacities of
administrative agent and collateral agent), and CSI will act as the sole advisor
and arranger, for the Credit Facilities.
You agree to assist Chemical and CSI in forming any such syndicate and
to provide Chemical, CSI and the other Lenders, promptly upon request, with all
information reasonably deemed necessary by it to complete successfully the
syndication, including, but not limited to, an information package for delivery
to potential syndicate members and participants including therein appropriate
projections. You agree to coordinate any other material financings in the United
States by the Company or any of its affiliates, and if practicable National and
any of its affiliates, with the Lenders' syndication effort and to refrain from
any such financings during such syndication process unless otherwise agreed to
by Chemical and CSI. You further agree to use your reasonable efforts to make
appropriate officers and representatives of the Company and, if practicable,
National available to participate in information meetings for potential
syndicate members and participants at such times and places as the Chemical and
CSI may reasonably request.
You represent and warrant that (a) all information (other than the
information referred to in clause (b) of this sentence) which has been or is
hereafter made available to Chemical and/or CSI by you or any of your
representatives in connection with the transactions contemplated hereby is and
will be complete and correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made,
(b) you have no knowledge that any of the information regarding National and its
subsidiaries which has been provided to you by National and has been made
available to Chemical and/or CSI by you or any of your representatives
("National Information") is not complete and correct in all material respects,
--------------------
and you have no knowledge that any such National Information contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made, and (c) all
financial projections that have been, or are hereafter prepared by you and made
available to Chemical and/or CSI or any other participants in the Credit
Facilities have been or will be prepared in good faith based upon
<PAGE>
Circle K Stores, Inc.
Circle K Properties, Inc. 3 August 7, 1995
reasonable assumptions. You agree to supplement the information and projections
referred to in clauses (a) and (b) above from time to time until completion of
the syndication so that the representation and warranty in the preceding
sentence remains correct. In arranging and syndicating the Credit Facilities,
Chemical and CSI will be using and relying on such information and projections.
We agree to keep confidential the information referred to in clauses
(a), (b) and (c) of the preceding paragraph and supplements thereof except such
information that (a) is disclosed to our officers, agents and advisors who are
directly involved in the consideration of this matter, (b) is compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case we agree to inform you promptly thereof), (c) has been publicly disclosed
other than in breach of this letter, (d) is available to us on a
non-confidential basis from a source other than you or (e) was available to us
on a non-confidential basis prior to its disclosure by you.
In connection with the syndication of the Credit Facilities, Chemical
and CSI may, in their discretion, allocate to other Lenders portions of any fees
payable to Chemical in connection with the Credit Facilities.
Chemical's commitment hereunder is based upon our review of certain
material and pro forma financial and other information is respect of material
provided by you. You agree that, to the extent that you are reasonably able to
do so, you will arrange for us to meet with officers and representatives of
National and to conduct our customary due diligence review of its business,
assets and liabilities. Our commitment hereunder is subject to our not becoming
aware, through such due diligence review or through additional information
provided by you or developed by us independently, of any information concerning
National which is inconsistent in a material and adverse manner with the
information concerning National you have already provided to us.
Chemical's commitment hereunder is subject to the condition, among
others, that after the date hereof there shall not have occurred any change in
or disruption of financial or capital market conditions that in the good faith
opinion of the Chemical or CSI has materially and adversely affected the
satisfactory syndication of the Credit Facilities (it being understood that the
failure to achieve a satisfactory syndication of the Credit Facilities will not
in and of itself constitute such a change or disruption). In addition,
Chemical's commitment is subject to the negotiation, execution and delivery
prior to February 2, 1996 of definitive documentation with respect to the Credit
Facilities satisfactory to Chemical and its counsel. Such documentation shall
contain the terms and conditions set forth in the Term Sheet and such other
indemnities, covenants, representations and warranties, events of default,
conditions precedent, security arrangements and other terms and conditions not
inconsistent therewith as shall be satisfactory in all respects to Chemical. The
terms and conditions of Chemical's commitment hereunder and of the Credit
Facilities are not limited to the terms and conditions set forth herein and in
the Term Sheet, and the matters which are not covered by the provisions of this
letter and the Term Sheet are subject to the approval of Chemical.
<PAGE>
Circle K Stores, Inc. 4 August 7, 1995
Circle K Properties, Inc.
The reasonable cost and expenses (including, without limitation, the
reasonable fees and expenses of counsel to Chemical and CSI and Chemical's and
CSI's syndication and other out-of-pocket expenses) arising in connection with
the preparation, execution and delivery of the definitive financing agreements
shall be for your account. You further agree to indemnify and hold harmless each
Lender (including Chemical) and each director, officer, employee, affiliate and
agent thereof (each, an "indemnified person") against, and to reimburse each
------------------
indemnified person, upon its demand for, any losses, claims, damages,
liabilities to other expenses ("Losses") to which such indemnified person may
------
become subject insofar as such Losses arise out of or in any way relate to or
result from the Acquisition, this letter or the financing contemplated hereby,
including, without limitation, Losses consisting of reasonable legal or other
expenses reasonably incurred in connection with investigating, defending or
participating in any legal proceeding relating to any of the foregoing (whether
or not such indemnified person is a party thereto); provided that the foregoing
--------
will not apply to any Losses to the extent they are found by a final decision of
a court of competent jurisdiction to have resulted from (a) the gross negligence
or willful misconduct of such indemnified person, (b) legal proceedings
commenced against any indemnified person by any security holder or creditor
thereof solely in its capacity as such or (c) legal proceedings commenced
against the Agent or any Lender by any transferee thereof. In addition, should
any indemnified person be involved (other than as a party or an officer,
director or employee of an indemnified person that is a party) in any litigation
or other proceeding in connection with the transactions contemplated hereby, you
agree to compensate such indemnified party in an amount equal to its customary
per-diem charges for each day that such indemnified party is involved in
preparation, discovery proceedings or testimony pertaining to any such
litigation or other proceedings. Your obligations under this paragraph shall
remain effective whether or not definitive financing documentation is executed
and notwithstanding any termination of this letter unless this paragraph is
expressly superseded by such definitive financing documentation. Neither
Chemical, CSI nor any other indemnified person shall be responsible or liable to
any other person for consequential damages which may be alleged as a result of
this letter or the financing contemplated hereby.
The provisions of this letter are supplemented as set forth in a
separate fee letter dated the date hereof from us to you (the "Fee Letter") and
----------
are subject to the terms of such Fee Letter. By executing this letter, you
acknowledge that this letter and the Fee Letter are the only agreements between
you and Chemical and CSI with respect to the Credit Facilities and set forth the
entire understanding of the parties with respect thereto. Neither this letter
nor the Fee Letter may be changed except pursuant to a writing signed by each of
the parties hereto. This letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet nor the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), provided that the foregoing
--------
<PAGE>
Circle K Stores, Inc.
Circle K Properties, Inc. 5 August 7, 1995
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
If you are in agreement with the foregoing, please sign and return to
Chemical the enclosed copies of this letter and the Fee Letter, together with
the up-front fee referred to in the Fee Letter, no later than 6:00 P.M., New
York time, on August 11, 1995. This offer shall terminate at such time unless
prior thereto we shall have received signed copies of such letters and such
payment.
We look forward to working with you on this transaction.
Very truly yours,
CHEMICAL BANK
By: /s/ Neil R. Boylan
-----------------------------
Title: VICE PRESIDENT
CHEMICAL SECURITIES INC.
By: /s/ Joseph Jabes
-----------------------------
Title: MANAGING DIRECTOR
Accepted and agreed to as of
the date first above written:
CIRCLE K STORES, INC.
By: /s/ Larry J. Zine
-----------------------------
Title: Executive Vice President
CIRCLE K PROPERTIES, INC.
By: /s/ Larry J. Zine
------------------------------
Title: Executive Vice President
<PAGE>
EXHIBIT A
CIRCLE K
$500,000,000 TERM LOAN AND REVOLVING CREDIT FACILITIES
Terms and Conditions
August 7, 1995
PARTIES TO THE FACILITIES
- -------------------------
Borrowers: (i) Circle K Stores, Inc. (formerly named
The Circle K Corporation) (the "Company")
-------
and (ii) Circle K Properties, Inc. (the
"Real Property Subsidiary").
------------------------
Agent: Chemical Bank ("Chemical"), as
--------
administrative agent (in such capacity,
the "Administrative Agent"), and as
--------------------
collateral agent (in such capacity, the
"Collateral Agent", and in both its
----------------
capacity as Administrative Agent and
Collateral Agent, the "Agent").
-----
Advisor and Arranger: Chemical Securities Inc. ("CSI").
---
Lenders: A syndicate of banks and other financial
institutions to be organized by the
Arranger and including the Agent (all
such entities collectively, the
"Lenders").
-------
Purpose: (i) To refinance the Amended and Restated
Credit Agreement, dated as of August 12,
1994 (as amended, supplemented or
otherwise modified from time to time, the
"Existing Agreement"), among the Company,
------------------
the Real Property Subsidiary, certain
lenders, Chemical, as administrative
agent, and The CIT Group/Business Credit,
Inc., as collateral agent, (ii) to
finance all or a portion of the purchase
price of the acquisition by the Company
or a subsidiary thereof of all of the
outstanding equity interests of National
Convenience Stores, Inc. ("National"),
--------
whether by merger or tender offer, or by
other form of transaction acceptable to
the Agent (the "Acquisition"), (iii) to
-----------
refinance all or a portion of the
existing indebtedness of National and its
subsidiaries, (iv) to finance certain of
the fees, expenses and financing costs
related to the Acquisition, and (v) after
giving effect to the Acquisition, for
general corporate purposes of the
<PAGE>
2
Company and its subsidiaries (including,
without limitation, National).
Documentation: Documentation with respect to the Credit
Facilities will be in the form of an
amendment and restatement of the Existing
Agreement (such amendment and restated
agreement, the "Credit Agreement").
----------------
AMOUNT AND TERMS OF THE FACILITIES
- ----------------------------------
Tranche A Term Loan Facility
Type of Facility: Term loan facility (the "Tranche A Term
--------------
Loan Facility").
-------------
Borrowers: The Company and the Real Property
Subsidiary.
Amount: $100,000,000.
Availability: The loans under the Tranche A Term Loan
Facility (the "Tranche A Term Loans")
--------------------
will be made to the Company and the Real
Property Subsidiary in a single drawing
on the Closing Date (as defined below).
Maturity: The Tranche A Term Loans will be
repayable in 10 consecutive semiannual
installments payable on each June 30 and
December 31, commencing June 30, 1996, in
the following respective amounts:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
1-4 $ 5,000,000
5-8 10,000,000
9-10 20,000,000
</TABLE>
Tranche B Term Loan Facility
Type of Facility: Term loan facility (the "Tranche B Term
Loan Facility", and together with the
Tranche A Term Loss Facility, the "Term
Loan Facilities").
Borrowers: The Company and the Real Property
Subsidiary.
Amount: $200,000,000.
<PAGE>
3
Availability: The loans under the Tranche B Term Loan
Facility (the "Tranche B Term Loans", and
--------------------
together with the Tranche A Term Loans,
the "Term Loans") will be made to the
----------
Company and the Real Property Subsidiary
in a single drawing on the Closing Date.
Maturity: The Tranche B Term Loans will be
repayable in 14 consecutive semiannual
installments payable on each June 30 and
December 31, commencing with June 30,
1996, in the following respective
amounts:
Installment Principal Amount
----------- ----------------
1-10 $ 250,000
11-12 48,750,000
13-14 50,000,000
Revolving Credit Facility
Type of Facility: Revolving credit loans, letters of credit
and swing line loans (the "Revolving
---------
Credit Facility", and together with the
---------------
Term Loan Facilities, the "Credit
------
Facilities").
----------
Borrower: The Company.
Amount: $200,000,000.
Availability: Revolving credit loans (the "Revolving
---------
Credit Loans") and swing line loans (the
------------
"Swing Line Loans") may be made, and
----------------
letters of credit (the "Letters of
----------
Credit") in an aggregate amount up to a
------
sublimit of $100,000,000 may be issued,
under the Revolving Credit Facility, at
any time during the period between the
Closing Date and December 31, 2000 (the
"Revolving Credit Termination Date");
---------------------------------
provided that no letter of Credit shall
--------
have an expiration date after the
Revolving Credit Termination Date.
No standby Letter of Credit shall have an
expiry date more than 365 days after its
date of issuance, and no commercial
Letter of Credit shall have an expiry
date more than 180 days after its date of
issuance.
Swing line Loan Facility sub-limit of
$15,000,000.
<PAGE>
4
Maturity: The Revolving Credit Termination Date.
GENERAL PROVISIONS
- ------------------
Interest Rate: Alternate Base Rate and Eurodollar Rate,
as follows:
A. Alternate Base Rate
-------------------
Interest shall be at the Alternate Base
Rate of Chemical plus the applicable
----
Interest Margin, calculated on the basis
of the actual number of days elapsed in a
year of 365 days, if determined by
reference to the prime commercial lending
rate of Chemical, or in a year of 360
days, otherwise, payable quarterly in
arrears. The Alternate Base Rate is
defined as the higher of (i) the Federal
Funds Rate, as published by the Federal
Reserve Bank of New York, plus 1/2 of 1%,
(ii) the secondary market rate for three-
month certificates of deposit of money
center banks, adjusted for reserves and
assessments, plus 1% or (iii) the prime
commercial lending rate of Chemical.
Alternate Base Rate drawings and
prepayments shall require one business
day's prior notice except for Swing Line
Loans and shall be in minimum amounts of
$1,000,000 and incremental multiples of
$100,000.
B. Eurodollar Rate
---------------
The Borrowers may elect that all or a
portion of the Loans (other than Swing
Line Loans) bear interest at a rate
(grossed-up for any reserve requirements)
at which eurodollar deposits for one,
two, three or six months, or if available
nine or twelve months (as selected by the
Borrowers) are offered to Chemical and
two other reference banks (collectively,
the "Reference Banks") in the London
---------------
interbank eurodollar market in the
approximate amount of such Reference
Bank's share of the relevant loan, plus
the applicable Interest Margin.
Eurodollar Rate drawings shall require
three business days' prior notice and
shall be in minimum amounts of $2,000,000
and incremental multiples of $1,000,000.
Swing Line Loans
----------------
<PAGE>
5
Interest shall be at Alternate Base Rate
plus the applicable Interest Margin,
calculated on the basis of the actual
number of days elapsed in a year of 365
days, if such rate is determined by
reference to the prime commercial lending
rate of Chemical, or in a year of 360
days, otherwise, payable quarterly in
arrears. Swing Line Loans will be
available on same day basis and shall be
in minimum amounts of $250,000 and
incremental multiples of $100,000.
Interest Margins: As set forth on Annex I hereto.
Issuing Bank: The issuing bank for the Letters of
Credit shall be Chemical.
Letter of Credit Fees: In the case of standby letters of credit,
the letter of credit fee shall be the
percentage per annum equal to the
Interest Margin then in effect for
Revolving Credit Eurodollar Loans of the
amount available to be drawn of each
standby letter of credit, payable
quarterly in arrears. In the case of
commercial letters of credit, such fee
shall be the percentage per annum equal
to the Interest Margin then in effect for
Revolving Credit Eurodollar Loans of the
face amount of each commercial letter of
credit to the scheduled expiry date of
such commercial letter of credit, payable
on the issuance date. The Issuing Bank
shall receive a fee of 1/4 of 1%, with
respect to standby letters of credit, and
1/8 of 1%, with respect to commercial
letters of credit, for its own account;
such fees shall be deducted from the
Letter of Credit Fees payable pursuant to
the preceding two sentences. Customary
administrative, issuance, amendment,
payment and negotiation charges will be
payable to the Issuing Bank for its own
account.
Collateral: The Credit Facilities for which the
Company is liable and all guarantees
thereof will be secured by a perfected
first priority security interest in (i)
all of the capital stock of the Company
and each of its direct and indirect
domestic subsidiaries, including, without
limitation, National and the Real
Property Subsidiary but excluding Circle
K Money Orders Corporation ("Money Orders
------------
Corporation"), and 66% of the capital
-----------
stock of all of the foreign subsidiaries
of the Company, (ii) all of the accounts
receivable, inventory and equipment of
the Company and each of its direct and
indirect domestic
<PAGE>
6
subsidiaries (other than the Real
Property Subsidiary and Money Orders
Corporation), and (iii) substantially all
other tangible and intangible assets
(including, without limitation, patents,
trademarks, tradenames and rights under
interest rate protection agreements) of
the Company and each of its direct and
indirect domestic subsidiaries (other
than the Real Property Subsidiary and
Money Orders Corporation). As promptly as
possible following the Closing Date, the
Company shall cause National to convey
certain real property owned by it to the
Real Property Subsidiary. If (a) the
Company obtains a rating of BBB- or
higher from S&P or a rating of Baa3 or
higher from Moody's and (b) no default
has occurred and is continuing under the
Credit Facilities, all collateral (other
than pledges of the capital stock of the
Company and each of its direct and
indirect subsidiaries) shall be released.
Guarantees: All obligations of the Borrowers under
the credit agreement and other financing
agreements will be unconditionally
guaranteed by The Circle K Corporation
(formerly named Circle K Holdings, Inc.)
("Holdings") and by each of the direct
--------
and indirect domestic subsidiaries of the
Company (except that Money Orders
Corporation will not guarantee any of
such obligations, and the Real Property
Subsidiary shall not guarantee the
obligations of the Company). The above-
referenced guarantees shall remain in
place after the release of collateral
described in "Collateral" above.
Risk Sharing Arrangement: All of the Lenders shall enter into a
risk sharing arrangement pursuant to an
intercreditor agreement in form and
substance satisfactory to them, which
will provide that, to the extent that
Lenders to the Company, on the one hand,
or the Real Property Subsidiary, on the
other hand (the "Benefitted Lenders")
------------------
receive payment after a default with
respect to their Loans to such Borrower
in a greater percentage than Lenders to
the other Borrower (the "Nonbenefitted
-------------
Lenders") shall have received with
-------
respect to their Loans to such other
Borrower, the Benefitted Lenders shall
purchase participating interests in the
Loans of the Nonbenefitted Lenders so
that the percentage of the Loans of both
the Company, on the one hand, and the
Real Property Subsidiary, on the other
hand, which has been paid (after
<PAGE>
taking into account the purchase of such
participating interests) shall be equal.
Interest Payment Dates: As above and, in the case of the Term
Loans, on each date principal is due.
Default Rate: Overdue principal, interest, fees and
other amounts owing will bear interest at
2% over the rate otherwise applicable
thereto. Overdue Eurodollar Loans shall
be converted to Alternate Base Rate Loans
at the end of the then current interest
period with respect thereto.
Reserve Requirements; The financing agreements will contain
Yield Protection: customary provisions relating to
increased costs, capital adequacy
protection, Eurodollar Rate
unavailability, withholding and other
taxes and illegality.
Interest Rate Protection: The Company shall have obtained within 90
days after the Closing Date, and shall
thereafter maintain for a period of at
least 24 months, interest rate protection
agreements covering not less than 50% of
the outstanding principal amount of the
Term Loans, which agreements shall be in
all respects satisfactory to the Agent,
provided that the Company and its
--------
subsidiaries may not maintain interest
rate protection agreements with notional
amounts in excess of 100% of its
consolidated indebtedness.
Commitment Fees: As set forth on Annex I hereto subject to
the proviso set forth in the paragraph
captioned "Interest Margins" above.
Commitment fees will be payable quarterly
in arrears.
Fee Basis: 365 days for actual days elapsed.
Mandatory Prepayments: The Loans shall be prepaid (and the
Letters of Credit shall be cash
collateralized or replaced) with all of
the net proceeds of:
(a) any sale or issuance of equity or
incurrence of indebtedness after
the Closing Date by the Company or
any of its subsidiaries, except
that: (i) additional equity
provided by an affiliate of the
Company, and non-cash proceeds of
equity issuances, shall not require
a prepayment of the Credit
Facilities, and (ii) a prepayment
of the Credit Facilities will not
be required as a result of
<PAGE>
8
debt expressly permitted to be
incurred by the financing agreements
for the Credit Facilities, other
than debt incurred in connection
with a Real Estate Financing (as
defined in the Existing Agreement);
and
(b) any sale or other disposition by the
Company or any of its subsidiaries
of any assets, except that
prepayments of the Credit Facilities
will not be required as a result of,
among other exceptions to be agreed;
(i) the sale of inventory, property,
plant and equipment in the ordinary
course of business, (ii) sales or
like-kind exchanges of real property
owned in fee having an aggregate
book value not in excess of
$25,000,000 in any year, so long as
the proceeds are reinvested in new
or existing stores within 18 months
and in the interim are applied to
repay Revolving Credit Loans, (iii)
sales to franchisees in the ordinary
course of business, (iv) obsolete or
worn-out property, (v) other sales
for consideration not to exceed
$3,000,000 during any fiscal year
and (iv) the first $30,000,000 of
net proceeds excluding those
described in (ii) above realized
from the sale or other disposition
of real property in the ordinary
course of business after Closing.
All mandatory prepayments from such net
proceeds shall be applied to, first, the
Term Loans and, second, to the permanent
reduction of the Revolving Credit
Facility (and prepayment of Revolving
Credit Loans and cash collateralization
or replacement of outstanding Letters of
Credit). Mandatory prepayments of the
Term Loans shall be applied, first (to
the extent such net proceeds aggregate up
to the greater of $20,000,000 or the
aggregate installments due on the next
two installment payment dates) to the
installments of the Term Loans in the
direct of maturity (and, to the extent
that the installment on the Tranche A
Team Loans and the installment on the
Tranche B Term Loans due any such
installment date is not paid in full,
ratably to such installments), and,
second, to the then remaining
installments of the Term Loans on a pro
rata basis.
Voluntary Prepayments: Permitted in whole or in part, with prior
written notice but without premium or
penalty, subject to limitations as
<PAGE>
9
to minimum amounts of prepayments.
Partial prepayments of loans are to be
applied in the order set forth in the
last paragraph of "Mandatory Prepayments"
above.
CERTAIN CONDITIONS PRECEDENT
- ----------------------------
The initial availability of the Credit
Facilities will be conditioned upon,
among other things, the consummation of
the Acquisition on terms and conditions,
and pursuant to definitive documentation,
satisfactory to the Agent in its
discretion, and the satisfaction of such
other conditions precedent customary for
this type of transaction and others
deemed appropriate by the Lenders,
including without limitation conditions
respecting the payment of all fees,
receipt of legal opinions, and
satisfaction with creation, existence and
perfection of security interests in the
Collateral (the date all such conditions
precedent are satisfied shall be the
"Closing Date"). All loans made under the
------------
Credit Facilities shall be in full
compliance with all applicable
requirements of Regulations G, T, U and X
of the Board of Governors of the Federal
Reserve System.
CERTAIN COVENANTS AND EVENTS OF DEFAULT
- ---------------------------------------
The documentation relating to the Credit
Facilities will include affirmative and
negative covenants and events of default
customary for financings of this type
(which covenants will be applicable to
the Company and its subsidiaries, and
will contain appropriate exceptions to
be negotiated) including, without
limitation.
Affirmative Covenants: Delivery of financial statements and
reports, customary accountants' letters
confirming that no default was discovered
during audit, projections, officer's
certificates and other information
reasonably requested by the Lenders;
payment of taxes and other obligations;
continuation of business and maintenance
of existence, rights and privileges;
compliance with contractual obligations
and laws; maintenance of books and
records; right of the Lenders to inspect
property and books and records, and
notices of defaults litigation and
material events.
<PAGE>
10
Financial Covenants: Financial covenants shall include minimum
EBITDA, minimum interest coverage (ratio
of EBITDA to cash interest expense) and
minimum fixed charge coverage ratio.
Negative Covenants: Limitations on indebtedness (which
limitation shall increase the amount of
permitted assumed indebtedness set forth
in subsection 9.1(e) of the Existing
Agreement from $5,000,000 to
$10,000,000), liens, guarantee
obligations, mergers, asset dispositions
(which limitation shall permit
dispositions of receivables generated
through credit card sales to the credit
card issuer in the ordinary course of
business on ordinary commercial terms),
investments, loans, advances and
acquisitions (which limitation shall
permit investments in joint ventures in
amounts and subject to terms and
conditions to be agreed), dividends and
other restricted junior payments
(provided that, so long as no default or
event of default shall have occurred and
be continuing or would result therefrom,
the Company will be permitted to pay
dividends in an amount equal to the
lesser of 50% of its net income for the
prior fiscal year and $7,500,000),
changes in fiscal year, transactions with
affiliates changes in business conducted,
prepayment and amendments of subordinated
debt, and special restrictions relating
to corporate separateness of the Real
Property Subsidiary. The Credit Agreement
will not contain a restriction on capital
expenditures.
Events of Default: Nonpayment of principal, interest, fees
or other amount (with appropriate grace),
violation of covenants (with appropriate
grace), material inaccuracy of
representations and warranties, cross-
default, bankruptcy, material judgments,
ERISA, actual or asserted invalidity of
any loan documents or security interests,
change in control of the Company or
Holdings.
CERTAIN OTHER TERMS
- -------------------
Conditions to all Loans: The making of each extension of credit
will be conditioned upon (a) all
representations and warranties in the
credit documentation (including without
limitation, the material adverse change
and litigation representations) being
true and correct and (b) there being no
default or event of default in existence
at the time of, or after giving effect to
the making of, such extension of credit.
<PAGE>
11
Representations and Customary for financings of this type and
Warranties: others deemed appropriate by the Lenders
(including, without limitation, no
material adverse change).
Assignments and Each Lender may assign all or a portion
Participation: of its loans and commitments under the
Credit Facilities (which shall not have
to be pro rata among the Credit
--- ----
Facilities, except that assignments of
the Tranche A Term Loans or the Tranche B
Term Loans shall have to be pro rata
--- ----
between those owing by the Company and
those owing by the Real Property
Subsidiary), or sell participations
therein, to another person or persons
provided that (i) each such assignment
shall be in a minimum amount to be agreed
and shall be subject to certain
conditions (including, without
limitation, the consent of the Agent,
which consent shall not be unreasonably
withheld) and (ii) no purchaser of a
participation shall have the right to
exercise or cause the exercise of voting
rights in respect of the Credit
Facilities (except as to issues requiring
the consent of all Lenders).
Governing Law: State of New York.
Required Lenders: 51%. Class voting and supermajority
voting provisions will be included for
amendments to the application of
mandatory prepayments and for certain
other matters on substantially the same
terms as set forth in the Existing
Agreement.
Expenses: The financing agreements will provide
that Company will pay all of the
reasonable expenses (including without
limitation, reasonable fees and expenses
of a single primary counsel and other
local and special counsel) incurred by
the Agent in connection with the
negotiation and documentation of the
Facilities and the financing agreements
therefor, or by the Agent, the Issuing
Bank and Lenders in connection with the
administration of the Facilities,
including any waivers, work-outs or
restructurings, and all of expenses
incurred by the Agent and Lenders in
connection with the protection, exercise
or enforcement of any right or remedy or
any foreclosure, collection or bankruptcy
proceedings.
Counsel to Agent: Simpson Thacher & Bartlett, and other
counsel as are selected by the Agent and
are reasonably acceptable to the Company.
<PAGE>
12
Indemnity: The Company will indemnify, pay and hold
harmless the Agent and Lenders (and their
respective directors, officers, employees
and agents) against any loss, liability,
cost of expense ("Losses") as customary
for transactions of this type incurred in
respect of the financing contemplated
hereby or the use of the proposed use of
proceeds thereof except Losses resulting
from (a) the gross negligence or willful
misconduct of such indemnified person,
(b) legal proceedings commenced against
any indemnified person by any security
holder or creditor thereof solely in its
capacity as such or (c) legal proceedings
commenced against the Agent or any Lender
by any transferee thereof.
<PAGE>
ANNEX I
<TABLE>
<CAPTION>
PRICING GRID
- ------------------------------------------------------------------------------------------------------------------------------------
Trenche A Term Loans Trenche B Term Loans Revolving Credit Loans Commitment
------------------------------------------------------------------------------------- Fee
Leverage Ratio* ABR Eurodollar ABR Eurodollar ABR Eurodollar Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
greater than 2.25 to 1.0 0.25% 1.50% 0.75% 2.00% 0.25% 1.50% 0.375%
- ------------------------------------------------------------------------------------------------------------------------------------
less than or equal
to 2.25 to 1.0
and
greater than 2.00 to 1.0 0.00% 1.25% 0.75% 2.00% 0.00% 1.25% 0.375%
- ------------------------------------------------------------------------------------------------------------------------------------
less than or equal
to 2.00 to 1.0
and
greater than 1.75 to 1.0 0.00% 1.00% 0.75% 2.00% 0.00% 1.00% 0.375%
- ------------------------------------------------------------------------------------------------------------------------------------
less than or equal
to 1.75 to 1.0 0.00% 0.75% 0.75% 2.00% 0.00% 0.75% 0.250%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
* Consolidated Total Indebtedness to Consolidated EBITDA (which shall be
calculated to include the Consolidated Indebtedness and Consolidated EBITDA of
National on a pro forma basis).
--- -----
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
- ---------------------------------------x
:
THE CIRCLE K CORPORATION :
:
Plaintiff, :
- against - : [STAMP APPEARS HERE]
:
NATIONAL CONVENIENCE STORES :
INCORPORATED V.H. VAN HORN, : C.A. No. 95-537
RICHARD C. STEADMAN, DUNBAR N. : --------------
CHAMBERS, JR., RAYMOND W. :
OELAND, JR., ROBERT B. STOBAUGH, :
WILLIAM K. WILDE, CHARLES J. :
LUELLEN AND LIONEL SOSA. :
:
Defendants. :
:
- ---------------------------------------x
COMPLAINT
---------
Plaintiff, The Circle K Corporation ("Circle K"), by its undersigned
attorneys, for its Complaint herein, alleges as follows:
JURISDICTION AND VENUE
----------------------
1. This Court has jurisdiction over this action pursuant to Section
27 of the Securities Exchange Act of 1934, 15 U.S.C. (S) 78aa (the "Exchange
Act") and 28 U.S.C. (S)(S) 1331 and 1337.
2. Venue is proper in this District pursuant to Section 27 of the
Exchange Act, and 28 U.S.C. (S) 1391(c) because acts and transactions complained
of here occurred and, unless enjoined, will continue to occur, in this District.
<PAGE>
PARTIES
-------
3. Plaintiff is a corporation organized under the laws of Delaware
with its principal place of business in Arizona. Plaintiff owns shares of the
common stock of defendant National Convenience Stores Incorporated ("NCS"). On
August 8, 1995, Circle K offered to acquire all of the remaining shares of NCS
common stock.
4. Defendant NCS is a corporation organized under the laws of
Delaware with its principal place of business in Texas. NCS's 6 million shares
of outstanding common stock are listed on the New York Stock Exchange.
5. Each of the 8 remaining defendants (the "individual defendants")
is a member of the NCS Board of Directors. NCS has a "staggered" Board; only 4
directors will stand for reelection at the upcoming annual meeting of NCS
stockholders.
DEFENDANTS' WRONGFUL CONDUCT
----------------------------
6. After Circle K offered to acquire NCS's common stock, the
individual defendants undertook a series of acts and transactions intended to
entrench themselves in their positions of power, prestige, and economic
advantage.
7. On August 8, 1995, Circle K submitted to the management and Board
of Directors of NCS a proposal whereby Circle K would purchase all outstanding
common stock of NCS at a price of $17 per share in cash. In addition, Circle K
would agree to assume approximately $100 million in existing debt of NCS. The
transaction was valued at approximately $210 million. Circle K also advised
Mr. Van Horn on August 8, 1995 that it intended to nominate a slate of directors
for election at NCS' upcoming annual
<PAGE>
meeting of stockholders.
8. On August 10, 1995, the NCS Board purported to amend NCS's bylaws
to make it substantially more difficult for shareholders to vote to expand the
number of persons serving on NCS's Board. Whereas under NCS's prior bylaws,
holders of a simple majority of NCS's outstanding common stock could amend the
company's bylaws to expand the size of the Board, now such a change purportedly
requires the vote of the holders of 75% of NCS's common stock.
9. On August 11, 1995, Circle K formally notified the individual
defendants of its intention, in connection with the annual meeting of NCS
stockholders this autumn,
(a) to propose bylaw amendments (i) expanding the size of the NCS
Board from 8 to 17 members, and (ii) rescinding the August 10
bylaw amendment requiring a 75% shareholder vote to expand the
size of the Board, and
(b) to nominate 9 persons for election to the NCS Board.
10. On August 14, 1995, the individual defendants caused NCS to issue
a press release purporting to describe, among other things, Circle K's offer
and its proposals concerning the Board.
The August 14 press release stated in part as follows:
The Company's bylaws provide that any change in the number of
directors must be approved by 75% of the shares entitled to vote at a
meeting of stockholders.
11. In describing the 75% vote requirement, the August 14 press
release did not reveal that the Board had voted to impose such a requirement
just 4 days earlier, or that, up until
3
<PAGE>
that time, a simple majority of shareholders could amend the bylaws to increase
the number of directors.
12. The August 14 press release also did not advise stockholders
that, under Delaware law, corporate directors may not act unilaterally to
restrict stockholders' ability to amend or repeal bylaws, or in the alternative,
that there is at the very least a substantial legal question about the ability
of corporate directors to take such action.
13. In describing Circle K's proposals, the press release did not
reveal that Circle K was proposing to reduce from 75% to a simple majority the
number of shares needed to vote to expand the size of the Board.
14. These omissions rendered the press release materially false and
misleading.
15. On August 14, 1995, the individual defendants caused NCS to file
a report on Form 8-K (the "8-K") with the Securities and Exchange Commission
("SEC"). The 8-K reported, among other things, that another shareholder of NCS
nominated 4 persons to be elected to the NCS Board of Directors at this autumn's
annual meeting of shareholders.
16. The 8-K failed to state that the other shareholder (which the 8-K
failed to identify by name) also proposed to expand the size of the Board so
that 5 directors would be elected this year and also announced its intention to
nominate an additional candidate to fill that newly created directorship.
17. These omissions rendered the 8-K materially false and misleading.
4
<PAGE>
18. Defendants made the representations and omissions set forth in the
press release and the 8-K through the use of the mails and other
instrumentalities of interstate commerce.
19. Plaintiff has no adequate remedy of law.
FIRST CLAIM FOR RELIEF
----------------------
(For Violations of Section 10(b)
of the Exchange Act and Rule 10b-5)
20. Plaintiff repeats and realleges paragraphs 1-19 above as if set
forth here in full.
21. Defendants violated Section 10(b) of the 1934 Act, 15 U.S.C.
(S) 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. (S) 240.10b-5, in
that defendants, by the use of a means of instrumentality of interstate commerce
and the mails and to the detriment of plaintiff:
(a) employed devices, schemes and artifices to defraud;
(b) made untrue statements of material facts and omitted to state
material facts necessary in order to make the statements made, in the light of
circumstances in which they were made, not misleading; and
(c) engaged in acts, practices and courses of business which operated
as a fraud and deceit upon plaintiff.
WHEREFORE, plaintiff respectfully requests judgment against defendants
as follows:
(a) compelling defendants to make immediate corrective action to
disclose material facts necessary to make defendants' statements not misleading;
(b) enjoining defendants, until after an appropriate
5
<PAGE>
period of time after full dissemination of the corrective disclosure referred to
above, from soliciting proxies form owners of NCS stock;
(c) granting plaintiff reasonable costs and expenses incurred in this
action; and
(d) granting such other and further relief as this Court may find
just and proper.
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Kenneth Nachbar
--------------------------------
Kenneth Nachbar
1201 North Market Street
P. O. Box 1347
Wilmington, DE 19899
(302) 658-9200
Attorneys for Plaintiff
OF COUNSEL:
Mitchell A. Karlan
GIBSON, DUNN & CRUTCHER
200 Park Avenue
New York, New York 10166
(212) 351-4000
September 5, 1995
6
<PAGE>
IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- -----------------------------------------x
THE CIRCLE K CORPORATION :
PLAINTIFF, :
:
:
- against - :
:
NATIONAL CONVENIENCE STORES : [STAMP APPEARS HERE]
INCORPORATED, V.H. VAN HORN :
RICHARD C. STEADMAN, DUNBAR N. : Civil Action No. __________
CHAMBERS, JR., RAYMOND W. :
OELAND, JR., ROBERT B. STOBAUGH, :
WILLIAM K. WILDE, CHARLES J. :
LUELLEN and LIONEL SOSA. :
:
Defendants. :
:
- -----------------------------------------x
COMPLAINT
---------
Plaintiff, The Circle K Corporation ("Circle K"), by its attorneys, for its
complaint herein, alleges as follows:
NATURE OF THE ACTION
--------------------
1. Circle K is a holder of common stock of National Convenience Stores
Incorporated ("NCS or the "Company") and has offered to acquire all remaining
shares of NCS. The individual defendants have wrongfully refused properly to
negotiate or consider any bona fide offer for the Company, and have taken
---- ----
reactive defensive actions, which were wrongfully designed to entrench NCS
officers and directors in their positions of control, and which were and are
unreasonable in relation to any perceived threat posed by Circle K. In
furtherance of these efforts, the individual defendants, on August 10, 1995,
specifically adopted and
<PAGE>
implemented an amendment to the Company's Restated By-Laws that purports to
require that any amendment to the By-Laws to change the number of directors must
be approved by holders of 75 percent of the shares entitled to vote at a meeting
of stockholders (the "75 Percent By-Laws Provision"). In addition, on August 31,
1995, the individual defendants adopted a poison pill. Their actions constitute
unfair dealing, improper interference with shareholder voting rights, a
manipulation of corporate machinery for personal purposes, and a breach of their
fiduciary duties to NCS stockholders. The individual defendants are using their
fiduciary position of control over NCS to thwart Circle K in its legitimate
attempt to acquire NCS, and the individual defendants are trying to entrench
themselves in their positions with the Company.
PARTIES
-------
2. Plaintiff is and, at all relevant times, has been the owner of shares
of NCS common stock.
3. NCS is a corporation organized under the laws of Delaware. NCS operates
approximately 660 specialty convenience stores under the name of "Stop N' Go"
in Texas. NCS has approximately 6 million shares of common stock outstanding
and 1,380 stockholders of record. NCS's stock is listed on the New York Stock
Exchange. NCS's Board of Directors has 8 members, 4 of whom will be elected at
the next annual meeting of NCS stockholders.
4. Defendant V. H. Van Horn is and has at all relevant times been NCS'
President and Chief Executive Officer and a member
-2-
<PAGE>
of its Board of Directors.
5. Defendant Richard C. Steadman is and has at all relevant times been
Chairman of NCS' Board of Directors.
6. Defendants Dunbar N. Chambers, Jr., Raymond W. Oeland, Jr., Robert B.
Stobaugh, William K. Wilde, Charles J. Luellen, and Lionel Sosa are and have
been at all relevant times directors of NCS.
SUBSTANTIVE ALLEGATIONS
-----------------------
7. On August 8, 1995, Circle K submitted to the management and Board of
Directors of NCS a proposal whereby Circle K would purchase all outstanding
common stock of NCS at a price of $17 per share in cash. In addition, Circle K
would agree to assume approximately $100 million in existing debt of NCS. The
transaction was valued at approximately $210 million. Circle K also advised Mr.
Van Horn on August 8, 1995 that it intended to nominate a slate of directors for
election at NCS' upcoming annual meeting of stockholders, which has now been
scheduled for November 7, 1995.
8. During the fiscal year ending June 30, 1995, the last full fiscal year
before the offer, NCS's common stock traded at prices as low as $6.50 and never
traded higher than $12.63.
9. On August 10, 1995, the individual defendants enacted the 75 Percent
By-Law Provision, but made no public announcement of its enactment.
10. On August 11, 1995, Circle K (a) submitted a proposal for shareholder
vote at NCS's upcoming annual meeting to
-3-
<PAGE>
amend NCS' By-Laws to increase the size of NCS's Board of Directors from 8 to 17
directors, (b) proposed a slate of nine candidates for election at that meeting,
and (c) announced that it would seek to repeal any bylaw amendment adopted since
January 1, 1994.
11. On August 31, 1995, the individual defendants announced that they had
rejected Circle K's offer. The individual defendants did not engage in or invite
Circle K to engage in any negotiations concerning a possible acquisition.
12. On August 31, the individual defendants also announced that they had
adopted a poison pill anti-takeover device (the "Poison Pill").
13. The NCS Poison Pill will have the result that, if Circle K or anyone
else becomes the beneficial owner (as therein defined) of 10% or more of the
Company's outstanding common stock, NCS' stockholders will have the right to
receive, upon exercise of the rights provided for therein, a number of
newly-issued shares of common stock having a current market price equal to two
times the exercise price of the right (which is now $55).
14. By enacting the 75 Percent By-Law Provision, the defendants have
purported, by unilateral board action, to restrict the stockholders' right to
----- ------------
amend the bylaws of their company. Delaware law does not permit corporate
directors to limit stockholders' right to amend corporate bylaws in this manner.
15. The 75 Percent By-Law Provision and the Poison Pill have the effect of
making it extraordinarily time-consuming, difficult, and expensive for any
potential acquiror not approved by
-4-
<PAGE>
the individual defendants to acquire NCS. It also makes more difficult
shareholder action through corporate suffrage to change Board composition.
Therefore, the 75 Percent By-Law Provision and the Poison Pill have the effect
of interfering with shareholder voting and precluding successful and timely
completion of even the most attractive offer for NCS unless the Board
acquiesces, thus denying the Company's shareholders an opportunity to make
their own unfettered choice.
16. As a consequence, the adoption and implementation of the 75 Percent
By-Law Provision and the Poison Pill have the force and effect of entrenching
the individual defendants in their corporate offices against any real or
perceived threat to their control, and dramatically impairs the rights of
shareholders to exercise freedom of choice in a proxy contest or to avail
themselves of a bona fide offer to purchase their shares by an acquiror
---- ----
unfavored by incumbent management.
17. The individual defendants have breached the duties they owe to
plaintiff and other shareholders in that they have not and are not exercising
independent business judgement and have acted and are acting to the detriment of
the shareholders to benefit themselves.
18. The individual defendants are acting to entrench themselves in their
offices and positions and maintain their substantial salaries and perquisites,
all to the expense and to the detriment of the shareholders of NCS.
19. By the acts, transactions and courses of conduct
-5-
<PAGE>
alleged herein, the individual defendants, individually and as part of a common
plan and scheme in breach of their fiduciary duties and obligations, are
attempting to ensure continuance of their positions as directors and officers.
The individual defendants have been engaged in a wrongful effort to entrench
themselves in their offices and positions of control and prevent the acquisition
of NCS except on terms which would further their own personal interests.
20. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgement against defendants as follows:
(a) declaring void and/or enjoining enforcement of the 75 Percent By-Law
Provision and the Poison Pill;
(b) ordering the individual defendants jointly and severally to account to
plaintiff for all damages suffered and to be suffered as a result of the acts
and transactions alleged herein;
(c) awarding plaintiff the costs and disbursements of this action,
including reasonable allowance for plaintiff's attorneys' and experts' fees; and
(d) granting such other and further relief as may be just and proper.
-6-
<PAGE>
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Kenneth Nachbar
--------------------------------
Kenneth Nachbar
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
Attorneys for Plaintiff
OF COUNSEL:
Mitchell A. Karlan
GIBSON, DUNN & CRUTCHER
200 Park Avenue
New York, New York 10166
(212) 351-4000
September 5, 1995
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