<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
BUTTREY FOOD AND DRUG STORES COMPANY
(NAME OF SUBJECT COMPANY)
LOCOMOTIVE ACQUISITION CORP.
ALBERTSON'S, INC.
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
124234105
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
THOMAS R. SALDIN, ESQ.
ALBERTSON'S, INC.
250 PARKCENTER BOULEVARD
P.O. BOX 20
BOISE, IDAHO 83726
TELEPHONE: (208) 395-6200
FACSIMILE: (208) 395-6225
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
THEODORE J. KOZLOFF, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR EMBARCADERO CENTER, SUITE 3800
SAN FRANCISCO, CALIFORNIA 94111
TELEPHONE: (415) 984-6400
FACSIMILE: (415) 984-2698
CALCULATION OF FILING FEE
TRANSACTION VALUATION* $141,424,821
AMOUNT OF FILING FEE $28,285
- ---------------
* Estimated for purposes of calculating the amount of the filing fee only. This
amount assumes the purchase of 9,124,182 shares of common stock, $.01 par
value (the "Shares"), of Buttrey Food and Drug Stores Company at a price of
$15.50 per Share in cash. Such number of Shares represents the 8,644,631
Shares outstanding as of January 23, 1998 and assumes the issuance prior to
the consummation of the Offer of 479,551 Shares upon the exercise of
outstanding options and warrants. The amount of the filing fee calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50th of one percent of the value of the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
================================================================================
<PAGE> 2
14D-1 AND 13D
CUSIP NO. 124234105
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
1 NAME OF REPORTING PERSON Locomotive Acquisition Corp.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
- ---------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
- ---------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEMS 2(e) or 2(f)
- ---------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON*
4,389,879
- ---------------------------------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) [ ]
EXCLUDES CERTAIN SHARES
- ---------------------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)*
50.8%
- ---------------------------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*
On January 19, 1998, Albertson's, Inc., a Delaware corporation ("Parent"),
and Locomotive Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), entered into a Tender and Option Agreement
(the "Tender Agreement") with FS Equity Partners II, L.P., a California limited
partnership (the "Major Stockholder"). The Major Stockholder is the owner of an
aggregate of 4,389,879 shares of the common stock, par value $.01 per share (the
"Shares"), or approximately 50.8% of the outstanding Shares, of Buttrey Food and
Drug Stores Company, a Delaware corporation (the "Company"). Pursuant to, and
subject to the terms of the Tender Agreement, the Major Stockholder has (i)
agreed to tender all Shares owned by it pursuant to the Offer (as defined in the
Offer to Purchase), (ii) granted to Parent an irrevocable proxy to vote its
Shares in connection with any meeting of the Company's stockholders (including,
without limitation, to vote in favor of the Merger (as defined in the Offer to
Purchase), the approval and adoption of the Merger Agreement (as defined in the
Offer to Purchase) and any actions required in furtherance thereof), and (iii)
granted to Parent an irrevocable option to purchase the Major Stockholder's
Shares at a purchase price of $15.50 per Share which option is exercisable in
whole only upon the occurrence of the events set forth in the Tender Agreement.
The Tender Agreement is described more fully in Section 11 -- "Background of the
Offer, Purpose of the Offer and the Merger, The Merger Agreement and Certain
Other Agreements" of the Offer to Purchase dated January 26, 1998 (the "Offer to
Purchase").
<PAGE> 3
14D-1 AND 13D
CUSIP NO. 124234105
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
1 NAME OF REPORTING PERSON Albertson's, Inc.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
- ---------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
- ---------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC/OO
- ---------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEMS 2(e) or 2(f)
- ---------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON*
4,389,879
- ---------------------------------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) [ ]
EXCLUDES CERTAIN SHARES
- ---------------------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)*
50.8%
- ---------------------------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* See footnote to previous table.
<PAGE> 4
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Locomotive Acquisition Corp., a Delaware corporation ("Purchaser")
and a wholly owned subsidiary of Albertson's, Inc., a Delaware corporation
("Parent"), to purchase all of the outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Buttrey Food and Drug Stores Company, a
Delaware corporation (the "Company"), at $15.50 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated January 26, 1998 (the "Offer to Purchase"), a
copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which
together constitute the "Offer"). This Statement also constitutes a Statement on
Schedule 13D of each of Purchaser and Parent with respect to the option granted
to Parent, pursuant to the Tender and Option Agreement, dated as of January 19,
1998, by and among Parent, Purchaser and FS Equity Partners II L.P., a
California limited partnership (the "Major Stockholder"), to purchase from the
Major Stockholder 4,389,879 Shares (approximately 50.8% of the Shares
outstanding on January 23, 1998) at $15.50 per Share. The option can be
exercised in certain circumstances described in Section 11 of the Offer to
Purchase. Each of Purchaser and Parent disclaims beneficial ownership of such
Shares.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Buttrey Food and Drug Stores Company
and the address of its principal executive offices is 601 6th Street, S.W.,
Great Falls, Montana 59404.
(b) The information set forth in the "INTRODUCTION" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Section 6 -- Price Range of the Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by Purchaser and Parent. The
information set forth in the "INTRODUCTION" and "Section 9 -- Certain
Information Concerning Parent and Purchaser" of the Offer to Purchase is
incorporated herein by reference. The name, business address, present principal
occupation or employment, the material occupations, positions, offices or
employments for the past five years and citizenship of each director and
executive officer of Parent and Purchaser and the name, principal business and
address of any corporation or other organization in which such occupations,
positions, offices and employments are or were carried on are set forth in
Schedule I of the Offer to Purchase and incorporated herein by reference.
(e)-(f) During the last five years neither Purchaser nor Parent nor, to the
best knowledge of Purchaser and Parent, any of the persons listed in Schedule I
of the Offer to Purchase have been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or 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, federal or
state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I of the Offer to Purchase have entered into any
transaction with the Company, or any of the Company's affiliates which are
corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to
or greater than one percent of the consolidated revenues of the Company for (i)
the fiscal year in which such transaction occurred or (ii) the portion of the
current fiscal year which has occurred if the transaction occurred in such year.
<PAGE> 5
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I of the Offer to Purchase have entered into any
transaction since the commencement of the Company's third full fiscal year
preceding the date of this Statement, with the executive officers, directors or
affiliates of the Company which are not corporations, in which the aggregate
amount involved in such transaction or in a series of similar transactions,
including all periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeded $40,000.
(b) The information set forth in the "INTRODUCTION," "Section 9 -- Certain
Information Concerning Parent and Purchaser," "Section 11 -- Background of the
Offer; Purpose of the Offer and the Merger; The Merger Agreement and Certain
Other Agreements" and "Section 12 -- Plans for the Company; Other Matters" of
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 10 -- 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)-(e) The information set forth in the "INTRODUCTION," "Section 11 --
Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" and "Section 12 -- Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in "Section 7 -- Effect of the Offer on
the Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations" 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 "Section 9 -- Certain Information
Concerning Parent and Purchaser" and "Section 11 -- Background of the Offer;
Purpose of the Offer and the Merger; The Merger Agreement and Certain Other
Agreements" 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 the "INTRODUCTION," "Section 10 -- Source and
Amount of Funds," "Section 11 -- Background of the Offer; Purpose of the Offer
and the Merger; The Merger Agreement and Certain Other Agreements," "Section
12 -- Plans for the Company; Other Matters" and "Section 16 -- Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16 -- Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9 -- Certain Information Concerning
Parent and Purchaser" of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I of the Offer to
<PAGE> 6
Purchase, and the Company, or any of its executive officers, directors,
controlling persons or subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION," "Section 14 --
Conditions to the Offer" and "Section 15 -- Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7 -- Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations" and "Section 15 -- Certain Legal Matters" of the Offer to Purchase
is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated January 26, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement dated January 26, 1998.
(a)(8) Press Release of Parent dated January 20, 1998.
(a)(9) Press Release of Parent dated January 26, 1998.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of January 19, 1998, by and among
Parent, Purchaser and the Company.
(c)(2) Tender and Option Agreement, dated as of January 19, 1998, by and among
Parent, Purchaser and the Major Stockholder.
(c)(3) Confidentiality Agreement, dated as of December 22, 1997, by and between
Parent and Freeman Spogli & Co., on behalf of the Company.
(d) None.
(e) Not applicable.
(f) None.
<PAGE> 7
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.
Date: January 26, 1998
LOCOMOTIVE ACQUISITION CORP.
By:/s/ GARY G. MICHAEL
------------------------------
Name: Gary G. Michael
Title: President
ALBERTSON'S, INC.
By:/s/ GARY G. MICHAEL
------------------------------
Name: Gary G. Michael
Title: Chairman of the Board
and Chief Executive Officer
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- --------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase dated January 26, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement dated January 26, 1998.
(a)(8) Press Release of Parent dated January 20, 1998.
(a)(9) Press Release of Parent dated January 26, 1998.
(c)(1) Agreement and Plan of Merger, dated as of January 19, 1998, by and among Parent,
Purchaser and the Company.
(c)(2) Tender and Option Agreement, dated as of January 19, 1998, by and among Parent,
Purchaser and the Major Stockholder.
(c)(3) Confidentiality Agreement, dated as of December 22, 1997, by and between Parent
and Freeman Spogli & Co., on behalf of the Company.
</TABLE>
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
AT
$15.50 NET PER SHARE
BY
LOCOMOTIVE ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ALBERTSON'S, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, FEBRUARY 23, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH
ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JANUARY 19, 1998 (THE "MERGER AGREEMENT"), BY AND AMONG ALBERTSON'S, INC.,
LOCOMOTIVE ACQUISITION CORP. AND BUTTREY FOOD AND DRUG STORES COMPANY (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON THE
DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER
CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14.
---------------------
IMPORTANT
Any stockholder who desires to tender all or any portion of such
stockholder's Shares (as defined herein) should either (i) complete and sign the
Letter of Transmittal (or facsimile thereof) in accordance with the instructions
in the Letter of Transmittal, have such stockholder's signature thereon
guaranteed if required by Instruction 1 to the Letter of Transmittal, mail or
deliver the Letter of Transmittal (or a facsimile thereof) and any other
required documents to the Depositary and either deliver the certificates for
such Shares to the Depositary or tender such Shares pursuant to the procedures
for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Any stockholder whose Shares are
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 to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of the
Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent. A stockholder also may contact brokers,
dealers, commercial banks or trust companies for assistance concerning the
Offer.
---------------------
The Information Agent for the Offer is:
LOGO
---------------------
The date of this Offer to Purchase is January 26, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION........................................................................... 1
THE OFFER.............................................................................. 3
1. Terms of the Offer................................................................ 3
2. Acceptance for Payment and Payment................................................ 5
3. Procedure for Tendering Shares.................................................... 6
4. Withdrawal Rights................................................................. 9
5. Certain Federal Income Tax Consequences........................................... 9
6. Price Range of the Shares; Dividends on the Shares................................ 10
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act 11
Registration; Margin Regulations..................................................
8. Certain Information Concerning the Company........................................ 12
9. Certain Information Concerning Parent and Purchaser............................... 13
10. Source and Amount of Funds........................................................ 14
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger Agreement 15
and Certain Other Agreements......................................................
12. Plans for the Company; Other Matters.............................................. 33
13. Dividends and Distributions....................................................... 35
14. Conditions to the Offer........................................................... 35
15. Certain Legal Matters............................................................. 37
16. Fees and Expenses................................................................. 41
17. Miscellaneous..................................................................... 41
Schedule I Information Concerning Directors and Executive Officers of Parent and
Purchaser.................................................................. I-1
</TABLE>
<PAGE> 3
To the Holders of Common Stock of
BUTTREY FOOD AND DRUG STORES COMPANY:
INTRODUCTION
Locomotive Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of Albertson's, Inc., a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of common stock, par value $.01
per share (the "Shares"), of Buttrey Food and Drug Stores Company, a Delaware
corporation (the "Company"), at a price of $15.50 per Share (the "Offer Price"),
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses of Georgeson & Company Inc., which is
acting as the Information Agent (the "Information Agent"), and ChaseMellon
Shareholder Services, L.L.C., which is acting as the Depositary (the
"Depositary"), incurred in connection with the Offer. See Section 16.
The Offer is conditioned upon, among other things, that number of Shares
(the "Minimum Shares") which represents at least a majority of the Shares
outstanding on the date Shares are accepted for payment being validly tendered
and not withdrawn prior to the expiration of the Offer (the "Minimum
Condition"). See Section 14. The Company has informed Purchaser that, as of
January 23, 1998, there were (i) 8,644,631 Shares issued and outstanding and
(ii) a total of 479,551 Shares issuable pursuant to the exercise of options and
warrants that are currently exercisable or will be exercisable at the
consummation of the Offer. The Merger Agreement (as defined below) provides,
among other things, that the Company will not, without the prior written consent
of Parent, issue any additional Shares (except upon the exercise of outstanding
options and warrants). Based on the foregoing and assuming the issuance of
479,551 Shares upon the exercise of outstanding options and warrants, Purchaser
believes that the Minimum Condition will be satisfied if 4,562,092 Shares are
validly tendered and not withdrawn prior to the expiration of the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 19, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company, and subject to the Delaware General Corporation Law (the
"DGCL"). Pursuant to the Offer and subject to the DGCL, as soon as practicable
after the completion of the Offer and satisfaction or waiver, if permissible, of
all conditions to the Merger (as defined below), Purchaser will be merged with
and into the Company and the separate corporate existence of Purchaser will
thereupon cease. The merger, as effected pursuant to the immediately preceding
sentence, is referred to herein as the "Merger," and the Company as the
surviving corporation of the Merger is sometimes herein referred to as the
"Surviving Corporation." At the effective time of the Merger (the "Effective
Time"), each Share then outstanding (other than Shares held by Parent or
Purchaser and Shares held by stockholders who properly perfect their dissenters'
rights under the DGCL) will be cancelled and extinguished and converted into the
right to receive $15.50 in cash or any higher price per Share paid in the Offer
(the "Merger Consideration"), without interest. The Merger Agreement is more
fully described in Section 11.
Concurrently with the execution and delivery of the Merger Agreement, FS
Equity Partners II, L.P., a California limited partnership (the "Major
Stockholder"), which has voting and dispositive power with respect to 4,389,879
Shares, which represents approximately 50.8% of the Shares outstanding on the
date hereof, entered into a Tender and Option Agreement, dated as of January 19,
1998 (the "Tender Agreement"), with Parent and Purchaser. Pursuant to the Tender
Agreement, the Major Stockholder has agreed, among other things, to tender
promptly the Shares
1
<PAGE> 4
held by it pursuant to the Offer, and not to withdraw any such Shares, upon the
terms and subject to the conditions set forth therein. If outstanding options
and warrants are not exercised, the tender of these 4,389,879 Shares will
satisfy the Minimum Condition.
THE COMPANY BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE HOLDERS OF SHARES AND UNANIMOUSLY RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
THERETO.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has delivered to the
Company Board its opinion, dated as of January 19, 1998 (the "Morgan Stanley
Opinion"), to the effect that, as of such date and based upon and subject to
certain matters stated therein, the consideration to be received by the holders
of Shares pursuant to the Merger Agreement is fair from a financial point of
view to such holders. The full text of the Morgan Stanley Opinion, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken, is attached as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which has been filed by the Company with the Securities and Exchange Commission
(the "Commission") in connection with the Offer and which is being mailed to
holders of Shares herewith. Holders of Shares are urged to, and should, read the
Morgan Stanley Opinion carefully in its entirety. The Morgan Stanley Opinion is
directed only to the fairness of the consideration to be received by the holders
of Shares from a financial point of view and does not address any other aspect
of the Merger Agreement. The Morgan Stanley Opinion does not constitute a
recommendation to any holder of Shares as to whether such holder should tender
Shares pursuant to the Offer or how such holder should vote with respect to the
Merger.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement, if required by applicable law in order to consummate the
Merger. See Section 14. Under the DGCL and pursuant to the Company's certificate
of incorporation, the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of any class or series of the Company's
capital stock that may be necessary to approve the Merger Agreement and the
Merger.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Purchaser acquires in the aggregate at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, then, at the election of Parent, a
short-form merger could be effected without any further approval of the Company
Board or the stockholders of the Company, subject to compliance with the
provisions of Section 253 of the DGCL. Even if Purchaser does not own 90% of the
outstanding Shares following consummation of the Offer, Parent or Purchaser
could seek to purchase additional shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per share
consideration paid for any Shares so acquired may be greater or less than the
Offer Price. Parent presently intends to effect a short-form merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company. See Section 15.
See Section 14, which sets forth the conditions to consummation of the
Offer, Section 15, which discusses certain legal matters and regulatory consents
and approvals and Section 5, which describes certain federal income tax
consequences of the sale of the Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE> 5
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, Purchaser will
accept for payment and pay for all Shares validly tendered, and not withdrawn,
prior to the Expiration Date. The term "Expiration Date" shall mean 12:00
Midnight, New York City time, on Monday, February 23, 1998, unless and until
Purchaser, in accordance with the terms of the Merger Agreement, 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 Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition. See Section 14, which sets forth in full the conditions to
the Offer. If the Minimum Condition is not satisfied or any of the other events
set forth in Section 14 shall have occurred or shall be determined by Purchaser
to have occurred prior to the Expiration Date, Purchaser reserves the right (but
shall not be obligated), subject to the terms of the Merger Agreement and
subject to complying with applicable rules and regulations of the Commission, to
(i) decline to purchase any of the Shares tendered in the Offer and terminate
the Offer and return all tendered Shares to the tendering stockholders, (ii)
waive any or all conditions to the Offer and, to the extent permitted by
applicable law, purchase all Shares validly tendered, (iii) extend the Offer
and, subject to the right of stockholders to withdraw Shares until the
Expiration Date, retain the Shares which have been tendered during the period or
periods for which the Offer is extended or (iv) amend the Offer.
Subject to the terms of the Merger Agreement, Purchaser may, and under
certain circumstances shall, from time to time, and regardless of whether any of
the events set forth in Section 14 shall have occurred, extend the period of
time during which the Offer is open and thereby delay the acceptance for payment
of, and payment for, any Shares by giving oral or written notice of such
extension to the Depositary. In addition, subject to the terms of the Merger
Agreement, Purchaser may amend the Offer by giving oral or written notice of
such amendment to the Depositary.
The Merger Agreement provides that Purchaser will not decrease the Offer
Price, change the form of consideration payable in the Offer, decrease the
number of Shares sought in the Offer, change or amend the conditions to the
Offer or impose additional conditions to the Offer, change the Expiration Date
or waive, add or amend any term of or condition to the Offer in any manner
adverse to the holders of the Shares without the written consent of the Company;
provided, however, that if on any scheduled Expiration Date, all conditions to
the Offer shall not have been satisfied or waived, Purchaser may extend the
Expiration Date. In addition, if on any scheduled Expiration Date, all
conditions to the Offer shall not have been satisfied or waived, Purchaser has
agreed to extend the Expiration Date as long as the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), shall not have expired or been terminated. Purchaser has further agreed
that if on any scheduled Expiration Date any order, decree, ruling or other
action of or an agreement with any United States or state governmental authority
or other agency or commission or United States or state court of competent
jurisdiction (a "Governmental Authority") that has the effect of restraining,
enjoining, prohibiting or delaying the consummation of the Offer or the Merger
or imposing material limitations on the ability of Purchaser to acquire the
Shares shall be in effect, Purchaser will extend the Expiration Date until it
has reached an agreement with the Department of Justice (the "DOJ"), the Federal
Trade Commission (the "FTC") or any other Governmental Authority that has
asserted that consummation of the Offer will violate Antitrust Laws (as defined
below) and any injunction or order prohibiting or limiting the consummation of
the Offer or the Merger shall have become final and non-appealable. If,
immediately prior to any scheduled Expiration Date, all conditions to the Offer
are satisfied as of such Expiration Date but the number of Shares tendered and
not withdrawn pursuant to the Offer constitute less than 90% of the Shares
outstanding, Purchaser may extend the Offer for a period not to exceed ten (10)
business days; provided that in the event the Offer is so extended Parent and
Purchaser must irrevocably waive all of the conditions to the Offer set forth in
Section 14 (other than the condition that no law be enacted
3
<PAGE> 6
or any injunction or order be issued which has the effect of making the
acquisition of the Shares by Purchaser illegal or which imposes material
limitations on the ability of Purchaser to acquire the Shares or which otherwise
prohibits the consummation of the transactions contemplated by the Merger
Agreement) that subsequently may not be satisfied during such extension of the
Offer as grounds for its refusal to accept for payment and purchase, or to pay
for, or as grounds for its delay in the acceptance for payment for, any Shares
tendered in the Offer. As used in this Offer to Purchase, "business day" has the
meaning set forth in Rule 14d-1 under the Exchange Act.
Purchaser currently anticipates that it will extend the Offer past the
initial scheduled Expiration Date in order to provide sufficient time for the
conditions to the Offer to be satisfied.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Without
limiting the obligation of Purchaser under such Rule or the manner in which
Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release to the Dow Jones News
Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated that in its view an offer must remain open
for a minimum period of time following a material change in the terms of the
Offer and that waiver of a material condition, such as the Minimum Condition, is
a material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five (5) business days from the date a
material change is first published, or sent or given to security holders and
that, if material changes are made with respect to information not materially
less significant than the offer price and the number of shares being sought, a
minimum of ten (10) business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed by Purchaser to record holders of Shares and will be furnished by
Purchaser to brokers, dealers, banks and similar persons whose names, or the
names of whose nominees, appear on the stockholder lists or, if applicable, who
are
4
<PAGE> 7
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions to the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay, promptly after
the Expiration Date, for all Shares validly tendered prior to the Expiration
Date and not properly withdrawn in accordance with Section 4. All determinations
concerning the satisfaction of such terms and conditions will be within
Purchaser's sole discretion, which determinations will be final and binding. See
Sections 1 and 14. Subject to the Merger Agreement, Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of, or
payment for, Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book-Entry Confirmation (as defined below) with respect
thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined below), and (iii)
any other documents required by the Letter of Transmittal. The per share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per share consideration paid to any other holder of such Shares pursuant
to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance for payment of such Shares. Payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If Purchaser is delayed in its acceptance for payment of, or payment for,
Shares or is unable to accept for payment, or pay for, Shares pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer (including such rights as are set forth in Sections 1 and 14) (but subject
to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled to
exercise, and duly exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates representing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to such account
maintained at a Book-Entry Transfer Facility as the tendering stockholder shall
specify in the Letter of Transmittal, as promptly as practicable following the
expiration, termination or withdrawal of the Offer. If no such instructions are
given with respect to Shares delivered by book-entry transfer, any such Shares
not tendered or not purchased will be returned by crediting the account at the
Book-
5
<PAGE> 8
Entry Transfer Facility designated in the Letter of Transmittal as the account
from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or in part, to
Parent or to any direct or indirect wholly owned subsidiary of Parent, the right
to purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") for purposes of the Offer within two (2) business days after the
date of this Offer to Purchase. Any financial institution that is a participant
in the Book-Entry Transfer Facility's systems may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the 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 that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section,
6
<PAGE> 9
includes any participant in any of the Book Entry Transfer Facilities' systems
whose name appears on a security position listing as the owner of the Shares) of
Shares tendered therewith and such registered holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (ii) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market
(the "Nasdaq National Market"), operated by the National Association of
Securities Dealers, Inc. (the "NASD"), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, 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 hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
7
<PAGE> 10
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's message) the tendering stockholder will
irrevocably appoint designees of Parent as such stockholder's attorneys-in-fact
and proxies, in the manner set forth in the Letter of Transmittal, each with
full power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
Purchaser, and with respect to any and all non-cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after January 19, 1998 (collectively, "Distributions"). All such
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective if and when, and only to the extent that,
Purchaser accepts for payment Shares tendered by such stockholder as provided
herein. All such powers of attorney and proxies will be irrevocable and will be
deemed granted in consideration of the acceptance for payment of Shares tendered
in accordance with the terms of the Offer. Upon such appointment, all prior
powers of attorney, proxies and consents given by such stockholder with respect
to such Shares (and any and all Distributions) will, without further action, be
revoked and no subsequent powers of attorney, proxies, consents or revocations
may be given by such stockholder (and, if given, will not be deemed effective).
The designees of Parent will thereby be empowered to exercise all voting and
other rights with respect to such Shares (and any and all Distributions),
including, without limitation, in respect of any annual or special meeting of
the Company's stockholders (and any adjournment or postponement thereof),
actions by written consent in lieu of any such meeting or otherwise, as each
such attorney-in-fact and proxy or his substitute shall in his sole discretion
deem proper. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser must be able to exercise full voting, consent
and other rights with respect to such Shares (and any and all Distributions),
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser, in its sole discretion, which determination
will be final and binding. Purchaser reserves the absolute right to reject any
or all tenders of any Shares determined by it not to be in proper form or the
acceptance for payment of which, or payment for which, may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in
its sole discretion, subject to the provisions of the Merger Agreement, to waive
any of the conditions of the Offer or any defect or irregularity in the tender
of any Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Subject to the terms of the
Merger Agreement, Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in either
case, the "Payee"), satisfies the conditions described in Instruction 10 of the
Letter of Transmittal or is otherwise exempt, the cash payable as a result of
the Offer may be subject to backup withholding tax at a rate of 31% of the gross
proceeds. To prevent backup withholding, each Payee should complete and sign the
Substitute Form W-9 provided in the Letter of Transmittal. See Instruction 10 to
the Letter of Transmittal.
8
<PAGE> 11
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by Purchaser pursuant to
the Offer, may also be withdrawn at any time after March 26, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares 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 be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 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 Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial holders of Shares whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted to cash in the Merger. The discussion is for general
information only and does not purport to consider all aspects of federal income
taxation that might be relevant to beneficial holders of Shares. The discussion
is based on current provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), existing, proposed and temporary regulations promulgated
thereunder and administrative and judicial interpretations thereof, all of which
are subject to change. The discussion applies only to beneficial holders of
Shares in whose hands Shares are capital assets within the meaning of Section
1221 of the Code and may not apply to Shares received pursuant to the exercise
of employee stock options or otherwise as compensation, or to certain types of
beneficial holders of Shares (such as insurance companies, tax-exempt
organizations, financial institutions and broker-dealers) who may be subject to
special rules. This discussion does not discuss the federal income tax
consequences to a beneficial holder of Shares who, for United States federal
income tax purposes, is a non-resident alien individual, a foreign corporation,
a foreign partnership or a foreign estate or trust, nor does it consider the
effect of any foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL HOLDER OF
SHARES SHOULD CONSULT SUCH BENEFICIAL HOLDER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL HOLDER AND THE
PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL HOLDER OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
9
<PAGE> 12
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and possibly
for state and local income tax purposes as well. In general, a stockholder who
sells Shares pursuant to the Offer or receives cash in exchange for Shares
pursuant to the Merger will recognize gain or loss for federal income tax
purposes equal to the difference, if any, between the amount of cash received
and the stockholder's adjusted tax basis in the Shares sold pursuant to the
Offer or surrendered for cash pursuant to the Merger. Gain or loss will be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) tendered pursuant to the Offer or surrendered
for cash pursuant to the Merger. Such gain or loss will be long-term capital
gain or loss provided that a stockholder's holding period for such Shares is
more than 12 months at the time of consummation of the Offer or Merger, as the
case may be. Long-term capital gain of individuals currently is taxed at a
maximum rate of 28% if such gain is with respect to property held more than 12
months but not more than 18 months as of the date of sale and at a maximum rate
of 20% with respect to property held more than 18 months.
A holder of Shares who perfects such holder's appraisal rights, if any,
under the DGCL probably will recognize gain or loss at the Effective Time in an
amount equal to the difference between the "amount realized" and such holder's
adjusted tax basis of such Shares. For this purpose, although there is no
authority to this effect directly on point, the amount realized generally should
equal the fair market value per share of the Shares at the Effective Time.
Ordinary interest income and/or capital gain (or capital loss, assuming that the
Shares were held as capital assets) should be recognized by such holder at the
time of actual receipt of payment, to the extent that such payment exceeds (or
is less than) the amount realized at the Effective Time.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares are traded through the Nasdaq National Market under the symbol
"BTRY". The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported sales price per Share on the Nasdaq
National Market.
<TABLE>
<CAPTION>
COMMON STOCK
------------------
HIGH LOW
-------- -------
<S> <C> <C> <C> <C>
Fiscal Year Ended February 3, 1996
First Quarter............................................................ $ 9 3/4 $ 6 3/4
Second Quarter........................................................... 7 7/8 6 5/8
Third Quarter............................................................ 8 3/8 6 3/4
Fourth Quarter........................................................... 7 5/8 6 3/4
Fiscal Year Ended February 1, 1997
First Quarter............................................................ $ 7 7/8 $ 6 7/8
Second Quarter........................................................... 8 3/8 7 3/8
Third Quarter............................................................ 8 1/4 7 1/4
Fourth Quarter........................................................... 8 7/8 8
Fiscal Year Ending January 31, 1998
First Quarter............................................................ $ 10 $ 7 7/8
Second Quarter........................................................... 10 5/8 8 1/8
Third Quarter............................................................ 12 9 3/4
Fourth Quarter (through January 23, 1998)................................ 15 3/8 9 3/4
</TABLE>
On January 16, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the last reported sales price of the Shares on the Nasdaq National
Market was $10 3/4 per Share. On January 23, 1998, the last full trading day
prior to the commencement of the Offer, the last reported sales price of the
Shares on the Nasdaq National Market was $15 3/8 per Share. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
10
<PAGE> 13
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. The agreements governing the Company's
indebtedness contain provisions which currently prohibit the Company from
declaring or paying dividends with respect to the Shares. In addition, under the
terms of the Merger Agreement, the Company is not permitted to declare or pay
dividends with respect to the Shares without the prior written consent of
Parent.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the requirements for continued
inclusion in the Nasdaq National Market, which requires that there be at least
200,000 shares publicly held, with a market value of at least $1,000,000, held
by at least 400 stockholders or 300 stockholders of round lots. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose. If
the Nasdaq National Market were to cease to publish quotations for the Shares,
it is possible that the Shares would continue to trade in the over-the-counter
market and that prices or other quotations would be reported by other sources.
The extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
stockholders and/or the aggregate market value of such securities 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.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act,
assuming there are no other securities of the Company subject to registration,
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement
pursuant to Section 14(a) in connection with stockholders' meetings and the
related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated.
Purchaser may seek delisting of the Shares from the Nasdaq National Market
and the termination of the registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such delisting
and termination are met. If the Nasdaq National Market listing and the Exchange
Act registration of the Shares are not terminated prior to the Merger, then the
Shares will be delisted from the Nasdaq National Market and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
Margin Regulations. The Shares presently are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding stock exchange
11
<PAGE> 14
listing and market quotations, it is possible that, following the Offer, the
Shares would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer be
used as collateral for loans made by brokers. In addition, if registration of
the Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. Neither Parent nor Purchaser assumes responsibility for
the accuracy or completeness of the information concerning the Company contained
in such documents and records 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 but which are unknown to Parent or Purchaser.
The Company is a food and drug retailer operating an aggregate of 43 stores
in Montana, Wyoming and western North Dakota. The Company also operates a mail
order pharmacy business. The Company is the successor to the Buttrey Food and
Drug Division (the "Predecessor Division") of Skaggs Alpha Beta, Inc., an
indirect, wholly owned subsidiary of American Stores Company. The Company
acquired certain assets and liabilities of the Predecessor Division in October
1990 in a transaction organized by Freeman Spogli & Co., a private investment
firm and an affiliate of the Major Stockholder ("FS & Co."). The Company is a
Delaware corporation with its principal executive offices at 601 6th St., S.W.,
Great Falls, Montana 59404. The telephone number of the Company at such location
is (406) 761-3401.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year ended
February 1, 1997 and its Quarterly Report on Form 10-Q for the quarter ended
November 1, 1997, both filed with the Commission pursuant to the Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
BUTTREY FOOD AND DRUG STORES COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED FISCAL YEARS ENDED
------------------------- ---------------------------------------
NOVEMBER 1, NOVEMBER 2, FEBRUARY 1, FEBRUARY 3, JANUARY 28,
1997 1996 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating Data:
Net Sales......................... $ 96,290 $ 92,843 $ 371,302 $ 368,135 $ 382,123
Operating Income.................. 2,553 1,963 7,559 6,063 5,205
Net Earnings...................... 1,114 749 3,593 2,299 3,403
Net Earnings per share............ 0.13 0.09 0.42 0.27 0.40
Balance Sheet Data (at end of
period):
Total Assets...................... $ 164,624 $ 158,985 $ 157,998 $ 144,631 $ 165,380
Total Liabilities................. 69,972 68,178 66,100 56,326 79,412
Stockholders' Equity.............. 94,652 90,807 91,898 88,305 85,968
</TABLE>
12
<PAGE> 15
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file 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 interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders 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 at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other information
relating to the Company which have been filed via the EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a Delaware corporation and is the
successor to the business founded by J. A. Albertson in 1939. Parent is one of
the largest retail food-drug chains in the United States based on sales. As of
October 30, 1997, Parent operated 857 stores in 20 Western, Midwestern and
Southern states and employed approximately 90,000 people. Parent's retail
operations are supported by 11 Parent-owned distribution centers.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of Purchaser is owned directly by Parent. Until immediately prior
to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
The principal offices of Purchaser and Parent are located at 250 Parkcenter
Boulevard, P.O. Box 20, Boise, Idaho 83726. The telephone number of Parent and
Purchaser at such location is (208) 395-6200.
For certain information concerning the executive officers and directors of
Parent and Purchaser, see Schedule I.
Pursuant to the Tender Agreement, Parent and Purchaser have acquired from
the Major Stockholder an option to purchase 4,389,879 Shares, which constitutes
beneficial ownership of such Shares for certain purposes. See Section 11. Such
Shares constitute approximately 50.8% of the total currently outstanding Shares.
Except as set forth in this Offer to Purchase, neither Purchaser nor Parent,
nor, to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I, nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares, and neither
Purchaser nor Parent nor, to the best of knowledge of Purchaser or Parent, any
of the persons or entities referred to above, nor any of the respective
executive officers, directors or subsidiaries of any of the foregoing, has
effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither Purchaser nor Parent
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
13
<PAGE> 16
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies.
In August 1994, in connection with an assignment from an unrelated third
party (the "Assignor") to Parent of the Assignor's right to purchase one of the
Company's stores in Kennewick, Washington, Parent purchased certain related real
property from the Company for approximately $3.6 million and certain related
equipment and inventory from the Assignor for approximately $2.5 million.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since January 30,
1994, any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would require to be reported
under the rules of the Commission. Except as set forth in this Offer to
Purchase, since January 30, 1994 there have been no contacts, negotiations or
transactions between Purchaser, Parent, any of their respective affiliates or,
to the best knowledge of Purchaser, Parent, any of the persons listed on
Schedule 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.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders 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 at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661. Copies of such information should be
obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other information
relating to Parent which have been filed via the EDGAR System. Such materials
should also be available at the offices of the New York Stock Exchange ("NYSE"),
20 Broad Street, New York, NY 10005 and the offices of the Pacific Stock
Exchange, 115 Sansome Street, San Francisco, CA 94111.
10. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger,
including the refinancing (if any) of approximately $23 million of debt
presently owed by the Company and the fees and expenses of the Offer and the
Merger, is estimated to be approximately $163 million. Purchaser will obtain all
such funds from Parent in the form of capital contributions and/or loans. Parent
will provide such funds through a combination of its cash on hand and the
issuance of debt securities (which may include, but may not be limited to,
commercial paper, medium term notes or underwritten offerings of other debt
securities). After the issuance of such debt securities, Parent may from time to
time refinance such issuances through the issuance of other debt securities. It
is anticipated that such debt securities will be repaid from funds generated
internally by Parent (including, after the Merger, if consummated, funds
generated by the Company) and from other sources. No final decisions have been
made concerning the debt securities to be issued or the refinancing or repayment
of such debt securities, and such decisions will be made based on Parent's
review from time to time of the
14
<PAGE> 17
advisability of certain actions, as well as on prevailing interest rates and
financial and other economic conditions.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Background of the Offer. On November 13, 1997, Gary G. Michael, Chairman
of the Board and Chief Executive Officer of Parent, and Thomas C. Young, a
director of the Company, had a preliminary discussion regarding the possibility
of Parent acquiring the Company. Mr. Young responded to Mr. Michael that he
would discuss the possibility with the Company and FS & Co.
On or about November 17, 1998, Mr. Michael spoke via telephone with Ronald
P. Spogli, a partner in FS & Co. and a director of the Company. Mr. Spogli
indicated during such telephone call that the Company and FS & Co. would be
willing to meet with representatives of Parent to discuss Parent's interest in
acquiring the Company.
On November 24, 1997, Mr. Michael and Michael F. Reuling, Executive Vice
President, Store Development of Parent, met with Mr. Young, Mr. Spogli, Bradford
M. Freeman, a partner in FS & Co., and J. Frederick Simmons, also a partner in
FS & Co. and a director of the Company, and continued preliminary discussions
concerning the potential acquisition of the Company by Parent.
On December 19, 1997, Mr. Michael and Mr. Reuling spoke to Mr. Simmons by
telephone concerning a structure for the proposed acquisition and, in addition,
a schedule for conducting due diligence and negotiating a definitive agreement
in respect of the acquisition. At that time, Mr. Michael and Mr. Reuling also
requested that Parent be provided with information concerning the Company's
sales and expenses, as well as summaries of leases to which the Company was a
party.
On December 22, 1997, Parent and the Company entered into a Confidentiality
Agreement pursuant to which Parent agreed, among other things, to treat as
confidential certain information provided to it by or on behalf of the Company.
See Section 11. Following the execution of the Confidentiality Agreement, the
Company made available to Parent certain information concerning the Company in
order to enable Parent to evaluate further its interest in the Company.
From December 22, 1997 through January 7, 1998, the parties held a number
of discussions by telephone relating to the structure of the proposed
acquisition and the information concerning the Company which had been delivered
to Parent. The parties also discussed a framework for further due diligence
review of the Company by Parent. Representatives of Parent also discussed with
representatives of FS & Co. Parent's requirement that the Major Stockholder
grant to Parent an option to purchase Shares held by the Major Stockholder, or
enter into such other agreement as Parent would require with respect to the
Major Stockholder's Shares. Representatives of Parent and FS & Co. agreed to
continue discussions on this requirement.
On December 30, 1997, Parent delivered a due diligence request to Mr.
Simmons.
On December 30 and 31, 1997, Mr. Reuling and Mr. Simmons spoke by telephone
regarding the scope of the information the Company would make available to
Parent for purposes of its due diligence review of the Company.
On January 6, 1998, Parent forwarded to Mr. Simmons a revised due diligence
request reflecting the conversations held by Mr. Reuling and Mr. Simmons on
December 30 and 31, 1997.
On January 8 and 9, 1998, Mr. Reuling, Mr. Richard J. Navarro, Group Vice
President and Controller of Parent and Mr. Paul G. Rowan, Vice President,
Business Law of Parent, along with Parent's legal advisors, met with Mr. Simmons
and Mr. William M. Wardlaw, a partner in FS & Co. and a director of the Company,
along with FS & Co.'s and the Company's legal advisors, to negotiate the terms
of the proposed acquisition. The meeting was also attended by Joseph H.
Fernandez, Chairman of the Board, President and Chief Executive Officer of the
Company, and Wayne S. Peterson, Senior Vice President, Chief Financial Officer
and Secretary of the Company.
15
<PAGE> 18
On January 9, 1998, Parent convened a meeting of its Board of Directors at
which Parent's Board unanimously authorized certain officers of Parent to
proceed on behalf of Parent with negotiations related to the proposed
acquisition and, if terms satisfactory to such officers could be reached, to
enter into a definitive agreement or agreements on behalf of the Parent in
respect of such acquisition. On January 12, 1998, the Company Board met and
reviewed the status of negotiations with Parent and particularly considered
antitrust matters and certain closing conditions.
On January 12, 1998, Mr. Michael and Mr. Reuling spoke with Mr. Spogli and
Mr. Simmons by telephone concerning various issues related to the proposed
acquisition that had been raised during the parties' meetings on January 8 and
9, 1998. Such issues included employee transition issues, antitrust matters,
closing conditions and a schedule for continued negotiations in respect of the
proposed acquisition.
Beginning on January 14, 1998, and continuing through the evening of
January 19, 1998, representatives of Parent, the Company and the Major
Stockholder, together with their respective legal advisors, met to continue
negotiations of the terms of the proposed acquisition. On January 14, 1998, the
parties determined conclusively to structure the acquisition as a tender offer
for all of the Shares followed by a merger of Purchaser with and into the
Company, provided that the Major Stockholder would agree to tender its Shares in
the Offer and to grant Parent a proxy with respect to the voting of such Shares
in favor of the Merger. During this period, representatives of Parent conducted
further due diligence of the Company.
Thereafter at its January 19, 1998 meeting, the Company Board determined
that the terms of the Offer and the Merger were fair to, and in the best
interests of, the stockholders of the Company and resolved unanimously to
approve the Merger Agreement, the Offer and the Merger and to recommend that the
Company's stockholders approve and adopt the Merger Agreement and tender their
Shares pursuant to the Offer. The Company Board also approved the Tender
Agreement. Additionally, on January 19, 1998, Morgan Stanley & Co. Incorporated
("Morgan Stanley") delivered to the Company Board its opinion to the effect that
on such date, based on the assumptions, procedures and matters referred to
therein, the consideration to be received by the holders of the Shares pursuant
to the Merger Agreement is fair from a financial point of view to such holders.
The written opinion of Morgan Stanley is set forth in full as an exhibit to the
Company's Schedule 14D-9, which is being mailed to stockholders of the Company.
Stockholders of the Company are urged to read that opinion in its entirety.
On the evening of January 19, 1998, Parent, Purchaser and the Company
executed and delivered the Merger Agreement, and Parent, Purchaser and the Major
Stockholder executed and delivered the Tender Agreement.
On the morning of January 20, 1998, Parent issued the following press
release:
Jan. 20, 1998 -- Albertson's, Inc. (NYSE:ABS) announced today that it
has entered into a definitive agreement whereby Albertson's will acquire
Buttrey Food and Drug Stores Company (NASDAQ: BTRY) for $15.50 per share.
Buttrey is headquartered in Great Falls, Montana and is a leading
supermarket and pharmacy retailer operating 43 stores in Montana, North
Dakota and Wyoming.
The agreement calls for a wholly-owned subsidiary of Albertson's to
commence a cash tender offer at $15.50 per share no later than Monday,
January 26, 1998, for all Buttrey outstanding shares. The offer will be
subject to regulatory approval and certain conditions, including the tender
of a majority of the Buttrey shares. Financing is not a condition.
Following the consummation of the offer, Albertson's subsidiary will be
merged with Buttrey and any remaining shares will be converted into the
right to receive $15.50 per share in cash. The transaction was unanimously
approved by the board of directors of Buttrey.
16
<PAGE> 19
As a part of this transaction, the Buttrey shareholder owning a
majority of the outstanding Buttrey stock has agreed to tender promptly all
its Buttrey shares and has granted Albertson's an option to purchase all
its Buttrey shares under certain circumstances.
"This announcement marks our second acquisition in as many weeks and
is another important step in our acquisition strategy. We will continue to
pursue opportunities that allow us to strengthen our market presence in
existing markets or efficiently enter new markets," said Mr. Gary Michael,
Chairman and Chief Executive Officer of Albertson's.
"This transaction will yield both strategic and financial benefits as
well as continue our program to accelerate top-line growth, increase
profitability and enhance shareholder value. We are joining together two
companies with complementary strengths and a shared commitment to providing
customers with high-quality products at a good value with top-notch
service.
"We will be obtaining an outstanding retailer with quality stores in
excellent locations. From a strategic standpoint, this transaction will
strengthen our market presence in Montana, North Dakota and Wyoming,
especially in many of the smaller towns where Albertson's does not
currently operate.
"From a financial standpoint, we expect to realize synergies in our
combined purchasing power, distribution efficiencies and merchandising and
systems opportunities. These synergies will enable us to build from the
solid sales and earnings base that Buttrey has created.
"We look forward to welcoming the well-trained, motivated and loyal
employees of Buttrey. Their commitment to customer service is a great fit
with the Albertson's employees who deliver the same outstanding service to
over 700 million customers a year," Mr. Michael concluded.
Albertson's, Inc. is one of the largest retail food-drug chains in the
United States. The Boise, Idaho based company currently operates 866 retail
stores in 20 Western, Midwestern and Southern states.
The tender offer would be made only pursuant to an offer to purchase
and related documents to be filed with the Securities and Exchange
Commission.
Forward-looking statements in this news release, if any, are not
updated to reflect actual results, changes in assumptions or changes in
other factors affecting such forward-looking information. Assumptions and
other information that could cause actual results to differ from those set
forth in the forward-looking information can be found in the Company's Form
10-Q.
On the morning of January 20, 1998, the Company issued the following
press release:
Great Falls, Montana, Jan. 20, 1998 -- Buttrey Food and Drug Stores
Company (NASDAQ: BTRY) today announced that it has entered into a
definitive agreement with Albertson's, Inc. (NYSE:ABS) providing for the
acquisition of Buttrey by Albertson's for $15.50 per share.
Under the terms of the agreement, Albertson's will begin a cash tender
offer on or before January 26, 1998 for all of Buttrey's approximately
8,645,000 outstanding common shares. Buttrey's Board of Directors
unanimously approved the agreement and recommended that Buttrey
stockholders tender their shares pursuant to the offer. After successful
completion of the tender offer, remaining shares of Buttrey will be
acquired at the tender offer price through a merger. Buttrey's Board of
Directors has received the opinion of Morgan Stanley & Co., Incorporated
that the consideration payable in the tender offer and merger is fair, from
a financial point of view, to Buttrey stockholders.
In connection with the acquisition agreement, an affiliate of Freeman
Spogli & Co. Incorporated, Buttrey's largest stockholder, has agreed to
tender its 4,389,879 shares of common stock, which represent 50.8% of
Buttrey's current outstanding stock, and has also granted Albertson's an
option on such shares at $15.50 per share of common stock, which can be
exercised under certain circumstances. The definitive agreement provides
for payment to Albertson's under
17
<PAGE> 20
certain circumstances of a termination fee and reimbursement of expenses if
Buttrey's Board of Directors, in the exercise of its fiduciary
responsibilities, terminates the definitive agreement or withdraws or
modifies its recommendation that Buttrey stockholders tender their shares
pursuant to the offer.
The consummation of the offer is subject to certain customary
conditions, including expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act and antitrust approval.
Financing is not a condition to completion of the transaction.
"I am very proud of the efforts of our associates throughout Buttrey,"
said Joseph H. Fernandez, chairman, president and chief executive officer
of Buttrey. "Through their dedication and commitment to our customers, our
associates have made Buttrey an attractive acquisition opportunity for
Albertson's, one of the most successful food retailers in the world.
Buttrey's outstanding associates share a commitment to quality products,
superior service and great prices that fits well with the strengths of
Albertson's. Additionally, Buttrey's network of quality stores in excellent
locations compliments Albertson's impressive network in our trade areas,
and offers Albertson's an opportunity to bring their programs to many new
customers."
Representatives of Buttrey and Albertson's have scheduled meetings
with Buttrey employees beginning on Tuesday, January 20, 1998 throughout
Montana and Wyoming to discuss the effects of the transaction and to begin
the process of transition to new ownership.
Buttrey Food and Drug Stores Company is a leading supermarket and
pharmacy retailer with 43 stores operating in Montana, North Dakota and
Wyoming, and two stores under construction. Thirty-five of the 45 stores
have pharmacies and the Company also runs the only mail-order pharmacy
business in the region. Buttrey operates distribution centers in Great
Falls, Montana, and in Salt Lake City, Utah, which provide its stores with
groceries and fresh products. The Company employs over 3,000 associates in
its various locations.
On January 26, 1998, Parent and Purchaser commenced the Offer and issued
the following press release:
Jan. 26, 1998 -- Albertson's, Inc. (NYSE:ABS) announced today that
Locomotive Acquisition Corp., a wholly owned subsidiary, has commenced its
tender offer to purchase all outstanding shares of Buttrey Food and Drug
Stores Company (NASDAQ:BTRY) for $15.50 net per share. The offer and
withdrawal rights are scheduled to expire at 12:00 midnight, New York City
time, on Monday, February 23, 1998, unless the offer is extended by
Albertson's, Inc.
The offer is being made in accordance with the previously announced
merger agreement among Albertson's, Inc., Locomotive Acquisition Corp. and
Buttrey Food and Drug Stores Company. The offer is subject to regulatory
approval and certain conditions, including the tender of a majority of the
outstanding Buttrey shares.
The offer is being made pursuant to a Tender Offer Statement on
Schedule 14D-1 to be filed today by Albertson's, Inc. with the Securities
and Exchange Commission and mailed to Buttrey shareholders. Copies of the
tender offer materials may be obtained from the Information Agent,
Georgeson & Company Inc., at 212-440-9800 or 800-223-2064.
Albertson's, Inc. is one of the largest retail food-drug chains in the
United States. The Boise, Idaho based company currently operates 869 retail
stores in 20 Western, Midwestern and Southern states.
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Parent to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not purchased
pursuant to the Offer. The transaction is structured as a merger in order to
ensure the acquisition by Parent of all the outstanding Shares.
18
<PAGE> 21
If the Merger is consummated, Parent's common equity interest in the
Company would increase to 100% and Parent would be entitled to all benefits
resulting from that interest. These benefits include complete management and
control with regard to the future conduct of the Company's business and the
right to any increase in its value. Similarly, Parent will also bear the risk of
any losses incurred in the operation of the Company and any decrease in the
value of the Company.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and any future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under the DGCL. See Section
12. Similarly, after selling their Shares in the Offer or the subsequent Merger,
stockholders of the Company will not bear the risk of any decrease in the value
of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
44% over the closing market price of the Shares on January 16, 1997, the last
full trading day prior to the initial public announcement that the Company,
Purchaser and Parent executed the Merger Agreement, and a more substantial
premium over recent historical trading prices.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement
not discussed elsewhere in this Offer to Purchase. The summary does not purport
to be complete and is qualified in its entirety by reference to the complete
text of the Merger Agreement, a copy of which is filed with the Commission as
Exhibit (c)(1) to the Schedule 14D-1 and is incorporated herein by reference.
Capitalized terms not otherwise defined below shall have the meanings set forth
in the Merger Agreement. The Merger Agreement may be examined and copies may be
obtained at the places and in the manner set forth in Section 9 of this Offer to
Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, capital stock, options
or other rights to acquire Shares, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and any applicable
laws and any agreements to which the Company or its assets may be bound,
financial statements, public filings, conduct of business, employee benefit
plans, ERISA, proprietary property, labor and employment matters, compliance
with laws, tax matters, litigation, environmental matters, material contracts,
conflicts of interest, brokers' and finders' fees, real property leases, title
to properties, absence of liens, insurance, inventory, suppliers, votes required
to approve the Merger Agreement, undisclosed liabilities, product liability,
disclosures in proxy statement and tender offer documents and the absence of
material adverse changes.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and any applicable
laws and any agreements to which Parent or Purchaser or their assets may be
bound, availability of funds to consummate the Offer and the Merger, brokers'
fees, disclosures in proxy statement and tender offer documents, no prior
ownership of Shares and no prior activities by Purchaser.
Conditions to the Merger. The respective obligations of Parent and
Purchaser, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction of each of the following conditions: (i)
Purchaser shall have commenced the Offer and shall have purchased, pursuant to
the terms and conditions of the Offer, all Shares duly tendered and not
withdrawn, (ii) Parent, Purchaser or an affiliate thereof shall have purchased a
majority of the
19
<PAGE> 22
outstanding Shares pursuant to the Offer, unless such failure to purchase is a
result of a breach of Parent's or Purchaser's obligations under the Merger
Agreement, (iii) the Merger Agreement and the Merger shall have been approved
and adopted by the requisite vote of the holders of the Shares, unless Purchaser
shall have acquired 90% or more of the outstanding Shares, (iv) no Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, final non-appealable injunction or other final
non-appealable order which is in effect and has the effect of making the
acquisition of Shares by Purchaser illegal or otherwise prohibiting consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that such condition does not modify Parent's obligation to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary or
required by the FTC or the DOJ in connection with the expiration or termination
of the waiting period under the HSR Act, or by any private party or Governmental
Authority or other tribunal under the Antitrust Laws or in a suit by a private
party or Governmental Authority as a result of the transactions contemplated by
the Merger Agreement, except that either Parent or Purchaser may institute,
prosecute or defend a suit or claim in good faith with respect to any suit,
objection, requirement or other action by the FTC, the DOJ, any other
Governmental Authority or any private party with respect to the transactions
contemplated by the Merger Agreement; and (v) the applicable waiting period
under the HSR Act shall have expired or been terminated.
The Company Board. The Merger Agreement provides that promptly upon the
purchase by Purchaser of the Minimum Shares pursuant to the Offer, Parent will
be entitled to designate up to such number of directors, rounded up to the next
whole number, on the Company Board as shall give Parent representation on the
Company Board equal to the product of the total number of directors (giving
effect to the directors designated by Parent pursuant to the Merger Agreement)
multiplied by the percentage, expressed as a decimal, that the aggregate number
of Shares beneficially owned by Purchaser following such purchase bears to the
total number of Shares then outstanding. The Company has agreed to promptly take
all actions necessary to cause Parent's designees to be elected as directors of
the Company, including, increasing the size of the Company Board and securing
the resignations of incumbent directors. The Company shall cause persons
designated by Parent to constitute the same percentage as persons designated by
Parent shall constitute of the Company Board of (i) each committee of the
Company Board, (ii) the board of directors of the Subsidiary (as defined below)
and (iii) each committee of each such board, in each case only to the extent
permitted by applicable law. The Company's obligation to appoint Parent's
designees to the Company Board is subject to compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder.
In the event that Parent's designees are elected to the Company Board,
until the Effective Time, the Company Board shall have at least two (2)
directors who are directors on the date of the Merger Agreement (such directors,
the "Independent Directors"); provided, however, that in such event if the
number of Independent Directors will be reduced below two for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there be only one remaining) shall be entitled to designate persons to fill such
vacancies, who shall be deemed to be Independent Directors for purposes of the
Merger Agreement, or, if no Independent Director then remains, the other
directors shall designate persons to fill such vacancies who shall not be
stockholders, affiliates or associates of Parent or Purchaser and such persons
shall be deemed to be Independent Directors for purposes of the Merger
Agreement. Following the election of Parent's designees to the Company Board and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate the Merger
Agreement on behalf of the Company, (ii) exercise or waive any of the Company's
rights, benefits or remedies under the Merger Agreement or (iii) take any other
action by the Company Board under or in connection with the Merger Agreement
which would adversely affect the rights of the Company's stockholders under the
Merger Agreement; provided, further, that if there will be no such directors,
such actions may be effected by the unanimous vote of the entire Company Board.
20
<PAGE> 23
Stockholders' Meeting; Proxy Statement. If required by applicable law in
order to consummate the Merger, the Company will (i) duly call, give notice of,
convene and hold a special meeting of its stockholders as promptly as
practicable following the acceptance for payment and purchase of the Minimum
Shares by Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of the Merger
Agreement and (ii) prepare and file with the Commission, subject to the prior
approval of Parent (which approval shall not be unreasonably withheld),
preliminary and final versions of a proxy statement (the "Proxy Statement") and
proxy and other filings relating to such stockholders' meeting as required by
the Exchange Act. Subject to the terms of the Merger Agreement, the Company has
agreed to include in the Proxy Statement the recommendation of the Company Board
that stockholders of the Company vote in favor of the approval of the Merger and
the adoption of the Merger Agreement.
Employee Benefits. The Merger Agreement provides that, following the
Effective Time, Parent will cause the Surviving Corporation to provide or will
directly provide to the employees of the Subsidiary and the Company who continue
to be so employed employee benefits that are substantially equivalent in the
aggregate to those provided by Parent to similarly situated employees of Parent.
In determining the level of benefits to be received by employees of the
Subsidiary or the Company, Parent will ensure that such employees are credited
for years of service with the Company or the Subsidiary, as such years of
service are currently recognized by the Company and the Subsidiary for purposes
of eligibility, vesting and benefit accrual under its employee benefit plans,
but not for purposes of benefit accrual under any defined benefit pension plan.
Neither Parent nor the Company is required to continue any existing employee
benefit plan applicable to employees of the Company or the Subsidiary following
the Effective Time, except as may be required by any applicable collective
bargaining agreement.
Options. The Merger Agreement provides that, except as limited by the
terms of the Merger Agreement, prior to consummation of the Offer or the
Effective Time or both, the Company may enter into agreements in respect of
outstanding options to purchase Shares (the "Options") pursuant to the Company's
1990 Nonqualified Performance Stock Option Plan (the "1990 Plan"), 1993 Special
Option Plan, 1995 Stock Option Plan and the 1996 Nonqualified Non-Employee
Directors Stock Option Plan (the "1996 Plan") (collectively, the "Stock Option
Plans"), providing for the payment upon surrender of each vested Option
immediately after the consummation of the Offer up to and including the
Effective Time an amount of cash per share subject to each such Option equal to
the excess, if any, of the Offer Price over the exercise price of such Option
less an amount equal to all taxes required to be withheld from such payment (the
"Spread Per Share"). Any Options not so surrendered or exercised prior to the
Effective Time shall terminate no later than the Effective Time in accordance
with the terms of the Stock Option Plans or such agreements with the optionees.
The Merger Agreement provides that the Company may accelerate the vesting of
options to purchase 28,070 Shares granted to Joseph H. Fernandez, Chairman of
the Board, President and Chief Executive Officer of the Company, under the 1990
Plan, and options to purchase an aggregate of 9,524 Shares granted to certain
non-employee directors of the Company under the 1996 Plan. The Merger Agreement
provides that, upon request of the Company following consummation of the Offer,
Parent shall advance to the Company sufficient funds to enable the Company to
pay the aggregate Spread Per Share.
Interim Operations; Covenants. Pursuant to the Merger Agreement, the
Company has agreed that, except (i) as expressly contemplated by the Merger
Agreement, (ii) as set forth in the applicable schedule thereto or (iii) as
consented to or approved in writing by Parent (such consent not to be
unreasonably withheld, except with respect to items (a), b(i) and (b)(v) below,
as to which consent may be withheld at any time and for any reason), the
business of the Company and the Buttrey Food and Drug Company, a Delaware
corporation and a wholly owned subsidiary of the
21
<PAGE> 24
Company (the "Subsidiary"), will be conducted only in the ordinary course
consistent in all material respects with past practice. The Merger Agreement
further provides that prior to the Effective Time:
(a) each of the Company and the Subsidiary shall not (i) amend its
Certificate of Incorporation or Bylaws, (ii) change the number of
authorized, issued or outstanding shares of its capital stock, except upon
the exercise of certain stock options outstanding on the date of the Merger
Agreement, (iii) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of shares of
its capital stock, (iv) make any direct or indirect redemption, retirement,
purchase or other acquisition of any of its capital stock (except for
repurchases of Shares from employees pursuant to existing stock
subscription agreements between the Company and certain of its employees)
or (v) split, combine or reclassify its outstanding shares of capital
stock;
(b) neither the Company nor the Subsidiary shall, directly or
indirectly, (i) issue, grant or sell or agree or propose to issue, grant or
sell any shares of, or rights of any kind to acquire any shares of the
capital stock of the Company or the Subsidiary, except that the Company may
issue Shares upon the exercise of Options and warrants outstanding on the
date hereof, (ii) other than in the ordinary course of business, incur any
indebtedness for borrowed money, (iii) waive, release, grant or transfer
any intangible rights of material value, except in the ordinary course of
business, (iv) transfer, lease, license, sell, mortgage, pledge, dispose of
or encumber any personal property of the Company or the Subsidiary other
than in the ordinary course of business and consistent with past practice
or (v) transfer, lease, license, sell, mortgage, pledge, dispose of or
encumber any real property of the Company or the Subsidiary;
(c) the Company and the Subsidiary shall use their reasonable best
efforts to preserve intact the business organization of the Company and the
Subsidiary, to keep available the services of its operating personnel, to
preserve the goodwill of those having business relationships with each of
them and to carry on their respective businesses in substantially the same
manner as carried on heretofore;
(d) neither the Company nor the Subsidiary will, directly or
indirectly, (i) increase the compensation payable or to become payable by
it to any of its employees, officers, directors, agents or consultants or
under any bonus, insurance, pension or other employee benefit plan or
arrangement made to, for or with any such persons (other than as provided
in certain employment agreements and welfare and benefit plans as in effect
on January 19, 1998, except in accordance with certain collective
bargaining agreements, and except for cost of living adjustments and other
increases in the ordinary course consistent with past practice or other
increases which are reasonably necessary for the operation of the business
of the Company and the Subsidiary), (ii) adopt, or make any payment or
amend any provision, other than as required by existing plans or agreements
as in effect on January 19, 1998 and provisions and actions under existing
stock option plans authorized in connection with the Offer or the Merger,
any bonus, profit sharing, pension, retirement, deferred compensation,
employment or other payment or employee compensation plan, agreement or
arrangement for the benefit of any employee, officer, director, agent or
consultant of the Company or the Subsidiary or modify the terms of any
Option, except as described above, (iii) grant any stock appreciation
rights, (iv) enter into or amend in any respect any employment agreement,
(v) make any loan or advance to, or make any change in its existing
borrowing or lending arrangements for or on behalf of or enter into any
written contract, lease or commitment with, any affiliate, officer or
director of the Company or the Subsidiary (pursuant to an employee benefit
plan or otherwise), (vi) enter into any collective bargaining agreement or
(vii) pay or make any accrual or arrangement for payment of any pension,
retirement allowance or other employee benefit pursuant to any existing
plan, agreement or arrangement to any employee, officer, director, agent or
consultant, or pay or agree to pay or make any accrual or arrangement for
payment to any employee, officer, director, agent or consultant of the
Company or the Subsidiary of any amount relating to unused vacation days,
except payments and accruals made in the ordinary
22
<PAGE> 25
course consistent with past practice or as required by the terms of any
such plan or collective bargaining agreement;
(e) neither the Company nor the Subsidiary shall, directly or
indirectly, assume, guarantee, endorse or otherwise become responsible for
the obligations of any other individual, firm or corporation other than the
Subsidiary, or make any loans or advance to any individual, firm or
corporation except in the ordinary course of its business and consistent
with past practice;
(f) except (i) as set forth on the applicable schedule to the Merger
Agreement, (ii) for replacement of equipment in the ordinary course of
business and (iii) for expenditures not in excess of $100,000 per month
(with unexpended amounts to carry forward to future months), neither the
Company nor the Subsidiary shall make any investment of a capital nature
either by purchase of stock or securities, contributions to capital,
property transfers or otherwise, or by the purchase of any property or
assets of any other individual, firm or corporation; provided, that the
Company will confer with Parent if the amount of any capital expenditure
would exceed $25,000;
(g) neither the Company nor the Subsidiary shall enter into, modify or
amend in any material respect or take any action to terminate their
respective material contracts;
(h) neither the Company nor the Subsidiary shall take any action,
other than reasonable and usual actions in the ordinary course of business
and consistent with past practice, with respect to accounting policies or
procedures, except for changes required by United States generally accepted
accounting principles;
(i) neither the Company nor the Subsidiary shall, without the consent
of Parent, which consent shall not be unreasonably withheld, make any
material tax election, change any material tax election already made, adopt
any material tax accounting method, change any material tax accounting
method unless required by United States generally accepted accounting
principles, enter into any closing agreement, settle any tax claim or
assessment or consent to any tax claim or assessment or any waiver of the
statute of limitations for any such claim or assessment;
(j) neither the Company nor the Subsidiary shall take, or agree to
commit to take, any action that (i) would or is reasonably likely to result
in any of the conditions to the Offer or any of the conditions to the
Merger not being satisfied, (ii) would make any representation or warranty
of the Company contained in the Merger Agreement inaccurate in any material
respect at, or as of any time prior to, consummation of the Offer (provided
that any violation of this covenant will not give rise to any claim for
damage, but may be the subject of a claim for equitable relief), or (iii)
would materially impair the ability of the Company to consummate the Offer
or the Merger in accordance with the terms thereof or materially delay such
consummation, and the Company and the Subsidiary will promptly advise
Parent in writing of any material adverse effect on the business,
operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets or liabilities of
the Company and the Subsidiary, taken as a whole, or any breach of the
Company's representations or warranties, or any material breach of a
covenant contained in the Merger Agreement of which the Company or the
Subsidiary has knowledge;
(k) neither the Company nor the Subsidiary shall adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or
the Subsidiary (other than the Merger);
(l) neither the Company nor the Subsidiary shall pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practice, of claims, liabilities or obligations (i) reflected or
reserved against in, or contemplated by, the financial statements (or the
notes thereto) included in all forms, reports, schedules, statements and
other documents required to be filed by the
23
<PAGE> 26
Company since January 1, 1995 under the Exchange Act or the Securities Act
or (ii) incurred in the ordinary course of business since the date of such
financial statements;
(m) neither the Company nor the Subsidiary shall permit any insurance
policy naming it as a beneficiary or a loss payable payee to be cancelled
or terminated without notice to Parent, except in the ordinary course of
business and consistent with past practice; and
(n) neither the Company nor the Subsidiary shall enter into an
agreement, commitment or arrangement to do any of the foregoing or
authorize, recommend, propose or announce an intention to do any of the
foregoing.
Parent and the Company have further agreed that, with the consent of
Parent, the Company may purchase certain software and services required by the
Company to address the "year 2000" problem with respect to the information
services systems of the Company. Alternatively, at the election of Parent,
Parent may agree to provide such services to the Company pursuant to a services
agreement in form and substance reasonably satisfactory to Parent and the
Company.
Negotiations. Pursuant to the Merger Agreement, the Company has agreed to
notify Parent immediately of the existence of any proposal, discussion,
negotiation or inquiry received by the Company, in each case in connection with
the occurrence of any of the following events: (i) the acquisition of the
Company by merger, tender offer, exchange offer, consolidation or otherwise by
any person other than Parent, Purchaser or any affiliate of Parent or Purchaser
(a "Third Party"); (ii) the acquisition by any Third Party of all or
substantially all of the assets of the Company and the Subsidiary, taken as a
whole; (iii) the acquisition by a third party of 50% or more of the outstanding
Shares; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (v) the repurchase by
the Company or the Subsidiary of 50% or more of the outstanding Shares (any of
the foregoing, a "Third Party Transaction"). The Company shall immediately
communicate to Parent the terms of any such proposal, discussion, negotiation or
inquiry which it may receive and the identity of the party making such proposal
or inquiry or engaging in such discussion or negotiation. The Company shall
promptly provide to Parent any non-public information concerning the Company
provided to any other party which was not previously provided to Parent. In
addition, the Company has agreed that it will immediately cease any existing
activities, discussions or negotiations with any parties conducted prior to the
date of the Merger Agreement with respect to any Third Party Transaction.
Pursuant to the Merger Agreement, neither the Company, nor the Subsidiary, nor
any affiliate of either of them, nor the directors, officers, employees,
representatives or agents of any of them, may, directly or indirectly, solicit,
initiate, encourage or participate in discussions or negotiations with or the
submission of any offer or proposal by or provide any information to, any
corporation, partnership, person or other entity or group (other than Purchaser
or Parent or any officer or other authorized representative of Purchaser or
Parent) concerning any Third Party Transaction or proposal related thereto or
participate in any negotiation regarding any Third Party Transaction or
otherwise cooperate in any way with or encourage any effort or attempt by any
other person to effectuate a Third Party Transaction; except that the Company or
the Company Board is not prohibited from (i) disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or (ii) from making
such disclosure to the Company's stockholders which, in the judgment of the
Company Board after receipt of advice from counsel may be required under
applicable law. In addition, except as specified below, the Company may not
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer or the Merger or approve or recommend, or propose to approve or
recommend, any Third Party Transaction or proposal relating thereto, or enter
into any agreement with respect thereto. Notwithstanding the foregoing, prior to
the acceptance for payment of Shares pursuant to the Offer, the Company may (x)
furnish information and access to any corporation, partnership, person or other
entity or group pursuant to appropriate confidentiality agreements in response
to unsolicited written requests therefor, and (y) negotiate and participate in
discussions and negotiations with such entity or group concerning a Third Party
Transaction or proposal related thereto if (with respect to clause (y) only) the
Company Board has determined in its good faith judgement, based
24
<PAGE> 27
as to legal matters on the written advice of outside legal counsel (i) that the
exercise of the directors' fiduciary duties requires the taking of such action
and (ii) after consultation with all of its principal advisors in connection
with the transactions contemplated in the Merger Agreement, that such Third
Party Transaction or proposal related thereto is a bona fide written proposal
that would, upon consummation thereof, result in a transaction more favorable to
the stockholders of the Company than the transactions contemplated in the Merger
Agreement and in the good faith reasonable judgment of the Company Board (based
in part upon the advice of all of its principal advisors in connection with the
transactions contemplated by the Merger Agreement) is proposed by a corporation,
partnership, person or other entity or group with sufficient financial resources
available to it or available from third parties to consummate such transaction
(a proposal that satisfies clauses (i) and (ii) being referred to as a "Superior
Proposal"). Moreover, prior to the time of acceptance for payment of Shares, the
Company Board may withdraw or modify its approval or recommendation of the
Offer, the Merger Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal, in
each case at any time after the fifth business day following Parent's receipt of
written notice advising Parent that the Company Board has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal, and identifying the person making such Superior Proposal; provided,
however, that the Company may not enter into an agreement with respect to a
Superior Proposal until the Company has furnished Parent with written notice not
later than 12:00 noon (Boise, Idaho time) five (5) business days in advance of
any date on which it intends to enter into such agreement and has caused its
financial and legal advisors to negotiate with Parent to make such adjustments
to the terms and conditions of the Merger Agreement as would enable the Company
to proceed with the transactions contemplated by the Merger Agreement on such
adjusted terms. In order to permit the Company to enter into an agreement with
respect to a Superior Proposal that the Company Board has determined is more
favorable to the stockholders of the Company than the Offer and the Merger, the
Company may terminate the Merger Agreement, provided that (i) the Company has
complied with all provisions with respect to a Superior Proposal set forth
above; and (ii) the Company makes simultaneous payment to Parent of the
Termination Fee (as defined below).
Indemnification. The Merger Agreement provides that, from and after the
Effective Time, in addition to any indemnification available to any officer or
director by the Company or the Subsidiary, Parent and the Surviving Corporation
shall (in each case to the fullest extent permitted by applicable law)
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer, director, or employee of the Company or the Subsidiary (the
"Indemnified Parties") against any and all losses, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement of, or in
connection with, any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of the Company or the
Subsidiary at or prior to the Effective Time and whether asserted or claimed
prior to, or at or within five (5) years after the Effective Time, and
including, without limitation, any which arise out of or relate to the
transactions contemplated by the Merger Agreement (collectively, the
"Indemnified Liabilities") (and Parent and the Surviving Corporation must pay
reasonable expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the fullest extent permitted by law);
provided, however, that neither Parent nor Surviving Corporation is required to
indemnify any Indemnified Party in connection with any proceeding (or portion
thereof) involving any claim, action, suit, proceeding or investigation
initiated by such Indemnified Party unless the initiation of such proceeding (or
portion thereof) was authorized by the Board of Directors of Parent or unless
such proceeding is brought by an Indemnified Party to enforce such Indemnified
Party's indemnification rights under the Merger Agreement. Parent and Surviving
Corporation may not take, or cause to be taken, at any time, any action to
modify or terminate the indemnification arrangements or limitation of liability
provisions contained in the Certificate of Incorporation or Bylaws of either the
Company or the Subsidiary, or in any indemnification agreement entered into by
either the Company or the Subsidiary, in a manner that would adversely
25
<PAGE> 28
affect the Indemnified Parties. Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Party (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to Parent; (ii) after the Effective Time,
Parent or the Surviving Corporation shall pay all reasonable fees and expenses
of counsel for the Indemnified Parties promptly as statements therefor are
received; provided, that Parent is not obligated to pay for more than one
counsel for all Indemnified Parties with respect to the same matter unless (A)
Parent and an Indemnified Party shall have mutually agreed to the contrary; or
(B) the representation of one or more such Indemnified Party and any other
Indemnified Party pursuant to the preceding sentence in any such proceeding by
the same counsel would be inappropriate due to actual or potential differing
interests between such Indemnified Parties; and (iii) after the Effective Time,
Parent and the Surviving Corporation shall use all reasonable efforts to assist
in the vigorous defense of any such matter, provided that Parent and the
Surviving Corporation will not be liable for any settlement of any claim
effected without their written consent, which consent, however, may not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under the Merger Agreement, upon learning of any such claim, action, suit,
proceeding or investigation, must notify Parent, and the Surviving Corporation
(but the failure so to notify Parent and the Surviving Corporation shall not
relieve either such corporation from any liability which it may have under the
Merger Agreement except to the extent such failure materially prejudices Parent
or the Surviving Corporation).
Termination. The Merger Agreement may be terminated and the transactions
contemplated therein abandoned at any time prior to the Effective Time, whether
before or after approval of the stockholders of the Company,
(a) by the mutual written consent of Parent and the Company, pursuant
to action by their respective Boards of Directors;
(b) by Parent if, without any material breach by Parent or Purchaser
of their obligations under the Merger Agreement, the purchase of Shares
pursuant to the Offer will not have occurred within 30 days after the later
of (i) the expiration or termination of the waiting period under the HSR
Act and (ii) the lifting, rescission or termination of any order, decree,
ruling or other action of or agreement with a Governmental Authority
theretofore in effect that has the effect of prohibiting, enjoining,
restraining or delaying the consummation of the Offer or the Merger or
imposes material limitations on the ability of Purchaser to acquire Shares,
provided that Parent may not terminate the Merger Agreement on the
foregoing basis unless (i) it has reached an agreement authorizing
consummation of the Offer and the Merger with the FTC or DOJ and any other
Governmental Authority that may have asserted that consummation of the
Offer would violate the Antitrust Laws and (ii) any injunction or order
prohibiting or limiting consummation of the Offer or the Merger (whether or
not issued or entered on antitrust grounds) has become final and
non-appealable;
(c) by the Company on or after July 19, 1998, if (i) the Company is
not then in material breach of any of its obligations hereunder; (ii) the
Company gives written notice to Parent (the "Termination Notice") of its
intention to terminate the Merger Agreement; (iii) Parent has not accepted
a majority of the Shares for payment pursuant to the terms of the Offer;
and (iv) Parent does not, within five (5) business days of receipt of the
Company's Termination Notice, give the Company a notice of its intention to
continue the Merger Agreement in effect (a "No Termination Notice"). A No
Termination Notice may not be given by Parent unless the waiting period
under the HSR Act has expired or been terminated and all other obligations
under the Antitrust Laws necessary to consummate the Offer have been
satisfied, including reaching an agreement, if necessary, authorizing
consummation of the Offer and the Merger with the FTC or DOJ and any other
Governmental Authority that may have asserted that consummation of the
Offer would violate Antitrust Laws. A No Termination Notice shall not be
effective (i) at any time when Parent is not using best efforts to lift,
rescind or terminate a temporary, preliminary or appealable injunction or
order (which does not relate to the Antitrust
26
<PAGE> 29
Laws) or (ii) if such notice does not contain a binding, unconditional
undertaking by Parent to accept Shares pursuant to the terms of the Offer
at the earliest practicable date after such injunction or order has been
lifted, rescinded or terminated, without regard to the satisfaction of any
other conditions to the Offer or any termination event set forth in the
Merger Agreement.
(d) by the Company, by action of the Company Board, if (i) Parent or
Purchaser shall have failed to comply with any of the covenants or
agreements contained in the Merger Agreement to be complied with or
performed by Purchaser or Parent at or prior to such date of termination,
which failure is material in the context of the transactions contemplated
by the Merger Agreement and is not reasonably capable of being cured or has
not been cured within ten (10) business days after the giving of written
notice to Parent or Purchaser, or (ii) any representation or warranty of
Parent or Purchaser in the Merger Agreement which is qualified as to
materiality shall not be true and correct, or any such representation or
warranty that is not so qualified shall not be true and correct in any
material respect, and in either event is not reasonably capable of being
cured by Parent or Purchaser, or has not been cured as the case may be,
within ten (10) business days of the notice, in each case as if such
representation or warranty was made as of such time on or after January 19,
1998 (unless such representation speaks as of an earlier date, in which
case it shall be deemed to have been made as of such earlier date);
(e) by the Company, prior to the purchase by Purchaser of at least the
Minimum Shares pursuant to the Offer, in order to permit the Company to
enter into an agreement with respect to a Superior Proposal that the
Company Board has determined is more favorable to the stockholders of the
Company than the Offer and the Merger, provided that (i) the Company has
complied with all provisions of the Merger Agreement with regard to such
Superior Proposal, including the notice provisions and (ii) the Company
makes simultaneous payment to Parent of the Termination Fee;
(f) by Parent, at any time prior to the purchase of Shares pursuant to
the Offer, if (i) the Company Board shall have withdrawn, modified, or
changed its recommendation or approval in respect of the Merger Agreement
or the Offer in a manner adverse to Purchaser, (ii) the Company Board shall
have recommended to the stockholders of the Company any proposal relating
to a Third Party Transaction, (iii) the Company shall have exercised a
right with respect to a Third Party Transaction and has, directly or
through its representatives, continued discussions with any Third Party
concerning such a proposal relating to a Third Party Transaction for more
than ten (10) business days after the date of receipt of such proposal or
(iv) a proposal relating to a Third Party Transaction that is publicly
disclosed shall have been commenced, publicly proposed or communicated to
the Company which contains a proposal as to price (without regard to
whether such proposal specifies a specific price or a range of potential
prices) and the Company will not have rejected such proposal within ten
(10) business days of its receipt or, if sooner, the date its existence
first becomes publicly disclosed. A right of termination will not arise
solely as a result of the Company or the Company Board issuing to its
stockholders a communication that contains only the statements permitted by
Rule 14d-9e promulgated under the Exchange Act and within five (5) business
days of issuing such communication the Company publicly reconfirms its
approval and recommendation of the Offer;
(g) by the Company, by action of the Company Board, if Purchaser shall
have failed to commence the Offer on or before January 26, 1998; provided,
that the Company may not so terminate the Merger Agreement if the Company
is at such time in material breach of its obligations under the Merger
Agreement (Purchaser believes that it has satisfied its obligation to
commence the Offer, and, accordingly, that the Company may not terminate
the Merger Agreement on this basis);
(h) by Parent or the Company if any Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, final non-appealable injunction
27
<PAGE> 30
or other final non-appealable order which is in effect and has the effect
of making the acquisition of Shares by Purchaser illegal or otherwise
prohibiting consummation of the transactions contemplated by the Merger
Agreement (provided, however, that this termination right does not modify
Parent's obligation to take, or cause to be taken, all action, and to do or
cause to be done, all things necessary or required by the FTC or the DOJ in
connection with the expiration or termination of the waiting period under
the HSR Act, or by any Governmental Authority, under the Antitrust Laws or
in a suit by a private party under the Antitrust Laws as a result of the
transaction contemplated by the Merger Agreement, except that either Parent
or Purchaser may institute, prosecute or defend a suit or claim in good
faith with respect to any suit, objection, requirement or other action by
the FTC, the DOJ, any other Governmental Authority or any private party
with respect to the transactions contemplated by the Merger Agreement).
(i) by Parent, by action of its Board of Directors, if prior to the
purchase of Shares pursuant to the Offer, (i) the Company shall have failed
to comply with any of the covenants or agreements contained in the Merger
Agreement to be complied with or performed by the Company prior to the date
of such termination, which failure singly or in the aggregate would have or
is reasonably likely to have a material adverse effect on the business,
operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets or liabilities of
the Company and the Subsidiary taken as a whole and is not reasonably
capable of being cured or has not been cured within ten (10) business days
after the giving of written notice to the Company or (ii) (A) any of the
representations and warranties made by the Company in the Merger Agreement
and relating to capital stock, options or other rights to acquire Shares,
authority relative to the Merger Agreement or the vote required to approve
the Merger and the Merger Agreement shall not be true and correct in all
material respects or (B) any other representations or warranties of the
Company in the Merger Agreement shall not be true and correct which
inaccuracy singly or in the aggregate would have or is reasonably likely to
have a material adverse effect on the business, operations, properties
(including intangible properties), condition (financial or otherwise),
results of operations, assets or liabilities of the Company and the
Subsidiary taken as a whole, in either case which is not reasonably capable
of being cured by the Company or has not been cured, as the case may be,
within ten (10) business days after the giving of written notice by Parent
to the Company;
(j) by Parent, prior to the purchase of Shares pursuant to the Offer,
if, since January 19, 1998, there shall have been any material adverse
change in the business, operations, properties (including intangible
properties), condition (financial or otherwise), results of operations,
assets or liabilities of the Company and the Subsidiary, taken as a whole,
excluding any such change occurring at any time after the date of the
Merger Agreement caused by (a) a general change in the economy (including
any such change caused by a general change in the markets served by the
Company and the Subsidiary) or (b) the institution or threat of any suit,
arbitration, mediation, action, proceeding, complaint or grievance which
challenges any of the transactions contemplated by the Merger Agreement or
any action required in connection with the resolution of matters relating
to the Antitrust Laws and excluding any such change occurring on or after
April 20, 1998 (the 90th day following the execution of the Merger
Agreement) caused by the voluntary termination of employment by employees
of the Company or the Subsidiary or a closure of, or any labor disruption,
slowdown or strike relating to, the Company's principal distribution center
located in Great Falls, Montana; and
(k) by the Company, beginning on April 20, 1998 (which is 90 days
after the date of the Merger Agreement) and subject to Purchaser's rights
described below, if, since January 19, 1998, there has been a material
adverse change in the business, operations, properties (including
intangible properties), condition (financial or otherwise), results of
operations, assets or liabilities of the Company and the Subsidiary, taken
as a whole. In order to exercise the foregoing right to terminate the
Merger Agreement (the "Company MAC Right"), the
28
<PAGE> 31
Company must first deliver to Parent a certificate (the "MAC Certificate")
executed by the Company's Chief Executive Officer or Chief Financial
Officer describing in detail the conditions, events and occurrences causing
or contributing to the material adverse change (the "Termination
Conditions") and asserting the Company's intention to terminate the Merger
Agreement. Parent is not required to respond to a MAC Certificate until the
No MAC Deadline. As used in the Merger Agreement, the "No MAC Deadline"
means the later of April 21, 1998 (the 91st day after the date of the
Merger Agreement) or five (5) business days after Parent's receipt of the
MAC Certificate. If Parent confirms in writing (a "No MAC Certificate") on
or prior to the No MAC Deadline that it is electing not to have the Company
terminate the Merger Agreement with respect to the Termination Conditions
set forth in the MAC Certificate, the Company shall not be entitled to so
terminate the Merger Agreement. If Parent exercises this right to prevent
the Company's termination of the Merger Agreement, Parent will not
thereafter be entitled, as a result of any of the conditions, events or
occurrences described in such MAC Certificate, to assert that a material
adverse change has occurred, or that the condition of the Offer relating to
material adverse changes has not been satisfied, or to assert that a
representation, warranty or covenant of the Company under the Merger
Agreement has been breached unless the adverse impact on the business,
operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets or liabilities of
the Company or the Subsidiary, taken as a whole, of such conditions, events
or occurrences described in the MAC Certificate increases substantially
after the date of such MAC Certificate. In determining whether the adverse
impact of a condition, event or occurrence described in any MAC Certificate
on the Company and the Subsidiary taken as a whole has increased
substantially, the adverse impact resulting from the passage of time and
from the impact of the condition, event or occurrence at up to the same
level and in substantially the same manner as described in such MAC
Certificate will not be taken into account. The Company may present a new
MAC Certificate to Parent at any time (i) if a material adverse change has
occurred as a result of a condition, event or occurrence not described in a
prior MAC Certificate or (ii) if the adverse impact of any condition, event
or occurrence described in the prior MAC Certificate has increased
substantially after the date of the prior MAC Certificate. If the Company
presents a new MAC Certificate the procedures and effect on Parent's rights
described above shall apply with respect to the conditions, events or
occurrences described in the new MAC Certificate. If the Company delivers a
MAC Certificate to Parent and Parent does not deliver a No MAC Certificate
to the Company on or prior to the No MAC Deadline, the Merger Agreement
shall terminate on the day immediately following the No MAC Deadline.
Subject to the terms and conditions of the Merger Agreement, in the event
of termination and abandonment of the Merger Agreement, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
thereof pursuant to which such termination is made, and the Merger Agreement
shall forthwith become null and void, and no party thereto (or any of its
directors or officers) will have any liability or further obligation to any
other party thereto except with respect to the obligations regarding
confidentiality, payment of expenses and fees, and payment by the Company of the
Termination Fee (as defined below), if applicable, and except that termination
of the Merger Agreement will not relieve any party from liability for any
willful breach of the Merger Agreement prior to such termination or abandonment.
Termination Fee. If (A) the Company terminates the Merger Agreement, prior
to the purchase by Purchaser of at least the Minimum Shares pursuant to the
Offer, in order to permit the Company to enter into an agreement with respect to
a Superior Proposal, or (B) Parent, at any time prior to the purchase by
Purchaser of Shares pursuant to the Offer, terminates the Merger Agreement on
the basis that (i) the Company Board has withdrawn, modified, or changed its
recommendation or approval of the Merger Agreement or the Offer in a manner
adverse to Purchaser, (ii) the Company Board has recommended to the stockholders
of the Company any proposal relating to a Third Party Transaction, (iii) the
Company has exercised a right with respect to a Third Party Transaction and has,
directly or through its representatives, continued discussions with any Third
Party concerning
29
<PAGE> 32
such a proposal relating to a Third Party Transaction for more than ten (10)
business days after the date of receipt of such proposal or (iv) a proposal
relating to a Third Party Transaction is publicly communicated to the Company
which contains a proposal as to price (without regard to whether such proposal
specifies a specific price or a range of potential prices) and the Company fails
to reject such proposal within ten (10) business days of its receipt or, if
sooner, the date its existence first becomes publicly communicated, then the
Company is required to pay to Parent simultaneously with such termination, in
the case of clause (A) of this sentence, and promptly, but in no event later
than two (2) business days thereafter, in the case of clause (B) of this
sentence, a termination fee (the "Termination Fee") of 3% of (x) the product of
$15.50 and the number of Shares outstanding on the date of termination, plus (y)
an amount (which shall not in any event exceed $1 million) equal to the actual
and reasonable documented out-of-pocket expenses incurred by Parent and
Purchaser in connection with the Offer, the Merger and the Merger Agreement. The
Termination Fee shall be payable by wire transfer to such account as Parent may
designate in writing to the Company.
TENDER AND OPTION AGREEMENT
The following is a summary of certain provisions of the Tender Agreement.
This summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Tender Agreement, a copy of which is filed
with the Commission as Exhibit (c)(2) to the Schedule 14D-1 and is incorporated
herein by reference. Capitalized terms not otherwise defined below shall have
the meanings set forth in the Tender Agreement. The Tender Agreement may be
examined and copies may be obtained at the places and in the manner set forth in
Section 9 of this Offer to Purchase.
Pursuant to the Tender Agreement, the Major Stockholder has agreed (i) to
tender all Shares owned by it pursuant to the Offer no later than the fifth
business day following the commencement of the Offer, or, if the Major
Stockholder has not received this Offer to Purchase, the related Letter of
Transmittal and the other tender offer documents distributed herewith and
therewith by such time, within two (2) business days following the receipt of
such documents, and (ii) not to withdraw any Shares so tendered (except in the
event that the Stock Option (as defined below) is exercised).
The Major Stockholder has also agreed in the Tender Agreement that, during
the term thereof, at any meeting (whether annual or special and whether or not
an adjourned or postponed meeting) of the holders of Shares, however called, or
in connection with any written consent of the holders of Shares, the Major
Stockholder will appear at the meeting or otherwise cause its Shares to be
counted as present thereat for purposes of establishing a quorum and vote or
consent (or cause to be voted or consented) the Shares (i) in favor of the
Merger, and (ii) against any action or agreement that would impede, interfere
with or prevent the Merger, including any other extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the
Company and any third party or any other proposal of a third party to acquire
the Company. The Major Stockholder has also granted to Parent an irrevocable
proxy to vote its Shares in connection with any meeting of the Company's
stockholders, in the manner provided in clauses (i) and (ii) in the immediately
preceding sentence.
The Major Stockholder has further agreed in the Tender Agreement that,
during the term thereof, it will not (i) except pursuant to the Offer or the
Stock Option, offer to sell, sell, pledge or otherwise dispose of or transfer
any interest in or encumber with any lien any of its Shares; (ii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of its Shares or any interest therein; (iii) except for
the proxy granted to Parent, grant any proxy, power-of-attorney or other
authorization or consent with respect to its Shares; (iv) deposit any of its
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares; or (v) take any other action with respect to its Shares
that would, in any way, restrict, limit or interfere with the performance of its
obligations under the Tender Agreement.
30
<PAGE> 33
In the Tender Agreement, the Major Stockholder has granted to Parent an
irrevocable option (the "Stock Option") to purchase its Shares at a purchase
price of $15.50 per Share. The Stock Option is exercisable, in whole only, if,
on or after January 19, 1998, any third party (i) commences or announces an
intention to commence a bona fide tender offer or exchange offer, the
consummation of which would result in such third party beneficially owning 50%
or more of the then outstanding voting equity of the Company; (ii) acquires
beneficial ownership of Shares that, when aggregated with any Shares already
owned by such third party, would result in such third party beneficially owning
25% or more of the outstanding voting equity of the Company; provided that the
foregoing shall not apply to any third party that beneficially owns more than
25% of the outstanding voting equity of the Company as of January 19, 1998 and
that does not thereafter increase such ownership percentage by more than an
additional 1% of the outstanding voting equity of the Company; (iii) acquires
assets constituting 25% or more of the total assets or earning power of the
Company taken as a whole; or (iv) enters into an agreement with the Company that
contemplates the acquisition of (x) assets constituting 25% or more of the total
assets or earning power of the Company taken as a whole or (y) beneficial
ownership of 25% or more of the outstanding voting equity of the Company. The
Stock Option is also exercisable, in whole only, on or after January 19, 1998,
if (i) the Company Board withdraws, modifies or changes its recommendation or
approval in respect of the Merger Agreement or the Offer in a manner adverse to
Purchaser or recommends to the stockholders of the Company any proposal relating
to a Third Party Transaction; (ii) the Company, directly or through its
representatives, continues discussions with any third party concerning a Third
Party Transaction for more than ten (10) business days after the date of receipt
of such third party's proposal relating thereto; or (iii) the Company fails to
reject a publicly communicated proposal relating to a Third Party Transaction
and the possible price or prices to be paid pursuant thereto within ten (10)
days of the earlier of the receipt or the first public disclosure of such
proposal.
Pursuant to the Tender Agreement, the Major Stockholder has agreed not to,
and to use its best efforts to ensure that its officers, directors, employees,
investment bankers, attorneys, accountants and other agents do not, directly or
indirectly: (i) initiate, solicit or encourage, or take any action to facilitate
the making of, any offer or proposal that constitutes or is reasonably likely to
lead to a Third Party Transaction; (ii) enter into any agreement with respect to
any Third Party Transaction; or (iii) in the event of an unsolicited written
proposal in respect of a Third Party Transaction, engage in any negotiations or
discussions with, or provide information or data to, any person (other than
Parent, Purchaser, any of their affiliates or representatives and except for
information that has been previously publicly disseminated by the Company)
relating to any Third Party Transaction.
The Tender Agreement, and all rights and obligations of the parties
thereunder, terminates upon the earliest of (i) the date the Merger Agreement is
terminated in accordance with its terms or the date the Offer is terminated by
Parent or Purchaser as a result of any failure of a condition to the Offer;
provided, however, that the provisions of the Tender Agreement providing for the
Stock Option shall, under certain circumstances, not terminate until at least
sixty (60) days thereafter; (ii) the purchase of all of the Major Stockholder's
Shares pursuant to the Offer or pursuant to the Stock Option; or (iii) July 19,
1998 (which date may be extended, under certain circumstances, to the date of
termination of the Merger Agreement).
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Confidentiality Agreement, a
copy of which is filed with the Commission as Exhibit (c)(3) to the Schedule
14D-1 and is incorporated herein by reference. Capitalized terms not otherwise
defined below shall have the meanings set forth in the Confidentiality
Agreement. The Confidentiality Agreement may be examined and copies may be
obtained at the places and in the manner set forth in Section 9 of this Offer to
Purchase.
31
<PAGE> 34
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent has agreed, subject to certain exceptions, to
keep confidential all nonpublic, confidential or proprietary information
concerning the Company which is furnished to Parent by or on behalf of the
Company (the "Confidential Information"), and to use the Confidential
Information solely for the purpose of evaluating a possible transaction
involving the Company and Parent and not in any way detrimental to the Company.
Parent has also agreed in the Confidentiality Agreement that for a period
of two years from the date thereof, unless and until it receives the prior
written invitation or approval of a majority of the Company Board, neither it
nor any of its affiliates will, among other things, directly or indirectly,
alone or with others (a) negotiate with or provide any information to any party
with respect to, or make any statement or proposal to the Company Board, to any
of its agents or to any stockholder of the Company with respect to, or make any
public announcement or proposal or offer whatsoever (including, but not limited
to any "solicitation" of "proxies" as such terms are defined or used in
Regulation 14A of the Exchange Act) with respect to, or otherwise solicit, seek
or offer to effect (i) any form of business combination or transaction involving
the Company or any affiliate thereof, including, without limitation, a merger,
tender or exchange offer or liquidation of the Company's assets, (ii) any form
of restructuring, recapitalization or similar transaction with respect to the
Company or any affiliate thereof, (iii) any purchase of any securities or
assets, or rights to acquire any securities or assets, of the Company, (iv) any
proposal to seek representation on the Company Board or otherwise to seek to
control or influence the Company Board or the management or policies of the
Company, (v) any request or proposal to waive, terminate or amend the provisions
of the Confidentiality Agreement, or (vi) any proposal or other statement
inconsistent with the terms of the Confidentiality Agreement, (b) instigate,
encourage or assist any third party to do any of the foregoing, or (c) become a
beneficial owner of any securities of the Company (other than through purchases
by persons affiliated with Parent for investment in open market transactions not
to exceed 1.0% of the Shares).
Parent has further agreed in the Confidentiality Agreement that, for a
period of two years from the date of the Confidentiality Agreement, unless
Parent receives the prior written consent of the Company, Parent will not,
directly or indirectly, solicit any management employee of the Company for
employment and will not initiate, participate in or contribute to any
interference with the Company's employment relationship with any such person;
provided, however, that nothing in the Confidentiality Agreement shall (i)
restrict or preclude Parent's right to make generalized searches for employees
by use of advertisements in the media (including without limitation trade media)
or by engaging search firms which are not targeted or focused on employees of
the Company or (ii) prohibit Parent from the hiring of any employee of the
Company who initially contacts Parent without prior contact by Parent or anyone
acting on Parent's behalf.
OTHER
Pursuant to a letter dated January 19, 1998 (the "Letter Agreement"),
Parent has agreed to provide severance and retention benefits to certain
employees of the Company, including certain of the Company's executive officers,
upon consummation of the Offer and the Merger. Pursuant to the Letter Agreement,
Parent will provide certain non-union employees, including executive officers,
who are terminated, other than for cause, within six months of the Effective
Time, a cash severance payment of 1 1/2 weeks of pay (up to 40 hours per week
for non-exempt employees) for each full year of service with the Company, with a
minimum payment of $3,000 for employees with at least one full year of service
and $1,000 for an employee with less than one full year of service. Executive
officers with current employment or severance agreements may elect to receive
the payment specified in the Letter Agreement or the payment provided for in
such employment or severance agreements, but not both. Parent has also agreed to
pay COBRA premiums for medical benefits for three months following the last day
of employment, and to offer similar severance and COBRA payments to certain
union employees.
32
<PAGE> 35
The Letter Agreement further provides that the Company may enter into
certain retention agreements (the "Retention Agreements") with the executive
officers of the Company (with the exception of Mr. Fernandez), and certain other
employees of the Company. As set forth in the Letter Agreement, the Retention
Agreements will provide that each such executive officer and employee will
receive a specified retention incentive bonus if (i) such executive officer or
employee remains employed with the Company until 60 days after consummation of
the Offer, (ii) the employment of such executive officer or employee is
terminated by the Company prior to the expiration of 60 days after the
consummation of the Offer, unless such termination is "for cause" (as
customarily defined), or (iii) if such executive officer or employee terminates
his employment prior to the expiration of 60 days after the consummation of the
Offer, so long as such termination is for "good reason" (as customarily
defined).
12. PLANS FOR THE COMPANY; OTHER MATTERS.
PLANS FOR THE COMPANY.
It is presently expected that, following the Merger, the operations of the
Company will be integrated with those of Parent. Parent expects that the food
and drug stores currently operated under the Company's name will ultimately be
operated under the name "Albertson's." Parent expects to open a division office
in Great Falls, Montana and a district office in Billings, Montana to oversee
the operations of the majority of the stores currently operated by the Company
and Parent in Montana, North Dakota and Wyoming. Parent also expects that the
operations of the existing headquarters office and the distribution centers of
the Company will be consolidated over time with Parent's operations. The stores
currently operated by the Company will be supplied by Parent's distribution
facilities.
Parent is conducting a detailed review of the Company and its business and
operations with a view towards determining how to optimally realize any
potential synergies which exist between the operations of the Company and those
of Parent. Such review is not expected to be completed until after the
consummation of the Merger, and, following such review, Parent will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing.
The Merger Agreement provides that, promptly after the purchase by
Purchaser of the Minimum Shares pursuant to the Offer, Parent has the right to
designate such number of directors, rounded up to the next whole number, on the
Company Board as is equal to the product of the total number of directors on the
Company Board (giving effect to the directors designated by Parent) multiplied
by the ratio of (a) the number of Shares beneficially owned by Purchaser or any
affiliate of Purchaser (including such Shares which are accepted for payment
pursuant to the Offer) to (b) the total number of Shares then outstanding. See
Section 11. The Merger Agreement provides that the directors of Purchaser and
the officers of the Company at the Effective Time of the Merger will, from and
after the Effective Time, be the initial directors and officers, respectively,
of the Surviving Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. Purchaser
and its affiliates also reserve the right to dispose of any or all Shares
acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
neither Parent nor Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of
assets, involving the
33
<PAGE> 36
Company or the Subsidiary, or any material changes in the Company's corporate
structure, business or composition of its management or personnel.
OTHER MATTERS
Stockholder Approval. Under the DGCL, the approval of the Company Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement and the Tender Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of the
Merger by the Company's stockholders in accordance with the DGCL. In addition,
the Company has represented that the affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock which is necessary to approve the
Merger Agreement and the transactions contemplated thereby, including the
Merger. Therefore, unless the Merger is consummated pursuant to the short-form
merger provisions under the DGCL described below (in which case no further
corporate action by the stockholders of the Company will be required to complete
the Merger), the only remaining required corporate action of the Company will be
the approval of the Merger Agreement and the transactions contemplated thereby
by the affirmative vote of the holders of a majority of the Shares. The Merger
Agreement provides that Parent will vote, or cause to be voted, all of the
Shares then owned by Parent, Purchaser or any of Parent's other subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of the Merger
Agreement. In the event that Parent, Purchaser and Parent's other subsidiaries
acquire in the aggregate at least a majority of the Shares entitled to vote on
the approval of the Merger and the Merger Agreement, the vote of no other
stockholder of the Company will be required to approve the Merger and the Merger
Agreement.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Parent, Purchaser and any other subsidiaries of Parent acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company, subject to compliance with the provisions of Section 253 of the DGCL.
Even if Parent and Purchaser do not own 90% of the outstanding Shares following
consummation of the Offer, Parent and Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 90%
threshold and employ a short-form merger. The per share consideration paid for
any Shares so acquired may be greater or less than that paid in the Offer.
Parent presently intends to effect a short-form merger if permitted to do so
under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of the
Shares at the Effective Time will have certain rights pursuant to the provisions
of Section 262 of the DGCL to dissent and demand appraisal of, and to receive
payment in cash of the fair value of, their Shares. Dissenting stockholders of
the Company who comply with the applicable statutory procedures will be entitled
to receive a judicial determination of the fair value of their Shares (exclusive
of any element of value arising from the accomplishment or expectation of the
Merger) and to receive payment of such fair value in cash, together with a fair
rate of interest thereon, if any. Any such judicial determination of the fair
value of the Shares could be based upon factors other than, or in addition to,
the price per Share to be paid in the Merger or the market value of the Shares.
The value so determined could be more or less than the price per Share to be
paid in the Merger.
34
<PAGE> 37
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL
DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY DISSENTERS' RIGHTS AVAILABLE UNDER THE
DGCL. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one year following
consummation of the Offer. If Rule 13e-3 were applicable to the Merger, it would
require, among other things, that certain financial information concerning the
Company, and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such a
transaction, be filed with the Commission and disclosed to minority stockholders
prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from January 19,
1998 until the Effective Time, without the prior written consent of Parent, the
Company will not (i) change the number of authorized, issued or outstanding
shares of its capital stock, except upon the exercise of certain stock options
outstanding on January 19, 1998 and described in the applicable schedule to the
Merger Agreement, (ii) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of shares of its
capital stock, (iii) make any direct or indirect redemption, retirement,
purchase or other acquisition of any of its capital stock (except for
repurchases of Shares from employees pursuant to existing stock subscription
agreements between the Company and certain of its employees described on the
applicable schedule to the Merger Agreement), (iv) split, combine or reclassify
its outstanding shares of capital stock, or (v) issue, grant or sell or agree or
propose to issue, grant or sell any shares of, or rights of any kind to acquire
any shares of, capital stock of the Company or the Subsidiary, except that the
Company may issue Shares upon the exercise of options and warrants outstanding
on January 19, 1998 to the extent such options are vested in accordance with
their terms or the terms of the Merger Agreement.
14. CONDITIONS TO THE OFFER.
The Offer is subject to the Minimum Condition being satisfied by 12:00
Midnight on February 23, 1998 or such later date as the Offer may be extended in
accordance with the terms of the Merger Agreement. Notwithstanding any other
provisions of the Offer, and subject to the terms of the Merger Agreement,
Purchaser shall not be obligated to accept for payment any Shares until
expiration of the applicable waiting periods under the HSR Act, and Purchaser
shall not be required to accept for payment, purchase or pay for, and may delay
the acceptance for payment of or payment for, any Shares tendered in the Offer,
or if the Minimum Condition shall not have been satisfied, Purchaser may
terminate or amend the Offer (subject to Purchaser's obligation to extend the
Offer pursuant to the Merger Agreement -- See Section 11) if, prior to the time
of acceptance for payment of any such Shares (whether or not any other Shares
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following shall have occurred and remain in effect:
(a) a United States or state governmental authority or other agency or
commission or United States or state court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order which is in effect and has the effect
of making the acquisition of the Shares illegal or imposing material
limitations on
35
<PAGE> 38
the ability of Purchaser to acquire the Shares or otherwise prohibiting the
consummation of the transactions contemplated by the Merger Agreement
subject to Parent's and Purchaser's obligations to reach an agreement
authorizing consummation of the Offer and Merger with the FTC or DOJ, and
any other Governmental Authority that may have asserted that consummation
of the Offer will violate Antitrust Laws, and to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary or
required by the FTC or DOJ in connection with the expiration or termination
of the waiting period under the HSR Act as a result of the transactions
contemplated by the Merger Agreement (provided, however, that the foregoing
shall not be construed so as to preclude, prevent or otherwise limit Parent
or Purchaser from instituting or prosecuting or defending a suit or claim
in good faith with respect to any suit, objection, requirement or other
action by the FTC, DOJ or any other such Governmental Authority or any
private party with respect to the transactions contemplated by the Merger
Agreement), and Parent's agreement not to terminate the Offer so long as
any such injunction or order has not become final and nonappealable;
(b) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE, and such event
shall have continued to exist for a period in excess of 24 hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchange not related to market conditions), (ii) any
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation by any United
States governmental authority on the extension of credit generally by banks
or other financial institutions, or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(c) either (i)(A) any of the representations or warranties of the
Company with respect to capital stock, options and other rights to acquire
Shares, authority relative to the Merger Agreement and the vote required
for the approval of the Merger Agreement and the Merger shall not be true
and correct in all material respects or (B) any other representation or
warranty of the Company in the Merger Agreement shall not be true and
correct which inaccuracy, singly or in the aggregate, would have or be
reasonably likely to have a material adverse effect on the business,
operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets or liabilities of
the Company and the Subsidiary taken as a whole and in either case are not
reasonably capable of being cured by the Company or have not been cured
within ten (10) business days after the giving of written notice to the
Company in each case as if such representations or warranties were made as
of such time on or after January 19, 1998 (unless a representation speaks
as of an earlier date, in which case it shall be deemed to have been made
as of such earlier date), or (ii) the Company shall have failed to perform
any obligation or to comply with any agreement or covenant of the Company
to be performed or complied with by it under the Merger Agreement, which
failure, singly or in the aggregate, would have or be reasonably likely to
have a material adverse effect on the business, operations, properties
(including intangible properties), condition (financial or otherwise),
results of operations, assets or liabilities of the Company and the
Subsidiary taken as a whole and is not reasonably capable of being cured by
the Company or has not been cured within ten (10) business days after the
giving of written notice to the Company; and the Chief Executive Officer of
the Company shall have provided a certificate to the effect that the
conditions set forth in clauses (i) or (ii) have not occurred on the date
Shares are to be accepted for payment pursuant to the Offer;
(d) since January 19, 1998 there shall have been any material adverse
change in the business, operations, properties (including intangible
properties), condition (financial or otherwise), results of operations,
assets or liabilities of the Company and the Subsidiary, taken as a whole,
excluding any such change occurring at any time after January 19, 1998
caused by (i) a general change in the economy (including any such change
caused by a general change in the
36
<PAGE> 39
markets served by the Company and the Subsidiary) or (ii) the institution
or threat of any suit, arbitration, mediation, action, proceeding,
complaint or grievance which challenges any of the transactions
contemplated by the Merger Agreement or any action required in connection
with the resolution of matters relating to the Antitrust Laws and excluding
any such change occurring on or after the 90th day following January 19,
1998 caused by the voluntary termination of employment by employees of the
Company or the Subsidiary or a closure of, or any labor disruption,
slowdown or strike relating to, the Company's principal distribution center
located in Great Falls, Montana; provided, however, that the foregoing
right is subject to the Company MAC Right described in Section 11 hereof;
(e) the Company Board (i) shall have amended, modified or withdrawn
its recommendation of the Offer or the Merger other than as permitted by
the Merger Agreement, (ii) shall have endorsed, approved or recommended any
Superior Proposal or (iii) the Company shall have entered into any
agreement with respect to any Superior Proposal;
(f) any person or group (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or Purchaser or any of their respective
subsidiaries or affiliates, shall have become the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of more than 25%
of the Shares (either on a primary or a fully diluted basis); provided,
however, that this provision shall not apply to any person that
beneficially owns more than 25% of the outstanding Shares on January 19,
1998 so long as such person does not further increase its beneficial
ownership beyond the number of Shares such person beneficially owns on
January 19, 1998; or
(g) the Merger Agreement shall have been terminated by the Company or
Parent pursuant to its terms;
which, in the reasonable judgment of Parent and Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser) giving rise to any such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for the
Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser,
may be asserted by Parent or Purchaser regardless of the circumstances giving
rise to such condition and may be waived by Parent or Purchaser in whole or in
part and at any time and from time to time. The failure by Parent or Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
any license or regulatory permit that appears to be material to the business of
the Company that might be adversely affected by Purchaser's acquisition of
Shares as contemplated herein or of any approval or other action by a domestic
or foreign governmental, administrative or regulatory agency or authority that
would be required for the acquisition and ownership of the Shares by Purchaser
as contemplated herein. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
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 or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any
37
<PAGE> 40
such approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, Purchaser could decline to accept for
payment, or pay for, any Shares tendered. See Section 14 for certain conditions
to the Offer, including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general,
prohibits a Delaware corporation such as the Company, from engaging in a
"Business Combination" (defined as a variety of transactions, including mergers,
as set forth below) with an "Interested Stockholder" (defined generally as a
person that is the beneficial owner of 15% or more of a corporation's
outstanding voting stock) for a period of three years following the date that
such person became an Interested Stockholder unless (a) prior to the date such
person became an Interested Stockholder, the board of directors of the
corporation approved either the Business Combination or the transaction that
resulted in the stockholder becoming an Interested Stockholder, (b) upon
consummation of the transaction that resulted in the stockholder becoming an
Interested Stockholder, the Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding stock held by directors who are also officers of the
corporation and employee stock ownership plans that do not provide employees
with the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer or (c) on or subsequent to
the date such person became an Interested Stockholder, the Business Combination
is approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote of
the holders of a least 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if, among
other things (a) the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203; (b)
the corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203, provided that, in addition to any other vote required by law, such
amendment of the certificate of incorporation or by-laws must be approved by the
affirmative vote of a majority of the shares entitled to vote, which amendment
would not be effective until 12 months after the adoption of such amendment and
would not apply to any Business Combination between the corporation and any
person who became an Interested Stockholder of the corporation on or prior to
the date of such adoption; (c) the corporation does not have a class of voting
stock that is (1) listed on a national securities exchange, (2) authorized for
quotation on an inter-dealer quotation system of a registered national
securities association or (3) held of record by more than 2,000 stockholders,
unless any of the foregoing results from action taken, directly or indirectly,
by an Interested Stockholder or from a transaction in which a person became an
Interested Stockholder; or (d) a stockholder become an Interested Stockholder
"inadvertently" and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder. Under Section
203, the restrictions described above also do not apply to certain Business
Combinations proposed by an Interested Stockholder following the announcement or
notification or one of certain extraordinary transactions involving the
corporation and a person who had not been an Interested Stockholder during the
previous three years or who became an Interested Stockholder with the approval
of a majority of the corporation's directors.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (a) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
a corporation; (b) any transaction which results in the issuance or transfer by
the
38
<PAGE> 41
corporation or by certain subsidiaries thereof of any stock of the corporation
or such subsidiaries to the Interested Stockholder, except pursuant to a
transaction which effects a pro rata distribution to all stockholders of the
corporation; (c) any transaction involving the corporation or certain
subsidiaries thereof which has the effect of increasing the proportionate share
of the stock of any class or series, or securities convertible into the stock of
any class or series, of the corporation or any such subsidiary which is owned
directly or indirectly by the Interested Stockholder (except as a result of
immaterial changes due to fractional share adjustments); or (d) any receipt of
the Interested Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances, guarantees, pledges or
other financial benefits provided by or through the corporation.
The foregoing description of Section 203 of the DGCL is not necessarily
complete and is qualified in its entirety by reference to the DGCL.
The provisions of Section 203 of the DGCL are not applicable to any of the
transactions contemplated by the Merger Agreement or the Tender Agreement, since
the Merger Agreement, the Tender Agreement and the transactions contemplated
thereby have been approved by the Company Board.
A number of states have adopted laws and regulations 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 principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the "Supreme Court") invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made certain corporate acquisitions more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining presenting stockholders. The state law before the Supreme Court was by
its terms applicable only to corporations that had a substantial number of
stockholders in the state and were incorporated there.
Neither Parent nor Purchaser knows whether the antitakeover laws and
regulations of any state other than Delaware will by their terms apply to the
Offer, and, except as set forth above with respect to Section 203 of the DGCL,
neither Parent nor Purchaser has currently complied with any state antitakeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
and nothing in this Offer to Purchase or any action taken in connection with the
Offer is intended as a waiver of such right. If it is asserted that any state
antitakeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer or may be
delayed in consummating the Offer. In such case, Purchaser may not be obligated
to accept for payment, or pay for, any Shares tendered pursuant to the Offer.
See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the DOJ and the FTC and certain
waiting period requirements have been satisfied.
Parent and the Company filed their Notification and Report Forms under the
HSR Act with respect to the Offer on January 22, 1998. The waiting period under
the HSR Act with respect to the Offer will expire at 11:59 p.m., New York City
time, on February 7, 1998, unless early termination of the waiting period is
granted. However, the DOJ or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent or the Company. If
such a request is made, such waiting period will expire at 11:59 p.m., New York
City time, on the tenth day
39
<PAGE> 42
after substantial compliance by Parent with respect to such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Parent. Purchaser will not accept for
payment Shares tendered pursuant to the Offer unless and until the waiting
period imposed by the HSR Act with respect to the Offer has been satisfied. See
Section 14.
The Merger may not be consummated until 30 calendar days after receipt by
the DOJ and the FTC of the Notification and Report Forms of both Parent and the
Company unless Purchaser acquires 50% or more of the outstanding Shares pursuant
to the Offer (which would be the case if the Minimum Condition were satisfied)
or the 30-day period is earlier terminated by the DOJ and the FTC. Within such
30-day period, the DOJ or the FTC may request additional information or
documentary materials from Parent and/or the Company. The Merger may not be
consummated until 20 days after such requests are substantially complied with by
both Parent and the Company. Thereafter, the waiting periods may be extended
only by court order or with the consent of Parent and the Company.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws of transactions such as Purchaser's acquisition of Shares pursuant to the
Offer and the Merger. At any time before or after Purchaser's acquisition of
Shares, the DOJ or the FTC could take such action under the Antitrust Laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the acquisition of Shares pursuant to the Offer or otherwise seeking divestiture
of Shares acquired by Purchaser or divestiture of substantial assets of Parent
or its subsidiaries. Private parties, as well as state governments, may also
bring legal action under the Antitrust Laws under certain circumstances. There
can be no assurance that a challenge to the Offer or other acquisition of Shares
by Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result.
In the Merger Agreement, Parent has agreed to take such action (including,
without limitation, agreeing to hold separate or to divest any of the
businesses, stores, products or assets of Parent or any of its affiliates or of
the Company or the Subsidiary) as may be required (i) by any Governmental
Authority (including the DOJ or the FTC) in order to resolve such objections as
such Governmental Authority may have under the Antitrust Laws to the
transactions contemplated by the Merger Agreement, or (ii) by any court or
similar tribunal, in any suit brought by a private party or Governmental
Authority challenging the transactions contemplated by the Merger Agreement as
violative of any Antitrust Law, in order to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order or other order that
has the effect of preventing the consummation of any of such transactions. The
Merger Agreement provides that either Parent or Purchaser may institute,
prosecute or defend a suit or claim in good faith with respect to any suit,
objection, requirement or other action by the FTC, the DOJ, any other
Governmental Authority or any private party with respect to the transactions
contemplated by the Merger Agreement. The Merger Agreement further provides that
an entry by a court, in any suit brought by a private party or a Governmental
Authority challenging the transactions contemplated by the Merger Agreement as
violative of any Antitrust Law, of an order or decree permitting the
transactions contemplated by the Merger Agreement, but requiring that any of the
businesses, product lines or assets of Parent or any of its affiliates or of the
Company or the Subsidiary be divested or held separate by Parent, or that would
otherwise limit Parent's freedom of action with respect to, or its ability to
retain, the Company and the Subsidiary or any portion thereof or any of Parent's
or its affiliates' other assets or businesses, shall not (A) be deemed a failure
to satisfy any of the conditions (i) to each party's obligations to effect the
Merger which are specified in the Merger Agreement, or (ii) to the Offer
contained in Section 14 of this Offer to Purchase, or (B) give rise to a right
of termination under the Merger Agreement. See Section 14 for certain conditions
to the Offer, including conditions with respect to litigation and certain
governmental actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administra-
40
<PAGE> 43
tive and judicial doctrines, and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. As described in Section 10
of this Offer to Purchase, the financing of the Offer will not be directly or
indirectly secured by the Shares or other securities which constitute margin
stock. Accordingly, all financing for the Offer will be in full compliance with
the Margin Regulations.
16. FEES AND EXPENSES.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent and ChaseMellon Shareholder Services, L.L.C. to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by personal interview, mail, telephone, telex, telegraph and other methods of
electronic communication and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward the Offer materials to beneficial
holders. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their services. Purchaser has also agreed to
reimburse each such firm for certain reasonable out-of-pocket expenses and to
indemnify each such firm against certain liabilities in connection with their
services, including certain liabilities under federal securities laws.
Neither Parent nor Purchaser will pay any fees or commissions to any broker
or dealer or other person (other than the Information Agent) for making
solicitations or recommendations in connection with the Offer. Brokers, dealers,
banks and trust companies will be reimbursed by Purchaser for customary mailing
and handling expenses incurred by them in forwarding the Offer materials to
their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
Purchaser is not aware of any jurisdiction in which the making of the Offer or
the tender of Shares in connection therewith would not be in compliance with the
laws of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act furnishing certain additional
information with respect to the Offer. The Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained at the
same places and in the same manner set forth in Section 9 of this Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
LOCOMOTIVE ACQUISITION CORP.
January 26, 1998
41
<PAGE> 44
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent. Each such person is a citizen of the
United States of America and, the business address of each such person is c/o
Albertson's, Inc., 250 Parkcenter Boulevard, P.O. Box 20, Boise, Idaho 83726.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with Parent. Unless otherwise indicated, each such
person has held his or her present occupation as set forth below, or has been an
executive officer at Parent, or the organization indicated, for the past five
years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------------- ----------------------------------------------------
<S> <C>
Kathryn Albertson....................... Director of Parent. Vice President and a director of
the J.A. and Kathryn Albertson Foundation, Inc.
President and a director of Alscott, Inc., real
estate and other investments from 1993 to 1997. Mrs.
Albertson is the Grandmother of J.B. Scott.
A. Gary Ames............................ Director of Parent. President and Chief Executive
Officer, U S WEST International, a
telecommunications company and a wholly owned
subsidiary of U S WEST, Inc. since July 1995.
President and Chief Executive Officer, U S West
Communications from 1990 to 1995. Mr. Ames is a
director of Flextech, Tektronix, Inc. and Telewest.
Cecil D. Andrus......................... Director of Parent. Chairman of the Andrus Center
for Public Policy, a public policy forum located at
Boise State University dealing in natural resource
issues, since January 1995 and of counsel to the
Gallatin Group, a consulting firm, since February
1995. Elected Governor of the State of Idaho in 1987
and served until January 1995. Mr. Andrus serves as
a director of Coeur d'Alene Mines Corp., KeyCorp.
and the J.A. and Kathryn Albertson Foundation, Inc.
John B. Carley.......................... Director of Parent. Chairman of the Executive
Committee of the Board of Directors since February
1996 and formerly President and Chief Operating
Officer of Parent. Mr. Carley is a director of Boise
Cascade Office Products Corporation, Idaho Power
Company and AgriBeef Co.
Paul I. Corddry......................... Director of Parent. Served as Senior Vice President,
Europe, of H.J. Heinz Company, a worldwide provider
of processed food products and services until his
retirement in 1992. Mr. Corddry is a director of
Ameristar Casinos, Inc.
</TABLE>
I-1
<PAGE> 45
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------------- ----------------------------------------------------
<S> <C>
John B. Fery............................ Director of Parent. Served as Chairman of the Board
of Boise Cascade Corporation, a timber and paper
products company until his retirement in 1995 and as
Chief Executive Officer from 1972 to 1994. Mr. Fery
is a director of Hewlett-Packard Company, The Boeing
Company and U.S. Bancorp.
Clark A. Johnson........................ Director of Parent. Chairman of the Board, Chief
Executive Officer and a director of Pier 1 Imports,
Inc., a retailer of imported goods. Mr. Johnson is
also a director of Heritage Media Corporation,
InterTan, Inc. and Metromedia International Group.
Charles D. Lein......................... Director of Parent. President and Chief Operating
Officer of Stuller Settings, Inc., a jewelry
manufacturing company since January 1994. Formerly
Chairman of the Board, President and Chief Executive
Officer of Black Hills Jewelry Manufacturing Co.
from 1982 to 1993. Mr. Lein is a director of Stuller
Settings, Inc. and First National Bank of Lafayette.
Warren E. McCain........................ Director of Parent. Served as Chairman of the
Executive Committee of the Board of Directors of
Parent until his retirement in February 1996 and as
Chairman of the Board and Chief Executive Officer of
Parent from 1976 to 1991. Mr. McCain is a director
of Pope and Talbot.
Beatriz Rivera.......................... Director of Parent. Member of the Public Utilities
Commission of the State of New Mexico since 1995.
Formerly owner of Infiniti of Albuquerque, an
automobile dealership, from 1990 to 1995.
J.B. Scott.............................. Director of Parent. Chairman of the Board and a
director of Alscott, Inc., real estate and other
investments. Grandson of Kathryn Albertson. Mr.
Scott is Chairman of the Board and a director of the
J.A. and Kathryn Albertson Foundation, Inc.
Thomas L. Stevens, Jr................... Director of Parent. Served as President, Los Angeles
Trade-Technical College (LATTC) until his retirement
in 1996. Mr. Stevens was a member of the Board of
Directors of the Federal Reserve Bank of San
Francisco, Los Angeles Branch, until his retirement
from LATTC.
Will M. Storey.......................... Director of Parent. Served as Executive Vice
President and Chief Financial Officer, American
President Companies, a provider of container
transportation services until his retirement in
1995. Mr. Storey is a director of Eagle-Pitcher
Industries, Inc. and T.I.S. Mortgage Investment
Company.
</TABLE>
I-2
<PAGE> 46
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------------- ----------------------------------------------------
<S> <C>
Steven D. Symms......................... Director of Parent. President of Symms, Lehn &
Associates, Inc., a consulting firm since January
1993. Elected United States Senator from the State
of Idaho in 1980 and served until January 1993. Vice
President and Secretary of Boise Air Service, Inc.
since 1983. Mr. Symms is a director of Symms, Lehn &
Associates, Inc., Boise Air Service, Inc. and Symms
Fruit Ranch, Inc.
Gary G. Michael......................... Director of Parent. Chairman of the Board and Chief
Executive Officer of Parent since 1991. Mr. Michael
is Chairman of the Board of Directors of the Federal
Reserve Bank of San Francisco and a director of
Boise Cascade Corporation and Questar Corporation.
Richard L. King......................... President and Chief Operating Officer of Parent
since February 1996. Previously served as Senior
Vice President and Regional Manager of Parent from
November 1994; Group Vice President, Merchandising
of Parent from January 1994; and Vice President,
Rocky Mountain Division of Parent from 1992.
Carl W. Pennington...................... Executive Vice President, Corporate Merchandising of
Parent since February 1996. Previously served as
Senior Vice President, Corporate Merchandising of
Parent from 1994 and Senior Vice President and
Regional Manager of Parent from 1988.
Michael F. Reuling...................... Executive Vice President, Store Development of
Parent since 1986.
Thomas R. Saldin........................ Executive Vice President, Administration and General
Counsel of Parent since 1991.
Ronald D. Walk.......................... Executive Vice President, Retail Operations of
Parent since February 1996. Previously served as
Senior Vice President and Regional Manager of Parent
from 1984.
Thomas E. Brother....................... Senior Vice President, Distribution of Parent since
1991.
William H. Emmons....................... Senior Vice President and Regional Manager of Parent
since February 1996. Previously served as Vice
President, North Texas Division of Parent from 1993
and Vice President, Texas Division of Parent from
1988.
Dennis C. Lucas......................... Senior Vice President and Regional Manager of Parent
since February 1996. Previously served as Vice
President, Oregon Division of Parent from 1995; Vice
President, Midwest Division of Parent from 1993; and
Division Manager, Midwest Division of Parent from
1992.
A. Craig Olson.......................... Senior Vice President, Finance and Chief Financial
Officer of Parent since 1991.
David G. Simonson....................... Senior Vice President and Regional Manager of Parent
from February 1996. Previously served as Vice
President, Southern California Division of Parent
from 1991.
</TABLE>
I-3
<PAGE> 47
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------------- ----------------------------------------------------
<S> <C>
Patrick S. Steele....................... Senior Vice President, Information Systems and
Technology of Parent since 1993 and Group Vice
President, Management Information Systems of Parent
from 1990.
Steven D. Young......................... Senior Vice President, Human Resources of Parent
since 1993 and Group Vice President, Human Resources
of Parent from 1991.
Robert K. Banks......................... Group Vice President, Real Estate of Parent since
December 1996. Previously served as Vice President,
Real Estate of Parent from 1990.
David G. Dean........................... Group Vice President, Procurement of Parent since
1991.
Peggy Jo Jones.......................... Group Vice President, Employee Development and
Communications of Parent since November 1993.
Previously served as Vice President, Employee
Development and Communications of Parent from
September 1993; and Vice President, Retail
Accounting of Parent from 1992.
Richard J. Navarro...................... Group Vice President and Controller of Parent since
1993 and Vice President and Controller of Parent
from 1989.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Purchaser. Each such person is a citizen of
the United States of America and the business address of each such person is c/o
Albertson's, Inc., 250 Parkcenter Boulevard, P.O. Box 20, Boise, Idaho 83726.
Unless otherwise indicated, each such person has held his or her present
occupation as set forth below, or has been an executive officer at Parent, or
the organization indicated, for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------------- ----------------------------------------------------------
<S> <C>
Gary G. Michael.................. Director and President of Purchaser. See Part 1 of this
Schedule I.
Richard L. King.................. Director and a Vice President of Purchaser. See Part 1 of
Schedule I.
Thomas R. Saldin................. Director and a Vice President of Purchaser. See Part 1 of
this Schedule I.
Michael F. Reuling............... Vice President of Purchaser. See Part 1 of this Schedule
I.
Kaye L. O'Riordan................ Secretary of Purchaser. Vice President and Corporate
Secretary of Parent since May 1997. Corporate Secretary
and Senior Attorney of Parent from January 1990.
Carol L. Wood.................... Assistant Secretary of Purchaser. Assistant Corporate
Secretary of Parent since September 1981 and Coordinator
of Stockholder Communications of Parent since 1982.
</TABLE>
I-4
<PAGE> 48
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(201) 329-8936
(For Eligible Institutions Only)
Confirm Facsimile by Telephone:
(201) 296-4860
---------------------
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification on Substitute Form
W-9 may be directed to the Information Agent at the address and telephone
numbers set forth below. Stockholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
LOGO
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free (800) 223-2064
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
PURSUANT TO THE OFFER TO PURCHASE
DATED JANUARY 26, 1998
OF
LOCOMOTIVE ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ALBERTSON'S, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, FEBRUARY 23, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH
ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(201) 329-8936
(For Eligible Institutions Only)
Confirm Facsimile by Telephone:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Buttrey Food
and Drug Stores Company if certificates for Shares (as such term is defined
below) are to be forwarded herewith or, unless an Agent's message (as defined in
Instruction 2 below) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by the Depositary at a Book-Entry
Transfer Facility (as defined in and pursuant to the procedures set forth in
Section 3 of the Offer to Purchase). Stockholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders" and
other stockholders who deliver shares are referred to herein as "Certificate
Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution __________________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
<TABLE>
<S> <C>
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust
Company
Account Number _____________________
Transaction Code Number _____________________
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _________________________________________________
Window Ticket Number (if any) __________________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________________
Name of Institution which Guaranteed Delivery __________________________________
If delivered by Book-Entry Transfer, check box of Applicable Book-Entry
Transfer Facility:
<TABLE>
<S> <C>
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust
Company
Account Number _____________________
Transaction Code Number _____________________
</TABLE>
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY
CERTIFICATE SHARE NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL SHARES
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by Share certificates delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Locomotive Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Albertson's, Inc., a
Delaware corporation ("Parent"), the above-described shares of common stock, par
value $.01 per share (the "Shares"), of Buttrey Food and Drug Stores Company, a
Delaware corporation (the "Company"), pursuant to Purchaser's offer to purchase
all of the outstanding Shares at a price of $15.50 per Share, net to the seller
in cash, without interest thereon (the "Offer Price") upon the terms and subject
to the conditions set forth in the Offer to Purchase dated January 26, 1998,
<PAGE> 3
and in this Letter of Transmittal (which, together with any amendments or
supplements thereto or hereto, collectively constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole at any time, or in part from time to time, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby
acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 19, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect thereof on or after January
19, 1998 (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 all Distributions), with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver certificates for such Shares (and any
and all Distributions), or transfer ownership of such Shares (and any and all
Distributions) on the account books maintained by any of the Book-Entry Transfer
Facilities, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) present such
Shares (and any and all Distributions) for transfer on the books of the Company,
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any and all Distributions), all in accordance with
the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Gary G. Michael, Richard L. King and Thomas R. Saldin, in their
respective capacities as officers of Purchaser, and any individual who shall
thereafter succeed to any such office of Purchaser, and each of them, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his substitute
shall in his sole discretion deem proper with respect to, and to otherwise act
as each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, all of the Shares (and any and all
Distributions) tendered hereby and accepted for payment by Purchaser. This
appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall, without further action, revoke any prior
powers of attorney and proxies granted by the undersigned at any time with
respect to such Shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). Purchaser
reserves the right to require that, in order for Shares or other securities to
be deemed validly tendered, immediately upon Purchaser's acceptance for payment
of such Shares, Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares (and any and all Distributions),
including voting at any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly to
the Depositary for the account of Purchaser all Distributions in respect of the
Shares tendered hereby, accompanied by appropriate documentation of transfer,
and, pending such remittance and transfer or appropriate assurance thereof,
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may
<PAGE> 4
withhold the entire purchase price of the Shares tendered hereby or deduct from
such purchase price, the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the Merger Agreement, the price to be paid
to the undersigned will be the amended price notwithstanding the fact that a
different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered." In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the "Special Payment Instructions," to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of the Shares so tendered.
<PAGE> 5
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned
or if Shares tendered hereby and delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or Share certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account set forth below:
Check appropriate box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
------------------------------------------------------------
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown under
"Description of Shares Tendered."
Mail check and/or Share certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: _________________________________, 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Share certificate(s) 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 trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person
acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s) __________________________________________________________________
(PLEASE PRINT)
Name of Firm _____________________________________________________________
Capacity (full title) ____________________________________________________
(SEE INSTRUCTION 5)
Address __________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number ___________________________________________
Taxpayer Identification or Social Security Number ________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature _____________________________________________________
Name(s) __________________________________________________________________
(PLEASE PRINT)
Title ____________________________________________________________________
Name of Firm _____________________________________________________________
Address __________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number ___________________________________________
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
<PAGE> 7
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of the
Company either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth herein and in Section 3 of the
Offer to Purchase. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or an
Agent's Message (in connection with book-entry transfer) and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either (i) certificates for tendered
Shares must be received by the Depositary at one of such addresses prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein and in Section 3 of the Offer to Purchase
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering stockholder must comply with the guaranteed
delivery procedures set forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (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
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation with respect to all tendered Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq National Market is open for business.
The term "Agent's Message" means a message, transmitted 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, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates 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 or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the
<PAGE> 8
name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
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 Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share 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 holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to
Purchaser 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 SHARE CERTIFICATES EVIDENCING THE
SHARES TENDERED HEREBY.
7. Special Payment and Delivery Instructions; Wire Transfers. If a check
for the purchase price of any Shares accepted for payment is to be issued in the
name of, and/or Share certificates for Shares not accepted for payment or not
tendered are to be issued in the name of and/or returned to, 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 a person 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. Any
stockholder(s) delivering Shares by book-entry transfer may request that Shares
not purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder(s) may designate in the box entitled "Special
Payment Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above as the account from which such Shares were delivered.
Purchaser has agreed to arrange to make payments of Shares accepted for payment
by wire transfer for holders of blocks of 45,000 shares or more. Stockholders
holding 45,000 shares or more should contact the Depositary at (201) 296-4332 in
order to complete such arrangements.
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance or 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
directed to the Information Agent, at the address or telephone numbers set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered.
<PAGE> 9
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 in this Letter of Transmittal and certify, under penalties
of perjury, that such TIN is correct and that such stockholder is not subject to
backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares 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 on Substitute Form W-9" for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his social security number. If a tendering stockholder is subject to backup
withholding, such stockholder must cross out item (2) of the Certification box
on the Substitute Form W-9. If the Depositary is not provided with the correct
taxpayer identification number, 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 purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, 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.
<PAGE> 10
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
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. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
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, such stockholder
should write "Applied For" in the space provided for in the TIN in Part 1, 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.
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- ----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX ------------------------------
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number
DEPARTMENT OF THE TREASURY BELOW
INTERNAL REVENUE SERVICE (If awaiting TIN write
"Applied For")
OR
------------------------------
Employer Identification Number
(If awaiting TIN write
"Applied For")
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART 2--CERTIFICATE--Under penalties of perjury, I certify that:
IDENTIFICATION NUMBER
("TIN") (1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued for me), and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service (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 currently subject to backup
withholding because of under-reporting interest or dividends on your tax
returns. However, if after being notified by the IRS that you are subject
to backup withholding, you receive another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such item
(2). (Also see instructions in the enclosed Guidelines).
SIGNATURE ----------------------------------------- DATE -------------, 1998
----------------------------------------------------------------------------
PART 3--Awaiting TIN [ ]
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF THE SUBSTITUTE FORM W-9.
<PAGE> 11
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to
the Depositary by the time of payment, 31% of all reportable payments made
to me thereafter will be withheld, but that such amounts will be refunded
to me if I provide a certified Taxpayer Identification Number to the
Depositary within sixty (60) days.
<TABLE>
<S> <C>
_______________________________________, 1998
____________________________________________________ Date
Signature
</TABLE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent as set forth below:
The Information Agent for the Offer is:
LOGO
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free 1-800-223-2064
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
TO
LOCOMOTIVE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ALBERTSON'S, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form 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
Buttrey Food and Drug Stores Company, a Delaware corporation, are not
immediately available, if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), 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, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(201) 329-8936
(For Eligible Institutions Only)
Confirm Facsimile by Telephone:
(201) 296-4860
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 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.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Locomotive Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Albertson's, Inc., a
Delaware corporation, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase dated January 26, 1998 and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
shares set forth below of common stock, par value $.01 per share (the "Shares"),
of Buttrey Food and Drug Stores Company, a Delaware corporation, pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares:
Certificate Nos. (if available):
- ---------------------------------------------------
- ---------------------------------------------------
Check one box if Shares will be
tendered by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
Dated: _________________________, 1998
Name(s) of Record Holder(s):
- ---------------------------------------------------
- ---------------------------------------------------
PLEASE PRINT
Address(es):
- ---------------------------------------------------
- ---------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
- ---------------------------------------------------
- ---------------------------------------------------
Signature(s):
- ---------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company or the Philadelphia
Depository Trust Company, in each case with delivery of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message, and any other documents required by
the Letter of Transmittal, within three trading days (as defined in the Offer to
Purchase) 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 Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:___________________ _________________________________
AUTHORIZED SIGNATURE
Address:________________________ Name:____________________________
PLEASE PRINT
________________________________ Title:___________________________
ZIP CODE
Area Code and Tel. No.:_________ Dated:____________________ , 1998
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
AT
$15.50 NET PER SHARE
BY
LOCOMOTIVE ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ALBERTSON'S, INC.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
MONDAY, FEBRUARY 23, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
January 26, 1998
TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by Locomotive Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Albertson's, Inc., a
Delaware corporation ("Parent"), to act as Information Agent in connection with
Purchaser's offer to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Buttrey Food and Drug Stores Company, a
Delaware corporation (the"Company"), at $15.50 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated January 26, 1998 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer") enclosed herewith. Please furnish copies of the
enclosed materials to those of your clients for whose accounts you hold Shares
registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares which constitutes at least a majority of the
Shares outstanding. The Offer is also subject to the other terms and conditions
contained in the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated January 26, 1998;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date (as defined in the Offer to
Purchase);
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. A letter to stockholders of the Company from Joseph H. Fernandez,
Chairman of the Board, President and Chief Executive Officer of the
Company, together with a Solicitation/Recommendation Statement on Schedule
14D-9 dated January 26, 1998, which has been filed by the Company with the
Securities and Exchange Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
<PAGE> 2
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company, pursuant to the procedures described in Section 3 of
the Offer to Purchase, (ii) a properly completed and duly executed Letter of
Transmittal (or a properly completed and manually signed facsimile thereof) or
an Agent's Message in connection with a book-entry transfer and (iii) all other
documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) for soliciting tenders of Shares pursuant to the
Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmitttal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, FEBRUARY 23, 1998, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer of Shares, and any other
required documents, should be sent to the Depositary, and certificates
representing the tendered Shares should be delivered or such Shares should be
tendered by book-entry transfer, all in accordance with the Instructions set
forth in the Letter of Transmittal and in the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent at our address and telephone numbers set forth on the back
cover of the Offer to Purchase.
Very truly yours,
GEORGESON & COMPANY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE
DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
AT
$15.50 NET PER SHARE IN CASH
BY
LOCOMOTIVE ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ALBERTSON'S, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, FEBRUARY 23, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH
ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
TO OUR CLIENTS:
Enclosed for your consideration are the Offer to Purchase dated January 26,
1998 and the related Letter of Transmittal (which, together with any amendments
or supplements thereto, collectively constitute the "Offer") in connection with
the offer by Locomotive Acquisition Corp., a Delaware corporation ("Purchaser"),
and a wholly owned subsidiary of Albertson's, Inc., a Delaware corporation
("Parent"), to purchase for cash all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Buttrey Food and Drug Stores Company, a
Delaware corporation (the "Company"). We are the holder of record of Shares held
for your account. A tender of such Shares can be made only by us as the holder
of record and pursuant to your instructions. The enclosed Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $15.50 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and determined that the Offer is fair to, and in the best interest
of, the stockholders of the Company and recommends that stockholders accept
the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Monday, February 23, 1998, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer to Purchase) that number of Shares which constitutes at least
a majority of the Shares outstanding.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated January 26, 1998 and the related Letter of Transmittal
in connection with the Offer by Locomotive Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Albertson's, Inc., a Delaware
corporation, to purchase all outstanding shares of common stock, par value $.01
per share (the "Shares"), of Buttrey Food and Drug Stores Company, a Delaware
corporation (the "Company").
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:*
- ----------------------------------------------------------------------
Shares
<TABLE>
<S> <C>
Dated: , 1998 ---------------------------------------------
---------------------------------------------
Signature(s)
---------------------------------------------
---------------------------------------------
Print Name(s)
---------------------------------------------
---------------------------------------------
Address(es)
---------------------------------------------
Area Code and Telephone Number
---------------------------------------------
Tax ID or Social Security Number
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for your account
are to be tendered.
</TABLE>
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
===================================================================================================================================
GIVE THE GIVE THE
SOCIAL SECURITY SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT NUMBER OF -- FOR THIS TYPE OF ACCOUNT NUMBER OF --
===================================================================================================================================
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, or The legal entity (do not
pension trust furnish the identifying
2. Two or more individuals The actual owner of the number of the personal
(joint account) account or, if combined representative or trustee
funds, any one of the unless the legal entity
individuals(2) itself is not designated
in the account title)(1)
3. Husband and wife The actual owner of the 10. Corporate account
(joint account) account or, if joint The corporation
funds, either person(2) 11. Religious, charitable, or
educational organization The organization
4. Custodian account of The minor(3) account
a minor (Uniform Gift
to Minors Act) 12. Partnership account held The partnership
in the name of the
5. Adult and minor The adult or, if the minor business
(joint account) is the only contributor,
the minor(1) 13. Association, club, or other The organization
tax-exempt organization
6. Account in the name The ward, minor, or
of guardian or incompetent person(4) 14. A broker or registered The broker or nominee
committee for a nominee
designated ward,
minor, or 15. Account with the Depart- The public entity
incompetent person ment of Agriculture in the
name of a public entity
7. a. The usual The grantor-trustee(1) (such as a State or local
revocable savings government, school dis-
trust account trict, or prison) that re-
(grantor is also ceives agricultural
trustee) program payments
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
8. Sole proprietorship The owner(5)
account
</TABLE>
================================================================================
(1) List first and circle the name of the legal trust, estate, or pension trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
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> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for Social Security Number Card or Form SS-4,
Application for Employer Identification Number at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under Section 501(A) or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A state, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
properly include any portion of an includible payment for interest, dividends,
or patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated January
26, 1998 and the related Letter of Transmittal, and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction or any administrative or judicial action pursuant thereto.
In any jurisdiction where securities, blue sky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of Purchaser by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
BUTTREY FOOD AND DRUG STORES COMPANY
AT
$15.50 NET PER SHARE
BY
LOCOMOTIVE ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ALBERTSON'S, INC.
Locomotive Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of Albertson's, Inc., a Delaware corporation ("Parent"),
is offering to purchase all of the outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of Buttrey Food and Drug Stores Company, a
Delaware corporation (the "Company"), at a price of $15.50 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated January 26, 1998 (the "Offer
to Purchase") and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, FEBRUARY 23, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH
ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of January 19, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides that, as soon as
practicable after the completion of the Offer and satisfaction or waiver, if
permissible, of all conditions contained in the Merger Agreement, and in
accordance with the
<PAGE> 2
relevant provisions of the General Corporation Law of the State of Delaware (the
"DGCL"), Purchaser will be merged with and into the Company (the "Merger").
Following the consummation of the Merger, the Company will continue as the
surviving corporation and will be a direct wholly owned subsidiary of Parent. At
the effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
any subsidiary of the Company or in the treasury of the Company, or by Parent,
Purchaser or any other subsidiary of Parent, which Shares will be cancelled, and
other than Shares, if any, held by stockholders who perfect their appraisal
rights under the DGCL) will be converted into the right to receive the per Share
price paid in the Offer, without interest thereon.
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into a Tender and Option Agreement, dated as of January 19,
1998 (the "Tender Agreement"), with FS Equity Partners II, L.P., a California
limited partnership, (the "Major Stockholder"). The Major Stockholder
beneficially owns an aggregate of 4,389,879 Shares, or approximately 50.8% of
the Company's Shares outstanding on the date hereof. Pursuant to the Tender
Agreement, the Major Stockholder has agreed, among other things, to validly
tender all such Shares pursuant to the Offer and not to withdraw any Shares so
tendered.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is conditioned upon there being validly tendered and not
withdrawn prior to the Expiration Date (as defined in the Offer to Purchase)
that number of Shares which constitutes at least a majority of the Shares
outstanding (the "Minimum Condition"). The Offer is also subject to other terms
and conditions, including the receipt of certain regulatory approvals, set forth
in the Offer to Purchase. The Offer is not conditioned on obtaining financing.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to ChaseMellon
Shareholder Services, L.L.C. (the "Depositary") of its acceptance for payment of
such Shares. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a confirmation
of a book-entry transfer of such Shares into the Depositary's account at one of
the Book-Entry Transfer Facilities (as defined in the Offer to Purchase)), (ii)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase),
and (iii) any other documents required by the Letter of Transmittal. The per
Share consideration paid to any stockholder pursuant to the Offer will be the
highest per Share consideration paid to any other stockholder pursuant to the
Offer. Under no circumstances will interest be paid on the purchase price to be
paid by Purchaser for such Shares, regardless of any extension of the Offer or
any delay in making such payment.
2
<PAGE> 3
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment pursuant to the
Offer, may also be withdrawn at any time after March 26, 1998, or such later
time as may apply if the Offer is extended. For a withdrawal to be effective, a
written, telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth in the Offer
to Purchase and must specify the name of the person having tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares 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
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in the Offer to Purchase), the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
set forth in Section 3 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 and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 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 Purchaser, in its sole discretion, which
determination will be final and binding.
Subject to the terms of the Merger Agreement, Purchaser may, and under
certain circumstances shall, from time to time, extend the period of time during
which the Offer is open and thereby delay acceptance for payment of, and the
payment for, any Shares, by giving oral or written notice of such extension to
the Depositary. Any such extension will be followed as promptly as practicable
by a public announcement thereof no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled date on which the Offer was
to expire. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer.
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares.
The Offer to Purchase, the related Letter of Transmittal and other
relevant documents will be mailed by Purchaser to record holders of Shares, and
will be furnished by Purchaser to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder lists, or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer
to Purchase, Letter of Transmittal and other tender offer documents may be
directed to the Information Agent, at the address and telephone number set forth
below, and copies will be furnished at Purchaser's expense. Purchaser will not
pay any fees or commissions to any broker or dealer or other person (other than
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
3
<PAGE> 4
THE INFORMATION REQUIRED TO BE DISCLOSED BY PARAGRAPH (E)(1)(VII) OF
RULE 14D-6 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED
IN THE OFFER TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
January 26, 1998
4
<PAGE> 1
EXHIBIT (a)(8)
PRESS RELEASE
FOR IMMEDIATE RELEASE
Jan. 20, 1998 - Albertson's, Inc. (NYSE:ABS) announced today that it has
entered into a definitive agreement whereby Albertson's will acquire Buttrey
Food and Drug Stores Company (NASDAQ: BTRY) for $15.50 per share. Buttrey is
headquartered in Great Falls, Montana and is a leading supermarket and pharmacy
retailer operating 43 stores in Montana, North Dakota and Wyoming.
The agreement calls for a wholly owned subsidiary of Albertson's to
commence a cash tender offer at $15.50 per share no later than Monday, January
26, 1998, for all Buttrey outstanding shares. The offer will be subject to
regulatory approval and certain conditions, including the tender of a majority
of the Buttrey shares. Financing is not a condition. Following the consummation
of the offer, Albertson's subsidiary will be merged with Buttrey and any
remaining shares will be converted into the right to receive $15.50 per share in
cash. The transaction was unanimously approved by the board of directors of
Buttrey.
As a part of this transaction, the Buttrey shareholder owning a majority
of the outstanding Buttrey stock has agreed to tender promptly all its Buttrey
shares and has granted Albertson's an option to purchase all its Buttrey shares
under certain circumstances.
"This announcement marks our second acquisition in as many weeks and is
another important step in our acquisition strategy. We will continue to pursue
opportunities that allow us to strengthen our market presence in existing
markets or efficiently enter new markets," said Mr. Gary Michael, Chairman and
Chief Executive Officer of Albertson's.
"This transaction will yield both strategic and financial benefits as
well as continue our program to accelerate top-line growth, increase
profitability and enhance shareholder value. We are joining together two
companies with complementary strengths and a shared commitment to providing
customers with high-quality products at a good value with top-notch service.
<PAGE> 2
"We will be obtaining an outstanding retailer with quality stores in
excellent locations. From a strategic standpoint, this transaction will
strengthen our market presence in Montana, North Dakota and Wyoming, especially
in many of the smaller towns where Albertson's does not currently operate.
"From a financial standpoint, we expect to realize synergies in our
combined purchasing power, distribution efficiencies and merchandising and
systems opportunities. These synergies will enable us to build from the solid
sales and earnings base that Buttrey has created.
"We look forward to welcoming the well trained, motivated and loyal
employees of Buttrey. Their commitment to customer service is a great fit with
the Albertson's employees who deliver the same outstanding service to over 700
million customers a year," Mr. Michael concluded.
Albertson's, Inc. is one of the largest retail food- drug chains in the
United States. The Boise, Idaho based company currently operates 866 retail
stores in 20 Western, Midwestern and Southern states.
The tender offer would be made only pursuant to an offer to purchase and
related documents to be filed with the Securities and Exchange Commission.
Forward-looking statements in this news release, if any, are not updated
to reflect actual results, changes in assumptions or changes in other factors
affecting such forward-looking information. Assumptions and other information
that could cause actual results to differ from those set forth in the
forward-looking information can be found in the Company's Form 10-Q.
CONTACT: Albertson's, Inc., Boise, Idaho
Investor Relations
A. Craig Olson 208/395-6284
Renee Berquist 208/395-6622
News Media 208/395-6392
Mike Read
Jenny Enochson
2
<PAGE> 1
EXHIBIT (a)(9)
FOR IMMEDIATE RELEASE
ALBERTSON'S, INC. COMMENCES TENDER OFFER
FOR BUTTREY FOOD AND DRUG STORE COMPANY
Jan. 26, 1998 -- Albertson's Inc. (NYSE:ABS) announced today that
Locomotive Acquisition Corp., a wholly owned subsidiary, has commenced its
tender offer to purchase all outstanding shares of Buttrey Food and Drug Stores
Company (NASDAQ:BTRY) for $15.50 net per share. The offer and withdrawal rights
are scheduled to expire at 12:00 midnight, New York City time on Monday,
February 23, 1998, unless the offer is extended by Albertson's, Inc.
The offer is being made in accordance with the previously announced
merger agreement among Albertson's, Inc., Locomotive Acquisition Corp. and
Buttrey Food and Drug Stores Company. The offer is subject to regulatory
approval and certain conditions, including the tender of a majority of the
outstanding Buttrey shares.
The offer is being made pursuant to a Tender Offer Statement on
Schedule 14D-1 to be filed today by Albertson's, Inc. with the Securities and
Exchange Commission and mailed to Buttrey shareholders. Copies of the tender
offer materials may be obtained from the Information Agent, Georgeson & Company
Inc., at 212-440-9800 or 800-223-2064.
Albertson's, Inc. is one of the largest retail food-drug chains in
the United States. The Boise, Idaho based company currently operates 869 retail
stores in 20 Western, Midwestern and Southern states.
********************
CONTACT:
Albertson's Inc., Boise, Idaho
Investor Relations
A. Craig Olson 208-395-6284
Renee Berquist 208-395-6622
News Media 208-395-6392
Mike Read
Jenny Enochson
<PAGE> 1
EXHIBIT (c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
ALBERTSON'S, INC.,
LOCOMOTIVE ACQUISITION CORP.
AND
BUTTREY FOOD AND DRUG STORES COMPANY
Dated as of January 19, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
1.2 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
1.3 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.2 Filing; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.3 Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.4 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
2.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
ARTICLE III CONVERSION OF AND SURRENDER AND PAYMENT FOR
COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
3.1 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
3.2 Closing of Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
3.3 Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
3.4 Funding of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
3.5 Company Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
ARTICLE IV CERTAIN EFFECTS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
4.1 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
4.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.2 Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.4 Proxy Statement; Offer Documents; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 11.
5.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
5.6 No Prior Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
5.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
5.8 No Prior Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
6.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
6.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
6.3 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
6.4 Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
6.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
6.6 Governmental Authorizations and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
6.8 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
6.9 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
6.10 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
6.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
6.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
6.13 Real Estate Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
6.14 Title to Properties; Absence of Liens and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . 20.
6.15 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
6.16 Proprietary Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
6.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
6.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
6.19 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
6.20 Proxy Statement; Offer Documents; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 22.
6.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
6.22 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
6.23 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
6.24 Potential Conflict of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
6.25 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
6.26 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
6.27 Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
6.28 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
ARTICLE VII COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
7.1 Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
7.2 Conduct of the Business of the Company Prior to the Effective Date . . . . . . . . . . . . . . . . . . 25.
7.3 Company Board Representation; Section 14(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.
7.4 Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.
7.5 Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.
7.6 Acquiror Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.
7.7 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.
7.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.
7.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.
7.10 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.
7.11 Antitrust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.
7.12 Notices of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.
</TABLE>
ii.
<PAGE> 4
<TABLE>
<S> <C> <C>
7.13 Stockholder Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.
7.14 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.
7.15 Certain Supplier Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.
7.16 Year 2000 Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.
7.17 Recovery of Certain Amounts Owed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.
ARTICLE VIII CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.
8.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . 37.
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.
9.2 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.
9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.
10.2 Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.
10.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.
10.5 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.
10.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.
10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.
10.8 Invalidity, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.
10.9 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.
10.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.
10.11 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.
</TABLE>
iii.
<PAGE> 5
EXHIBITS
EXHIBIT A CONDITIONS TO THE OFFER
EXHIBIT B CERTIFICATE OF MERGER
SCHEDULES
SCHEDULE 3.5 COMPANY STOCK OPTION PLANS
SCHEDULE 6.1 CORPORATE ORGANIZATION
SCHEDULE 6.3 OPTIONS OR OTHER RIGHTS
SCHEDULE 6.5 VIOLATIONS OF/CONSENTS REQUIRED BY MATERIAL
CONTRACTS
SCHEDULE 6.7 LITIGATION INVOLVING THE COMPANY OR THE SUBSIDIARY
SCHEDULE 6.9 ABSENCE OF CERTAIN CHANGES OR EVENTS
SCHEDULE 6.10 BENEFIT PLANS
SCHEDULE 6.11 ERISA
SCHEDULE 6.12 COMPLIANCE WITH ENVIRONMENTAL LAWS
SCHEDULE 6.13 LEASED REAL ESTATE
SCHEDULE 6.14 TITLE TO PROPERTIES; ABSENCE OF LIENS AND
ENCUMBRANCES
SCHEDULE 6.15 TAX MATTERS
SCHEDULE 6.16A LIST OF PROPRIETARY PROPERTY
SCHEDULE 6.17 LABOR MATTERS
SCHEDULE 6.18 INSURANCE
SCHEDULE 6.19 MATERIAL CONTRACTS
SCHEDULE 6.22 SUPPLIERS
SCHEDULE 7.2 CONDUCT OF BUSINESS OF COMPANY PRIOR TO THE EFFECTIVE DATE
SCHEDULE 10.11 DEFINITION
iv.
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of January 19, 1998
among Albertson's, Inc., a Delaware corporation (the "Acquiror"), Locomotive
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the
Acquiror ("Newco"), and Buttrey Food and Drug Stores Company, a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Newco, the Acquiror and the Company
deem advisable and in the best interests of their respective stockholders the
merger of Newco with and into the Company (the "Merger") upon the terms and
conditions set forth herein and in accordance with the General Corporation Law
of the State of Delaware (the "General Corporation Law") (the Company and Newco
being hereinafter sometimes referred to as the "Constituent Corporations" and
the Company, following the effectiveness of the Merger, being hereinafter
sometimes referred to as the "Surviving Corporation");
WHEREAS, in furtherance thereof, it is proposed that Newco make an offer
to purchase for cash (the "Offer") all of the issued and outstanding shares of
Common Stock, $.01 par value, of the Company (the "Common Stock") at a price
per share equal to the Price Per Share (as defined in Section 1.1 hereof),
subject to the terms and conditions set forth herein and in Exhibit A attached
hereto;
WHEREAS, the Boards of Directors of the Acquiror, Newco and the Company
have approved the Offer, and have approved the Merger following expiration of
the Offer, upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has further determined
that the consideration to be paid for each share of Common Stock in the Offer
and the Merger is fair to the holders of such shares and has resolved to
recommend that the holders of such shares accept the Offer and approve this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein; and
WHEREAS, FS Equity Partners II, L.P., a California limited partnership
(the "Major Stockholder"), concurrently herewith is entering into that certain
Tender and Option Agreement (the "Stockholder Agreement"), dated as of the date
hereof, with the Acquiror and Newco, pursuant to which the Major Stockholder
will agree, among other things, to tender the shares of Common Stock held by it
in the Offer and to grant the Acquiror a proxy with respect to the voting of
such shares upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Offer and the Merger and the mode
of carrying the same into effect, the parties hereby agree as follows:
1.
<PAGE> 7
ARTICLE I
THE TENDER OFFER
1.1 The Offer.
(a) So long as none of the events set forth in paragraphs
(a) through (g) in Exhibit A attached hereto shall have occurred and be
continuing, Newco shall, as soon as practicable but in no event later than five
Business Days (as defined in Section 1.3) from the date hereof, commence the
Offer to purchase all of the outstanding shares of Common Stock of the Company
at a price of $15.50 per share, in cash (the "Price Per Share") and subject to
(i) at least that number of shares of Common Stock equivalent to a majority of
the total issued and outstanding shares of Common Stock on the date such shares
are purchased pursuant to the Offer (the "Minimum Shares") being validly
tendered and not withdrawn prior to the expiration of the Offer (the "Minimum
Condition") and (ii) the satisfaction of the other conditions set forth in
Exhibit A attached hereto, any of which conditions may be waived by Newco in
its sole discretion, Newco shall not withdraw the Offer and shall at the
earliest time following the expiration of the Offer and subject to the terms of
the Offer accept for payment, purchase and pay for all shares of Common Stock
duly tendered and not withdrawn. The Offer shall be made pursuant to an Offer
to Purchase and related Letter of Transmittal in forms reasonably satisfactory
to the Company and containing terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Exhibit A attached hereto,
which terms and conditions shall not be amended without the prior written
consent of the Company.
(b) Neither the Acquiror nor Newco will, without the prior
written consent of the Company, decrease the Price Per Share payable in the
Offer, decrease the number of shares of Common Stock sought pursuant to the
Offer or change the form of consideration payable in the Offer, change or amend
the conditions to the Offer (including the conditions set forth in Exhibit A
attached hereto) or impose additional conditions to the Offer, change the
expiration date of the Offer, or otherwise amend, add or waive any term or
condition of the Offer in any manner adverse to the holders of shares of Common
Stock; provided, however, that if on any scheduled expiration date of the
Offer, which shall initially be twenty Business Days after the date the Offer
is commenced, all conditions to the Offer have not been satisfied or waived,
(i) Newco may, from time to time, extend the expiration date of the Offer and
(ii) Newco shall from time to time after consultation with the Company extend
the expiration date of the Offer as long as (A) the waiting period under the
HSR Act (as defined below) shall not have expired or been terminated or (B) any
order, decree, ruling or other action of or agreement with a Governmental
Authority (as defined below) that has the effect of restraining, enjoining,
prohibiting or delaying the consummation of the Offer or the Merger or imposing
material limitations on the ability of Newco to acquire shares of Common Stock
shall be in effect. Subject to the terms and conditions of this Agreement,
Acquiror agrees that it shall extend the expiration date of the Offer and shall
not terminate the Offer under clause (a) of Exhibit A or Section 9.1(b) or (h)
of this Agreement until it has reached an agreement authorizing consummation of
the Offer and the Merger with the FTC or DOJ (each, as defined below) and any
other Governmental Authority that may have asserted that consummation of the
Offer will violate Antitrust Laws and any injunction or order prohibiting or
limiting consummation of the Offer or the Merger has become final and
non-appealable. Each such extension shall be reasonable under the
circumstances, with the parties acknowledging that
2.
<PAGE> 8
they wish to consummate the purchase of shares pursuant to the Offer as
expeditiously as possible. If, immediately prior to the expiration date of the
Offer (as it may be extended), the shares of Common Stock tendered and not
withdrawn pursuant to the Offer constitute less than 90% of the number of
outstanding shares of Common Stock, Newco may extend the Offer for a period not
to exceed ten Business Days, notwithstanding that all conditions to the Offer
are satisfied as of such expiration date of the Offer; provided that in the
event the Offer is extended pursuant to this sentence then Acquiror and Newco
shall no longer be able to rely on the provisions of subparagraphs (b), (c),
(d), (e), (f) or (g) of Exhibit A, or Sections 9.1(b), (f), (h), (i) and (j)
hereof, then or in the future as grounds for its refusal to accept for payment
and purchase, or to pay for, or as grounds for its delay in the acceptance for
payment for, any shares of Common Stock tendered in the Offer. Acquiror and
Newco will subject to the terms and conditions of this Agreement use their best
efforts to consummate the Offer. Assuming the prior satisfaction or waiver of
all the conditions to the Offer set forth in Exhibit A, and subject to the
terms and conditions of this Agreement, the Acquiror shall cause Newco to
accept for payment and pay for, in accordance with the terms of the Offer, all
shares of Common Stock tendered pursuant to the Offer as soon as permitted
recognizing that the parties wish to close as expeditiously as possible
following expiration or termination of the waiting period under the HSR Act.
The Acquiror shall provide or cause to be provided to Newco, on a timely basis,
the funds necessary to purchase any shares of Common Stock that Newco becomes
obligated to purchase pursuant to the Offer.
1.2 SEC Filings. On or before January 26, 1998, the Acquiror and/or
Newco shall file with the Securities and Exchange Commission (the
"Commission"), with respect to the Offer, a Tender Offer Statement on Schedule
14D-1 (the "Schedule 14D-1"). The Schedule 14D-1 will comply in all material
respects with the provisions of applicable federal securities laws and will
incorporate by reference to the Offer to Purchase, the related Letter of
Transmittal and any related summary advertisement (the Schedule 14D-1, the
Offer to Purchase, the Letter of Transmittal and such other documents being
collectively referred to herein as the "Offer Documents"). The Company and its
counsel shall be given an opportunity to review and comment upon the Offer
Documents and any amendments or supplements thereto, prior to the filing
thereof with the Commission, and Acquiror and Newco shall in good faith
consider such comments. The Acquiror and Newco agree to provide to the Company
and its counsel any comments which the Acquiror, Newco or their counsel may
receive from the Staff of the Commission with respect to the Offer Documents
promptly after receipt thereof. The Acquiror, Newco and the Company agree to
correct promptly any information provided by any of them for use in the Offer
Documents which shall have become false or misleading in any material respect,
and the Acquiror and Newco further agree to take all steps necessary to cause
the Schedule 14D-1 as so corrected to be filed with the Commission, and the
other Offer Documents as so corrected to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. Notwithstanding the foregoing, the Acquiror and Newco hereby
agree that the Offer Documents to be transmitted to the stockholders of the
Company shall include provisions pursuant to which the depositary or exchange
agent selected by the Acquiror, Newco and the Company will make payment of the
Price Per Share, to any holder who validly tenders at least 45,000 shares of
Common Stock in the Offer on or prior to its expiration date, by wire transfer
of the Price Per Share to such holder within one Business Day of the date that
such shares of Common Stock are accepted for payment and purchased by Newco.
3.
<PAGE> 9
Commission a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which will comply in all material respects with the
provisions of applicable federal securities laws. The Acquiror and its counsel
shall be given an opportunity to review and comment upon the Schedule 14D-9 and
any amendments or supplements thereto, prior to the filing thereof with the
Commission, and the Company shall in good faith consider any such comments.
The Company agrees to provide to the Acquiror and Newco and their counsel any
comments which the Company or its counsel may receive from the Staff of the
Commission with respect to the Schedule 14D-9 promptly after receipt thereof.
The Company, Acquiror and Newco agree to correct promptly any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause such Schedule 14D-9 as so corrected to be
filed with the Commission and disseminated to the Company's stockholders as and
to the extent required by applicable federal securities laws. Subject to the
fiduciary duties of the Board of Directors of the Company, under applicable
law, the Offer Documents shall contain the recommendations of the Board of
Directors of the Company that the Company's stockholders accept the Offer.
Acquiror, Newco and the Company each hereby agree promptly to provide such
information necessary to the preparation of the exhibits and schedules to the
Schedule 14D-9 and the Offer Documents which the respective party responsible
therefor shall reasonably request.
1.3 Company Action.
(a) The Company hereby approves of and consents to the
Offer and represents that its Board of Directors has (i) determined that each
of the Offer and Merger is fair to and in the best interests of the Company's
stockholders, (ii) approved the Merger and the making of the Offer and (iii)
resolved to recommend acceptance of the Offer by the Company's stockholders and
approval and adoption of this Agreement and authorization of the Merger by the
stockholders of the Company; provided, however, that such recommendation may be
withdrawn, modified or amended in accordance with Section 7.5(b). The Company
represents that Morgan Stanley & Co. Incorporated ("Morgan Stanley") has
delivered to the Company's Board of Directors its written opinion that as of
the date hereof, based upon the factors considered by Morgan Stanley in
connection with the transactions contemplated by this Agreement, the Price Per
Share to be received by the holders of shares of Common Stock pursuant to the
Offer, this Agreement and the Merger is fair, from a financial point of view,
to such holders receiving the Price Per Share and that a copy of such opinion
will be promptly delivered to the Acquiror.
(b) Promptly upon execution of this Agreement and in
connection with the Offer, the Company shall furnish Newco with or cause Newco
to be furnished with such information, including lists of the stockholders of
the Company, mailing labels and lists of securities positions, each as of a
recent date, and shall thereafter render such assistance as the Acquiror or
Newco may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, the Acquiror and Newco and each
of their respective affiliates and associates shall hold in confidence the
information contained in any of such labels and lists, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, will promptly deliver to the Company all copies of
such information then in their
4.
<PAGE> 10
possession. Without limiting the generality of the foregoing, upon receipt of
a request from the Acquiror or Newco under Rule 14d-5 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company
will comply with Rule 14d-5(a) by a notice to the Acquiror given no later than
the first Business Day (as defined in Rule 14d-1(b)(7) of the Exchange Act)
after the date of the Acquiror's request, and shall elect to comply with Rule
14d-5(c) within one Business Day thereof.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and conditions hereinafter set forth
and in accordance with the General Corporation Law, at the Effective Date (as
defined in Section 2.3), Newco shall be merged with and into the Company and
thereupon the separate existence of Newco shall cease, and the Company, as the
Surviving Corporation, shall continue to exist under and be governed by the
General Corporation Law.
2.2 Filing; Closing. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Section 8 hereof (other
than the condition set forth in Section 8.1(a), which may not be waived), Newco
and the Company will either (i) cause a Certificate of Merger, in substantially
the form of Exhibit B attached hereto (the "Certificate of Merger"), to be
executed and filed with the Secretary of State of the State of Delaware as
provided in Section 251 of the General Corporation Law, or (ii) in the event
Newco shall have acquired 90% or more of the outstanding shares of each class
of capital stock of the Company, cause a Certificate of Ownership to be
executed and filed with the Secretary of State of the State of Delaware as
provided in Section 253 of the General Corporation Law. Prior to such filing,
a closing shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom,
919 Third Avenue, New York, New York 10022, or such other place as the parties
shall agree, for the purpose of confirming the satisfaction or waiver, as the
case may be, of the conditions set forth in Section 8 of this Agreement (the
"Closing"). The Closing shall occur no later than the second Business Day
after satisfaction or waiver of the conditions set forth in Section 8 (other
than the condition set forth in Section 8.1(a), which may not be waived).
2.3 Effective Date of the Merger. The Merger shall become effective
immediately upon the filing, in accordance with Section 251 or Section 253, as
the case may be, of the General Corporation Law, of the Certificate of Merger
or a Certificate of Ownership, as the case may be, with the Secretary of State
of the State of Delaware in accordance therewith. The date and time of such
filing is herein sometimes referred to as the "Effective Date."
2.4 Certificate of Incorporation and Bylaws. Upon the effectiveness
of the Merger, the Certificate of Incorporation of the Company shall be the
certificate of incorporation of the Surviving Corporation, and the Bylaws of
Newco as in effect on the Effective Date shall be the Bylaws of the Surviving
Corporation; provided that such Certificate and Bylaws of the Surviving
Corporation shall not be inconsistent with the provisions of Section 7.8
hereof.
5.
<PAGE> 11
2.5 Directors and Officers. The persons who are directors of Newco
immediately prior to the Effective Date and the officers of the Company shall,
after the Effective Date and in accordance with the Certificate of Merger or
Certificate of Ownership, as the case may be, serve as the directors and
officers, respectively, of the Surviving Corporation, in each case such
directors and officers to serve until their successors have been duly elected
and qualified in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation.
ARTICLE III
CONVERSION OF AND SURRENDER AND
PAYMENT FOR COMMON STOCK
3.1 Conversion. At the Effective Date, by virtue of the Merger and
without any action on the part of the holders thereof:
(a) Each issued and outstanding share of the Common Stock
of the Company, other than (i) shares of Common Stock owned of record by the
Acquiror or Newco, (ii) Dissenting Stock (as hereinafter defined) or (iii)
shares of Common Stock held in the treasury of the Company, shall be
automatically converted into the right to receive the Price Per Share in cash.
(b) Each issued and outstanding share of the Common Stock
of Newco shall be converted into one (1) validly issued, fully paid and
nonassessable share of common stock, $.01 par value (the "New Common Stock"),
of the Surviving Corporation.
(c) All shares of Common Stock which are held by the
Company as treasury shares or which are owned of record by the Acquiror or
Newco shall be canceled and retired and cease to exist, without any conversion
thereof or payment with respect thereto.
(d) The right of any stockholder of the Company to receive
the Price Per Share shall be subject to and reduced by the amount of any
required tax withholding obligation.
Notwithstanding any provision of this Agreement to the contrary, shares
of the Common Stock with respect to which appraisal rights have been demanded
and perfected in accordance with Section 262(d) of the General Corporation Law
(the "Dissenting Stock") shall not be converted into the right to receive cash
at or after the Effective Date, and the holder thereof shall be entitled only
to such rights as are granted by the General Corporation Law. Notwithstanding
the preceding sentence, if any holder of shares of Common Stock who demands
appraisal of such shares under the General Corporation Law shall effectively
withdraw his demand for such appraisal (in accordance with Section 262(k) of
the General Corporation Law) or becomes ineligible for such appraisal (through
failure to perfect or otherwise) then, as of the Effective Date or the
occurrence of such event, whichever last occurs, such holder's Dissenting Stock
shall cease to be Dissenting Stock and shall be converted into and represent
the right to receive cash, without interest thereon, as provided in this
Section 3.1. The Company shall give the Acquiror (i) prompt notice of any
written demands for appraisal, withdrawals of demands for appraisal and any
other instrument served pursuant to Section 262 of the General Corporation Law
received by the
6.
<PAGE> 12
Company and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under such Section. Except
with the prior written consent of Acquiror, prior to the Effective Date, the
Company will not voluntarily make any payment with respect to any demands for
appraisal and will not settle or offer to settle any such demands.
3.2 Closing of Transfer Books. At the Effective Date, the stock
transfer books of the Company shall be closed, and no transfer of shares of
Common Stock of the Company shall thereafter be made. If, after the Effective
Date, certificates previously representing shares of Common Stock are presented
to the Surviving Corporation or the Paying Agent (as defined in Section 3.3),
they shall be canceled and exchanged for cash as provided in Section 3.1(a),
subject to applicable law in the case of Dissenting Stock.
3.3 Surrender of Certificates.
(a) The Company. From and after the Effective Date, such
bank and trust company as Newco, at least five days prior to the mailing of the
Proxy Statement (as defined in Section 7.1), shall designate and the Company
shall approve (which approval shall not be unreasonably withheld), shall act as
paying agent (the "Paying Agent") in effecting the exchange for cash of
certificates that, prior to the Effective Date, represented shares of Common
Stock entitled to payment in cash pursuant to Section 3.1(a). As soon as
practicable after the Effective Date, the Paying Agent shall send a notice and
transmittal form to each holder of record of Common Stock immediately prior to
the Effective Date, advising such holder of the effectiveness of the Merger and
the procedure for surrendering to the Paying Agent (who may appoint forwarding
agents with the approval of Newco) the certificate or certificates to be
exchanged pursuant to the Merger. Upon the surrender for exchange of such a
certificate, together with such letter of transmittal duly completed and
properly executed in accordance with instructions thereto and such other
documents as may be required pursuant to such instructions, the holder shall be
paid promptly, without interest thereon and subject to any required withholding
of taxes, the amount of cash to which such holder is entitled hereunder, and
such certificate shall forthwith be canceled. Until so surrendered and
exchanged, each certificate which immediately prior to the Effective Date
represented outstanding shares of the Common Stock (other than Dissenting Stock
and shares of Common Stock owned by the Acquiror or Newco) shall represent
solely the right to receive the cash into which the Common Stock it theretofore
represented shall have been converted pursuant to Section 3.1(a), subject to
any required withholding of taxes. If any payment for Common Stock is to be
made to a person other than the person in whose name the certificates for such
shares surrendered or registered, it shall be a condition of the exchange that
the person requesting such exchange shall pay to the Paying Agent any transfer
or other taxes required by reason of the delivery of such check to a person
other than the registered owner of the certificate surrendered or shall
establish to the satisfaction of the Paying Agent that such tax has been paid
or is not applicable.
(b) Newco. The Acquiror, as the sole stockholder of Newco,
shall, upon surrender to the Surviving Corporation of certificates representing
the common stock, $1.00 par value, of Newco, receive a certificate representing
the number of shares of New Common Stock into which the capital stock of Newco
shall have been converted pursuant to Section 3.1(b).
7.
<PAGE> 13
3.4 Funding of Paying Agent. Prior to the Effective Date, the
Company and Newco shall enter into an agreement (the "Payment Agreement") with
the Paying Agent. Prior to the filing of the Certificate of Merger or the
Certificate of Ownership, as the case may be, Newco shall deposit or cause to
be deposited with the Paying Agent in trust for the benefit of stockholders of
the Company, cash in an aggregate amount equal to the product obtained by
multiplying (i) the number of shares of Common Stock outstanding (and not owned
of record by the Acquiror or Newco) immediately prior to the Effective Date, by
(ii) the Price Per Share. The deposit made by Newco pursuant to the preceding
sentence is hereinafter referred to as the "Payment Fund." The Payment
Agreement shall provide, among other things, that (a) the Paying Agent shall
maintain the Payment Fund as a separate fund to be held for the benefit of the
holders of the Common Stock of the Company, which shall be promptly applied by
the Paying Agent to making the payments provided for in Section 3.3, (b) any
portion of the Payment Fund that has not been paid to holders of the Common
Stock pursuant to Section 3.3 prior to that date which is six months from the
Effective Date shall be paid to the Surviving Corporation, and any holders of
Common Stock who shall not have theretofore complied with Section 3.3 shall
thereafter look only to the Acquiror and the Surviving Corporation for payment
of the amount of cash to which they are entitled under this Agreement, (c) the
Payment Fund shall not be used for any purpose that is not provided for herein,
(d) the Paying Agent may invest, if so directed by Acquiror or the Surviving
Corporation, the Payment Fund in obligations of the United States government or
any agency or instrumentality thereof, or in obligations that are guaranteed or
insured by the United States government or any agency or instrumentality
thereof, (e) any net profit resulting from, or interest or income produced by,
such investments shall be payable to the Surviving Corporation on demand, and
(f) all expenses of the Paying Agent shall be paid directly by the Surviving
Corporation. Promptly following the date which is six months from the
Effective Date, the Paying Agent shall return to the Surviving Corporation all
cash and any other instruments in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a certificate formerly representing Common Stock
other than the Dissenting Stock may surrender such certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the consideration payable in respect thereto
pursuant to Section 3.1(a) hereof, without interest, but shall have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under the General Corporation Law.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable for the Price Per Share to any holder of a certificate
formerly representing Common Stock if such amount is delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
3.5 Company Stock Option Plans. Prior to consummation of the Offer
or the Effective Date or both, the Company may, subject to the penultimate
sentence of this Section 3.5 and Schedule 3.5, enter into agreements in respect
of outstanding options to purchase shares of Common Stock (the "Options")
pursuant to the Company's 1990 Nonqualified Performance Stock Option Plan, 1993
Special Option Plan, 1995 Stock Option Plan and the 1996 Nonqualified
Non-Employee Directors Stock Option Plan (collectively, the "Stock Option
Plans"), providing for the payment upon surrender of each vested Option
immediately after the consummation of the Offer up to and including the
Effective Date of an amount of cash per share subject to each such Option equal
to the excess, if any, of the Price Per Share over the exercise price of such
Option
8.
<PAGE> 14
less an amount equal to all taxes required to be withheld from such payment
(the "Spread Per Share"). Any Options not so surrendered or exercised prior to
the Effective Date shall terminate no later than the Effective Date in
accordance with the terms of the Stock Option Plans or such agreements with
optionees. The Company may accelerate the vesting of outstanding Options in
accordance with Schedule 3.5. Upon request of the Company following
consummation of the Offer, the Acquiror shall advance to the Company sufficient
funds to enable the Company to pay the aggregate Spread Per Share.
ARTICLE IV
CERTAIN EFFECTS OF MERGER
4.1 Effect of Merger. On and after the Effective Date, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, and be subject to all
the restrictions, disabilities and duties of each of the Constituent
Corporations; and all and singular rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real, personal and
mixed, and all debts due to either of the Constituent Corporations on whatever
account, as well for stock subscriptions as all other things in action or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise, in
either of the Constituent Corporations shall not revert or be in any way
impaired; but all rights of creditors and all liens upon any property of either
of the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall thenceforth attach
to the Surviving Corporation and may be enforced against it to the same extent
as if said debts, liabilities and duties had been incurred or contracted by it.
4.2 Further Assurances. If at any time after the Effective Date the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary, desirable or
proper (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, the title to any property or right of the Constituent
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or (b) otherwise to carry out the purposes of this Agreement, the
Constituent Corporations agree that the Surviving Corporation and its proper
officers and directors shall and will execute and deliver all such deeds,
assignments and assurances in law and do all acts necessary, desirable or
proper to vest, perfect or confirm title to such property or right in the
Surviving Corporation and otherwise to carry out the purposes of this
Agreement, and that the proper officers and directors of the Constituent
Corporations and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of the Constituent Corporations or otherwise
to take any and all such action.
9.
<PAGE> 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
ACQUIROR AND NEWCO
The Acquiror and Newco jointly and severally represent and warrant to
the Company as follows:
5.1 Corporate Organization. Each of the Acquiror and Newco is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with all requisite corporate
power and authority to own, operate and lease its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
material adverse effect on Acquiror and its Subsidiaries, taken as a whole.
5.2 Authority Relative to Agreement. Each of the Acquiror and Newco
has full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated on its part hereby. The
execution, delivery and performance by each of the Acquiror and Newco of this
Agreement and the consummation of the transactions contemplated on their parts
hereby have been duly authorized by all necessary corporate action (including,
without limitation, stockholder action) on the part of the Acquiror and Newco.
No other action on the part of the Acquiror or Newco is necessary to authorize
the execution and delivery of this Agreement by the Acquiror and Newco or the
performance by the Acquiror and Newco of their respective obligations
hereunder. This Agreement has been duly executed and delivered by each of the
Acquiror and Newco, and is a legal, valid and binding obligation of each of the
Acquiror and Newco, enforceable against each of the Acquiror and Newco in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general
equitable principles.
5.3 No Violation. The execution, delivery and performance of this
Agreement by each of the Acquiror and Newco and the consummation by each of
them of the transactions contemplated hereby, will not (i) violate or conflict
with any provision of any material law applicable to the Acquiror or Newco or
by which any property or asset of either of them is bound, (ii) require the
consent, waiver, approval, license or authorization of or any filing by the
Acquiror or Newco with any public authority (other than (a) the filing of a
pre-merger notification report under The Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (collectively, the "HSR Act"), (b) in connection with or in
compliance with the provisions of the Exchange Act, the General Corporation
Law, the "takeover" or "blue sky" laws of various states, (c) applicable state
statutes and regulations regulating the sale of various items and services sold
by the Acquiror or Newco, and (d) any other filings and approvals expressly
contemplated by this Agreement), (iii) conflict with or result in any breach of
any material provision of the respective certificate of incorporation or
by-laws of the Acquiror and Newco in any material respect or (iv) violate,
conflict with, result in a breach of or the acceleration of any obligation
under, or constitute a default (or an event which with notice or the lapse of
time or both would become a default) under, or give to others any right of
10.
<PAGE> 16
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Acquiror, Newco, or any of their respective subsidiaries (collectively, the
"Subsidiaries") pursuant to any provision of any indenture, mortgage, lien,
lease, agreement, contract, instrument, order, judgment, ordinance, regulation
or decree to which the Acquiror or Newco is subject or by which the Acquiror or
Newco or any of their property or assets is bound, except in the case of
clauses (i), (ii) and (iv) where failure to give such notice, make such
filings, or obtain such authorizations, consents or approvals, or where such
violations, conflicts, breaches or defaults, individually or in the aggregate,
would not prevent or delay consummation of the Offer or the Merger, or
otherwise adversely effect the ability of the Acquiror or Newco to consummate
the transactions contemplated by this Agreement or to perform their respective
obligations hereunder.
5.4 Proxy Statement; Offer Documents; Other Information. Neither
the Offer Documents nor any of the information supplied or to be supplied in
writing by either the Acquiror or Newco for inclusion in the Schedule 14D-9,
the Proxy Statement (as defined in Section 7.1) and any other documents to be
filed with the Commission or any regulatory agency in connection with the
transactions contemplated hereby, including any amendment or supplement to such
documents, will, at the respective times such documents are filed, and, with
respect to the Schedule 14D-9, the Proxy Statement and the Offer Documents,
when first published, sent or given to stockholders of the Company, contain any
untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements made therein in light of the
circumstances under which they are made not misleading or, in the case of the
Schedule 14D-9 and the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Meeting (as defined in Section 7.1) and at the
Effective Date, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they are made, not false or misleading or necessary to correct any statement in
any earlier communication with respect to the Offer or the solicitation of
proxies for the Meeting which shall have become false or misleading. If, at
any time prior to the Effective Date, any event relating to the Acquiror or any
of its affiliates, officers or directors is discovered by the Acquiror that
should be set forth in an amendment or supplement to the Schedule 14D-9, the
Proxy Statement or the Offer Documents, the Acquiror will promptly inform the
Company, and such amendment or supplement will be promptly filed with the
Commission and appropriate state securities administrators, and disseminated to
the stockholders of the Company, to the extent required by applicable federal
and state securities laws. All documents which the Acquiror or Newco files or
is responsible for filing with the Commission and any regulatory agency in
connection with the Offer or the Merger (including, without limitation, the
Offer Documents and the Proxy Statement) will comply as to form and content in
all material respects with the provisions of applicable law. Notwithstanding
the foregoing, neither the Acquiror nor Newco makes any representation or
warranty with respect to any information that has been supplied by the Company
or the Subsidiary or their auditors, attorneys, financial advisors, other
consultants or advisors specifically for use in the Offer Documents, or in any
other documents to be filed with the Commission or any regulatory agency in
connection with the transactions contemplated hereby.
5.5 Financing. The Acquiror and Newco have funds or other financial
resources available sufficient to consummate the Offer and the Merger on the
terms contemplated by this
11.
<PAGE> 17
Agreement, and at the expiration of the Offer and the Effective Date of the
Merger, the Acquiror and Newco will have available all of the funds necessary
for the acquisition of all shares of Common Stock pursuant to the Offer and the
Merger, as the case may be, and to perform their respective obligations under
this Agreement.
5.6 No Prior Activities. Newco has not incurred nor will it incur
any liabilities or obligations, except those incurred in connection with its
organization and with the negotiation of this Agreement and the performance
hereof, and the consummation of the transactions contemplated hereby, including
the Merger. Except as contemplated by this Agreement, Newco has not engaged in
any business activities of any type or kind whatsoever, or entered into any
agreements or arrangements with any person or entity, or become subject to or
bound by any obligation or undertaking. As of the date hereof, the authorized
capital stock of Newco consists of 1,000 shares of common stock, par value
$1.00 per share, 100 shares of which have been issued, and all of which are
owned beneficially and of record by the Acquiror.
5.7 Brokers. Neither the Acquiror nor Newco has paid or become
obligated to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with this Agreement.
5.8 No Prior Ownership. To the best knowledge of the Acquiror and
Newco, none of the Acquiror, Newco or any of their respective affiliates,
beneficially or of record owns any shares of Common Stock of the Company, other
than shares of Common Stock, if any, held by or for the account of employees or
former employees of the Acquiror, Newco or any of their respective affiliates
pursuant to any of such employees' employee benefit plans or arrangements.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Acquiror and Newco as
follows:
6.1 Corporate Organization. Each of the Company and its subsidiary,
Buttrey Food and Drug Company (the "Subsidiary"), is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as it is now being conducted,
and is qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed, in the
aggregate, would have or be reasonably likely to have a material adverse effect
on the business, operations, properties (including intangible properties),
condition (financial or otherwise), results of operations, assets or
liabilities of the Company and the Subsidiary, taken as a whole. True and
complete copies of the Certificate of Incorporation and the Bylaws of the
Company and the Subsidiary have been delivered to Acquiror and Newco. Such
Certificates of Incorporation and Bylaws are in full force and effect. Neither
the Company nor the Subsidiary is in violation of any material provision of its
Certificate of Incorporation or Bylaws in any material respect. Except for the
Subsidiary, the Pharmacy Corporation (as defined below) and as set forth in
Schedule 6.1, neither the Company nor the Subsidiary owns (i) any equity
interest in any corporation or other entity or (ii) marketable
12.
<PAGE> 18
securities where the Company's or the Subsidiary's equity interest in any
entity exceeds five percent of the outstanding equity of such entity on the
date hereof. Other than the Pharmacy Corporation (as defined in the next
sentence), the Subsidiary is the only subsidiary, direct or indirect, of the
Company. The Subsidiary owns 490 shares of the common stock, $100 par value,
of N.D. Pharmacy, Inc., a corporation organized under the laws of the State of
North Dakota (the "Pharmacy Corporation").
6.2 Capital Stock. As of the date hereof, (i) the authorized
capital stock of the Company consists in its entirety of 15,000,000 shares of
Common Stock, $.01 par value, 8,644,631 of which are issued and outstanding and
none of which are held in the Company's treasury, 199,722 shares of Non-Voting
Common Stock, $.01 par value, none of which are issued and outstanding, and
1,000,000 shares of Preferred Stock, $.01 par value, none of which is issued
and outstanding, (ii) the authorized capital stock of the Subsidiary consists
in its entirety of 1,000 shares of common stock, $.01 par value, all of which
is issued and outstanding and owned beneficially and of record by the Company,
and (iii) the authorized capital stock of the Pharmacy Corporation consists in
its entirety of 2,000 shares of Common Stock, $100 par value, 490 shares of
which are issued and outstanding and owned beneficially and of record by the
Subsidiary, and 510 shares of which are issued and outstanding and owned
beneficially and of record by Robert Treitline. All of the outstanding shares
of capital stock of the Subsidiary and all of the outstanding shares of capital
stock of the Pharmacy Corporation owned by the Subsidiary are held free and
clear of all liens, charges, encumbrances, options, rights of first refusal or
limitations or agreements regarding voting rights of any nature, are duly
authorized and have been validly issued and are fully paid and nonassessable.
6.3 Options or Other Rights. Except as set forth on Schedule 6.3 or
as contemplated by this Agreement, there is no outstanding right, subscription,
warrant, call, unsatisfied preemptive right, option or other agreement or
arrangement of any kind to purchase or otherwise to receive from the Company or
the Subsidiary any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the capital stock or any other security of the Company or
the Subsidiary and there is no outstanding security of any kind convertible
into or exchangeable for such capital stock. Except as set forth on Schedule
6.3, there are no voting trusts or other agreements or understandings to which
the Company, the Subsidiary or the Pharmacy Corporation is a party with respect
to the voting of the capital stock of the Company, the Subsidiary or the
Pharmacy Corporation.
6.4 Authority Relative to Agreement. The Company has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on its part hereby. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated on its part hereby have been duly authorized by its
Board of Directors, and (other than the approval of the voting stockholders as
provided in Section 7.1 hereof) no other action on the part of the Company or
its stockholders is necessary to authorize the execution and delivery of this
Agreement by the Company or the consummation of the transactions contemplated
on its part hereby. This Agreement has been duly executed and delivered by the
Company, and is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that
13.
<PAGE> 19
its enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
6.5 No Violation. Except as set forth on Schedule 6.5, the
execution, delivery and performance of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby will not (i)
materially violate or conflict with any provision of any material law
applicable to the Company or the Subsidiary or by which a material amount of
their property or assets of either of them is bound, (ii) require any consent,
waiver, approval, license or authorization of or any filing by the Company or
the Subsidiary with any public authority (other than (a) the filing of a
premerger notification report under the HSR Act, (b) in connection with or in
compliance with the provisions of the Exchange Act, the General Corporation Law
or the "takeover" or "blue sky" laws of various states, (c) state statutes and
regulations regulating the sale of certain items and services sold or provided
by the Company and the Subsidiary, (d) any such consent, waiver, approval,
license, authorization or filing the failure to obtain or make would not
materially impact the Company's operations and (e) any other filings and
approvals expressly contemplated by this Section 6.5), (iii) conflict with or
result in any breach of any material provision of the certificate of
incorporation or by-laws of the Company or the Subsidiary in any material
respect or (iv) materially violate, conflict with or result in a breach of or
the acceleration of any obligation under, or constitute a default (or an event
which with notice or the lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any material property or asset of the Company or the Subsidiary pursuant to any
provision of any material indenture, mortgage, lien, lease, agreement, contract
or instrument (the "Company Agreements") or any material order, judgment,
ordinance, regulation or decree to which the Company or the Subsidiary is
subject or by which the Company or the Subsidiary or a material amount of their
property or assets is bound. Schedule 6.5 sets forth a list of all material
third party consents and approvals required to be obtained under any Company
Agreement prior to the consummation of the transactions contemplated by this
Agreement.
6.6 Governmental Authorizations and Regulations. The Company and
the Subsidiary hold all governmental licenses, permits and other authorizations
material to the conduct of their businesses. Such material governmental
licenses, permits and other authorizations are valid and sufficient in all
material respects for all business presently carried on by the Company and the
Subsidiary, and the Company knows of no threatened suspension, cancellation or
invalidation of any such material license, permit or other authorization.
Neither the Company nor the Subsidiary is in material conflict with, or is in
material default or violation of, (i) any material law, rule, regulation,
order, judgment, ordinance, regulation or decree applicable to the Company or
the Subsidiary or by which a material amount of the property or assets of
either of them is bound or affected, or (ii) any material indenture, mortgage,
lien, lease, agreement, instrument, contract, note, bond, license, permit,
franchise or other material authorization or obligation to which the Company or
the Subsidiary is a party or by which the Company or the Subsidiary or a
material amount of the property or assets of either of them is bound or
affected. No notice, charge, claim, action or assertion has been received by
the Company or the Subsidiary or has been filed, commenced or, to the Company's
knowledge, threatened against the Company or the Subsidiary alleging any such
material conflict, default or violation.
14.
<PAGE> 20
6.7 Litigation. Except as set forth on Schedule 6.7, and except for
actions which are instituted or, to the Company's knowledge, threatened after
the date hereof challenging or seeking to prevent, or which arise as a result
of, directly or indirectly, the consummation of the transactions contemplated
by this Agreement or the Stockholder Agreement, there are no material suits,
claims, arbitrations, mediations, actions, proceedings, unfair labor practice
complaints or grievances pending or, to the best of the Company's or the
Subsidiary's knowledge, threatened or, to the best of the Company's or the
Subsidiary's knowledge, investigations pending or threatened against the
Company or the Subsidiary or with respect to a material amount of the property
or assets of either of them before any court, arbitrator, administrator or
governmental or regulatory authority or body. Neither the Company nor the
Subsidiary nor a material amount of the property or assets of either of them is
subject to any material order, judgment, injunction or decree.
6.8 Financial Statements and Reports. The Company has filed with
the Commission all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1995 under the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"). The reports,
statements and registration statements referred to in the immediately preceding
sentence (including, without limitation, any financial statements or schedules
or other information incorporated by reference therein) are referred to in this
Agreement as the "Company SEC Filings." As of the respective times such
documents were filed or, as applicable, became effective, the Company SEC
Filings complied as to form and content, in all material respects, with the
requirements of the Securities Act, and the Exchange Act, as the case may be,
and the rules and regulations promulgated thereunder, and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Subsidiary
is not required to file any material forms, reports, schedules, statements or
other documents with the Commission. The financial statements of the Company
included in the Company SEC Filings were prepared from, and are, in all
material respects, in accordance with, the books and records of the Company and
the Subsidiary, comply in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto were prepared, in all material respects, in accordance with
United States generally accepted accounting principles (as in effect from time
to time) applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and present fairly in all material respects the
consolidated financial position, results of operations and cash flows of the
Company and the Subsidiary as of the dates and for the periods indicated
subject, in the case of unaudited interim consolidated financial statements, to
normal recurring year-end adjustments and any other adjustments described
therein which adjustments will not be material either singly or in the
aggregate. (The unaudited consolidated balance sheet of the Company and the
Subsidiary as of November 1, 1997 included in the Form 10-Q for the Company's
fiscal quarter ended November 1, 1997 is hereinafter called the "Company
Balance Sheet," and November 1, 1997 is hereinafter called the "Company Balance
Sheet Date.")
6.9 Absence of Certain Changes or Events. Since the Company Balance
Sheet Date and except as disclosed on Schedule 6.9, the business of the Company
and the Subsidiary have been conducted in the ordinary course, and there has
not been (i) from the Company Balance Sheet Date to the date of this Agreement
any material adverse change in the business, operations, properties (including
intangible properties), condition (financial or otherwise), results of
15.
<PAGE> 21
operations, assets or liabilities of the Company and the Subsidiary, taken as a
whole, excluding any such change or changes caused by a general change in the
economy (including any such change caused by a general change in the markets
served by the Company and the Subsidiary); (ii) any material indebtedness
incurred by the Company or the Subsidiary for borrowed money, other than in the
ordinary course of business; (iii) any declaration, setting aside or payment of
any dividend or other distribution or payment in cash, stock or property in
respect of shares of its capital stock; (iv) any material increase in the
compensation payable or to become payable by the Company or the Subsidiary to
any of their employees, officers or directors or in any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such directors, officers or key employees (other than as provided on
Schedule 6.10, except in accordance with collective bargaining agreements set
forth on Schedule 6.17, and except for cost of living adjustments and other
increases in the ordinary course and consistent with past practice and other
increases which are reasonably necessary for the operation of the business of
the Company and the Subsidiary); (v) any entry by the Company or the Subsidiary
into any commitment or transaction out of the ordinary course of business which
is material to the Company and the Subsidiary taken as a whole; or (vi) any
action taken, other than reasonable and usual actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures, except for changes required by generally accepted accounting
principles.
6.10 Benefit Plans. Except as disclosed on Schedule 6.10 or Schedule
6.11 and for plans, programs, arrangements or agreements that provide only
immaterial benefits, neither the Company nor the Subsidiary has outstanding any
employment agreement with any officer or employee of the Company or the
Subsidiary and neither the Company, the Subsidiary nor any other entity ("ERISA
Affiliate") that, together the Company or the Subsidiary would be deemed a
"single employer" for purposes of Section 4001(b)(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), sponsors, maintains,
contributes to or is required to contribute to, any bonus, incentive
compensation, deferred compensation, profit sharing, stock option, stock bonus,
stock purchase, stock appreciation right or other stock-based incentive,
savings, change in control, severance, or termination pay, salary continuation,
consulting, hospitalization or other medical, life, disability or other
insurance, profit-sharing, retirement (including, without limitation, health
and life insurance benefits provided after retirement) or pension plan
(including, without limitation, Company Employee Benefit Plans as defined in
Section 6.11 hereof), program, agreement or arrangement with or for the benefit
of any current or former director, officer, employee, consultant, agent, or
independent contractor of the Company or the Subsidiary, or for the benefit of
any group of such persons ("Company Plans"). Except as provided in Schedule
6.10 or as required by the terms of a collective bargaining agreement, neither
the Company, the Subsidiary nor any ERISA
16.
<PAGE> 22
Affiliate has any formal plan or commitment to create any additional Company
Plan or modify an existing Company Plan in any material respect that would
affect any current or former employee or director of the Company, the
Subsidiary or any ERISA Affiliate. With respect to each of the Company Plans,
the Company has heretofore delivered to Acquiror true and complete copies of
(i) the plan document (including all amendments thereto) or a written
description of any Company Plan that is not otherwise in writing; (ii) if the
Company Plan is funded through a trust or any other funding vehicle, a copy of
the trust or other funding agreement (including all amendments thereto); and
(iii) all contracts relating to the Company Plans with respect to which the
Company, the Subsidiary or any ERISA Affiliate may have any material liability.
Except as disclosed on Schedule 6.10, neither the Company nor the Subsidiary
has made, or entered into any agreement to make, any payment that could
reasonably be expected to be treated as an "excess parachute payment" as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"). Each of the Company Plans has been operated and administered in all
material respects in accordance with their terms and all applicable material
laws, including, without limitation, ERISA and the Code. There are no material
actions, suits or claims pending, other than routine claims for benefits and
proceedings relating to "qualified domestic relations orders" (within the
meaning of Code Section 414(p)), with respect to the Company Plans or their
operation, administration or maintenance. Except as provided in Schedule 6.10,
none of the Company Plans or any other agreement or arrangement with respect to
which the Company or the Subsidiary may have any liability could give rise to
the payment of any material amount that would fail to be deductible for federal
income tax purposes by reason of Section 162(m) of the Code. No Company Plan
provides material amounts of benefits, including without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees after retirement or other termination of service other than (i)
coverage mandated by applicable law, (ii) death benefits or retirement benefits
under any "employee pension benefit plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of the Company, the Subsidiary or any ERISA Affiliate, or (iv)
benefits, the full cost of which is borne by the current or former employee (or
his beneficiary). Except as disclosed on Schedule 6.10, the consummation of
the transactions contemplated hereunder will not result in the payment,
vesting, acceleration or enhancement of any material benefit under any Company
Plan. Only the first sentence of this Section 6.10 shall apply to any Company
Plan that is a "multiemployer plan" as defined in Section 3(37) of ERISA
("Multiemployer Plan").
6.11 ERISA. Set forth on Schedule 6.10 and Schedule 6.11 are all of
the employee benefit plans, as defined in Section 3(3) of ERISA that are
sponsored, or are being maintained or contributed to, or are required to be
contributed to, by the Company, the Subsidiary, or any ERISA Affiliate
("Company Employee Benefit Plans"), including but without limitation, any
Multiemployer Plan. The Company has furnished Acquiror (a) a true and complete
copy of the current plan document and summary plan description (if applicable),
together with the current summary of material modifications issued with respect
to such summary plan description for each Company Employee Benefit Plan (or
written description of any Company Employee Benefit Plan that is not otherwise
in writing), (b) a true and complete copy of the most recently filed Form 5500
(including the related schedules) with respect to each Company Employee Benefit
Plan for which such form is required to be filed, and (c) a true and complete
copy of any trust agreement, insurance contract or other agreement or
arrangement serving as a source of funding for any benefits payable under any
Company Employee Benefit Plan. No"prohibited transactions" (as such term is
defined in Section 4975 of the Code or in Part 4 of Subtitle B of Title I of
ERISA) have occurred with respect to the Company Employee Benefit Plans that
could result, individually or in the aggregate, in the imposition of a material
amount of taxes or penalties. With respect to each of the Company Employee
Benefit Plans that is intended to qualify for favorable income tax treatment
under Section 401(a) of the Code, (i) the Internal Revenue Service ("IRS") has
issued a favorable determination letter with respect to such plan; (ii) the
Company will furnish Acquiror with a copy of the determination letter most
recently issued by the IRS with respect to such plan within two days of the
date of this Agreement; and (iii) to the best
17.
<PAGE> 23
knowledge of the Company, no event has occurred from the date of each such
favorable determination letter that would materially and adversely affect the
tax-qualified status of the plan in question. With respect to the Company
Employee Benefit Plans, neither the Company, the Subsidiary, nor any ERISA
Affiliate has incurred any material liabilities as a result of the violation of
or the failure to comply with any applicable provision of ERISA, the Code, any
other applicable provision of law, or any provision of such plan. None of the
Company Employee Benefit Plans is subject to Section 302 of ERISA or Section
412 of the Code and no plan at any time sponsored, maintained, contributed to
or required to be contributed to by the Company or the Subsidiary is or was
subject to Title IV of ERISA. Neither the Company nor the Subsidiary has any
reasonable risk of incurring any material liability under Sections 4064 or 4069
of ERISA. Neither the Company, the Subsidiary, nor any ERISA Affiliate has
failed to make any material contribution to, or to make any material payment
under, the Company Employee Benefit Plans (including, without limitation,
Multiemployer Plans) that it was required to make pursuant to the terms of the
plans or pursuant to applicable law and all such material amounts properly
accrued through the Closing with respect to the current plan year thereof will
be paid by the Company, the Subsidiary or such ERISA Affiliate prior to the
Closing, or will be properly recorded in the Company's financial statements or
books and records. There is no pending or, to the best knowledge of the
Company, threatened material legal action, proceeding or investigation against
or involving the Company Employee Benefit Plans which could result individually
or in the aggregate in material liabilities to such plans, the Company or the
Subsidiary. With respect to any Company Employee Benefit Plan that is a
Multiemployer Plan (i) neither the Company, the Subsidiary nor any ERISA
Affiliate has, since September 26, 1980 through the date hereof, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Section 4203 and 4205 of ERISA, that individually or in
the aggregate could result in a material liability, (ii) through the date
hereof no event has occurred that presents a material risk of a complete or
partial withdrawal that, individually or in the aggregate, could result in a
material liability, and (iii) except as listed in Schedule 6.11, neither the
Company, the Subsidiary nor any ERISA Affiliate has any material contingent
liability under Section 4204 of ERISA. The Company has provided to Acquiror a
list of all Multiemployer Plans that are subject to Title IV of ERISA to which
the Company and the Subsidiary contribute or are required to contribute. All
representations made by the Company in this Section 6.11 are likewise true with
respect to the Subsidiary. Except as expressly referenced herein, the term
"Company Employee Benefit Plan" shall not include any Multiemployer Plan for
purposes of this Section 6.11.
6.12 Environmental Matters.
(a) Schedule 6.14 discloses all real property owned by the
Company and the Subsidiary, and Schedule 6.13 discloses all real property
leased or operated by the Company and the Subsidiary (collectively, the
"Company Real Properties").
(b) Except as disclosed in the Company SEC Filings or set
forth on Schedule 6.12, (i) none of the Company, the Subsidiary or, to the
Company's knowledge, any of the Company Real Properties fails to comply in any
material respect with any Environmental Laws; (ii) no governmental agency or
third party has alleged that the Company, the Subsidiary or, to the Company's
knowledge, the Company Real Properties is in material violation of, or subject
to any administrative or judicial proceeding pursuant to, any Environmental Law
in any material respect;
18.
<PAGE> 24
(iii) to the Company's knowledge, there has not occurred, nor is there
presently occurring, any Release or Releases of any amount of any Hazardous
Materials on, into or beneath the surface of the Company Real Properties or any
property located adjacent to the Company Real Properties in a manner which
materially and adversely affects the Company Real Properties or the Company and
the Subsidiary, taken as a whole; (iv) neither the Company nor the Subsidiary
has disposed, or allowed or arranged for any third parties to dispose, of any
amount of any Hazardous Materials upon any of the Company Real Properties in a
manner which materially and adversely affects the Company Real Properties or
the Company and the Subsidiary, taken as a whole; (v) neither the Company nor
the Subsidiary has received any notice that either of them or any of the
Company Real Properties is a potentially responsible party for a federal or
state environmental cleanup site or sites or for corrective actions under any
Environmental Law with respect to any material matters; and (vi) the Company
has delivered to the Acquiror copies of all material audits, environmental
assessments or environmental studies undertaken by or in the possession of the
Company or the Subsidiary with respect to their operations or the Company Real
Properties.
(c) For purposes of this Agreement, "Hazardous Materials"
shall mean asbestos, petroleum products, underground tanks of any type and all
other materials now or hereafter defined as "hazardous substances", "hazardous
wastes", "toxic substances", "solid wastes", or otherwise now or hereafter
listed or regulated pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq. ("CERCLA"); the Resource Conservation and Recovery Act, 42 U.S.C. Section
Section 6901 et seq. ("RCRA"), and any amendments thereto; the Hazardous
Materials Transportation Act, 49 U.S.C. Section Section 1801 et seq. ("HMTA");
the Clean Water Act, the Safe Drinking Water Act; the Atomic Energy Act; the
Federal Insecticide, Fungicide, and Rodenticide Act; the Clean Air Act; and any
other similar federal, state or local statute, regulation, ordinance, order,
decree, or any other law, common law theory or reported decision of any state
or federal court, as now or at any time hereafter in effect, relating to, or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material.
(d) For purposes of this Agreement, "Environmental Laws"
means any and all federal, state and local laws (including, without limitation,
common law), statutes, ordinances, rules, regulations, judgments, orders,
decrees, permits, licenses, or other governmental restrictions or requirements
relating to health, pollution, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
the release or threatened release, discharge, emission, of any Hazardous
Materials or materials containing Hazardous Materials, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or the pollution of the
environment or the protection of human health, including, without limitation,
CERCLA, RCRA and HMTA.
(e) For purposes of this Agreement, "Release" shall mean
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, escaping, leaching, disposing or dumping.
6.13 Real Estate Leases. Schedule 6.13 sets forth a list as of the
date of this Agreement of (i) all real property which is leased by the Company
or the Subsidiary (the "Leased Real
19.
<PAGE> 25
Property"); (ii) all material options held by the Company or the Subsidiary or
contractual obligations on the part of the Company or the Subsidiary to
purchase or acquire any interest in real property; and (iii) all options
granted by the Company or the Subsidiary or contractual obligations on the part
of the Company or the Subsidiary to sell or dispose of any material interest in
real property. True and complete copies of all leases and all material
amendments and modifications thereto entered into by the Company or the
Subsidiary with respect to the Leased Real Property (the "Leases") have
heretofore been delivered by the Company to the Acquiror. The Leases are in
full force and effect and constitute binding obligations of the Company or the
Subsidiary and, to the best of its knowledge, the other parties thereto, and,
to the best knowledge of the Company and the Subsidiary (i) there are no
material defaults thereunder by the Company or the Subsidiary and (ii) to the
Company's knowledge, no event has occurred which (with notice, lapse of time or
both or occurrence of any other event) would constitute a material default by
the Company or the Subsidiary or by any other party thereto.
6.14 Title to Properties; Absence of Liens and Encumbrances.
Schedule 6.14 lists all real property owned by the Company or the Subsidiary as
of the date of this Agreement. The Company and/or the Subsidiary has good and
marketable title to all of the real property listed on Schedule 6.14 free and
clear of all Encumbrances (as defined below) except for Permitted Encumbrances
(as defined below). The term "Permitted Encumbrances" means (i) statutory
liens for current taxes or assessments not due or delinquent or the validity of
which is being contested in good faith, (ii) mechanics, workers, repairmen's
and other similar liens arising or incurred in the ordinary course of business,
(iii) such other liens, imperfections in title, charges, easements,
restrictions and other encumbrances, if any, which in the aggregate are not
material in amount (to the extent they relate to monetary obligations) and do
not materially and adversely affect the use of the property subject thereto (as
such property is used on the date hereof), and (iv) liens securing obligations
reflected on the Company Balance Sheet and other encumbrances and matters
specifically set forth on Schedule 6.14. Except for leased assets, the Company
and the Subsidiary have good and marketable title to all of their material
tangible personal property used in their businesses, including, without
limitation, those reflected in the Company Balance Sheet (other than assets
disposed of in the ordinary course of business since the Company Balance Sheet
Date), free and clear of all liens, charges, pledges, security interests or
other encumbrances ("Encumbrances"), except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as would not,
in the aggregate, materially and adversely affect the operation of the business
of the Company or the Subsidiary, and except as reflected or disclosed in the
Company Balance Sheet, the Company SEC Filings or on Schedule 6.14.
6.15 Tax Matters. Except as disclosed on Schedule 6.15, the Company
and the Subsidiary have timely filed all material tax returns which the Company
and/or the Subsidiary (as the case may be) are required to file ("Tax Returns")
with respect to all federal, state, local, foreign or other governmental
income, franchise, payroll, F.I.C.A., unemployment, withholding, real property,
personal property, sales, payroll, disability and all other material taxes
imposed on the Company or the Subsidiary or with respect to any of their
respective properties, or otherwise payable by them, including interest and
penalties, if any, in respect thereof (collectively, "Company Taxes"), and have
paid or provided for all Company Taxes shown to be due thereon. The Company
has made available copies of all such Tax Returns to the Acquiror. Except as
set forth on Schedule 6.15, (i) neither the Company nor the Subsidiary has
filed or entered into, or is
20.
<PAGE> 26
otherwise bound by, any election, consent or extension agreement that extends
any applicable statute of limitations with respect to taxable periods of the
Company and (ii) the Company is not a party to any contractual obligation
requiring the indemnification or reimbursement of any person with respect to
the payment of any material Company Tax. Except as set forth on Schedule 6.15,
to the Company's knowledge, no action or proceeding is pending or threatened by
any governmental authority for any audit, examination, deficiency, assessment
or collection from the Company or the Subsidiary of any material Company Taxes,
no unresolved claim for any deficiency, assessment or collection of any
material Company Taxes has been asserted against the Company or the Subsidiary,
and all resolved assessments of Company Taxes have been paid or are reflected
in the Company Balance Sheet. Except as set forth on Schedule 6.15, no power
of attorney has been granted by the Company or the Subsidiary, and is currently
in force, with respect to any matter relating to Company Taxes. Except as set
forth on Schedule 6.15, all material tax deficiencies asserted or assessed
against the Company have been paid. The Company has made available to the
Acquiror true and complete copies of all employment contracts which relate to
any and all employees of the Company or the Subsidiary. Except as set forth on
Schedule 6.15, neither the Company nor the Subsidiary has been a member of an
affiliated group other than the group in which the Company is the parent.
6.16 Proprietary Property. To the best knowledge of the Company,
Schedule 6.16A contains a complete and accurate list of all material trade
names, logos, trademarks, trade secrets, service marks, copyrights and other
intellectual property rights (collectively "Proprietary Property"), including
all contracts, agreements and licenses relating thereto, owned by the Company
or the Subsidiary or in which either of them has any rights. To the Company's
knowledge, neither the Company nor the Subsidiary has materially infringed or
is now materially infringing on any Proprietary Property belonging to any other
person, firm or corporation. The Company and the Subsidiary own or hold
material licenses or other material rights to use all Proprietary Property
necessary for them to conduct their respective businesses as they are being
conducted. Neither the Company nor the Subsidiary has granted any licenses
with respect to any of their respective Proprietary Property. Neither the
Company nor the Subsidiary has received any notice, nor does the Company know,
of any material conflict or claimed material conflict with respect to the
rights of others to the use of their corporate name or any of their Proprietary
Property.
6.17 Labor Matters. Schedule 6.17 lists, as of the date of this
Agreement, all collective bargaining agreements which relate to any of the
employees of the Company and the Subsidiary. As of the date of this Agreement,
except as set forth on Schedule 6.17, neither the Company nor the Subsidiary
knows of any activity or proceedings of any labor union (or representatives
thereof) to organize any unorganized employees employed by the Company or the
Subsidiary, nor of any strikes, slowdowns, work stoppages, lockouts or threats
thereof, by or with respect to any of the employees of the Company or the
Subsidiary. Except as set forth on Schedule 6.17, as of the date of this
Agreement, neither the Company nor the Subsidiary has received notice of any
material claim, or has knowledge of any facts which are likely to give rise to
any material claim, that they have not complied in any respect with any laws
relating to the employment of labor, including, without limitation, any
provisions thereof relating to wages, hours, collective bargaining, the payment
of social security and similar taxes, equal employment opportunity, employment
discrimination or employment safety.
21.
<PAGE> 27
6.18 Insurance. Schedule 6.18 lists, as of the date of this
Agreement, all material policies of fire, products liability, general
liability, vehicle, worker's compensation, directors' and officers' liability,
title and other insurance owned or held by or covering the Company or the
Subsidiary or any of their property or assets which are material to the
business of the Company and the Subsidiary, taken as a whole. As of the date
of this Agreement, there is no material claim pending under any of such
policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies and to the best of the Company's knowledge as of
the date of this Agreement there is no basis for an underwriter of such policy
to deny any such pending material claim. As of the date of this Agreement, all
of such policies are in full force and effect in all material respects, and no
notice of cancellation or termination has been received with respect to any
such policy which has not been replaced or cannot be replaced on substantially
similar terms prior to the date of such cancellation or termination. All
premiums due and payable under such policies have been paid. Except as set
forth on Schedule 6.18 no insurance policy or arrangement provides for any
retrospective premium adjustment, experience based liability or loss sharing
arrangement affecting the Company or the Subsidiary except adjustments,
liabilities or loss sharing arrangements which would not be material in amount.
6.19 Material Contracts. Schedule 6.19 lists, as of the date of this
Agreement, (i) all contracts in the nature of mortgages, indentures, promissory
notes, loan or credit agreements or similar instruments under which the Company
and the Subsidiary have borrowed or may borrow at least $200,000 and (ii) all
contracts or other written agreements, whether or not made in the ordinary
course of business, which are material to the business of the Company and the
Subsidiary taken as a whole (other than Leases and agreements relating to real
property listed on Schedule 6.14 hereof), but excluding in the case of clause
(ii) any contract or agreement which (x) does not require or involve payments
of at least $100,000 in the aggregate in any given calendar year, or (y) would
be terminable by the Company and/or the Subsidiary on less than 90 days prior
notice without payment of a material termination penalty. Neither the Company
nor the Subsidiary is in material default and no event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence
of any other event) would constitute a material default under any of the
contracts or agreements listed on Schedule 6.19.
6.20 Proxy Statement; Offer Documents; Other Information. Neither
the Schedule 14D-9 nor any of the information supplied or to be supplied in
writing by the Company for inclusion in the Proxy Statement and any other
documents, including the Offer Documents, to be filed with the Commission or
any regulatory agency in connection with the transactions contemplated hereby,
including any amendment or supplement to such documents, will, at the
respective times such documents are filed, and, with respect to the Proxy
Statement and the Offer Documents, when first published, sent or given to
stockholders of the Company, contain any untrue statement of material fact, or
omit to state any material fact necessary in order to make the statements made
therein in light of the circumstances under which they are made not misleading
or, in the case of the Offer Documents and the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Meeting and at the Effective
Date, contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading or necessary to correct any statement in any
earlier communication with respect to the Offer or the solicitation of proxies
for the Meeting which shall
22.
<PAGE> 28
have become false or misleading. If, at any time prior to the Effective Date,
any event relating to the Company or any of its affiliates, officers or
directors is discovered by the Company that should be set forth in an amendment
or supplement to the Proxy Statement or the Offer Documents, the Company will
promptly inform the Acquiror, and such amendment or supplement will be promptly
filed with the Commission and appropriate state securities administrators, and
disseminated to the stockholders of the Company, to the extent required by
applicable federal and state securities laws. All documents which the Company
files or is responsible for filing with the Commission and any regulatory
agency in connection with the Offer or the Merger (including, without
limitation, the Schedule 14D-9 and the Proxy Statement) will comply as to form
and content in all material respects with the provisions of applicable law.
Notwithstanding the foregoing, neither the Company nor the Subsidiary makes any
representations or warranties with respect to any information that has been
supplied by the Acquiror or Newco, or their auditors, attorneys, financial
advisors, other consultants or advisors specifically for use in the Schedule
14D-9 and the Proxy Statement, or in any other documents to be filed with the
Commission or any regulatory agency in connection with the transactions
contemplated hereby.
6.21 Brokers. Neither the Company nor the Subsidiary has paid or
become obligated to pay any fee or commission to any broker, finder, investment
banker or other intermediary in connection with this Agreement, except that the
Company has retained Morgan Stanley to provide a "fairness opinion" and advice
on certain matters pursuant to that certain Letter Agreement between Morgan
Stanley and the Company dated January 8, 1998.
6.22 Suppliers and Customers. Except as set forth in Schedule 6.22,
the Company has no commitment or obligation to continue to utilize the services
of, or otherwise to do business with, any licensor, vendor, supplier or
licensee of the Company or the Subsidiary which is not terminable by the
Company on less than 60 days notice without penalty and which required
aggregate payments within the 12 months preceding the date of this Agreement in
excess of $200,000 or which is reasonably likely to require payments during the
12 months following the date of this Agreement in excess of $200,000.
6.23 Inventories. As of the date of the Company Balance Sheet, the
inventories shown on the Company Balance Sheet consisted in all material
respects of items of a quantity and quality usable or saleable in the ordinary
course of business net of reserves. All of such inventories were acquired in
the ordinary course of business and have been replenished in all material
respects in the ordinary course of business consistent with past practice. All
such inventories are valued on the Company Balance Sheet in accordance with
generally accepted accounting principles applied on a basis consistent with the
Company's past practices, and provision has been made or reserves have been
established on the Company Balance Sheet, in each case in an amount believed by
the Company as of the date of this Agreement to be adequate, for all
slow-moving, obsolete or unusable inventories.
6.24 Potential Conflict of Interest. As of the date of this
Agreement, except as set forth in the Company SEC Filings filed prior to the
date hereof, since February 1, 1997, there have been no transactions,
agreements, arrangements or understandings between the Company or the
Subsidiary, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act.
23.
<PAGE> 29
6.25 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
6.26 No Undisclosed Liabilities. Neither the Company nor the
Subsidiary has any material liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) that were not fully reflected or reserved
against in the Company Balance Sheet, except for liabilities and obligations of
a nature not required to be reflected or reserved against in the Company
Balance Sheet in accordance with generally accepted accounting principles or
incurred in the ordinary course of business and consistent with past practice
since the date thereof.
6.27 Product Liability. There are not presently pending or, to the
Company's knowledge, threatened any material civil, criminal or administrative
actions, suits, demands, claims, hearings, notices of violation,
investigations, proceedings or demand letters relating to any alleged material
hazard or alleged material defect in design, manufacture, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product distributed or sold
by or on behalf of the Company or the Subsidiary. Neither the Company nor the
Subsidiary has extended to any of its customers any material written,
non-uniform product warranties, indemnifications or guarantees.
6.28 Full Disclosure. Neither any representation or warranty by the
Company in this Agreement nor any statement by the Company in any Schedules
hereto omits to state any material fact necessary in order to make the
representations, warranties or statements made herein or therein, in the light
of the circumstances under which they were made, not misleading.
ARTICLE VII
COVENANTS AND AGREEMENTS
7.1 Stockholders Meeting.
(a) The Company agrees, subject to Section 7.1(b), Section
9.1(e) and applicable law, that this Agreement shall be submitted at a meeting
(the "Meeting") of its stockholders duly called and held pursuant to Section
251(c) of the General Corporation Law. As soon as practicable after the
acquisition by Newco of the Minimum Shares pursuant to the Offer, the Company
shall take all action, to the extent necessary to consummate the Merger, in
accordance with applicable law, its Certificate of Incorporation and Bylaws, to
convene a meeting of its stockholders promptly to consider and vote upon the
approval of the Merger and to obtain the necessary approval of the Merger and
the Agreement by its stockholders, and the Company shall prepare and file with
the Commission, subject to the prior approval of Acquiror, which approval
Acquiror shall not unreasonably withhold, preliminary and final versions of a
proxy statement and proxy and other filings relating to the Meeting as required
by the Exchange Act. The term "Proxy Statement" shall mean such proxy
statement at the time it is first mailed, sent or given to stockholders, and
all duly filed amendments or revisions made thereto, if any, similarly mailed,
sent or given to such stockholders. Except as otherwise permitted by Section
7.5, the
24.
<PAGE> 30
Company shall include in the Proxy Statement the recommendation of the Board of
Directors of the Company that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement. Notice of the
Meeting shall be mailed to the stockholders of the Company along with the Proxy
Statement. The Company, the Acquiror and Newco each shall use its reasonable
best efforts to obtain and furnish the information required to be included in
the Proxy Statement, and the Company, after consultation with Newco, shall
respond promptly to any comments made by the Commission with respect to the
Proxy Statement and cause the Proxy Statement and proxy to be mailed to its
stockholders at the earliest practicable time.
(b) Notwithstanding the preceding paragraph or any other
provision of this Agreement, in the event Newco owns 90% or more of the
outstanding shares of each class of the capital stock of the Company following
expiration of the Offer, the Company shall not be required to call the Meeting
or to file or mail the Proxy Statement, and the parties hereto shall, at the
request of the Acquiror and subject to Article VIII, take all necessary and
appropriate action to cause the Merger to become effective, as soon as
practicable following such expiration, without a meeting of stockholders of the
Company in accordance with Section 253 of the General Corporation Law.
7.2 Conduct of the Business of the Company Prior to the Effective
Date. Except (i) as set forth on Schedule 7.2, (ii) as expressly permitted by
this Agreement or (iii) as otherwise consented to or approved in writing by
Acquiror, the Company agrees that prior to the Effective Date:
(a) the business of the Company and the Subsidiary shall be
conducted only in the ordinary course and consistent in all material respects
with past practice;
(b) each of the Company and the Subsidiary shall not (i)
amend its Certificate of Incorporation or Bylaws, (ii) change the number of
authorized, issued or outstanding shares of its capital stock, except upon the
exercise of stock options outstanding on the date hereof described on Schedule
7.2, (iii) declare, set aside or pay any dividend or other distribution or
payment in cash, stock or property in respect of shares of its capital stock,
(iv) make any direct or indirect redemption, retirement, purchase or other
acquisition of any of its capital stock (except for repurchases of Common Stock
from employees pursuant to existing stock subscription agreements between the
Company and certain of its employees described on Schedule 7.2) or (v) split,
combine or reclassify its outstanding shares of capital stock;
(c) neither the Company nor the Subsidiary shall, directly
or indirectly, (i) issue, grant or sell or agree or propose to issue, grant or
sell any shares of, or rights of any kind to acquire any shares of the capital
stock of the Company or the Subsidiary, except that the Company may issue
shares of Common Stock upon the exercise of Options and warrants outstanding on
the date hereof, (ii) other than in the ordinary course of business, incur any
indebtedness for borrowed money, (iii) waive, release, grant or transfer any
intangible rights of material value, except in the ordinary course of business,
(iv) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber
any personal property of the Company or the Subsidiary other than in the
ordinary course of business and consistent with past practice or
25.
<PAGE> 31
(v) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber
any real property of the Company or the Subsidiary;
(d) the Company and the Subsidiary shall use their
reasonable best efforts to preserve intact the business organization of the
Company and the Subsidiary, to keep available the services of its operating
personnel, to preserve the goodwill of those having business relationships with
each of them and to carry on their respective businesses in substantially the
same manner as carried on heretofore;
(e) neither the Company nor the Subsidiary will, directly
or indirectly, (i) increase the compensation payable or to become payable by it
to any of its employees, officers, directors, agents or consultants or under
any bonus, insurance, pension or other employee benefit plan or arrangement
made to, for or with any such persons (other than as provided in employment
agreements and welfare and benefit plans set forth on Schedule 6.10 as in
effect on the date hereof, except in accordance with collective bargaining
agreements set forth on Schedule 6.17, and except for cost of living
adjustments and other increases in the ordinary course consistent with past
practice or other increases which are reasonably necessary for the operation of
the business of the Company and the Subsidiary), (ii) adopt, or make any
payment or amend any provision, other than as required by existing plans or
agreements as in effect on the date hereof and provisions and actions under
existing stock option plans authorized in connection with the Offer or the
Merger, any bonus, profit sharing, pension, retirement, deferred compensation,
employment or other payment or employee compensation plan, agreement or
arrangement for the benefit of any employee, officer, director, agent or
consultant of the Company or the Subsidiary or modify the terms of any Option
except in accordance with Section 3.5, (iii) grant any stock appreciation
rights, (iv) enter into or amend in any respect any employment agreement, (v)
make any loan or advance to, or make any change in its existing borrowing or
lending arrangements for or on behalf of or enter into any written contract,
lease or commitment with, any affiliate, officer or director of the Company or
the Subsidiary (pursuant to an employee benefit plan or otherwise), (vi) enter
into any collective bargaining agreement, or (vii) pay or make any accrual or
arrangement for payment of any pension, retirement allowance or other employee
benefit pursuant to any existing plan, agreement or arrangement to any
employee, officer, director, agent or consultant, or pay or agree to pay or
make any accrual or arrangement for payment to any employee, officer, director,
agent or consultant of the Company or the Subsidiary of any amount relating to
unused vacation days, except payments and accruals made in the ordinary course
consistent with past practice or as required by the terms of any such plan or
collective bargaining agreement;
(f) neither the Company nor the Subsidiary shall, directly
or indirectly, assume, guarantee, endorse or otherwise become responsible for
the obligations of any other individual, firm or corporation other than the
Subsidiary, or make any loans or advances to any individual, firm or
corporation except in the ordinary course of its business and consistent with
past practices;
(g) except (i) as set forth on Schedule 7.2, (ii) for
replacement of equipment in the ordinary course of business and (iii) for
expenditures not in excess of $100,000 per month (with unexpended amounts to
carry forward to future months), neither the Company nor the
26.
<PAGE> 32
Subsidiary shall make any investment of a capital nature either by purchase of
stock or securities, contributions to capital, property transfers or otherwise,
or by the purchase of any property or assets of any other individual, firm or
corporation; provided, that the Company will confer with Acquiror if the amount
of any capital expenditure would exceed $25,000;
(h) neither the Company nor the Subsidiary shall enter
into, modify or amend in any material respect or take any action to terminate
their respective material contracts;
(i) neither the Company nor the Subsidiary shall take any
action, other than reasonable and usual actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures, except for changes required by generally accepted accounting
principles;
(j) neither the Company nor the Subsidiary shall, without
the consent of Acquiror, which consent shall not be unreasonably withheld, make
any material Tax election, change any material Tax election already made, adopt
any material Tax accounting method, change any material Tax accounting method
unless required by United States generally accepted accounting principles,
enter into any closing agreement, settle any Tax claim or assessment or consent
to any Tax claim or assessment or any waiver of the statute of limitations for
any such claim or assessment;
(k) neither the Company nor the Subsidiary shall take, or
agree to commit to take, any action that (i) would or is reasonably likely to
result in any of the conditions to the Offer set forth in Exhibit A or any of
the conditions to the Merger set forth in Article VIII not being satisfied,
(ii) would make any representation or warranty of the Company contained herein
inaccurate in any material respect at, or as of any time prior to, consummation
of the Offer (provided that any violation of this covenant will not give rise
to any claim for damages, but may be the subject of a claim for equitable
relief), or (iii) would materially impair the ability of the Company to
consummate the Offer or the Merger in accordance with the terms hereof or
materially delay such consummation and the Company and the Subsidiary will
promptly advise the Acquiror in writing of any material adverse effect on the
business, operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets or liabilities of the
Company and the Subsidiary, taken as a whole or any breach of the Company's
representations or warranties, or any material breach of a covenant contained
herein of which the Company or the Subsidiary has knowledge;
(l) neither the Company nor the Subsidiary shall adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or the
Subsidiary (other than the Merger);
(m) neither the Company nor the Subsidiary shall pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations (i)
reflected or reserved against in, or contemplated by, the financial statements
(or the notes thereto) included in the
27.
<PAGE> 33
Company SEC Filings or (ii) incurred in the ordinary course of business since
the date of such financial statements;
(n) neither the Company nor the Subsidiary shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to the Acquiror, except in the ordinary
course of business and consistent with past practice; and
(o) neither the Company nor the Subsidiary shall enter into
an agreement, commitment or arrangement to do any of the things described in
clauses (a) through (n) of this Section 7.2, or authorize, recommend, propose
or announce an intention to do any of such things.
The consent of Acquiror required by this Section 7.2 will not be
unreasonably withheld subject to the following qualifications: (i) consent to
actions described in clauses (b) and (c)(i) and (c)(v) may be withheld at any
time for any reason and (ii) it shall be unreasonable to withhold such consent
120 days or more after the date of this Agreement unless the action would
materially and adversely affect the value of the business of the Company and
the Subsidiary to the Acquiror.
7.3 Company Board Representation; Section 14(f).
(a) Promptly upon the purchase by the Acquiror or any of
its Subsidiaries of the Minimum Shares pursuant to the Offer, and from time to
time thereafter, the Acquiror shall be entitled to designate up to such number
of directors, rounded up to the next whole number, on the Board of the Company
(the "Board") as shall give the Acquiror representation on the Board equal to
the product of the total number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage,
expressed as a decimal, that the aggregate number of shares of Common Stock
beneficially owned by the Acquiror or any affiliate of the Acquiror following
such purchase bears to the total number of shares of Common Stock then
outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause the Acquiror's designees to be elected as directors of the
Company, including increasing the size of the Board or securing the
resignations of incumbent directors, or both. The Company shall cause persons
designated by the Acquiror to constitute the same percentage as persons
designated by the Acquiror shall constitute of the Board of (i) each committee
of the Board, (ii) the board of directors of the Subsidiary and (iii) each
committee of each such board, in each case only to the extent permitted by
applicable law. Notwithstanding the foregoing, until the earlier of (i) the
time the Acquiror acquires a majority of the then outstanding shares of Common
Stock, and (ii) the Effective Date, the Company shall use its best efforts to
ensure that all the members of the Board and each committee of the Board and
such boards and committees of the Subsidiary as of the date hereof who are not
employees of the Company shall remain members of the Board and of such boards
and committees.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 7.3, and
shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 to fulfill such obligations. The Acquiror and Newco shall supply to
the Company and
28.
<PAGE> 34
be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) In the event that the Acquiror's designees are elected
to the Company's Board of Directors, until the Effective Date, the Company's
Board of Directors shall have at least two directors who are directors on the
date hereof (the "Independent Directors"); provided, however, that in such
event if the number of Independent Directors will be reduced below two for any
reason whatsoever, any remaining Independent Directors (or Independent
Director, if there be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent Directors
for purposes of this Agreement or, if no Independent Director then remains, the
other directors shall designate persons to fill such vacancies who shall not be
stockholders, affiliates or associates of the Acquiror or Newco and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event that the Acquiror's designees are elected to the Company's Board of
Directors after the acceptance for payment of shares of Common Stock pursuant
to the Offer and prior to the Effective Date, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement by the Company, (ii) exercise or waive any of the
Company's rights, benefits or remedies hereunder or (iii) take any other action
by the Company's Board of Directors under or in connection with this Agreement
which would adversely affect the rights of Company stockholders under this
Agreement; provided, however, that if there will be no such directors, such
actions may be effected by the unanimous vote of the entire Board of Directors
of the Company. The provisions of this Section 7.3 are in addition to and
shall not limit any rights which the Acquiror, Newco or any of their affiliates
may have as a holder or beneficial owner of shares of Common Stock as a matter
of law with respect to the election of directors or otherwise; provided, that
none of Acquiror, Newco or such affiliates shall take any action to remove or
replace the Independent Directors prior to the Effective Date.
7.4 Access to Properties and Records. The Company and the
Subsidiary shall afford to the Acquiror and its accountants, counsel and
representatives, reasonable access during normal business hours throughout the
period prior to the Effective Date to all of their respective properties,
books, contracts, commitments and written records (including but not limited to
tax returns), and shall make reasonably available their respective officers and
employees to answer fully and promptly questions put to them thereby (so long
as such questions are not outside of the scope of purpose of this Section 7.4);
provided that no investigation pursuant to this Section 7.4 shall alter any
representation or warranties of any party hereto or conditions to the
obligation of the parties hereto; provided, further, that such access shall not
unreasonably interfere with the normal business operations of the Company or
the Subsidiary. The Acquiror and Newco agree to provide the Company and the
Subsidiary with reasonable notice prior to visiting any such property for the
purpose of any such investigation, including notice of the purpose and reason
for such investigation. Notwithstanding the foregoing, the Acquiror and Newco
agree that, it will obtain the approval of the Chief Executive Officer or the
Chief Financial Officer of the Company (not to be unreasonably withheld) prior
to any such investigation to be conducted at any of the warehouses or retail
stores of the Company or the Subsidiary.
29.
<PAGE> 35
7.5 Negotiations.
(a) Following the execution of this Agreement by the
Company, neither the Company nor the Subsidiary nor any affiliate of either of
them as of the date of this Agreement, nor the directors, officers, employees,
representatives or agents of any of them, shall, directly or indirectly,
solicit, initiate encourage or participate in discussions or negotiations with
or the submission of any offer or proposal by or provide any information to,
any corporation, partnership, person, or other entity or group (other than
Newco or Acquiror or an officer or other authorized representative of Newco or
Acquiror) concerning any Third Party Transaction (as defined in Section 9.2(b))
or proposal related thereto or, participate in any negotiation regarding any
Third Party Transaction or otherwise cooperate in any way with or encourage any
effort or attempt by any other person to effectuate a Third Party Transaction.
Notwithstanding the foregoing, prior to the acceptance for payment of shares of
Common Stock pursuant to the Offer, the Company may (x) furnish information and
access to any corporation, partnership, person or other entity or group
pursuant to appropriate confidentiality agreements in response to unsolicited
written requests therefor, and (y) negotiate and participate in discussions and
negotiations with such entity or group concerning a Third Party Transaction or
proposal related thereto if (with respect to clause (y) only) the Board has
determined in its good faith judgement, based as to legal matters and the
written advise of outside legal counsel (i) that the exercise of the directors'
fiduciary duties requires the taking of such action and, (ii) after
consultation with all of its principal advisors in connection with the
transactions contemplated herein, that such Third Party Transaction or proposal
related thereto is a bona fide written proposal that would, upon consummation
thereof, result in a transaction more favorable to the stockholders of the
Company than the transactions contemplated herein and in the good faith
reasonable judgement of the Board (based in part upon the advise of all of its
principal advisors in connection with the transactions contemplated herein) is
proposed by a corporation, partnership, person or other entity or group with
sufficient financial resources available to it or available from third parties
to consummate such transaction (a proposal that satisfies clauses (i) and (ii)
being referred to herein as a "Superior Proposal"). The Company will
immediately notify the Acquiror of the existence of any proposal, discussion,
negotiation or inquiry received by the Company, and the Company shall
immediately communicate to the Acquiror the terms of any proposal, discussion,
negotiation or inquiry which it may receive and the identity of the party
making such proposal or inquiry or engaging in such discussion or negotiation.
The Company shall promptly provide to the Acquiror any non-public information
concerning the Company provided to any other party which was not previously
provided to the Acquiror. Nothing contained in this Section 7.5 shall prohibit
the Company or its Board of Directors from disclosing to the Company's
stockholders a position with respect to a tender offer by a third party
pursuant to Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act, or
from making such disclosure to the Company's stockholders which, in the
judgment of the Board of Directors, after receipt of advice from counsel, may
be required under applicable law, provided, that the Company may not, except as
permitted by Section 7.5(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend any Third Party Transaction or
proposal relating thereto, or enter into any agreement with respect thereto.
The Company shall immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company agrees not to
30.
<PAGE> 36
release any third party from, or waive any provision of, any confidentiality
agreement to which the Company is a party.
(b) Except as set forth herein, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to the Acquiror
or Newco, the approval or recommendation by such Board of Directors or any such
committee of the Offer, this Agreement or the Merger, (ii) approve or recommend
or propose to approve or recommend, any proposal related to a Third Party
Transaction or (iii) enter into any agreement with respect to any such
proposal. Notwithstanding the foregoing, prior to the time of acceptance for
payment of shares of Common Stock pursuant to the Offer, the Board of Directors
of the Company may (subject to the terms of this and the following sentence)
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case at any time after
the fifth Business Day following the Acquiror's receipt of written notice
advising the Acquiror that the Board of Directors has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal; provided,
however, that the Company shall not enter into an agreement with respect to a
Superior Proposal unless the Company shall have furnished the Acquiror with
written notice not later than 12:00 noon (Boise time) five Business Days in
advance of any date that it intends to enter into such agreement and shall have
caused its financial and legal advisors to negotiate with the Acquiror to make
such adjustments in the terms and conditions of this Agreement as would enable
the Company to proceed with the transactions contemplated hereby on such
adjusted terms. In addition, if the Company enters into an agreement with
respect to any Third Party Transaction, it shall concurrently with entering
into such agreement pay, or cause to be paid, to the Acquiror the Termination
Fee (as defined in Section 9.2(a)), plus any amounts payable at said time for
reimbursement of expenses pursuant to the provisions of Section 9.2(a).
7.6 Acquiror Vote. Acquiror shall vote all shares of Common Stock
and all proxies it holds in favor of the Merger. After the date hereof, and
prior to the expiration of the Offer the Acquiror shall not purchase, offer to
purchase, or enter into any contract, agreement or understanding regarding the
purchase of shares of Common Stock of the Company, except pursuant to the terms
of the Stockholder Agreement, the Offer and the Merger.
7.7 Employee Benefits.
(a) The Acquiror will cause the Surviving Corporation to
provide or will directly provide to the employees of the Subsidiary and the
Company employee benefits that are substantially equivalent in the aggregate to
those provided by Acquiror to similarly situated employees of Acquiror, and in
determining the level of benefits under its employee benefit plans will provide
full credit for years of service with the Company or the Subsidiary, as such
years of service are currently recognized by the Company and the Subsidiary for
its employee benefits for purposes of eligibility, vesting and benefit accrual
but not for purposes of benefit accrual with respect to any "defined benefit
pension plan." Nothing contained herein shall be deemed to require the
Acquiror or the Company to continue in effect following the closing any
existing Company Plan, except as may be required by any applicable collective
bargaining agreement.
31.
<PAGE> 37
(b) The Board of Directors of the Company shall adopt
resolutions, effective immediately prior to the Closing, terminating each tax
qualified defined contribution retirement plan sponsored, maintained,
contributed to or required to be contributed to by the Company, the Subsidiary
or any ERISA Affiliate, except any such plan required to be maintained by any
applicable collective bargaining agreement.
7.8 Indemnification.
(a) From and after the Effective Date, in addition to any
indemnification available to any officer or director by the Company or the
Subsidiary, the Acquiror and Surviving Corporation shall (in each case to the
fullest extent permitted by applicable law) indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Date, an officer, director or employee of the
Company or the Subsidiary (the "Indemnified Parties") against any and all
losses, damages, costs, expenses, liabilities or judgments, or amounts that are
paid in settlement of, or in connection with, any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of the Company or the Subsidiary at or prior to the Effective Date and
whether asserted or claimed prior to, or at or within 5 years after the
Effective Date, and including, without limitation, any which arise out of or
relate to the transactions contemplated by this Agreement (collectively, the
"Indemnified Liabilities") (and the Acquiror and Surviving Corporation shall
pay reasonable expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted by
law); provided, however, that neither the Acquiror nor Surviving Corporation
shall be required to indemnify any Indemnified Party in connection with any
proceeding (or portion thereof) involving any claim, action, suit, proceeding
or investigation initiated by such Indemnified Party unless the initiation of
such proceeding (or portion thereof) was authorized by the Board of Directors
of the Acquiror or unless such proceeding is brought by an Indemnified Party to
enforce rights under this Section 7.8. The Acquiror and Surviving Corporation
shall not take, or cause to be taken, at any time, any action to modify or
terminate the indemnification arrangements or limitation of liability
provisions contained in the Certificate of Incorporation or Bylaws of either
the Company or the Subsidiary, or in any indemnification agreements entered
into by either the Company or the Subsidiary, in a manner that would adversely
affect the Indemnified Parties. Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is brought against
any Indemnified Party (whether arising before or after the Effective Date), (i)
any counsel retained by the Indemnified Parties for any period after the
Effective Date shall be reasonably satisfactory to the Acquiror; (ii) after the
Effective Date, the Acquiror or Surviving Corporation shall pay all reasonable
fees and expenses of counsel for the Indemnified Parties promptly as statements
therefor are received; provided that Acquiror shall not be obligated to pay for
more than one counsel for all Indemnified Parties with respect to the same
matter unless (A) the Acquiror and an Indemnified Party shall have mutually
agreed to the contrary; or (B) the representation of one or more such
Indemnified Party and any other Indemnified Party pursuant to the preceding
sentence in any such proceeding by the same counsel would be inappropriate due
to actual or potential differing interests between such Indemnified Parties;
and (iii) after the Effective Date, the Acquiror and Surviving Corporation
shall use all reasonable efforts to assist in the vigorous defense of any such
matter, provided that the Acquiror and Surviving Corporation shall not be
liable for any settlement of any claim effected
32.
<PAGE> 38
without their written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 7.8, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify the Acquiror and Surviving
Corporation (but the failure so to notify the Acquiror and Surviving
Corporation shall not relieve either such corporation from any liability which
it may have under this Section 7.8 except to the extent such failure materially
prejudices the Acquiror or Surviving Corporation).
(b) This Section 7.8 shall survive the closing of all of
the transactions contemplated hereby, is intended to benefit the Company, the
Subsidiary, the Surviving Corporation and each of the Indemnified Parties (each
of whom shall be entitled to enforce this Section 7.8 against the Acquiror or
the Surviving Corporation, as the case may be) and shall be binding on all
successors and assigns of the Surviving Corporation and the Acquiror.
7.9 Confidentiality. The terms of the Confidentiality Agreement,
dated December 22, 1997 (the "Acquiror Confidentiality Agreement") between the
Company and the Acquiror are herewith incorporated by reference and shall
continue in full force and effect until the Effective Date shall have occurred,
and if this Agreement is terminated or if the Effective Date shall not have
occurred for any reason whatsoever, the Acquiror Confidentiality Agreement
shall thereafter remain in full force and effect in accordance with its terms.
Notwithstanding the foregoing, the Company hereby expressly consents to the
disclosure of any information subject to the Acquiror Confidentiality Agreement
required to be disclosed by applicable law in connection with the consummation
of the transactions contemplated by this Agreement; provided, that the Acquiror
shall consult with the Company prior to the disclosure of any such information.
7.10 Best Efforts. Subject to the terms and conditions hereof, each
of the parties hereto agrees to use their reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary to satisfy the conditions set forth herein as soon as practicable,
including, without limitation, reasonable best efforts necessary (i) to have
removed or rescinded any and all temporary, preliminary or permanent
injunctions or other orders, and (ii) to defend against any and all claims,
actions, suits, proceedings, investigations or litigation, including, without
limitation, any injunctions or other orders or claims, actions, suits,
proceedings or investigations which arise out of or relate to the transactions
contemplated by this Agreement, and including those described in Section 8.1(b)
of this Agreement. Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to require the Company, the Acquiror or Newco to commence any
litigation against any entity in order to facilitate the consummation of any of
the transactions contemplated hereby; provided, however, that in the event the
Acquiror or Newco elects to commence any such litigation, the Company shall use
its reasonable best efforts to cooperate fully in the prosecution of such
litigation. Except for any such litigation that may be commenced by the
Acquiror or Newco pursuant to Section 7.11, no party hereto will take any
action for the purpose of or that may have the effect of delaying, impairing or
impeding the receipt of any required consent, authorization, order or approval
or the making of any required filing or registration. In case at any time
after the Effective Date any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of the
Company, the Acquiror and Newco shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions.
33.
<PAGE> 39
7.11 Antitrust.
(a) Notwithstanding anything contained in Section 7.10 of
this Agreement to the contrary, the Acquiror and the Company each agree to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary or required by the United States Federal Trade Commission (the
"FTC") or the United States Department of Justice (the "DOJ") in connection
with the expiration or termination of the waiting period under the HSR Act as a
result of the transactions contemplated by this Agreement; provided, however,
that nothing set forth in this Section 7.11 shall be construed so as to
preclude, prevent or otherwise limit the Acquiror or Newco from instituting or
prosecuting or defending a suit or claim in good faith with respect to any
suit, objection, requirement or other action by the FTC, the DOJ, any other
such governmental authority or any private party with respect to the
transactions contemplated hereby. The Acquiror shall pay all filing fees
incurred in connection with such filings under the HSR Act. Each party hereto
shall promptly inform the other of any material communication from the FTC, the
DOJ or any other government or governmental authority regarding any of the
transactions contemplated hereby. If either the Acquiror or the Company or any
of their respective affiliates receives a request for additional information or
documentary material from any such government or governmental authority with
respect to the transactions contemplated by this Agreement, then such party
shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. The Acquiror shall
advise the Company, and the Company shall advise the Acquiror, promptly in
respect of any understandings, undertakings or agreements (oral or written)
which it proposes to make or enter into with the FTC, the DOJ or any other
governmental authority in connection with the transactions contemplated hereby.
Except as otherwise provided in this Section 7.11, the Acquiror agrees to
resolve any objections as may be asserted with respect to the transactions
contemplated hereby under the Antitrust Laws (as defined hereafter) by the
applicable government or governmental authority (including, without limitation,
the Antitrust Division of the DOJ or the FTC). Except as otherwise provided in
this Section 7.11, if any suit is threatened or instituted challenging any of
the transactions contemplated hereby as violative of any Antitrust Law, the
Acquiror shall take such action (including, without limitation, agreeing to
hold separate or to divest any of the businesses, stores, products or assets of
the Acquiror or any of its affiliates or of the Company or the Subsidiary) as
may be required (i) by the applicable government or governmental authority
(including, without limitation, the Antitrust Division of the DOJ or the FTC)
in order to resolve such objections as such government or governmental
authority may have to such transactions under such Antitrust Law, or (ii) by
any court or similar tribunal, in any suit brought by a private party or
governmental authority challenging the transactions contemplated hereby as
violative of any Antitrust Law, in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or other order
that has the effect of preventing the consummation of any of such transactions.
The entry by a court, in any suit brought by a private party or governmental
authority challenging the transactions contemplated hereby as violative of any
Antitrust Law, of an order or decree permitting the transactions contemplated
hereby, but requiring that any of the businesses, product lines or assets of
the Acquiror or any of its affiliates or of the Company or the Subsidiary be
divested or held separate by the Acquiror, or that would otherwise limit the
Acquiror's freedom of action with respect to, or its ability to retain, the
Company and the Subsidiary or any portion thereof or any of the Acquiror's or
its affiliates' other assets or businesses, shall not be deemed a failure to
satisfy
34.
<PAGE> 40
the conditions specified in Section 8.1 or Exhibit A of this Agreement or give
rise to a right of termination under Section 9.1. Notwithstanding anything
contained in this Agreement to the contrary, the Company shall in no event
prior to the date on which the Offer is consummated be required to divest or
hold separate or otherwise take or commit to take any action that limits its
freedom of action with respect to, or its ability to retain, the Subsidiary or
any portion thereof, or any of its other assets, stores, businesses or
products.
(b) For purposes of this Agreement, "Antitrust Laws" shall
mean and include the Sherman Act, as amended, the Clayton Act, as amended, the
HSR Act, the Federal Trade Commission Act, as amended, and all other Federal
and state statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade.
7.12 Notices of Certain Events. The Company and the Acquiror shall,
upon obtaining knowledge of any of the following, promptly notify the other of
(i) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the Offer and the
Merger; (ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Offer and the Merger;
(iii) any actions, suits, claims, investigations or other judicial proceedings
commenced or threatened against the Company or the Subsidiary which, if pending
on the date of this Agreement, would have been required to have been disclosed
pursuant to Section 6.7 or which relates to the consummation of the Offer or
the Merger; (iv) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at or
prior to the Effective Date; and (v) any material failure of the Company, the
Acquiror or Newco, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
7.12 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
7.13 Stockholder Litigation. The Company shall give the Acquiror the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any of the
transactions contemplated by this Agreement; provided, however, that no such
settlement shall be agreed to without the Acquiror's consent.
7.14 Consents and Approvals. Subject to the provisions of Section
7.11, each of the Company, the Acquiror and Newco shall take all reasonable
actions necessary to comply promptly with all legal requirements that may be
imposed on it with respect to this Agreement and the transactions contemplated
hereby (which requirements shall include, without limitation, those identified
in Schedule 6.5,) and shall promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their subsidiaries in connection with this Agreement and the
transactions contemplated hereby. Subject to the provisions of Section 7.11,
each of the Company, the Acquiror and Newco shall, and shall cause its
subsidiaries to, take all reasonable actions necessary to obtain (and shall
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by,
35.
<PAGE> 41
any Governmental Authority (as defined below) or other public or private third
party required to be obtained or made by the Acquiror, Newco, the Company or
any of their subsidiaries in connection with the Merger or the taking of any
action contemplated thereby or by this Agreement.
7.15 Certain Supplier Agreements. The Company shall use its
reasonable best efforts to assist the Acquiror in obtaining modifications
desired by the Acquiror to any arrangements with the principal suppliers of the
Company and the Subsidiary, such modifications to take effect from and after
the Effective Date or the acceptance of shares of Common Stock for payment
pursuant to the Offer, whichever occurs first.
7.16 Year 2000 Services. When the Company has determined the
particular management information services and software it requires in order
to address the "year 2000 problem" it will provide written notice (the
"Notice") to Acquiror describing the services and software it requires and the
cost and payment schedule for such services and software. Within thirty (30)
days of receipt of such Notice (but Acquiror shall not be required to respond
prior to sixty (60) days from the date hereof), Acquiror shall permit the
Company to purchase such services and software without violation of any
representation, warranty or covenant under this Agreement or, at Acquiror's
election, Acquiror and the Company will enter into a services agreement in form
and substance reasonably satisfactory to Acquiror and the Company under which
the Acquiror will provide management information services and software to
address the "year 2000 problem" to (i) acquire inventory, (ii) ensure that
stores may transmit orders and receive inventory, (iii) provide necessary
interfaces between Acquiror's systems and the Company's and the Subsidiary's
general ledger software and such other interfaces as are necessary to permit
operation of the Company's and the Subsidiary's business as historically
conducted. Acquiror will provide such services at its cost and expense while
the Merger Agreement is in force and effect (but not for less than one hundred
eighty (180) days from the date hereof) and shall continue such services after
termination of the Merger Agreement until the Company and the Subsidiary are
able to obtain and implement a fully operational system to provide the software
and systems necessary to address year 2000 problems and permit operation of the
Company's and the Subsidiary's business as historically conducted. After the
termination of the Merger Agreement but not before one hundred eighty (180)
days from the date hereof, the Company and the Subsidiary shall pay a
reasonable fee for the services provided by Acquiror which shall be mutually
agreed upon by the parties. In the event that Acquiror is unable to provide
the services described hereunder within 60 days of the date of the Notice (but
not before ninety (90) days from the date hereof) or provide reasonable
assurances that it will be able to provide such services in accordance with the
timetable required by the Company, the Company and the Subsidiary shall be free
to purchase the services and software described in the Notice to address year
2000 problems and permit operation of the Company and the Subsidiary's business
as historically conducted without violating any representation, warranty or
covenant under this Agreement. The parties will cooperate in good faith to
implement the intent and purpose of this Section and to establish security
procedures to protect the integrity of the data and preserve its
confidentiality.
36.
<PAGE> 42
7.17 Recovery of Certain Amounts Owed. Prior to the Effective Date,
the Company shall use its reasonable best efforts to cause all amounts payable
under those certain promissory notes of Joseph Fernandez in favor of the
Company described on Schedule 6.10 to be repaid in full.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger contemplated hereby shall
have been approved and adopted by the requisite vote of the holders of the
outstanding shares of Common Stock of the Company entitled to vote thereon at
the Meeting, unless Newco shall have acquired 90% or more of the outstanding
shares of each class of capital stock of the Company;
(b) No United States or state governmental authority or
other agency or commission or United States or state court of competent
jurisdiction (collectively, "Governmental Authority") shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation, final
non-appealable injunction or other final non-appealable order which is in
effect and has the effect of making the acquisition of Common Stock by Newco
illegal or otherwise prohibiting consummation of the transactions contemplated
by this Agreement; provided however, that this condition shall not modify
Acquiror's obligation to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary or required by the FTC or the DOJ in
connection with the expiration or termination of the waiting period under the
HSR Act, or by any private party or Governmental Authority or other tribunal
under the Antitrust Laws or in a suit by a private party or governmental
authority as a result of the transactions contemplated by this Agreement, all
as further specified in and subject to Section 1.1 and Section 7.11 of this
Agreement;
(c) Any waiting period applicable to the Offer and the
Merger under the HSR Act shall have expired or been terminated;
(d) Newco shall have commenced the Offer pursuant to
Article I hereof, and Newco shall have purchased, pursuant to the terms and
conditions of such Offer, all shares of Common Stock duly tendered and not
withdrawn; and
(e) The Acquiror, Newco or their affiliates shall have
purchased a majority of the outstanding shares of Common Stock, except that
this condition shall not apply if the Acquiror, Newco or their affiliates shall
have failed to purchase shares of Common Stock pursuant to the Offer in breach
of their obligations under this Agreement.
37.
<PAGE> 43
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Date, whether before or
after approval by the stockholders of the Company:
(a) by the mutual written consent of the Acquiror and the
Company, pursuant to action by their respective Boards of Directors;
(b) by the Acquiror if, without any material breach by the
Acquiror or Newco of their obligations under this Agreement, the purchase of
shares of Common Stock pursuant to the Offer will not have occurred within 30
days after the later of (i) the expiration or termination of the waiting period
under the HSR Act and (ii) the lifting, rescission or termination of any order,
decree, ruling or other action of or agreement with a Governmental Authority
theretofore in effect that has the effect of prohibiting, enjoining,
restraining or delaying the consummation of the Offer or the Merger or imposes
material limitations on the ability of Newco to acquire shares of Common Stock;
provided that Acquiror may not terminate under this clause (b) unless it has
reached an agreement authorizing consummation of the Offer and the Merger with
the FTC or DOJ and any other Governmental Authority that may have asserted that
consummation of the Offer would violate the Antitrust Laws and any injunction
or order prohibiting or limiting consummation of the Offer or the Merger has
become final and non-appealable;
(c) by the Company on or after July 19, 1998, if (i) the
Company is not then in material breach of any of its obligations hereunder;
(ii) the Company gives written notice to Acquiror (the "Termination Notice") of
its intention to terminate this Agreement; (iii) Acquiror has not accepted a
majority of the shares of Common Stock for payment pursuant to the terms of the
Offer; and (iv) Acquiror does not, within five Business Days of receipt of the
Company's Termination Notice, give the Company a notice of its intention to
continue this Agreement in effect (a "No Termination Notice"). A No
Termination Notice may not be given by the Acquiror unless the waiting period
under the HSR Act has expired or been terminated and all other obligations
under the Antitrust Laws necessary to consummate the Offer have been satisfied,
including reaching an agreement, if necessary, authorizing consummation of the
Offer and the Merger with the FTC or DOJ and any other Governmental Authority
that may have asserted that consummation of the Offer would violate the
Antitrust Laws. A No Termination Notice shall not be effective (i) at any time
when Acquiror is not using best efforts to lift, rescind or terminate a
temporary, preliminary or appealable injunction or order (which does not relate
to the Antitrust Laws) of the type described in clause (a) of Exhibit A, or
(ii) if such notice does not contain a binding, unconditional undertaking by
Acquiror to accept shares of Common Stock pursuant to the terms of the Offer at
the earliest practicable date after such injunction or order has been lifted,
rescinded or terminated, without regard to the satisfaction of any other
conditions to the Offer set forth in Exhibit A or any termination event set
forth in Section 9.1.
(d) by the Company, by action of its Board of Directors, if
(i) the Acquiror or Newco shall have failed to comply with any of the covenants
or agreements contained in this Agreement to be complied with or performed by
the Acquiror or Newco at or prior to such date
38.
<PAGE> 44
of termination, which failure is material in the context of the transactions
contemplated by this Agreement and is not reasonably capable of being cured or
has not been cured within ten Business Days after the giving of written notice
to the Acquiror or Newco, or (ii) any representation or warranty of the
Acquiror or Newco in this Agreement which is qualified as to materiality shall
not be true and correct, or any such representation or warranty that is not so
qualified shall not be true and correct in any material respect, in either
event is not reasonably capable of being cured by the Acquiror or Newco, or has
not been cured as the case may be, within ten Business Days of notice, in each
case as if such representation or warranty was made as of such time on or after
the date of the Agreement (unless such representation speaks as of an earlier
date, in which case it shall be deemed to have been made as of such earlier
date);
(e) by the Company, prior to the purchase by Newco of at
least the Minimum Shares pursuant to the Offer, in order to permit the Company
to enter into, pursuant to Section 7.5, an agreement with respect to a Superior
Proposal that the Board of Directors of the Company has determined is more
favorable to the stockholders of the Company than the Offer and the Merger,
provided that (i) the Company has complied with all provisions of said Section
7.5, including the notice provision set forth therein, and (ii) the Company
makes simultaneous payment to the Acquiror of the Termination Fee;
(f) by the Acquiror, at any time prior to the purchase of
shares of Common Stock pursuant to the Offer, if (i) the Board of Directors of
the Company shall have withdrawn, modified, or changed its recommendation or
approval in respect of this Agreement or the Offer in a manner adverse to
Newco, (ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company any proposal relating to a Third Party Transaction,
(iii) the Company shall have exercised a right with respect to a Third Party
Transaction referenced in Section 7.5 and has, directly or through its
representatives, continued discussions with any Third Party concerning such a
proposal relating to a Third Party Transaction for more than ten Business Days
after the date of receipt of such proposal or (iv) a proposal relating to a
Third Party Transaction that is publicly disclosed shall have been commenced,
publicly proposed or communicated to the Company which contains a proposal as
to price (without regard to whether such proposal specifies a specific price or
a range of potential prices) and the Company will not have rejected such
proposal within ten Business Days of its receipt or, if sooner, the date its
existence first becomes publicly disclosed; provided, further, that nothing
contained in this Section 9.1(f) or any other provision hereof shall give rise
to a right of termination solely as a result of the Company or the Board of
Directors of the Company issuing to its stockholders a communication that
contains only the statements permitted by Rule 14d-9e promulgated under the
Exchange Act and within five Business Days of issuing such communication the
Company publicly reconfirms its approval and recommendation of the Offer;
(g) by the Company, by action of its Board of Directors, if
Newco shall have failed to commence the Offer on or before that date which is
five Business Days from the date hereof; provided, that the Company may not
terminate this Agreement pursuant to this Section 9.1(g) if the Company is at
such time in material breach of its obligations under this Agreement;
39.
<PAGE> 45
(h) by the Acquiror or the Company if any Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, final non-appealable injunction or other final
non-appealable order which is in effect and has the effect of making the
acquisition of Common Stock by Newco illegal or otherwise prohibiting
consummation of the transactions contemplated by this Agreement (provided,
however, that this termination event shall not modify Acquiror's obligation to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary or required by the FTC or the DOJ in connection with the
expiration or termination of the waiting period under the HSR Act, or by any
Governmental Authority, under the Antitrust Laws or in a suit by a private
party under the Antitrust Laws as a result of the transactions contemplated by
this Agreement, all as further specified in and subject to Section 7.11 of this
Agreement and subject to Section 1.1);
(i) by the Acquiror, by action of its Board of Directors,
if prior to the purchase of shares of Common Stock pursuant to the Offer, (i)
the Company shall have failed to comply with any of the covenants or agreements
contained in this Agreement to be complied with or performed by the Company
prior to the date of such termination, which failure singly or in the aggregate
would have or is reasonably likely to have a material adverse effect on the
business, operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets or liabilities of the
Company and the Subsidiary taken as a whole and is not reasonably capable of
being cured or has not been cured within ten Business Days after the giving of
written notice to the Company or (ii) (A) any of the representations or
warranties set forth in Sections 6.2, 6.3, 6.4 and 6.25 shall not be true and
correct in all material respects or (B) any other representations or warranties
of the Company in this Agreement shall not be true and correct which inaccuracy
singly or in the aggregate would have or is reasonably likely to have a
material adverse effect on the business, operations, properties (including
intangible properties), condition (financial or otherwise), results of
operations, assets or liabilities of the Company and the Subsidiary taken as a
whole, in either case which is not reasonably capable of being cured by the
Company or has not been cured, as the case may be, within ten Business Days
after the giving of written notice to the Company; and
(j) by the Acquiror prior to the purchase of shares of
Common Stock pursuant to the Offer, if, since the date of this Agreement, there
shall have been any material adverse change in the business, operations,
properties (including intangible properties), condition (financial or
otherwise), results of operations, assets or liabilities of the Company and the
Subsidiary, taken as a whole, excluding any such change occurring at any time
after the date of this Agreement caused by (a) a general change in the economy
(including any such change caused by a general change in the markets served by
the Company and the Subsidiary) or (b) the institution or threat of any suit,
arbitration, mediation, action, proceeding, complaint or grievance which
challenges any of the transactions contemplated by this Agreement or any action
required in connection with the resolution of matters relating to the Antitrust
Laws and excluding any such change occurring on or after the 90th day following
the execution of this Agreement caused by the voluntary termination of
employment by employees of the Company or the Subsidiary or a closure of, or
any labor disruption, slowdown or strike relating to, the Company's principal
distribution center located in Great Falls, Montana.
40.
<PAGE> 46
(k) by the Company, beginning 90 days after the date of
this Agreement, if since the date of this Agreement there has been a material
adverse change in the business, operations, properties (including intangible
properties), condition (financial or otherwise), results of operations, assets
or liabilities of the Company and the Subsidiary, taken as a whole. In order
to exercise its right to terminate this Agreement pursuant to this Section
9.1(k) (the "Company MAC Right"), the Company shall first deliver to Acquiror a
certificate (the "MAC Certificate") executed by the Company's Chief Executive
Officer or Chief Financial Officer describing in detail the conditions, events
and occurrences causing or contributing to the material adverse change (the
"Termination Conditions") and asserting the Company's intention to terminate
this Agreement pursuant to this Section 9.1(k). Acquiror shall not be required
to respond to a MAC Certificate until the No MAC Deadline. As used herein, the
"No MAC Deadline" shall mean the later of the 91st day after the date of this
Agreement or five Business Days after Acquiror's receipt of the MAC
Certificate. If the Acquiror confirms in writing (a "No MAC Certificate") on
or prior to the No MAC Deadline that it is electing not to have the Company
terminate the Agreement pursuant to this Section 9.1(k) with respect to the MAC
Conditions set forth in the MAC Certificate, the Company shall not be entitled
to so terminate this Agreement. If the Acquiror exercises this right to
prevent the Company's termination of this Agreement, the Acquiror shall not
thereafter be entitled, as a result of any of the conditions, events or
occurrences described in such MAC Certificate, to assert that a material
adverse change has occurred pursuant to Section 9.1(j), or that the condition
of subparagraph (d) of Exhibit A has not been satisfied, or to assert that a
representation, warranty or covenant of the Company under this Agreement has
been breached unless the adverse impact on the business, operations, properties
(including intangible properties), condition (financial or otherwise), results
of operations, assets or liabilities of the Company or the Subsidiary, taken as
a whole, of such conditions, events or occurrences described in the MAC
Certificate increases substantially after the date of such MAC Certificate. In
determining whether the adverse impact of a condition, event or occurrence
described in any MAC Certificate on the Company and the Subsidiary taken as a
whole has increased substantially the adverse impact resulting from the passage
of time and from the impact of the condition, event or occurrence at up to the
same level and in substantially the same manner as described in such MAC
Certificate shall not be taken into account. The Company may present a new MAC
Certificate to the Acquiror any time (i) if a material adverse change has
occurred as a result of a condition, event or occurrence not described in a
prior MAC Certificate or (ii) if the adverse impact of any condition, event or
occurrence described in the prior MAC Certificate has increased substantially
after the date of the prior MAC Certificate. If the Company presents a new MAC
Certificate the procedures and affect on the Acquiror's rights described in
this Section 9.1(k) shall apply with respect to the conditions, events or
occurrences described in the new MAC Certificate. If the Company delivers a
MAC Certificate to the Acquiror and Acquiror does not deliver a No MAC
Certificate to the Company on or prior to the No MAC Deadline, this Agreement
shall terminate on the day immediately following the No MAC Deadline.
Subject to the terms and conditions of this Agreement, in the
event of such termination and abandonment, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and no party hereto (or any of its directors or
officers) shall have any liability or further obligation to any other party to
this Agreement except
41.
<PAGE> 47
as provided in Sections 7.9, 9.2 or 10.2 and except that nothing herein will
relieve any party from liability for any wilful breach of this Agreement prior
to such termination or abandonment.
9.2 Termination Fee.
(a) If (i) the Acquiror shall have terminated this
Agreement pursuant to Section 9.1(f), or (ii) the Company shall have terminated
this Agreement pursuant to Section 9.1(e), then in any such case the Company
shall pay simultaneously with such termination, if pursuant to Section 9.1(e),
and promptly, but in no event later than two Business Days thereafter if
pursuant to Section 9.1(f), to the Acquiror a termination fee (the "Termination
Fee") equal to 3% of the amount equal to (A) $15.50 multiplied by (B) the
number of shares of Common Stock outstanding on the date of termination, plus
an amount (which shall not in any event exceed $1 million) equal to the
Acquiror's and Newco's actual and reasonable documented out-of-pocket expenses
incurred by the Acquiror and Newco in connection with the Offer, the Merger and
this Agreement. The Termination Fee shall be payable by wire transfer to such
account as the Acquiror may designate in writing to the Company.
(b) For purposes of this Agreement, "Third Party
Transaction" shall mean the occurrence of any of the following events: (i) the
acquisition of the Company by merger, tender offer, exchange offer,
consolidation or otherwise by any person other than the Acquiror, Newco or any
affiliate thereof (a "Third Party"); (ii) the acquisition by any Third Party of
all or substantially all of the total assets of the Company and the Subsidiary,
taken as a whole; (iii) the acquisition by a Third Party of 50% or more of the
outstanding shares of Common Stock of the Company; (iv) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the repurchase by the Company or the Subsidiary
of 50% or more of the outstanding shares of Common Stock of the Company.
9.3 Amendment. Subject to the applicable provisions of the General
Corporation Law, this Agreement may be amended by the parties hereto solely by
action taken by their respective Boards of Directors, but no amendment shall be
made which decreases the amount of cash into which shares of Common Stock of
the Company are to be converted as provided in Section 3.1(a) hereof or which
in any way materially and adversely affects the rights of such stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.4 Waiver. At any time prior to the Effective Date, the parties
hereto, by action taken by their respective Boards of Directors, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any documents delivered
pursuant hereto, and (iii) waive compliance by the other party with any of the
agreements or conditions herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
42.
<PAGE> 48
ARTICLE X
MISCELLANEOUS
10.1 Survival. All representations, warranties and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall terminate and be extinguished at the Effective Date or the
earlier date of termination of this Agreement pursuant to Section 9.1, as the
case may be, except that the agreements set forth in Article I, Article II and
in Sections 3.4, 7.7, 7.8 and 7.9 will survive the Effective Date indefinitely,
and those set forth in Sections 9.2 and 10.5 will survive the termination of
this Agreement indefinitely, and other than any covenant the breach of which
has resulted in the termination of this Agreement.
10.2 Expenses and Fees. If the Offer is consummated, all reasonable
fees and expenses incurred in connection with the Agreement, the Offer and the
Merger and the transactions contemplated thereby will be paid by the party
incurring such fees and expenses of the Company and may be paid by the
Surviving Corporation at the closing of the Offer. Notwithstanding the
foregoing, the Company agrees to pay, no later than on the Effective Date, all
reasonable fees, expenses and disbursements of counsel to the Company incurred
in connection with the Merger.
10.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally or sent by regular mail or by
telecopier to the parties at the following addresses:
(a) if to Newco or the Acquiror, to:
Albertson's, Inc.
250 Parkcenter Boulevard
P.O. Box 20
Boise, Idaho 83726
Attention: Gary G. Michael, Chairman
Telephone: 208-395-6200
Telecopy: 208-395-6225
with a copy to:
Albertson's, Inc.
250 Parkcenter Boulevard
P.O. Box 20
Boise, Idaho 83726
Attention: Thomas R. Saldin, Esq.
Telephone: 208-395-6200
Telecopy: 208-395-6672
43.
<PAGE> 49
with copies to:
Skadden, Arps, Slate, Meagher & Flom
Four Embarcadero Center, Suite 3800
San Francisco, California 94111
Attention: Theodore J. Kozloff, Esq.
Telephone: 415-984-6400
Telecopy: 415-984-2698
(b) if to the Company or the Subsidiary, to:
Buttrey Food and Drug Stores Company
601 6th Street S.W.
Great Falls, Montana 59404
Attention: Joseph H. Fernandez
Telephone: 406-454-7404
Telecopy: 406-454-7251
with copies to:
Riordan & McKinzie
300 S. Grand Avenue, 29th Floor
Los Angeles, California 90071
Attention: Richard J. Welch, Esq.
Telephone: 213-229-8510
Telecopy: 213-229-8550
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date so delivered or mailed.
10.4 Headings. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
10.5 Publicity. The parties hereto shall not, and shall cause their
affiliates not to, issue or cause the publication of any press release or other
announcement with respect to the Offer, the Merger or this Agreement without
consulting with all other parties and their respective counsel.
10.6 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations shall be assigned by any of the parties
hereto without the prior written consent of the other parties. This Agreement
is not intended to confer upon any other person any rights or remedies
hereunder.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
44.
<PAGE> 50
10.8 Invalidity, Etc. In the event that any provision of this
Agreement shall be deemed contrary to law or invalid or unenforceable in any
respect by a court of competent jurisdiction, the remaining provisions shall
remain in full force and effect to the extent that such provisions can still
reasonably be given effect in accordance with the intentions of the parties,
and the invalid and unenforceable provisions shall be deemed, without further
action on the part of the parties, modified, amended and limited solely to the
extent necessary to render the same valid and enforceable.
10.9 Specific Performance. Each of the parties hereto acknowledges
and agrees that the other parties hereto would be irreparably damaged in the
event any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, each of the
parties hereto agrees that they each shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and conditions hereof in any
action instituted in any court of the United States or any state having
competent jurisdiction, in addition to any other remedy to which such party may
be entitled, at law or in equity.
10.10 Governing Law. The validity and interpretation of this
Agreement shall be governed by the laws of the State of Delaware, without
reference to the conflict of laws principles thereof.
10.11 Definition. For purposes of this Agreement, "knowledge of the
Company or of the Subsidiary" or words of similar import shall mean the actual
knowledge of the officers and directors of the Company on Schedule 10.11.
45.
<PAGE> 51
IN WITNESS WHEREOF, the Acquiror, Newco and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
ACQUIROR:
ALBERTSON'S, INC.
By: /s/ MICHAEL F. REULING
--------------------------------
Name: Michael F. Reuling
Title: Executive Vice President
NEWCO:
LOCOMOTIVE ACQUISITION CORP.
By: /s/ MICHAEL F. REULING
--------------------------------
Name: Michael F. Reuling
Title: Vice President
COMPANY:
BUTTREY FOOD AND DRUG STORES COMPANY
By: /s/ JOSEPH H. FERNANDEZ
--------------------------------
Name: Joseph H. Fernandez
Title: Chairman, President and
Chief Executive Officer
Albertson's, Inc. ("Acquiror"), hereby guarantees the due performance of
any and all obligations and/or liabilities of Newco under or arising out of
this Agreement and the transactions contemplated hereby during the period up to
and including the Effective Date.
ACQUIROR:
ALBERTSON'S, INC.
By: /s/ MICHAEL F. REULING
--------------------------------
Name: Michael F. Reuling
Title: Executive Vice President
46.
<PAGE> 52
EXHIBIT A
CONDITIONS TO THE OFFER
Certain Conditions of the Offer. The Offer shall be conditioned upon a
minimum of a majority of the total issued and outstanding shares of Common
Stock, as defined in the Agreement, on the date such shares are purchased
pursuant to the Offer (the "Minimum Shares") being validly tendered and not
withdrawn prior to 12:01 A.M., New York City time, [twenty Business Days after
the date the Offer is commenced] or such later date as the Offer may be
extended by an amendment to this Agreement in accordance with the provisions of
Section 1.1 or as the Offer shall be extended as provided in the Agreement.
Moreover, notwithstanding any other provision of the Offer, and subject to the
terms and conditions of the Agreement, Newco shall not be obligated to accept
for payment any shares of Common Stock until expiration of all applicable
waiting periods under the HSR Act, and Newco shall not be required to accept
for payment, purchase or pay for, and may delay the acceptance for payment of
or payment for, any shares of Common Stock tendered in the Offer, or if the
Minimum Shares shall not have been validly tendered pursuant to the Offer and
not withdrawn, may terminate or amend the Offer, subject to the terms and
conditions of the Agreement and Newco's obligation to extend the Offer pursuant
to Section 1.1 if, prior to the time of acceptance for payment of any such
shares of Common Stock (whether or not any other shares of Common Stock have
theretofore been accepted for payment or paid for pursuant to the Offer), any
of the following shall occur and remain in effect:
(a) a United States or state governmental authority or
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order which is in effect and has
the effect of making the acquisition of Common Stock by Newco illegal or
imposes material limitations on the ability of Newco to acquire shares of
Common Stock or otherwise prohibiting consummation of the transactions
contemplated by this Agreement, subject to Acquiror's and Newco's obligations
pursuant to Sections 1.1 and 7.11 of the Agreement and Acquiror's agreement not
to terminate the Offer as long as any such injunction or order has not become
final and non-appealable;
(b) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on the NYSE, and such
event shall have continued to exist for a period in excess of 24 hours
(excluding suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) any limitation by any United States
governmental authority on the extension of credit generally by banks or other
financial institutions or (iv) in the case of any of the foregoing existing at
the time of the commencement of the Offer, a material acceleration or worsening
thereof;
1.
<PAGE> 53
(c) either (i) (A) any of the representations or warranties
of the Company in the Agreement set forth in Sections 6.2, 6.3, 6.4 and 6.25
shall not be true and correct in all material respects or (B) any other
representations or warranties of the Company in the Agreement shall not be true
and correct which inaccuracy singly or in the aggregate would have or be
reasonably likely to have a material adverse effect on the business,
operations, properties (including intangible properties), condition (financial
or otherwise), results of operations, assets or liabilities of the Company and
the Subsidiary taken as a whole and in either case are not reasonably capable
of being cured by the Company or have not been cured within ten Business Days
after the giving of written notice to the Company in each case as if such
representations or warranties were made as of such time on or after the date of
the Agreement (unless a representation speaks as of an earlier date, in which
case it shall be deemed to have been made as of such earlier date); or (ii) the
Company shall have failed to perform any obligation or to comply with any
agreement or covenant of the Company to be performed or complied with by it
under the Agreement, which failure singly or in the aggregate would have or be
reasonably likely to have a material adverse effect on the business,
operations, properties (including intangible properties), condition (financial
or otherwise), results of operations, assets or liabilities of the Company and
the Subsidiary taken as a whole and is not reasonably capable of being cured
by the Company or has not been cured within ten Business Days after the giving
of written notice to the Company; and the Chief Executive Officer of the
Company shall have provided a certificate to the effect that the conditions set
forth in clauses (i) or (ii) have not occurred on the date shares are to be
accepted for payment pursuant to the Offer;
(d) since the date of this Agreement and subject to Section
9.1(k) of the Agreement, there shall have been any material adverse change in
the business, operations, properties (including intangible properties),
condition (financial or otherwise), results of operations, assets or
liabilities of the Company and the Subsidiary, taken as a whole, excluding any
such change occurring at any time after the date of this Agreement caused by
(i) a general change in the economy (including any such change caused by a
general change in the markets served by the Company and the Subsidiary) or (ii)
the institution or threat of any suit, arbitration, mediation, action,
proceeding, complaint or grievance which challenges any of the transactions
contemplated by this Agreement or any action required in connection with the
resolution of matters relating to the Antitrust Laws, and excluding any such
change occurring after the 90th day following the execution of this Agreement
caused by the voluntary termination of employment by employees of the Company
or the Subsidiary or a closure of, or any labor disruption, slowdown or strike
relating to, the Company's principal distribution center located in Great
Falls, Montana;
(e) the Board of Directors of the Company (i) shall have
amended, modified or withdrawn its recommendation of the Offer or the Merger,
subject to Sections 7.5 and 9.1(e), (ii) shall have endorsed, approved or
recommended any Superior Proposal in accordance with Section 7.5 or (iii) the
Company shall have entered into any agreement with respect to any Superior
Proposal in accordance with Section 7.5;
(f) any person or group (as defined in Section 13(d)(3) of
the Exchange Act), other than the Acquiror or Newco or any of their respective
subsidiaries or affiliates, shall have
2.
<PAGE> 54
become the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of more than 25% of the outstanding shares of Common Stock
(either on a primary or a fully diluted basis); provided, however, that this
provision shall not apply to any person that beneficially owns more than 25% of
the outstanding shares of Common Stock on the date hereof so long as such
person does not further increase its beneficial ownership beyond the number of
shares of Common Stock such person beneficially owns on the date of the
Agreement; or
(g) the Agreement shall have been terminated by the Company
or the Acquiror pursuant to its terms;
which, in the reasonable judgment of the Acquiror and Newco, in any such case,
and regardless of the circumstances (including any action or inaction by the
Acquiror or Newco) giving rise to any such conditions, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment
for shares of Common Stock. The foregoing conditions are for the sole benefit
of the Acquiror and Newco and may be asserted by the Acquiror and Newco
regardless of the circumstances giving rise to such condition or may be waived
by the Acquiror and Newco in whole or in part at any time and from time to
time. The failure by the Acquiror or Newco at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
3.
<PAGE> 1
EXHIBIT (c)(2)
TENDER AND OPTION AGREEMENT
TENDER AND OPTION AGREEMENT, dated as of January 19, 1998 (the
"Agreement"), by and among Albertson's Inc., a Delaware corporation
("Acquiror"), Locomotive Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Acquiror ("Newco"), and FS Equity Partners II, L.P.,
a California limited partnership (the "Stockholder").
WHEREAS, the Stockholder is the owner of 4,389,879 shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
Buttrey Food and Drug Stores Company (the "Company");
WHEREAS, the Acquiror, Newco and the Company have entered into an
Agreement and Plan of Merger, dated as of the date hereof (as amended from time
to time, the "Merger Agreement"), which provides, among other things, that,
upon the terms and subject to the conditions therein, Newco will make a cash
tender offer (the "Offer") for all of the outstanding shares of Common Stock
and after expiration of the Offer will merge with the Company (the "Merger");
and
WHEREAS, as a condition to the willingness of Acquiror and Newco to
enter into the Merger Agreement, Acquiror has requested that the Stockholder
agree, and in order to induce Acquiror and Newco to enter into the Merger
Agreement, the Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder represents and warrants to the Acquiror as follows:
a. The Stockholder is the sole record and beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which meaning will apply for all purposes of this
Agreement) of the Shares and there exist no liens, claims, security interests,
options, proxies, voting agreements, charges, obligations, understandings,
arrangements or other encumbrances of any nature whatsoever, except for
restrictions applicable thereto under federal and state securities laws
("Liens"), affecting the Shares.
<PAGE> 2
b. The Shares and the certificates representing the
Shares are now and at all times during the term hereof will be held by the
Stockholder, or by a nominee or custodian for the benefit of the Stockholder
free and clear of all Liens, except for any Liens arising hereunder. Upon
transfer to Acquiror by the Stockholder of the Shares hereunder, Acquiror will
have good and marketable title to the Shares, free and clear of all Liens.
c. Except for the Shares, the Stockholder does not,
directly or indirectly, beneficially own or have any option, warrant or other
right to acquire any securities of the Company nor is the Stockholder subject
to any contract, commitment, arrangement, understanding or relationship that
allows or obligates it to vote or acquire any securities of the Company.
d. The Stockholder is a limited partnership duly formed,
validly existing and in good standing under the laws of California and has full
partnership power and authority to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Stockholder. This Agreement has been duly and validly executed and delivered
by the Stockholder and, assuming due authorization, execution and delivery by
Acquiror and Newco, constitutes a valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
e. The execution and delivery of this Agreement by the
Stockholder does not, and the performance by the Stockholder of its obligations
hereunder will not, constitute a violation of, conflict with, result in a
default (or an event which, with notice or lapse of time or both, would result
in a default) under, or result in the creation of any Lien on any Shares under,
(i) any material contract, commitment, agreement, partnership agreement,
understanding, arrangement or restriction of any kind to which the Stockholder
is a party or by which the Stockholder is bound, (ii) any material judgment,
writ, decree, order or ruling applicable to the Stockholder or (iii) any
material law applicable to the Stockholder.
f. To the Stockholder's knowledge, neither the execution
and delivery of this Agreement nor the performance by the Stockholder of its
obligations hereunder will require any consent, authorization or approval of,
filing with or notice to, any court, administrative agency or other
governmental body or authority, other than any required notices or filings
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
state antitrust laws or the federal securities laws.
g. Except as set forth on Schedule 6.7 to the Merger
Agreement and except for actions instituted or, to the Stockholder's knowledge,
threatened after the date hereof
2
<PAGE> 3
challenging or seeking to prevent, or which arise as a result, directly or
indirectly, of the consummation of the transactions contemplated by this
Agreement or the Merger Agreement and solely with respect to matters set forth
in this Section 1(g) in which the Stockholder or any of its partners or
employees is a party, (i) there are no material suits, claims, arbitrations,
mediations, actions or proceedings pending or, to the best of the Stockholder's
knowledge, threatened or, to the best of the Stockholder's knowledge,
investigations pending or threatened against the Company or the Subsidiary or
with respect to any material property or assets of either of them before any
Governmental Authority and (ii) neither the Company nor the Subsidiary, nor a
material amount of the property or assets of either of them, is subject to any
material order, judgment, injunction or decree.
h. As of the date hereof, except as set forth on
Schedule 6.24 to the Merger Agreement or in the Company SEC Filings filed prior
to the date hereof, since February 1, 1997, there have been no transactions,
agreements, arrangements or understandings between the Company or the
Subsidiary, on the one hand, and the Stockholder or any of its partners or
employees, on the other hand, that would be required to be disclosed under Item
404 of Regulation S-K under the Securities Act.
i. Neither the Company nor the Subsidiary has any
outstanding liabilities or obligations to the Stockholder or any of its
partners or employees that were not fully reflected or reserved against in the
Company Balance Sheet, except for immaterial travel and other expenses related
to service as a director and obligations relating to service as a director
(including indemnity obligations).
2. Representations and Warranties of Acquiror and Newco.
Acquiror and Newco jointly and severally represent and warrant to the
Stockholder as follows:
a. Each of Acquiror and Newco is duly organized and
validly existing and in good standing under the laws of the State of Delaware,
has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and has taken
all necessary corporate action to authorize the execution, deliver and
performance of this Agreement. This Agreement has been duly and validly
executed and delivered by each of Acquiror and Newco and constitutes the legal,
valid and binding obligation of each of Acquiror and Newco, enforceable against
each of Acquiror and Newco in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
b. The execution and delivery of this Agreement by each
of Acquiror and Newco does not, and the performance by each of Acquiror and
Newco of its obligations hereunder will not, constitute a violation of,
conflict with, or result in a default (or an event which, with notice or lapse
of time or both, would result in a default) under, its certificate of
incorporation or bylaws or any contract, commitment, agreement, understanding,
arrangement
3
<PAGE> 4
or restriction of any kind to which Acquiror or Newco is a party or by which
Acquiror or Newco is bound or any judgment, writ, decree, order or ruling
applicable to Acquiror or Newco.
c. Neither the execution and delivery of this Agreement
nor the performance by each of Acquiror and Newco of its obligations hereunder
will violate any order, writ, injunction, judgment, law, decree, statute, rule
or regulation applicable to Acquiror or Newco or require any consent,
authorization or approval of, filing with, or notice to, any court,
administrative agency or other governmental body or authority, other than any
required notices or filings pursuant to the HSR Act, state antitrust laws or
the federal securities laws.
3. Tender of Shares.
a. Acquiror and Newco jointly and severally agree:
i. subject to the conditions of the Offer set
forth in Exhibit A to the Merger Agreement and the other terms and conditions
of the Merger Agreement, that Newco will commence the Offer within five (5)
Business Days (as defined in the Merger Agreement) after the execution of this
Agreement;
ii. subject to the conditions of the Offer set
forth in Exhibit A to the Merger Agreement and the other terms and conditions
of the Merger Agreement, that Newco will purchase all shares of Common Stock
tendered pursuant to the Offer as promptly as practicable following
commencement of the Offer and that Newco will consummate the Merger in
accordance with the terms of the Merger Agreement; and
iii. not to decrease the price per share to be
paid to the Company's stockholders in the Offer below $15.50 per share (the
"Tender Offer Price"). The provisions of Section 3(a) shall survive the
termination of this Agreement.
b. The Stockholder will (i) tender the Shares into the
Offer promptly, and in any event no later than the fifth Business Day following
the commencement of the Offer, or, if the Stockholder has not received the
Offer Documents by such time, within two Business Days following receipt of
such documents, and (ii) not withdraw any Shares so tendered (except in the
event the Stock Option is exercised). Upon the purchase of all the Shares
pursuant to the Offer in accordance with this Section 3, this Agreement will
terminate. The Stockholder will receive the same price per Share received by
other stockholders of the Company in the Offer with respect to Shares tendered
by it in the Offer. In the event that, notwithstanding the provisions of the
first sentence of this Section 3(b), any Shares are for any reason withdrawn
from the Offer or are not purchased pursuant to the Offer, such Shares will
remain subject to the terms of this Agreement. The Stockholder acknowledges
that Newco's obligation to accept for payment and pay for the Shares in the
Offer is subject to all the terms and conditions of the Offer. On the date the
Shares are accepted for payment and purchased
4
<PAGE> 5
by Newco pursuant to the Offer, Newco or Acquiror, as the case may be, shall
make payment by wire transfer to the Stockholder of the purchase price for such
Shares to an account designated by the Stockholder in the Offer Documents.
c. The Stockholder hereby agrees to permit Acquiror to
publish and disclose in the Offer Documents and, if approval of the
stockholders of the Company is required under applicable law, the Proxy
Statement, its identity and ownership of Common Stock and the nature of its
commitments, arrangements and understandings under this Agreement.
4. Option to Purchase.
a. The Stockholder hereby grants to Acquiror, subject to
the terms and conditions hereof, an irrevocable option (the "Stock Option") to
purchase the Shares at a purchase price per share of $15.50 per Share (the
"Exercise Price"), in the manner set forth in this Section 4. At any time
prior to the termination of the Stock Option hereunder, Acquiror (or a wholly
owned subsidiary of Acquiror) may exercise the Stock Option, in whole only, if
on or after the date hereof:
i. any corporation, partnership, individual,
trust, unincorporated association, or other entity or "person" (as defined in
Section 13(d)(3) of the Exchange Act) other than Acquiror or any of its
"affiliates" (as defined in the Exchange Act) (a "Third Party"), will have:
A. commenced or announced an intention
to commence a bona fide tender offer or exchange offer for any shares of Common
Stock, the consummation of which would result in "beneficial ownership" (as
defined in the Exchange Act) by such Third Party (together with all such Third
Party's affiliates and "associates" (as defined in the Exchange Act)) of 50% or
more of the then outstanding voting equity of the Company (either on a primary
or a fully diluted basis);
B. acquired beneficial ownership of
shares of Common Stock that, when aggregated with any shares of Common Stock
already owned by such Third Party, its affiliates and associates, would result
in the aggregate beneficial ownership by such Third Party, its affiliates and
associates of 25% or more of the then outstanding voting equity of the Company
(either on a primary or a fully diluted basis); provided, however, that "Third
Party" for purposes of this clause (B) does not include any corporation,
partnership, person, other entity or group that beneficially owns more than 25%
of the outstanding voting equity of the Company (either on a primary or a fully
diluted basis) as of the date hereof and that does not, after the date hereof,
increase such ownership percentage by more than an additional 1% of the
outstanding voting equity of the Company (either on a primary or a fully
diluted basis);
C. acquired assets constituting 25% or
more of the total assets or earning power of the Company taken as a whole;
5
<PAGE> 6
D. entered into an agreement with the
Company that contemplates the acquisition of (x) assets constituting 25% or
more of the total assets or earning power of the Company taken as a whole or
(y) beneficial ownership of 25% or more of the outstanding voting equity of the
Company; or
ii. any of the events described in Section 9.1(e)
or 9.1(f) of the Merger Agreement that would allow the Company or Acquiror to
terminate the Merger Agreement has occurred (after the passage of any time
periods set forth in such sections but without the necessity of the Company or
Acquiror having terminated the Merger Agreement).
In the event that Acquiror wishes to exercise the Stock
Option, Acquiror shall give written notice (the "Option Notice", with the date
of the Option Notice being hereinafter called the "Notice Date") to the
Stockholder specifying the place and date (not earlier than three nor later
than ten Business Days from the Notice Date) for closing such purchase (a
"Closing"). Acquiror's obligation to purchase the Shares upon any exercise of
the Stock Option and the Stockholder's obligation to sell the Shares upon any
exercise of the Stock Option are subject (at the election of Acquiror and the
Stockholder, respectively,) to the conditions that (i) no preliminary or
permanent injunction or other order prohibiting the purchase, issuance or
delivery of the Shares issued by any Governmental Authority will be in effect
and (ii) any applicable waiting period required for the purchase of Shares
under the HSR Act will have expired or an agreement shall have been reached
with Governmental Authorities with respect to the Antitrust Laws authorizing
consummation of the transactions contemplated hereby, provided that if such
injunction or other order has become final and nonappealable, the Stock Option
shall terminate; and provided further, that if the Stock Option is not
exercisable because either of the circumstances described in clauses (i) or
(ii) exist, then the Stock Option shall be exercisable for the ten Business Day
period commencing on the date that the circumstances set forth in clauses (i)
or (ii) cease to exist, but in no event shall the Stock Option be exercisable
after the date set forth in Section 9(c). Acquiror's obligation to purchase
the Shares upon exercise of the Stock Option is further subject (at Acquiror's
election) to the condition that there will have been no material breach of the
representations, warranties, covenants or agreements of the Stockholder
contained in this Agreement or of the Company contained in the Merger Agreement
which breach has not been cured within ten Business Days of the receipt of
written notice thereof from the Acquiror. The Stockholder's obligation to sell
the Shares upon exercise of the Stock Option and the Stockholder's obligations
under Section 7 are subject (at the Stockholder's election) to the further
conditions that there will have been no material breach of the representations,
warranties, covenants or agreements of Acquiror or Newco contained in this
Agreement or contained in the Merger Agreement, which breach has not been cured
within ten Business Days of the receipt of written notice thereof from the
Stockholder. Acquiror agrees to use its best efforts to cause any such waiting
period or injunction or order to be terminated or lifted and to obtain all
necessary regulatory approvals under the Antitrust Laws.
b. At the Closing, (i) the Stockholder shall deliver to
Acquiror the certificate or certificates representing the Shares in proper form
for transfer upon exercise of
6
<PAGE> 7
the Stock Option in the denominations designated by Acquiror in the Option
Notice and (ii) Acquiror shall pay the aggregate purchase price for the Shares
by wire transfer of immediately available funds to an account designated by the
Stockholder in writing to Acquiror in the amount equal to the product of the
Exercise Price and the number of the Shares.
c. In the event that Acquiror or Newco pays a price
higher than $15.50 per share for Shares tendered into the Offer, the Exercise
Price shall be increased to equal such higher price.
d. The Stockholder has granted the Stock Option to
Acquiror in order to induce Acquiror to enter into and consummate the
transactions contemplated by the Merger Agreement. Acquiror and Newco covenant
and agree that they will perform their respective obligations under the Merger
Agreement. The provisions of this Section 4(d) are intended both for the
benefit of the Stockholder and for the benefit of the Company and the other
stockholders of the Company and may not be modified, waived or amended without
the consent of the Company.
5. Transfer of the Shares.
a. During the term of this Agreement, the Stockholder
will not offer to sell, sell, pledge or otherwise dispose of or transfer any
interest in or encumber with any Lien any of the Shares, (ii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of the Shares or any interest therein; (iii) grant any
proxy, power-of-attorney or other authorization or consent in or with respect
to the Shares; (iv) deposit the Shares into a voting trust or enter into a
voting agreement or arrangement with respect to the Shares; or (v) take any
other action with respect to the Shares that would in any way restrict, limit
or interfere with the performance of its obligations hereunder.
b. The Stockholder agrees to place the following legend
on any and all certificates evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT
CERTAIN TENDER AND OPTION AGREEMENT, DATED AS OF JANUARY 19,
1998, BY AND BETWEEN ALBERTSON'S, INC. , LOCOMOTIVE
ACQUISITION CORP. AND FS EQUITY PARTNERS II, L.P. ANY
TRANSFER OF SUCH SHARES OF COMMON STOCK IN VIOLATION OF THE
TERMS OF SUCH AGREEMENT SHALL BE NULL AND VOID AND OF NO
EFFECT WHATSOEVER.
7
<PAGE> 8
6. Certain Other Agreements. The Stockholder shall notify
Acquiror immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated
or continued with the Stockholder or its officers, directors, employees,
investment bankers, attorneys, accountants or other agents (each of such
actions, an "Interest"), in each case in connection with any Third Party
Transaction indicating, in connection with such notice, the name of the person
indicating such Interest and the terms and conditions of any related proposals
or offers. The Stockholder agrees to cease immediately and cause to be
terminated immediately any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Third Party
Transaction. In addition, the Stockholder agrees to keep Acquiror informed, on
a current basis, of the status and terms of any Third Party Transaction. The
Stockholder furthermore agrees not to, and will use its best efforts to ensure
that its officers, directors, employees, investment bankers, attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to facilitate the making of, any offer
or proposal that constitutes or is reasonably likely to lead to any Third Party
Transaction, (ii) enter into any agreement with respect to any Third Party
Transaction or (iii) in the event of an unsolicited written proposal in respect
of a Third Party Transaction, engage in negotiations or discussions with, or
provide any information or data to, any person (other than Acquiror, any of its
affiliates or representatives and except for information that has been
previously publicly disseminated by the Company) relating to any Third Party
Transaction. The obligations provided for in this Section 6 shall become
effective immediately following the execution and delivery of this Agreement by
the parties hereto.
7. Voting of Shares; Grant of Irrevocable Proxy; Appointment of
Proxy.
a. The Stockholder hereby agrees that, during the term
of this Agreement, at any meeting (whether annual or special and whether or not
an adjourned or postponed meeting) of the holders of Common Stock, however
called, or in connection with any written consent of the holders of Common
Stock, the Stockholder will appear at the meeting or otherwise cause the Shares
to be counted as present thereat for purposes of establishing a quorum and vote
or consent (or cause to be voted or consented) the Shares (i) in favor of the
Merger and (ii) against any action or agreement that would impede, interfere
with or prevent the Merger, including any other extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the
Company and a third party or any other proposal of a third party to acquire the
Company and (iii) if requested by Acquiror, in favor of a stockholder
resolution proposed by Acquiror in accordance with applicable provisions of the
Delaware General Corporation Law (the "DGCL") the purpose of which is to cause
the Offer and the Merger to be consummated and which does not relate to the
election of directors.
b. The Stockholder hereby irrevocably grants to, and
appoints, Acquiror and any nominee thereof, its proxy and attorney- in-fact
(with full power of substitution) during the term of this Agreement, for and in
the name, place and stead of the Stockholder, to vote the Shares, or grant a
consent or approval in respect of the Shares, in connection with any meeting of
the stockholders of the Company (i) in favor of the Merger and (ii) against any
8
<PAGE> 9
action or agreement that would impede, interfere with or prevent the Merger,
including any other extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company and a third party or any
other proposal of a third party to acquire the Company.
c. The Stockholder represents that all proxies
heretofore given in respect of the Shares, if any, are not irrevocable, and
hereby revokes all such proxies given with respect to the Shares.
d. The Stockholder hereby affirms that the irrevocable
proxy set forth in this Section 7 is given in connection with the execution of
the Merger Agreement and that such irrevocable proxy is given to secure the
performance of the duties of the Stockholder under this Agreement. The
Stockholder hereby further affirms that the irrevocable proxy set forth in this
Section 7 is coupled with an interest and is intended to be irrevocable in
accordance with the provisions of Section 212(e) of the DGCL.
8. Adjustments. The number and types of securities subject to
this Agreement will be appropriately adjusted in the event of any stock
dividends, stock splits, recapitalization, combinations, exchanges of shares or
the like or any other action that would have the effect of changing the
Stockholder's ownership of the Company's capital stock.
9. Termination. Except as otherwise specifically provided
herein, all obligations under this Agreement will terminate on the earliest of
(a) the date the Merger Agreement is terminated in accordance with its terms or
the date the Offer is terminated by Acquiror or Newco as a result of any
failure of a condition of the Offer; provided, however, that the provisions of
Sections 4(a) shall not terminate until sixty (60) days thereafter (or such
later time as permitted by Section 4(a)) if the Merger Agreement was terminated
pursuant to Section 9.1(e) or (f) thereof or the Offer was not consummated due
to the occurrence of the condition set forth in clause (e) of Exhibit A to the
Merger Agreement, (b) the purchase of all the Shares pursuant to the Offer in
accordance with Section 3 or pursuant to the Stock Option, or (c) on July 19,
1998; provided, that such date shall be extended to the date of termination of
the Merger Agreement if the Company has given notice of termination under
Section 9.1(c) of the Merger Agreement and Acquiror has given the No
Termination Notice. The provisions of Section 13 shall survive any termination
of this Agreement.
10. Effectiveness. This Agreement shall not be effective unless
and until it shall have been approved by the Company's Board of Directors.
11. Brokerage. Acquiror, Newco and the Stockholder represent and
warrant to the other that the negotiations relevant to this Agreement have been
carried on by Acquiror and Newco, on the one hand, and the Stockholder, on the
other hand, directly with the other, and that there are no claims for finder's
fees or brokerage commissions or other like payments in connection with this
Agreement or the transactions contemplated hereby. Acquiror and Newco, on the
one hand, and each Stockholder, on the other hand, will indemnify and hold
9
<PAGE> 10
harmless the other from and against any and all claims or liabilities for
finder's fees or brokerage commissions or other like payments incurred by
reason of action taken by him, it or any of them, as the case may be.
12. Miscellaneous.
a. Except for the representations and warranties set
forth in Section 1(b), all representations and warranties contained herein will
terminate upon the termination of this Agreement.
b. Any provisions of this Agreement may be waived at any
time by the party that is entitled to the benefits thereof. No such waiver,
amendment or supplement will be effective unless in writing and is signed by
the party or parties sought to be bound thereby. Any waiver by any party of a
breach of any provision of this Agreement will not operate as or be construed
to be a waiver of any other breach of such provisions or of any breach of any
other provision of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement or one or more sections hereof
will not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.
c. This Agreement contains the entire agreement among
the parties in respect to the subject matter hereof, and supersedes all prior
agreements among the parties with respect to such matters. This Agreement may
not be amended, changed, supplemented, waived or otherwise modified, except
upon the delivery of a written agreement executed by the parties hereto.
d. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and performed in that state. Each party hereto hereby (i) irrevocably and
unconditionally submits in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive general jurisdiction of the state and federal courts
in the state of Delaware, and appellate courts from any thereof and (ii)
consents that any action or proceeding may be brought in such courts and waives
any objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the same. Each of
the parties hereto acknowledges and agrees that in the event of any breach of
this Agreement, each non-breaching party would be irreparably and immediately
harmed and could not be made whole by monetary damages. It is accordingly
agreed that the parties hereto (i) will waive, in any action for specific
performance, the defense of adequacy of a remedy at law and (ii) will be
entitled, in addition to any other remedy to which they may be entitled at law
or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court sitting in Wilmington, Delaware.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in the Merger Agreement.
10
<PAGE> 11
e. The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
f. All notices and other communications hereunder will
be in writing and will be given (and will be deemed to have been duly given
upon receipt) by delivery in person, by telecopy, or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to Stockholder to:
FS Equity Partners II, L.P.
11100 Santa Monica Boulevard
Suite 1900
Los Angeles, CA 90025
Attention: J. Frederick Simmons
Telephone: (310) 444-1822
Telecopy: (310) 444-1870
with a copy to:
Riordan & McKinzie
300 S. Grand Avenue, 29th Floor
Los Angeles, CA 90071
Attention: Richard J. Welch, Esq.
Telephone: (213) 229-8510
Telecopy: (213) 229-8550
If to Acquiror or Newco to:
Albertson's, Inc.
250 Parkcenter Boulevard
P.O. Box 20
Boise, ID 83726
Attention: Gary G. Michael, Chairman
Telephone: (208) 395-6200
Telecopy: (208) 395-6225
11
<PAGE> 12
with a copy to:
Albertson's, Inc.
250 Parkcenter Boulevard
P.O. Box 20
Boise, ID 83726
Attention: Thomas R. Saldin, Esq.
Telephone: (208) 395-6200
Telecopy: (208) 395-6672
and:
Skadden, Arps, Slate, Meagher & Flom
Four Embarcadero Center, Suite 3800
San Francisco, CA 94111
Attention: Theodore J. Kozloff, Esq.
Telephone: (415) 984-6400
Telecopy: (415) 984-2698
or to such other address as any party may have furnished to the other parties
in writing in accordance herewith.
g. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one agreement.
h. This Agreement is binding upon and is solely for the
benefit of the parties hereto and their respective successors, legal
representatives and assigns. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned by any of the
parties hereto without the prior written consent of the other parties.
i. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect as long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto will negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated by this Agreement are
consummated to the extent possible.
j. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity will be
cumulative and not alternative,
12
<PAGE> 13
and the exercise of any thereof by either party will not preclude the
simultaneous or later exercise of any other such right, power or remedy by such
party.
13. Expenses. Except as provided in Section 4 hereof, all fees
and expenses incurred by any one party hereto shall be borne by the party
incurring such fees and expenses.
14. Further Assurances; Stockholder Capacity.
a. The Stockholder shall, upon request of Acquiror or
Newco, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by Acquiror or Newco to be necessary or
desirable to carry out the provisions hereof and to vest the power to vote the
Shares as contemplated by Section 7 hereof in Acquiror.
b. Nothing in this Agreement shall be construed to
prohibit any affiliate of the Stockholder who is a member of the Board of
Directors of the Company from taking any action solely in his capacity as a
member of the Board of Directors of the Company to the extent specifically
permitted by the Merger Agreement or as required by applicable law.
13
<PAGE> 14
IN WITNESS WHEREOF, the Acquiror, Newco and the Stockholder have
caused this Agreement to be signed by their respective officers or
representatives thereunto duly authorized, all as of the date first written
above.
ACQUIROR:
ALBERTSON'S, INC.
By: /s/ MICHAEL F. REULING
----------------------------------
Name: Michael F. Reuling
-----------------------------
Title: Executive Vice President
----------------------------
NEWCO:
LOCOMOTIVE ACQUISITION CORP.
By: /s/ MICHAEL F. REULING
----------------------------------
Name: Michael F. Reuling
-----------------------------
Title: Vice President
----------------------------
STOCKHOLDER:
FS EQUITY PARTNERS II, L.P.
By: Freeman Spogli & Co.
Its: General Partner
By: /s/ WILLIAM M. WARDLAW
----------------------------------
Name: William M. Wardlaw
Title: General Partner
<PAGE> 1
EXHIBIT (c)(3)
December 22, 1997
Albertsons, Inc.
P.O. Box 20
Boise, Idaho 83726
Atten: Mr. Gary G. Michael
Chairman and Chief Executive Officer
Gentlemen:
In connection with your consideration of a possible negotiated
business combination or acquisition transaction (a "Transaction") with Buttrey
Food and Drug Stores Company (together with its subsidiaries, the "Company")
certain financial, operational and other information concerning the Company is
being furnished to you. As a condition to your receipt of such information,
you agree, as set forth below, to treat any information concerning the Company
(irrespective of its source or form of communication) that may be furnished to
you by or on behalf of the Company (collectively referred to as "Evaluation
Material"), whether furnished before, on or after the date of this
Confidentiality Agreement ("Confidentiality Agreement"), in accordance with the
provisions hereof and you further agree to abide by the other provisions
contained in this Confidentiality Agreement.
The term Evaluation Material shall include any notes, analyses,
compilations, studies or other documents or records prepared by you or others,
which contain or reflect or are generated from information supplied by the
Company or its representatives. The term Evaluation Material shall not include
information which you can prove by documentary evidence (i) is now or becomes
generally available to the public other than as a result of a disclosure by you
or your representatives in violation of this Confidentiality Agreement, (ii)
was available to you on a non-confidential basis from a source other than the
Company or its representatives prior to receipt
<PAGE> 2
Albertsons, Inc.
December 22, 1997
Page 2
in accordance with this Confidentiality Agreement provided such information is
not known by you to be subject to another confidentiality agreement with or
other obligation of secrecy to the Company or another party, or (iii) becomes
available to you on a non-confidential basis from sources other than the
Company or its representatives, provided that such source is not known by you
or your representatives to be prohibited from transmitting the information to
you by a contractual, legal or fiduciary obligation.
You agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible Transaction involving the Company and will not
be used by you in any way detrimental to the Company and that the Evaluation
Material will be kept confidential by you; provided, however, that any of such
information may be disclosed (i) initially, only to Mr. Michael, and key
personnel in your finance and real estate departments and executive office as
well as to your legal and other outside professional advisors involved in your
acquisition review process, and (ii) after the Company's express written
consent has been given, to your directors, other officers and employees,
potential financing sources, professional service providers and advisors
(collectively referred to as "representatives") who, in your reasonable
judgment, need to know such information for the purpose described above, it
being understood that prior to any disclosure of Evaluation Material under
either clause (i) or (ii) of this sentence, each of your representatives shall
be informed by you of the terms of this Confidentiality Agreement and of the
confidential nature of the Evaluation Material. Each of your representatives
shall agree to keep the Evaluation Material confidential and to use it only in
connection with the purpose described above and in accordance with the other
terms of this Confidentiality Agreement. You shall be responsible for any
breach of this Confidentiality Agreement by you or any of your representatives
and you agree, at your sole expense, to take all reasonable measures (including
but not limited to court proceedings) to restrain your representatives from
prohibited or unauthorized disclosure or use of the Evaluation Material.
Without the prior written consent of the Company, you will not
disclose and will direct your representatives not to disclose, to any person
other than your representatives, the fact that the Evaluation Material has been
made available to you, the fact that you or we are considering a Transaction,
or any information with respect
<PAGE> 3
Albertsons, Inc.
December 22, 1997
Page 3
to the discussions or negotiations, including the status thereof; provided that
you may, after consultation with us, make such disclosure to the extent (i) you
have been advised by legal counsel that such disclosure is required by law or
the requirements of any securities exchange on which your securities are traded
and (ii) as provided in the next paragraph. The term "person" as used in this
Confidentiality Agreement shall be broadly interpreted to include, without
limitation, any corporation, company, partnership or individual.
If you or any of your representatives are requested or required
(orally or in writing, by interrogatory, subpoena, civil investigatory demand
or any similar process relating to any legal proceeding, investigation, hearing
or otherwise) to disclose any Evaluation Material, you will provide the Company
with prompt notice in advance of such disclosure so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance with this
Confidentiality Agreement and you agree to cooperate with the Company in
pursuing any such course of action. In the event that such protective order or
other remedy is not obtained, or if the Company waives compliance with the
provisions of this Confidentiality Agreement, you will furnish only such
information as you are advised is legally required and will cooperate with us
in any efforts we may undertake to obtain assurance that confidential treatment
will be accorded to any information which is compelled to be disclosed.
If you decide that you do not wish to proceed with a Transaction, you
will promptly inform the Company of your decision. In that event or if a
Transaction with the Company is not completed, you and your representatives
will upon the request of the Company at your election either (i) promptly
deliver to the Company all Evaluation Material in or under your or your
representatives' possession or control, without retaining any copy, extract or
reproduction thereof, or (ii) promptly destroy all Evaluation Material in or
under your or your representatives' possession or control, and such destruction
shall be certified in writing to the Company by one of your officers
supervising such destruction. Notwithstanding the return or destruction of the
Evaluation Material, you and your representatives will continue to be bound by
the confidentiality and other obligations created hereby.
<PAGE> 4
Albertsons, Inc.
December 22, 1997
Page 4
You acknowledge that you are aware, and agree that you will advise
your representatives who are informed as to the matters which are the subject
of this Confidentiality Agreement, that the United States securities laws
prohibit any person who has received from an issuer material, nonpublic
information concerning the matters which are the subject of this
Confidentiality Agreement from purchasing or selling securities of such issuer
or from communicating such information to any other person under circumstances
in which it is reasonably foreseeable that such person is likely to purchase or
sell such securities while in possession of material nonpublic information.
You hereby further acknowledge that the Evaluation Material is being
furnished to you in further consideration of your agreement that neither you,
nor any person affiliated with you, will for a period of two years from the
date hereof, directly or indirectly, alone or with others, (a) negotiate with
or provide any information to any party with respect to, or make any statement
or proposal to the Board of Directors of the Company, to any of its agents or
to any stockholder of the Company with respect to, or make any public
announcement or proposal or offer whatsoever (including, but not limited to any
"solicitation" of "proxies" as such terms are defined or used in Regulation 14A
of the Securities Exchange Act of 1934) with respect to, or otherwise solicit,
seek or offer to effect (i) any form of business combination or transaction
involving the Company or any affiliate thereof, including, without limitation,
a merger, tender or exchange offer or liquidation of the Company's assets, (ii)
any form of restructuring, recapitalization or similar transaction with respect
to the Company or any affiliate thereof, (iii) any purchase of any securities
or assets, or rights to acquire any securities or assets, of the Company, (iv)
any proposal to seek representation on the Board of Directors of the Company or
otherwise to seek to control or influence the management, Board of Directors or
policies of the Company, (v) any request or proposal to waive, terminate or
amend the provisions of this letter, or (vi) any proposal or other statement
inconsistent with the terms of this letter, (b) instigate, encourage or assist
any third party to do any of the foregoing, or (c) become a beneficial owner
of any securities of the Company (other than through purchases by persons
affiliated with you for investment in open market transactions not to exceed
1.0% of the Company's common stock), unless and until you have received the
prior written invitation or approval of a majority of the Board of Directors of
the Company to do any of the foregoing.
<PAGE> 5
Albertsons, Inc.
December 22, 1997
Page 5
You agree that without the prior consent of the Company, neither you
nor any of your representatives will contact any employee, supplier, customer
or representative of the Company concerning the Evaluation Material, the
Transaction or, except in the ordinary course of business, any aspect of the
Company's business, prospects or finances, or any other matter related to any
of the same. It is understood and agreed that J. Frederick Simmons of Freeman
Spogli & Co. Incorporated shall arrange for appropriate contacts at the
Company. It is also understood that all (a) communications regarding a
possible Transaction, (b) requests for additional information, (c) requests for
facility tours or management meetings and (d) discussions or questions
regarding procedures will be submitted or directed to Mr. Simmons.
You agree further that without the Company's prior written consent,
for a period of two years from the date hereof, you will not directly or
indirectly solicit any management employee of the Company for employment and
you will not initiate, participate in, include or contribute to any
interference with the Company's employment relationship with any such person;
provided, however, that nothing herein shall restrict or preclude your right to
make generalized searches for employees by use of advertisements in the media
(including without limitation trade media) or by engaging search firms which
are not targeted or focused on employees of the Company and this paragraph
shall not be deemed to prohibit your hiring of any employee of the Company who
initially contacts you without prior contact by you or anyone acting on your
behalf.
You agree to limit to three the number of your representatives who may
visit any of the Company's retail stores at any one time in the ordinary course
of business. You further agree that no group of more than three of your
representatives shall visit any of the Company's retail stores at any one time
without the prior specific approval of Mr. Simmons. You acknowledge that the
company could be irreparably harmed in the event that any of its retail store
employees learned about the possibility of the Transaction, and you agree to
use your best efforts to ensure that they do not become aware of it during any
of the visits which your representatives may make during the ordinary course of
the Company's business.
<PAGE> 6
Albertsons, Inc.
December 22, 1997
Page 6
You understand that the Company does not make any representation or
warranty as to the accuracy or completeness of the Evaluation Material. Only
those representations and warranties contained in the final definitive
agreement covering the Transaction, when, as and if executed, and subject to
such limitations as may be specified therein, will have any legal effect. You
agree that unless and until a definitive agreement (expressly excluding any
executed letter of intent or other preliminary written agreement and any
written or oral acceptance of an offer or a bid) with respect to any
Transaction has been executed and delivered, neither the Company nor you will
be under any legal obligation of any kind whatsoever with respect to such a
transaction by virtue of this letter agreement or any written or oral
expression with respect to such a Transaction by either party or any of its
respective agents except, in the case of this Confidentiality Agreement, for
the matters specifically agreed to herein.
You acknowledge and agree that (a) the Company reserves the right, in
its sole discretion, to change the procedures relating to its consideration of
a possible transaction at any time without prior notice to you or any other
person, to reject any and all proposals made by you or any of your
representatives, and to terminate discussions and negotiations with you at any
time and for any reason, and (b) unless and until a written definitive
agreement concerning the Transaction has been executed, neither the Company nor
any of its representatives will have any liability to you with respect to the
Transaction or the evaluation and the bidding process and procedures, whether
by virtue of this Confidentiality Agreement, any other written or oral
expression with respect to the Transaction or otherwise.
You acknowledge and agree that the Company would not have an adequate
remedy at law and would be irreparably harmed in the event that any of the
provisions of this Confidentiality Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Company shall be entitled to injunctive relief to prevent breaches of
this Confidentiality Agreement and to specifically enforce the terms and
provisions hereof, in addition to any other remedy to which the Company may be
entitled at law or in equity. It is further understood and agreed that no
failure to or delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, and no single or
<PAGE> 7
Albertsons, Inc.
December 22, 1997
Page 7
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise of any right, power or privilege.
In the event of litigation relating to this Confidentiality Agreement,
if a court of competent jurisdiction determines in a final, nonappealable order
that a party has breached this agreement, then such party shall be liable and
pay to the non-breaching party the reasonable legal fees such non-breaching
party has incurred in connection with such litigation, including any appeal
therefrom.
This Confidentiality Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed within such State.
This Confidentiality Agreement shall remain in effect for a period of
three years from the date hereof and may be modified or waived only by a
separate writing by the Company and you that expressly so modifies or waives
this Confidentiality Agreement.
<PAGE> 8
Albertsons, Inc.
December 22, 1997
Page 8
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter agreement to the undersigned, whereupon this
Confidentiality Agreement shall become a binding agreement.
Very truly yours,
FREEMAN SPOGLI & CO. INCORPORATED
For Buttrey Food and Drug Stores Company
By: /s/ J. Frederick Simmons
J. Frederick Simmons
Agreed to and Accepted:
ALBERTSONS, INC.
By: /s/ Gary G. Michael
Gary G. Michael
Chairman and CEO
Date: December 22, 1997
