<PAGE> 1
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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
------------------------
RISER FOODS, INC.
(NAME OF SUBJECT COMPANY)
------------------------
TALON ACQUISITION COMPANY
GIANT EAGLE, INC.
(BIDDERS)
------------------------
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
767612 10 4
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
DAVID S. SHAPIRA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GIANT EAGLE, INC.
101 KAPPA DRIVE
RIDC PARK
PITTSBURGH, PENNSYLVANIA 15238
(412) 963-6200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
CHARLES C. COHEN, ESQ.
COHEN & GRIGSBY, P.C.
2900 CNG TOWER
625 LIBERTY AVENUE
PITTSBURGH, PENNSYLVANIA 15222
(412) 394-4900
------------------------
MAY 14, 1997
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
======================================================================================================
AMOUNT OF
TRANSACTION VALUATION* FILING FEE
<C> <S> <C> <C>
- ------------------------------------------------------------------------------------------------------
$306,998,496............................................................... $61,399.70
======================================================================================================
</TABLE>
* Estimated for purposes of calculating amount of filing fee only. The amount
assumes the purchase of 7,309,488 shares of Class A common stock, par value
$.01 per share (the "Shares"), of Riser Foods, Inc., at a price per share of
$42.00 in cash. Such number of Shares represents all the Shares outstanding
as of May 13, 1997. Such number does not include any shares issuable upon
exercise of employee stock options or upon conversion of any of the Company's
Class B common stock.
[ ] 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.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
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<PAGE> 2
14D-1 AND 13D
CUSIP NO. 767612 10 4
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TALON ACQUISITION COMPANY
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCES OF FUNDS
AF
- --------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e)
OF 2(f) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
870,390*
- --------------------------------------------------------------------------------
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 12% OF THE SHARES OUTSTANDING AS OF MAY 14, 1997*
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE> 3
14D-1 AND 13D
CUSIP NO. 767612 10 4
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GIANT EAGLE, INC.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCES OF FUNDS
BK
- --------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e)
OF 2(f) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
PENNSYLVANIA
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
870,390*
- --------------------------------------------------------------------------------
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 12% OF THE SHARES OUTSTANDING AS OF MAY 14, 1997*
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
* On May 14, 1997 Giant Eagle, Inc. ("Parent") entered into an agreement (the
"Stockholders Agreement") with certain holders (collectively, the "Selling
Stockholders") of Class B Common Stock, par value $.01 per share (the "Class B
Shares"), of Riser Foods, Inc. (the "Company"), pursuant to which each Selling
Stockholder agreed, among other things, to tender in the Offer (as defined in
the Offer to Purchase dated May 20, 1997 (the "Offer to Purchase")) and not
withdraw all shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of the Company owned by such Selling Stockholder (the "Selling
Stockholders Shares"). As of May 14, 1997, the Selling Stockholders Shares
represented in the aggregate 870,390 Shares, or approximately 12% of the
outstanding Shares. The Selling Stockholders' obligation to tender their
Shares in the Offer is reflected in Rows 7 and 9 of each of the tables above.
It is a condition to the Purchaser's obligation to purchase Shares pursuant to
the Offer that holders of at least 80% of the Class B Shares execute and
deliver the Stockholders Agreement. As of May 14, 1997, 506,198 Class B
Shares, or 57% of the outstanding Class B Shares, were held by the Selling
Stockholders who had signed the Stockholders Agreement. The Stockholders
Agreement is described more fully in Section 12 ("Purpose of the Offer; The
Merger Agreement and the Stockholders Agreement") of the Offer to Purchase.
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by Parent and Talon Acquisition
Company, a Delaware corporation and wholly-owned subsidiary of Parent (the
"Purchaser"), of beneficial ownership of the Selling Stockholders Shares. The
item numbers and responses thereto below are in accordance with the requirements
of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Riser Foods, Inc. a Delaware
corporation, which has its principal executive offices at 5300 Richmond Road,
Bedford Heights, Ohio 44146.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding Shares at a price of $42.00 per Share, net to the seller in cash
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. Information concerning the number of outstanding Shares is set
forth in the Introduction of the Offer to Purchase and is incorporated herein by
reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of the Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser, which
is a Delaware corporation, and Parent, which is a Pennsylvania corporation. The
Purchaser is a wholly-owned subsidiary of Parent. Information concerning the
principal business and the address of the principal offices of the Purchaser and
Parent is set forth in Section 9 ("Certain Information Concerning the Purchaser
and Parent") of the Offer to Purchase and is incorporated herein by reference.
The names, business addresses, present principal occupations or employment,
material occupations, positions, offices or employment during the last five
years and citizenship of the directors and executive officers of the Purchaser
and Parent are set forth in Schedule I to the Offer to Purchase and are
incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") and Section 14 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer") of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer") and Section 12 ("Purpose of the Offer; The Merger
Agreement and the Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (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 Section 12 ("Purpose of the Offer; The
Merger Agreement and the Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
<PAGE> 5
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares, Stock Quotation and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purpose of the Offer; The Merger Agreement and the Stockholders Agreement") 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 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Merger Agreement and the Stockholders Agreement") of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 15 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The Purchaser and Parent do not believe that their financial condition or
the financial condition of their affiliates is material to a decision by a
security holder of the Company whether to sell, tender or hold Shares.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement and the Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in Section 14 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of May 13, 1997, among
Parent, the Purchaser and the Company (the "Merger Agreement") and the
Stockholders Agreement, copies of which are attached hereto as Exhibits (a)(1),
(a)(2), (c)(1) and (c)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and
Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated May 20, 1997.
(a)(8) Text of Press Release dated May 14, 1997, issued by the Company.
(b) Commitment Letter dated May 12, 1997 between Mellon Bank, N.A. and
Parent.
<PAGE> 6
(c)(1) Agreement and Plan of Merger dated as of May 13, 1997 among Parent, the
Purchaser and the Company (the "Merger Agreement").
(c)(2) Form of Stockholder Voting Agreement between Parent and certain
stockholders of the Company (the "Stockholders Agreement").
(c)(3) Employment Agreement dated May 13, 1997 between Anthony C. Rego and
Parent.
(c)(4) Employment Agreement dated May 13, 1997 between Charles A. Rini, Sr. and
Parent.
(c)(5) Confidentiality Agreement dated January 16, 1997 between the Company and
Parent.
(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.
Dated: May 20, 1997
TALON ACQUISITION COMPANY
By: /s/ DAVID S. SHAPIRA
------------------------------------
Name: David S. Shapira
Title: Chairman and Chief Executive
Officer
GIANT EAGLE, INC.
By: /s/ DAVID S. SHAPIRA
------------------------------------
Name: David S. Shapira
Title: Chairman and Chief Executive
Officer
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME PAGE
- -------- ----------------------------------------------------------------------------- ----
<S> <C> <C>
(a)(1) Offer to Purchase............................................................
(a)(2) Letter of Transmittal........................................................
(a)(3) Notice of Guaranteed Delivery................................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees........
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and
Other Nominees...............................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.....................................................................
(a)(7) Form of Summary Advertisement dated May 20, 1997.............................
(a)(8) Text of Press Release dated May 14, 1997 issued by the Company...............
(b) Commitment Letter dated May 12, 1997 between Mellon Bank, N.A. and Parent....
(c)(1) Agreement and Plan of Merger dated as of May 13, 1997 among Parent, the
Purchaser and the Company (the "Merger Agreement")...........................
(c)(2) Form of Stockholder Voting Agreement between Parent and certain stockholders
of the Company listed therein (the "Stockholders Agreement").................
(c)(3) Employment Agreement dated May 13, 1997 between Anthony C. Rego and
Parent.......................................................................
(c)(4) Employment Agreement dated May 13, 1997 between Charles A. Rini, Sr. and
Parent.......................................................................
(c)(5) Confidentiality Agreement dated January 16, 1997 between the Company and
Parent.......................................................................
(d) None.........................................................................
(e) Not applicable...............................................................
(f) None.........................................................................
</TABLE>
<PAGE> 9
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
RISER FOODS, INC.
AT
$42.00 NET PER SHARE
BY
TALON ACQUISITION COMPANY
A WHOLLY-OWNED SUBSIDIARY OF
GIANT EAGLE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 17, 1997, UNLESS EXTENDED.
THE BOARD OF DIRECTORS OF RISER FOODS, INC. HAS, BY UNANIMOUS VOTE,
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF RISER FOODS, INC. AND RECOMMENDS THAT THE STOCKHOLDERS OF RISER
FOODS, INC. ACCEPT THE OFFER AND TENDER THEIR SHARES.
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 WOULD REPRESENT AT LEAST 80% OF THE OUTSTANDING SHARES OF CLASS A
COMMON STOCK OF RISER FOODS, INC. AS DETERMINED IMMEDIATELY PRIOR TO THE
CONSUMMATION OF THE OFFER.
------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal or a
facsimile copy 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 such facsimile and any other required documents to the Depositary
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such stockholder desires
to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase.
------------------
The Dealer Manager for the Offer is:
PARKER/HUNTER
INCORPORATED
MAY 20, 1997
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Introduction........................................................................... 1
1. Terms of the Offer............................................................ 2
2. Procedure for Tendering Shares................................................ 4
3. Withdrawal Rights............................................................. 6
4. Acceptance for Payment and Payment............................................ 7
5. Certain Federal Income Tax Consequences....................................... 8
6. Price Range of the Shares; Dividends on the Shares............................ 9
7. Effect of the Offer on the Market for the Shares, Stock Quotation and Exchange
Act Registration.............................................................. 9
8. Certain Information Concerning the Company.................................... 10
9. Certain Information Concerning the Purchaser and Parent....................... 11
10. Source and Amount of Funds.................................................... 12
11. Contacts with the Company; Background of the Offer............................ 14
12. Purpose of the Offer; The Merger Agreement and the Stockholders Agreement..... 15
13. Certain Conditions of the Offer............................................... 24
14. Certain Legal Matters......................................................... 25
15. Fees and Expenses............................................................. 27
16. Miscellaneous................................................................. 28
Schedule I--Directors and Executive Officers........................................... S-1
Schedule II--Section 262 of the Delaware General Corporation Law....................... S-3
</TABLE>
<PAGE> 11
To the Holders of Common Stock
of Riser Foods, Inc.
INTRODUCTION
Talon Acquisition Company, a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Giant Eagle, Inc., a Pennsylvania corporation
("Parent"), hereby offers to purchase all outstanding shares of Class A Common
Stock, par value $.01 per share (the "Shares"), of Riser Foods, Inc., a Delaware
corporation (the "Company"), at $42.00 per Share, net to the seller in cash (the
"Offer Price"), 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 purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Parker/Hunter Incorporated, which is
acting as Dealer Manager (the "Dealer Manager"), ChaseMellon Shareholder
Services, L.L.C., which is acting as the Depositary (the "Depositary"), and D.
F. King & Co., Inc., which is acting as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE, APPROVED THE
OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL, THE COMPANY'S FINANCIAL ADVISOR, AND
MCDONALD & COMPANY SECURITIES, INC., THE FINANCIAL ADVISOR TO CERTAIN OF THE
COMPANY'S OUTSIDE DIRECTORS, EACH HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE
COMPANY ITS WRITTEN OPINION TO THE EFFECT THAT THE CASH CONSIDERATION TO BE
RECEIVED BY THE HOLDERS OF SHARES IN EACH OF THE OFFER AND THE MERGER IS FAIR,
FROM A FINANCIAL POINT OF VIEW, TO THE STOCKHOLDERS OF THE COMPANY AS OF THE
DATE OF DELIVERY OF SUCH OPINION. SUCH OPINIONS ARE SET FORTH IN FULL AS
EXHIBITS TO THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 (THE "SCHEDULE 14D-9"), WHICH IS BEING MAILED TO STOCKHOLDERS OF THE
COMPANY HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF SHARES") WHICH WOULD REPRESENT
AT LEAST 80% OF THE OUTSTANDING SHARES AS DETERMINED IMMEDIATELY PRIOR TO THE
CONSUMMATION OF THE OFFER (THE "MINIMUM TENDER CONDITION"). THE PURCHASER
RESERVES THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION")), WHICH IT PRESENTLY HAS
NO INTENTION OF EXERCISING, TO WAIVE THE MINIMUM TENDER CONDITION AND TO ELECT
TO PURCHASE, PURSUANT TO THE OFFER, FEWER THAN THE MINIMUM NUMBER OF SHARES. SEE
SECTIONS 1 AND 13.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 13, 1997 (the "Merger Agreement"), among Parent, the Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the Merger as a wholly-owned
subsidiary of Parent, or, at the election of Parent, unless such election would
have a material adverse effect on the financial interests of the Company and its
stockholders, the Company will be merged with and into the Purchaser, with the
Purchaser surviving as a wholly-owned subsidiary of Parent (in either case, the
"Merger"; and the surviving corporation in either case, the "Surviving
Corporation"). In the Merger, each outstanding Share (other than Shares held in
the Company's treasury or by any subsidiary of the Company, or owned by Parent,
the Purchaser or any other subsidiary of Parent or held by stockholders, if any,
who are entitled to and who properly exercise appraisal rights under Delaware
law) will be converted into the right to receive the Offer Price in cash,
without interest (the "Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by the
stockholders of the Company, if such approval is required by applicable law. See
Section 12.
-1-
<PAGE> 12
In connection with the execution of the Merger Agreement, on May 14, 1997
Parent entered into a Stockholder Voting Agreement (the "Stockholders
Agreement") with certain holders of Class B Common Stock, par value $.01 per
share ("Class B Shares"), of the Company (collectively, the "Selling
Stockholders"), pursuant to which each Selling Stockholder has agreed, among
other things, to (i) tender in the Offer and not withdraw all Shares owned by
such Selling Stockholder (the "Selling Stockholders Shares") and (ii) vote all
Shares and Class B Shares beneficially owned by such Selling Stockholder in
favor of the Merger. As of May 14, 1997, the Selling Stockholders Shares
represented in the aggregate 870,390 Shares, or approximately 12% of the
outstanding Shares. It is a condition to the obligation of the Purchaser to
accept and pay for any Shares tendered in the Offer that the beneficial owners
of not less than 80% of the Class B Shares execute and deliver the Stockholders
Agreement on or before June 4, 1997. As of May 14, 1997, 506,198 Class B Shares,
or 57% of the outstanding Class B Shares, were beneficially owned by the Selling
Stockholders who had signed the Stockholders Agreement.
The Company has informed the Purchaser that as of May 13, 1997, there were
(1) 7,309,488 Shares issued and outstanding and (2) 353,700 Shares reserved for
issuance upon the exercise of outstanding Stock Options (as defined herein).
Based upon the foregoing, and assuming that no Class B Shares are converted into
Shares, the Purchaser believes that approximately 5,847,591 Shares constitutes
80% of the outstanding Shares (and approximately 6,130,551 Shares would
constitute 80% of the outstanding Shares if all outstanding Stock Options were
exercised). Accordingly, based upon the foregoing assumptions the Minimum Tender
Condition will be satisfied if at least 5,847,591 Shares are validly tendered
and not withdrawn prior to the expiration of the Offer.
The Merger Agreement and the Stockholders Agreement are more fully
described in Section 12. Certain Federal income tax consequences of the sale of
Shares pursuant to the Offer and the exchange of Shares for the Merger
Consideration pursuant to the Merger are described in Section 5.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Tuesday,
June 17, 1997, unless and until the Purchaser shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission, the Purchaser expressly reserves the right, in
its sole discretion, to (1) 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 and
(2) amend the Offer in any other respect by giving oral or written notice of
such amendment to the Depositary. THE PURCHASER SHALL NOT HAVE ANY OBLIGATION TO
PAY INTEREST ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE
PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the consent of the Company, extend the Offer, except that, without the consent
of the Company, the Purchaser may extend the Offer (1) for a period of not more
than 20 business days beyond the date on which the Offer would otherwise expire
if on the date of such extension any of the conditions to the Purchaser's
obligation to purchase Shares shall not be satisfied, until such time as such
conditions are satisfied or waived, (2) for a period of not more than ten
business days beyond the date on which the Offer would otherwise expire if on
the date of such extension the Minimum Tender Condition shall not be satisfied
or if on the date of such extension holders of less than 80% of the outstanding
Class B Shares have executed the Stockholders Agreement, (3) for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer and (4) for any reason for a period
of not more than ten business days beyond the latest expiration date that would
otherwise be permitted under the terms of the Merger Agreement as described in
this sentence. The Company, Parent and the Purchaser each has the right to
terminate the Merger Agreement if
-2-
<PAGE> 13
the Purchaser has not purchased Shares pursuant to the Offer within 90 days
following the date of the Merger Agreement. In addition, the Merger Agreement is
subject to termination as more fully described in Section 12. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under
the Exchange Act.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the consent of the Company, (1) reduce the number of Shares subject
to the Offer, (2) reduce the Offer Price, (3) modify or add to the conditions
set forth in Section 13 or (4) change the form of consideration payable in the
Offer.
If by 12:00 Midnight, New York City time, on Tuesday, June 17, 1997 (or any
other date or time then set as the Expiration Date), any or all conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement and to the applicable rules and regulations of the
Commission, to (1) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders, (2) waive all the
unsatisfied conditions and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (3) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (4) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than the
earlier of (1) 9:00 a.m., New York City time, or (2) the opening of the American
Stock Exchange (the "AMEX"), 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 Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 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 such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials 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 the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of ten business days is generally required to allow for
adequate dissemination to stockholders and investor response.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Tender Condition, the expiration or termination of all waiting periods imposed
by the Hart-Scott-Rodino Antitrust Improvements
-3-
<PAGE> 14
Act of 1976, as amended, and the regulations thereunder (the "HSR Act") and the
other conditions described in Section 13. Subject to the terms and conditions
contained in the Merger Agreement, the Purchaser reserves the right (but shall
not be obligated) to waive any or all such conditions. However, if the Purchaser
waives or amends the Minimum Tender Condition during the last five business days
during which the Offer is open, the Purchaser will be required to extend the
Expiration Date so that the Offer will remain open for at least five business
days after the announcement of such waiver or amendment is first published, sent
or given to holders of Shares.
The Company has provided the 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, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the 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.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either
certificates for tendered Shares must be received by the Depositary at one of
such addresses or such Shares must be delivered pursuant to the procedure 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 (2) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must, in any
case, be transmitted to, and received by, the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering stockholder must comply with the guaranteed delivery
procedure described below. The confirmation of a book-entry transfer of Shares
into the Depositary's account at a Book-Entry Transfer Facility as described
above is referred to herein as a "Book-Entry Confirmation". DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. 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 if (1) the Letter of Transmittal is signed by the registered holder
of Shares (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) 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 (2) such Shares are tendered for the account of a firm
that is a member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. (the
-4-
<PAGE> 15
"NASD"), or a commercial bank or trust company having an office or correspondent
in the United States or by any other "eligible guarantor institution", as such
term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). In all other cases, all signatures on the 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 issued to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered 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 procedure 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:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser is received by the
Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for transfer
(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 and any other
documents required by the Letter of Transmittal, 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
AMEX 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 (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (3) 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 are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser 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 the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after May 13, 1997. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such appointment,
all prior powers of attorney and proxies given by such stockholder with respect
to such Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all
-5-
<PAGE> 16
voting and other rights with respect to such Shares or other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
stockholders, or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting and other rights
with respect to such Shares and other securities or rights, including voting at
any meeting of stockholders then scheduled.
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 the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares, 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
the Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager
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. The 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. 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 provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such stockholder and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). 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 Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, 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 the Purchaser pursuant
to the Offer, may also be withdrawn at any time after July 18, 1997.
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 procedure
for book-entry transfer as set forth in Section 2, 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
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<PAGE> 17
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 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager 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.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. Any determination
concerning the satisfaction of such terms and conditions will be within the sole
discretion of the Purchaser, and such determination will be final and binding on
all tendering stockholders. See Sections 1 and 13. The 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
the Purchaser's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer).
Parent filed a Notification and Report Form with respect to the Offer under
the HSR Act on May 15, 1997. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., New York City time, on May 30, 1997,
unless early termination of the waiting period is granted. In addition, the
Antitrust Division of the Department of Justice (the "Antitrust Division") or
the Federal Trade Commission (the "FTC") may extend the waiting period by
requesting additional information or documentary material from Parent. If such a
request is made, such waiting period will expire at 11:59 p.m., New York City
time, on the 10th day after substantial compliance by Parent with such request.
See Section 14 hereof for additional information concerning the HSR Act and the
applicability of antitrust laws to the 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 (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and (3) 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.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the 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 the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the 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 the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the 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 3.
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<PAGE> 18
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by stockholders of the Company pursuant to the Merger) will be
taxable transactions for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For Federal income
tax purposes, a tendering stockholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer (or canceled pursuant to the Merger).
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. Under present law,
long-term capital gains recognized by a tendering individual stockholder will
generally be taxed at a maximum Federal marginal tax rate of 28%, and long-term
capital gains recognized by a tendering corporate stockholder will be taxed at a
maximum Federal marginal tax rate of 35%.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional 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 FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
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<PAGE> 19
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the AMEX under the symbol "RSR". The following
table sets forth, for each of the periods indicated, the high and low reported
sales prices per Share as reported by the AMEX and the Dow Jones News Retrieval
Service.
<TABLE>
<CAPTION>
SALES PRICE
-----------------
HIGH LOW
------ ------
<S> <C> <C>
Fiscal year ended July 1, 1995
First Quarter........................................................... $ 7.50 $ 6.25
Second Quarter.......................................................... 7.38 6.13
Third Quarter........................................................... 8.63 6.88
Fourth Quarter.......................................................... 10.75 8.06
Fiscal year ended June 29, 1996
First Quarter........................................................... $14.50 $ 9.75
Second Quarter.......................................................... 16.38 13.38
Third Quarter........................................................... 20.00 14.13
Fourth Quarter.......................................................... 24.00 17.75
Fiscal year ending June 28, 1997
First Quarter........................................................... $27.75 $23.50
Second Quarter.......................................................... 32.13 25.38
Third Quarter........................................................... 34.13 30.00
Fourth Quarter (through May 19, 1997)................................... 41.75 33.00
</TABLE>
On May 13, 1997, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing sale
price of the Shares on the AMEX was $40.875 per Share. On May 19, 1997, the last
full day of trading before the commencement of the Offer, the reported closing
sale price of the Shares on the AMEX was $41.625 per Share. STOCKHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended June 29, 1996 (the "Company's Form 10-K"), and its Quarterly Reports on
Form 10-Q for the first three quarters of the fiscal year ending June 28, 1997,
the Company has paid a regular quarterly cash dividend of $.05 per Share since
October 10, 1995, which quarterly dividend was increased to $.06 per Share with
the dividend payable on October 8, 1996.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the AMEX for continued listing and
may, therefore, be delisted from such exchange. According to the AMEX's
published guidelines, the AMEX could consider delisting the Shares if, among
other things, the number of publicly-held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings of
10% or more) were less than 200,000, there were less than 300 holders of at
least 100 shares or the aggregate market value of the publicly-held Shares
(excluding Shares held by officers, directors, their immediate families and
other concentrated holdings of 10% or more) were less than $1 million. According
to the Company, as of May 13, 1997, there were approximately 950 holders of
record of Shares and 7,309,488 Shares were outstanding. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the AMEX for continued listing on the AMEX, and the Shares are
no longer listed for trading on the AMEX, the market for Shares could be
adversely affected.
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<PAGE> 20
In the event that the AMEX were to delist the Shares, it is possible that
Shares would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interests in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
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 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 no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act 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. 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 144A promulgated
under the Securities Act of 1933, as amended, may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be traded on the AMEX and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of Shares. Depending upon factors similar to those described
above regarding 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. If registration
of the Shares under the Exchange Act were terminated, the Shares would no longer
be "margin securities".
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
at 5300 Richmond Road, Bedford Heights, Ohio 44146. According to the Company's
Form 10-K for the fiscal year ended June 29, 1996, the Company's principal line
of business is the distribution of groceries and related items through its
retail supermarket subsidiary, Rini-Rego Supermarkets, Inc., and its wholesale
distribution subsidiary, American Seaway Foods, Inc.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Company's Form 10-K, as well as the Company's
Quarterly Report on Form 10-Q for the quarter ended April 5, 1997. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information".
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<PAGE> 21
RISER FOODS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in millions, except per share data)
<TABLE>
<CAPTION>
40 WEEKS ENDED YEAR ENDED
-------------------------- --------------------------------
APRIL 5, APRIL 6, JUNE 29, JULY 1, JULY 2,
1997 1996 1996 1995 1994
----------- ----------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $ 1,030.7 $ 984.9 $1,285.2 $1,185.0 $1,121.6
Net income......................... 14.4 11.7 16.6 11.6 8.4
Net income per share............... 1.77 1.45 2.0 5 1.42 1.03
</TABLE>
<TABLE>
<CAPTION>
AT APRIL 5, AT JUNE 29, AT JULY 1,
1997 1996 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................................... $ 20.9 $ 15.0 $ 23.9
Property, equipment & capital leases, net............ 144.2 124.0 118.1
Total assets......................................... 284.1 262.3 268.5
Long-term obligations
Debt.............................................. 48.0 32.5 55.7
Capital leases.................................... 4.7 5.5 6.8
Liabilities-to-equity ratio.......................... 1.7 1.9 2.6
</TABLE>
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports 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, stock
options and other matters, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in 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 located at 450 Fifth Street, N.W., Washington, DC
20549, and at the regional offices of the Commission located in the Northwestern
Atrium Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661,
and Seven World Trade Center, 13th Floor, New York, New York 10048. Such
reports, proxy statements and other information may also be obtained at the web
site that the Commission maintains at http://www.sec.gov. Copies 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, DC 20549. Such information should also be on file at the American
Stock Exchange, 86 Trinity Place, New York, New York 10006-1881.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information or has been provided by the Company. Although the
Purchaser and Parent do not have any knowledge that any such information is
untrue, neither the Purchaser nor Parent takes any responsibility for the
accuracy or completeness of such information or for any failure by the Company
to disclose events that may have occurred and may affect the significance or
accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser is a Delaware corporation and a wholly-owned subsidiary of
Parent. The Purchaser was organized to acquire the Company and has not conducted
any unrelated activities since its organization. The principal offices of the
Purchaser are located at 101 Kappa Drive, RIDC Park, Pittsburgh, Pennsylvania
15238-2809.
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<PAGE> 22
All outstanding shares of capital stock of the Purchaser are wholly owned
by Parent, a Pennsylvania corporation. Parent is principally engaged in the
retail sale and distribution of groceries and related items. The principal
offices of Parent are located at 101 Kappa Drive, RIDC Park, Pittsburgh,
Pennsylvania 15238-2809.
The name, business address, present principal occupation or employment,
five-year employment history and citizenship of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
Except as described in this Offer to Purchase, neither the Purchaser, nor
Parent (collectively, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Corporate Entities or, to the best knowledge of the Corporate Entities, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, transactions or negotiations between any of the Corporate Entities,
any of their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (2) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
During the last five years, none of the Corporate Entities or, to the best
knowledge of the Corporate Entities, any of the persons listed in Schedule I (1)
has been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (2) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, United States Federal or
state securities laws or finding any violation of such laws.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and the Merger, all outstanding Class B
Shares pursuant to the Stockholders Agreement and the Merger and all outstanding
stock options, to pay fees and expenses related to the Offer and the Merger and
to assume existing debt of the Company is estimated to be approximately $403
million. The Purchaser plans to obtain all funds needed for the Offer and the
Merger through a loan that will be made by Mellon Bank, N.A. ("Mellon") to
Parent on the terms described below and a capital contribution and/or an
intercompany loan that will be made by Parent to Purchaser.
Mellon has committed to underwrite $475,000,000 of senior secured credit
facilities to Parent (the "Facilities") pursuant to a commitment letter dated
May 12, 1997. The Facilities will consist of a $250,000,000 revolving credit
loan (the "Revolving Credit Loan") and a $225,000,000 term loan (the "Term
Loan") and will be used by Parent to provide funds to effect the Offer and the
Merger, refinance certain existing indebtedness of Parent and the Company and
finance general working capital and corporate purpose needs. Mellon intends to
syndicate all or a portion of the Facilities to additional lenders.
The Revolving Credit Loan in the principal amount of $250,000,000 will
mature six years from the date of closing of the Facilities (the "Loan Closing
Date") and must be repaid in full on or prior to such date. Draws under the
Revolving Credit Loan may also take the form of requests for issuance of standby
letters of credit for the account of Parent to be issued by Mellon or an
affiliate of Mellon. The aggregate amount of such letters of credit shall not
exceed $30,000,000. Such letters of credit shall not expire later than 12 months
after the date of original issuance and, in any event, not later than the
maturity date of the Facilities. At no time shall the sum of the outstanding
advances under the Revolving Credit Loan, undrawn letters of credit and
unreimbursed letter of credit drawings exceed $250,000,000.
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<PAGE> 23
The Term Loan in the principal amount of $225,000,000 will mature six years
from the Loan Closing Date and will require repayments of principal as follows:
$10,000,000 during year one; $25,000,000 during year two; $35,000,000 during
year three; $50,000,000 during year four; $50,000,000 during year five; and
$55,000,000 during year six.
Interest shall accrue on the amount outstanding under the Facilities at
either the Base Rate (defined as the higher of (i) the federal funds rate plus
.50% or (ii) Mellon's prime rate) or on a LIBOR basis with margins fixed until
the end of Parent's second full fiscal quarter after the Loan Closing Date and
thereafter to be adjusted quarterly based on the consolidated cash flow coverage
ratio of Parent and its subsidiaries for the preceding four consecutive fiscal
quarters.
Mandatory prepayments of the Facilities will be required in an amount equal
to the net cash proceeds of (i) certain permitted asset sales, (ii) insurance
recoveries not reinvested in the businesses, (iii) certain equity issuances and
(iv) 50% of excess cash flow (the definition of which shall be mutually agreed
between Parent and Mellon). Parent will enter into interest rate caps, collars
or swaps to hedge interest rate exposure under the Term Loan for a maturity and
for an amount which has not yet been negotiated.
The Facilities will be secured by a first priority lien on and a security
interest in substantially all of the properties and assets of Parent and each of
its subsidiaries including, in any case (i) all of the capital stock of each
subsidiary, (ii) cash and investments, (iii) accounts receivable and notes
receivable, (iv) assignments of leases, (v) real property, equipment and other
tangible personal property and (vi) trademarks and other intellectual property.
After January 1, 1999, security will be released upon the achievement, based on
the prior 12 months, of a leverage ratio of less than or equal to 2.0 and a
consolidated cash flow coverage ratio of greater than or equal to 1.10.
Funding under the Facilities is contingent upon, among other things, (i) no
material adverse change having occurred in the condition (financial or
otherwise) of the business, prospects or results of operations of Parent and its
subsidiaries, taken as a whole, since March 31, 1997, (ii) no pending or
threatened (A) litigation which seeks to challenge or prevent or declare illegal
the transactions contemplated under the commitment letter or (B) other material
litigation involving Parent or any subsidiary, (iii) the Purchaser and the
Company having entered into the Merger Agreement and the related documents
attached as exhibits thereto and all conditions set forth therein having been
met except for funding, (iv) Mellon not having become aware of any fact or
condition (of which fact or condition Mellon did not have knowledge prior to May
12, 1997) which could reasonably be expected to have a material adverse effect
on the ability of Parent to achieve levels of financial condition and results of
operation projected in projections provided to Mellon on May 8, 1997 and (v)
other customary conditions. The commitment letter provides that the definitive
loan documents will include customary representations, warranties and covenants,
including financial covenants, which have not yet been negotiated.
Pursuant to the commitment letter, the Purchaser and Parent have agreed,
regardless of whether the commitment letter is revoked or terminated or whether
or not the financing transactions contemplated thereby close, to reimburse
Mellon for all out-of-pocket expenses incurred by Mellon in connection with the
commitment letter, the transactions contemplated thereby and the ongoing due
diligence investigation of Mellon in connection therewith.
The obligations of Mellon in the commitment letter are subject to the
execution and delivery of mutually agreeable loan documents incorporating the
terms and conditions contained in the commitment letter. The commitment letter
provides that the commitments in respect of the Facilities will terminate on
June 30, 1997, unless definitive loan documents are executed and the Facilities
have closed on or prior to such time.
The foregoing description of the commitment letter is qualified in its
entirety by reference to the text of the commitment letter, a copy of which has
been filed as an exhibit to the Schedule 14D-1 of the Purchaser and Parent
relating to the Offer.
Parent expects that it will repay any amounts borrowed under the Facilities
with cash flow from operations.
-13-
<PAGE> 24
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
In 1991, the Company and Parent engaged in preliminary discussions about a
possible combination of the two companies. The Company engaged Houlihan Lokey
Howard & Zukin Capital ("Houlihan Lokey") to assist in evaluating the Company
and Parent. However, after several weeks of discussion and evaluation, Parent
and the Company elected not to proceed with such a transaction and terminated
the discussions.
Between 1991 and 1996, representatives of Parent and the Company had
occasional conversations about their respective businesses, but did not resume
discussions concerning a possible combination.
On August 22, 1996, representatives of the Company and Parent met to
discuss their respective businesses, the growth of their respective companies
and the existence of a strategic fit between the companies and renewed
discussions concerning a possible combination of the companies. Discussions
between representatives of the companies resumed on November 22, 1996, at which
time Parent indicated that it had a serious interest in pursuing a combination
with the Company, and continued at various meetings held in December 1996 and
January 1997. At those meetings, representatives of Parent and the Company
discussed various acquisition and combination strategies, the synergies between
the companies, management and operational issues and related issues.
On January 16, 1997, the Company and Parent entered into a confidentiality
agreement (the "Confidentiality Agreement") pursuant to which each party agreed
to treat as confidential their discussions and negotiations and certain
information provided to it by or on behalf of the other party. On February 11,
1997, Parent formally engaged Parker/Hunter Incorporated ("Parker/Hunter") as
financial advisor to assist Parent in its evaluation of a possible transaction
with the Company. On February 13, 1997, representatives of the Company and
Houlihan Lokey met in Pittsburgh with representatives of Parent and
Parker/Hunter. At that meeting the parties discussed issues regarding the
valuation of the Company and Parent. Thereafter, representatives of the Company
and Parent continued discussions regarding due diligence, document preparation
and various legal issues, including Parent's requirement that Messrs. Rego and
Rini enter into employment agreements with Parent concurrently with any
agreement on the combination. Management of Parent and the Company thereafter
determined to attempt to negotiate and consummate a stock-for-stock business
combination.
Representatives of the Company and Parent met on March 13, 1997 in
Youngstown, Ohio and on March 21, 1997 in Pittsburgh to continue negotiations
regarding various management, control and operational issues and to discuss the
structure of the proposed stock-for-stock merger. However, the companies were
unable to reach a definitive agreement on the proposed stock-for-stock merger
and, at this time, they decided to suspend negotiations while the Company and
Parent evaluated the advantages and disadvantages of the structure and
consequences of a business combination of that type. Thereafter, representatives
of the Company and Parent had occasional telephone conversations regarding
whether to renew discussions relating to the proposed merger.
On April 23, 1997, the Board of Directors of Parent met and determined to
attempt to pursue a cash merger with the Company. On April 25, 1997,
representatives of the Company, Parent, Houlihan Lokey and Parker/Hunter resumed
negotiations at a meeting in Pittsburgh. At this meeting, Parent informed the
Company that it had decided to remain a privately-held company and proposed that
Parent make a cash tender offer at $40.00 per share for all of the Shares which,
if successful, would be followed by a merger in which the holders of Shares who
did not tender and the holders of Class B Shares would also be paid $40.00 per
share. On April 28, 1997, a representative of Parker/Hunter met with
representatives of Houlihan Lokey to determine if there was a basis on which
they could recommend to their respective clients that discussions should
continue regarding an acquisition by Parent of 100% of the common stock of the
Company. Thereafter, representatives of the Company and Parent engaged in
continuing discussions regarding the value of Parent's proposed tender offer,
the Stockholders Agreement, the Employment Agreements and various other terms of
the tender offer, including an $11 million termination fee proposed by Parent.
Those discussions ultimately resulted in Parent increasing its offer to $42.00
per share.
-14-
<PAGE> 25
On May 2, 1997, Parent instructed its counsel to commence preparation of
the Merger Agreement and related documentation for the proposed transaction, and
Parent and its representatives commenced a due diligence analysis and
investigation of the Company. The delivery of successive drafts of such
documents and related negotiations commencing on May 3, 1997 revealed a number
of open issues, many of which were resolved by the parties over the course of
the next several days.
On May 2, 1997, the Company issued a press release stating that it was
engaged in negotiations with an unidentified supermarket chain and that there
was no assurance that a transaction would result from those negotiations. On May
4, 1997, certain outside directors of the Board of Directors of the Company
retained legal counsel to advise them regarding the proposed transaction.
The Company issued another press release on May 5, 1997 in which it
disclosed that it had received a cash tender offer of $42.00 per share from an
unidentified supermarket chain, but that no agreement had been reached between
the parties and that there could be no assurance that the transaction would be
consummated.
Later on May 5, 1997, the Company informed Parent that the Company's Board
concluded that it would be willing to pursue Parent's proposal subject to
certain conditions, including but not limited to a reduction of the termination
fee, changes to the financing contingency provisions of the draft Merger
Agreement and an investigation of obtaining a second fairness opinion from
another investment banking firm in addition to the fairness opinion from
Houlihan Lokey.
Parent informed the Company that the Company's full Board must
unconditionally approve its offer by May 7, 1997 or it would have no alternative
but to terminate its offer. After additional negotiations, on May 7, 1997,
Parent and the Company agreed that Parent would extend its offer until May 13,
1997 to enable a second fairness opinion to be obtained in exchange for the
Company's agreement with respect to various matters, including the Company's
agreement to pay Parent a termination fee of $10 million in the event its Board
approved or recommended to the Company's stockholders an acquisition proposal
other than Parent's on or before November 30, 1997.
From May 7 to May 13, the parties continued to exchange drafts of the
Merger Agreement and related documents and to resolve outstanding issues. Prior
to and during this period, management of Parent kept Parent's Board of Directors
fully informed and received all requisite approvals. Late in the evening on May
13, 1997, following approval and adoption of the Merger Agreement by the Board
of Directors of the Company, Parent, Purchaser and the Company executed and
delivered the Merger Agreement, and Parent and Messrs. Rego and Rini executed
the Employment Agreements.
At about 8:00 a.m., eastern time, on May 14, 1997, the Company issued a
press release announcing the execution of the Merger Agreement and the intention
of Parent to commence a tender offer to purchase all outstanding Shares.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT AND THE STOCKHOLDERS AGREEMENT
Purpose. The purpose of the Offer is to acquire control of the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
Each Party's Obligation to Effect the Merger", the Purchaser will be merged with
and into the Company, or, at the election of Parent, the Company will be merged
with and into the Purchaser, and each then outstanding Share (other than Shares
held in the Company's treasury or by any subsidiary of the Company or owned by
Parent, unless such election would have a material adverse effect on the
financial interests of the Company and its stockholders, the Purchaser or any
other subsidiary of Parent or held by stockholders, if any, who are entitled to
and who properly exercise appraisal rights under Delaware law) will be converted
into the right to receive the Merger Consideration.
VOTE REQUIRED TO APPROVE MERGER. The Delaware General Corporation Law
("DGCL") provides that the adoption of any plan of merger or consolidation by
the Company requires the approval of the Board of
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<PAGE> 26
Directors and the affirmative vote of a majority of the outstanding shares
entitled to vote thereon (including the votes of any Shares owned by the
Purchaser). The Board of Directors of the Company has authorized and approved
the Offer and the Merger. Under the Company's Second Amended Certificate of
Incorporation (the "Company Certificate") the holders of not less than 80% of
the outstanding Shares and Class B Shares, voting together as a single class,
must also approve the Merger. In addition, the Company Certificate requires that
any change in the Company Certificate which adversely affects the holders of the
Class B Shares must be approved by the holders of at least 80% of the
outstanding Class B Shares. The Purchaser and Parent have concluded that the
Merger would adversely affect the Class B Shares and therefore the Merger must
receive the approval of the holders of at least 80% of the outstanding Class B
Shares, voting as a separate class. One of the conditions to the Purchaser's
obligation to purchase Shares pursuant to the Offer is that holders of at least
80% of the Class B Shares have signed the Stockholders Agreement and thereby
grant to the Purchaser a proxy to vote such holders' Class B Shares in favor of
the Merger.
CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The Merger
Agreement provides that the respective obligations of each party to effect the
Merger are subject to the satisfaction or waiver on or prior to the Merger
becoming effective (the "Effective Time") of the following conditions: (1) if
required by applicable law, the Merger Agreement shall have been approved and
adopted by the affirmative vote of the Company's stockholders by the requisite
percentage in accordance with applicable law and the Company Certificate, and
the Certificate of Merger shall have been executed and delivered by the
Surviving Corporation and filed in the Department of State of the State of
Delaware, (2) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that each of the parties has agreed to use its
best efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any injunction or other order that may be
entered, (3) all regulatory and related approvals (in addition to any approval
contemplated by the HSR Act) shall have been obtained on terms mutually
satisfactory to Parent and the Company, except for any the failure of which to
obtain would not have a material adverse effect on either Parent or the
Surviving Corporation and (4) the Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the Offer;
provided however that this condition shall not be applicable to the obligations
of Parent or the Purchaser if, in breach of the Merger Agreement or the terms of
the Offer, Purchaser fails to purchase any Shares validly tendered and not
withdrawn pursuant to the Offer.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated and the Merger contemplated thereby may be abandoned at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company, (1) by mutual written consent of the Company and
Parent, except if Shares have been purchased pursuant to the Offer, (2) by any
of the Company, Parent or the Purchaser if (a) upon a vote at a duly held
stockholders meeting or any adjournment thereof, any required approval of the
stockholders of the Company shall not have been obtained; (b) (i) the Purchaser
shall not have commenced the Offer within five business days after the date of
the Merger Agreement, (ii) as a result of the failure of any of the conditions
described in Section 13 to the Purchaser's obligations to consummate the Offer,
the Offer shall have been terminated by Parent or expired in accordance with its
terms without the Purchaser having purchased Shares pursuant to the Offer or
(iii) the Purchaser shall not have purchased Shares pursuant to the Offer within
90 days following the date of the Merger Agreement; provided, however, that the
passage of the period referred to in clause (iii) shall be tolled for any part
thereof during which any party shall be subject to a nonfinal order, decree,
ruling or action restraining, enjoining or otherwise prohibiting the purchase of
Shares pursuant to the Offer or the consummation of the Merger; and provided,
further, that the right to terminate the Merger Agreement pursuant to clause
(2)(b) of this paragraph shall not be available to any party whose failure to
fulfill any of its obligations under the Merger Agreement results in the failure
of any such condition; (c) the Merger shall not have been consummated on or
before the date six months following the date of the Merger Agreement, unless
the failure to consummate the Merger is the result of a willful and material
breach of the Merger Agreement by the party seeking to terminate the Merger
Agreement; provided, however, that the passage of such period shall be tolled
for any part thereof during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or otherwise prohibiting
the consummation of the Merger or the calling or holding of the Stockholders
Meeting; provided
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<PAGE> 27
further, that no party shall be entitled to terminate the Merger Agreement
pursuant to this clause (2)(c) of this paragraph if Shares have been purchased
pursuant to the Offer; or (d) any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of Shares or Class B Shares
pursuant to the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or (3) by either Parent or the
Company under the circumstances described below under "Acquisition Proposals".
In the event the Merger Agreement is terminated by any of the Company,
Parent or the Purchaser as described in the foregoing paragraph, the Merger
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of the Company, the Purchaser or Parent, except with
respect to certain specified provisions (including the provisions described
below under "Fees and Expenses") and, in the case of Parent and the Purchaser,
except to the extent that such termination results from the material breach by
Parent or the Purchaser of any of its representations, warranties, covenants or
agreements set forth in the Merger Agreement.
ACQUISITION PROPOSALS. The Merger Agreement provides that the Company
and its subsidiaries will not, and will cause their respective directors,
officers, employees, or other agents not to, directly or indirectly, (1) take
any action to solicit, initiate or encourage any Acquisition Proposal (as
defined below), provided that no public announcement made by the Company prior
to the date of the Merger Agreement regarding the transactions contemplated
thereby will be deemed a violation of this clause (1), or (2) engage in
negotiations with, or disclose any nonpublic information relating to the Company
or any of its subsidiaries or afford access to their respective property, books
or records to any person that may be considering making, or has made an
Acquisition Proposal. Notwithstanding the foregoing, the Company and its Board
of Directors (or any committee thereof) will not be prohibited from (a) taking
and disclosing a position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated by the Commission under the
Exchange Act, or (b) considering, negotiating, discussing, approving or
recommending to the stockholders of the Company a bona fide Acquisition Proposal
not solicited in violation of the Merger Agreement if and only to the extent
that, (i) such Board of Directors determines in good faith upon the advice of
counsel that such action is required for the Board of Directors to comply with
its fiduciary duties to stockholders imposed by law, and (ii) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, the Company provides written notice to Parent to
the effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity. Parent or (provided the Company and
its Board of Directors have complied with the requirements described in this
paragraph) the Company may terminate the Merger Agreement if the Company or its
Board of Directors approves or recommends to the Company's stockholders an
Acquisition Proposal or the Board of Directors of the Company withdraws its
recommendation that the stockholders accept and approve the transactions
contemplated by the Merger Agreement. The Merger Agreement defines "Acquisition
Proposal" as any proposal or offer from any person (other than Parent or the
Purchaser) relating to (i) any direct or indirect acquisition or purchase of any
equity interest in, or a substantial amount of assets of, the Company or its
subsidiaries, (ii) any tender offer or exchange offer (including a self-tender
offer) involving the equity securities of the Company, (iii) any merger,
consolidation, recapitalization, liquidation, business combination or similar
transaction involving the Company other than the transactions contemplated by
the Merger Agreement or (iv) any other extraordinary transaction the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or materially delay the transactions contemplated by the Merger
Agreement.
FEES AND EXPENSES. The Merger Agreement provides that, except as
provided below, all fees and expenses in connection with the Offer, the Merger,
the Merger Agreement and the transactions contemplated by the Merger Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
Parent shall be entitled to receive from the Company (i) a termination fee
in the amount of $10,000,000 if the Merger Agreement is terminated or the
Purchaser does not purchase Shares pursuant to the Offer because the Company or
its Board of Directors approves or recommends to the Company's stockholders an
Acquisition Proposal or in connection with an Acquisition Proposal the Board of
Directors of the Company withdraws its recommendation that the stockholders of
the Company accept and approve the transactions
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contemplated by the Merger Agreement; (ii) a termination fee in the amount of
$5,000,000 if the Purchaser has not purchased Shares pursuant to the Offer as a
result of (a) the failure of the conditions set forth in clause (2) of the first
paragraph of Section 13 hereof ("Certain Conditions of the Offer") or paragraphs
(6) or (7) of Section 13 hereof to be satisfied or (b) the failure of holders of
Shares to have validly tendered and not withdrawn prior to the expiration of the
Offer that number of Shares that would represent the minimum number of
outstanding Shares, determined immediately prior to the consummation of the
Offer, that would enable Parent and the Purchaser to consummate the Merger under
the Company Certificate notwithstanding the negative vote of all Shares not
acquired by the Purchaser in the Offer and the negative vote of all Class B
Shares as to which the beneficial owners have not executed and delivered the
Stockholders Agreement; and (iii) a topping fee in the amount of $10,000,000 in
the event that following any termination of the Merger Agreement (other than
solely because Parent or the Purchaser failed to fulfill their obligations under
the Merger Agreement) the Board of Directors of the Company approves or
recommends an Acquisition Proposal to the Company's stockholders on or before
November 30, 1997, which amount shall be due and payable upon consummation of
the transactions contemplated by such Acquisition Proposal.
Under no circumstances will the Company be obligated to pay more than
$10,000,000 pursuant to the provisions of the foregoing paragraph. Therefore, if
the Company has paid $5,000,000 pursuant to clause (ii) above and subsequently
becomes obligated to make a payment pursuant to clause (iii) above, the
$10,000,000 payment under clause (iii) shall be reduced by the $5,000,000
previously paid under clause (ii). If circumstances should occur giving rise to
the payment of fees under more than one of the above described clauses, the
Company will pay under the clause requiring the highest fee.
Parent has also agreed that if it has received the full amount of any
payment under the foregoing paragraph, neither Parent nor the Purchaser shall
assert or pursue, directly or indirectly, whether arising under tort, contract,
or otherwise, any claim or cause of action against any of the Company or any
person making an Acquisition Proposal or their respective directors, officers or
representatives based in whole or part upon its or their receipt, consideration,
recommendation or approval of an Acquisition Proposal, including the Company's
exercise of its right of termination pursuant to the provisions of the Merger
Agreement.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that,
except as otherwise set forth in the Merger Agreement and described in a
schedule to the Merger Agreement, the Company will, and will cause each of its
subsidiaries to, conduct its business in the ordinary course and consistent with
past practice and use its reasonable best efforts to preserve intact its
respective business organization and relationships with third parties and to
keep available the services of its officers and key employees. The Merger
Agreement further provides that, without limiting the generality of the
foregoing, during the period from the date of the Merger Agreement to the
Effective Time of the Merger, without the prior written consent of Parent, which
consent shall not be unreasonably withheld: (1) the Company will not adopt or
propose any change in its Certificate of Incorporation or By-Laws; (2) other
than declaration and payment of regular quarterly dividends not to exceed $0.06
per share of Common Stock, the Company will not, and will not permit any of its
subsidiaries to, declare, set aside or pay any dividend or other distribution
with respect to any shares of capital stock of the Company, or contract for or
effect any repurchase, redemption or other acquisition or investment by the
Company or any of its subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or any of its
subsidiaries; (3) the Company will not, and will not permit any of its
subsidiaries to, merge or consolidate with any other person or acquire a
material amount of assets of any other person; (4) the Company will not, and
will not permit any of its subsidiaries to, sell, lease, license or otherwise
surrender, relinquish or dispose of any assets or property which are material to
the Company and its subsidiaries, taken as a whole, except (a) pursuant to
existing contracts or commitments (the terms of which have been disclosed to
Parent prior to the date of the Merger Agreement), or (b) in the ordinary course
of business consistent with past practice; (5) the Company will not settle any
material tax audit, make or change any material tax election or file amended tax
returns; (6) the Company will not issue or grant any securities or option or
warrant to acquire any securities (except pursuant to existing obligations),
enter into any amendment of any material term of any outstanding security of the
Company or of any of its subsidiaries, incur any indebtedness or guarantee
obligations of others except pursuant to existing credit facilities or
arrangements, fail to make any required contribution to any of the Company's
employee
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benefit plans, increase compensation, bonus or other benefits payable to any
employee or former employee or enter into any settlement or consent with respect
to any pending litigation, except in the ordinary course of business consistent
with past practice or as otherwise permitted by the Merger Agreement; (7) the
Company will not change any method of accounting or accounting practice by the
Company or any of its subsidiaries, except for any such required change in
generally accepted accounting principles; (8) the Company will not commit to any
capital expenditures not in the ordinary course of business; and (9) the Company
will not, and will not permit any of its subsidiaries to, agree or commit to do
any of the foregoing.
The Merger Agreement also provides that, except to the extent necessary to
comply with the requirements of applicable laws and regulations, the Company
will not, and will not permit any of its subsidiaries to (1) take, or agree or
commit to take, any action that would make any representation and warranty of
the Company in the Merger Agreement inaccurate in any respect at, or as of any
time prior to, the Effective Time or (2) omit, or agree or commit to omit, to
take any action necessary to prevent any such representation or warranty from
being inaccurate in any respect at any such time, provided, however that the
Company shall be permitted to take or omit to take such action which can
(without any uncertainty) be cured at or prior to the Effective Time.
BOARD OF DIRECTORS. The Merger Agreement provides that, promptly upon
the acceptance for payment of and payment by the Purchaser for, any Shares
pursuant to the Offer, the Purchaser will be entitled to designate such number
of directors on the Board of Directors of the Company as will give the
Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on such Board of Directors equal to at least that number of
directors which is the product of (1) the total number of directors on such
Board of Directors who are elected by the holders of Shares pursuant to the
Company Certificate (giving effect to the directors elected pursuant to this
sentence) multiplied by (2) the percentage that (a) such number of Shares so
accepted for payment and paid for by the Purchaser plus the number of Shares
otherwise owned by the Purchaser or any other subsidiary of Parent bears to (b)
the total number of Shares outstanding, and the Company shall, at such time,
cause the Purchaser's designees to be appointed or elected; provided, however,
that, in the event the Purchaser's designees are to be appointed or elected to
the Company's Board of Directors, until the Effective Time of the Merger, the
Board of Directors of the Company will have at least three directors who were
directors of the Company on the date of the Merger Agreement and who are not
officers of the Company (the "Independent Directors"); and provided further
that, in such event, if the number of Independent Directors shall be reduced
below three for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there shall 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 Directors
then remain, the other directors shall designate three persons to fill such
vacancies who are not officers, stockholders or affiliates of the Company,
Parent or the Purchaser, and such persons shall be deemed to be Independent
Directors for purposes of the Merger Agreement. Subject to applicable law, the
Company has agreed to take all action requested by Parent necessary to effect
any such appointment or election, including mailing to its stockholders an
information statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information
Statement"). Parent has waived the requirement that the Company make such
mailing with the mailing of the Schedule 14D-9, except Parent reserved the right
to request the Company to make such mailing at a later date if Parent deems it
necessary or appropriate to do so. In connection with the foregoing, the Merger
Agreement provides that the Company will promptly, at the option of the
Purchaser (which the Purchaser intends to exercise), either increase the size of
the Company's Board of Directors or obtain the resignation of such number of its
current directors as is necessary to enable the Purchaser's designees to be
elected or appointed to the Company's Board of Directors as provided above.
STOCK PLANS. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering any Stock Plans (as
defined below)) shall adopt such resolutions or take such other actions as are
required to adjust the terms of all outstanding stock options to purchase Shares
("Stock Options") granted prior to the date of the Merger Agreement under any
stock option plan, program or arrangement of the Company (collectively, the
"Stock Plans") to provide that each Stock Option outstanding immediately prior
to the
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acceptance for payment of Shares pursuant to the Offer, whether or not vested,
shall be canceled in exchange for a cash payment to the holder by the Purchaser,
within five business days of the day Shares are purchased pursuant to the Offer,
of an amount equal to (1) the excess, if any, of (a) the price per Share to be
paid pursuant to the Offer over (b) the exercise price per Share subject to such
Stock Option, multiplied by (2) the number of Shares for which such Stock Option
shall not theretofore have been exercised.
All amounts payable pursuant to the terms described in the preceding
paragraph shall be subject to any required withholding of taxes and shall be
paid without interest. The Company agrees in the Merger Agreement to use its
best efforts to obtain all consents of the holders of the Stock Options as shall
be necessary to effectuate the foregoing. Notwithstanding anything to the
contrary contained in the Merger Agreement, payment shall, at Parent's request,
be withheld in respect of any Stock Option with respect to any holder until all
necessary consents with respect to such holder are obtained.
The Merger Agreement provides further that all Stock Plans shall terminate
as of the Effective Time of the Merger, and the provisions in any other benefit,
stock or other plan providing for the issuance, transfer or grant of any capital
stock of the Company, any interest in respect of any capital stock of the
Company, or any amounts derived from the value of any capital stock of the
Company shall be deleted at the time of the Merger, and the Company shall ensure
that following the Merger no holder of a Stock Option or any participant in any
Stock Plan or other employee benefit plan of the Company or any of its
subsidiaries will have any right thereunder to acquire any capital stock of the
Company or the Surviving Corporation.
INDEMNIFICATION, EXCULPATION AND INSURANCE. The Merger Agreement
provides that the Certificate of Incorporation of the Surviving Corporation
shall contain provisions with respect to matters occurring prior to the
Effective Time that are no less favorable with respect to indemnification than
are set forth in Article XV of the Company Certificate, which provisions shall
not be amended, repealed or otherwise modified in any manner that would have an
adverse effect on the rights thereunder of individuals who as of May 13, 1997 or
at the Effective Time are directors, officers, employees, fiduciaries or agents
of the Company, unless such modification shall be required by law.
The Merger Agreement also provides that the Company shall, to the fullest
extent permitted under applicable law and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and, after the Effective Time,
the Surviving Corporation shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each present and former director,
officer, employee, fiduciary and agent of the Company and each of its
subsidiaries and each fiduciary and agent of each such director and officer
(collectively, the "Indemnified Parties") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts ("Losses") paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent of the Company or any of its
subsidiaries, occurring before the Effective Time, until the expiration of the
statute of limitations relating thereto (and shall pay any expenses in advance
of the final disposition of such action or proceeding to each Indemnified Party
to the fullest extent permitted under the DGCL, upon receipt from the
Indemnified Party to whom expenses are advanced of any undertaking to repay such
advances required under DGCL). Parent has agreed to guarantee the obligations of
the Surviving Corporation and, following consummation of the Offer, of the
Company, as described in this paragraph.
The Merger Agreement provides that Parent shall cause the Surviving
Corporation to, and the Surviving Corporation shall, use its reasonable efforts
to maintain in effect for six years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by the
Company (provided that the Surviving Corporation may substitute therefore
policies of at least the same coverage containing terms and conditions which are
not materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this paragraph more than an amount
per year equal to 200% of current annual premiums paid by the Company for such
insurance. In the event that, but for the proviso to the immediately preceding
sentence, the Surviving Corporation would be required to expend more than 200%
of current annual premiums, the Surviving
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Corporation shall obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to 200% of current annual premiums.
BEST EFFORTS. The Merger Agreement provides that, subject to the terms
and conditions of the Merger Agreement, each of the parties will use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable law
and regulations to consummate and make effective in the most expeditious manner
practicable, the Offer and the Merger and the other transactions contemplated by
the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains customary
representations and warranties from the Company, Parent and the Purchaser.
PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. The Merger
Agreement provides that action by a majority of the members of the Board of
Directors of the Company who were members thereof on the date of the Merger
Agreement and remain as such thereafter or the duly authorized designee of such
members and approval by a majority of Independent Directors is required for the
Company to amend or terminate the Merger Agreement, exercise or waive any of its
rights or remedies under the Merger Agreement or extend the time for performance
of the Purchaser's and Parent's respective obligations under the Merger
Agreement.
Employment Agreements. In connection with the execution of the Merger
Agreement, Parent entered into five-year Employment Agreements with Anthony C.
Rego and Charles A. Rini, Sr. Pursuant to the Employment Agreements, Mr. Rego
will be the Vice Chairman of Parent and Chief Executive Officer of the Surviving
Corporation and Mr. Rini will be the Executive Vice President of Parent and
Chief Operating Officer of the Surviving Corporation. The Employment Agreements
provide for payment to Messrs. Rego and Rini of a base salary at their current
base salary rates with the Company. In addition, Messrs. Rego and Rini will be
entitled to (1) an annual incentive bonus under the annual bonus program
applicable to Parent's senior executive officers and (2) a long-term incentive
bonus under Parent's Long-Term Incentive Plan ("LTIP") so that (a) during fiscal
years 1998, 1999 and 2000 (i) in the event that the LTIP threshold has been met,
they each will receive a bonus of $500,000, (ii) in the event that the LTIP
target has been met, they each will receive a bonus of $1,500,000, and (iii) in
the event that the LTIP maximum has been achieved, they each will receive a
bonus of $3,000,000; and (b) during fiscal years 2001 and 2002, (i) in the event
that the LTIP (or such successor long-term incentive plan for executives of
Parent which is a successor of the LTIP) threshold has been met, they each will
receive a bonus of $300,000, (ii) in the event that the LTIP (or successor plan)
target has been met, they each will receive a bonus of $1,000,000, and (iii) in
the event that the LTIP (or successor plan) maximum has been achieved, they each
will receive a bonus of $2,000,000. Parent will also provide Messrs. Rego and
Rini with certain life insurance and other standard fringe benefits. In the
Employment Agreements Messrs. Rego and Rini have agreed not to compete with the
Company during the term of the Employment Agreements and for a period of two
years thereafter.
Parent has agreed, pursuant to the terms of the Merger Agreement and a
letter dated May 13, 1997 and delivered to each of Mr. Rego and Mr. Rini in
connection with their execution of the Employment Agreements, to cause Messrs.
Rego and Rini to be elected to the Board of Directors of Parent as of the
Effective Time.
The Stockholders Agreement. In connection with the execution of the Merger
Agreement, Parent and the Selling Stockholders entered into the Stockholders
Agreement pursuant to which each Selling Stockholder has agreed to tender in the
Offer and not withdraw all Shares owned by such Selling Stockholder, subject to
certain provisions of the Stockholders Agreement described below. As of May 14,
1997, the Selling Stockholders Shares represented in the aggregate 870,390
Shares, or approximately 12% of the outstanding Shares. The Selling Stockholders
include Charles A. Rini, Sr., Anthony C. Rego and other members of the Rini and
Rego families.
Parent intends to circulate the Stockholders Agreement to all holders of
Class B Shares for their execution and delivery. It is a condition to the
Purchaser's obligation to purchase Shares pursuant to the Offer that holders of
at least 80% of the Class B Shares execute and deliver the Stockholders
Agreement. As of
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May 14, 1997, holders of 506,198 Class B Shares, or approximately 57% of the
outstanding Class B Shares, had executed and delivered the Stockholders
Agreement. The provisions of the Stockholders Agreement described herein as
applicable to the Selling Stockholders will also apply to all other holders of
Class B Shares who execute the Stockholders Agreement.
The Stockholders Agreement provides that no later than 15 business days
after commencement of the Offer, each Selling Stockholder will tender to the
Depositary (1) a letter of transmittal with respect to the Shares owned or held
by such Selling Stockholder complying with the terms of this Offer to Purchase,
(2) the certificates representing the Shares and (3) all other documents or
instruments required to be delivered pursuant to the terms of this Offer to
Purchase and the related Letter of Transmittal. The Stockholders Agreement
further provides that no Selling Stockholder will, subject to applicable law,
withdraw the tender effected in accordance with the Stockholders Agreement.
In addition, the Selling Stockholders have agreed in the Stockholders
Agreement to vote all Shares and all Class B Shares beneficially owned by them
(1) in favor of approval and adoption of the Merger Agreement and all related
matters, (2) against any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement and (3)
against any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger. The Selling Stockholders also
agreed, upon the request of Parent, to execute and deliver an agreement
terminating an existing stockholders agreement among certain holders of Class B
Shares immediately prior to (and subject to) the closing of the Offer or the
Merger. In order to implement the agreement of the Selling Stockholders
described in this paragraph, each Selling Stockholder appointed Parent the true
and lawful attorney and proxy of such Selling Stockholder (1) to vote all Shares
and Class B Shares beneficially owned by such Selling Stockholder and (2) to
execute and deliver, in the name, place and stead of such Selling Stockholder, a
written agreement terminating the existing stockholders agreement immediately
prior to (and subject to) the closing of the Merger.
Each of the Selling Stockholders has also agreed in the Stockholders
Agreement that at any time prior to the Effective Time, no later than three
business days following notice from Parent or the Purchaser, the Selling
Stockholder shall tender to the Purchaser all Class B Shares beneficially owned
by such Selling Stockholder for a price per share of $42.00 in cash.
Each of the Selling Stockholders has agreed that, without the prior written
consent of Parent, it will not (1) sell, transfer, assign, tender, pledge or
otherwise dispose of or hypothecate any of its Shares or Class B Shares (except
for such pledges in effect as of the date of the Stockholders Agreement); (2)
grant any proxies, deposit any Shares or Class B Shares into a voting trust or
enter into a voting agreement with respect to any Shares or Class B Shares as to
any matter specified; (3) convert any of their Class B Shares into Shares or (4)
take any action that would make any representation or warranty of the Selling
Stockholders contained in the Stockholders Agreement untrue or incorrect in any
material respect or have the effect of preventing or disabling the Selling
Stockholders from performing their obligations under the Stockholders Agreement;
provided, however, that nothing in the Stockholders Agreement shall prevent the
Selling Stockholders from converting their Class B Shares into Shares, pursuant
to the terms of the Company Certificate, if 100% of the Class B Shares are so
converted; provided further, that nothing in the Stockholders Agreement shall
prevent the Selling Stockholders from tendering their Shares in the Offer. Any
permitted transferee of Shares or Class B Shares held by any of the Selling
Stockholders must become a party to the Stockholders Agreement and any purported
transfer of Shares or Class B Shares held by any of the Selling Stockholders to
a person or entity that has not become a party to the Stockholders Agreement
shall be null and void.
Each Selling Stockholder has agreed that such Selling Stockholder will not,
and will cause its officers, directors, employees and agents not to, directly or
indirectly, (1) take any action to solicit, initiate or encourage any
Acquisition Proposal, or (2) engage in negotiations with, or disclose any
nonpublic information relating to the Company or its subsidiaries, or afford
access to their respective properties, books or records to, any person that may
be considering making, or has made, an Acquisition Proposal (but nothing in this
paragraph shall prohibit any such person, solely in his capacity as a director
or officer of the Company, from
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<PAGE> 33
taking any actions permitted or not prohibited by the Merger Agreement with
respect to any Acquisition Proposal). The Selling Stockholders have also agreed,
upon the request of Parent, to execute and deliver an agreement terminating the
existing stockholders agreement among certain holders of Class B Shares
immediately prior to (and subject to) the closing of the Offer or the Merger.
The Stockholders Agreement will terminate upon the earlier to occur of (1)
November 30, 1997, or (2) the Effective Time. Notwithstanding the foregoing, the
Stockholders Agreement will terminate effective immediately upon the occurrence
of (a) both of the following: (i) any termination of the Merger Agreement in
accordance with its terms and (ii) payment to Parent of all amounts that may be
owing in respect of such termination; or (b) any termination by the Company of
the Merger Agreement in accordance with its terms solely because of a material
breach by Parent or the Purchaser of their respective obligations thereunder;
provided, however, that the Stockholders Agreement shall not terminate if Shares
have been purchased pursuant to the Offer.
Confidentiality Agreement. The Company and Parent signed a Confidentiality
Agreement dated January 16, 1997, providing for each of them to keep
confidential their discussions and negotiations regarding the Offer and the
Merger and all information exchanged by them concerning the Company or Parent.
Appraisal Rights. Holders of Shares do not have appraisal rights as a
result of the Offer. If the Merger is consummated, however, persons who hold
Shares at that time would have the right to appraisal of their Shares in
accordance with Section 262 of the DGCL (which is reproduced in full in Schedule
II hereto). Such appraisal rights, if the statutory procedures are complied
with, would result in a judicial determination of the "fair value" of the Shares
owned by such holders. Any such judicial determination of the fair value of the
Shares could be based upon considerations other than or in addition to the price
paid in the Offer and the Merger and the market value of the Shares, including
asset values, the investment value of the Shares and any other valuation
considerations generally accepted in the investment community. In Weinberger v.
UOP, Inc., the Delaware Supreme Court stated that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. The Weinberger court also noted that under Section 262 of
the DGCL, fair value is to be determined "exclusive of any element of value
arising from the accomplishment or expectation of the merger." In Cede & Co. v.
Technicolor, Inc., however, the Delaware Supreme Court stated that, in the
context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be included in the appraisal process. As
a consequence of the foregoing, the fair value determined for Shares could be
the same as or more or less than the value of the consideration per Share to be
paid pursuant to the Offer or the Merger and payment of such consideration would
take place subsequent to payment pursuant to the Offer.
Several recent decisions by the Delaware courts have held that a
substantial stockholder of a corporation involved in a merger has a fiduciary
duty to the other stockholders which requires that the merger be fair to such
other stockholders. In determining whether a merger is fair to minority
stockholders, the Delaware courts have considered, among other things, the type
and amount of consideration received by the stockholders and whether there was
fair dealing among the parties. The Delaware Supreme Court indicated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that ordinarily the
remedy available to stockholders in a merger that is found not to be "fair" to
minority stockholders is the right to appraisal described above or a damages
remedy based on essentially the same principles.
No provision has been made by the Company, the Purchaser or Parent to allow
access to the Company's files by unaffiliated stockholders or to obtain counsel
or appraisal services at the expense of the Company, the Purchaser or Parent.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Other Matters. Parent intends to conduct a detailed review of the Company
and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of
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the circumstances then existing, and reserves the right to take such actions or
effect such changes as it deems desirable. Such changes could include changes in
the Company's business, corporate structure, capitalization, Board of Directors,
management or dividend policy.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's capitalization or dividend policy or
any other material change in the Company's business, corporate structure or
personnel.
Exhibits. Although the foregoing summary of the Merger Agreement, the
Employment Agreements, the Stockholders Agreement and the Confidentiality
Agreement includes all material terms of such agreements, other terms are
contained in such agreements. Copies of the Merger Agreement, the Employment
Agreements, the Stockholders Agreement and the Confidentiality Agreement have
been filed as exhibits to the Schedule 14D-1 of which this Offer to Purchase is
a part.
13. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-l(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless (1) the Minimum Tender
Condition shall have been satisfied, (2) the holders of at least 80% of the
issued and outstanding Class B Shares shall have executed and delivered the
Stockholders Agreement not later than 5:00 p.m. Eastern Time, on June 4, 1997,
and shall have fully performed their obligations thereunder, and (3) any waiting
period under the HSR Act applicable to the purchase of Shares pursuant to the
Offer shall have expired or been terminated. Furthermore, notwithstanding any
other term of the Offer or the Merger Agreement, the Purchaser shall not be
required to commence or continue the Offer or accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate or amend the Offer, if, at any time on or after the date
of the Merger Agreement and before the acceptance of such Shares for payment or
the payment therefor, any of the following conditions exists:
(1) there shall have been entered in any action or proceeding before
any Governmental Entity, an injunction or order, (a) prohibiting or
limiting the acquisition by Parent or the Purchaser of any Shares, (b)
restraining or prohibiting or otherwise rendering unenforceable the
consummation of the Merger or any of the other transactions contemplated by
the Merger Agreement or the Stockholders Agreement, (c) prohibiting or
limiting the ownership or operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, or
compelling the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, as a result
of the Merger or any of the other transactions contemplated by the Merger
Agreement, (d) imposing limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares, including, without limitation, the right to vote Shares purchased
by the Purchaser on all matters properly presented to the stockholders of
the Company; or (e) requiring the Company, Parent or the Purchaser to pay
damages that reasonably can be foreseen, or are reasonably likely, to
result in a material adverse effect on the business, assets, liabilities,
results of operation or financial condition of the Company and its
subsidiaries taken as a whole (a "Company Material Adverse Effect");
(2) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction that is or could reasonably
be likely to result, directly or indirectly, in any of the consequences
referred to in clauses (a) through (e) of paragraph (1) above;
(3) there shall have occurred any material adverse change, or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in a Company Material Adverse Effect;
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<PAGE> 35
(4) there shall have occurred (a) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States (excluding
any coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (b) any material adverse change in the
financial markets, commodities markets or major stock exchange indices in
the United States, (c) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, or (d) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States;
(5) (a) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Acquisition Proposal, (b)
the Company shall have entered into any agreement (other than a
confidentiality agreement or engagement letter with an investment bank)
with respect to any Acquisition Proposal or (c) the Board of Directors of
the Company or any committee thereof shall have resolved to do any of the
foregoing;
(6) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time;
(7) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement and such failure continues for five business days after
receipt by the Company of notice from Parent specifying such failure;
(8) the Merger Agreement shall have been terminated in accordance with
its terms; or
(9) the Purchaser, Parent and the Company (with the approval of a
majority of its Independent Directors) shall have mutually agreed that the
Purchaser shall terminate the Offer or postpone the acceptance for payment
of or payment for Shares thereunder;
which, in the sole judgment of the Purchaser or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including any
action or inaction by Parent or any of its affiliates), makes it inadvisable to
proceed with such acceptance for payment or payment.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of the Purchaser and Parent and may be asserted by the Purchaser or
Parent regardless of the circumstances giving rise to such condition or may be
waived by the Purchaser and Parent in whole or in part at any time and from time
to time in their sole discretion. The failure by Parent, the Purchaser or any
other affiliate of Parent at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
14. CERTAIN LEGAL MATTERS
Except as described in this Section 14, based on a review of publicly
available filings made by the Company with the Commission and other information
made available to Parent and the Purchaser concerning the Company and the review
of certain information furnished by the Company to the Parent, neither the
Purchaser nor Parent is aware of any license or regulatory permit that appears
to be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the Purchaser's acquisition of Shares
as contemplated herein or of any approval or other action by any Governmental
Entity that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent currently contemplate that such approval or
other action will be sought, except as described below under "State Takeover
Laws". While, except as otherwise expressly described in this Section 14, the
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
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<PAGE> 36
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 if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 13 for certain
conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directions
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's By-Laws contain a provision opting out of Section
203. In addition, the Company's Board of Directors has approved the Merger
Agreement, the Purchaser's acquisition of Shares pursuant to the Offer and the
Stockholders Agreement. Therefore, Section 203 of DGCL is inapplicable to the
Merger.
The Ohio Control Bid Statute ("OCBS") purports to regulate certain attempts
to purchase or offer to purchase any equity security of a company (1) which has
its principal place of business or its principal executive office in Ohio or
owns or controls assets located in Ohio that have a fair market value of at
least $1,000,000 and (2) more than 10% of whose beneficial or record equity
security holders are residents of Ohio or more than 10% of whose equity
securities are owned beneficially or of record by residents of Ohio or more than
1,000 of whose beneficial or record equity security holders are resident in
Ohio, where after the purchase of such security, the offeror would beneficially
own more than 10% of any class of the issued and outstanding equity securities
of the company (a "Control Bid"). The OCBS prohibits the making of a Control Bid
until the offeror files with the Ohio Division of Securities a copy of its
Schedule 14D-1 and certain other information and materials. While reserving and
not waiving its right to challenge the validity of the OCBS or its applicability
to the Offer, the Purchaser is making such a filing with the Ohio Division of
Securities in order to comply with the OCBS.
Based on information supplied by the Company, the Purchaser does not
believe that any other state takeover statutes purport to apply to the Offer or
the Merger, and neither the Purchaser nor Parent has made any filings or taken
any other action with respect to any other other state takeover statute or
regulation. The Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Merger and
nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Merger is intended as a waiver of such right. If it is asserted
that any state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, the Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities, and the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, the Purchaser may not be obliged to accept for
payment or pay for any Shares tendered pursuant to the Offer.
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<PAGE> 37
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent made such filing on May 15, 1997. If, within the initial 15-day
waiting period, either the Antitrust Division or the FTC requests additional
information or material from Parent concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance by Parent with 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. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares and Class B Shares at the
time of the Merger and if the Merger occurs within one year after the HSR Act
waiting period applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result thereof.
It is a condition to the obligation of the Purchaser to purchase Shares
tendered in the Offer that any waiting period under the HSR Act shall have
expired or been terminated. It is also a condition to the obligation of the
Purchaser to purchase Shares tendered in the Offer that there not be entered in
any action or proceeding before any Governmental Entity any injunction or order
having the effect described in paragraph (1) of Section 13 hereof ("Certain
Conditions of the Offer") and that there not be any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction that has or could
have the effect described in paragraph (2) of Section 13 hereof ("Certain
Conditions of the Offer").
15. FEES AND EXPENSES
Parker/Hunter Incorporated is acting as Dealer Manager in connection with
the Offer and has provided certain financial advisory services to Parent in
connection with the Offer and the Merger. Parent has agreed to pay Parker/Hunter
as compensation for all such services, including such services as Dealer
Manager, a financial advisory retainer fee of $70,000 and $1,000,000 (inclusive
of the retainer fee) upon consummation of the transaction. In the event Parent
receives any termination fees as described in Section 12 hereof ("Purpose of the
Offer; The Merger Agreement and the Stockholders Agreement--The Merger
Agreement--Fees and Expenses"), Parent has agreed to pay Parker/Hunter 5% of any
such fees received. In addition, Parent has agreed to reimburse Parker/Hunter
for its out-of-pocket expenses, including travel costs, document production and
other such expenses, including the fees and expenses of its counsel, in
connection with the Offer and to indemnify Parker/Hunter and certain related
persons against certain liabilities and expenses, including certain liabilities
under the Federal securities laws.
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<PAGE> 38
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
16. MISCELLANEOUS
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. Neither the Purchaser nor Parent is 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. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by the Dealer Manager or 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 THE PURCHASER OR PARENT 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.
The 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. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act,
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
TALON ACQUISITION COMPANY
May 20, 1997
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<PAGE> 39
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, principal business address, present principal occupation or
employment, five-year employment history and certain other information
concerning the directors and executive officers of Parent. Unless otherwise
indicated, the business address of each individual listed below is 101 Kappa
Drive, RIDC Park, Pittsburgh, Pennsylvania 15238, and the position listed is
with Parent. Each person listed is a citizen of the United States of America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ------------------------------ ------------------------------------------------------------
<S> <C>
David S. Shapira.............. Chief Executive Officer of Parent since 1992 and Director
since 1980. President of Parent from 1980 until 1992,
Executive Vice President from 1978 to 1980 and Vice
President of Store Operations from 1974 to 1978.
Gerald Chait.................. Director of Parent since 1988.
Charles C. Cohen.............. Director of Parent since September 1996. Partner in law firm
Cohen & Grigsby, P.C. of Cohen & Grigsby, P.C.
2900 CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222
Edward Moravitz............... Director of Parent since 1995. Employee of Parent since
1969.
Charles W. Porter............. Director of Parent since 1994. Employee of Parent since
1978.
Farrell Rubenstein............ Director of Parent since September 1996. Financial and
2500 One PPG Place business consultant serving on a number of corporate boards.
Pittsburgh, PA 15222 Immediate Past Chairman of the Board of Trustees of the
University of Pittsburgh. Partner at Deloitte & Touche,
retiring in 1990 as National Director of Tax.
Norman Weizenbaum............. Director of Parent since 1972. Vice President of Parent from
1972 to 1986.
Raymond J. Burgo.............. President and Chief Operating Officer of Parent since 1992.
Executive Vice President from 1991 to 1992, Senior Vice
President- Corporate Administration from 1986 to 1991 and
Vice President from 1980 to 1986.
Maureen Ausura................ Senior Vice President of Human Resources of Parent since May
1996. Employee of Campbell Soup Company from 1984 to 1996 in
several human resource capacities, domestic and
international; last position held Vice President, Human
Resources.
Joseph R. Faccenda............ Senior Vice President of Merchandising of Parent since
December 1986. Vice President of Merchandising from 1978 to
1986.
Jack Flanagan................. Senior Vice President of Retail Operations of Parent since
November 1994. Employee of Price/Costco from 1990 to 1994 as
Assistant to the President.
John Lucot.................... Senior Vice President of Retail Development of Parent since
1992. Vice President of Retail Development from 1989 to 1992
and Director of Retail Development from 1987 to 1989.
Mark J. Minnaugh, CPA......... Secretary of Parent since 1993, Senior Vice President and
Treasurer since 1992, and Chief Financial Officer since
1991. Corporate Controller from 1989 to 1991.
</TABLE>
S-1
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ------------------------------ ------------------------------------------------------------
<S> <C>
Richard H. Nimtz.............. Senior Vice President of Parent since 1981 and President of
Kappa Properties Co. since 1992.
Raymond Smaltz................ Vice President Grocery Buying and Merchandising of Parent
since 1990. Employee of Parent since 1964.
John Tedesco.................. Vice President Drug Store Merchandising of Parent since
1994. Vice President of Administrative Services from 1990 to
July 1994. Employee of Parent since 1970.
Gene Tommasi.................. Vice President Store Planning and Development of Parent
since September 1996. Employee of Parent since August 1992,
initially as Director of Distribution and Logistics and then
as Director of Retail Support. Previously Vice President,
Distribution for the Peter J. Schmitt Company.
M. Michele Sponholz........... Vice President Real Estate of Parent since November 1995.
Regional Real Estate Manager of McDonald's Corporation prior
to 1995.
Russell Ross.................. Vice President IS of Parent since November 1995. Employee of
Parent since 1990.
Larry Baldauf................. Vice President Distribution of Parent since 1989. Employee
of Parent since 1979.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, principal business address, present principal occupation or
employment, five-year employment history and certain other information
concerning the directors and executive officers of the Purchaser. Unless
otherwise indicated, the business address of each individual listed below is 101
Kappa Drive, RIDC Park, Pittsburgh, Pennsylvania 15238, and the position listed
is with the Purchaser. Each person listed is a citizen of the United States of
America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ------------------------------ ------------------------------------------------------------
<S> <C>
David S. Shapira.............. Director, Chairman and Chief Executive Officer. Chief
Executive Officer of Parent since 1992 and Director of
Parent since 1980. President of Parent from 1980 until 1992,
Executive Vice President of Parent from 1978 to 1980 and
Vice President of Store Operations of Parent from 1974 to
1978.
Raymond J. Burgo.............. Director and President. President and Chief Operating
Officer of Parent since 1992. Executive Vice President of
Parent from 1991 to 1992, Senior Vice President--Corporate
Administration of Parent from 1986 to 1991 and Vice
President of Parent from 1980 to 1986.
Mark J. Minnaugh, CPA......... Director, Senior Vice President and Chief Financial Officer.
Secretary of Parent since 1993, Senior Vice President and
Treasurer of Parent since 1992, and Chief Financial Officer
of Parent since 1991. Corporate Controller of Parent from
1989 to 1991.
</TABLE>
S-2
<PAGE> 41
SCHEDULE II
The following is reproduced from Section 262 of the Delaware General
Corporation Law.
SECTION 262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
subsection (g) of sec. 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
S-3
<PAGE> 42
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation of any stockholder who has
complied with subsections 9(a) and (d) hereof and who is otherwise
S-4
<PAGE> 43
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in such a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof shall
be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have been become
entitled to appraisal rights. The Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrower money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertified stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other
S-5
<PAGE> 44
decrees in the Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be changed pro rata against the value of all of
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceedings in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
S-6
<PAGE> 45
Manually signed facsimile copies of the Letter of Transmittal 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 such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Hand
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway
13th Floor
New York, NY 10271
By Overnight Courier
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
85 Challenger Road
Mail Drop -- Reorg.
Ridgefield Park, NJ 07660
By Mail
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
P.O. Box 3301
South Hackensack, NJ 07606
Facsimile for Eligible Institutions:
(201) 329-8936
To confirm fax only:
(201) 296-4860
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC
77 Water Street
New York, NY 10005
(800) 714-3311
The Dealer Manager for the Offer is:
PARKER/HUNTER
INCORPORATED
600 Grant Street
Pittsburgh, PA 15219
(412) 562-8000
<PAGE> 46
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A COMMON STOCK
OF
RISER FOODS, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 20, 1997
BY
TALON ACQUISITION COMPANY
A WHOLLY OWNED SUBSIDIARY OF
GIANT EAGLE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 17, 1997, UNLESS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Hand
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway-13th Floor
New York, NY 10271
By Overnight Courier
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
85 Challenger Road
Mail Drop -- Reorg.
Ridgefield Park, NJ 07660
By Mail
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
P.O. Box 3301
South Hackensack, NJ 07606
Facsimile for Eligible Institutions:
(201) 329-8936
To confirm fax only:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at The Depository
Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 2 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 2 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
in accordance with the guaranteed delivery procedures set forth in Section 2 of
the Offer to Purchase. See Instruction 2.
<PAGE> 47
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Check Box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
Transaction Code Number
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
Date of Execution of
Notice of Guaranteed Delivery
Name of Institution
that Guaranteed Delivery
If delivered by Book-Entry Transfer check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
Transaction Code Number
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL-IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON (ATTACH ADDITIONAL SIGNED LIST, IF
CERTIFICATE(S)) NECESSARY)
- -------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
TOTAL
SHARES:
- -------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered.
See Instruction 4.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 48
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Talon Acquisition Company, a Delaware
corporation (the "Purchaser"), the above described shares of Class A common
stock, par value $.01 per share (the "Shares"), of Riser Foods, Inc., a Delaware
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at the price set forth in the Offer to Purchase dated May 20,
1997 (the "Offer to Purchase"), net to the seller in cash, in accordance with
the terms and conditions of the Offer to Purchase and this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer (including, if the Offer is extended or amended, the terms or
conditions of any such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all the Shares that are being tendered hereby (and any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after May 13, 1997) and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any such other Shares or securities
or rights), with full power of substitution (such power of attorney being deemed
to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares (and any such other Shares or securities or rights)
or transfer ownership of such Shares (and any such other Shares or securities or
rights) on the account books maintained by a Book-Entry Transfer Facility
together, in any such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Purchaser, (b) present such Shares
(and any such other Shares or securities or rights) for transfer on the
Company's books and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares (and any such other Shares or securities
or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all Shares or other securities or rights issued or issuable
in respect of such Shares on or after May 13, 1997), and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares (and any such other Shares or
other securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby irrevocably appoints David S. Shapira, Mark J.
Minnaugh and Raymond J. Burgo, and each of them, and any other designees of the
Purchaser, the attorneys-in-fact and proxies of the undersigned, each with full
power of substitution, to vote at any annual, special or adjourned meeting of
the Company's stockholders or otherwise in such manner as each such attorney 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
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney and proxy or his
substitute shall in his sole discretion deem proper with respect to, all the
Shares tendered hereby that have been accepted for payment by the Purchaser
prior to the time any such action is taken and with respect to which the
undersigned is entitled to vote (and with respect to any and all other Shares or
other securities or rights issued or issuable in respect of such Shares on or
after May 13, 1997). This appointment is effective when, and only to the extent
that, the Purchaser accepts for payment such Shares as provided in the Offer to
Purchase. 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 all prior powers of attorney and proxies appointed by the
undersigned at any time with respect to such Shares (and any such other Shares
or securities or rights) and no subsequent powers of attorney or proxies will be
appointed by the undersigned, or be effective, with respect thereto.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE> 49
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered". Similarly, unless
otherwise indicated under "Special Delivery Instructions", please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered". In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to the person or persons so indicated.
Unless otherwise indicated herein under "Special Payment Instructions", in the
case of a book-entry delivery of Shares, please credit the account maintained at
the Book-Entry Transfer Facility indicated above with any Shares not accepted
for payment. The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions to transfer any Shares from the
name of the registered holder thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
SPECIAL PAYMENT 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 are to be issued in the name of someone other than the undersigned, of
if Shares 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 certificate(s) to:
Name
(PLEASE PRINT)
Address
(INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
[ ] Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below.
Check appropriate box:
[ ] The Depository Trust Company
[ ] 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 are to be sent to someone other than the undersigned or to the
undersigned at an address other than that indicated above.
Mail check and/or certificate(s) to:
Name
(PLEASE PRINT)
Address
(INCLUDE ZIP CODE)
<PAGE> 50
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
(SIGNATURE(S) OF STOCKHOLDER(S) )
Dated: ______________________________ , 1997
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
(PLEASE PRINT)
Capacity (Full Title)
Address
(INCLUDE ZIP CODE)
Area Code and Telephone No.
Taxpayer Identification or Social Security No.
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
Name
(PLEASE PRINT)
Name of Firm
Address
(INCLUDE ZIP CODE)
Area Code and Telephone No.
Dated: ______________________________ , 1997
<PAGE> 51
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURE. 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 document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof, or (b) if such Shares are tendered for the account of a firm that is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States or by any other "eligible
guarantor institution", as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (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.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or if delivery
of Shares is to be made pursuant to the procedures for book-entry transfer set
forth in Section 2 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 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 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 below and in Section 2 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 or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (a) such tender must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must be
received by the Depositary prior to the Expiration Date and (c) the certificates
for all physically delivered Shares or a Book-Entry Confirmation with respect to
all tendered Shares, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within three trading days of the American Stock Exchange after
the date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
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 certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the expiration of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
<PAGE> 52
5. SIGNATURES ON LETTERS OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered holder(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons 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 person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be 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 accepted for payment be credited
to such account maintained at a Book-Entry Transfer Facility as such
stockholder(s) may designate.
8. WAIVER OF CONDITIONS. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered.
9. 31% BACKUP WITHHOLDING. Under U.S. Federal income tax law, a stockholder
whose tendered Shares are accepted for payment is required to provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the
correct TIN, the Internal Revenue Service may subject the stockholder or other
payee to a $50 penalty. In addition, payments that are made to such stockholder
or other payee with respect to Shares purchased pursuant to the Offer may be
subject to 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed
<PAGE> 53
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. 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, provided that the
required information is given to the Internal Revenue Service. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
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.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, 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.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for 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 should be directed to the
Information Agent at its addresses set forth below. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF (TOGETHER
WITH CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH RESPECT TO, TENDERED
SHARES WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS)
MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE.
<PAGE> 54
PAYER'S NAME:
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
SUBSTITUTE PART 1: PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. ------------------------
Social Security Number
OR Employer
Identification Number
------------------------------------------------------------------------------------
DEPARTMENT OF THE PART 2--CERTIFICATES--Under the penalties of perjury, I certify that:
TREASURY INTERNAL
REVENUE SERVICE (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
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION (2) I am not subject to backup withholding because (a) I am exempt from backup
NUMBER ("TIN") 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
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to backup withholding, do
not cross out such item (2).
PART 3--AWAITING TIN [ ]
SIGNATURE
SIGNATURE
(If joint account, both must sign)
DATE
NAME
(Please Print)
ADDRESS
(Include Zip Code)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within sixty
days.
Signature ____ Date
Questions and requests for assistance or additional copies of the Offer to
Purchase, any supplements thereto, this Letter of Transmittal and other tender
offer materials may be directed to the Information Agent or the Dealer Manager
as set forth below.
<PAGE> 55
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC
77 WATER STREET
NEW YORK, NY 10005
(800) 714-3311
THE DEALER MANAGER FOR THE OFFER IS:
PARKER/HUNTER
INCORPORATED
600 GRANT STREET
PITTSBURGH, PA 15219
(412) 562-8000
<PAGE> 56
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS A COMMON STOCK
OF
RISER FOODS, INC.
TO
TALON ACQUISITION COMPANY
A WHOLLY OWNED SUBSIDIARY OF
GIANT EAGLE, INC.
(Not to be Used for Signature Guarantees)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of Class A common stock, par
value $.01 per share (the "Shares"), of Riser Foods, Inc., a Delaware
corporation (the "Company"), are not immediately available or if 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 (as defined in Section 1 of the Offer to Purchase). Such form may be
delivered by hand or transmitted by telegram or facsimile transmission or mailed
to the Depositary and must include a guarantee by an Eligible Institution (as
defined in Section 2 of the Offer to Purchase). See Section 2 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Hand
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway-13th Floor
New York, NY 10271
By Overnight Courier
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
85 Challenger Road
Mail Stop -- Reorg.
Ridgefield Park, NJ 07660
By Mail
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
P.O. Box 3301
South Hackensack, NJ 07606
Facsimile for Eligible Institutions:
(201) 329-8936
To confirm fax only:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, 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> 57
Ladies and Gentlemen:
The undersigned hereby tenders to Talon Acquisition Company, a Delaware
corporation (the "Purchaser") and wholly owned subsidiary of Giant Eagle, Inc.,
a Pennsylvania corporation, upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated May 20, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged, Shares pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares:
Certificate Nos. (if available):
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
Name(s) of Record Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
(Please Print)
Address(es):
- ------------------------------------------------------
Zip Code
Area Code and Tel. No.:
(Check one box if Shares will be tendered
by book-entry transfer)
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
Dated:
Signature(s):
- ------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution", as such term is defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to
the Depositary either the certificates representing the Shares tendered hereby,
in proper form for transfer, or a Book-Entry Confirmation (as defined in Section
2 of the Offer to Purchase) of a transfer of such Shares, in any such case
together with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, with any required signature guarantees, and
any other documents required by the Letter of Transmittal within three trading
days of the American Stock Exchange after the date hereof.
Name of Firm:
Address:
- ------------------------------------------------------
Zip Code
Area Code and Tel. No.:
- ------------------------------------------------------
Authorized Signature
Title:
Dated:
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 58
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
RISER FOODS, INC.
AT
$42.00 NET PER SHARE
BY
TALON ACQUISITION COMPANY
A WHOLLY OWNED SUBSIDIARY OF
GIANT EAGLE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 17, 1997, UNLESS EXTENDED.
May 20, 1997
To Brokers, Dealers, Banks, Trust Companies and Other Nominees:
We have been appointed by Talon Acquisition Company, a Delaware corporation
(the "Purchaser") and wholly owned subsidiary of Giant Eagle, Inc., a
Pennsylvania corporation ("Parent"), to act as Dealer Manager in connection with
the Purchaser's offer to purchase all outstanding shares of Class A common
stock, par value $.01 per share (the "Shares"), of Riser Foods, Inc., a Delaware
corporation (the "Company"), at $42.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Purchaser's Offer
to Purchase dated May 20, 1997 (the "Offer to Purchase"), and the related Letter
of Transmittal (which, together with any supplements or amendments thereto,
collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Board and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
TUESDAY, JUNE 17, 1997, UNLESS EXTENDED.
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 would represent at least 80% of the outstanding Shares as
determined immediately prior to the consummation of the Offer.
The Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger (as defined below) and determined that the terms of the
Offer and the Merger are fair to, and in the best interests
<PAGE> 59
of, the stockholders of the Company and recommends that stockholders of the
Company accept the Offer and tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 13, 1997 (the "Merger Agreement"), among Parent, the Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, or, at the election of Parent, unless such election would
have a material adverse effect on the financial interests of the Company and its
stockholders, the Company will be merged with and into the Purchaser (in either
case, the "Merger"). In the Merger, each outstanding Share (other than Shares
held by the Company's treasury or by any subsidiary of the Company or owned by
Parent, the Purchaser or any other subsidiary of Parent or held by stockholders,
if any, who are entitled to and who properly exercise appraisal rights under
Delaware law) will be converted into the right to receive $42.00 per Share,
without interest, as set forth in the Merger Agreement and described in the
Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2 of the Offer to Purchase), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by the Letter of Transmittal.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of the
enclosed Offer to Purchase.
Very truly yours,
PARKER/HUNTER
INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
-2-
<PAGE> 60
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
RISER FOODS, INC.
AT
$42.00 NET PER SHARE
BY
TALON ACQUISITION COMPANY
A WHOLLY OWNED SUBSIDIARY OF
GIANT EAGLE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
JUNE 17, 1997, UNLESS EXTENDED.
May 20, 1997
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated May 20, 1997
(the "Offer to Purchase"), and a related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
relating to an offer by Talon Acquisition Company, a Delaware corporation (the
"Purchaser") and wholly owned subsidiary of Giant Eagle, Inc., a Pennsylvania
corporation ("Parent"), to purchase all outstanding shares of Class A common
stock, par value $.01 per share (the "Shares"), of Riser Foods, Inc., a Delaware
corporation (the "Company"), at $42.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer. Also
enclosed is the Letter to Stockholders of the Company from the Chairman of the
Board and Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $42.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has, by unanimous vote,
approved the Offer and the Merger (as defined below) and determined that
the terms of the Offer and the Merger are fair to, and in the best
interests of, the stockholders of the Company and recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of May 13, 1997 (the "Merger Agreement"), among Parent, the
Purchaser and the Company pursuant to which, following the consummation of
the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company, or, at the election of
Parent, unless such election would have a material adverse effect on the
financial interests of the Company and its stockholders, the Company will
be merged with and into the Purchaser (in either case, the "Merger"). In
the Merger, each outstanding Share (other than Shares held by the Company's
treasury or by any subsidiary of the Company or owned
<PAGE> 61
by Parent, the Purchaser or any other subsidiary of Parent or held by
stockholders, if any, who are entitled to and who properly exercise
appraisal rights under Delaware law) will be converted into the right to
receive $42.00 per Share, without interest, as set forth in the Merger
Agreement and described in the Offer to Purchase.
5. 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 would represent at least 80% of the outstanding
Shares as determined immediately prior to the consummation of the Offer.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Tuesday, June 17, 1997, unless the Offer is extended by
the Purchaser. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or timely Book-Entry
Confirmation of a transfer of such Shares as described in Section 2 of the
Offer to Purchase), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified below. Your instructions to us should be forwarded promptly
to permit us to submit a tender on your behalf prior to the expiration of the
Offer.
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 or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
-2-
<PAGE> 62
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
SHARES OF COMMON STOCK
OF
RISER FOODS INC.
BY
TALON ACQUISITION COMPANY
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase dated May 20, 1997, of Talon Acquisition Company, a Delaware
corporation and wholly owned subsidiary of Giant Eagle, Inc., a Pennsylvania
corporation, and the related Letter of Transmittal, relating to shares of Common
Stock, par value $.01 per share, of Riser Foods, Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set forth
in such Offer to Purchase and the related Letter of Transmittal.
Dated:
- ------------------------------------------ 1997
Number of Shares
to be Tendered*
------------------ Shares
- ------------------------------------------------------
- ------------------------------------------------------
Signature(s)
- ------------------------------------------------------
- ------------------------------------------------------
Please print name(s)
Address
- ---------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.
- ------------------------------------------------------
Taxpayer Identification or Social Security No.
- ------------------------------------------------------
- ---------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
-3-
<PAGE> 63
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>
<C> <S> <C>
- ------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
5. Sole proprietorship The owner(3)
account
======================================================
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------
6. A valid trust, estate, The legal entity (Do
or pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(4)
7. Corporate account The corporation
8. Religious, charitable, The organization
or educational
organization account
9. Partnership The partnership
10. Association, club, or The organization
other tax-exempt
organization
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- ------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 64
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a Taxpayer Identification Number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the 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 nonexempt 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 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.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under 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 IRS. IRS USES THE NUMBERS FOR IDENTIFICATION
PURPOSES. PAYERS MUST BE GIVEN THE NUMBERS WHETHER OR NOT RECIPIENTS ARE
REQUIRED TO FILE TAX RETURNS. PAYERS MUST GENERALLY WITHHOLD 31% OF TAXABLE
INTEREST, DIVIDEND, AND CERTAIN OTHER PAYMENTS TO A PAYEE WHO DOES NOT FURNISH A
TAXPAYER IDENTIFICATION NUMBER TO A PAYER. CERTAIN PENALTIES MAY ALSO APPLY.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--IF YOU FAIL
TO FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER TO A PAYER, YOU ARE SUBJECT
TO A PENALTY OF $50 FOR EACH SUCH FAILURE UNLESS YOUR FAILURE IS DUE TO
REASONABLE CAUSE AND NOT TO WILLFUL NEGLECT.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--IF YOU
MAKE A FALSE STATEMENT WITH NO REASONABLE BASIS WHICH RESULTS IN NO
IMPOSITION OF BACKUP WITHHOLDING, YOU ARE SUBJECT TO A PENALTY OF $500.
(3) 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> 65
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 May 20,
1997 and the related Letter of Transmittal and is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdiction, the
securities laws of which require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
RISER FOODS, INC.
AT
$42.00 NET PER SHARE
BY
TALON ACQUISITION COMPANY
A WHOLLY OWNED SUBSIDIARY OF
GIANT EAGLE, INC.
Talon Acquisition Company, a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Giant Eagle, Inc., a Pennsylvania corporation
("Parent"), is offering to purchase all outstanding shares of Class A Common
Stock, par value $.01 per share (the "Shares"), of Riser Foods Inc., a Delaware
corporation (the "Company"), at $42.00 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 20, 1997 and in the related Letter of Transmittal
(which together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JUNE 17, 1997 UNLESS EXTENDED.
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 would represent at least 80% of the outstanding Shares as
determined immediately prior to the consummation of the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of May 13, 1997 (the "Merger Agreement"), among Parent, the Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"). On the effective date of the Merger, each
outstanding Share (other than Shares held in the Company's treasury or by any
subsidiary of the Company, or owned by Parent, the Purchaser or any other
subsidiary of Parent or held by stockholders, if any, who are entitled to and
who properly exercise appraisal rights under Delaware law) will be converted
into the right to receive the Offer Price, without interest. Parent has also
entered into an agreement with certain holders of shares of Class B Common
Stock, par value $.01 per share (the "Class B Shares"), of the Company and has
circulated the agreement to all holders of Class B Shares (holders of Class B
Shares being the "Selling Stockholders"), pursuant to which each Selling
Stockholder has agreed (or, upon execution of the agreement, will agree), among
other things, to tender in the Offer all the Shares owned by such Selling
Stockholder. As of May 14, 1997, such Selling Stockholders' Shares represented
in the aggregate, 870,390 Shares, or approximately 12% of the outstanding
Shares.
The Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger and determined that the terms of the Offer and the Merger
are fair to, and in the best interests of, the stockholders of the Company, and
recommends that stockholders of the Company accept the Offer and tender their
Shares.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment and thereby purchase Shares properly tendered to the Purchaser and not
withdrawn as, if, and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the Purchase Price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting payment to tendering stockholders.
In all other cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (a) certificates for such
Shares or timely confirmation of book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility (as defined in the Offer
to Purchase) pursuant to the procedures set forth in Section 2 of the Offer to
Purchase, (b) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and (c) any other
documents required by the Letter of Transmittal. Under no circumstances will
interest be paid by the Purchaser on the purchase price of the Shares,
regardless of any delay in making such payment. The term "Expiration Date" means
12:00 midnight, New York City time, on Tuesday, June 17, 1997 unless and until
the Purchaser, in its sole discretion (but subject to the terms of the Merger
Agreement), shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date on which the Offer, as so extended by the Purchaser, shall expire. The
Purchaser expressly reserves the right, in its sole discretion (but subject to
the terms of the Merger Agreement), at any time or from time to time, to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and payment for, any Shares, by giving oral or written notice of
such extension to the Depositary. The Purchaser shall not have any obligation to
pay interest on the purchase price for tendered Shares in the event that the
Purchaser exercises its right to extend the period of time during which the
Offer is open. There can be no assurance that the Purchaser will exercise its
right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of the tendering stockholder to withdraw such
stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn at any time prior to 12:00
midnight, New York City time, on Tuesday, June 17, 1997, (or, if the Purchaser
shall have extended the period of time during which the Offer is open, the
latest time and date at which the Offer, as so extended by the Purchaser, shall
expire) and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after July
18, 1997. 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 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 number shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase), the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer as
set forth in Section 2 of the Offer to Purchase, 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 2 of the Offer to Purchase at any time prior to the Expiration Date.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of the Shares and furnished
to brokers, dealers, banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholders' list or, if applicable,
who are listed as participants in a clearing agency security position listing,
for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14(d)-6(e)(1)(vii) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION
WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Requests for copies of this Offer to Purchase and the Letter of Transmittal
may be directed to the Information Agent or the Dealer Manager as set forth
below, and copies will be furnished promptly at the Purchaser's expense.
<TABLE>
<S> <C>
The Information Agent for the Offer is: The Dealer Manager for the Offer is:
D.F. KING & CO., INC. PARKER/HUNTER
77 WATER STREET INCORPORATED
NEW YORK, NY 10005 600 GRANT STREET
(800) 714-3311 PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8000
</TABLE>
May 20, 1997
<PAGE> 66
Exhibit (a)(8)
[RISER FOODS INC. LETTERHEAD] NEWS RELEASE
5300 Richmond Road
Bedford Heights, Ohio 44146 EXHIBIT B
(216) 292-7000
FOR IMMEDIATE RELEASE CONTACT: Joseph Faccenda
Giant Eagle, Inc.
(412) 963-2510
- or -
Ronald Ocasek
Riser Foods, Inc.
(216) 591-2830
CLEVELAND'S RISER FOODS AND
PITTSBURGH-BASED GIANT EAGLE TO MERGE
COMBINED COMPANIES TO CONTINUE OPERATING AUTONOMOUSLY;
MANAGEMENT TEAMS WILL MAINTAIN LOCAL BUSINESS FOCUS
BEDFORD HEIGHTS, OHIO, May 14, 1997 -- Riser Foods, Inc. (AMEX:RSR)
today announced that it has reached a definitive agreement to merge with Giant
Eagle, Inc., a privately held, Pittsburgh-based retail supermarket chain and
wholesale distributor.
Giant Eagle will acquire all of Riser's outstanding Class A and Class B
stock for $42 per share, for a total of $403 million, including the assumption
of approximately $47 million of debt and the acquisition of existing options.
The transaction will be financed under a firm commitment that Giant Eagle has
received from a major U.S. Bank.
Giant Eagle will shortly commence a tender offer to acquire all the
outstanding shares of Riser's Class A stock and, following the closing of the
tender offer, will acquire all outstanding Class B stock in a merger. The
transaction is subject to required regulatory approvals and other customary
terms and conditions, and the merger is also subject to shareholder approval.
(more)
<PAGE> 67
RISER FOODS AND GIANT EAGLE TO MERGE -- PAGE 2
In connection with the merger agreement, certain Riser shareholders,
who own approximately 13 percent of the Class A stock and approximately 57
percent of the Class B stock, have agreed not to transfer their shares except
in accordance with the tender offer and have agreed to vote their shares in
favor of the merger. Although there is no assurance that the transaction will
be consummated, Giant Eagle and Riser expect that the tender offer will be
closed in June 1997.
The combined companies will have retail stores in Ohio, Pennsylvania
and West Virginia, and wholesale operations in both Pennsylvania and Ohio.
Combined sales are expected to be about $4 billion next year.
"In the retail food industry's current era of consolidation, this
merger of two successful and family-oriented companies with complementary
geographic markets represents an excellent fit," said David S. Shapira,
chairman and chief executive officer of Giant Eagle.
Both Shapira and Anthony C. Rego, chairman and chief executive officer
of Riser Foods, stressed that it would be business as usual for the companies'
customers, associates and suppliers. In the future, they added, the combined
companies will have even greater strength and flexibility in terms of
purchasing power, economies of scale and the ability to continue their long
traditions of community involvement.
"This joining of two companies with similar management styles and a
dedication to providing the highest customer service makes perfect strategic
sense," Rego explained. "It is part of a continuing growth strategy to ensure
that the new company has the best management and resources in place for the
future, as well as providing our associates with enhanced career
opportunities," he added.
The executives noted that the combined strengths of the companies will
allow them to be even more effective in serving their independently owned
stores and wholesale customers with new technologies and growth opportunities.
(more)
<PAGE> 68
RISER FOODS AND GIANT EAGLE TO MERGE -- PAGE 3
Shapira will continue to be chairman and chief executive officer of
Giant Eagle. Rego has been named vice chairman of Giant Eagle, in addition to
his role as chief executive officer of Riser Foods. Raymond J. Burgo, Giant
Eagle's president and chief operating officer, will assume the same position
with the new company. Charles A. Rini, Sr., president and chief operating
officer of Riser Foods, will also remain in that position and has been named to
the addition post of executive vice president of Giant Eagle. Furthermore, both
Rego and Rini will serve on the Giant Eagle Board of Directors.
These four executives will make up a newly formed executive committee,
with overall management responsibility for the combined companies. "Both Ray
Burgo and Chuck Rini, as well as Anthony Rego, will continued in their current
offices, maintaining their focus on the Pennsylvania and Ohio markets,
respectively," Shapira noted. "We will continue to operate these divisions
autonomously, and we are committed to making sure management is able to
concentrate on the local businesses day to day."
Currently, Giant Eagle operates 56 company-owned stores and supplies 86
independently owned Giant Eagle stores. Riser Foods operates 36 company-owned
stores under the Rini-Rego Stop-n-Shop banner, which are part of the 54-store
Stop-n-Shop Supermarket Association. Riser also owns American Seaway Foods,
which serves approximately 500 wholesale outlets, including many fine
independent supermarkets and mass-merchandising retailers. In addition, Riser's
Eagle Ice Cream operation manufactures private-label ice cream products.
###
Editor's Note: An overview of both Giant Eagle and Riser Foods is attached.
<PAGE> 69
COMPANY PROFILES
----------------
GIANT EAGLE INCORPORATED
- ------------------------
Headquarters: Pittsburgh, Pa.
Year established: 1931
Fiscal 1996 net sales: Approximately $2.3 billion
Number of employees: Approximately 12,700
Number of company-owned stores: 56
Number of total Giant Eagle stores,
including independently-owned: 142
Average core store size (1996): 55,000 sq. ft.
Wholesale supply to: 246 outlets
Other operations: Butler Refrigerated Meats
RISER FOODS, INC.
- -----------------
Headquarters: Bedford Heights, Ohio
Year established: 1988
Fiscal 1996 net sales: $1.3 billion
Number of employees: Approximately 5,800
Number of company-owned
Stop-n-Shop stores: 36
Number of total Stop-n-Shop stores,
including independently-owned: 54
Average core store size (3Q97): 50,900 sq. ft.
Wholesale supply to: 500 outlets via American Seaway Foods
Other operations: Eagle Ice Cream
<PAGE> 70
EXHIBIT (b)
[LOGO]
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001
CONFIDENTIAL
May 12, 1997
Giant Eagle, Inc.
101 Kappa Drive
RIDC Park
Pittsburgh, Pennsylvania 15238
Attn: Mr. Mark J. Minnaugh
Senior Vice President and Chief Financial Officer
Re: Commitment Letter
-----------------
Gentlemen:
Giant Eagle, Inc. ("Giant Eagle") has advised Mellon Bank, N.A. ("Mellon") that
Giant Eagle proposes to acquire, for cash, all of the outstanding common shares
of Riser Foods, Inc. ("Riser"). Giant Eagle has requested that Mellon extend,
or arrange for the extension of, credit facilities of up to $475,000,000 in
connection with such acquisition (the "Financing").
Mellon is pleased to advise Giant Eagle that, on the terms and subject to the
conditions set forth or referred to in this letter and in the attached Summary
of Terms and Conditions (which forms a part of this letter and is incorporated
in this letter by reference), Mellon is willing to provide bank credit
facilities (the "Facilities") for the full $475,000,000 amount of the
Financing, with a view to syndication to other financial institutions
reasonably satisfactory to Mellon and Giant Eagle.
Mellon will not be obligated to make any loan or extend credit under the
Facilities unless and until all the conditions set forth, referred to or
incorporated in this letter, and all other terms and conditions which may be
required by Mellon have been satisfied. The Facilities will be made available
pursuant to a Credit Agreement (the "Credit Agreement") and, as appropriate,
related security agreements and other agreements and documents (collectively,
the "Documentation") in form and substance satisfactory to Mellon, which
Documentation will reflect the terms and conditions set
<PAGE> 71
Giant Eagle, Inc.
May 12, 1997
Page 2
forth, referred to or incorporated in this letter (including those in the
attached Summary of Terms and Conditions) and such additional representations,
warranties, covenants and other terms and provisions as, in Mellon's opinion,
are appropriate in transactions of this type.
Mellon shall be entitled to compensation as provided in the Term Sheet and in
the Fee Letter date May 7, 1997 herewith from Mellon to Giant Eagle (which
letter is incorporated herein by reference and which shall be deemed to refer
to this commitment letter, rather than the commitment letter dated May 2, 1997,
which this letter replaces.).
Whether or not the transactions contemplated hereby are closed, Giant Eagle
agrees to pay Mellon the reasonable out-of-pocket costs and expenses of Mellon
incurred in connection with the establishment of the Facilities, including but
not limited to the reasonable fees and expenses of counsel for Mellon,
reasonable and customary travel and syndication expenses and other expenses
referred to in the Summary of Terms and Conditions. Giant Eagle agrees to
indemnify and hold harmless Mellon and each director, officer, employee and
agent thereof, and the other financial institutions which may participate or be
offered to participate in this financing, and each affiliate and each director,
officer, employee and agent thereof (collectively, the "Indemnified Parties"
and, individually, an "Indemnified Party"), from and against any and all
losses, claims, damages, expenses or liabilities to which any Indemnified Party
may become subject, insofar as such losses, claims, damages, expenses or
liabilities (or actions, suits or proceedings, including any inquiry or
investigations or claims in respect thereof) arise out of, or in any way relate
to, or result from a claim made by a Third Party (as hereinafter defined) in
respect of, the transactions described in this letter or the financing
contemplated hereby (whether or not any Indemnified Party is a party to any
action or proceeding out of which any such losses, claims, damages, expenses or
liabilities arise), and to reimburse each Indemnified Party, upon demand, for
any reasonable legal or other expenses incurred by any Indemnified Party in or
in connection with investigating, preparing to defend or defending any such
claim, action or proceeding related to any such loss, claim, damage or
liability, except that Giant Eagle shall not be obligated to indemnify, hold
harmless or reimburse any Indemnified Party to the extent that any such losses,
claims, damages, expenses or liabilities are determined in a final judgment by
a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Indemnified Party. The term "Third
Party," as used in this letter, means any person, corporation or entity other
than Giant Eagle.
<PAGE> 72
Giant Eagle, Inc.
May 12, 1997
Page 3
As stated above, Mellon intends to syndicate a portion of the Facilities to
lenders reasonably acceptable to Mellon and Giant Eagle. In accordance with
normal practice relating to the syndication of facilities such as the
Facilities, Giant Eagle agrees to provide Mellon with an information package
containing relevant information about Giant Eagle, Riser and their businesses.
Mellon will not be responsible or liable for any damages which may be alleged
in connection with such information to the extent that such information is used
or distributed in the form provided to Mellon or otherwise approved by Giant
Eagle. Mellon is hereby expressly authorized to distribute such package in the
form provided to it or otherwise approved by Giant Eagle (and any and all such
other information and materials respecting Giant Eagle and their businesses as
from time to time delivered to, received by or otherwise in the possession of
Mellon) to any such prospective syndicate members and/or participants. Borrower
agrees that it will, at its own expense, use all reasonable efforts to
cooperate with such syndication effort, including but not limited to causing
its appropriate officers, representatives and experts to meet with prospective
syndicate members or participants from time to time as reasonably requested.
The commitment represented by this letter will terminate at 5:00 P.M. (local
time in Pittsburgh, Pennsylvania) on May 13, 1997 unless Mellon has received
Giant Eagle's written acceptance prior to that time. Upon such acceptance, this
letter will replace and be deemed to amend and restate Mellon's prior
commitment letter, dated May 2, 1997. If this letter is accepted on or before
its expiration in accordance with the preceding sentence, the commitment will
nonetheless terminate at 5:00 P.M. (local time in Pittsburgh, Pennsylvania) on
June 30, 1997 unless definitive Documentation, satisfactory in form and
substance to Mellon and Giant Eagle, shall have been entered into and the
Facilities shall have closed on or prior to such time.
This letter may be executed by the parties hereto on one or more counterparts,
each of which shall be an original and all of which together shall constitute
but one and the same agreement.
Neither the contents nor existence of this letter may be disclosed verbally or
in writing by Giant Eagle to any Third Party (excluding Giant Eagle's legal,
accounting and financial advisors retained in connection herewith) unless and
until this letter has been accepted by Giant Eagle. Mellon will not be
responsible or liable to any person for any damages which may be alleged as a
result of the existence of the letter or of the contents thereof.
<PAGE> 73
Giant Eagle, Inc.
May 12, 1997
Page 4
If you are in agreement with the foregoing, please sign and return to Mellon at
the address indicated above one enclosed copy of this letter. Upon receipt of
copies hereof duly signed by Giant Eagle, Mellon's and Giant Eagle's
undertakings hereunder shall become effective to the extent and in the manner
provided herein.
We are pleased to have the opportunity to assist you in this financing and we
very much look forward to working with you.
Very truly yours,
MELLON BANK, N.A.
By T. KENNEDY
Assistant Vice President
The foregoing is hereby acknowledged, accepted and agreed to as of this 13th day
of May, 1997.
GIANT EAGLE, INC.
By: MARK J. MINNAUGH
Title: Sr. VP-CFO & Treasurer
<PAGE> 74
SUMMARY OF TERMS AND CONDITIONS
MAY 12, 1997
1. Borrower Giant Eagle, Inc., a Pennsylvania corporation (the
"Borrower").
2. Guarantors Butler Refrigerated Meats, Inc., The Tamarkin Company,
Aetos Construction Company, Retail Promotions, Inc.,
Scriptnet, Inc., Good Nature Distributing Company,
Inc., Giant Eagle of Delaware, Inc., Eaglestone of
Delaware, Inc., Riser Foods Inc. ("Riser") and any
other current or future active subsidiaries (the
"Guarantors").
3. Lenders; Agent The lenders (the "Lenders") under the proposed
revolving credit and term loan agreement (the "Credit
Agreement") shall initially be Mellon Bank, N.A.
("Mellon") and thereafter Mellon Bank, N.A. and such
other financial institutions as are acceptable to
Mellon Bank, N.A. and the Borrower. Mellon Bank, N.A.
shall act as agent (the "Agent") for the Lenders.
4. Facilities
Types. Revolving Credit and Term Loan.
Amount: $475,000,000 in the aggregate (the 'Maximum Commitment
Amount', consisting of a $250,000,000 Revolving Credit
and a $225,000,000 Term Loan.
Letters of Credit: Draws under the Revolving Credit may take the form of
requests for issuance of standby letters of credit, for
the account of the Borrower, issued by Mellon or an
affiliate of Mellon (in either case, the "Issuing
Bank") selected by Mellon and acceptable to the
Required Lenders (as defined in Appendix A). The
aggregate amount of such letters of credit shall not
exceed $30,000,000. Such letters of credit shall not
expire later than 12 months after the date of original
issuance (and in any event not later than the maturity
date of the Credit Agreement), shall be denominated in
Dollars, shall be payable only against sight drafts and
shall be in a minimum stated amount of $250,000, unless
otherwise agreed to by the Issuing Bank. Letters of
Credit may be used to provide credit enhancement for
workers' compensation obligations, contract performance
guarantees, like bonding requirements in the ordinary
course of the business of the Borrower and its
Subsidiaries, and to provide credit support for
Indebtedness or other financing arrangements. Each
Lender participating in the Credit Agreement shall be
deemed to have purchased from the Issuing Bank a
ratable participation in each such letter of credit.
Drawings on each such letter of credit shall be due and
payable on demand, and interest thereon shall accrue at
the past due interest rate for draws on the Revolving
Credit (it being understood that the account party may,
if the conditions to lending under the Credit Agreement
are otherwise satisfied, fund its
<PAGE> 75
reimbursement obligation by borrowing under the Credit
Agreement). The undrawn amount of each such letter of
credit at any time shall be deemed a borrowing under
the Revolving Credit for purposes of calculating the
Revolving Credit commitment fee and like purposes. The
Documentation shall contain provisions satisfactory to
the Issuing Bank with respect to, among other things,
(A) the unconditional nature of the Borrower's
reimbursement obligations under, and the Lenders'
participation in, each letter of credit, and (B)
indemnification of the Issuing Bank in its capacity as
the issuer of the letters of credit from the Borrower
and the other Lenders.
Maturity: The Facilities shall mature six years from the closing
date.
Availability: At no time shall the sum of the outstanding Revolving
Credit loans, undrawn letters of credit and
unreimbursed letter of credit drawings exceed
$250,000,000.
Amortization: The Revolving Credit will be due in full at maturity.
The Term Loan will amortize as follows:
<TABLE>
<CAPTION>
Year Amortization
<S> <C>
1 $10,000,000
2 $25,000,000
3 $35,000,000
4 $50,000,000
5 $50,000,000
6 $55,000,000
</TABLE>
Purpose: The Facilities will be used to fund the acquisition of
Riser and the expenses associated with the acquisition.
The proceeds of the Revolving Credit will also be used
for general working capital and corporate purposes.
Ranking: The Credit Agreement and the guaranties made by the
Guarantors shall each be full recourse obligations of
the Borrower and the Guarantors, respectively and they
shall be secured by a first priority security interest
as described herein.
5. Interest Rates; Payment Dates, etc.
Interest Rates: Base Rate or LIBOR based with margins fixed until the
end of the second full fiscal quarter after closing and
thereafter to be adjusted quarterly, based on the
Consolidated Cash Flow Coverage Ratio ("CCFCR") as set
forth on the grid attached as Appendix 'B' for the
preceding four consecutive fiscal quarters (or for
interest accruing during the third full fiscal quarter
after closing for the preceding two
2
<PAGE> 76
fiscal quarters and for interest accruing during the
fourth full quarter after closing for the preceding
three fiscal quarters).
Past Due Interest: 2% in excess of rate(s) otherwise applicable, computed
in accordance with the Agent's customary practices.
Basis of Calculation: "Base Rate" (actual/360 day basis): for each day, the
higher of (i) the Federal Funds Rate, as published by
the Federal Reserve Bank of New York one business day
prior to the date of calculation, plus 0.50%, or (ii)
the Agent's Prime Rate, such rate to change
automatically from time to time effective as of the
effective date of each change in such rate. "Prime
Rate" for each day, shall mean the interest rate per
annum announced from time to time by the Agent as its
prime rate. The Prime Rate may be greater or less than
other interest rates charged by the Agent to other
borrowers and is not solely based or dependent upon the
interest rate which the Agent may charge any particular
borrower or class of borrowers.
"LIBOR" (actual/360 day basis): The interest rate per
annum for each day in the applicable LIBOR period (at
the option of borrower from time to time -- one, two,
three or six months) determined by the Agent to be the
rate being offered to leading banks in the London
Interbank Market for deposits in amounts equivalent to
the applicable loan for periods equivalent to the
applicable LIBOR period, as fully adjusted for possible
reserve requirements (whether or not actually
incurred).
Interest Interest on loans bearing interest based on the Base
Payment Dates: Rate shall be due and payable monthly in arrears.
Interest on loans bearing interest based on LIBOR shall
be due and payable on the last day of the applicable
LIBOR period and, in the case of a LIBOR period of more
than three months, on the last day of the third month
of such period.
Prepayment: If any amount bearing interest based on a LIBOR rate is
due or is paid for any reason (on account of mandatory
prepayment, acceleration or otherwise) before the end
of such fixed rate period, the Lenders shall be
entitled to compensation for the present value (using
as the discount rate the rate on the date of prepayment
equal to the yield that could be obtained by investing
in U.S. Treasury securities maturing at the end of
such fixed rate period) of the difference between the
yield that the Lenders would have been entitled to on
the amount so due or prepaid absent such event and the
yield that the Lenders would realize by reinvesting the
amount due or prepaid in U.S. Treasury obligations of
like maturity.
Mandatory Prepayment: Mandatory prepayments will be required in amounts equal
to the net cash proceeds of (i) certain permitted asset
sales, (ii) insurance
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recoveries not reinvested in the businesses, (iii)
certain equity issuances and (iv) 50% of Excess Cash
Flow. Excess Cash Flow is to be defined.
Interest Rate The Borrower will enter into interest rate caps,
Protection: collars or swaps to hedge interest rate exposure
under the Term Loan for a maturity and for an amount to
be determined.
Yield Protection The Credit Agreement shall contain customary
Provisions: indemnities and yield protection provisions, including
an indemnity with respect to diminution of the return
on capital to the Lenders on account of any existing or
future capital adequacy requirements applicable to the
Lenders.
6. Fees and Expenses
Revolving Credit At a rate per annum, calculated in accordance
Commitment Fee: with Appendix B, on the average daily unused amount
of the Revolving Credit commitment from and after the
Closing Date, payable quarterly in arrears, on each
reduction in the Revolving Credit commitment and on
termination of the Revolving Credit commitment.
Agent's and As set forth in a separate letter agreement between
Origination Fee: the Borrower and the Agent.
Letter of Credit At a fee rate per annum, calculated in accordance
Fee: with Appendix B, on the average daily undrawn amount
of outstanding Letters of Credit, payable quarterly in
arrears, which shall be for the ratable benefit of each
of the Lenders.
Letter of Credit 0.125 % of the stated amount of such Letter of
Facing Fee: Credit, payable on the date of issuance, which shall
be for the sole benefit of the Issuing Bank. In
addition, the Issuing Bank shall be entitled to its
ordinary and customary fees for administration, drawing
and amendment.
Expenses: The Borrower shall pay: (i) all out-of-pocket costs and
expenses incurred by the Agent in connection with the
negotiation, preparation, execution and delivery of the
loan agreements and related agreements and documents
pursuant to which the Credit Agreement will be made
available (collectively, the "Documentation") and this
Term Sheet, or in connection with any and all
amendments, modifications and waivers of or with
respect to the Documentation or the making and
administration of the Loans and (ii) all out-of-pocket
costs and expenses (including but not limited to those
listed above) incurred by the Agent, Issuing Bank, or
the Lenders or their assigns in connection with the
enforcement of the Documentation or preservation of
rights thereunder, including but not limited to, any
work-out in respect thereof.
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7. Security The Borrower and each subsidiary shall grant first
priority liens on substantially all of its properties
and assets from time to time, including in any case (i)
all of the capital stock of each of its subsidiaries,
(ii) cash and investments, (iii) accounts receivable
and notes receivable, (iv) the assignment of leases (v)
real property, equipment, and other tangible personal
property and (vi) trademarks and other intellectual
property. Inventory shall be excluded from the first
priority liens. After January 1, 1999, security will be
released upon the achievement, based on the last twelve
months, of a Leverage Ratio of less than or equal to
2.0 and a Consolidated Cash Flow Coverage Ratio of
greater than or equal to 1.10.
8. Representations and Warranties
The Documentation shall include such representations and warranties of
the Borrower and the Guarantors as the Agent deems appropriate for transactions
of this type.
9. Covenants
The Documentation shall include such covenants of the Borrower and the
Guarantors as the Agent deems appropriate for transactions of this type
including, but not limited to the following:
(a) Financial Covenants. The Documentation shall include the following
financial covenants:
Minimum Consolidated Net Worth. At closing, Consolidated Net Worth
(as defined in Appendix A) shall not be less than 90% of an amount
to be determined. Thereafter Consolidated Net Worth may not be less
than the amount to be determined plus 60% of Consolidated Net
Income, not to be reduced by losses, for the period from closing.
Consolidated Cash Flow Coverage Ratio. The Consolidated Cash Flow
Coverage Ratio (as defined in Appendix A) at the end of each fiscal
quarter for the 12 consecutive prior months ending on such date
shall not be less than 1.00 to 1 initially. This level will
increase by an amount and over a time period to be determined.
Leverage Ratio. The Leverage Ratio (as defined in Appendix A) at
the end of each fiscal quarter for the 12 consecutive prior months
ending on such date shall not be greater than 2.75. This level will
decrease by an amount and over a time period to be determined.
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(b) Additional Debt and Debt Substitutes. The Documentation shall
prohibit the incurrence of debt and debt substitutes by the
Borrower and its subsidiaries, except (i) indebtedness satisfactory
to the Agent existing on the Closing Date and listed on a Schedule
(and certain refinancings thereof); (ii) indebtedness under the
proposed Credit Agreement; (iii) indebtedness secured by permitted
purchase money liens; (iv) accounts payable to trade creditors in
the ordinary course of business; (v) subordinated debt having terms
satisfactory to the Lenders; and (vi) Indebtedness under interest
rate hedging agreements acceptable to the Required Lenders.
Notwithstanding the foregoing, Borrower is permitted additional
unsecured debt totaling in aggregate $25,000,000, having terms and
conditions no more restrictive to the Borrower than those contained
in the Documentation.
(c) Liens, etc. The Borrower and its subsidiaries shall not have any
liens, except (i) liens satisfactory to the Agent existing on the
Closing Date and listed on a Schedule to the Credit Agreement (and
liens securing certain successor obligations); (ii) liens for taxes
and assessments, etc. to the extent they are being contested in
good faith and adequate GAAP reserves have been made; (iii)
deposits of cash in the ordinary course of business to secure
workers' compensation, performance bids, surety or appeal bonds or
similar obligations; (iv) judgment liens not in excess of
$1,000,000 and other judgment liens that are fully bonded pending
appeal; (v) purchase money security interests (and certain
additions and substitutions therefor) for property placed in
service not more than 9 months prior to the creation of such lien;
and (vi) zoning restrictions, easements and other minor
restrictions on the use of real property that are not material.
(d) Guarantees. The Borrower and its subsidiaries shall not have any
guaranties, except (i) guaranties satisfactory to the Agent
existing on the Closing Date and listed on a Schedule to the Credit
Agreement; (ii) guaranty of the Guarantors in favor of the Agent;
(iii) contingent liabilities arising from endorsement of
instruments in ordinary course of business; (iv) indemnities for
officers and directors; (v) where Borrower and Independent Retailer
stores provide, through a single service provider, same or
different services to customers, the Borrower may guarantee
Independent Retailer obligations to service provider; (vi)
obligations of the Borrower to repurchase inventory and equipment
from Independent Retailers, upon default by Independent Retailers
on agreements with their lenders; (vii) a guaranty by the Borrower
of obligations in a principal amount up to $15,100,000, in
connection with the Moraine Pointe development; (viii) guarantees
of Independent Retailer obligations in the ordinary course of
business, which when added to loans to Independent Retailers, do
not exceed $35,000,000; (ix) guarantees of obligations of Related
Companies (as defined in Appendix A) which when added to loans to
Related Companies, do not exceed $20,000,000; (x) continuing
liability of the Borrower as a lessee under a lease that it has
assigned or subleased; (xi) indemnities given by the Borrower and
its Subsidiaries in the ordinary course of business (excluding any
indemnities given in support of Indebtedness not otherwise
permitted); and (xii) upstream and downstream intercompany
guarantees given in the ordinary course of business.
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(e) Loans and Other Investments. The Borrower and its subsidiaries
shall not make any loans, advances or other investments, except (i)
loans and investments satisfactory to the Agent existing on the
Closing Date and listed on a Schedule to the Credit Agreement; (ii)
receivables arising from sale of goods in the ordinary course of
business; (iii) loans to subcontractors or suppliers of Aetos in
the ordinary course of business up to $250,000 in the aggregate;
(iv) loans to executives up to $100,000 in the aggregate; (v) cash
equivalent investments; (vi) loans to Independent Retailers in the
ordinary course of business which when added to guarantees for
Independent Retailers, do not exceed $35,000,000; (vii) loans to
Related Companies, which when added to guarantees for Related
Companies, do not exceed $20,000,000; (viii) intercompany loans
(other than downstream loans to a subsidiary that is not a
Guarantor); (ix) investments with an aggregate cumulative cost not
exceeding $10,000,000 through the term of the Credit Agreement (but
not of the type contemplated by (vi) and (vii) herein).
(f) Dividends: Redemptions; Stock Repurchases. The Borrower shall not
pay dividends or make other distributions on account of, or
repurchase or redeem, its capital stock, if an Event of Default or
Potential Default has occurred and is continuing or exists at the
time such dividend, repurchase or redemption is declared or paid or
would occur or exist immediately after giving effect to such
declaration or payment.
(g) Sale-Leaseback. The Borrower and its subsidiaries shall not engage
in any sale-leaseback transaction, except (i) sale-leaseback
transactions satisfactory to the Agent existing on the Closing Date
and listed on a Schedule to the Credit Agreement (and certain
refinancings thereof); (ii) sale-leaseback transactions that would
be permitted if structured as debt or if structured as capitalized
leases; and (iii) other sale-leaseback transactions not to exceed
$25,000,000.
(h) Leases. The Borrower and its subsidiaries shall not enter into any
lease, as lessee or lessor, except (i) arms'-length leases to
Independent Retailers in the ordinary course of business on usual
terms; (ii) existing leases to Phar-Mor and Tamco satisfactory to
the Agent and existing on the Closing Date and listed on a Schedule
to the Credit Agreement; (iii) subleases and assignments in the
ordinary course of business if the property was not acquired for
such purposes; (iv) operating leases of equipment in the ordinary
course of business; (v) leases cancelable without penalty on not
more than 90 days' notice; (vi) capitalized leases which constitute
permitted indebtedness; and (vii) leases, subleases and assignments
of store locations, closed stores, office space, warehouse and
distribution locations and similar space for operations and
equipment for such locations in the ordinary course of business.
(i) Mergers; Acquisitions; The Borrower and its subsidiaries shall not
merge or consolidate, liquidate, wind-up, dissolve or divide,
acquire all or any substantial portion of the properties of any
concern or line of business, or acquire all or any substantial
portion of the properties of any Person other than in the ordinary
course of business, except (i) subsidiaries may merge into the
Borrower; (ii) a subsidiary may merge into another subsidiary so
long as any Guarantor party to such merger is the survivor and no
change is made in the capital stock of such Guarantor; and (iii)
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an acquisition of assets of, or ownership interests in, a business
that is engaged in the same line of business as the Borrower and
the Borrower is the surviving entity, as long as no Event of
Default or Potential Default exists before or after giving effect
to such acquisition. Acquisitions allowed in (iii) above must meet
the covenants on a proforma historical basis and the cumulative
purchase prices, including assumed liabilities, will be limited to
$25,000,000 over the life of the Facilities.
(j) Disposition of Properties. The Borrower and its subsidiaries shall
not sell, transfer, lease or otherwise dispose of any properties,
except (i) sales of inventory or equipment in the ordinary course;
(ii) arms-length sales or leases of equipment, fixtures and other
property to Franchises; (iii) disposal of obsolete equipment; (iv)
arms-length sales or other dispositions in an aggregate amount
through the term of the Credit Agreement of up to 10% of the book
value of the Borrower's consolidated assets immediately prior to
each disposition; and (v) permitted sale-leaseback transactions and
permitted leases.
(k) Dealings with Affiliates. The Borrower and its Subsidiaries shall
not enter into any transactions with Affiliates except (i)
compensation paid to directors, officers and employees and
consultants and other transactions with Affiliates if made in good
faith on terms no less favorable to the Borrower than would be
obtained from an unrelated person and which are approved by a
majority of the disinterested directors; and (ii) loans and
guarantees permitted by other Sections.
(l) Double Negative Pledge. Neither Borrower nor any of its
Subsidiaries shall enter into any agreement that would prohibit
Agent from being granted a security interest in any or all of
Borrower's or Subsidiaries' assets.
(m) More Restrictive Covenants. The Borrower and its subsidiaries shall
not enter into or be a party to any agreement containing covenants
that are more restrictive than certain enumerated covenants
contained in the Documentation.
10. Reporting Requirements.
The Documentation shall include such reporting requirements as the
Lenders deem appropriate for transactions of this type.
11. Events of Default
The Documentation shall include such events of default as the Lenders
deem appropriate for transactions of this type, including, without
limitation, the following:
(a) Failure to pay principal when due or to reimburse Mellon for drawings
under letters of credit when due.
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(b) Failure to pay interest, commitment fees or other amounts when due and
such failure continues for 5 business days.
(c) Breaches of representations and warranties of the Borrower or the
Guarantors.
(d) Failure by the Borrower or the Guarantors to comply with covenants in
the Documentation, subject to grace periods in the Existing Credit
Agreement.
(e) Payment defaults with respect to other Indebtedness by the Borrower
and its subsidiaries aggregating $5,000,000 or more or other defaults
with respect thereto if the effect is to cause, or to permit the
holder to cause, acceleration of such Indebtedness.
(f) Judgments against the Borrower and its subsidiaries aggregating in
excess of $1,000,000 that remain unstayed and undischarged for 45 days
or any judgments exceeding $25,000,000 in the aggregate.
(g) Any material governmental action required in connection with the
Credit Agreement ceasing to be in full force and effect.
(h) Any loan document ceasing to be in full force and effect, or the
Borrower or any attempt by the Borrower or any Guarantor to
terminate, revoke or otherwise contest any loan document.
(i) Certain ERISA events.
(j) All of the capital stock of the Guarantors ceases to be owned
beneficially by the Borrower and of record by the Borrower or one or
more of the Guarantors.
(k) Any subordination provisions of permitted subordinated debt ceasing to
be in full force and effect or an person attempt by an person to
terminate, revoke or otherwise contest any such provision.
(l) A Change in Control (as defined in Appendix A).
(m) Bankruptcy, insolvency or similar events affecting the Borrower or any
subsidiary.
12. Conditions Precedent:
In addition to other conditions set forth or referred to herein, the
obligation of the Lenders to provide the Credit Agreement and to advance
any funds thereunder shall be subject to such conditions precedent as the
Agent deems appropriate for transactions of this type, including without
limitation the following:
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(a) All necessary corporate action shall have been taken to approve the
transactions described herein and the use of the proceeds of the
Credit Agreement. (Paragraph (b) intentially omitted.)
(c) The Agent shall have received assurances, satisfactory to the Agent,
(including without limitation, opinions of counsel or consents of
other lenders) that the Documentation, and the exercise of remedies in
respect of such Documentation, do not and will not conflict with any
agreement or instrument to which the Borrower or any subsidiary is a
party or with applicable law.
(d) The Agent shall have received all such representations, warranties,
resolutions, opinions of counsel, consents, waivers, financing
statements, financing statement searches, casualty and liability
insurance certificates and policies (disclosing the Lenders' interests
as they may appear), officers' certificates, and the like, in each
case which the Agent may have requested, and shall have found the same
to be satisfactory.
(e) No material adverse change shall have occurred in the condition
(financial or otherwise), of the business, prospects or results of
operations of the Borrower and its subsidiaries, taken as a whole,
since March 31, 1997.
(f) No litigation which seeks to challenge or prevent or declare illegal
the transactions contemplated hereby shall be pending or threatened,
and no other material litigation involving the Borrower or any
subsidiary, shall be pending or threatened.
(g) No event shall have occurred or be continuing which, with the passage
of time or the giving of notice or both, would constitute an Event of
Default or Potential Default under the Credit Agreement.
(h) The Agent shall have received copies of (or, in the case of items
which are not documents, satisfactory evidence of) the following
items, each of which items shall be satisfactory in form and substance
to the Agent:
o The Borrower and Riser shall have entered into an agreement and
plan of merger and the related documents attached as exhibits
thereto (collectively, the "Acquisition Documents"). All
conditions to the Acquisition set forth in the Acquisition
Documents shall have been met (without giving effect to any
amendment, modification or waiver of the Acquisition Documents
not approved in writing by Mellon) except for funding pursuant to
the Documentation.
(i) The Borrower shall have paid and discharged all of its obligations for
borrowed money, with exceptions to be determined.
(j) The Agent shall have received evidence that all actions necessary or,
in the opinion of the Agent, desirable to create and perfect the liens
contemplated hereby have been
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taken.
(k) All fees and expenses required to be paid by the Borrower at or before
the closing shall have been paid.
(l) All corporate and other proceedings, and all documents, instruments
and other matters in connection with the acquisition and the
Facilities, shall be in form and substance satisfactory to the Agent.
(m) Mellon shall not have become aware of any fact or condition (of which
fact or condition Mellon did not have knowledge prior to May 12, 1997)
which could reasonably be expected to have a material adverse effect
on the ability of Giant Eagle to achieve the levels of financial
condition and results of Operations projected in the projections
provided to Mellon on May 8, 1997.
13. Assignments and Participations; Amendments and Waivers:
Assignments (with novations) and participations with full voting
rights shall be permitted with respect to all or part of the Credit
Agreement with prior consent of the Borrower. Participations with voting
rights limited to the changes in commitment level, maturity or interest
rates shall be permitted without prior consent. Assignments or
participations may be with full or limited voting rights as the Agent may
determine. Assignments shall be in the minimum amount of $10,000,000.
The Documentation shall provide that amendments to, and waivers of,
the terms thereof may be effected with the consent of the Required Lenders,
except that the consent of all Lenders will be required in order to alter
the Credit Agreement commitments, extend the maturity of principal or
interest, reduce the rate of interest or otherwise change the payment terms
of the Credit Agreement, release any of the Guarantors, or release all or a
major portion of the collateral (unless otherwise permitted by the
Documents).
14. Documentation:
All Documentation shall be in form and substance satisfactory to the
Agent and its counsel. All Documentation shall be governed by the laws of
the Commonwealth of Pennsylvania unless the Agent otherwise agrees. The
parties submit to the jurisdiction of any state or federal court of
competent jurisdiction sitting in Pennsylvania in connection with any
action, suit or proceeding in connection with this letter, any
Documentation entered into in respect thereof or any acts or omissions in
connection with the transactions contemplated hereby. The Borrower waives,
and each Guarantor shall waive any right to jury trial in connection
therewith.
15. Agent's Counsel.
Counsel for the Agent shall be Reed Smith Shaw & McClay (with the
consent of the Borrower and Agent).
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*****
The foregoing are not all of the provisions that will be contained in
the Documentation, which Documentation shall contain such other provisions
(including representations and warranties, conditions of lending, yield
protection provisions, affirmative and negative covenants, events of
default and indemnification provisions) as the Agent deems appropriate for
transactions of this type.
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APPENDIX A
DEFINITIONS
"Change of Control" shall mean that at any time (i) the members of
the five families (disclosed to the Lenders) presently owning the capital stock
of the Borrower in the aggregate (beneficially and of record) shall cease to
have the right to vote at least 51% of the shares of voting common stock of the
Borrower; or (ii) the members of such families in the aggregate shall cease to
own (beneficially and of record) at least 51% of the shares of voting common
stock of all classes of the Borrower (assuming for purposes of both such
calculations that all then-outstanding options, warrants, conversion rights or
other rights held by any Person other than members of such families which may
in any circumstances give such other Person the right to acquire shares of
voting common stock are exercised at such time by such other Person, regardless
of whether such rights are in fact then exercisable or whether any conditions
to such exercise are then met).
"Consolidated Cash Flow Coverage Ratio" for any period shall mean
the ratio of Consolidated EBITDA (Adjusted) for such period to Consolidated
Fixed Charges for such period.
"Consolidated EBIT" for any period, with respect to the Borrower
and its consolidated Subsidiaries, shall mean the sum of (a) Consolidated Net
Income for such period, (b) Consolidated Interest Expense for such period, (c)
Consolidated Income Tax Expense for such period, and (d) any LIFO charge to the
extent deducted from Consolidated Net Income for such period, minus the sum of
(x) extraordinary gains (but not any losses) to the extent included in
determining such Consolidated Net Income, (y) equity earnings (but not any
losses) of Affiliates to the extent included in Consolidated Net Income for
such period, and (z) any LIFO benefit to the extent included in such
Consolidated Net Income for such period, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated EBITDA" for any period with respect to the Borrower
and its consolidated Subsidiaries, shall mean the sum of (a) Consolidated EBIT
for such period, and (b) depreciation and amortization for such period, all as
determined on a consolidated basis in accordance with GAAP. The EBITDA of a
permitted acquisition is included as if it had been owned by the Borrower for
such period.
"Consolidated EBITDA (Adjusted)" for any period with respect to
the Borrower and its consolidated Subsidiaries, shall mean the sum of (a)
Consolidated EBIT for such period, (b) depreciation and amortization for such
period, and (c) Consolidated Net Rental Expense for such period, all as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charges" for any period, with respect to the
Borrower and its consolidated Subsidiaries, shall mean the sum of (a)
Consolidated Interest Expense for such period, (b) Consolidated Net Rental
Expense for such period, (c) Capital Expenditures for such period, (d)
scheduled payments of principal due during such period with respect to any
Indebtedness and (e) dividends paid by the Borrower during such period, all as
determined on a consolidated basis in accordance with GAAP. Such calculation
shall not include the special dividend of $22,000,000 paid in June 1996.
<PAGE> 87
"Consolidated Income Tax Expense" for any period, with respect to
the Borrower and its consolidated Subsidiaries, shall mean the charges against
income for federal, state and local income taxes for such period, determined on
a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any period shall mean the
total interest expense of the Borrower and its consolidated Subsidiaries for
such period (to the extent not included in Consolidated Net Rental Expense for
such period) determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period shall mean the net
earnings (or loss) after taxes of the Borrower and its consolidated
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP; provided, that there shall be deducted therefrom (a) the income (but
not any deficit) of any Person accrued prior to the date it becomes a
consolidated Subsidiary or is merged into or consolidated with or is otherwise
acquired by or combined with the Borrower or any consolidated Subsidiary in a
business combination accounted for as a pooling of interests, including, in the
case of a successor to the Borrower or any consolidated Subsidiary by
consolidation or merger or transfer of assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets, (b)
income (but not any loss) accounted for by the Borrower on the equity method
because of the income during such period of any Person (other than a
consolidated Subsidiary) in which the Borrower or any consolidated Subsidiary
has an ownership interest, but the deduction for such equity income shall be
reversed to the extent that during such period an amount not in excess of such
income has been actually received by the Borrower or such consolidated
Subsidiary in the form of cash dividends or similar cash distributions, (c) any
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of the Borrower or any consolidated
Subsidiary, and (d) any extraordinary gain.
"Consolidated Net Rental Expense" for any period shall mean all
rental payments accruing under or associated with operating leases of the
Borrower and its consolidated Subsidiaries during such period plus cash
payments by the Borrower and its Consolidated Subsidiaries for rent accruing
under or associated with Capitalized Leases during such period less cash
payments received by the Borrower and its Consolidated Subsidiaries from
sublessees during such period, all determined and consolidated in accordance
with GAAP.
"Consolidated Net Worth" at any time shall mean the total amount
of stockholders' equity of the Borrower and its consolidated Subsidiaries at
such time determined on a consolidated basis in accordance with GAAP; provided,
that (i) there shall be deducted therefrom the following, to the extent
otherwise included therein: (a) any write-ups or other revaluation after
November 19, 1992 in the book value of any asset owned by the Borrower or any
of its consolidated Subsidiaries, (b) all investments in unconsolidated
Subsidiaries of the Borrower and in Persons that are not Subsidiaries of the
Borrower (other than Cash Equivalent Investments), and (c) treasury stock, and
(ii) there shall be added thereto (a) an amount equal to the LIFO reserve less
the amount obtained by multiplying such
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LIFO reserve by the then maximum federal corporate income tax rate, all of the
foregoing as determined in accordance with GAAP,(b) deferred finance charges
incurred on or prior to the Closing Date in connection with this Agreement, and
(c) non-cash charges to stockholder's equity if the charges are the result of
the compensation/stock option program and are less than an amount to be
determined.
"Independent Retailer" shall mean franchisee customers of the
Borrower and its Subsidiaries, and to the extent approved by the Lenders, the
other wholesale customers or classes of wholesale customers.
"Funded Debt" shall mean at any time Indebtedness of the Borrower
and its consolidated Subsidiaries determined on a consolidated basis (including
the current portion thereof) which would as of such date be classified in whole
or in part as a long-term liability in accordance with GAAP, and in any event
includes (i) any Indebtedness having a final maturity later than one year after
the date of incurrence of such Indebtedness, and (ii) any Indebtedness,
regardless of its term, which is renewable or extendable by the obligor to a
date later than one year after the date of incurrence of such Indebtedness.
"Indebtedness" of a Person shall mean the following: (a) all
obligations on account of money borrowed by, or credit extended to or on behalf
of, or for or on account of deposits with or advances to, such Person; (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments; (c) all obligations of such Person for the deferred purchase price
of property or services; (d) all obligations secured by a Lien on property
owned by such Person (whether or not assumed), and all obligations of such
Person under Capitalized Leases (without regard to any limitation of the rights
and remedies of the holder of such Lien or the lessor under such Capitalized
Lease to repossession or sale of such property); (e) the stated amount of all
letters of credit issued for the account of such Person and, without
duplication, the unreimbursed amount of all drafts drawn thereunder, and all
other obligations of such Person associated with such letters of credit or
draws thereon; (f) all obligations of such Person in respect of acceptances or
similar obligations issued for the account of such Person; (g) all obligations
of such Person under a product financing or similar arrangement described in
paragraph 8 of FASB Statement of Accounting Standards No. 49 or any similar
requirement of GAAP; and (h) all obligations of such Person under any interest
rate hedging agreement, any other interest rate or currency swap, cap, floor,
collar, future, forward or option agreement, or other interest rate or currency
protection agreement.
"Leverage Ratio" shall mean the ratio of Indebtedness at the end
of a period to Consolidated EBITDA for such period.
"Material Adverse Effect" shall mean: (a) a material adverse
effect on the business, operations, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) a material
adverse effect on the ability of any Loan Party to perform or comply with any
of the terms and conditions of any Loan Document, or (c) an adverse effect on
the legality, validity,
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<PAGE> 89
binding effect, enforceability or admissibility into evidence of any Loan
Document, or the ability of the Agent or any Lender Party to enforce any rights
or remedies under or in connection with any Loan Document.
"Person" shall mean an individual, corporation, partnership,
trust, unincorporated association, joint venture, joint-stock company,
Governmental Authority or any other entity.
"Phar-Mor" shall mean Phar-Mor, Inc., a Pennsylvania corporation.
"Related Company" shall mean any corporation or partnership which
is not a Subsidiary, of which at least 25% (by number of shares and number of
votes) of any class of the outstanding capital stock or ownership interest is
at the time owned directly or indirectly by the Borrower or one or more
Subsidiaries or by stockholders of the Borrower; provided, that in no event
shall Phar-Mor, Tamco Distributors Company or their respective Subsidiaries or
any Independent Retailer be deemed to be Related Companies for purposes of this
Agreement.
"Required Lenders" shall mean, as of any date, Lenders holding in
the aggregate 51% of the sum of (a) the aggregate Credit Agreement exposure,
plus (b) the aggregate undrawn Revolving Credit committed amounts as further
defined in the Credit Agreement.
"Subsidiary" of a Person at any time shall mean any corporation of
which a majority (by number of shares or number of votes) of any class of
outstanding capital stock is at such time owned directly or indirectly,
beneficially or of record, by such Person or one or more Subsidiaries of such
Person, and any trust or other Person of which a majority of any class of
outstanding equity interest is at such time owned directly or indirectly,
beneficially or of record, by such Person or one or more Subsidiaries of such
Person. Record or beneficial ownership of capital stock by a director or
officer of a Person shall not constitute indirect ownership of such capital
stock by such Person for purposes of this definition.
A-4
<PAGE> 90
APPENDIX B
Schedule for pricing for borrowings/letter of credit fees
and commitment fees
<TABLE>
<CAPTION>
Level I Level II Level III Level IV Level V Level VI
<S> <C> <C> <C> <C> <C> <C>
CCFCR: > =2.0 > = 1.75 > = 1.5 > = 1.25 > = 1.10 > = 1.00
LIBOR: 25.0 bps 37.5 bps 50.0 bps 62.5 bps 75.0 bps 100.0 bps
Commitment
Fee: 10.0 bps 15.0 bps 20.0 bps 25.0 bps 30.0 bps 35.0 bps
</TABLE>
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<PAGE> 91
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
Dated as of May 13, 1997,
Among
GIANT EAGLE, INC.
TALON ACQUISITION COMPANY
And
RISER FOODS, INC.
<PAGE> 92
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE OFFER......................................................................2
SECTION 1.01. The Offer........................................................2
SECTION 1.02. Company Actions..................................................4
ARTICLE II THE MERGER....................................................................5
SECTION 2.01. The Merger.......................................................5
SECTION 2.02. Closing..........................................................6
SECTION 2.03. Effective Time...................................................6
SECTION 2.04. Effects of the Merger............................................6
SECTION 2.05. Articles of Incorporation and Bylaws.............................7
SECTION 2.06. Directors and Officers...........................................7
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES........................................................7
SECTION 3.01. Effect on Capital Stock..........................................7
SECTION 3.02. Exchange of Certificates.........................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES...............................................10
SECTION 4.01. Representations and Warranties of the Company...................10
SECTION 4.02. Representations and Warranties of Parent and Sub................26
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................................28
SECTION 5.01. Conduct of Business by the Company..............................28
ARTICLE VI ADDITIONAL AGREEMENTS........................................................29
SECTION 6.01. Stockholder Approval; Preparation of Proxy Statement............30
SECTION 6.02. Access to Information; Confidentiality..........................31
SECTION 6.03. Best Efforts; Notification......................................31
SECTION 6.04. Stock Plans.....................................................32
SECTION 6.05. Company Plans...................................................33
SECTION 6.06. Indemnification.................................................33
SECTION 6.07. Directors.......................................................35
SECTION 6.08. Public Announcements............................................36
SECTION 6.09. Stockholder Litigation..........................................37
SECTION 6.10 Acquisition Proposals...........................................37
</TABLE>
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<PAGE> 93
<TABLE>
<S> <C>
SECTION 6.11. Filings; Other Action...........................................38
SECTION 6.12. Directors of Parent.............................................39
SECTION 6.13. Additional Agreements...........................................39
SECTION 6.14. Shares Held by Company Subsidiaries.............................39
SECTION 6.15. Employment Agreements...........................................39
SECTION 6.16. Merger Certificate..............................................39
SECTION 6.17. Provision of Funds..............................................39
ARTICLE VII CONDITIONS PRECEDENT........................................................40
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger......40
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................................41
SECTION 8.01. Termination.....................................................41
SECTION 8.02. Effect of Termination...........................................42
SECTION 8.03. Amendment.......................................................42
SECTION 8.04. Extension; Waiver...............................................42
SECTION 8.05. Procedure for Termination. Amendment, Extension or Waiver.......43
SECTION 8.06. Effect of Termination and Abandonment...........................43
ARTICLE IX GENERAL PROVISIONS...........................................................45
SECTION 9.01. Survival of Representations, Warranties and Agreements..........45
SECTION 9.02. Notices.........................................................45
SECTION 9.03. Descriptive Headings............................................46
SECTION 9.04. Entire Agreement; Assignment....................................46
SECTION 9.05. Governing Law...................................................46
SECTION 9.06. Expenses and Fees...............................................47
SECTION 9.07. Counterparts; Effectiveness.....................................47
SECTION 9.08. Severability; Validity; Parties in Interest.....................47
SECTION 9.09. Jurisdiction....................................................47
</TABLE>
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<PAGE> 94
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 13, 1997 (this
"Agreement"), among GIANT EAGLE, INC., a Pennsylvania corporation (the
"Parent"), TALON ACQUISITION COMPANY, a Delaware corporation and a wholly-owned
subsidiary of Parent (the "Sub"), and RISER FOODS, INC., a Delaware corporation
(the "Company"),
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent and Sub have
each determined that it is advisable and in the best interest of the Parent and
Sub, respectively, to engage in a transaction whereby Parent will acquire the
Company on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has determined that it
is advisable and in the best interest of the Company and its stockholders to
engage in a transaction whereby Parent will acquire the Company on the terms
and subject to the conditions set forth in this Agreement and that the Offer
and Merger are fair to the stockholders of the Company;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Class A Common Stock"), at a price per share of Class A Common Stock of $42.00
in cash, upon the terms and subject to the conditions set forth in this
Agreement; and the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger (as hereinafter defined) and recommending
that the Company's stockholders accept the Offer;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub into the Company, or the Company into
Sub, at the election of Parent as set forth below (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of Common Stock (as hereinafter defined in Section
1.01) not owned directly or indirectly by Parent or the Company, except shares
of Common Stock held by persons who object to the Merger and comply with all
the provisions of Delaware law concerning the right of holders of Common Stock
to dissent from the Merger and require appraisal of their shares of Common
Stock ("Dissenting Stockholders"), will be converted into the right to receive
the per share consideration paid pursuant to the Offer;
<PAGE> 95
WHEREAS, the Company, Parent and Sub wish to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the holders of Class B Common Stock (as hereinafter defined) of the
Company will be asked to enter into an agreement (the "Stockholders'
Agreement"), a copy of which is attached hereto as Exhibit C, pursuant to which
such shareholders will, among other things, tender their shares of Class A
Common Stock in the Offer and vote their shares of Class B Common Stock in
favor of the Merger upon the terms and subject to the conditions set forth
therein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, and intending to be legally bound, the
parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of this Agreement, Sub shall, and Parent shall cause Sub
to, commence the Offer. The obligation of Sub to, and of Parent to cause Sub
to, commence the Offer and accept for payment, and pay for, any shares of Class
A Common Stock tendered pursuant to the Offer shall be subject to the terms and
conditions set forth in Exhibit A (any of which may be waived by Sub in its
sole discretion, subject to limitations imposed by applicable law) and
completion of the recapitalization of the shares of Class A Stock owned by 5300
Richmond Road Corp. Sub expressly reserves the right to modify the terms of the
Offer, except that, without the consent of the Company, Sub shall not (i)
reduce the number of shares of Class A Common Stock subject to the Offer, (ii)
reduce the price per share of Class A Common Stock to be paid pursuant to the
Offer, (iii) modify or add to the conditions set forth in Exhibit A, (iv)
except as provided in the following sentence, extend the offer or (v) change
the form of consideration payable in the Offer. Notwithstanding the foregoing,
Sub may, without the consent of the Company, (i) extend the Offer for a period
of not more than 20 business days beyond the date on which the Offer would
otherwise expire if on the date of such extension any of the conditions to
Sub's obligation to purchase shares of Class A Common Stock shall not be
satisfied, until such time as such conditions are satisfied or waived, (ii)
extend the Offer for a period of not more than 10 business
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<PAGE> 96
days beyond the date on which the Offer would otherwise expire if on the date
of such extension the Minimum Tender Condition (as defined in Exhibit A) shall
not be satisfied or if on the date of such extension the holders of less than
80% of the outstanding shares of the Company's Class B Common Stock, par value
$.01 per share (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock"), have executed the Stockholder's Agreement,
(iii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer and (iv) extend the Offer
for any reason for a period of not more than 10 business days beyond the latest
expiration date that would otherwise be permitted under clause (i), (ii) or
(iii) of this sentence. Subject to the terms and conditions of the Offer, Sub
shall, and Parent shall cause Sub to, pay for all shares of Class A Common
Stock validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer, but no later than as required by applicable law.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the offer will be made, together with any
supplements or amendments thereto, the "Offer Documents") and on such date
shall mail the Offer Documents to the Company's stockholders. The Offer
Documents shall comply as to form in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied by
the Company for inclusion in the Offer Documents. Each of Parent, Sub and the
Company agrees promptly to correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and each of Parent and Sub
further agrees to take all steps necessary to amend or supplement the Offer
Documents and to cause the Offer Documents as so amended or supplemented to be
filed with the SEC and to be disseminated to the Company's stockholders, in
each case as and to the extent required by applicable law. Parent and Sub agree
to provide the Company and its counsel in writing with any comments Parent, Sub
or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments. The Company agrees
to share with Parent and Sub information in its possession necessary to enable
Parent and Sub to prepare the Offer Documents.
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<PAGE> 97
(c) Subject to the terms and condition of the Offer, Parent
shall provide or cause to be provided to Sub on a timely basis the funds
necessary to purchase any shares of Common Stock that Sub becomes obligated to
purchase pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants to Parent and Sub that the
Board of Directors of the Company (at a meeting duly called and held) has duly
adopted resolutions approving this Agreement, the Offer and the Merger,
determining that the terms of the Offer and the Merger are fair to, and in the
best interest of, the Company's stockholders and recommending that the
Company's stockholders accept the Offer and tender their shares pursuant to the
Offer and, if required, approve and adopt this Agreement. The Company
represents and warrants to Parent and Sub that, in connection with its
consideration of this Agreement, its Board of Directors received the written
opinion of Houlihan Lokey Howard & Zukin Capital ("Houlihan Lokey") and the
independent directors of the Company received the written opinion of McDonald &
Company Securities, Inc. ("McDonald") that the consideration to be received by
the Company's stockholders in the Offer and the Merger is fair, from a
financial point of view, to such stockholders. The Company has been or will be
authorized by Houlihan Lokey to include a copy of such opinion in the Offer
Documents. A complete and correct signed copy of such opinion has been
delivered by the Company to the Parent.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation / Recommendation Statement
on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended
from time to time, the "Schedule 14D-9") containing the recommendations
described in paragraph (a) and shall mail the Schedule 14D-9 to the
stockholders of the Company. The Schedule 14D-9 shall comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Sub for inclusion in the Schedule
14D-9. Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent
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<PAGE> 98
required by applicable law. The Company agrees to provide Parent and its
counsel in writing with any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments. Parent and Sub agree to share with the Company
information in their possession necessary to enable the Company to prepare the
Schedule 14D-9.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Common Stock as of a recent date and of
those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control
regarding the beneficial owners of Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Sub 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, Parent and Sub shall hold in confidence the information contained
in any such labels, listings and files, will use such information only in
connection with the Offer and the Merger and, if this Agreement shall be
terminated, will, upon request, deliver to the Company all copies of such
information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the conditions
hereof, and pursuant to Section 251 of the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined) of the Merger. Following the Merger, the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL, and the separate corporate existence of Sub shall cease.
Notwithstanding the foregoing, Parent may elect at any time prior to the
Merger, instead of merging Sub into the Company as provided above, to merge the
Company with and into Sub; provided, however, (i) that the Company shall not be
deemed to have breached any of its representations, warranties, covenants or
agreements set forth in this Agreement solely by reason of such election and
(ii) Parent may not so elect if doing so would have a material adverse effect
on the financial interests of the Company and its stockholders. In such event,
the parties agree to execute an appropriate amendment to this Agreement in
order to reflect the foregoing and,
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<PAGE> 99
where appropriate, to provide that Sub shall be the Surviving Corporation. At
the election of Parent, any direct or indirect subsidiary of Parent may be
substituted for Sub as a constituent corporation in the Merger; provided that
no such substitution shall affect Parent's obligations hereunder. In such
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger (the "Closing") shall take
place (i) at 10:00 a.m, on a date to be specified by the parties, which
(subject to satisfaction or waiver of the conditions set forth in Article VII)
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VII (the "Closing Date"), at the offices of
Cohen & Grigsby, P.C., 2900 CNG Tower, 625 Liberty Avenue, Pittsburgh,
Pennsylvania 15222, or (ii) at such other place and/or on such other date as
the parties hereto may agree in writing.
SECTION 2.03. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII, the parties
shall cause a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") to be executed and filed in the Department
of State of the State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective (i) at the time and date of filing of the
Certificate of Merger in the Department of State of the State of Delaware or
(ii) at such other time as is agreed upon by the parties and specified in the
Certificate of Merger (such time as the Merger becomes effective is hereinafter
referred to as the "Effective Time" of the Merger).
SECTION 2.04. Effects of the Merger. The Merger shall have the effects
set forth in the DGCL. As of the Effective Time of the Merger, Parent shall
own, directly or indirectly, all of the issued and outstanding Common Stock of
the Surviving Corporation.
SECTION 2.05. Articles of Incorporation and Bylaws. At the Effective
Time, Sub's Articles of Incorporation and By-laws shall be the Articles of
Incorporation and By-laws of the Surviving Corporation; except that (i) Article
First of Sub's Articles of Incorporation shall be amended to read as set forth
in Schedule 2.05 and (ii) such other amendments as are necessary to effectuate
the provisions of Section 6.06 hereof shall be adopted.
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<PAGE> 100
SECTION 2.06. Directors and Officers. At the Effective Time of the
Merger, the persons listed on Schedule 2.06 shall become the directors and
officers of the Surviving Corporation until their successors are duly elected
and qualified.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. Effect on Capital Stock. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of common stock, par
value $0.01 per share, of Sub shall be converted into and become one fully paid
and nonassessable, issued and outstanding share of common stock, par value
$0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each share of Common Stock issued and held immediately prior to the Effective
Time of the Merger in the Company's treasury or by any Company Subsidiary (as
defined in Section 4.01(c)) and each share of Common Stock that is owned by
Parent, Sub or any other subsidiary of Parent shall automatically be canceled
and retired without payment of any consideration therefor and cease to exist.
(c) Conversion of Common Stock. Subject to Section 3.01(d),
each share of Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger that is not owned by the Parent or Sub or any
other subsidiary of Parent (other than shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price per share of Class A
Common Stock paid pursuant to the Offer (the "Merger Consideration"). As of the
Effective Time of the Merger, all such shares of Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares
of Common Stock held by a Dissenting Stockholder shall not be converted as
described in Section 3.01(c) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the laws of the
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<PAGE> 101
State of Delaware; provided, however, that the shares of Common Stock
outstanding immediately prior to the Effective Time of the Merger and held by a
Dissenting Stockholder who shall, after the Effective Time of the Merger,
withdraw his demand for appraisal or lose his right of appraisal, in either
case pursuant to the DGCL, shall be deemed to be converted as of the Effective
Time of the Merger into the right to receive the Merger Consideration. The
Company shall give Parent (i) prompt notice of any written demands for
appraisal of shares of Common Stock received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of Parent,
voluntarily make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
SECTION 3.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time of the Merger,
Parent shall select a bank or trust company to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration upon surrender of
certificates representing Common Stock. Unless Parent notifies the Company
otherwise, the Paying Agent will be Mellon Bank, N.A.
(b) Parent To Provide Funds. Subject to the provisions of
this Agreement, Parent shall take all steps necessary to enable and cause the
Surviving Corporation to provide to the Paying Agent on a timely basis, as and
when needed after the Effective Time of the Merger, funds necessary to pay for
the shares of Common Stock pursuant to Section 3.01.
(c) Exchange Procedure. As soon as reasonably practicable
after the Effective Time of the Merger, the Paying Agent shall mail to each
record holder of a certificate or certificates which immediately prior to the
Effective Time of the Merger represented outstanding shares of Common Stock
(the "Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 3.01, (i) a notice and letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify, including instructions with
respect to lost certificates) and advising such holder of the effectiveness of
the Merger and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereon, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be
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<PAGE> 102
entitled to receive in exchange therefor the amount of cash into which the
shares of Common Stock theretofore represented by such Certificate shall have
been converted pursuant to Section 3.01, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Common
Stock which is not registered in the transfer records of the Company, payment
may be made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time of the Merger
to represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 3.01. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate.
(d) No Further Ownership Rights in Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Common Stock theretofore represented by such
Certificates, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Common Stock
which were outstanding immediately prior to the Effective Time of the Merger.
If, after the Effective Time of the Merger, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article III.
(e) No Liability. Any portion of the funds delivered to the
Paying Agent in accordance with Section 3.02(b) hereof and which remain
unclaimed by the former stockholders of the Company one year after the
Effective Time shall be delivered by the Paying Agent to Parent. Any former
stockholders of the Company who have not theretofore complied with this Article
III shall thereafter look only to Parent for payment of the Merger
Consideration, without any interest thereon. None of Parent, Sub, the Company
or the Paying Agent or any other person will be liable to any former holder of
Common Shares for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company. Except as
otherwise disclosed to Parent and Sub in a letter delivered to them prior to
the execution hereof (which letter shall contain appropriate references to
identify the representations and warranties herein to which the information in
such letter relates) (the "Company Disclosure Letter"), the Company represents
and warrants to Parent and Sub as follows:
(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now
being conducted or presently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not individually or in the
aggregate have a material adverse effect on the business, assets, liabilities,
results of operations or financial condition of the Company and the Company
Subsidiaries (as defined below), taken as a whole (a "Company Material Adverse
Effect"; such material adverse effects with respect to Parent and its
subsidiaries, a "Parent Material Adverse Effect"); provided, however, that
"Company Material Adverse Effect" when used in connection with Company or any
of the Company Subsidiaries (as defined below) shall exclude (i) items
disclosed in the Company SEC Reports (as defined below) prior to the date
hereof and (ii) departures of officers, directors, consultants, employees or
agents of the Company or the Company Subsidiaries resulting from the
announcement or expectation of the transactions contemplated hereby.
(b) Capitalization. The authorized capital stock of the
Company consists of 20,000,000 shares of Class A Common Stock; 5,000,000 Shares
of Class B Common Stock and 30,000 shares of Company preferred stock, par value
$100 per share (the "Company Preferred Shares"). As of May 6, 1997 (i)
7,299,488 shares of Class A Common Stock were issued and outstanding (it being
understood, for this purpose, that shares of Class A Common Stock held by a
Company Subsidiary are not considered to be outstanding), 901,912 shares of
Class B Common Stock were issued and outstanding and no Company Preferred
Shares were issued and outstanding, (ii) stock options to acquire 353,700
shares of Class A Common Stock were outstanding under all stock option plans
and agreements of the Company and (iii) 879,500 shares of Class A Common Stock
(including 353,700 shares issuable upon exercise of the options identified in
clause (ii) above) were reserved for issuance pursuant to all employee plans of
the Company. The Company has no outstanding stock appreciation rights or stock
purchase rights. All of the issued and outstanding shares of Common Stock are
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validly issued, fully paid and nonassessable and free of preemptive rights.
Except as set forth above or as specified on Schedule 4.01(b) of the Company
Disclosure Letter, as of the date of this Agreement there are no shares of
capital stock of the Company issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Company to issue, transfer, sell, redeem, repurchase or
otherwise acquire any shares of its capital stock or securities. Except as
provided in this Agreement or as set forth on Schedule 4.01(b) of the Company
Disclosure Letter, after the Effective Time, the Company will have no
obligation to issue, transfer or sell any shares of its capital stock pursuant
to any employee benefit plan or otherwise.
(c) Subsidiaries.
(i) Each of the subsidiaries of the Company
(the "Company Subsidiaries") is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not individually or in the aggregate have a Company Material
Adverse Effect. Each Company Subsidiary is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Company Material Adverse Effect.
(ii) Except as set forth on Schedule
4.01(c)(ii) of the Company Disclosure Letter, the Company is, directly or
indirectly, the record and beneficial owner of all of the outstanding shares of
capital stock of each of the Company Subsidiaries, there are no proxies with
respect to any such shares, and no equity securities of any Company Subsidiary
are or may become required to be issued by reason of any options, warrants,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable or
exercisable for, shares of any capital stock of any Company Subsidiary, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any Company Subsidiary is or may be bound to issue, redeem, purchase
or sell additional shares of its capital stock or of any Company Subsidiary or
securities convertible into or exchangeable or exercisable for any such shares.
All of such shares so owned by the Company are validly issued, fully paid and
nonassessable and are owned by it free and clear of any claim, mortgage, deed of
trust, pledge, lien, security interest, charge, encumbrance, or similar
agreement of any kind or nature whatsoever ("Lien"), restraint on alienation, or
any other restriction with respect to the
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transferability or assignability thereof (other than restrictions on transfer
imposed by federal or state securities laws).
(d) Material Investments. Except as set forth on Schedule
4.01(d) of the Company Disclosure Letter, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation (other than a subsidiary), partnership, joint venture or other
business association or entity which is material to the Company. Except as set
forth on Schedule 4.01(d) of the Company Disclosure Letter, the Company has
heretofore delivered to Parent financial statements (audited to the extent
available) and interim unaudited financial statements of each of such entities
(through the most recently concluded fiscal quarter for each of such entities)
and, to the best knowledge of the Company, such financial statements fairly
present, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto or on Schedule 4.01(d) of the Company
Disclosure Letter), the financial condition of each and the results of
operations for the periods so indicated (subject to normal year-end adjustments
in the case of the interim unaudited financial statements), and the Company's
disclosures with respect to its investment in each of such entities otherwise
included in the Company's SEC Reports (as defined below) do not contain any
untrue statements of material fact or omit to state any material fact required
to be stated therein or which are necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except as set forth on Schedule 4.01(d) of the Company Disclosure
Letter, the Company (or, as indicated thereon, a Company Subsidiary) has good
and marketable title to the securities evidencing its investment in the Company
Subsidiaries, which have been validly issued and are fully paid and
non-assessable and are held by Company (or, as indicated thereon, a Company
Subsidiary) free and clear of any Lien, restraint on alienation, or any other
restriction with respect of the transferability or assignability thereof (other
than restrictions on transfer imposed by federal or state securities laws).
(e) Authority Relative to this Agreement. The Company has the
power to enter into this Agreement and to carry out its obligations hereunder
(subject only, with respect to the Merger, to the approval and adoption of this
Agreement and the transactions contemplated hereby by the holders of at least
eighty percent (80%) of the outstanding shares of Common Stock entitled to vote
in accordance with the DGCL and the Company's Certificate of Incorporation and
By-Laws). The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by the Company's Board of Directors and,
except for the approval of its stockholders (if required under applicable law),
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the transactions contemplated hereby. Subject to
the foregoing, this Agreement has been duly and validly executed and
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delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms. The
Company has taken all action necessary so that the restrictions set forth in
Section 203 of the DGCL will not and do not apply to the Merger.
(f) Consents and Approvals; No Violations. Except for
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act (the HSR Act, Securities Act and Exchange
Act, collectively, the "Governmental Requirements), state or foreign laws
relating to takeovers, if applicable, state securities or blue sky laws, and
the filing of the Certificate of Merger, no filing with, and no permit,
authorization, consent or approval of, any court or tribunal or administrative,
governmental or regulatory body, agency, public body or authority is necessary
for the execution, delivery and performance of this Agreement by the Company of
the transactions contemplated by this Agreement, except in the case of permits,
authorizations, consents or approvals which, if not obtained, would not
individually or in the aggregate have a Company Material Adverse Effect.
Neither the execution, delivery and performance of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof, will
(i) conflict with or result in any breach of any provisions of the Certificate
of Incorporation or By-Laws of Company or the Certificate or Articles of
Incorporation, as the case may be, or By-Laws of any of the Company
Subsidiaries, (ii) except as set forth on Schedule 4.01(f)(ii) of the Company
Disclosure Letter, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under (or give rise to
any right of termination, cancellation, vesting, payment, exercise,
acceleration, suspension or revocation), any of the terms, conditions or
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, lease, license, contract, agreement, insurance policy, plan or other
instrument or obligation to which the Company or any of the Company
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or affected, (iii) except as set forth on Schedule
4.01(f)(iii) of the Company Disclosure Letter, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of the Company Subsidiaries or any of their properties or assets, (iv) except
as set forth on Schedule 4.01(f)(iv) of the Company Disclosure Letter, result
in the creation or imposition of any Lien on any asset of the Company or any
Company Subsidiary or (v) except as set forth on Schedule 4.01(f)(v) of the
Company Disclosure Letter, cause the suspension, termination or revocation of
any certificates of need, accreditation, registrations, licenses, permits and
other consents or approvals of governmental agencies, except in the case of
clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults,
terminations, cancellations, accelerations, creations, impositions, suspensions
or revocations which would not individually or in the aggregate have a Company
Material Adverse Effect.
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(g) Company SEC Reports. Exclusive of the exhibits thereto,
the Company has delivered to Parent true and complete copies of each
registration statement, periodic and other reports and information or proxy
statements, including, without limitation, its Annual Reports to Stockholders
incorporated in material part by reference in certain of such reports, in the
form (including any amendments thereto) required to be filed with the SEC since
July 2, 1994 (collectively, the "Company SEC Reports"). As of the respective
dates the Company SEC Reports were filed or, if any such Company SEC Report was
amended or supplemented, as of the date such amendment or supplement was filed,
each of the Company SEC Reports (i) complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the audited consolidated financial statements and unaudited consolidated
interim financial statements of the Company (including any related notes and
schedules) included (or incorporated by reference) in its Annual Reports on
Form 10-K for each of the fiscal years ended June 29, 1996, July 1, 1995 and
July 2, 1994 and its Quarterly Reports on Form 10-Q for all interim periods
subsequent to June 29, 1996 fairly present, in conformity with GAAP applied on
a consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company as of its date and the
consolidated results of operations and changes in financial position for the
period then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
(h) Absence of Certain Changes or Events. Since January 11,
1997 (the "Company Financial Statement Date"), except as set forth on Schedule
4.01(h) of the Company Disclosure Letter or in the SEC Reports, the Company and
the Company Subsidiaries have in all material respects conducted their business
in the ordinary course consistent with past practices and there has not
occurred: (i) any Company Material Adverse Effect; (ii) any amendments or
changes in the Certificate of Incorporation or By-Laws of the Company; (iii)
any sale of, or material pledge of or material encumbrance upon, property of
the Company with a value in excess of $3,000,000; (iv) any material change by
the Company in its accounting methods, principles or practices except as
required by any change in GAAP or as a result of a change in law; or (v) any
material revaluation by Company of any of its assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business.
(i) Litigation. Except for litigation disclosed in the
Company SEC Reports or as set forth on Schedule 4.01(i) of the Company
Disclosure Letter, there is no suit, action or proceeding (whether at law or
equity, before or by any federal, state or foreign commission, court, tribunal,
board, agency or instrumentality, or
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before any arbitrator) pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of the Company Subsidiaries, the outcome
of which, in the reasonable judgment of the Company, would individually or in
the aggregate have a Company Material Adverse Effect, nor is there any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against the
Company or any of the Company Subsidiaries having, or which, insofar as can
reasonably be foreseen, in the future may have, any such effect. The Company has
disclosed to Parent all litigation in which the Company or a Company Subsidiary
is named as a party except for litigation the outcome of which, individually or
in the aggregate, in the reasonable judgment of the Board of Directors of the
Company would not have a Company Material Adverse Effect.
(j) Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in the
Company's financial statements (or reflected in the notes thereto) included in
the SEC Reports or which were incurred after the Company Financial Statement
Date in the ordinary course of business and consistent with past practices, the
Company and the Company Subsidiaries do not have any material liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet (or reflected
in the notes thereto).
(k) No Default. Except as set forth on Schedule 4.01(k) of
the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is in violation or breach of, or default under (and no event has
occurred which with notice or the lapse of time or both would constitute a
violation or breach of, or a default under) any term, condition or provision of
(i) its Certificate of Incorporation or By-Laws, (ii) any note, bond, mortgage,
deed of trust, security interest, indenture, license, agreement, plan,
contract, lease, insurance policy, commitment or other instrument or obligation
to which the Company or any of the Company Subsidiaries is a party or by which
they or any of their properties or assets may be bound or affected, (iii) any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of the Company Subsidiaries or any of their properties or
assets, or (iv) any license, permit and other consent or approval of
governmental agencies or accreditation organizations, except in the case of
clauses (ii), (iii) and (iv) above for breaches, defaults or violations which
would not individually or in the aggregate have a Company Material Adverse
Effect.
(l) Taxes. Except as set forth on Schedule 4.01(l) of
the Company Disclosure Letter:
(A) The Company and each of the Company
Subsidiaries has (i) timely filed (or has had timely filed on its behalf) or
will cause to be timely filed all material Tax Returns (as defined below)
required by applicable law to be
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filed by any of them for tax years ended prior to the date of this Agreement and
all such Tax Returns and amendments thereto are or will be true, complete, and
correct in all material respects, (ii) paid (or has had paid on its behalf) all
Taxes (as defined below) due or has properly accrued or reserved for all such
Taxes for such periods and (iii) accrued for all Taxes for periods commencing
after the periods covered by such Tax Returns and ending prior to the date
hereof.
(B) There are no material liens for Taxes
upon the assets of the Company or any of the Company Subsidiaries, except
liens for taxes not yet due.
(C) There are no material deficiencies or
adjustments for Taxes that have been proposed or assessed (except as heretofore
disclosed by the Company to Parent) by any Tax Authority (as defined below)
against the Company or any of the Company Subsidiaries and which remain unpaid.
(D) Prior to the date hereof, the Company
and the Company Subsidiaries have disclosed all material Tax sharing, Tax
indemnity, or similar agreements to which the Company or any of the Company
Subsidiaries is a party, is bound by, or has any obligation or liability for
Taxes.
(E) The Company and the Company Subsidiaries
have not paid, and do not expect to pay, in any taxable year commencing on or
after July 1, 1994, remuneration that would result in a disallowance of any
material amount of tax deductions under section 162(m) of the Code. There are no
changes in the tax accounting methods subject to section 481(a) of the Code
which have an ongoing material effect on Company or any of the Company
Subsidiaries. No "consent" within the meaning of section 341(f) of the Code has
been filed with respect to the Company or any of the Company Subsidiaries.
(F) As used herein, (i) "Audit" shall mean any
audit, assessment of taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes, (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes,
and (iv) "Tax Returns" shall mean all "Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
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(m) Title to Certain Properties; Encumbrances.
A. Real Property.
Except as otherwise disclosed on
Schedule 4.01(m)A of the Company Disclosure Letter, to the extent the buildings
and other improvements located on the real property owned or leased by the
Company or any Company Subsidiary are not in good repair and operating
condition, the aggregate cost of putting such buildings and other improvements
in good repair and operating condition would not have a Company Material Adverse
Effect. The Company has provided Parent with copies of all real property leases
to which the Company or a Company Subsidiary is a party and has provided to
Parent a list of all real property owned or leased by the Company or a Company
Subsidiary except such leases or property which individually or in the aggregate
are immaterial.
B. Personal Property.
(i) Except as otherwise disclosed on
Schedule 4.01(m)B(i) of the Company Disclosure Letter, to the extent the
equipment and machinery which is used in the Company's or any Company
Subsidiary's business ("Company E & M") is not in good repair and operating
condition, the aggregate cost of putting such machinery and equipment in good
repair and operating condition would not have a Company Material Adverse Effect.
(ii) Except as otherwise disclosed on
Schedule 4.01(m)B(ii) of the Company Disclosure Letter, all inventory of the
Company or any Company Subsidiary is of a quantity and quality usable and
salable in the ordinary course of the Company's or the Company Subsidiary's
business, except to the extent the failure to be so usable and salable would not
have a Company Material Adverse Effect.
Except as otherwise disclosed on Schedule 4.01(m) of the
Company Disclosure Letter, the Company or the Company Subsidiaries, as the case
may be, hold (x) good and marketable title to all real and personal property
purported to be owned by them and (y) good leasehold title to all real and
personal property purported to be leased by them, in each case free and clear
of all material Liens.
(n) Compliance with Applicable Law. Each of the
Company and the Company Subsidiaries is in compliance with all applicable
laws, except where the failure to be in such compliance would not
individually or in the aggregate have a Company Material Adverse Effect.
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(o) Labor Matters. Except as set forth on Schedule 4.01(o) of
the Company Disclosure Letter, neither Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. There is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against the Company or
the Company Subsidiaries relating to their business, except for any such
proceedings which would not have individually or in the aggregate a Company
Material Adverse Effect. To the knowledge of the Company, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of the Company Subsidiaries, nor, except as pursuant to the collective
bargaining agreements set forth on Schedule 4.01(o) does any labor union or
organization claim to represent the employees of the Company or any of the
Company Subsidiaries. There is no labor strike, dispute, slow down, work
stoppage, or lockout actually pending or, to the knowledge of the Company,
threatened against the Company or the Company Subsidiaries. The Company has
provided Parent with all collective bargaining agreements to which the Company
or any Company Subsidiary is a party or may be bound.
(p) Employee Benefit Plans; ERISA.
(A) With respect to each of the bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement of the Company and the Company's
Subsidiaries (the "Company Plans") in force on or after January 1, 1994, except
for multiemployer plans as defined in Section 3(37)(A) of ERISA and except as
disclosed on Schedule 4.01(p)(A) of the Company Disclosure Letter, the Company
has heretofore delivered to Parent true and complete copies of each of the
following documents: (i) a copy of the Company Plans (including all amendments
thereto), (ii) a copy of the annual report and actuarial report, if required
under ERISA, with respect to each of the Company Plans that is an "employee
benefit plan", as that term is defined in Section 3(3) of ERISA (the "Company
ERISA Plans"), for the last two years, (iii) a copy of the most recent Summary
Plan Description, together with each Summary of Material Modifications, required
under ERISA with respect to the Company ERISA Plans, (iv) if the Company Plans
are funded through a trust or any third party funding vehicle, a copy of the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof, and (v) the most recent determination
letter received from the Internal Revenue Service with respect to each Company
ERISA Plan intended to qualify under Section 401(a) of the Code.
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(B) No liability under Title IV of ERISA has
been incurred by the Company, any Company Subsidiary or any company that is an
affiliate of the Company under ERISA (a "Company ERISA Affiliate") since the
effective date of ERISA that has not been satisfied in full, and except as
disclosed on Schedule 4.01(p)B of the Company Disclosure Letter, no condition
exists that presents a material risk to the Company, any Company Subsidiary or
any Company ERISA Affiliate of incurring any liability under such Title (other
than liability for premiums due to PBGC). To the extent this representation
applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only
with respect to the Company ERISA Plans but also with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which the Company, a Company Subsidiary or a Company ERISA Affiliate made, or
was required to make, contributions during the five-year period ending on the
date of this Agreement.
(C) With respect to each Company ERISA
Plan which is subject to Title IV of ERISA, except as set forth on Schedule
4.01(p)C of the Company Disclosure Letter, the present value of accrued benefits
under such plan, based upon the actuarial assumptions used for financial
reporting purposes in either the most recent actuarial report prepared by such
plan's actuary with respect to such plan or in information disclosed to the
Company by a multiemployer plan as defined in Section 3(37)(A) of ERISA, did not
exceed, as of its latest valuation date, the then current value of the assets of
such plan allocable to such accrued benefits.
(D) Except as disclosed on Schedule 4.01(p)(D)
of the Company Disclosure Letter, no Company ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code) , whether or not waived, as of
the last day of the most recent fiscal year of each Company ERISA Plan ended
prior to the date of this Agreement, and all contributions required to be made
with respect thereto (whether pursuant to the terms of any Company ERISA Plan or
otherwise) on or prior to the date of this Agreement have been timely made.
(E) Except as set forth on Schedule 4.01(p)E
of the Company Disclosure Letter, no ERISA Plan is a "multi-employer pension
plan," as defined in Section 3(37)(A) of ERISA, nor is any Company ERISA Plan a
plan described in Section 4063(a) of ERISA.
(F) Except as set forth on Schedule 4.01(p)F
of the Company Disclosure Letter and except for any multiemployer plan as
defined in Section 3(37)(A) of ERISA, each Company ERISA Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified and the trusts maintained
thereunder have been determined to be exempt from taxation under Section 501(a)
of the Code
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and, to the best knowledge of the Company, no event has occurred nor
does any condition exist which would adversely affect such qualification and
exemption.
(G) Except as set forth on Schedule 4.01(p)G
of the Company Disclosure Letter and except for any multiemployer plan as
defined in Section 3(37)(A) of ERISA, each of the Company Plans has been
operated and administered in all material respects in accordance with applicable
laws, including, but not limited to, ERISA and the Code except for requirements
which would not individually or in the aggregate have a Company Material Adverse
Effect.
(H) Except as set forth on Schedule 4.01(p)H
of the Company Disclosure Letter, no amounts payable under the Company Plans or
any other contract, arrangement or agreement will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(I) Except as set forth on Schedule 4.01(p)I
of the Company Disclosure Letter, no Company Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of the Company, any Company Subsidiary or
any Company ERISA Affiliate beyond such employees' retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension 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, any Company Subsidiary or
any Company ERISA Affiliate or (iv) benefits the full cost of which is borne by
such employees or their beneficiaries.
(J) Except as set forth on Schedule 4.01(p)J
of the Company Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or officer of the Company, any Company Subsidiary or any Company ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, (ii) accelerate the time of
payment or vesting, or increase the amount, of any compensation due any such
employee or officer, or (iii) result in any prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code for which an exemption is not
available.
(K) With respect to each Company Plan that is
funded wholly or partially through an insurance policy, there will be no
liability of the Company, any Company Subsidiary or any Company ERISA Affiliate,
as of the Effective Time, under any such insurance policy or ancillary agreement
with respect to such insurance policy in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the closing.
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(L) Except as set forth on Schedule 4.01(p)(L)
of the Company Disclosure Letter, there are no pending, threatened or
anticipated claims by or on behalf of any of the Company Plans, by any employee
or beneficiary covered under any such Company Plan, or otherwise involving any
such Company Plan (other than routine claims for benefits).
(M) None of the Company, any Company
Subsidiary, any Company ERISA Affiliate, any of the Company ERISA Plans, any
trust created thereunder or any trustee or administrator thereof has engaged in
a transaction in connection with which the Company, any Company Subsidiary or
any Company ERISA Affiliate, any of the Company ERISA Plans, any such trust, or
any trustee or administrator thereof, or any party dealing with the Company
ERISA Plans or any such trust could be subject to either a material civil
liability under Section 409 of ERISA, Section 502(i) of ERISA, or Section 502(1)
of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code.
(q) Intellectual Property. The Company and the Company
Subsidiaries, as the case may be, have the lawful right to use all intellectual
property currently used in any of their businesses, and no such use infringes
upon the lawful rights of any other person, except as would not individually or
in the aggregate result in a Company Material Adverse Effect. No person is
using any intellectual property in a manner which infringes upon the lawful
rights of the Company or any Company Subsidiary, except as would not
individually or in the aggregate result in a Company Material Adverse Effect.
(r) Insurance. There are no claims by the Company or any of
the Company Subsidiaries under any of the Company's insurance policies as to
which any insurance company is denying liability or defending under a
reservation of rights clause, in each case except as would not individually or
in the aggregate result in a Company Material Adverse Effect. Except as set
forth on Schedule 4.01(r) of the Company Disclosure Letter, the Company is
unaware of any reason why any of the Company's or any Company Subsidiary's
comprehensive general liability carriers would deny coverage in connection with
any litigation disclosed in the Company SEC Reports.
(s) Brokers. No broker, finder or investment banker (other
than Houlihan Lokey and McDonald) is entitled to any brokerage, finder's fee or
other fee or commission payable by the Company in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company.
(t) Customers and Suppliers. Except as set forth on Schedule
4.01(t) of the Company Disclosure Letter, no supplier of the Company or any
Company Subsidiary with aggregate sales to the Company and the Company
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Subsidiaries in the 12-month period ending December 31, 1996 of $1,000,000 or
more has terminated its relationship with, or materially reduced its sales to
the Company or any Company Subsidiary.
(u) Governmental Permits. The Governmental Permits (as
hereinafter defined) obtained by the Company have been validly acquired, are in
full force and effect and, except as would not individually or in the aggregate
result in a Company Material Adverse Effect, represent all Governmental Permits
necessary under applicable law for the Company or any Company Subsidiary to
carry on its business as now being conducted and to own, occupy or use its
properties and assets. The Company and the Company Subsidiaries are in
compliance with all such Governmental Permits, except where the failure to so
comply would not reasonably be expected to have a Company Material Adverse
Effect. "Government Permit" means any permit, license, franchise, certificate,
authorization, approval or consent obtained from or issued by any Governmental
Person which is necessary for the Company or the Company Subsidiary to carry on
its business as now being conducted or to own, operate or use its properties
and assets; "Governmental Person" means any governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, agency, bureau, body
or entity of the United States of America or of any state, county, municipality
or other political subdivision located therein.
(v) Environmental Matters. Except as otherwise
disclosed on Schedule 4.01(v) of the Company Disclosure Letter:
(A) no Hazardous Substances (as hereinafter
defined) have been or are being generated, used, processed, treated, stored,
released, transported or disposed of by the Company and the Company
Subsidiaries, except in material compliance with applicable Environmental Rules
(as hereinafter defined);
(B) to the Company's knowledge, no Hazardous
substances are present on or under any real property owned, leased, occupied or
used by the Company or any Company Subsidiary, or in any improvement located
thereon, in quantities or at levels which require reporting or remediation under
any applicable Environmental Rule; and
(C) to the Company's knowledge, no event has
occurred and no condition exists with respect to Company or any Company
Subsidiary or their business, properties or assets which has resulted in, or is
likely to result in, any material liability, cost or expense to Company or any
Company Subsidiary under any applicable Environmental Rule, and neither the
Company nor any Company Subsidiary has received any notice from any Governmental
Person of its intention to impose any such liability, cost or expense upon the
Company.
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As used in this Agreement, "Environmental Rule" means any
governmental rule which relates to Hazardous Substances, pollution or
protection of the environment, natural resources or public health or safety,
including without limitation any governmental rule relating to the generation,
use, processing, treatment, storage, release, transport or disposal of
Hazardous Substances and any common laws of nuisance, negligence and strict
liability relating thereto, together with all rules, regulations and orders
issued thereunder.
As used in this Agreement, "Hazardous Substance" means any
substance which constitutes, in whole or in part, a pollutant, contaminant or
toxic or hazardous substance or waste under, or the generation, use, processing,
treatment, storage, release, transport or disposal of which is regulated by, any
governmental rule, and shall specifically include without limitation any
substance which (a) constitutes a "hazardous substance" under the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601 et
seq., or a "hazardous waste" under the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., (b) exhibits any of the hazardous
characteristics enumerated in 40 C.F.R. Sections 261.20-261.24, inclusive, (c)
constitutes any of those extremely hazardous substances referred to in Section
302 of the Superfund Amendments and Reauthorization Act of 1986, Public Law
99-499, 100 Stat. 1613, at 42 U.S.C. Section 11002, (d) constitutes a hazardous
material which, when transported, is subject to regulation by the United States
Department of Transportation at 49 C.F.R. Parts 171-199 or (e) constitutes
asbestos, urea formaldehyde, chlorinated biphenyls (polychlorinated or
monochlorinated) or petroleum products.
(w) Material Agreements. Except as otherwise disclosed on
Schedule 4.01(w) of the Company Disclosure Letter, each contract, agreement,
instrument or document involving the payment by or to the Company or any
Company Subsidiary (whether direct or indirect, fixed or contingent) of more
than $1,000,000 over the term thereof (a "Material Contract"), each real
property lease to which the Company is a party, each labor agreement to which
the Company is a party and each agreement, document, instrument that creates,
evidences or secures any indebtedness of $1,000,000 or more of the Company or
any Company Subsidiary or pursuant to which the Company or any Company
Subsidiary has guaranteed indebtedness or other obligations of $1,000,000 or
more, and each Company ERISA Plan (each a "Company Material Agreement") is in
full force and effect and is enforceable in accordance with its terms. Except
as otherwise disclosed on Schedule 4.01(w) of the Company Disclosure Letter,
the Company or the Company Subsidiary, as the case may be, is in compliance
with each Company Material Agreement, except, in each case, for such
non-compliance as does not give rise to a Company Material Adverse Effect. All
other parties to the Company Material Agreements are in substantial compliance
with the terms thereof except, in each case, for such non-compliance as does
not give rise to a Company Material Adverse Effect. Prior to the date hereof, a
true, correct and complete copy of the
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Company Certificate of Incorporation and By-Laws have been provided by Company
to Parent.
(x) Transactions with Affiliates. Except as set forth on
Schedule 4.01(x) to the Company Disclosure Letter, or disclosed in the Company
SEC Reports or specifically excluded pursuant to the last sentence of this
subsection (x):
(A) none of the customers, suppliers,
distributors or sales representatives of the Company are Affiliates of
the Company;
(B) none of the properties or assets of the
Company are owned or used by or leased to any Affiliate of the Company and
(C) no Affiliate of the Company is a party to
any agreement with the Company.
(D) any agreement between the Company and any
Affiliate of the Company contains commercially reasonable terms and conditions.
(E) As used in this Agreement, "Affiliate"
means with respect to any person, any person who directly or indirectly controls
or is controlled by, or is under common control with, such person. As used in
this definition, the term "control" shall mean, with respect to any person, the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such person, whether through ownership of voting
securities, by contract or otherwise.
It is understood and agreed that no disclosure under this
subsection (x) is required for any of the items listed in (A) through (D) above
if disclosure thereof would not be required in any of the Company SEC Reports.
(y) No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement, anything described
in or listed in the Company Disclosure Letter, or any other document delivered
pursuant to this Agreement, neither the Company nor any other person makes any
representation or warranty to Parent or Sub, express or implied, and the
Company and each Company Subsidiary hereby disclaims any such representation or
warranty, whether by the Company or a Company Subsidiary or any of their
respective officers, directors, employees, agents or representatives or any
other person of any document or other information.
(z) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Schedule 14D-9, or (iii) the information to
be filed by the
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Company in connection with the Offer pursuant to Rule 14f-1 promulgated under
the Exchange Act (the "Rule 14f-1 Statement") or any proxy or information
statement will, at the respective times the Offer Documents, the Schedule 14D-9
and the Rule 14f-1 Statement are filed with the SEC or first published, sent or
given to the Company's stockholders or, in the case of any proxy or information
statement, at the time the proxy or information statement is first mailed to the
Company's stockholders or at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, if
necessary, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein, in light of the circumstances under
which they are made, not misleading. The Schedule 14D-9, the Rule 14f-1
Statement and any such proxy or information statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation or warranty is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
(aa) Certain Expenses. The Company has previously
disclosed to Parent the Company's fee arrangements with Houlihan Lokey and
McDonald, and such arrangements continue and will continue in effect
without alteration.
SECTION 4.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as it is now
being conducted or presently proposed to be conducted.
(b) Authority. Each of Parent and Sub has the power to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by each of Parent and Sub and the
consummation by each of Parent and Sub of the transactions contemplated hereby
have been duly authorized by the Board of Directors of each of Parent and Sub
and by the sole Shareholder of Sub and, no other corporate proceedings on the
part of Parent or Sub are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and constitutes a legal, valid
and binding agreement of each of Parent and Sub, enforceable against each of
Parent and Sub in accordance with its terms.
(c) Consents and Approvals; No Violations. Except for
applicable Governmental Requirements, state or foreign laws relating to
takeovers, if
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applicable, state securities or blue sky laws, and the filing of the Certificate
of Merger, no filing with, and no permit, authorization, consent or approval of,
any court or tribunal or administrative, governmental or regulatory body,
agency, public body or authority is necessary for the execution, delivery and
performance of this Agreement by Parent or Sub of the transactions contemplated
by this Agreement. Neither the execution, delivery and performance of this
Agreement by Parent or Sub, nor the consummation by Parent or Sub of the
transactions contemplated hereby, nor compliance by Parent or Sub with any of
the provisions hereof, will (i) conflict with or result in any breach of any
provisions of the Articles or Certificate of Incorporation or By-Laws of Parent
or Sub, as the case may be, (ii) except as previously disclosed by Parent to the
Company in writing, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under, any of the terms, conditions or provisions of
any note, bond, mortgage, deed of trust, security interest, indenture, lease,
license, contract, agreement, insurance policy plan or other instrument or
obligation to which Parent or Sub is a party or by which either of them or
either of their properties or assets may be bound or affected, (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent or Sub or any of their properties or assets, (iv) result in the creation
or imposition of any Lien on any asset or (v) cause the suspension, termination
or revocation of any registrations, licenses, permits and other consents or
approvals of governmental agencies, except in the case of clauses (ii), (iii),
(iv) and (v) for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations which would
not individually or in the aggregate have a Parent Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby.
(d) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
the Offer Documents, the Schedule 14D-9, the Rule 14F-1 Statement or any proxy
or information statement will, at the respective times the Offer Documents, the
Schedule 14D-9 and the Rule 14F-1 Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or, in the case of any
proxy or information statement, at the time any proxy or information statement
is first mailed to the Company's stockholders or at the time of the meeting of
the Company's stockholders held to vote on approval and adoption of this
Agreement, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation or warranty
is made by Parent or Sub with respect to statements made or incorporated by
reference therein based on
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information supplied by the Company for inclusion or incorporation by reference
therein.
(e) Brokers. No broker, investment banker, financial advisor
or other person, other than Parker/Hunter Incorporated, the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
(f) Financing. Parent has provided to the Company a complete
and correct copy of its commitment letter from its financing source for the
Offer and the Merger (the "Commitment Letter").
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company. From the date hereof
until the Effective Time, unless Parent shall otherwise agree in writing, or
except as set forth on Schedule 5.01 of the Company Disclosure Letter, or as
otherwise contemplated by this Agreement, the Company and the Company
Subsidiaries shall conduct their business in the ordinary course consistent
with past practice and shall use their reasonable best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and key employees,
subject to the terms of this Agreement. Without limiting the foregoing and
except as otherwise provided in this Agreement, from the date hereof until the
Effective Time, without the prior written consent of Parent , which consent
shall not be unreasonably withheld:
(a) The Company will not adopt or propose any change in
its Certificate of Incorporation or By-Laws;
(b) Other than declaration and payment of regular quarterly
dividends not to exceed $0.06 per share of Common Stock, the Company will not,
and will not permit any Company Subsidiary to, declare, set aside or pay any
dividend or other distribution with respect to any shares of capital stock of
the Company, or contract for or effect any repurchase, redemption or other
acquisition or investment by the Company or any Company Subsidiary of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or any Company Subsidiary;
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(c) The Company will not, and will not permit any Company
Subsidiary to, merge or consolidate with any other person or acquire a material
amount of assets of any other person;
(d) The Company will not, and will not permit any Company
Subsidiary to, sell, lease, license or otherwise surrender, relinquish or
dispose of any assets or property which are material to the Company and the
Company Subsidiaries, taken as a whole, except (x) pursuant to existing
contracts or commitments (the terms of which have been disclosed to Parent
prior to the date hereof), or (y) in the ordinary course of business consistent
with past practice;
(e) The Company will not settle any material Audit,
make or change any material Tax election or file amended Tax Returns;
(f) The Company will not issue or grant any securities or
option or warrant to acquire any securities (except pursuant to existing
obligations), enter into any amendment of any material term of any outstanding
security of the Company or of any Company Subsidiary, incur any indebtedness or
guarantee obligations of others except pursuant to existing credit facilities
or arrangements, fail to make any required contribution to any Company ERISA
Plan, increase compensation, bonus or other benefits payable to any employee or
former employee or enter into any settlement or consent with respect to any
pending litigation, except in the ordinary course of business consistent with
past practice or as otherwise permitted by this Agreement;
(g) The Company will not change any method of accounting or
accounting practice by the Company or any Company Subsidiary, except for any
such required change in GAAP;
(h) The Company will not commit to any capital expenditures
not in the ordinary course of business;
(i) The Company will not, and will not permit any
Company Subsidiary to, agree or commit to do any of the foregoing; and
(j) except to the extent necessary to comply with the
requirements of applicable laws and regulations, the Company will not, and will
not permit any Company Subsidiary to (i) take, or agree or commit to take, any
action that would make any representation and warranty of the Company hereunder
inaccurate in any respect at, or as of any time prior to, the Effective Time or
(ii) omit, or agree or commit to omit, to take any action necessary to prevent
any such representation or warranty from being inaccurate in any respect at any
such time, provided, however that the Company shall be permitted to take or omit
to take such action which can (without any uncertainty) be cured at or prior to
the Effective Time.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholder Approval; Preparation of Proxy Statement.
(a) If stockholder approval of this Agreement is required by
law, the Company will, at Parent's request, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") for the
purpose of approving this Agreement and the transactions contemplated by this
Agreement. The Company will, through its Board of Directors, recommend to its
stockholders approval of this Agreement and the transactions contemplated by
this Agreement; provided that Sub has purchased shares of Class A Common Stock
pursuant to the Offer. Notwithstanding the foregoing, if Parent shall acquire
such number of the outstanding shares of Class A Common Stock and Class B
Common Stock as to be able to cause the Merger to become effective without a
Stockholders' Meeting, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective
without a Stockholders Meeting in accordance with the Company's Certificate of
Incorporation and Section 253 of the DGCL.
(b) If stockholder approval of this Agreement is required by
law, the Company will, at Parent's request, prepare and file a preliminary
Proxy Statement with the SEC and will use its best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable after such filing. The
Company will notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. If at any time prior
to the approval of this Agreement by the Company's stockholders there shall
occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company will promptly prepare and mail to its stockholders
such an amendment or supplement. The Company will not mail any Proxy Statement,
or any amendment or supplement thereto, to which Parent reasonably objects.
(c) Sub agrees to vote, and Parent agrees to cause, all
shares of Class A Common Stock purchased pursuant to the Offer and all other
shares of Common Stock owned by Sub or any other subsidiary of Parent to be
voted in favor of the approval of this Agreement.
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SECTION 6.02. Access to Information; Confidentiality. During the
period prior to the Effective Time of the Merger, the Company will, and will
cause each Company Subsidiary to, (i) give Parent, and Parent's officers,
employees, accountants, counsel, financial advisors and other authorized
representatives, reasonable access during regular business hours to all of its
plants, offices, warehouses and other properties and to their employees,
agents, independent accountants and all of their books, records, contracts and
commitments AND, during such period, the Company will, and will cause each of
its subsidiaries to, furnish promptly to Parent a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws; (ii)
permit Parent, at its own expense, and its authorized representatives to make
such inspections, including, without limitation, environmental assessments or
surveys, during regular business hours as the Parent may reasonably require and
(iii) cause the Company officers and those of its subsidiaries to furnish
Parent and its authorized representatives with such financial and operating
data and other information with respect to the business and properties of the
Company and the Company subsidiaries as Parent may from time to time reasonably
request; provided, however, that such access shall be conducted in such a
manner as to (1) avoid any undue disruption of the normal business operations
of the Company and the Company Subsidiaries and (2) maintain the
confidentiality of the Confidential Information, as defined in the
Confidentiality Agreement, dated January 16, 1997 (the "Confidentiality
Agreement"), between Parent and the Company, in accordance with the provisions
set forth therein.
SECTION 6.03. Best Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer and the Merger, and the other transactions contemplated
by this Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Persons and the
making of all necessary registrations and filings (including filings with
Governmental Persons, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Person, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the transactions
contemplated by this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Person vacated or
reversed and (iv) the execution and delivery of any additional
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instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing and to the extent possible under applicable law, the
Company, Parent and Sub and their respective Boards of Directors shall (i) take
all action necessary to ensure that no state takeover statute or similar statute
or regulation is or becomes applicable to the Offer, the Merger, this Agreement
or any of the other transactions contemplated by this Agreement, other than any
such statutes or regulations the sole effect of which is to require a filing or
notice, provided that the Company, Parent and Sub, as applicable, shall take all
action necessary to comply with such filing and notice requirements, and (ii) if
any state takeover statute or similar statute or regulation becomes applicable
to the Offer, the Merger, this Agreement or any other transaction contemplated
by this Agreement, take all action necessary to ensure that the Offer, the
Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger and the other transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and
Parent or Sub shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, including if necessary, by amendment to the
Company Disclosure Letter (which amendments shall not affect or amend the
representations and warranties of the Company set forth herein), and (ii) any
failure by it to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 6.04. Stock Plans.
(a) As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if appropriate, any
committee administering the Stock Plans, as defined below), shall adopt such
resolutions or take such other actions as are required to adjust the terms of
all outstanding stock options to purchase shares of Common Stock ("Stock
Options") heretofore granted under any stock option, program or arrangement of
the Company (collectively, the "Stock Plans") to provide that each Stock Option
outstanding immediately prior to the acceptance for payment of shares of Common
Stock pursuant to the Offer, whether or not vested, shall be canceled in
exchange for a cash payment by Sub within five business days of the day shares
of Class A Common Stock are
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purchased pursuant to the Offer, an amount equal to (i) the excess, if any, of
(x) the price per share of Class A Common Stock to be paid pursuant to the Offer
over (y) the exercise price per share of Common Stock subject to such Stock
Option, multiplied by (ii) the number of shares of Common Stock for which such
Stock Option shall not theretofore have been exercised (the "Option
Consideration").
(b) All amounts payable pursuant to this Section 6.04 shall
be subject to any required withholding of taxes and shall be paid without
interest. The Company shall use its best efforts to obtain all consents of the
holders of the Stock Options as shall be necessary to effectuate the foregoing.
Notwithstanding anything to the contrary contained in this Agreement, payment
shall, at Parent's request, be withheld in respect of any Stock Option with
respect to any holder until all necessary consents with respect to such holder
are obtained.
(c) The Stock Plans shall terminate as of the Effective Time
of the Merger, and the provisions in any other employee benefit, stock or other
plan of the Company providing for the issuance, transfer or grant of any
capital stock of the Company, any interest in respect of any capital stock of
the Company, or any amounts derived from the value of any capital stock of the
Company shall be deleted as of the Effective Time of the Merger, and the
Company shall ensure that following the Effective Time of the Merger no holder
of a Stock Option or any participant in any Stock Plan or other Company Plan
shall have any right thereunder to acquire any capital stock of the Company or
the Surviving Corporation.
SECTION 6.05. Company Plans. Except as may be required by law, Parent
agrees, and shall cause Sub, to continue for at least one year after the
Effective Time to follow the Company's policies with respect to employees and
employee benefits in effect immediately prior to the Effective Date. As set
forth in Section 9.08, none of the employees of the Company is intended to be a
third party beneficiary of this Section 6.05.
SECTION 6.06. Indemnification.
(a) The Certificate of Incorporation of the Surviving
Corporation shall contain provisions with respect to matters occurring prior to
the Effective Time that are no less favorable with respect to indemnification
than are set forth in Article XV of the Second Restated Certificate of
Incorporation of the Company (the "Company Certificate"), which provisions
shall not be amended, repealed or otherwise modified in any manner that would
have an adverse effect on the rights thereunder of individuals who as of the
date of this Agreement or at the Effective Time are directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by law.
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(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each present and former director, officer,
employee, fiduciary and agent of the Company and each Company Subsidiary and
each fiduciary and agent of each such director and officer (collectively, the
"Indemnified Parties") against all costs and expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts ("Losses") paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer, director, employee,
fiduciary or agent of the Company or any Company Subsidiary, occurring before
the Effective Time, until the expiration of the statute of limitations relating
thereto (and shall pay any expenses in advance of the final disposition of such
action or proceeding to each Indemnified Party to the fullest extent permitted
under Delaware Law, upon receipt from the Indemnified Party to whom expenses
are advanced of any undertaking to repay such advances required under Delaware
Law). In the event of any claim, action, suit, proceeding or investigation, to
extent provided in the Company Certificate or the Certificate of the Surviving
Corporation, as the case may be, (i) the Company or the Surviving Corporation,
as the case may be, shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received, and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall
not be unreasonably withheld); and provided, further, that neither the Company
nor the Surviving Corporation shall be obligated pursuant to this Section
6.06(b) to pay the fees and expenses of more than one counsel (plus appropriate
local counsel) for all Indemnified Parties in any single action except to the
extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action, in which case such additional counsel
(including local counsel) as may be required to avoid any such likely conflict
may be retained by the Indemnified Parties at the expense of the Company or the
Surviving Corporation, to the extent that payment of such expense is permitted
under the Company Certificate or the Certificate of the Surviving Corporation,
as the case may be; and provided further that, in the event that any claim for
indemnification is asserted or made, all rights to indemnification in respect
of such claim shall continue until the disposition of such claim. Parent hereby
guarantees the obligations of the Surviving Corporation and, following
consummation of the Offer, of the Company under this Section 6.06(b).
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(c) Parent shall cause the Surviving Corporation to, and the
Surviving Corporation shall, use its reasonable efforts to maintain in effect
for six years from the Effective Time, if available, the current directors' and
officers' liability insurance policies maintained by the Company (provided that
the Surviving Corporation may substitute therefore policies of at least the
same coverage containing terms and conditions which are not materially less
favorable) with respect to matter occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 6.06(c) more than an amount per year equal
to 200% of current annual premiums paid by the Company for such insurance. In
the event that, but for the proviso to the immediately preceding sentence, the
Surviving Corporation would be required to expend more than 200% of current
annual premiums, the Surviving Corporation shall obtain the maximum amount of
such insurance obtainable by payment of annual premiums equal to 200% of
current annual premiums.
(d) In the event the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Company or the Surviving Corporation, as the case may be, or at Parent's
option, Parent, shall assume the obligations set forth in this Section 6.06.
(e) Each of the Indemnified Parties is made a third party
beneficiary of the obligations of the Parent, Sub, Company and Surviving
Corporation under this Section 6.06.
SECTION 6.07. Directors. Promptly upon the acceptance for payment of,
and payment by Sub for, shares of Class A Common Stock pursuant to the Offer,
Sub shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Sub, subject to compliance with Section
14(f) of the Exchange Act, representation on such Board of Directors equal to
at least that number of directors, rounded up to the next whole number, which
is the product of (a) the total number of directors on such Board of Directors
who are elected by the holders of Class A Common Stock pursuant to the Company
Certificate (giving effect to the directors elected pursuant to this sentence)
multiplied by (b) the percentage that (i) such number of shares of Class A
Common Stock so accepted for payment and paid for by Sub plus the number of
shares of Class A Common Stock otherwise owned by Sub or any other subsidiary
of Parent bears to (ii) the total number of shares of Class A Common Stock
outstanding, and the Company shall, at such time, cause Sub's designees to be
appointed or elected; provided, however, that in the event that Sub's designees
are to be appointed or
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elected to the Board of Directors of the Company, until the Effective Time of
the Merger, such Board of Directors shall have at least three directors who are
directors on the date of this Agreement and who are not officers of the Company
(the "Independent Directors"); and provided further that, in such event, if the
number of Independent Directors shall be reduced below three for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there shall 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 Directors then remain, the other
directors shall designate three persons to fill such vacancies who shall not be
officers, stockholders or affiliates of the Company, Parent or Sub, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such appointment or election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Sub shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Sub, either increase the
size of the Company's Board of Directors or obtain the resignation of such
number of its current directors as is necessary to enable Sub's designees to be
elected or appointed to the Company's Board of Directors as provided above.
SECTION 6.08. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Offer and the Merger, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with, or regulations or
requirements of, any securities exchange. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by
this Agreement is set forth in Exhibit B to this Agreement.
SECTION 6.09. Stockholder Litigation. The Company shall consult with
Parent 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 Parent's consent, which consent shall not be unreasonably withheld.
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SECTION 6.10 Acquisition Proposals.
(a) From the date hereof until the termination hereof, the
Company and the Company Subsidiaries will not, and will cause their respective
officers, directors, employees or other agents not to, directly or indirectly,
(i) take any action to solicit, initiate or encourage any Acquisition Proposal
(as hereinafter defined) provided that no public announcement made by the
Company prior to the date hereof regarding the transactions contemplated hereby
shall be deemed a violation of this Section 6.10(a)(i), or (ii) engage in
negotiations with, or disclose any nonpublic information relating to the
Company or the Company Subsidiaries, respectively, or afford access to their
respective properties, books or records to any person in connection with an
Acquisition Proposal. Nothing contained in this Section 6.10 shall prohibit the
Company and its Board of Directors (or any committee thereof) from (x) taking
and disclosing a position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated by the SEC under the Exchange
Act, or (y) considering, negotiating, discussing, approving or recommending to
the stockholders of the Company a bona fide Acquisition Proposal not solicited
in violation of this Agreement if and only to the extent that, (A) such Board
of Directors determines in good faith upon the advice of counsel that such
action is required for the Board of Directors to comply with its fiduciary
duties to stockholders imposed by law, and (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, the Company provides written notice to Parent to the effect that it
is furnishing information to, or entering into discussions or negotiations
with, such person or entity. Either Parent or (provided the Company and its
Board of Directors have complied with the above requirements of this Section
6.10(a)) the Company may terminate this Agreement if the Company or its Board
of Directors approves or recommends to the Company's stockholders an
Acquisition Proposal or the Board of Directors of the Company withdraws its
recommendation that the stockholders accept and approve the transactions
contemplated by this Agreement.
(b) The term "Acquisition Proposal" as used herein means any
proposal or offer from any person (other than Parent or Sub) relating to (i)
any direct or indirect acquisition or purchase of any equity interest in, or a
substantial amount of assets of, the Company or Subsidiaries, (ii) any tender
offer or exchange offer (including a self-tender offer) involving the equity
securities of the Company, (iii) any merger, consolidation, recapitalization,
liquidation, business combination or similar transaction involving the Company
other than the transactions contemplated by this Agreement or (iv) any other
extraordinary transaction the consummation of which would or could reasonably
be expected to impede, interfere with, prevent or materially delay the
transactions contemplated by this Agreement.
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(c) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other
than each other) conducted heretofore with respect to any of the foregoing
transactions referenced in this Section 6.10.
SECTION 6.11. Filings; Other Action. Subject to the terms and
conditions herein provided, as promptly as practicable, the Company, Parent and
Sub shall: (i) promptly make all filings and submissions under the HSR Act as
may be required to be made in connection with this Agreement and the
transactions contemplated hereby, (ii) use all reasonable efforts to cooperate
with each other in (A) determining which filings are required to be made prior
to the Effective Time with, and which material consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
or District of Columbia, and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations, and
(iii) use all reasonable efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary or appropriate
to consummate the transactions contemplated by this Agreement. In connection
with the foregoing, the Company will provide Parent, and Parent and Sub will
provide the Company, with copies of correspondence, filings or communications
(or memoranda setting forth the substance thereof) between such party or any of
its representatives, on the one hand, and any governmental agency or authority
or members of their respective staffs, on the other hand, with respect to this
Agreement and the transactions contemplated hereby. Each of Parent, Sub and the
Company acknowledge that certain actions may be necessary with respect to the
foregoing in making notifications and obtaining clearances, consents,
approvals, waivers or similar third party actions which are material to the
consummation of the transactions contemplated hereby, and each of Parent, Sub
and the Company agree to take such action as is necessary to complete such
notifications and obtain such clearances, approvals, waivers or third party
actions.
SECTION 6.12. Directors of Parent. Effective as of the Effective
Time, Parent shall cause Anthony C. Rego and Charles A. Rini to be elected to
the Board of Directors of Parent.
SECTION 6.13. Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to
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consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals in connection with the Governmental Requirements, to effect all
necessary registrations and filings and to obtain all necessary financing. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of Parent, Sub and the Company shall take all such necessary
action.
SECTION 6.14. Shares Held by Company Subsidiaries. The Company agrees
to cause each of the Company Subsidiaries that owns any shares of Common Stock
to not tender any such shares pursuant to the Offer.
SECTION 6.15. Employment Agreements. Concurrently herewith, the
employment agreements attached as Exhibits D and E hereto shall be executed
by all parties thereto.
SECTION 6.16. Merger Certificate. Parent shall file or cause Sub to
file the Certificate of Merger referenced in Section 7.01(a) as soon as
practicable, but in no event more than two business days after the satisfaction
of the conditions set forth in Article VII.
SECTION 6.17. Provision of Funds. Parent shall make available
to Sub all funds required to consummate the Offer and the Merger.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver on or prior to the Effective Time of the
Merger of the following conditions:
(a) Stockholder Approval. If required by applicable law, this
Agreement shall have been approved and adopted by the affirmative vote of the
stockholders of the Company by the requisite percentage in accordance with
applicable law and the Company's Certificate of Incorporation, and the
Certificate of Merger shall have been executed and delivered by the Surviving
Corporation and filed in the Department of State of the State of Delaware.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the
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consummation of the Merger shall be in effect; provided, however, that each
of the parties shall have used its best efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered,
(c) Regulatory Approvals. All regulatory and related
approvals (in addition to any approval contemplated by the HSR Act) shall have
been obtained on terms mutually satisfactory to Parent and the Company, except
for any the failure of which to obtain would not have a material adverse effect
on either Parent or the Surviving Corporation,
(d) Offer. Sub or its permitted assignee shall have purchased
all Class A Common Stock validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall not be applicable to the
obligations of Parent or Sub if, in breach of this Agreement or the terms of
the Offer, Sub fails to purchase any Class A Common Stock validly tendered and
not withdrawn pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding
approval thereof by the stockholders of the Company, but prior to the Effective
Time of the Merger, in any one of the following circumstances:
(a) by mutual written consent of Parent and the Company
except if shares of Class A Stock have been purchased pursuant to the
Offer;
(b) by either Parent, Sub or the Company:
(i) if, upon a vote at a duly held
Stockholders Meeting or any adjournment thereof, any
required approval of the Stockholders of the Company
shall not have been obtained;
(ii) if (x) Sub shall not have commenced the Offer
within the time required by Section 1.01 of this Agreement,
(y) as the result of the failure of any of the conditions set
forth in Exhibit A to this Agreement, the Offer shall have
been terminated by Parent or expired in accordance with its
terms without Sub having purchased shares of Class A Common
Stock pursuant to the Offer or (z) Sub
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shall not have purchased shares of Class A Common Stock
pursuant to the Offer within 90 days following the date of
this Agreement; provided, however, that the passage of the
period referred to in clause (z) shall be tolled for any part
thereof during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the purchase of shares of Class A Common
Stock pursuant to the Offer or the consummation of the Merger;
and provided further that the right to terminate this
Agreement pursuant to this Section 8.01(b)(ii) shall not be
available to any party whose failure to fulfill any of its
obligations under this Agreement results in the failure of any
such condition;
(iii) if the Merger shall not have been consummated
on or before the date six (6) months following the date of
this Agreement, unless the failure to consummate the Merger
is the result of a willful and material breach of this
Agreement by the party seeking to terminate this Agreement;
provided, however, that the passage of such period shall be
tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the
consummation of the Merger or the calling or holding of the
Stockholders Meeting; provided, further that no party shall
be entitled to terminate this Agreement pursuant to this
Section 8.01(b)(iii) if shares of Class A Common Stock have
been purchased pursuant to the Offer; or
(iv) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the purchase
of shares of Class A Common Stock or Class B Common Stock
pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and
nonappealable; or
(c) by either Parent or Company pursuant to Section
6.10.
SECTION 8.02. Effect of Termination. Subject to Section 8.06(b), in
the event of termination of this Agreement by either the Company, Parent or Sub
as provided in Section 8.01, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of (i) the
Company, other than the provisions of Sections 8.06 and 9.06 or (ii) on the
part of Parent or Sub, other than the provisions of Section 9.06, except to the
extent that such termination results from the material breach by Parent or Sub
of any of its representations, warranties, covenants or agreements set forth in
this Agreement.
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SECTION 8.03. Amendment. To the extent permitted by applicable law,
this Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by the
stockholders of the Company; provided, however, that after any such approval,
there shall not be made any amendment that by law requires further approval by
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.
SECTION 8.04. Extension; Waiver. At any time prior to the Effective
Time of the Merger, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 8.01, an amendment
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant
to Section 8.04 shall, in order to be effective, require (a) in the case of
Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors and (b) in the case of the
Company, action by a majority of the members of the Board of Directors of the
Company who were members thereof on the date of this Agreement and remain as
such thereafter or the duly authorized designee of such members and approval by
a majority of Independent Directors.
SECTION 8.06. Effect of Termination and Abandonment.
(a) Termination Fees and Expenses.
(i) Parent shall be entitled to receive from the
Company a termination fee in the amount of $10,000,000 if
this Agreement is terminated or Sub does not purchase shares
of Class A Common Stock pursuant to the Offer because the
Company or its Board of Directors approves or recommends to
the Company's stockholders an Acquisition Proposal or in
connection with an Acquisition Proposal
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the Board of Directors of the Company withdraws its
recommendation that the stockholders of the Company accept
and approve the transactions contemplated by this Agreement;
(ii) Parent shall be entitled to receive from the
Company a termination fee in the amount of $5,000,000 if Sub
has not purchased shares of Class A Common Stock pursuant to
the Offer as a result of (x) the failure of the conditions
set forth in clause (ii) of the first paragraph of Exhibit A
to this Agreement or paragraph (f) of Exhibit A to this
Agreement to be satisfied or (y) the failure of the holders
of Class A Common Stock to have validly tendered and not
withdrawn prior to the expiration of the Offer that number of
shares of Class A Common Stock which would represent the
minimum number of outstanding shares of Class A Common Stock,
determined immediately prior to the consummation of the
Offer, that would enable Parent and Sub to consummate the
Merger under the Company's Certificate of Incorporation
notwithstanding the negative vote of all shares of Class A
Stock not acquired by Sub in the Offer and the negative vote
of all shares of Class B stock as to which the beneficial
owners have not executed and delivered the Stockholders'
Agreement; and
(iii) Parent shall be entitled to receive from the
Company a topping fee in the amount of $10,000,000 in the
event that following any termination of this Agreement (other
than solely because Parent or Sub failed to fulfill any of
their obligations under this Agreement) the Board of
Directors of the Company approves or recommends an
Acquisition Proposal to the Company's stockholders on or
before November 30, 1997, which amount shall be due and
payable upon consummation of the transactions contemplated by
such Acquisition Proposal.
Under no circumstances shall the Company be obligated to pay
more than $10,000,000 pursuant to this Section 8.06(a). Therefore, if the
Company has paid $5,000,000 pursuant to Section 8.06(a)(ii) and subsequently
becomes obligated to make a payment to Parent pursuant to Section 8.06(a)(iii),
the $10,000,000 payment under Section 8.06(a)(iii) shall be reduced by the
$5,000,000 payment previously paid under Section 8.06(a)(ii). If circumstances
should occur giving rise to the payment of fees under more than one of the
above clauses, the Company shall pay solely under the clause requiring the
highest fee.
(b) If Parent has received the full amount of any payment
under Section 8.06(a), neither Parent nor Sub shall assert or pursue, directly
or indirectly, whether arising under tort, contract, or otherwise, any claim or
cause of action against any of the Company or any person making an Acquisition
Proposal
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or their respective directors, officers or representatives based in whole or
part upon its or their receipt, consideration, recommendation or approval of an
Acquisition Proposal, including the Company's exercise of its right of
termination pursuant to this Article VIII.
(c) It is understood and agreed by the parties hereto that
the termination and topping fees provided for in Section 8.06(a)(i), (ii) and
(iii) are intended to constitute liquidated damages, since the actual amount of
damages which would be sustained by Parent and Sub as a result of such
termination is difficult, if not impossible, of ascertainment and that the
agreement of the parties with regard to the payment of the foregoing sum as
liquidated damages represents a good faith effort by each of the parties to
establish the reasonable amount of restitution necessary to provide for
recovery of all costs and expenses associated with efforts to consummate the
Offer and the Merger, including, without limitation, opportunity costs.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Survival of Representations, Warranties and Agreements.
No representations or warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive beyond the Effective Time.
This Section 9.01 shall not limit any covenant or agreement after the Effective
Time.
SECTION 9.02. Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand or (c) the expiration of
five business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as shall
be specified by like notice):
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(a) If to Parent or Sub, to:
Talon, Inc.
101 Kappa Drive
RIDC Park
Pittsburgh, PA 15238-2809
Attention: David S. Shapira
Facsimile: (412) 963-2540
with a copy to:
Cohen & Grigsby, P.C.
2900 CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222
Attention: Charles C. Cohen, Esquire
Facsimile: (412) 391-3382
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<PAGE> 138
(b) if to Company, to:
Mojo, Inc.
5300 Richmond Road
Bedford Heights, OH 44146
Attention: Anthony C. Rego, Charles A. Rini, Sr.
Facsimile: (216) 591-2972
with a copy to:
Kohrman Jackson & Krantz P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, OH 44114
Attention: S. Lee Kohrman, Esquire
Facsimile: (216) 621-6536
SECTION 9.03. Descriptive Headings. Headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.04. Entire Agreement; Assignment. This Agreement (including
the Schedules, Exhibits and other documents and instruments referred to herein
which are incorporated herein and made a part of this Agreement) (a)
constitutes the entire agreement and supersedes all other prior agreements and
understandings both written and oral among the parties or any of them, with
respect to the subject matter hereof, including, without limitation, any
transaction between or among the parties hereto except the terms of the
Confidentiality Letter shall remain in full force and effect; (b) is not
intended to confer upon any other person any rights or remedies hereunder; and
(c) shall not be assigned by operation of law or otherwise.
SECTION 9.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the provisions thereof relating to conflicts of law.
SECTION 9.06. Expenses and Fees. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses. The provisions of Section 8.06 shall survive the
termination of this Agreement.
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SECTION 9.07. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of' which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by all of the other parties hereto.
SECTION 9.08. Severability; Validity; Parties in Interest. If any
provision of this Agreement, or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Except as set forth in Section 6.06, nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.09. Jurisdiction. Any legal action or proceeding with
respect to this Agreement or any document related hereto shall be brought by
Company, Parent or Sub in the Court of Common Pleas, Allegheny County,
Pennsylvania or the United States District Court for the Western District of
Pennsylvania, and by execution and delivery of this Agreement or any document
related hereto, each of the Company, Parent or Sub hereby consents, for itself
and in respect of its property, to this jurisdiction of the aforesaid courts.
Each of the parties hereto hereby irrevocably waives, to the extent permitted
by applicable law, any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which
such party may now or hereafter have to the bringing of any action or
proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by an officer thereunto duly authorized on the day
and year first above written,
GIANT EAGLE, INC.
By /s/ DAVID S. SHAPIRA
---------------------------------
Name: David S. Shapira
Title: CEO
TALON ACQUISITION COMPANY
By /s/ RAYMOND J. BURGO
---------------------------------
Name: Raymond J. Burgo
Title: President
RISER FOODS, INC.
By /s/ ANTHONY C. REGO
---------------------------------
Name: Anthony C. Rego
Title: Chairman of the Board and
Chief Executive Officer
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Schedule 2.05
Article First: The name of the corporation is Riser Foods, Inc.
<PAGE> 142
Schedule 2.06
I. Officers of the Surviving Corporation:
The Officers of the Surviving Corporation shall be identical to those
of Riser Foods, Inc. prior to the Effective Time of the Merger.
II. Directors of the Surviving Corporation:
David S. Shapira
Raymond J. Burgo
Anthony C. Rego
Charles A. Rini, Sr.
<PAGE> 143
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Agreement
and Plan of Merger dated May _____, 1997 among [to come], (the "Merger
Agreement") Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to Sub's obligation to pay for or return tendered shares
of Class A Common Stock after the termination or withdrawal of the Offer), to
pay for any shares of Class A Common Stock tendered pursuant to the Offer
unless (i) there shall have been validly tendered and not withdrawn prior to
the expiration of the Offer that number of shares of Class A Stock which would
represent at least 80% of the outstanding shares of Class A Stock as determined
immediately prior to the acceptance of shares tendered in the Offer (the
"Minimum Tender Condition"), (ii) the holders of at least 80% of the issued and
outstanding shares of Class B Common Stock shall have executed and delivered
the Stockholders' Agreement not later than 5:00 p.m. Eastern Time, on [insert
date which is 15 days after Offer Documents are mailed] and shall have fully
performed their obligations thereunder, and (iii) any waiting period under the
HSR Act applicable to the purchase of shares of Common Stock pursuant to the
Offer and/or the Merger shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer or the Merger Agreement, Sub shall
not be required to commence or continue the Offer or accept for payment or,
subject as aforesaid, to pay for any shares of Class A Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer if, at any time on or after the date of the Merger Agreement and before
the acceptance of such shares for payment or the payment therefor, any of the
following conditions exists:
(a) No Litigation. There shall have been entered in any
action or proceeding before any Governmental Person an injunction or
order, (i) prohibiting or limiting the acquisition by Parent or Sub of
any shares of Common Stock, (ii) restraining or prohibiting or
otherwise rendering unenforceable the consummation of the Merger or
any of the other transactions contemplated by or provisions of the
Merger Agreement or the Stockholders' Agreement, (iii) prohibiting or
limiting the ownership or operation by the Company, Parent or any of
their respective subsidiaries of any material portion of the business
or assets of the Company, Parent or any of their respective
subsidiaries, or to compel the Company, Parent or any of their
respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the Merger or any of the
other
<PAGE> 144
transactions contemplated by the Merger Agreement, (iv) imposing
limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Common Stock,
including, without limitation, the right to vote the Common Stock
purchased by Sub on all matters properly presented to the stockholders
of the Company, or (v) requiring the Company, Parent or Sub to pay
damages that reasonably can be foreseen, or are reasonably likely, to
result in a Company Material Adverse Effect; or
(b) there shall be any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction that is or
could reasonably be expected to result, directly or indirectly, in any
of the consequences referred to in clauses (i) through (v) of
paragraph (a) above; or
(c) there shall have occurred any material adverse change, or
any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in a Company Material Adverse Effect; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States (excluding any coordinated trading halt triggered solely as a
result of a specified decrease in a market index), (ii) any material
adverse change in the financial markets, commodities markets or major
stock exchange indices in the United States, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks
in the United States, or (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States; or
(e) (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Sub its approval or recommendation of the Offer, the
Merger or the Merger Agreement, or approved or recommended any
Acquisition Proposal, (ii) the Company shall have entered into any
agreement (other than a confidentiality agreement or engagement letter
with an investment bank) with respect to any Acquisition Proposal or
(iii) the Board of Directors of the Company or any committee thereof
shall have resolved to do any of the foregoing; or
(f) (i) any of the representations and warranties of the
Company set forth in the Merger Agreement that are qualified as to
materiality shall not be true and correct and any such representations
and warranties that are not so qualified shall not be true and correct
in any material respect, in each case as if such representations and
warranties were made as of such time; or (ii) the Company shall have
failed to perform in any material respect any obligation or to comply
in any material respect with any agreement or
-2-
<PAGE> 145
covenant of the Company to be performed or complied with by it under
the Merger Agreement and such failure continues for five business days
after receipt by the Company of notice from Parent specifying such
failure; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms, including without limitation a termination
by Parent or the Company pursuant to Section 6.10; or
(h) Sub, Parent and the Company (with the approval of a
majority of its Independent Directors) shall have mutually agreed that
Sub shall terminate the Offer or postpone the acceptance for payment
of or payment for shares of Class A Common Stock thereunder;
which, in the sole judgment of Sub or Parent, in any such case, and regardless
of the circumstances giving rise to any such condition (including any action or
inaction by Parent or any of its affiliates), makes it inadvisable to proceed
with such acceptance for payment or payment,
The foregoing conditions are for the sole benefit of Sub and
Parent and may be asserted by Sub or Parent regardless of the circumstances
giving rise to such condition or may be waived by Sub and Parent in whole or in
part at any time and from time to time in their sole discretion. The failure by
Parent, Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Merger Agreement.
-3-
<PAGE> 146
Exhibit (c)(2)
STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT (this "Agreement") is made and
entered into as of this _____ day of May, 1997, by and among GIANT EAGLE, INC.,
a Pennsylvania corporation ("Parent"), and the stockholders named on the
signature page hereto (the "Stockholders"). On the date hereof the Stockholders
Beneficially Own (as defined in Section 12(a) hereof) that number of shares of
Class A Common Stock, par value $.01 per share (the "Class A Stock"), and/or
shares of Class B Common Stock, par value $.01 per share (the "Class B Stock"),
of RISER FOODS, INC. ("the Company"), a Delaware corporation, as set forth
below each Stockholder's name on the signature page hereto.
WITNESSETH:
WHEREAS, Parent, Parent Acquisition Company, a wholly-owned subsidiary
of Parent ("Sub"), and the Company concurrently herewith are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), providing for, among other things, the merger of Sub with and into
the Company (the "Merger") following the making of a tender offer (the "Offer")
by Sub for shares of Class A Stock; and
WHEREAS, each of the Stockholders owns shares of Class B Stock and is
a party to the Riser Foods, Inc. Class B Stockholders' Agreement dated as of
April 7, 1988 (the "Stockholders' Agreement").
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has requested that the Stockholders agree, and the
Stockholders have agreed (i) to tender the shares of Class A they Beneficially
Own pursuant to the Offer, (ii) to grant to Parent certain rights to vote all
shares of Class B Stock as to which the Stockholders have voting power as
provided herein in favor of the Merger and a termination of the Class B
Stockholders' Agreement and (iii) to tender their Class B Shares Beneficially
Owned to Sub, all on the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
<PAGE> 147
1. Voting Rights; Tender of Shares.
(a) Voting Agreement. The Stockholders agree to vote all shares of
Class A Stock and Class B Stock Beneficially Owned by them on matters as to
which the Stockholders are entitled to vote at a meeting of the stockholders of
the Company, or by written consent without a meeting with respect to all shares
of Class A Stock and Class B Stock Beneficially Owned by them, as follows: (i)
in favor of approval and adoption of the Merger Agreement and all related
matters; (ii) against any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (iii)
against any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger. The Stockholders also agree, upon
the request of Parent, to execute and deliver an agreement terminating the
Stockholders' Agreement pursuant to Section 12 thereof immediately prior to
(and subject to) the closing of the Offer or the Merger.
(b) Grant of Proxy; Appointment of Attorney. In order to fully
implement the agreement of the Stockholders set forth in Section 1(a) above,
each Stockholder hereby irrevocably appoints Parent, with full power of
substitution (Parent and its substitutes being referred to herein as the
"Proxy"), as the true and lawful attorney and proxy of such Stockholder (i) to
vote all shares of Class A Stock and Class B Stock Beneficially Owned by such
Shareholder on matters as to which the Stockholders are entitled to vote at a
meeting of the stockholders of the Company or to which they are entitled to
express consent or dissent to corporate action in writing without a meeting, in
the Proxy's absolute, sole and binding discretion, on the matters specified in
Section 1(a) above and (ii) to execute and deliver, in the name, place and
stead of such Stockholder, a written agreement terminating the Stockholders'
Agreement in accordance with Section 12 thereof immediately prior to (and
subject to) the closing of the Merger. The Stockholders agree that the Proxy
may, in each such Stockholder's name and stead, (i) attend any annual or
special meeting of the stockholders of the Company and vote all shares of Class
A Stock and Class B Stock at any such annual or special meeting as to the
matters specified in Section 1(a) above, (ii) execute with respect to all
shares of Class A Stock and Class B Stock any written consent to, or dissent
from, corporate action respecting any matter specified in Section 1(a) above,
and (iii) execute and deliver with respect to all shares of Class B Stock
Beneficially Owned by such Stockholder a written agreement or consent
terminating the Stockholders' Agreement pursuant to Section 12 thereof
immediately prior to (and subject to) the closing of the Merger. The
Stockholders agree to refrain from (A) voting at any annual or special meeting
of the stockholders of the Company in any manner inconsistent with the terms of
this Agreement, (B) executing any written consent in lieu of a meeting of the
stockholders of the Company in any manner inconsistent with the terms of this
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<PAGE> 148
Agreement, (C) exercising any rights of dissent with respect to their shares of
Class A Stock or Class B Stock, (D) taking any action to amend the
Stockholders' Agreement, except as contemplated by this Agreement, and (E)
granting any proxy or authorization to any person with respect to the voting of
the shares of Class A Stock and Class B Stock, except pursuant to this
Agreement, or taking any action contrary to or in any manner inconsistent with
the terms of this Agreement. The Stockholders agree that this grant of proxy
and appointment of attorney is irrevocable and coupled with an interest and
agree that the person designated as Proxy pursuant hereto may at any time name
any other person as its substituted Proxy to act pursuant hereto, either as to
a specific matter or as to all matters. The Stockholders hereby revoke any
proxy previously granted by them with respect to their shares of Class B Stock
as to the matters specified in Section 1(a) above.
(c) Voting by Proxy. The proxy shall cast all votes in accordance with
Section 1(a) above.
(d) Tender of Class A Shares. No later than 15 business days after
commencement of the Offer, each Stockholder shall tender to the Depository
designated in connection with the Offer (A) a letter of transmittal with
respect to the shares of Class A Stock Beneficially Owned by the Stockholder
and any other shares of Class A Stock held by such Stockholder (whether or
not currently held by such Stockholder) complying with the terms of the
Offer, (B) the certificates representing such shares and (C) all other
documents or instruments required to be delivered pursuant to the terms of
the Offer and such letter of transmittal. No Stockholder shall withdraw the
tender effected in accordance with this Section 1(c). The provisions of
Section 1(a) and 1(b) relating to the grant of proxies for shares of Class A
Stock and Class B Stock are not intended to alter or limit the obligations of
the Stockholders under this Section 1(c).
(e) Tender of Class B Shares. Each Stockholder hereby irrevocably
agrees that at any time prior to the Effective Time (as defined in the Merger
Agreement), no later than three (3) business days following notice from Talon
or Sub (the "Class B Notice"), the Stockholder shall tender to Sub (A) a
letter of transmittal with respect to the shares of Class B Stock
Beneficially Owned by the Stockholder and any other shares of Class B Stock
held by such Stockholder (whether or not currently held by such Stockholder)
transferring all of its right, title and interest in such shares of Class B
Stock to Sub at a price per share of Class B Stock of $42.00 in cash, (B) the
certificates representing such shares and (C) all other documents or
instruments required to be delivered pursuant to terms of the Class B Notice.
The provisions of Section 1(a) and 1(b) relating to the grant of proxies for
shares of Class A Stock and Class B Stock are not intended to alter or limit
the obligations of the Stockholders under this Section 1(e).
2. Adjustment Upon Certain Changes in Capitalization. In the event of
any change in the Class A Stock or Class B Stock by reason of a stock dividend,
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<PAGE> 149
stock split, split-up, recapitalization, combination, exchange of shares or
similar transaction, the type and number of shares or securities that
constitute Class A Stock or Class B Stock, as the case may be, hereunder shall
be adjusted appropriately.
3. Termination.
(a) This Agreement shall terminate upon the earlier to occur of (i)
the Outside Date (as defined in Section 12(d) hereof), or (ii) the Effective
Date (as defined in the Merger Agreement). Notwithstanding the foregoing, this
Agreement shall terminate effective immediately upon the occurrence of (x) both
of the following: (i) any termination of the Merger Agreement in accordance
with its terms and (ii) payment to Parent of all amounts that may be owing in
respect of such termination pursuant to Section 8.06(a) of the Merger Agreement
; or (y) any termination by the Company of the Merger Agreement in accordance
with its terms solely because of a material breach by Parent or Sub of their
respective obligations thereunder; provided, however, that this Agreement shall
not terminate if shares of Class A Common Stock have been purchased pursuant to
the Offer.
(b) Upon termination, this Agreement shall have no further force or
effect, except for Section 7 which shall continue to apply to any case, action
or proceeding relating to the enforcement of this Agreement.
4. Representations, Warranties and Covenants of Stockholders. Each
Stockholder, severally and jointly, hereby represents and warrants to Parent as
follows:
(a) Due Authorization. The Stockholder has the legal capacity and all
necessary corporate, partnership and trust power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Stockholder Beneficially Owns all of the shares of Class A Stock and Class B
Stock listed on the signature page hereof and specified as so owned with no
restrictions on the voting rights or rights of disposition pertaining thereto,
except as set forth in the Stockholders' Agreement and the Second Restated
Certificate of Incorporation and the By-laws of the Company, which constitute
all Class A Stock and Class B Stock Beneficially Owned by Stockholder. Assuming
this Agreement has been duly and validly authorized, executed and delivered by
Parent, this Agreement constitutes a legal, valid and binding agreement of the
Stockholder, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by the principles governing the
availability of equitable remedies.
(b) No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation by Stockholder of the transactions contemplated hereby
will conflict with or constitute a violation of or default under any contract,
commitment,
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<PAGE> 150
agreement, arrangement or restriction of any kind to which such Stockholder is a
party or by which such Stockholder is bound.
5. No Transfer; Solicitation.
(a) The Stockholders hereby agree, without the prior written consent
of Parent, except pursuant to the terms hereof, not to (i) sell, transfer,
assign, tender, pledge or otherwise dispose of or hypothecate any of their
shares of Class A Stock or Class B Stock (except for such pledges in effect as
of the date hereof, the terms and conditions of which, if any, are described on
Schedule 5 hereto); (ii) grant any proxies, deposit any Class A Stock or Class
B Stock into a voting trust or enter into a voting agreement with respect to
any Shares of Class A Stock or Class B Stock as to any matter specified in
Section 1(a); (iii) convert any of their shares of Class B Stock into Class A
Stock or (iv) take any action that would make any representation or warranty of
the Stockholders contained herein untrue or incorrect in any material respect
or have the effect of preventing or disabling the Stockholders from performing
their obligations under this Agreement; provided, however, that nothing in this
Agreement shall prevent the Stockholders from converting their shares of Class
B Stock into Class A Stock, pursuant to the terms of the Company's Second
Restated Certificate of Incorporation, if 100% of the Class B Stock is so
converted; provided further that nothing in this Agreement shall prevent the
Stockholders from tendering their Class A Stock in the Offer. Any permitted
transferee of shares of Class A Stock or Class B Stock held by any of the
Stockholders must become a party to this Agreement and any purported transfer
of shares of Class A Stock or Class B Stock held by any of the Stockholders to
a person or entity that has not become a party hereto shall be null and void.
(b) The Stockholders will not, and will cause their officers,
directors, employees and agents not to, directly or indirectly, (i) take any
action to solicit, initiate or encourage any Acquisition Proposal (as defined
in the Merger Agreement), or (ii) engage in negotiations with, or disclose any
nonpublic information relating to the Company or its subsidiaries, or afford
access to their respective properties, books or records to, any person in
connection with an Acquisition Proposal (but nothing in this Agreement shall
prohibit any such person, solely in his capacity as a director or officer of
the Company, from taking any actions permitted or not prohibited by the Merger
Agreement with respect to any Acquisition Proposal).
6. Representations and Warranties of Parent. Parent hereby represents
and warrants to the Stockholders that Parent has the requisite corporate power
and authority to enter into and perform this Agreement. This Agreement has been
duly authorized by all necessary corporate action on the part of Parent and has
been duly executed by a duly authorized officer of Parent. Assuming this
Agreement has been duly and validly executed and delivered by the Stockholders,
this Agreement constitutes a valid and binding agreement of Parent, enforceable
against it in
5
<PAGE> 151
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors,
rights generally or by the principles governing the availability of equitable
remedies.
7. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof; (b) except
as provided in Section 10, shall not be assigned by operation of law or
otherwise without the prior written consent of the other parties hereto, except
that Talon may assign, in its sole discretion, all or any of its rights,
interests and obligations hereunder to Sub; and (c) shall not be amended,
altered or modified in any manner whatsoever, except by a written instrument
executed by the parties hereto..
8. Remedies. The parties acknowledge that it would be impossible to
fix money damages for violations of this Agreement and that such violations
will cause irreparable injury for which adequate remedy at law is not available
and, therefore, this Agreement must be enforced by specific performance or
injunctive relief. The parties hereto agree that any party may, in its sole
discretion, apply to the court of competent jurisdiction (in accordance with
Section 19 hereof) for specific performance or injunctive or such other relief
as such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable law,
each party waives any objection or defense to the imposition of such relief.
Nothing herein shall be construed to prohibit any party from bringing any
action for damages in addition to an action for specific performance or an
injunction for a breach of this Agreement.
9. Legends on Certificates. As soon as practicable after the execution
hereof and until such time as this Agreement shall terminate pursuant to
Section 3 hereof, all certificates representing Stockholder Shares shall bear
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A STOCKHOLDER VOTING AGREEMENT, DATED AS OF _____________, 1997, BY
AND BETWEEN TALON AND THE STOCKHOLDERS. ANY TRANSFEREE OF THESE SHARES
TAKES SUBJECT TO THE TERMS OF SUCH AGREEMENT, COPIES OF WHICH ARE ON
FILE AT THE OFFICES OF TALON, 101 KAPPA DRIVE, RIDC PARK, PITTSBURGH,
PENNSYLVANIA 15238-2809.
10. Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, permitted assigns, heirs, executors, administrators and
other legal
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<PAGE> 152
representatives, and nothing this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
11. Counterparts. It is intended that this Agreement will be executed
in several counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
12. Definitions. Unless the context otherwise requires, the following
terms shall have the following respective meanings:
(a) "Beneficial Owner" has the meaning set forth in Rule 13d-3 of the
Rules and Regulations to the Exchange Act, and "Beneficially Owned" and
"Beneficially Own(s)" shall have correlative meanings; provided, however, that
for purposes of this Agreement a person shall be deemed to be the Beneficial
Owner of Company Shares that may be acquired pursuant to the exercise of an
option or other right regardless of when such option is exercisable.
(b) "Person" means a corporation, association, partnership, joint
venture, limited liability company, organization, business, individual, trust,
estate or any other entity or group (within the meaning of Section 13(d)(3) of
the Exchange Act).
(c) The terms "Affiliates" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act, as in
effect on the date hereof (the term "registrant" in said Rule 12b-2 meaning in
this case the Company).
(d) "Outside Date" shall be November 30, 1997.
13. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Parent to:
Parent, Inc.
101 Kappa Drive
RIDC Park
Pittsburgh, Pennsylvania 15238-2809
Attention: David S. Shapira
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<PAGE> 153
with a copy to:
Cohen & Grigsby, P.C.
2900 CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Telecopy No. (412) 391-3382
Attention: Charles C. Cohen, Esquire
(b) If to the Stockholders, to the addresses set forth on the
signature page, hereto.
with a copy to:
Kohrman, Jackson & Krantz, P.L.L.
One Cleveland Center
20th Floor
Cleveland, OH 44114
Telecopy No. (216) 696-8700
Attention: S. Lee Kohrman, Esq.
14. Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
15. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
16. Further Assurances. The Stockholders further agree to execute all
additional writings, consents and authorizations as may be reasonably requested
by Parent to evidence the agreements herein or the powers granted to the Proxy
hereby or to enable the Proxy to exercise those powers.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
the principles of conflicts of laws thereof.
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<PAGE> 154
18. Venue. Any and all disputes regarding any and all aspects of this
Agreement must be filed in either the District Court for the Western District of
Pennsylvania or the Court of Common Pleas, Allegheny County, Pittsburgh,
Pennsylvania, which ever jurisdiction is appropriate.
19. Stockholders' Agreement. The Stockholders hereby agree that Section
3 of the Class B Stockholders' Agreement shall be deemed amended so as not to
apply to the transactions contemplated by the Merger Agreement or this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RISER FOODS, INC.
By:
---------------------------
Name:
Title:
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<PAGE> 155
STOCKHOLDERS
1. By:____________________________
Name:
Title:
No. of shares of Class A Stock Beneficially Owned:_____
No. of shares of Class B Stock Beneficially Owned:_____
Address for Notices:
2. By:____________________________
Name:
Title:
No. of shares of Class A Stock Beneficially Owned:_____
No. of shares of Class B Stock Beneficially Owned:_____
Address for Notices:
3. By:____________________________
Name:
Title:
No. of shares of Class A Stock Beneficially Owned:_____
No. of shares of Class B Stock Beneficially Owned:_____
Address for Notices:
(etc.)
10
<PAGE> 156
Exhibit (c)(3)
GIANT EAGLE, INC.
Employment Agreement dated
May 13, 1997
with
ANTHONY C. REGO
<PAGE> 157
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Headings Page No.
- ---------------- --------
<S> <C>
Section 1. Term of Employment...............................................................................2
Section 2. Services to be Rendered..........................................................................3
Section 3. Compensation.....................................................................................3
Section 4. Disability.......................................................................................6
Section 5. Termination for Proper Cause.....................................................................7
Section 6. Non-Competition..................................................................................8
Section 7. Confidentiality..................................................................................9
Section 8. Removal of Documents or Objects..................................................................9
Section 9. Injunctive Relief...............................................................................10
Section 10. Merger or Consolidation........................................................................10
Section 11. Notices........................................................................................11
Section 12. Governmental Regulation........................................................................11
Section 13. Arbitration....................................................................................11
Section 14. Governing Law..................................................................................12
Section 15. Divisability...................................................................................12
Section 16. Headings.......................................................................................12
Section 17. Entire Agreement; Amendment....................................................................12
</TABLE>
<PAGE> 158
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into this 13th day of May, 1997, by and
between ANTHONY C. REGO, an individual residing in Cuyahoga County, Ohio
("Executive"), and GIANT EAGLE, INC., a Pennsylvania corporation (the
"Company"),
WITNESSETH THAT:
WHEREAS, Executive has served Riser, Inc. ("Riser") as a senior
executive officer and as a member of its Board of Directors for many years; and
WHEREAS, the Company and Riser intend to enter into a transaction
whereby the Company will acquire control over the business and properties of
Riser; and
WHEREAS, the Company desires to assure itself of the benefit of
Executive's services and experience, and to that end has authorized this
Agreement, to be effective from and after consummation of that transaction; and
WHEREAS, the Company will not enter into the proposed transaction with
Riser unless and until Executive enters into this Agreement with the Company;
and
WHEREAS, Executive is willing to enter the employ of the Company upon
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
<PAGE> 159
Section 1. Term of Employment.
(a) The term of employment of Executive under this Agreement
shall be the five-year period commencing on the date which is the Effective
Time of the Merger under the Agreement and Plan of Merger dated May 13, 1997 by
and among the Company, Riser and Talon Acquisition Company and ending on the
fifth anniversary of the Effective Time of the Merger.
(b) Notwithstanding paragraph (a), the term of employment of
Executive under this Agreement shall be subject to earlier termination upon:
(i) dismissal of Executive from his position as
an executive officer pursuant to resolution of the Board of
Directors, or failure of the Board to re-elect him as an
executive officer of the Company; or
(ii) determination of disability of Executive
pursuant to Section 4 hereof; or
(iii) death of Executive.
In the event of termination pursuant to clause (i), the Company shall
thereafter be obligated to pay to Executive the compensation and benefits
provided for under Section 3(e) hereof. In the event of termination pursuant to
clause (ii) the provisions of Section 4 hereof shall apply. In the event of
termination pursuant to clause (iii) , the Company shall be obligated to pay
Executive's estate or designated beneficiary the compensation reserved under
Section 3(a) hereof until the end of the twelfth calendar month following his
death, plus pro-rata portions of annual and long-term incentive bonus awards
described in Section 3(b) hereof (when and if payable) under any plan or
program in which Executive was then a participant.
(c) If Executive remains in the Company's employ after the
five-year term specified in paragraph (a), this Agreement will continue to be
effective except that the Executive's employment will then be terminable "at
will" by either party on 20 days' advance written notice.
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Section 2. Services to be Rendered.
The Company hereby agrees to employ Executive as the
Company's Vice Chairman and the chief executive officer of the Riser division
or subsidiary of the Company, to serve at the Riser headquarters office located
in the Cleveland, Ohio area, subject to the terms, conditions and provisions of
this Agreement. Executive hereby accepts such employment, and agrees (i) to
perform all executive and managerial duties as may be required of him by the
Company, but in no event less than the level of duties a chief executive
officer of a wholly-owned subsidiary or division the size of Riser, at the
Effective Time of the Merger, would perform, and (ii) that he shall devote his
best efforts, on a full-time basis, and shall apply substantially the same
degree of skill and diligence in rendering services to the Company under this
Agreement as he has applied during his employment with Riser. In connection
therewith, Executive shall report to and be subject to the direction of the
Company's Chief Executive and Board of Directors. Notwithstanding the
foregoing, Executive may devote a reasonable amount of his time to his personal
investments and business affairs (including service as a director of
unaffiliated companies) and to civic and charitable activities, within the
limits of and subject to the Company's policies in effect from time to time.
Section 3. Compensation.
In consideration for services rendered to the Company (and
any and all subsidiaries and affiliates to which he may be assigned) under this
Agreement, the Company shall pay and provide to Executive the following
compensation and benefits.
(a) Salary. The Company shall pay Executive a base salary at
an annual rate equal to his current base salary rate at Riser during the term
hereof, to be paid in accordance with the Company's normal payroll practice.
Such base salary rate shall be increased or decreased from time to time at such
intervals and by the same percentages as may be authorized by the Board of
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<PAGE> 161
Directors of the Company generally with respect to base salary increases or
decreases for executive officers of the Company.
(b) Bonus. In addition to base salary under paragraph (a),
Executive shall also be entitled to (i) an annual incentive bonus under the
Annual Bonus Program applicable to the Company's senior executive officers, and
(ii) a long-term incentive bonus under the Company's Long Term Incentive Plan
("LTIP"), so that (1) during fiscal years 1998, 1999 and 2000, (A) in the event
that the LTIP threshold has been met, Executive shall receive a bonus of
$500,000, (B) in the event that the LTIP target has been met, Executive shall
receive a bonus of $1,500,000, and (C) in the event that the LTIP maximum has
been achieved, Executive shall receive a bonus of $3,000,000; and (2) during
fiscal years 2001 and 2002, (A) in the event that the LTIP (or such successor
long-term incentive plan for executives of the Company which is a successor to
the LTIP) threshold has been met, Executive shall receive a bonus of $300,000,
(B) in the event that the LTIP (or successor plan) target has been met,
Executive shall receive a bonus of $1,000,000, and (C) in the event that the
LTIP (or successor plan) maximum has been achieved, Executive shall receive a
bonus of $2,000,000.
(c) Life Insurance; SERP. The Company shall maintain
insurance on the life of Executive under such policy or policies as are
currently maintained for him by Riser, and shall continue Executive's
participation in the Supplemental Retirement Plan (SERP) of Riser dated July 1,
1994, which Riser established for the benefit of certain key executives,
including Executive, and which Riser provided to Executive pursuant to a
certain SERP Agreement made as of July 1, 1995.
(d) Fringe Benefits. Executive shall be entitled to
vacations, automobile, retirement benefits and other fringe benefits, including
but not limited to group life, health and disability insurance coverages,
consistent with the compensation policies and practices of the Company from
time to time prevailing with respect to executive officers of the Company.
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<PAGE> 162
(e) Continuation After Termination.
(1) If the employment of Executive is terminated
pursuant to Section 1(b)(i) hereof without proper cause (as defined in Section 5
hereof), the Company shall continue to be obligated, for the remainder of the
term specified in Section 1(a) hereof, to pay to Executive the base salary and
bonus amounts to which he otherwise would have been entitled under paragraphs
(a) and (b) of this Section 3 but for such early termination, and also to
continue his participation in the other benefit plans and programs referred to
in paragraphs (c) and (d) of this Section 3, during such period, if and to the
extent permitted by the terms of such plans and programs (or, if and to the
extent not so permitted, to pay or reimburse to Executive an amount equal to the
cost that would have been incurred by the Company in providing such benefits but
for such early termination).
(2) If the employment of Executive is terminated
pursuant to Section 1(b)(i) hereof as a result of his voluntary resignation
effective on or before June 30, 2000, the Company shall be obligated to pay to
Executive, in a lump sum, a severance benefit equal to one year's base salary at
the annual rate then in effect under paragraph (a) of this Section 3.
(3) If the employment of Executive is terminated
pursuant to Section (1)(b)(i) hereof as a result of his voluntary resignation
effective on or after July 1, 2000, the Company shall be obligated to pay to
Executive (i) in a lump sum, a severance benefit equal to the lesser of (A) one
year's base salary at the annual rate then in effect under paragraph (a) of this
Section 3 or (B) the base salary to which he otherwise would have been entitled
but for such early termination, plus (ii) a pro rata portion (based upon the
period of time during which he was actually employed from and after July 1,
2000) of the bonus amounts to which he otherwise would have been entitled but
for such early termination.
(4) If the employment of Executive is terminated
pursuant to Section (1)(b)(i) hereof for proper cause (as defined in Section 5
hereof), except in the case of voluntary termination covered by subparagraph (2)
or (3) of this Section 3(e), the Company shall
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<PAGE> 163
thereupon be relieved of its obligations to pay all compensation and benefits
under this Agreement (except for accrued and unpaid base salary).
Section 4. Disability.
The term of employment of Executive may be terminated at the
election of the Company upon a determination by the Board of Directors of the
Company, made in its sole discretion, that Executive will be unable, by reason
of physical or mental incapacity, to perform his reasonably expected or
customary duties under this Agreement on a substantially full-time basis for a
period longer than six consecutive months or more than nine months in any
consecutive twelve-month period. In the exercise of its discretion, the Board
of Directors may give due consideration to, among such other factors as it
deems appropriate to the best interests of the Company, the opinion of
Executive's personal physician or physicians and to the opinion of any
physician or physicians selected by the Board of Directors for these purposes.
Executive shall submit to examination by any physician or physicians so
selected by the Board of Directors, and to otherwise cooperate with the Board
of Directors in making the determination contemplated hereunder (such
cooperation to include, without limitation, consenting to the release of
information by any such physicians to the Board of Directors). In the event of
such termination, the Company shall thereupon be relieved of its obligations to
pay compensation and benefits under Section 3 hereof (except for accrued and
unpaid items, including a pro rata portion of the annual and long-term bonuses
described in Section 3(b) hereof) but shall be obligated to pay to (or for the
benefit of) Executive until his death the following:
(a) A monthly disability income benefit in an amount equal to
60% of the average monthly base salary paid to Executive under Section 3(a)
hereof during the twelve calendar months next preceding such determination, The
Company shall be entitled to credit, against its obligation to pay such
disability benefit, the amounts received from time to time by Executive
pursuant to each disability income insurance policy maintained by the Company.
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<PAGE> 164
(b) The benefits referred to in Section 3(c) hereof.
(c) Health insurance premiums for comparable coverages and
with comparable contributory features provided from time to time by the Company
for its executive officers, unless and until Executive shall have accepted
other employment in which health insurance is available to him.
Section 5. Termination for Proper Cause.
The occurrence of any of the following events shall
constitute "proper cause" for termination, at the election of the Board of
Directors of the Company, of the term of employment of Executive under this
Agreement, to wit:
(a) Executive shall voluntarily resign as a director,
officer or employee of the Company or any of its subsidiaries or affiliates
without approval of the Board of Directors of the Company;
(b) Executive shall breach this Agreement in any material
respect and, if curable, shall fail to cure such breach within 30 calendar days
after receiving written notice of such breach from the Company;
(c) the perpetration of defalcations, fraud or theft by
Executive involving the Company or any of its subsidiaries or affiliates, or
any other violation of law that the Board of Directors deems materially
injurious to the Company's business or reputation; or
(d) the deliberate failure of Executive to comply with
reasonable policies or directives of the Board of Directors;
provided, however the inability of Executive to achieve favorable results of
operations for reasons essentially unrelated to those set forth in paragraphs
(a), (b), (c) and (d) of this Section 5 shall not be deemed to constitute proper
cause for termination hereunder, The Company's election to terminate for proper
cause as aforesaid shall not be deemed to modify or abrogate any vested
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<PAGE> 165
rights of Executive under any deferred compensation or retirement plan of the
Company except as expressly set forth therein.
Section 6. Non-Competition.
Executive agrees that during the term of his employment
hereunder and for the Restricted Period (hereinafter defined) after his
employment hereunder terminates or is terminated, he will not in any way,
directly or indirectly, manage, operate, control, accept employment or a
consulting position with or otherwise advise or assist or be connected with or
own or have any other interest in or right with respect to (other than through
ownership of not more than one percent (1%) of the outstanding shares of a
corporation's stock which is listed on a national securities exchange) any
supermarket or any wholesale distributor of merchandise of the kinds generally
sold in supermarkets, which in any material way competes or proposes to compete
with the Company in the areas served, at any time during the Restricted Period,
by the Company; provided, however, Executive's ownership and management of his
(and his family's) investments in real estate leased to Riser, the Company
and/or other supermarkets and wholesale distributors of such merchandise shall
not be deemed to violate the foregoing restriction. For purposes of this
Section 6, "Restricted Period" means the greater of (i) the period of two years
next following the termination of Executive's employment, or (ii) the period of
time during which Executive is entitled to receive payments from the Company
pursuant to Section 3(e) or 4 hereof (as the case may be). Without limitation
of the Company's rights and remedies under this Agreement or as otherwise
provided by law or in equity, it is understood and agreed between the parties
that the right of Executive to receive any payments otherwise due to him under
this Agreement and any deferred compensation plan shall be suspended and
canceled if and for so long as he shall be in violation of the foregoing
covenant not to compete. If and when Executive cures such violation, such right
shall be automatically reinstated but only for the remainder of the period
during which such payments are due him.
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Section 7. Confidentiality.
For purposes of this Agreement, "proprietary information"
shall mean any material information relating to the business of the Company
that has not previously been publicly released by duly authorized
representatives of the Company and shall include (but shall not be limited to)
Company information encompassed in all marketing and sales plans, financial
information, costs, pricing information, and all methods, concepts, or ideas in
or reasonably related to the business of the Company and not in the public
domain.
Executive agrees to regard and preserve as confidential all
proprietary information pertaining to the Company's business that has been or
may hereafter be obtained by Executive in the course of his employment with
Riser and the Company, whether he has such information in his memory or in
writing or other physical form. Executive shall not, without written authority
from the Company to do so, use for his benefit or purposes, nor disclose to
others, either during the term of his employment or thereafter, except as
required by the conditions of his employment with the Company (or any
subsidiary or affiliate), any proprietary information connected with the
business or development of the Company. This provision shall not apply after
the proprietary information has been voluntarily disclosed to the public,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.
Section 8. Removal of Documents or Objects.
Executive agrees not to remove from the premises of the
Company, except as an employee of the Company in pursuit of the business of the
Company or any of its subsidiaries or affiliates, or except as specifically
permitted in writing by the Company, any document or object containing or
reflecting any proprietary information of the Company. Executive recognizes
that all such documents and objects, whether developed by him or by someone
else, are the exclusive property of the Company.
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Section 9. Injunctive Relief.
It is understood and agreed by and between the parties hereto
that the services to be rendered by Executive hereunder are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which may not be reasonably or adequately compensated in
damages and additionally that a breach by Executive of the covenants set out in
Sections 6, 7 and 8 of this Agreement will cause the Company great and
irreparable injury and damage. Executive hereby expressly agrees that the
Company shall be entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach of Sections 6, 7 and 8 of this
Agreement by Executive. This provision shall not, however, be construed as a
waiver of any of the rights which the Company may have for damages or
otherwise.
Section 10. Merger or Consolidation.
In the event of the merger or consolidation of the Company
with any unrelated corporation or corporations, or of the sale by the Company
of a major portion of its assets or of its business and good will to an
unrelated third party, this Agreement shall remain in effect and be assigned
and transferred to the Company's successor in interest as an asset of the
Company, and the Company shall cause such assignee to assume the Company's
obligations hereunder; and in such event Executive hereby confirms his
agreement to continue to perform his duties and obligations according to the
terms and conditions hereof for such assignee or transferee of this Agreement.
It is understood and agreed, however, that the scope of Executive's services
under Section 2 hereof may be appropriately modified, at the election of such
successor, to cover the segment of such successor's enterprise represented by
the assets and operations in which Executive is involved at the time of such
aforementioned transaction.
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Section 11. Notices.
All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been given if delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid:
(a) If to the Company, to it at the following address:
Giant Eagle, Inc.
101 Kappa Drive
Pittsburgh, PA 15238
Attention: Chairman of the Board
(b) If to the Executive, to him at the following address:
Anthony C. Rego
75 Kensington Oval
Rocky River, OH 44116
or to such other place as either party shall have specified by notice in
writing to the other.
Section 12. Governmental Regulation.
Nothing contained in this Agreement shall be construed so as
to require the commission of any act contrary to law and whenever there is any
conflict between any provision of this Agreement and any statute, law,
ordinance, order or regulation, the latter shall prevail, but in such event any
such provision of this Agreement shall be curtailed and limited only to the
extent necessary to bring it within the legal requirements.
Section 13. Arbitration.
Any dispute or controversy as to the interpretation,
construction, application or enforcement of, or otherwise arising under or in
connection with this Agreement shall be submitted at the request of either
party hereto for resolution and settlement through arbitration in Cleveland,
Ohio in accordance with the rules then prevailing of the American Arbitration
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<PAGE> 169
Association, Any award rendered therein shall be final and binding on each of
the parties hereto and their heirs, executors, administrators, successors and
assigns, and judgment may be entered thereon in any court having jurisdiction.
The foregoing provisions of this Section 13 shall not be deemed to limit the
rights and remedies reserved to the Company under and pursuant to Section 9
hereof.
Section 14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
Section 15. Divisability.
Should a court or arbitrator declare any provision hereof to
be invalid, such declaration shall not affect the validity of the Agreement as
a whole or any part thereof, other than the specific portion declared to be
invalid.
Section 16. Headings.
The headings to the Sections and paragraphs hereof are placed
herein for convenience of reference only and in case of any conflict the text
of this Agreement, rather than the headings, shall control.
Section 17. Entire Agreement; Amendment.
This Agreement sets forth the entire understanding of the
parties in respect of the subject matter contained herein and supersedes all
prior agreements, arrangements and understandings relating to the subject
matter and may only be amended by a written agreement signed by both parties
hereto or their duly authorized representatives.
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<PAGE> 170
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ ANTHONY C. REGO
---------------------------------
Anthony C. Rego
GIANT EAGLE, INC.
By: /s/ DAVID S. SHAPIRA
---------------------------------
Title: CEO
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<PAGE> 171
GIANT EAGLE, INC.
May 13, 1997
VIA TELECOPIER
Mr. Anthony Rego
Mr. Charles A. Rini, Sr.
c/o Kohrman, Jackson & Krantz P.L.L.
One Cleveland Center; 20th Floor
Cleveland, OH 44114
Dear Anthony and Chuck:
I am writing to confirm that, in accordance with our recent
conversation about this matter, the Board of Directors of Giant Eagle has
agreed to take all necessary corporate action to effect the election of each of
you as a member of the Boards of Giant Eagle and its Riser subsidiary for a
term extending to the date of the Annual Meeting of Shareholders held after the
end of fiscal 1998. We will take these steps as soon as practicable after
completion of the "back-end" merger provided for in the Agreement and Plan of
Merger dated May 13, 1997.
I am hopeful that your service will extend further into the future
than the term described above. However, as we discussed, I do not believe it
would be appropriate for us to make any firm commitment on that subject at this
time.
In addition, as we have discussed, in my capacity as Chairman and
Chief Executive, I will establish an internal Executive Management Committee to
which each of you will be appointed to serve, along with Ray Burgo and myself
(and perhaps others). The mission of this Committee will be to lead the
combined company's strategic planning efforts and to provide managerial control
and oversight in executing its strategic plans.
Yours truly,
/s/ DAVID S. SHAPIRA
--------------------
David S. Shapira
Chairman
<PAGE> 172
Exhibit (c)(4)
GIANT EAGLE, INC.
Employment Agreement dated
May 13, 1997
with
CHARLES A. RINI, SR.
<PAGE> 173
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Headings Page No.
- ---------------- --------
<S> <C> <C>
Section 1. Term of Employment.............................................................................2
Section 2. Services to be Rendered........................................................................3
Section 3. Compensation...................................................................................3
Section 4. Disability.....................................................................................6
Section 5. Termination for Proper Cause...................................................................7
Section 6. Non-Competition................................................................................8
Section 7. Confidentiality................................................................................9
Section 8. Removal of Documents or Objects................................................................9
Section 9. Injunctive Relief.............................................................................10
Section 10. Merger or Consolidation......................................................................10
Section 11. Notices......................................................................................11
Section 12. Governmental Regulation......................................................................11
Section 13. Arbitration..................................................................................11
Section 14. Governing Law................................................................................12
Section 15. Divisability.................................................................................12
Section 16. Headings.....................................................................................12
Section 17. Entire Agreement; Amendment..................................................................12
</TABLE>
<PAGE> 174
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into this 13th day of May, 1997, by and
between CHARLES A. RINI, SR., an individual residing in Cuyahoga County, Ohio
("Executive"), and GIANT EAGLE, INC., a Pennsylvania corporation (the
"Company"),
WITNESSETH THAT:
WHEREAS, Executive has served Riser, Inc. ("Riser") as a senior
executive officer and as a member of its Board of Directors for many years; and
WHEREAS, the Company and Riser intend to enter into a transaction
whereby the Company will acquire control over the business and properties of
Riser; and
WHEREAS, the Company desires to assure itself of the benefit of
Executive's services and experience, and to that end has authorized this
Agreement, to be effective from and after consummation of that transaction; and
WHEREAS, the Company will not enter into the proposed transaction with
Riser unless and until Executive enters into this Agreement with the Company;
and
WHEREAS, Executive is willing to enter the employ of the Company upon
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
<PAGE> 175
Section 1. Term of Employment.
(a) The term of employment of Executive under this Agreement
shall be the five-year period commencing on the date which is the Effective
Time of the Merger under the Agreement and Plan of Merger dated May 13, 1997 by
and among the Company, Riser and Talon Acquisition Company and ending on the
fifth anniversary of the Effective Time of the Merger.
(b) Notwithstanding paragraph (a), the term of employment of
Executive under this Agreement shall be subject to earlier termination upon:
(i) dismissal of Executive from his position as
an executive officer pursuant to resolution of the Board of
Directors, or failure of the Board to re-elect him as an
executive officer of the Company; or
(ii) determination of disability of Executive
pursuant to Section 4 hereof; or
(iii) death of Executive.
In the event of termination pursuant to clause (i), the Company shall
thereafter be obligated to pay to Executive the compensation and benefits
provided for under Section 3(e) hereof. In the event of termination pursuant to
clause (ii) the provisions of Section 4 hereof shall apply. In the event of
termination pursuant to clause (iii), the Company shall be obligated to pay
Executive's estate or designated beneficiary the compensation reserved under
Section 3(a) hereof until the end of the twelfth calendar month following his
death, plus pro-rata portions of annual and long-term incentive bonus awards
described in Section 3(b) hereof (when and if payable) under any plan or
program in which Executive was then a participant.
(c) If Executive remains in the Company's employ after the
five-year term specified in paragraph (a), this Agreement will continue to be
effective except that the Executive's employment will then be terminable "at
will" by either party on 20 days' advance written notice.
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Section 2. Services to be Rendered.
The Company hereby agrees to employ Executive as the
Company's Executive Vice President and the chief operating officer of the Riser
division or subsidiary of the Company, to serve at the Riser headquarters
office located in the Cleveland, Ohio area, subject to the terms, conditions
and provisions of this Agreement. Executive hereby accepts such employment, and
agrees (i) to perform all executive and managerial duties as may be required of
him by the Company, but in no event less than the level of duties a chief
operating officer of a wholly-owned subsidiary or division the size of Riser,
at the Effective Time of the Merger, would perform, and (ii) that he shall
devote his best efforts, on a full-time basis, and shall apply substantially
the same degree of skill and diligence in rendering services to the Company
under this Agreement as he has applied during his employment with Riser. In
connection therewith, Executive shall report to and be subject to the direction
of the Company's Chief Executive and Board of Directors. Notwithstanding the
foregoing, Executive may devote a reasonable amount of his time to his personal
investments and business affairs (including service as a director of
unaffiliated companies) and to civic and charitable activities, within the
limits of and subject to the Company's policies in effect from time to time.
Section 3. Compensation.
In consideration for services rendered to the Company (and
any and all subsidiaries and affiliates to which he may be assigned) under this
Agreement, the Company shall pay and provide to Executive the following
compensation and benefits.
(a) Salary. The Company shall pay Executive a base salary at
an annual rate equal to his current base salary rate at Riser during the term
hereof, to be paid in accordance with the Company's normal payroll practice.
Such base salary rate shall be increased or decreased from time to time at such
intervals and by the same percentages as may be authorized by the Board of
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<PAGE> 177
Directors of the Company generally with respect to base salary increases or
decreases for executive officers of the Company.
(b) Bonus. In addition to base salary under paragraph (a),
Executive shall also be entitled to (i) an annual incentive bonus under the
Annual Bonus Program applicable to the Company's senior executive officers, and
(ii) a long-term incentive bonus under the Company's Long Term Incentive Plan
("LTIP"), so that (1) during fiscal years 1998, 1999 and 2000, (A) in the event
that the LTIP threshold has been met, Executive shall receive a bonus of
$500,000, (B) in the event that the LTIP target has been met, Executive shall
receive a bonus of $1,500,000, and (C) in the event that the LTIP maximum has
been achieved, Executive shall receive a bonus of $3,000,000; and (2) during
fiscal years 2001 and 2002, (A) in the event that the LTIP (or such successor
long-term incentive plan for executives of the Company which is a successor to
the LTIP) threshold has been met, Executive shall receive a bonus of $300,000,
(B) in the event that the LTIP (or successor plan) target has been met,
Executive shall receive a bonus of $1,000,000, and (C) in the event that the
LTIP (or successor plan) maximum has been achieved, Executive shall receive a
bonus of $2,000,000.
(c) Life Insurance; SERP. The Company shall maintain
insurance on the life of Executive under such policy or policies as are
currently maintained for him by Riser, and shall assume the obligations of
Riser, and continuation of the performance thereof, pursuant to a certain
Split-Dollar Insurance Agreement between Riser and Charles A. Rini, Jr.,
Trustee (the "Insurance Agreement"), which Insurance Agreement was entered into
by Riser upon the election of Executive to forego participation in a certain
Supplemental Retirement (SERP) Plan which Riser had established for the benefit
of certain key executives, including Executive.
(d) Fringe Benefits. Executive shall be entitled to
vacations, automobile, retirement benefits and other fringe benefits, including
but not limited to group life, health and disability insurance coverages,
consistent with the compensation policies and practices of the Company from
time to time prevailing with respect to executive officers of the Company.
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(e) Continuation After Termination.
(1) If the employment of Executive is terminated
pursuant to Section 1(b)(i) hereof without proper cause (as defined in Section 5
hereof), the Company shall continue to be obligated, for the remainder of the
term specified in Section 1(a) hereof, to pay to Executive the base salary and
bonus amounts to which he otherwise would have been entitled under paragraphs
(a) and (b) of this Section 3 but for such early termination, and also to
continue his participation in the other benefit plans and programs referred to
in paragraphs (c) and (d) of this Section 3, during such period, if and to the
extent permitted by the terms of such plans and programs (or, if and to the
extent not so permitted, to pay or reimburse to Executive an amount equal to the
cost that would have been incurred by the Company in providing such benefits but
for such early termination).
(2) If the employment of Executive is terminated
pursuant to Section 1(b)(i) hereof as a result of his voluntary resignation
effective on or before June 30, 2000, the Company shall be obligated to pay to
Executive, in a lump sum, a severance benefit equal to one year's base salary at
the annual rate then in effect under paragraph (a) of this Section 3.
(3) If the employment of Executive is terminated
pursuant to Section (1)(b)(i) hereof as a result of his voluntary resignation
effective on or after July 1, 2000, the Company shall be obligated to pay to
Executive (i) in a lump sum, a severance benefit equal to the lesser of (A) one
year's base salary at the annual rate then in effect under paragraph (a) of this
Section 3 or (B) the base salary to which he otherwise would have been entitled
but for such early termination, plus (ii) a pro rata portion (based upon the
period of time during which he was actually employed from and after July 1,
2000) of the bonus amounts to which he otherwise would have been entitled but
for such early termination.
(4) If the employment of Executive is terminated
pursuant to Section (1)(b)(i) hereof for proper cause (as defined in Section 5
hereof), except in the case of voluntary termination covered by subparagraph (2)
or (3) of this Section 3(e), the Company shall
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thereupon be relieved of its obligations to pay all compensation and benefits
under this Agreement (except for accrued and unpaid base salary).
Section 4. Disability.
The term of employment of Executive may be terminated at the
election of the Company upon a determination by the Board of Directors of the
Company, made in its sole discretion, that Executive will be unable, by reason
of physical or mental incapacity, to perform his reasonably expected or
customary duties under this Agreement on a substantially full-time basis for a
period longer than six consecutive months or more than nine months in any
consecutive twelve-month period. In the exercise of its discretion, the Board
of Directors may give due consideration to, among such other factors as it
deems appropriate to the best interests of the Company, the opinion of
Executive's personal physician or physicians and to the opinion of any
physician or physicians selected by the Board of Directors for these purposes.
Executive shall submit to examination by any physician or physicians so
selected by the Board of Directors, and to otherwise cooperate with the Board
of Directors in making the determination contemplated hereunder (such
cooperation to include, without limitation, consenting to the release of
information by any such physicians to the Board of Directors). In the event of
such termination, the Company shall thereupon be relieved of its obligations to
pay compensation and benefits under Section 3 hereof (except for accrued and
unpaid items, including a pro rata portion of the annual and long-term bonuses
described in Section 3(b) hereof) but shall be obligated to pay to (or for the
benefit of) Executive until his death the following:
(a) A monthly disability income benefit in an amount equal to
60% of the average monthly base salary paid to Executive under Section 3(a)
hereof during the twelve calendar months next preceding such determination, The
Company shall be entitled to credit, against its obligation to pay such
disability benefit, the amounts received from time to time by Executive
pursuant to each disability income insurance policy maintained by the Company.
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(b) The benefits referred to in Section 3(c) hereof.
(c) Health insurance premiums for comparable coverages and
with comparable contributory features provided from time to time by the Company
for its executive officers, unless and until Executive shall have accepted
other employment in which health insurance is available to him.
Section 5. Termination for Proper Cause.
The occurrence of any of the following events shall
constitute "proper cause" for termination, at the election of the Board of
Directors of the Company, of the term of employment of Executive under this
Agreement, to wit:
(a) Executive shall voluntarily resign as a director,
officer or employee of the Company or any of its subsidiaries or affiliates
without approval of the Board of Directors of the Company;
(b) Executive shall breach this Agreement in any material
respect and, if curable, shall fail to cure such breach within 30 calendar days
after receiving written notice of such breach from the Company;
(c) the perpetration of defalcations, fraud or theft by
Executive involving the Company or any of its subsidiaries or affiliates, or
any other violation of law that the Board of Directors deems materially
injurious to the Company's business or reputation; or
(d) the deliberate failure of Executive to comply with
reasonable policies or directives of the Board of Directors;
provided, however the inability of Executive to achieve favorable results of
operations for reasons essentially unrelated to those set forth in paragraphs
(a), (b), (c) and (d) of this Section 5 shall not be deemed to constitute proper
cause for termination hereunder, The Company's election to terminate for proper
cause as aforesaid shall not be deemed to modify or abrogate any vested
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rights of Executive under any deferred compensation or retirement plan of the
Company except as expressly set forth therein.
Section 6. Non-Competition.
Executive agrees that during the term of his employment
hereunder and for the Restricted Period (hereinafter defined) after his
employment hereunder terminates or is terminated, he will not in any way,
directly or indirectly, manage, operate, control, accept employment or a
consulting position with or otherwise advise or assist or be connected with or
own or have any other interest in or right with respect to (other than through
ownership of not more than one percent (1%) of the outstanding shares of a
corporation's stock which is listed on a national securities exchange) any
supermarket or any wholesale distributor of merchandise of the kinds generally
sold in supermarkets, which in any material way competes or proposes to compete
with the Company in the areas served, at any time during the Restricted Period,
by the Company; provided, however, Executive's ownership and management of his
(and his family's) investments in real estate leased to Riser, the Company
and/or other supermarkets and wholesale distributors of such merchandise shall
not be deemed to violate the foregoing restriction. For purposes of this
Section 6, "Restricted Period" means the greater of (i) the period of two years
next following the termination of Executive's employment, or (ii) the period of
time during which Executive is entitled to receive payments from the Company
pursuant to Section 3(e) or 4 hereof (as the case may be). Without limitation
of the Company's rights and remedies under this Agreement or as otherwise
provided by law or in equity, it is understood and agreed between the parties
that the right of Executive to receive any payments otherwise due to him under
this Agreement and any deferred compensation plan shall be suspended and
canceled if and for so long as he shall be in violation of the foregoing
covenant not to compete. If and when Executive cures such violation, such right
shall be automatically reinstated but only for the remainder of the period
during which such payments are due him.
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Section 7. Confidentiality.
For purposes of this Agreement, "proprietary information"
shall mean any material information relating to the business of the Company
that has not previously been publicly released by duly authorized
representatives of the Company and shall include (but shall not be limited to)
Company information encompassed in all marketing and sales plans, financial
information, costs, pricing information, and all methods, concepts, or ideas in
or reasonably related to the business of the Company and not in the public
domain.
Executive agrees to regard and preserve as confidential all
proprietary information pertaining to the Company's business that has been or
may hereafter be obtained by Executive in the course of his employment with
Riser and the Company, whether he has such information in his memory or in
writing or other physical form. Executive shall not, without written authority
from the Company to do so, use for his benefit or purposes, nor disclose to
others, either during the term of his employment or thereafter, except as
required by the conditions of his employment with the Company (or any
subsidiary or affiliate), any proprietary information connected with the
business or development of the Company. This provision shall not apply after
the proprietary information has been voluntarily disclosed to the public,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.
Section 8. Removal of Documents or Objects.
Executive agrees not to remove from the premises of the
Company, except as an employee of the Company in pursuit of the business of the
Company or any of its subsidiaries or affiliates, or except as specifically
permitted in writing by the Company, any document or object containing or
reflecting any proprietary information of the Company. Executive recognizes
that all such documents and objects, whether developed by him or by someone
else, are the exclusive property of the Company.
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<PAGE> 183
Section 9. Injunctive Relief.
It is understood and agreed by and between the parties hereto
that the services to be rendered by Executive hereunder are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which may not be reasonably or adequately compensated in
damages and additionally that a breach by Executive of the covenants set out in
Sections 6, 7 and 8 of this Agreement will cause the Company great and
irreparable injury and damage. Executive hereby expressly agrees that the
Company shall be entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach of Sections 6, 7 and 8 of this
Agreement by Executive. This provision shall not, however, be construed as a
waiver of any of the rights which the Company may have for damages or
otherwise.
Section 10. Merger or Consolidation.
In the event of the merger or consolidation of the Company
with any unrelated corporation or corporations, or of the sale by the Company
of a major portion of its assets or of its business and good will to an
unrelated third party, this Agreement shall remain in effect and be assigned
and transferred to the Company's successor in interest as an asset of the
Company, and the Company shall cause such assignee to assume the Company's
obligations hereunder; and in such event Executive hereby confirms his
agreement to continue to perform his duties and obligations according to the
terms and conditions hereof for such assignee or transferee of this Agreement.
It is understood and agreed, however, that the scope of Executive's services
under Section 2 hereof may be appropriately modified, at the election of such
successor, to cover the segment of such successor's enterprise represented by
the assets and operations in which Executive is involved at the time of such
aforementioned transaction.
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<PAGE> 184
Section 11. Notices.
All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been given if delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid:
(a) If to the Company, to it at the following address:
Giant Eagle, Inc.
101 Kappa Drive
Pittsburgh, PA 15238
Attention: Chairman of the Board
(b) If to the Executive, to him at the following address:
Charles A. Rini, Sr.
4430 Valley Forge Drive
Fairview Park, OH 44126
or to such other place as either party shall have specified by notice in
writing to the other.
Section 12. Governmental Regulation.
Nothing contained in this Agreement shall be construed so as
to require the commission of any act contrary to law and whenever there is any
conflict between any provision of this Agreement and any statute, law,
ordinance, order or regulation, the latter shall prevail, but in such event any
such provision of this Agreement shall be curtailed and limited only to the
extent necessary to bring it within the legal requirements.
Section 13. Arbitration.
Any dispute or controversy as to the interpretation,
construction, application or enforcement of, or otherwise arising under or in
connection with this Agreement shall be submitted at the request of either
party hereto for resolution and settlement through arbitration in Cleveland,
Ohio in accordance with the rules then prevailing of the American Arbitration
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<PAGE> 185
Association, Any award rendered therein shall be final and binding on each of
the parties hereto and their heirs, executors, administrators, successors and
assigns, and judgment may be entered thereon in any court having jurisdiction.
The foregoing provisions of this Section 13 shall not be deemed to limit the
rights and remedies reserved to the Company under and pursuant to Section 9
hereof.
Section 14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
Section 15. Divisability.
Should a court or arbitrator declare any provision hereof to
be invalid, such declaration shall not affect the validity of the Agreement as
a whole or any part thereof, other than the specific portion declared to be
invalid.
Section 16. Headings.
The headings to the Sections and paragraphs hereof are placed
herein for convenience of reference only and in case of any conflict the text
of this Agreement, rather than the headings, shall control.
Section 17. Entire Agreement; Amendment.
This Agreement sets forth the entire understanding of the
parties in respect of the subject matter contained herein and supersedes all
prior agreements, arrangements and understandings relating to the subject
matter and may only be amended by a written agreement signed by both parties
hereto or their duly authorized representatives.
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<PAGE> 186
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ CHARLES A. RINI, SR.
---------------------------------
Charles A. Rini, Sr.
GIANT EAGLE, INC.
By: /s/ DAVID S. SHAPIRA
---------------------------------
Title: CEO
--------------------------
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<PAGE> 187
GIANT EAGLE, INC.
May 13, 1997
VIA TELECOPIER
Mr. Anthony Rego
Mr. Charles A. Rini, Sr.
c/o Kohrman, Jackson & Krantz P.L.L.
One Cleveland Center; 20th Floor
Cleveland, OH 44114
Dear Anthony and Chuck:
I am writing to confirm that, in accordance with our recent
conversation about this matter, the Board of Directors of Giant Eagle has
agreed to take all necessary corporate action to effect the election of each of
you as a member of the Boards of Giant Eagle and its Riser subsidiary for a
term extending to the date of the Annual Meeting of Shareholders held after the
end of fiscal 1998. We will take these steps as soon as practicable after
completion of the "back-end" merger provided for in the Agreement and Plan of
Merger dated May 13, 1997.
I am hopeful that your service will extend further into the future
than the term described above. However, as we discussed, I do not believe it
would be appropriate for us to make any firm commitment on that subject at this
time.
In addition, as we have discussed, in my capacity as Chairman and
Chief Executive, I will establish an internal Executive Management Committee to
which each of you will be appointed to serve, along with Ray Burgo and myself
(and perhaps others). The mission of this Committee will be to lead the
combined company's strategic planning efforts and to provide managerial control
and oversight in executing its strategic plans.
Yours truly,
/s/ David S. Shapira
--------------------
David S. Shapira
Chairman
<PAGE> 188
Exhibit (c)(5)
[RISER FOODS LOGO]
RISER FOODS, INC.
5300 Richmond Road
Bedford Heights, Ohio 44146
(216) 292-7000
January 16, 1997
CONFIDENTIAL
Giant Eagle, Inc.
101 Kappa Drive
Pittsburgh, PA 15238
Attention: David S. Shapira, Chairman
Gentlemen:
Riser Foods, Inc. ("Riser") is interested in the possibility of a
business combination (the "Transaction") with Giant Eagle, Inc. ("Eagle") and
desires to exchange information with Eagle. As a condition to each of Riser's
and Eagle's furnishing such information to the other, directly or through its
representatives, each of Riser and Eagle requires all such information to be
treated confidentially.
In consideration of the opportunity to review such information, each
of Riser and Eagle hereby agrees as follows:
1. CONFIDENTIAL INFORMATION. Subject to the limitations set forth
below, "Confidential Information" means all information that Riser or Eagle or
its representatives furnishes to the other or its representatives, whether
furnished before or after the date of this letter, all copies, extracts and
reproductions thereof and such portions of all notes, analyses, compilations,
studies and other documents, whether prepared by Riser or Eagle or others
(including Riser's or Eagle's professional advisers or employees) that contain
or reflect such information.
Confidential Information shall not include information that (a) is or
becomes generally available to the public other than as a result of a
disclosure by Riser or Eagle or its respective representatives in violation of
this letter; (b) is shown by written documentation to have been available to
Riser or Eagle or its respective representatives prior to its disclosure to
Riser or Eagle or its respective representatives by the other party hereto or
its respective representatives; or (c) is shown by written documentation to
have become available to or independently developed by Riser or Eagle or its
representatives from a source other than the other party hereto or its
respective representatives; provided that with respect to clauses (b) and (c)
above, the source of such information was not bound at the time of such
disclosure by a confidentiality agreement with Riser or Eagle or their
respective representatives or otherwise prohibited from transmitting the
information to Riser or Eagle by a contractual, legal or fiduciary obligation.
<PAGE> 189
RISER FOODS, INC.
Giant Eagle, Inc.
January 16, 1997
Page 2
2. RESTRICTED USE OF CONFIDENTIAL INFORMATION. Each of Riser and Eagle
agrees that it will keep the Confidential Information confidential; provided
that any of the Confidential Information may be disclosed to Riser's or Eagle's
respective directors, officers, employees, professional advisers or other
representatives who are directly involved in planning and evaluating the
Transaction solely for the purpose of planning and evaluating the Transaction
and not for any other purpose. The parties agree, however, that the fact of any
exchange of Confidential Information will not in any way impede the parties'
rights to compete against each other in the future. Such respective persons
shall be informed by each of Riser and Eagle of the confidential nature of the
Confidential Information, and each of Riser and Eagle shall cause such
respective persons to comply with this letter as if they were parties hereto.
3. NONDISCLOSURE. Except as may be required by judicial process or
applicable law, each of Riser and Eagle agrees that, without the prior written
consent of the other, it will not, and that it will cause its directors,
officers, employees, professional advisers and other representatives not to,
disclose to any person (a) any of the Confidential Information; (b) the fact
that the Confidential Information has been made available to it or that it has
inspected any part of the Confidential Information; (c) the fact that
discussions or negotiations are taking place concerning the Transaction; and
(d) any of the terms, conditions or other facts with respect to the
Transaction, including the status thereof.
4. CIVIL PROCESS, ETC. If Riser or Eagle or its respective
representatives are requested or required as a result of a judicial or
regulatory proceeding (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose or make any disclosure referred to in Paragraph 3, it
agrees to provide the other party hereto with prompt notice thereof so that the
latter may seek an appropriate protective order. If a protective order has not
been obtained after the latter has had sufficient time to secure the same and
the former or its representatives are, in the opinion of counsel for the
former, compelled to disclose Confidential Information to any tribunal,
regulatory authority or agency or third party claimant against the latter or
its representatives or else stand liable for contempt or suffer any similar
censure, sanction or penalty, then the former may disclose such information to
the extent required to such tribunal, regulatory authority or agency or third
party claimant without liability hereunder.
5. FUTURE EMPLOYMENT SOLICITATION. For a period of one year
after the date hereof, neither Riser nor Eagle nor its respective
representatives will, without the prior approval of the other, directly or
indirectly solicit for employment with it any representative of the other with
whom the former or its representatives has contact, or any person who is
employed by the other in an executive
<PAGE> 190
RISER FOODS, INC.
Giant Eagle, Inc.
January 16, 1997
Page 3
capacity as of the date hereof or at any time prior to the termination of the
current discussions concerning the Transaction.
6. RETURN OF INFORMATION. Each of Riser and Eagle will, and it will
cause its respective directors, officers, employees, professional advisers or
other representatives to deliver to the other all Confidential Information that
has been furnished to it by the other or its respective representatives,
without retaining any copy thereof, promptly upon the request of the other. In
such event, all other documents and material constituting Confidential
Information held by the former or any of those mentioned above shall be
destroyed and it will certify to the other that all such documents and
materials have been so destroyed.
7. NO OBLIGATION TO NEGOTIATE A DEFINITIVE AGREEMENT. Nothing
in this letter requires either Riser or Eagle to enter into a definitive
agreement for the Transaction. Either Riser or Eagle
may terminate discussions and negotiations with the other at any time.
8. NO REPRESENTATIONS, ETC. Except pursuant to the representations,
warranties and agreements of Riser or Eagle in a definitive agreement for the
Transaction if, when and as executed and subject to the limitations specified
therein, (a) neither makes any representation with respect to the accuracy or
completeness of the Confidential Information, and (b) neither party nor any of
its directors, officers or employees or other representatives shall have any
liability to the other party hereto or its representatives resulting from the
use of the Confidential Information by such other party or its representatives.
9. SPECIFIC PERFORMANCE AND EXPENSES. Each of Riser and Eagle
specifically agrees that there is no adequate remedy at law and that money
damages would not be a sufficient remedy for any breach of this letter and that
the other shall be entitled to specific performance (including an injunction)
as a remedy for any such breach. Specific performance shall not be deemed to be
the exclusive remedy for any breach by the other of this letter but shall be in
addition to all other remedies provided by law or equity. In the event of any
action for breach of this letter by either party, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses incurred in such
action.
10. MISCELLANEOUS. This letter shall be governed by and construed in
accordance with the laws of the State of Pennsylvania. This letter constitutes
the entire agreement of the parties with respect to the subject matter herein.
This letter may be waived, amended, or modified only by an instrument in
writing signed by the party against which such waiver, amendment or
modification is sought to be enforced. Neither Riser nor Eagle shall be
entitled to assign this letter without the prior
<PAGE> 191
RISER FOODS, INC.
Giant Eagle, Inc.
January 16, 1997
Page 4
written consent of the other. If any provision of this letter shall for any
reason be adjudged to be void, invalid or unenforceable, the remainder of this
letter shall continue and remain in full force and effect. This letter may be
executed in one or more counterparts, each of which will be deemed to
constitute an original, and all of which when taken together shall be deemed to
constitute one and the same agreement.
If you are in agreement with the foregoing, please sign and return one
copy of this letter, which will constitute your agreement with respect to the
subject matter hereof.
RISER FOODS, INC.
By: /s/ Anthony C. Rego
------------------------------
Anthony C. Rego, Chairman
AGREED TO AND ACCEPTED
January 23, 1997
GIANT EAGLE, INC.
By: /s/ David S. Shapira
--------------------------------
David S. Shapira, Chairman
