<PAGE>
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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
----------------
PAMIDA HOLDINGS CORPORATION
(Name of Subject Company)
----------------
SHOPKO MERGER CORP.
a wholly owned subsidiary of
SHOPKO STORES, INC.
(Bidders)
----------------
Common Stock, par value $0.01 per share
(Title of Class of Securities)
----------------
697642106
(CUSIP Number of Class of Securities)
----------------
Richard D. Schepp, Senior Vice President and General Counsel
ShopKo Stores, Inc.
P.O. Box 19060
Green Bay, Wisconsin 54307
(920) 429-4664
(Name, address and telephone number of persons authorized to
receive notices and communications on behalf of bidders)
Copy to
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
(312) 853-7000
Attention: Dennis V. Osimitz
May 17, 1999
(Date of Event Which Requires Filing Statement on Schedule 13D)
----------------
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee
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<S> <C>
$74,425,378 $14,885
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</TABLE>
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* For the purpose of calculating the fee only, this amount assumes the
purchase of 6,471,772 shares of common stock, par value $0.01 per share
("Common Stock"), of Pamida Holdings Corporation, at $11.50 per share. Such
number includes all outstanding shares of Common Stock as of May 10, 1999,
and assumes the exercise of all options to purchase shares of Common Stock
then outstanding but does not assume the conversion of the shares of
nonvoting common stock, par value $0.01 per share ("Nonvoting Common
Stock") of the Company into 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.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
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<PAGE>
SCHEDULES 14D-1 AND 13D
Page 2 of 8 Pages
CUSIP NO. 697642106
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1 NAME OF REPORTING PERSONS: ShopKo Merger Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)[X]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS:
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f):
[_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
907,387 Shares
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
[X]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
14.0% of the Shares issued and outstanding as of May 10, 1999, assuming
exercise of the option to purchase Shares granted under the Stockholder and
Purchase Agreement described in this Statement.*
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10 TYPE OF REPORTING PERSON:
CO
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- --------
* See second and third paragraphs on page 4.
2
<PAGE>
SCHEDULES 14D-1 AND 13D
Page 3 of 8 Pages
CUSIP NO. 697642106
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1 NAME OF REPORTING PERSONS: ShopKo Stores, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 410985054
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)[X]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS:
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f):
[_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Wisconsin
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 907,387
SHARES
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
[X]
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9 PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7):
14.0% of the Shares issued and outstanding as of May 10, 1999, assuming
exercise of the option to purchase Shares granted under the Stockholder and
Purchase Agreement described in this Statement.*
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10 TYPE OF REPORTING PERSON:
CO
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- --------
* See second and third paragraphs on page 4.
3
<PAGE>
Page 4 of 8 Pages
This Statement relates to a tender offer by ShopKo Merger Corp., a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of ShopKo Stores,
Inc., a Wisconsin corporation (the "Parent"), to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), of Pamida
Holdings Corporation, a Delaware corporation (the "Company"), at a purchase
price of $11.50 per Share, net to the seller in cash, without interest, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 17, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are filed
as Exhibits (a)(1) and (a)(2) hereto, respectively, and which are incorporated
herein by reference. The cover page above and item numbers and responses
thereto below are in accordance with the requirements of Schedule 14D-1.
The Offeror and Parent have entered into Stockholder Agreements, each dated
as of May 10, 1999 (the "Stockholder Agreements"), with each of the directors
of the Company (the "Tendering Stockholders"), pursuant to which the Tendering
Stockholders have agreed to tender 303,965 Shares owned of record by the
Tendering Stockholders and any other shares that they may acquire upon the
exercise of options to purchase Shares held by such Tendering Stockholders
(the "Committed Shares") pursuant to the Offer. Pursuant to the Stockholder
Agreements, the Tendering Stockholders have also agreed that, among other
things, until the termination of the Offer, and, in certain cases, for a
period of 60 days thereafter, to vote such Committed Shares in favor of the
Merger (as defined herein) and against certain competing transactions.
The Offeror and Parent have also entered into a Stockholder and Purchase
Agreement, dated as of May 10, 1999 (the "Stockholder and Purchase
Agreement"), with 399 Venture Partners, Inc. ("Venture Partners"), pursuant to
which Venture Partners has (i) agreed to tender the 907,387 Shares owned of
record by Venture Partners and (ii) granted to the Offeror an irrevocable
option to purchase the 907,387 Shares and the 3,050,473 shares of nonvoting
common stock, par value $0.01 per share (the "Nonvoting Shares") of the
Company owned of record by Venture Partners (collectively the "Venture
Partners Committed Shares") at a price per Share and Nonvoting Share of $11.50
in cash. The Offeror has agreed to purchase such Shares (to the extent not
tendered) and Nonvoting Shares immediately after the acceptance for purchase
by the Offeror of Shares pursuant to the Offer. Pursuant to the Stockholder
and Purchase Agreement, Venture Partners has also agreed that, among other
things, until the termination of the Merger Agreement, and, in certain cases,
for a period of 60 days thereafter, it will not transfer the Venture Partners
Committed Shares and will vote the Venture Partners Committed Shares in favor
of the Merger and against certain competing transactions. The Offeror and
Parent disclaim ownership of any Share issuable upon the conversion of
Nonvoting Shares. Additional information about the Stockholder Agreements and
the Stockholder and Purchase Agreement is contained in Section 13 ("The Merger
Agreement; the Stockholder Agreements; and the Stockholder and Purchase
Agreement") of the Offer to Purchase.
Item 1. Security and Subject Company.
(a) The name of the subject company is Pamida Holdings Corporation. The
address of the principal executive offices of the Company is set forth in
Section 8 ("Certain Information Concerning the Company") of the Offer to
Purchase and is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is the common stock, par value $0.01 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
Page 5 of 8 Pages
Item 2. Identity and Background.
(a) through (d), (g): The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Offeror and Parent") of the
Offer to Purchase, and in Annex I thereto, is incorporated herein by
reference.
(e) and (f): None of the Offeror, the Parent nor, to the best of their
knowledge, any of the persons listed in Annex I of the Offer to Purchase has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations With the Subject Company.
(a) None.
(b) The information set forth in the Introduction and Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company") 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) through (e): The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company"), Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") and Section 13 ("The Merger Agreement; the Stockholder Agreements;
and the Stockholder and Purchase Agreement") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g): The information set forth in Section 7 ("Certain Effects of
the Transaction") 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 Offeror and Parent") and Section 13 ("The
Merger Agreement; the Stockholder Agreements; and the Stockholder and Purchase
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 and Section 11 ("Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company")
and Section 13 ("The Merger Agreement; the Stockholder Agreements; and the
Stockholder and Purchase Agreement") of the Offer to Purchase is incorporated
herein by reference.
5
<PAGE>
Page 6 of 8 Pages
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 9 ("Certain Information Concerning the
Offeror and Parent") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company as to whether to sell,
tender or hold Shares being sought in the Offer.
Item 10. Additional Information.
(a) The information set forth in Section 13 ("The Merger Agreement; the
Stockholder Agreements; and the Stockholder and Purchase Agreement") of the
Offer to Purchase is incorporated by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated May 17, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Announcement, dated May 17, 1999.
(a)(8) Press Release issued by the Parent and the Company on May 11, 1999.
(a)(9) Press Release issued by the Parent and the Company on May 17, 1999.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of May 10, 1999, among the
Parent, the Offeror and the Company.
6
<PAGE>
Page 7 of 8 Pages
(c)(2) Stockholder and Purchase Agreement, dated as of May 10, 1999, between
the Parent, the Offeror and Venture Partners.
(c)(3) Stockholder Agreement, dated as of May 10, 1999, among L. David
Callaway, III, the Offeror and Parent.
(c)(4) Stockholder Agreement, dated as of May 10, 1999, among Stuyvesant P.
Comfort, the Offeror and Parent.
(c)(5) Stockholder Agreement, dated as of May 10, 1999, among Steven S.
Fishman, the Offeror and Parent.
(c)(6) Stockholder Agreement, dated as of May 10, 1999, among M. Saleem
Muqaddam, the Offeror and Parent.
(c)(7) Stockholder Agreement, dated as of May 10, 1999, among Peter J.
Sodini, the Offeror and Parent.
(c)(8) Stockholder Agreement, dated as of May 10, 1999, among Frank A.
Washburn, the Offeror and Parent.
(d) None.
(e) Not applicable.
(f) None.
7
<PAGE>
Page 8 of 8 Pages
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 17, 1999
ShopKo Stores, Inc.
/s/ William J. Podany
By: _________________________________
Name: William J. Podany
Title: President and Chief
Executive Officer
ShopKo Merger Corp.
/s/ William J. Podany
By: _________________________________
Name: William J. Podany
Title: President and Chief
Executive Officer
8
<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
PAMIDA HOLDINGS CORPORATION
at
$11.50 Net Per Share
by
SHOPKO MERGER CORP.
a wholly owned subsidiary of
SHOPKO STORES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 14, 1999,
UNLESS THE OFFER IS EXTENDED.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF MAY 10, 1999 (THE "MERGER AGREEMENT"), AMONG
SHOPKO STORES, INC. ("PARENT"), SHOPKO MERGER CORP. (THE "OFFEROR") AND PAMIDA
HOLDINGS CORPORATION (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER (AS
DEFINED HEREIN), HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND RECOMMENDS
THAT HOLDERS OF THE SHARES (AS DEFINED HEREIN) ACCEPT THE OFFER AND TENDER
THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
IN CONNECTION WITH THE MERGER AGREEMENT, PARENT AND THE OFFEROR ENTERED
INTO STOCKHOLDER AGREEMENTS, EACH DATED AS OF MAY 10, 1999 (THE "STOCKHOLDER
AGREEMENTS"), WITH EACH OF THE DIRECTORS OF THE COMPANY WHO TOGETHER
BENEFICIALLY OWN APPROXIMATELY 4.7% OF THE SHARES THAT ARE OUTSTANDING ON A
FULLY DILUTED BASIS (BUT NOT ASSUMING THE CONVERSION OF THE NONVOTING SHARES
(AS DEFINED HEREIN)). PURSUANT TO THE STOCKHOLDER AGREEMENTS, THE DIRECTORS
HAVE AGREED, AMONG OTHER THINGS, TO TENDER ALL OF THEIR SHARES PURSUANT TO THE
OFFER. PARENT AND THE OFFEROR HAVE ALSO ENTERED INTO A STOCKHOLDER AND
PURCHASE AGREEMENT DATED AS OF MAY 10, 1999 (THE "STOCKHOLDER AND PURCHASE
AGREEMENT") WITH 399 VENTURE PARTNERS, INC. ("VENTURE PARTNERS"), WHICH
BENEFICIALLY OWNS APPROXIMATELY 14.0% OF THE SHARES THAT ARE OUTSTANDING ON A
FULLY DILUTED BASIS (BUT NOT ASSUMING THE CONVERSION OF THE NONVOTING SHARES)
AND ALL OF THE NONVOTING SHARES THAT ARE OUTSTANDING. PURSUANT TO THE
STOCKHOLDER AND PURCHASE AGREEMENT, VENTURE PARTNERS HAS AGREED, AMONG OTHER
THINGS, TO TENDER ALL OF ITS SHARES PURSUANT TO THE OFFER AND HAS GRANTED
PARENT AN IRREVOCABLE OPTION TO PURCHASE (THE "OPTION") ALL OF ITS SHARES AND
ALL OF ITS NONVOTING SHARES, AT A PURCHASE PRICE OF $11.50 PER SHARE,
EXERCISABLE UPON THE OCCURRENCE OF CERTAIN EVENTS. PARENT AND THE OFFEROR HAVE
AGREED TO EXERCISE THE OPTION AND PURCHASE ALL OF THE SHARES (TO THE EXTENT
NOT TENDERED) AND ALL OF THE NONVOTING SHARES FROM VENTURE PARTNERS
IMMEDIATELY AFTER THE PURCHASE OF SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SHARES
CONSTITUTING AT LEAST 51% OF THE SHARES THAT ARE OUTSTANDING DETERMINED ON A
FULLY DILUTED BASIS (BUT NOT ASSUMING THE CONVERSION OF THE NONVOTING SHARES),
(ii) ANY WAITING PERIOD UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO
THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN
TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER AND (iii) THE SATISFACTION OF
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal and deliver the Letter of Transmittal with the Shares and all
other required documents to the Depositary (as defined herein) or follow the
procedure for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for the stockholder. Stockholders having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such person if they desire to tender their Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply
with the procedures for book-entry transfer on a timely basis or who cannot
deliver all required documents to the Depositary, in each case prior to the
expiration of the Offer, must tender such Shares pursuant to the guaranteed
delivery procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal 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:
Merrill Lynch & Co.
May 17, 1999
<PAGE>
TABLE OF CONTENTS
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Page
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<S> <C>
Introduction.............................................................. 1
1.Terms of the Offer..................................................... 3
2.Acceptance for Payment and Payment for Shares.......................... 5
3.Procedure for Tendering Shares......................................... 6
4.Withdrawal Rights...................................................... 9
5.Certain United States Federal Income Tax Consequences.................. 10
6.Price Range of Shares; Dividends....................................... 11
7.Certain Effects of the Transaction..................................... 11
8.Certain Information Concerning the Company............................. 12
9.Certain Information Concerning the Offeror and Parent.................. 14
10.Source and Amount of Funds............................................. 17
11.Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company......................................................... 17
12.Purpose of the Offer and the Merger; Plans for the Company............. 22
13. The Merger Agreement; the Stockholder Agreements; and the Stockholder
and Purchase Agreement................................................ 23
14.Dividends and Distributions............................................ 32
15.Certain Conditions to the Offeror's Obligations........................ 32
16.Certain Legal Matters.................................................. 34
17.Fees and Expenses...................................................... 35
18.Miscellaneous.......................................................... 36
Annex ICertain Information Concerning the Directors and Executive Officers
of Parent and the Offeror.......................................... 37
</TABLE>
<PAGE>
To the holders of Common Stock of Pamida Holdings Corporation:
INTRODUCTION
ShopKo Merger Corp., a Delaware corporation (the "Offeror") and a wholly
owned subsidiary of ShopKo Stores, Inc., a Wisconsin corporation ("Parent"),
hereby offers to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Pamida Holdings Corporation, a Delaware
corporation (the "Company"), at a purchase price of $11.50 per Share, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). Tendering holders of Shares
will not be obligated to pay brokerage fees or commissions or, except as set
forth in the Letter of Transmittal, stock transfer taxes on the purchase of
Shares by the Offeror pursuant to the Offer. The Offer is not being made for
shares of nonvoting common stock, par value $.01 per share (the "Nonvoting
Shares"), of the Company, each of which Nonvoting Shares is convertible into
one Share except under certain conditions. The Offeror will pay all charges
and expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), which is acting as the Dealer Manager ("Dealer Manager"), American
Stock Transfer & Trust Company, which is acting as the Depositary (the
"Depositary"), and D.F. King & Co., Inc., which is acting as the Information
Agent (the "Information Agent"), in connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT (AS DEFINED HEREIN), THE OFFER AND THE MERGER (AS DEFINED HEREIN),
HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE
HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
Johnson Rice & Company, L.L.C. ("Johnson Rice"), the Company's financial
advisor, has delivered to the Company's Board of Directors its written opinion
dated May 10, 1999 to the effect that, as of such date and based upon and
subject to certain matters set forth in such opinion, the consideration to be
received by the holders of Shares pursuant to the Offer and the Merger and the
consideration to be received by the holders of Nonvoting Shares pursuant to
the Merger is fair to such holders from a financial point of view. A copy of
such opinion is contained in the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, which has been filed by the Company with the
Securities and Exchange Commission (the "Commission") in connection with the
Offer and which is being distributed to the Company's stockholders.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer Shares
constituting at least 51% of the Shares that are outstanding determined on a
fully diluted basis (but not assuming the conversion of the Nonvoting Shares)
(the "Minimum Condition"), (ii) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the purchase of Shares pursuant to the Offer having expired or having been
terminated prior to the expiration of the Offer and (iii) the satisfaction of
certain other terms and conditions. See Section 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of May 10, 1999 (the "Merger Agreement"), among Parent, the Offeror and the
Company. The Merger Agreement provides that, among other things, after the
purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the Delaware General Corporation Law, as amended (the
"DGCL"), the Offeror will be merged with and into the Company (the "Merger").
Following the consummation of the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and will be a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share and each Nonvoting Share that is issued and outstanding
immediately prior to the Effective Time (other than Shares and Nonvoting
Shares owned by the Company, any subsidiary of the Company, Parent, the
Offeror or any other direct or indirect subsidiary of Parent (other than
1
<PAGE>
Shares in trust accounts, custodial accounts and the like that are
beneficially owned by third parties) or Shares with respect to which appraisal
rights are properly exercised under Delaware law ("Dissenting Shares")) will
be converted into the right to receive from the Surviving Corporation $11.50
(or any higher price that may be paid for each Share pursuant to the Offer) in
cash, without interest thereon (the "Offer Price"). See Section 5 for a
description of certain United States federal income tax consequences of the
Offer and the Merger.
In connection with the Merger Agreement, the Offeror and Parent entered
into Stockholder Agreements, each dated as of May 10, 1999 (the "Stockholder
Agreements"), with each of the following directors of the Company: L. David
Callaway, III, Stuyvesant P. Comfort, Steven S. Fishman, M. Saleem Muqaddam,
Peter J. Sodini and Frank A. Washburn (the "Tendering Stockholders"), pursuant
to which the Tendering Stockholders have agreed to tender pursuant to the
Offer the 303,965 Shares owned of record by the Tendering Stockholders and any
other Shares that they may acquire upon the exercise of options to purchase
Shares held by such Tendering Stockholders (the "Committed Shares"). Pursuant
to the Stockholder Agreements, the Tendering Stockholders have also agreed
that, among other things, until the Stockholder Agreement Termination Date (as
defined herein), such Tendering Stockholders will not transfer the Committed
Shares and will vote the Committed Shares in favor of the Merger and against
certain competing transactions. The Committed Shares represent approximately
4.7% of the Shares that, as of May 10, 1999, were issued and outstanding on a
fully diluted basis (but not assuming the conversion of the Nonvoting Shares).
The Offeror and Parent also entered into a Stockholder and Purchase
Agreement, dated as of May 10, 1999 (the "Stockholder and Purchase
Agreement"), with 399 Venture Partners, Inc. ("Venture Partners"), pursuant to
which Venture Partners has (i) agreed to tender pursuant to the Offer the
907,387 Shares owned of record by Venture Partners and (ii) granted to the
Offeror an irrevocable option to purchase (the "Option") the Shares and the
3,050,473 Nonvoting Shares owned of record by Venture Partners (collectively
the "Venture Partners Committed Shares") at a price per Share and Nonvoting
Share of $11.50 in cash. The Offeror has agreed to purchase such Shares (to
the extent not tendered) and Nonvoting Shares immediately after the acceptance
for purchase by the Offeror of Shares pursuant to the Offer. The Option will
terminate on the Option Termination Date (as defined herein). Pursuant to the
Stockholder and Purchase Agreement, Venture Partners has also agreed that,
among other things, until the Option Termination Date, it will not transfer
the Venture Partners Committed Shares and will vote the Venture Partners
Committed Shares in favor of the Merger and against certain competing
transactions. Parent and the Offeror have agreed to exercise the Option and
purchase all of the Shares (to the extent not tendered) and all of the
Nonvoting Shares from Venture Partners immediately after the purchase of
Shares pursuant to the Offer. The Venture Partners Committed Shares represent
approximately 14.0% of the Shares that, as of May 10, 1999, were issued and
outstanding on a fully diluted basis (but not assuming the conversion of the
Nonvoting Shares).
Pursuant to the Company's Restated Certificate of Incorporation (the
"Charter"), for so long as the Notes (as defined herein) remain outstanding,
the Nonvoting Shares purchased upon the exercise of the Option may not be
converted into Shares by Parent or the Offeror until the 61st day after their
transfer and, thereafter, may only be converted if such conversion would not
have the effect of causing Parent and the Offeror to become the beneficial
owner of 30% or more of the Shares. After the purchase of Shares pursuant to
the Offer, Parent has the right under the Merger Agreement to require Pamida,
Inc., a Delaware corporation ("Pamida") and a wholly owned subsidiary of the
Company, to, among other things, redeem or discharge the Notes if Parent
provides the funds for such redemption or discharge. If Parent exercises this
right prior to the Effective Time, Parent or the Offeror would then be able to
convert the Nonvoting Shares into Shares and to vote such Shares in favor of
the Merger.
The Merger Agreement, the Stockholder Agreements and the Stockholder and
Purchase Agreement are more fully described in Section 13.
The Merger Agreement provides that, promptly after the Offeror acquires
Shares which represent at least the Minimum Condition, Parent will be entitled
to designate such number of directors on the Board of Directors of the
Company, subject to compliance with Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as will make the percentage of
the Company's directors designated by Parent equal to
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the percentage of the Shares then outstanding held by Parent or any of its
subsidiaries and the Company shall, at such time, cause the Offeror's
designees to be so elected by its existing Board of Directors. However, until
the Effective Time, the Board of Directors of the Company shall have at least
two directors who were directors on the date of the Merger Agreement. The
Company has agreed, subject to the applicable provisions of the Company's
Charter and Bylaws (the "Constituent Documents"), either to increase the size
of the Board of Directors of the Company and/or obtain the resignation of such
number of directors as is necessary to enable the Offeror's designees to be
elected or appointed to the Board.
If the Minimum Condition and the other conditions to the Offer are
satisfied and the Offer is consummated, the Offeror will own a sufficient
number of Shares to ensure that the Merger will be approved. Under the DGCL,
if, after consummation of the Offer, the Offeror owns at least 90% of the
Shares and at least 90% of the Nonvoting Shares then outstanding, then the
Offeror will be able to cause the Merger to occur without a vote of the
Company's stockholders. If, however, after consummation of the Offer, the
Offeror owns less than 90% of the then outstanding Shares or Nonvoting Shares,
a vote of the Company's stockholders will be required under the DGCL to
approve the Merger, and a significantly longer period of time will be required
to effect the Merger.
The Company has advised the Offeror that as of May 10, 1999, there were (a)
6,026,495 Shares issued and outstanding, (b) 3,050,473 Nonvoting Shares issued
and outstanding and (c) 445,277 Shares reserved for issuance upon the exercise
of outstanding employee stock options. Based on the foregoing, the Minimum
Condition will be satisfied if at least 3,300,604 Shares, or approximately
54.8% of the outstanding Shares as of May 10, 1999 (approximately 51% of the
Shares on a fully diluted basis (but not assuming the conversion of the
Nonvoting Shares)), are validly tendered and not withdrawn prior to the
Expiration Date.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and thereby purchase all
Shares validly tendered prior to the Expiration Date and not withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight,
New York City time, on Monday, June 14, 1999, unless the Offeror has extended
the period of time for which the Offer is open, in which event the term
"Expiration Date" will mean the latest time and date at which the Offer, as so
extended by the Offeror, will expire.
If the Offeror decides, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time
that notice of such increase is first published, sent or given to holders of
Shares in the manner specified below, the Offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth business day
from, and including, the date that such notice is first so published, sent or
given, then the Offer will be extended until the expiration of such period of
ten business days. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 Midnight, New York City time.
The Offer is conditioned upon satisfaction of the Minimum Condition, the
expiration or termination of any waiting period under the HSR Act applicable
to the purchase of Shares pursuant to the Offer and certain other terms and
conditions. See Section 15. The Merger Agreement and the Offer may be
terminated by the Offeror and Parent if certain events occur. The Offeror
reserves the right, in accordance with applicable rules and regulations of the
Commission, subject to the limitations set forth in the Merger Agreement and
described below, to waive or reduce the Minimum Condition or to waive any
other condition to the Offer. If the Minimum Condition or any condition set
forth in Section 15 has not been satisfied by 12:00 Midnight, New York City
time, on June 14, 1999 (or any other time then set as the Expiration Date),
the Offeror may, subject to the terms of the Merger Agreement as described
below, elect to (i) extend the Offer and, subject
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to applicable withdrawal rights, retain all tendered Shares until the
expiration of the Offer, as extended, (ii) subject to complying with applicable
rules and regulations of the Commission, accept for payment all Shares so
tendered and not extend the Offer or (iii) terminate the Offer and not accept
for payment any Shares and return all tendered Shares to tendering
stockholders. During any extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer and subject to the right of a
tendering stockholder to withdraw such stockholder's Shares. See Section 4.
Under no circumstances will the Offeror pay interest on the purchase price for
tendered Shares, whether or not it extends the Offer.
Under the terms of the Merger Agreement, the Offeror may not, without the
consent of the Company, decrease the Offer Price, change the form of
consideration to be paid in the Offer, reduce the maximum number of Shares to
be purchased in the Offer, alter the terms of the Minimum Condition, waive the
Minimum Condition, otherwise modify or amend the conditions to the Offer in a
manner that is adverse to the holders of Shares or Nonvoting Shares or which
imposes additional conditions to the Offer or extend the Offer (except as
described in the next sentence). Notwithstanding the foregoing, the Offeror
may, without the consent of the Company and so long as the Merger Agreement has
not been terminated, (i) extend the Offer, if at the scheduled or extended
expiration date of the Offer any of the conditions shall not be satisfied or
waived, until such time as such conditions are satisfied or waived, (ii) extend
the Offer for any period required by any rule, regulation, interpretation or
position of the Commission or the Commission staff applicable to the Offer,
(iii) if all Offer conditions are satisfied or waived but the number of Shares
tendered is at least equal to 85%, but less than 90%, of the then outstanding
number of Shares, extend the Offer for any reason on one or more occasions for
an aggregate period of not more than five business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) and
(iv) extend the Offer until July 2, 1999 unless (A) the event of default which
would arise under Section 8.1(j) of the Amended and Restated Loan and Security
Agreement, dated as of July 2, 1998 (the "Loan Agreement"), by and among Pamida
and Seaway Importing Company, a Nebraska corporation, as borrowers, and the
Agent and Lenders who are parties thereto because of the Offeror's purchase of
Shares pursuant to the Offer has been waived or (B) the termination fee payable
under Section 10.2(e) of the Loan Agreement has been reduced to $1.25 million
or less. If the Offeror extends the Offer under clause (iv) of the preceding
sentence, then the Offeror will be deemed to have irrevocably waived the
condition that the representations and warranties of the Company be true and
accurate as of the date of the consummation of the Offer and the condition that
no events or changes that have had or would reasonably be expected to have or
constitute, individually or in the aggregate, a Material Adverse Effect (as
defined in the Merger Agreement) on the Company shall have occurred. The
Offeror's right to extend the Offer is in each case subject to the right of
Parent, the Offeror or the Company to terminate the Merger Agreement pursuant
to the terms thereof.
Subject to the limitations set forth in this Offer and the Merger Agreement,
the Offeror reserves the right, at any time or from time to time in its sole
discretion, to extend the period during which the Offer is open by giving oral
or written notice of such extension to the Depositary and by making a public
announcement of such extension. There can be no assurance that the Offeror will
exercise its right to extend the Offer. During such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer and
subject to the right of a tendering stockholder to withdraw such Shares.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, the Offeror
expressly reserves the right, at any time and from time to time, in its sole
discretion, (i) to delay payment for any Shares regardless of whether such
Shares were theretofore accepted for payment, or to terminate the Offer and not
to accept for payment or pay for any Shares not theretofore accepted for
payment or paid for, upon the occurrence of any of the conditions set forth in
Section 15, by giving oral or written notice of such delay or termination to
the Depositary, and (ii) at any time or from time to time, to amend the Offer
in any respect. The Offeror's right to delay payment for any Shares or not to
pay for any Shares theretofore accepted for payment is subject to the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, relating to the Offeror's obligation to pay for or
return tendered Shares promptly after the termination or withdrawal of the
Offer.
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Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without
limiting the obligation of the Offeror under such rule or the manner in which
the Offeror may choose to make any public announcement, the Offeror currently
intends to make announcements by issuing a press release to the Dow Jones News
Service and making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer (including, with the
consent of the Company, a waiver of the Minimum Condition), the Offeror will
disseminate additional tender offer materials and extend the Offer if and to
the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act or otherwise. The minimum period during which a tender offer must remain
open following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage
of securities sought, will depend upon the facts and circumstances, including
the materiality of the changes. In the Commission's view, an offer should
remain open for a minimum of five business days from the date the material
change is first published, sent or given to stockholders, and, if material
changes are made with respect to information not materially less significant
than the Offer Price and the percentage of securities sought, a minimum ten
business day period may be required to allow for adequate dissemination to
stockholders and investor response. With respect to a change in price or a
change in percentage of securities sought, a minimum ten business day period
is generally required to allow for adequate dissemination to stockholders and
investor response.
The Company's transfer agent has provided the Offeror with the Company's
list of stockholders 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 to
record holders of Shares and will be furnished by the Offeror to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Offeror will purchase, by accepting for payment,
and will pay for, all Shares validly tendered and not withdrawn in accordance
with Section 4 prior to the Expiration Date promptly after the later to occur
of (a) the Expiration Date and (b) the satisfaction or waiver of the
conditions set forth in Section 15 related to regulatory matters. Subject to
compliance with Rule 14e-1(c) under the Exchange Act, the Offeror expressly
reserves the right, in its sole discretion, to delay acceptance of, or payment
for, Shares in order to comply in whole or in part with any applicable law.
See Sections 1 and 16. In all cases, payment for Shares purchased pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in Section 3, (ii) the Letter of
Transmittal, properly completed and duly executed (or a facsimile thereof)
with all required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message (as defined below) and (iii) any other documents
required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
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For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment pursuant to the Offer. In all
cases, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Offeror
and transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or the Offeror is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to the Offeror's
rights under Section 1, the Depositary may, nevertheless, on behalf of the
Offeror, retain tendered Shares, and such Shares may not be withdrawn, except
to the extent that the tendering stockholders are entitled to withdrawal
rights as described in Section 4 below and as otherwise required by Rule 14e-
1(c) under the Exchange Act. Under no circumstances will interest on the
purchase price for Shares be paid by the Offeror.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates representing unpurchased or untendered Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer to the Book-Entry Transfer Facility,
such Shares will be credited to an account maintained within such Book-Entry
Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being
paid for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
The Offeror reserves the right, subject to the provisions of the Merger
Agreement, to transfer or assign, in whole or from time to time in part, to
one or more of its wholly owned subsidiaries, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but no such transfer or
assignment will relieve the Offeror of its obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment.
3. Procedure for Tendering Shares.
Valid Tenders. Except as set forth below, for Shares to be validly tendered
pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date or the tendering stockholder
must comply with the guaranteed delivery procedure set forth below. In
addition, either (i) certificates representing tendered Shares must be
received by the Depositary along with the Letter of Transmittal or such Shares
must be tendered pursuant to the procedure for book-entry transfer set forth
below, and a Book-Entry Confirmation must be received by the Depositary, in
each case prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternative, conditional
or contingent tenders will be accepted. The method of delivery of
certificates, the Letter of Transmittal and all other required documents,
including delivery through the Book-Entry Transfer Facility, is at the option
and sole risk of the tendering stockholder, and delivery will be deemed made
only when actually received by the Depositary (including, in the case of a
book-entry transfer, by book-entry confirmation). If delivery is by mail,
registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer.
Any financial institution that is a participant in the Book-Entry
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Transfer Facility's system may make book-entry delivery of Shares by causing
such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account at such Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. Although delivery
of Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted
to and received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with. Delivery
of documents to the Book-Entry Transfer Facility does not constitute delivery
to the Depositary.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or by any other bank, broker, dealer, credit union,
savings association or other entity which is an "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 under the Exchange Act
(each of the foregoing constituting an "Eligible Institution"), unless the
Shares tendered thereby are tendered (i) by a registered holder of Shares who
has not completed either the box labeled "Special Delivery Instructions" or
the box labeled "Special Payment Instructions" on the Letter of Transmittal or
(ii) for the account of any Eligible Institution. If the certificates are
registered in the name of a person or persons other than the signer of the
Letter of Transmittal, or if payment is to be made, or delivered to, or
certificates for unpurchased Shares are to be issued or returned to, a person
other than the registered holder, then the tendered certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed by an Eligible Institution as provided in the Letter of
Transmittal. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof)
must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all
of the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Offeror, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates (or a Book-Entry Confirmation) representing all
tendered Shares, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
and any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, 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. The
term "trading day" is any day on which the American Stock Exchange ("Amex")
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for, or a Book-Entry
Confirmation with respect to, such Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or
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a facsimile thereof), with all required signature guarantees or, in the case
of a book-entry transfer, an Agent's Message, and (iii) any other documents
required by the Letter of Transmittal. Accordingly, tendering stockholders may
be paid at different times depending upon when certificates are received by
the Depository or Book-Entry Confirmations with respect to Shares are received
into the Depositary's account at the Book-Entry Transfer Facility. Under no
circumstances will interest be paid on the purchase price of the Shares to be
paid by the Offeror, regardless of any extension of the Offer or any delay in
making any payment.
Backup Federal Income Tax Withholding. To prevent 31% "backup" federal
income tax withholding with respect to payment of the purchase price of Shares
purchased pursuant to the Offer, each stockholder must, subject to certain
exceptions, provide the Depositary with such stockholder's correct Taxpayer
Identification Number ("TIN") and certify that such stockholder is not subject
to backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. Foreign holders must generally submit a
completed Form W-8 to avoid backup withholding. This form may be obtained from
the Depositary. See Instructions 8 and 9 set forth in the Letter of
Transmittal.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties.
The Offeror reserves the absolute right to reject any or all tenders of any
Shares that are determined by it not to be in proper form or the acceptance of
or payment for which may, in the opinion of the Offeror, be unlawful. The
Offeror also reserves the absolute right to waive any of the conditions of the
Offer, subject to applicable law and the limitations set forth in the Merger
Agreement, or any defect or irregularity in the tender of any Shares whether
or not similar defects or irregularities are waived in the case of other
stockholders. The Offeror's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the Instructions to the Letter
of Transmittal) will be final and binding on all parties. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. Neither the Offeror nor 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.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Offeror as such
stockholder's agent, attorneys in fact and proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to
exercise all voting and other rights of the stockholder as each such attorney
and proxy or his substitute shall in his sole judgment deem proper, with
respect to all of the Shares tendered by such stockholder and accepted for
payment by the Offeror (and any and all other Shares or other securities
issued or issuable in respect of such Shares on or after the date of this
Offer to Purchase). All such powers of attorney and proxies will be considered
irrevocable and coupled with an interest in the tendered Shares. This
appointment is effective when, and only to the extent that, the Offeror
accepts for payment the Shares in accordance with the terms of the Offer. Upon
acceptance for payment, all prior powers of attorney, proxies and written
consents granted by the stockholder at any time with respect to such Shares or
other securities or rights will, without further action, be revoked and no
subsequent powers of attorney or proxies may be given or written consent
executed by such Stockholder (and, if given or executed, will not be deemed
effective). The designees of the Offeror will, with respect to the Shares and
other securities or rights, be empowered to exercise all voting and other
rights of such stockholder as they in their sole judgment deem proper in
respect of any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, any actions by written consent in lieu of
any such meeting or otherwise. In order for Shares to be deemed validly
tendered, immediately upon the Offeror's payment for such Shares, the Offeror
must be able to exercise full voting and other rights with respect to such
Shares and the other securities or rights issued or issuable in respect of
such Shares, including voting at any meeting of stockholders (whether annual
or special or whether or not adjourned) in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's
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representation and warranty that (i) such stockholder has the full power and
authority to tender, sell, assign and transfer the tendered Shares (and any
and all other Shares or other securities issued or issuable in respect of such
Shares), and (ii) when the same are accepted for payment by the Offeror, the
Offeror will acquire good and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any
adverse claims. A tender of Shares pursuant to any of the procedures described
above will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty to the Offeror that (a) such stockholder has a net long position
in such Shares being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (b) the tender of such Shares complies with Rule 14e-4 under
the Exchange Act. It is a violation of Rule 14e-4 under the Exchange Act for a
person, directly or indirectly, to tender Shares for such person's own account
unless, at the time of tender, the person so tendering (i) has a net long
position equal to or greater than the amount of (x) Shares tendered or (y)
other securities immediately convertible into or exchangeable or exercisable
for the Shares tendered and such person will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will cause such Shares to be
delivered in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on
behalf of another person. The Offeror's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Offeror upon the terms and subject to the
conditions of the Offer.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment pursuant to the Offer, may also be withdrawn
at any time after July 15, 1999. If acceptance of any Shares tendered is
delayed for any reason or if the Offeror is unable to accept for payment or
pay for Shares tendered pursuant to the Offer, then, without prejudice to the
Offeror's rights under the Offer, the Depositary may, on behalf of the
Offeror, retain tendered Shares, and such Shares may not be withdrawn except
to the extent that tendering stockholders are entitled to and duly exercise
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c)
under the Exchange Act, which provides that no person who makes a tender offer
shall fail to pay the consideration offered or fail to return the securities
deposited by or on behalf of security holders promptly after the termination
or withdrawal of the Offer.
For a withdrawal of Shares tendered pursuant to the Offer to be effective,
a written telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase. Any notice of withdrawal must specify
the name of the person who tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and (if certificates have been tendered) the name in
which the certificates are registered, if different from that of the person
who tendered the Shares. If certificates have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the stockholder must submit the serial numbers shown on the
certificates evidencing the Shares to be withdrawn to the Depositary and,
unless such Shares have been tendered for the account of an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry transfer set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with such Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including time of receipt) of notices
of withdrawal will be determined by the Offeror, in its sole discretion, and
its determination will be final and binding on all parties. Neither the
Offeror nor 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.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
9
<PAGE>
5. Certain United States Federal Income Tax Consequences.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to
cash in the Merger. The discussion is for general information only and does
not purport to consider all aspects of United States federal income taxation
that might be relevant to beneficial owners of Shares. The discussion is based
on current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), proposed, temporary and final regulations promulgated thereunder and
administrative and judicial interpretations thereof, all of which are subject
to change, possibly on a retroactive basis. The discussion applies only to
beneficial owners of Shares in whose hands Shares are capital assets within
the meaning of Section 1221 of the Code, and may not apply to Shares received
pursuant to the exercise of employee stock options or otherwise as
compensation, or to certain types of beneficial owners of Shares (such as
insurance companies, tax-exempt organizations, mutual funds and broker-
dealers) who might be subject to special rules. This discussion does not
discuss the United States federal income tax consequences to a beneficial
owner of Shares who, for United States federal income tax purposes, is a non-
resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust, nor does it consider the effect of any foreign, state
or local tax laws.
Because individual circumstances may differ, each beneficial owner of
Shares should consult such beneficial owner's own tax advisor to determine the
applicability of the rules discussed below to such beneficial owner and the
particular tax effects to such beneficial owner of the Offer and the Merger,
including the application and effect of state, local and other tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes. In
general, for United States federal income tax purposes, a beneficial owner of
Shares will recognize gain or loss equal to the difference (if any) between
the beneficial owner's adjusted tax basis in the Shares sold pursuant to the
Offer or converted to cash in the Merger and the amount of cash received
therefor. In general, such gain or loss will be capital gain or loss and will
be long-term capital gain or loss if the beneficial owner held the Shares for
more than one year as of the date of sale (in the case of the Offer) or the
Effective Time (in the case of the Merger). The excess of net long-term
capital gains over net short-term capital losses is currently taxed at a
maximum rate of 20% for noncorporate taxpayers.
Payments in connection with the Offer or the Merger might be subject to
"backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct TIN to the payor, certifies
as to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A beneficial owner
who does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the beneficial
owner's United States federal income tax liability. Each beneficial owner of
Shares should consult with his or her own tax advisor as to his or her
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Those tendering their Shares in the Offer may
prevent backup withholding by completing the Substitute Form W-9 included in
the Letter of Transmittal. See Section 3. Similarly, those who convert their
Shares into cash in the Merger may prevent backup withholding by completing a
Substitute Form W-9 and submitting it to the paying agent for the Merger.
In general, cash received in respect of Dissenting Shares, if any, will
result in the recognition of capital gain or loss to the beneficial owner of
such Shares. Any such beneficial owner should consult such owner's tax advisor
in that regard.
Parent and the Offeror will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement to any holder
of Shares such amounts as Parent or the Offeror is required to deduct and
withhold with respect to the making of such payment. To the extent that
amounts are so withheld by Parent or the Offeror, such withheld amounts shall
be treated for all purposes of the Merger Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by Parent or the Offeror.
10
<PAGE>
6. Price Range of Shares; Dividends.
According to the Company's Annual Report to its stockholders for the fiscal
year ended January 31, 1999, the Shares are traded on the Amex under the
symbol "PAM". The following table sets forth for the periods indicated the
reported high and low sales prices for the Shares for the periods indicated.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended February 1, 1998:
First Quarter............................................. 3 1/2 2
Second Quarter............................................ 4 1/8 2 3/4
Third Quarter............................................. 6 7/16 4 1/8
Fourth Quarter............................................ 6 1/8 4 1/4
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended January 31, 1999:
First Quarter............................................. 6 1/4 4 5/8
Second Quarter............................................ 7 3/4 5 7/8
Third Quarter............................................. 7 3 1/4
Fourth Quarter............................................ 4 9/16 3
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended January 30, 2000:
First Quarter ............................................ 8 1/4 3 1/16
Second Quarter (through May 14, 1999)..................... 11 1/4 6 5/8
</TABLE>
On April 26, 1999, the last full trading day prior to the Company's
announcement that it had received a proposal to purchase all of the
outstanding Shares, according to publicly available sources, the reported
closing price per Share on the Amex was $5 1/2. On May 10, 1999, the last full
day of trading prior to the public announcement of the execution of the Merger
Agreement, according to publicly available sources, the reported closing price
per Share on the Amex was $8 1/4. On May 14, 1999, the last full day of
trading prior to the commencement of the Offer, according to publicly
available sources, the reported closing price per Share on the Amex was $11
1/8. Stockholders are urged to obtain current market quotations for the
Shares.
The Company has never declared or paid any dividends on the Shares.
7. Certain Effects of the Transaction.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares and could adversely affect the liquidity and
market value of the remaining Shares held by the public. The Company has
advised the Offeror that, as of May 10, 1999, there were approximately 250
holders of record and approximately 920 beneficial owners of the Shares. The
Offeror can not predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer price therefor.
Amex Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing
on the Amex. The Amex will normally consider suspending dealings in, or
removing from the list, the common stock of a company that (i) has fewer than
200,000 publicly held shares, (ii) has an aggregate market value of publicly
held shares of less than $1 million, and (iii) has fewer than 300 holders of
shares. Shares held, directly or indirectly, by an officer or director of the
Company, or by any beneficial owner of more than 10% of the shares, ordinarily
will not be considered as being publicly held for this purpose.
If the Shares are no longer eligible for Amex quotation, quotations might
still be available from 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 such Shares remaining at such time, the interest in
maintaining a market in such Shares on the part of securities firms, the
possible termination of registration of such Shares under the Exchange Act as
described below and other factors.
11
<PAGE>
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of the
Shares. It is the intention of the Offeror to seek to cause an application for
such termination to be made as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met. If such
registration were terminated, the Company would no longer legally be required
to disclose publicly in proxy materials distributed to stockholders the
information which it now must provide under the Exchange Act or to make public
disclosure of financial and other information in annual, quarterly and other
reports required to be filed with the Commission under the Exchange Act; the
Company would no longer be subject to Rule 13e-3 under the Exchange Act
relating to "going private" transactions; and the officers, directors and 10%
stockholders of the Company would no longer be subject to the "short-swing"
insider trading reporting and profit recovery provisions of the Exchange Act.
Furthermore, if such registration were terminated, the ability of "affiliates"
of the Company and persons holding "restricted securities" of the Company to
dispose of such securities under Rule 144 or Rule 144A promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), may be impaired,
or, with respect to certain persons, eliminated.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will no longer be eligible for Amex quotation and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of such Shares for the
purpose of buying, carrying or trading in securities ("Purpose Loans").
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 Purpose Loans made by brokers. If registration of Shares
under the Exchange Act were terminated, such Shares would no longer be "margin
securities."
8. Certain Information Concerning the Company.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources. Although neither the Offeror nor Parent has any knowledge that
would indicate that statements contained herein based upon such documents are
untrue, neither the Offeror nor Parent assumes any responsibility for the
accuracy or completeness of the information concerning the Company or for any
failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to the Offeror or Parent.
The Company is a Delaware corporation with its principal executive offices
located at 8800 F Street, Omaha, Nebraska 68127. The Company conducts a
general merchandise retail business through its wholly owned subsidiary,
Pamida. Pamida currently operates 147 general merchandise retail stores in 15
Midwest, North Central and Rocky Mountain states. Pamida also operates on a
trial basis four Heartland Home Furnishings stores.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted or derived from financial information contained in
the Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1999. More comprehensive financial information is included in such report and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to such report and such
other documents and all the financial information (including any related
notes) contained therein. Such report and other documents should be available
for inspection and copies thereof should be obtainable in the manner set forth
below.
12
<PAGE>
Pamida Holdings Corporation and Subsidiary
Selected Consolidated Financial Data
(amount in thousands, except per share data, number of shares and other data)
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------------------
January 29, January 28, February 2, February 1, January 31,
1995 1996 1997 (1) 1998 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Sales.................. $ 711,019 $ 736,315 $ 633,189 $ 657,017 $ 672,394
Gross profit........... 177,367 177,688 154,090 161,935 167,568
Selling, general and
administrative
expenses.............. 142,689 150,102 124,429 128,436 134,288
Interest expense....... 28,263 30,520 30,457 30,213 25,847
Long-lived asset write-
off................... -- 78,551 -- -- --
Store closing costs.... -- 21,397 -- -- --
---------- ---------- ---------- ---------- ----------
Income (loss) before
provision for income
taxes and
extraordinary item.... 6,415 (102,882) (796) 3,286 7,433
Income tax provision
(benefit)............. 3,500 (7,863) -- -- 2,887
---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary item.... 2,915 (95,019) (796) 3,286 4,546
Extraordinary item..... -- 371 -- 1,735 --
---------- ---------- ---------- ---------- ----------
Net income (loss)...... 2,915 (94,648) (796) 5,021 4,546
Effect of preferred
stock
reclassification...... -- -- -- 756 --
Less preferred
dividends and discount
amortization.......... (361) (362) (391) (407) --
---------- ---------- ---------- ---------- ----------
Net income (loss)
available for common
shares................ $ 2,554 $ (95,010) $ (1,187) $ 5,370 $ 4,546
========== ========== ========== ========== ==========
Weighted average number
of basic shares
outstanding........... 4,999,984 5,002,853 5,004,942 5,843,441 9,046,410
Weighted average number
of diluted shares
outstanding........... 5,039,684 5,002,853 5,004,942 5,875,463 9,094,194
Basic net income (loss)
per share:
Income (loss) before
extraordinary item... $ .51 $ (19.07) $ (.24) $ .62 $ .50
Extraordinary item.... -- .08 -- .30 --
---------- ---------- ---------- ---------- ----------
Basic income (loss)... $ .51 $ (18.99) $ (.24) $ .92 $ .50
========== ========== ========== ========== ==========
Diluted net income
(loss) per share:
Income (loss) before
extraordinary item... $ .51 $ (19.07) $ (.24) $ .62 $ .50
Extraordinary item.... -- .08 -- .29 --
---------- ---------- ---------- ---------- ----------
Diluted income (loss). $ .51 $ (18.99) $ (.24) $ .91 $ .50
========== ========== ========== ========== ==========
Balance Sheet Data:
Working capital........ $ 46,725 $ 34,082 $ 28,673 $ 37,421 $ 43,329
Total assets........... 354,367 258,525 269,188 260,081 298,215
Long-term debt (less
current portion)...... 162,505 163,746 168,000 140,289 140,242
Obligations under
capital leases (less
current portion)...... 43,050 36,559 33,999 32,156 35,925
Redeemable preferred
stock................. 1,779 1,826 1,875 -- --
Stockholders' (deficit)
equity................ 8,876 (86,116) (87,303) (52,275) (47,539)
Other Data:
Team members........... 7,200 7,200 5,700 5,600 6,000
Number of stores....... 184 184 148 148 147
Retail square feet (in
millions)............. 5.09 5.22 4.35 4.41 4.45
</TABLE>
- --------
(1) Represents a 53-week year.
13
<PAGE>
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interests of such persons in transactions with the Company. Such reports,
proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained at prescribed
rates from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports and other
information regarding registrants that file electronically with the
Commission. Such material may also be inspected at the offices of the American
Stock Exchange, at 86 Trinity Place, New York, New York 10006.
9. Certain Information Concerning the Offeror and Parent.
The Offeror is a newly incorporated Delaware corporation. To date, the
Offeror has not conducted any business other than that incident to its
formation, the execution and delivery of the Merger Agreement and the
commencement of the Offer. Accordingly, no meaningful financial information
with respect to the Offeror is available. The Offeror is a wholly owned
subsidiary of Parent. The principal executive office of the Offeror is located
at 700 Pilgrim Way, Green Bay, Wisconsin 54304.
Parent, a Wisconsin corporation, has its principal executive office at 700
Pilgrim Way, Green Bay, Wisconsin 54304. It is a specialty discount retailer
with stores in 19 states, primarily in the Midwest, Western Mountain and
Pacific Northwest regions. It also provides health benefit management
services, pharmacy mail services, vision benefit management services and
health information and clinical support services though its subsidiary
ProVantage Health Services, Inc. ("ProVantage"). ProVantage conducts business
principally throughout the United States.
On February 4, 1999, ProVantage filed a registration statement for the
initial public offering of ProVantage's common stock. If the offering is
completed as currently contemplated, ProVantage would retain $20.0 million
from the offering proceeds. Parent would receive approximately $62.8 million
as payment on a dividend note, and Parent would own between approximately
66.0% and 70.0% of ProVantage's common stock. There can be no assurance that
ProVantage's initial public offering will be completed or that it will be
completed on the terms described above. Parent may use a portion of the
proceeds from payment on the dividend note to repay indebtedness of the
Company. See Section 10.
Set forth below are certain summary consolidated financial data with
respect to Parent excerpted or derived from financial information contained in
Parent's Annual Report on Form 10-K for the year ended January 30, 1999 and
Parent's earnings release for the quarter ended May 1, 1999. More
comprehensive financial information is included in such report and other
documents filed by Parent with the Commission, as well as Parent's press
release dated May 13, 1999 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.
14
<PAGE>
ShopKo Stores, Inc.
Selected Financial Information
<TABLE>
<CAPTION>
First Quarter
Fiscal Years Ended Ended
-------------------------------------------------- -------------------
Feb. 25, Feb. 24, Feb. 22, Jan. 31, Jan. 30, May 2, May 1,
1995 1996 1997 1998(1) 1999 1998 1999
(52 wks) (52 wks) (52 wks) (49 wks) (52 wks) (13 wks) (13 wks)
-------- -------- -------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
(Millions)
Net sales............. $ 1,853 $ 1,968 $ 2,333 $ 2,448 $ 2,981 $ 646 $ 760
Licensed department
rentals and other
income............... 12 14 13 12 12 3 3
Gross margin.......... 488 501 550 564 662 139 152
Selling, general and
administrative
expenses............. 356 361 397 404 472 111 121
Nonrecurring charge... -- -- -- 3(2) 6(3) 2(3) --
Depreciation and
amortization
expenses............. 53 56 60 58 68 17 18
Interest expense--net. 29 34 32 31 38 9 9
Earnings before income
taxes................ 62 63 74 80 92 3 7
Net earnings before
extraordinary item .. 38 38 45 49 56 2 5
Extraordinary item.... -- -- -- -- -- -- 4(4)
Net earnings.......... 38 38 45 49 56 2 1
Per Share Data (Dollars)
Basic net earnings per
share:
Earnings before
extraordinary item... $ 1.18 $ 1.20 $ 1.40 $ 1.73 $ 2.14 $ 0.08 $ 0.16
Extraordinary item.... (0.14)(4)
Basic net earnings.... 1.18 1.20 1.40 1.73 2.14 0.08 0.02
Diluted net earnings
per share:
Earnings before
extraordinary item... 1.18 1.20 1.39 1.71 2.10 0.08 0.16
Extraordinary item.... (0.14)(4)
Diluted net earnings.. 1.18 1.20 1.39 1.71 2.10 0.08 0.02
Cash dividends
declared per common
share(5)............. 0.44 0.44 0.22 -- -- -- --
Financial Data
(Millions)
Working capital....... $ 187 $ 215 $ 232 $ 144 $ 167 $ 151 $ 103
Property and
equipment--net....... 618 617 603 630 704 628 713
Total assets.......... 1,110 1,118 1,234 1,251 1,374 1,239 1,499
Total debt(6)......... 429 416 421 440 472 439 571
Total shareholders'
equity............... 397 422 461 396 459 403 461
Capital expenditures.. 95 53 39 32 100 15 26
Financial Ratios
Current ratio......... 1.7 1.8 1.7 1.4 1.4 1.4 1.2
Return on beginning
assets (before
extraordinary item).. 4.0% 3.5% 4.0% 4.0% 4.4% 0.2% 0.3%
Return on beginning
shareholders' equity
(before extraordinary
item)................ 10.1% 9.7% 10.7% 10.6% 14.0% 0.5% 0.9%
Total debt as % of
total
capitalization(7).... 50.9% 48.5% 46.6% 51.4% 49.3% 50.8% 53.9%
Other Data
Stores open at period
end.................. 124 129 130 149(8) 147 148 158
Average store size-
square feet.......... 90,260 89,945 89,840 88,754 89,106 89,104 89,301
</TABLE>
15
<PAGE>
- --------
(1) Fiscal year end was changed from the last Saturday in February to the
Saturday nearest January 31.
(2) Nonrecurring charge related to the termination of the proposed combination
with Phar-Mor and Cabot Noble.
(3) Nonrecurring charge related to the elimination of duplicate operations at
the Penn-Daniels administrative office and warehouse.
(4) Loss on early retirement of debt.
(5) Upon termination of the proposed combination with Phar-Mor and Cabot
Noble, Parent determined to retain earnings for the growth and expansion
of its business and not declare or pay any cash dividends.
(6) Total debt includes short-term debt, current portion of long-term
obligations and long-term obligations.
(7) Total capitalization includes shareholders' equity, total debt and non-
current deferred income taxes.
(8) Includes 19 stores acquired from Penn-Daniels, Incorporated, two of which
closed in fiscal 1998.
Parent is subject to the informational requirements of the Exchange Act and
in accordance therewith files periodic reports and other information with the
Commission relating to its business, financial condition and other matters.
Such reports and other information are available for inspection and copying at
the offices of the Commission in the same manner as set forth with respect to
the Company in Section 8. Such material may also be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
During the past five years, Parent has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), nor has it
been 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 or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the directors
and executive officers of Parent and the Offeror are set forth in Annex I to
this Offer to Purchase. Each such executive officer and director is a citizen
of the United States of America. During the past five years, none of the
executive officers or directors has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or been 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
or mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Except as described in this Offer to Purchase, neither the Offeror nor
Parent, or to the best knowledge of the Offeror or Parent, any of the persons
listed in Annex I hereto, owns or has any right to acquire any Shares and none
of them has effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither the Offeror nor
Parent or, to the best knowledge of the Offeror or Parent, any of the persons
listed in Annex I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, there have been no
contacts, negotiations or transactions between the Offeror, or Parent, or, to
the best of their knowledge, any of the persons listed in Annex I hereto, on
the one hand, and the Company or its affiliates, on the other hand, concerning
a merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets. Except as described in this Offer to Purchase, neither the
Offeror nor Parent or, to the best knowledge of Parent or the Offeror, any of
the persons listed in Annex I hereto, has had any transaction with the Company
or any of its executive officers, directors or affiliates that would require
disclosure under the rules and regulations of the Commission applicable to the
Offer.
16
<PAGE>
10. Source and Amount of Funds.
The Offeror estimates that the total amount of funds required to (i)
purchase the Shares that are outstanding on a fully diluted basis (but not
assuming the conversion of the Nonvoting Shares) pursuant to the Offer, (ii)
purchase the Nonvoting Shares from Venture Partners pursuant to the
Stockholder and Purchase Agreement immediately after Offeror's purchase of
Shares pursuant to the Offer and (iii) pay fees and expenses related to the
Offer and the Merger will be approximately $109 million. The Offeror will
obtain the funds from Parent. Parent currently anticipates obtaining the
necessary funds from cash on hand (approximately $100 million as of May 14,
1999) and cash generated by operations after May 14, 1999.
Parent has agreed in the Merger Agreement that (i) if, after the purchase
by the Offeror of Shares pursuant to the Offer and prior to the Effective
Time, the obligations of the Company under the Loan Agreement are declared to
be immediately due and payable on account of the occurrence of an event of
default thereunder triggered by the "change of control" resulting from such
purchase, then Parent will deposit with the Company the amount of money
necessary to pay all amounts owing by the Company under the Loan Agreement;
(ii) if, after such purchase and prior to the Effective Time, the 11 3/4%
Senior Subordinated Notes due 2003 (the "Notes") of Pamida are declared
immediately due and payable under the Indenture, dated as of March 15, 1993
(the "Indenture"), by and among Pamida, as issuer, the Company, as guarantor,
and State Street Bank and Trust Company, as trustee, on account of the
occurrence of an event of default thereunder triggered by the acceleration of
the Company's obligations under the Loan Agreement described in clause (i),
then Parent will deposit with the Company the amount of money necessary to pay
all amounts owing by Pamida under the Notes and the Indenture; and (iii) if,
after such purchase and prior to the Effective Time, the holders of any Notes
elect to require Pamida to purchase the Notes as provided in the Indenture,
then Parent will deposit with Pamida the amount of money necessary to effect
such purchases. In addition, Parent has the right under the Merger Agreement,
exercisable at any time after the purchase by the Offeror of Shares pursuant
to the Offer, to require the Company to repay the amounts owing under the Loan
Agreement and terminate the Loan Agreement and to redeem or discharge the
Notes if Parent provides the Company with the money necessary for it to do so.
The maximum amount of funds that would required to repay the amounts owing
under the Loan Agreement (based on the principal amount owing thereunder as of
May 10, 1999) and to redeem or discharge the Notes would be approximately $240
million. Parent currently intends to request the Company to seek a waiver of
the event of default under the Loan Agreement that will occur upon the
purchase of Shares by Purchaser pursuant to the Offer, although no assurance
can be given that such waiver will be obtained. If Parent is required to, or
immediately after such purchase elects to, repay such amounts and redeem or
discharge the Notes, it currently anticipates obtaining the necessary funds
initially from the proceeds to Parent (estimated to be approximately $62.8
million) from the anticipated initial public offering of common stock of
ProVantage, which Parent currently expects will be completed prior to the
Expiration Date, and from borrowings under an existing $200 million bank
credit facility, under which approximately $86 million is available for
borrowing as of May 14, 1999, with the balance to be obtained from other
financing sources. Parent currently anticipates raising additional funds
through an equity and/or debt offering to refinance any such borrowings prior
to the end of 1999, although no assurances can be given that any such equity
or debt offering will occur.
While the foregoing represents the current intention of Parent and the
Offeror with respect to the financial arrangements for such funds, such
financial arrangements may change depending upon such factors as Parent and
the Offeror may deem appropriate.
The Offer is not subject to a financing condition.
11. Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company.
In November 1997, the Company completed a recapitalization transaction in
which (i) the Company's outstanding promissory notes having an aggregate
principal value of approximately $32,000,000 as of September 1, 1997, and
bearing interest at rates ranging from 15.5% to 16.25% per annum, were paid in
full with Shares and Nonvoting Shares and (ii) the Company's outstanding
shares of preferred stock with an aggregate liquidation
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value of approximately $2,900,000 as of August 31, 1997, and then effective
dividend rates of 17.75% and 19.75% per annum, were reclassified into Shares.
The purpose of such transactions was to improve the Company's highly leveraged
capital structure by relieving the Company of substantial amounts of
compounding non-cash interest expense on the promissory notes and from
earnings per share dilution caused by the preferred stock dividends and by
discount amortization on certain of the promissory notes and preferred stock.
The transactions added approximately $36,000,000 to the Company's equity
capitalization, but the Company continued to have a consolidated balance sheet
with a negative stockholders' equity and a highly leveraged capital structure
which has inhibited the sales growth, profitability, and store expansion
program of Pamida.
Following the 1997 recapitalization, the Board of Directors of the Company
(the "Board") and management regularly discussed in general terms various
strategic alternatives which the Company might pursue as a means to facilitate
its objectives of enhanced sales and profitability and reduced financial
leverage. Among the alternatives which the Board considered were maintenance
of the Company's existing capital structure, an infusion of additional equity
capital, and the acquisition of a substantial existing operating company.
In May 1998, M. Saleem Muqaddam, a member of the Board, reported to the
Board on various discussions that he had held with several investment bankers
concerning strategic and financial alternatives potentially available to the
Company, including a possible acquisition of another retailer, a rights
offering to the Company's stockholders, and a public offering of additional
shares of the Company's stock. The Board also discussed management's analysis
of the potential results of an acceleration of new store openings over the
next several years using an enhanced revolving credit facility which Pamida
was then in the process of obtaining. The Board informally agreed that
management should pursue such accelerated new store opening program
irrespective of the other strategic and financial alternatives that might
become available to the Company.
In July 1998, Steven S. Fishman, Chairman of the Board, President and Chief
Executive Officer of the Company, and George R. Mihalko, Chief Financial
Officer of the Company, reported to the Board on meetings that they had held
with several prospective equity investors and analysts. They noted that the
prospective investors had expressed concern over the lack of available stock
float as well as the stock price level and the Company's negative
stockholders' equity. Mr. Mihalko also informed the Board that, in the view of
a major bond rating company, (i) the Company needed additional equity and (ii)
no improvement in the rating of the Notes was likely to occur as long as the
Company's financial leverage remained high. However, the significant stock
market decline in the third quarter of 1998, from which the microcap stock
sector largely has still not recovered, virtually eliminated the possibility
of a successful equity offering by the Company without substantially diluting
the interests of existing stockholders.
Parent's overall growth strategy includes the penetration of underserved,
small rural markets. Parent's existing operating model has been developed for
mid-sized to larger markets and is not readily adaptable to serve the needs of
small market customers. Over the past several years, Parent has considered
developing a small market operating model of its own or acquiring a company
which already has developed such a model. During this time, Parent and its
financial advisors have studied and considered the viability of strategic
alliances between Parent and numerous retail companies, including the Company.
In late 1998, Parent began more intensive consideration of an acquisition of
the Company. In early January 1999, a representative of an investment banking
firm contacted Mr. Fishman to indicate Parent's possible interest in
considering a business combination with the Company.
On January 24, 1999, Mr. Fishman met with Dale P. Kramer, who was then
Parent's President, Chairman and Chief Executive Officer and is now Parent's
Chairman, and William J. Podany, who was then Executive Vice President and
Chief Operating Officer of Parent and who is now Parent's President and Chief
Executive Officer. At this meeting, Mr. Fishman indicated that the Company
would be willing to explore a business combination with Parent and suggested
that the Company's principal stockholder, Venture Partners, should be
contacted by Parent about selling its stock in the Company to Parent. The next
day, Paul H. Freischlag, Senior Vice President and Chief Financial Officer of
Parent, met with representatives of Venture Partners to discuss the
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possibility of Venture Partners's selling its shares to Parent. Following
these discussions, the Company and Parent agreed that they would continue to
explore their mutual interest in a business combination.
On February 23, 1999, Mr. Fishman, Frank A. Washburn the Company's
Executive Vice President and Chief Operating Officer, and Mr. Muqaddam met
with senior executives of Parent to discuss further the possibility of some
form of business combination. In early March 1999, Parent, Venture Partners
and the Company executed a confidentiality agreement with an effective date of
February 22, 1999.
On March 2, 1999, Mr. Fishman also had a conversation with the chief
executive officer of another major retailer (the "Other Retailer") concerning
the possibility of some form of business combination involving their
respective companies. The other executive indicated an interest in examining
such possibility.
On March 10, 1999, Parent requested certain preliminary information from
the Company.
At a March 11, 1999 meeting of the Board, the Board instructed management
to pursue on an exploratory basis its discussions with Parent and with the
Other Retailer to determine whether either company had a bona fide interest in
pursuing a business combination with the Company. The Board also authorized
management to engage Johnson Rice to investigate a possible transaction with
two other investor prospects proposed by Johnson Rice if, upon the
identification of such prospects, they appeared acceptable to management. On
March 16, 1999, the Company entered into an engagement agreement with Johnson
Rice authorizing Johnson Rice to approach the two prospective "financial
buyers" in connection with the possible sale, merger, recapitalization, or
consolidation of the Company. Johnson Rice subsequently reported to the
Company that it had contacted both prospects and that neither was interested
in pursuing a possible transaction involving the Company.
During the first two weeks of March 1999, Mr. Fishman had additional
telephone conversations with the chief executive officer of the Other
Retailer, and the Company received a request for certain information about its
real estate and leases, store sales and profitability, and advertising
activity from the Other Retailer. The Company did not provide such information
to the Other Retailer because of the Board's belief that the Other Retailer
had provided too little information regarding the nature of a proposed
transaction to enable the Company to determine the seriousness of the Other
Retailer's interest. However, in late March 1999, the Company and the Other
Retailer executed a confidentiality agreement, which was substantially similar
to the confidentiality agreement with Parent.
On March 23, 1999, Mr. Freischlag met with Messrs. Fishman, Washburn and
Mihalko to discuss various due diligence matters, and at that meeting the
Company provided certain preliminary information to Parent. From March 23
through April 12, 1999, Parent continued its due diligence review of the
Company.
During the first two weeks of April, there were several telephone
communications between representatives of the Company and representatives of
the Other Retailer concerning the types of information about the Company that
the Other Retailer wanted to receive, but the Other Retailer continued to give
no indication of the type of transaction that it might consider with respect
to the Company. At a telephonic meeting of the Board held on April 15, 1999,
the Board authorized Mr. Fishman to make an additional contact with the chief
executive officer of the Other Retailer in an attempt to clarify the
objectives that such company might have with respect to a possible transaction
with the Company.
On April 15, 1999, Mr. Fishman reported to the Board that he had held three
further meetings and other conversations with representatives of Parent and on
April 13, 1999, had received a letter from Mr. Podany indicating Parent's
interest in a business combination in which the holders of the Company's stock
would receive $7.00 per share. The April 13 letter from Parent also requested
the opportunity to work with the Company on an exclusive basis through May 31,
1999 to reach a definitive agreement. After a discussion, the Board
unanimously concluded that such price was inadequate. The Board then
authorized Mr. Fishman to request Parent, by the close of business on April
19, 1999 to indicate to the Company a price range, with a minimum price
substantially in
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excess of $7.00 per share, within which Parent would be able to make a cash
tender offer. The Board's authorization contemplated that (i) if Parent
submitted an acceptable price range, then discussions and information exchanges
would continue, with the understanding that by the close of business on May 10,
1999 Parent would inform the Company of the actual tender offer price, (ii) if
that price, or such higher price as the Company and Parent then might
negotiate, was acceptable to the Company, then Parent would have until the
close of business on May 28, 1999 to complete the negotiation of a definitive
agreement with the Company and (iii) if the foregoing conditions were
satisfied, then the Company would agree to work with Parent on an exclusive
basis, subject to the right of either party to terminate discussions at any
time.
At the April 15, 1999 Board meeting, the Board also appointed a special
committee of the Board composed of L. David Callaway, III and Peter J. Sodini
to oversee the negotiation of a definitive tender offer price if the
discussions with Parent reached such stage and to make a recommendation to the
Board with respect to such price.
On April 15, 1999, following the Board meeting, Mr. Fishman sent a letter to
Mr. Podany indicating the Company's rejection of the $7.00 per share price and
setting forth the conditions for further discussions described above.
On April 19, 1999, at the request of Mr. Podany in response to Mr. Fishman's
April 15, 1999 letter, Messrs. Fishman and Muqaddam met with Mr. Podany and
other Parent representatives. At that meeting, Mr. Podany advised Messrs.
Fishman and Muqaddam that Parent wished to indicate a firm tender offer price
rather than a price range that would necessitate further negotiation. After a
discussion by the parties, Mr. Podany indicated Parent's willingness to move
forward towards a cash tender offer at a price of $11.50 per share that would
not be subject to a financing condition. Mr. Podany also stated that Parent
desired to continue its review of pertinent information concerning the Company
with the objective of completing the negotiation of a definitive agreement by
May 10, 1999. In the interim, either party would have the right to terminate
discussions. At such meeting, Mr. Muqaddam stated that Venture Partners as a
principal stockholder of the Company would support the proposed Parent offer,
subject to the completion of a satisfactory definitive agreement.
On April 20, 1999, Mr. Fishman received a letter from Mr. Podany confirming
the proposal described above and requesting acceptance of the terms by the
countersignatures of the Company and Venture Partners.
On April 20, 1999, the Board held a telephonic meeting at which Mr. Fishman
reported on the April 19, 1999 meeting with the Parent representatives and the
April 20, 1999 letter from Mr. Podany. He also reported that he had received a
further telephone call from the chief executive officer of the Other Retailer
expressing continued interest in exploring a transaction with the Company but
giving no indication of the type of transaction in which the Other Retailer
might be interested. The Board then authorized Mr. Fishman to facilitate
Parent's due diligence activities concurrently with the negotiation of a
definitive agreement with Parent and also authorized Mr. Fishman to undertake
to elicit from the Other Retailer an indication of both the price range within
which it would be willing to pursue a transaction with the Company and the type
of transaction it was considering. If the Other Retailer did not respond
promptly or did not indicate a price range having a minimum of approximately
$11.50 per share, then the Board authorized the Company to negotiate
exclusively with Parent until the close of business on May 10, 1999, subject to
the right of either party to terminate negotiations at any time.
At the April 20, 1999 meeting, the Board also authorized the engagement of
Johnson Rice to prepare a fairness opinion for the Board with respect to the
proposed tender offer price.
Following the April 20, 1999 Board meeting, Mr. Fishman contacted the chief
executive officer of the Other Retailer to request an indication of its
continued interest and a price range for a possible transaction. On April 22,
1999, the Other Retailer's chief executive officer sent a letter to Mr. Fishman
indicating the Company's continued interest in the Company and his belief that
"any transaction would likely involve a very substantial premium of two to
three times your stock's trading value of this afternoon." The letter also
stated that, until the
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Other Retailer had received and analyzed information concerning the Company,
"we are not able to make any firm offer". The high and low prices of the
Company's Common Stock on the Amex on April 22, 1999 were $4.9375 and $4.3125,
respectively.
On April 26, 1999, Mr. Fishman advised the executive officer of the Other
Retailer both by telephone and by a letter sent by fax that representatives of
the Company would be willing to provide the requested information and to meet
on the following day with representatives of the Other Retailer to facilitate
review of the information to be provided so as to enable the Other Retailer to
submit a specific bid for the Company. Mr. Fishman stated that it was necessary
that the Other Retailer submit its best all cash offer for the Company's stock
by April 30, 1999 and that any such bid must specify any conditions, which
should not include financing, and be accompanied by evidence of the Other
Retailer's ability to finance a cash tender offer for the full purchase price
and a commitment to complete its due diligence and enter into a definitive
agreement by no later than May 10, 1999.
On April 27, 1999, prior to the opening of trading in the Shares, the
Company issued a press release noting that it had received from a third party a
proposal to acquire all of the Company's outstanding common stock, that it was
currently in discussions with such third party and that it had also received
inquiries from another party regarding a possible business combination.
In a telephone conversation on April 27, 1999, the chief executive officer
of the Other Retailer indicated that the conditions set forth by Mr. Fishman on
April 26, 1999, could not be satisfied by his company and that his company did
not intend at that time to proceed with any further activity relating to a
business combination or other transaction with the Company.
Following such telephone conversation, the Company, Venture Partners and
Parent signed a letter confirming the previously signed confidentiality
agreement among the parties and also confirming that the Company would work
with Parent on an exclusive basis through May 10, 1999 for the purpose of
negotiating a definitive agreement. After the signing of such agreement, Parent
continued its due diligence activities, and the parties continued the
negotiation of a definitive agreement.
On April 29, 1999, a special meeting of the Board was held by telephone at
which time Mr. Fishman reported to the Board on all of the developments that
had occurred since the last meeting of the Board, and legal counsel for the
Company advised the Board with respect to its fiduciary responsibilities in the
context of a potential acquisition of the Company. The Board also discussed
various aspects of the proposed transaction with Parent and noted several
issues that remained open for negotiation.
While the negotiation of a definitive agreement was underway, Parent,
members of the Board and Venture Partners also negotiated the terms of proposed
stockholders agreements relating to the proposed transaction.
On May 4, 1999, the special committee of the Board met with representatives
of Johnson Rice and received a preliminary report from such firm with respect
to its conclusion as to the fairness of the proposed transaction from a
financial point of view to the stockholders of the Company. After the
presentation of various data to the special committee and extensive discussion
with and questions from the special committee, the representatives of Johnson
Rice stated preliminarily that the proposed transaction with Parent was fair
from a financial point of view to the stockholders of the Company.
On May 7, 1999, the Board met in person and by telephone. Mr. Callaway
reported to the Board on behalf of the special committee and informed the Board
of the information that had been presented by Johnson Rice with respect to the
fairness of the proposed transaction and other factors that had been discussed
with the representatives of Johnson Rice. Upon conclusion of his report, Mr.
Callaway advised the Board that he and Mr. Sodini, as members of the special
committee, were satisfied with the proposed tender offer price and other
aspects of the proposed transaction with Parent, including its favorable timing
and the absence of any financing contingency, and recommended to the Board that
the Board approve such proposal and recommend it to the Company's stockholders.
After Mr. Callaway's report, a representative of Johnson Rice delivered to the
Board a
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formal presentation with respect to such firm's analysis of the proposed
transaction with Parent and also delivered to the Company's legal counsel a
draft of a proposed form of fairness opinion that Johnson Rice was prepared to
deliver to the Board. Legal counsel for the Company then presented to the
Board a detailed overview of the principal terms of the most recent drafts of
the Merger Agreement, the Stockholder Agreements and the Stockholder and
Purchase Agreement and noted several areas which remained open for
negotiation. The Board also identified several items which required further
discussion with Parent. The Board then scheduled a meeting for May 10, 1999,
to give counsel for the Company an opportunity to complete the negotiation of
the definitive agreement.
The Board of Directors of Parent also met on May 7, 1999 to consider the
Merger Agreement, the Stockholder Agreements and the Stockholder and Purchase
Agreement. After hearing a report from Parent's financial advisor and
discussing the terms of the Merger Agreement and related documents and those
issues that required further discussion with the Company, the Board of
Directors of Parent preliminarily approved the transaction, subject to final
approval of a special committee of the Board. The special committee scheduled
a meeting for the afternoon of May 10, 1999.
Counsel for the Company and Parent then held a series of telephone
conferences in which the final terms of the Merger Agreement, the Stockholder
Agreements and the Stockholder and Purchase Agreement were negotiated to the
mutual satisfaction of the parties. On May 10, 1999, the Board at a telephone
meeting with all members present unanimously (i) determined that the Merger
Agreement was fair to and in the best interests of the stockholders of the
Company, (ii) declared the Merger Agreement and the transactions contemplated
thereby to be advisable and in the best interests of the stockholders of the
Company, (iii) approved the Merger Agreement and the transactions contemplated
thereby, and (iv) recommended that the holders of Shares accept the Offer,
tender their Shares pursuant to the Offer and approve and adopt the Merger
Agreement and the transactions contemplated thereby. On May 10, 1999, the
special committee of the Board of Directors of Parent also approved the Merger
Agreement, the Stockholder Agreements and the Stockholder and Purchase
Agreement.
At the end of the business day on May 10, 1999, the Merger Agreement, the
Stockholder Agreements and the Stockholder and Purchase Agreement were signed
and delivered by the respective parties.
On May 11, 1999, prior to the opening of stock trading, Parent and the
Company issued a press release announcing the transaction. On May 17, 1999,
the Offeror commenced the Offer.
12. Purpose of the Offer and the Merger; Plans for the Company.
The purpose of the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby is to enable Parent to acquire control of,
and the entire equity interest in, the Company. Following the Offer, the
Offeror and Parent intend to acquire any remaining equity interest in the
Company not acquired in the Offer by consummating the Merger. Upon
consummation of the Merger, the Company will become a wholly owned subsidiary
of Parent.
Pursuant to the DGCL and the Charter of the Company, adoption by the Board
of Directors of the Company and the affirmative vote of the holders of a
majority of all votes entitled to be cast by all shares entitled to vote is
required to approve the Merger Agreement. The Board of Directors of the
Company has unanimously approved the Merger Agreement, the terms of the Offer
and the Merger, and, unless the Merger is consummated pursuant to the short
form merger provisions under the DGCL as described below, the only remaining
required corporate action of the Company is the approval of the Merger
Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares. If the Offeror acquires, through the Offer or otherwise, a
majority of the combined voting power of the outstanding Shares (which would
be the case if the Minimum Condition were satisfied and the Offeror were to
accept for payment Shares tendered pursuant to the Offer), it would have
sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company.
Pursuant to the Merger Agreement, the Company has agreed that, as soon as
practicable following the expiration of the Offer, it will duly call, give
notice of, convene and hold a meeting of stockholders for the
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purpose of obtaining the stockholders' approval of the Merger Agreement. Parent
has agreed that all Shares owned by the Offeror or any other subsidiary of
Parent will be voted in favor of approval of the Merger Agreement. The
stockholders meeting shall be held as soon as practicable following the
purchase of Shares pursuant to the Offer. If the Offeror acquires a majority of
the Shares through the Offer or otherwise, approval of the Merger Agreement can
be obtained without the affirmative vote of any other stockholder of the
Company.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have certain rights under the DGCL to dissent and demand appraisal of, and to
receive payment in cash for the fair value of, their Shares. Such rights to
dissent, if the stockholder does not vote in favor of the Merger and complies
with certain statutory procedures, could lead to a judicial determination of
the fair value of the Shares (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to
such dissenting holders for their Shares. Such value could be less than, equal
to, or more than the Offer Price. In addition, such dissenting stockholders may
be entitled to receive payment of interest from the date of consummation of the
Merger on the amount determined to be the fair value of their Shares. In
determining the fair value of the Shares, a Delaware court would be required to
take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earning capacity.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may,
under certain circumstances, be applicable to the Merger or another business
combination in which the Offeror seeks to acquire the remaining Shares not held
by it following the purchase of Shares pursuant to the Offer. The Offeror
believes, however, that Rule 13e-3 will not be applicable to the Merger if the
Merger is consummated within one year after the termination of the Offer at the
Offer Price. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to consummation of the
transaction.
Plans for the Company. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger. Parent intends to seek additional
information about the Company during this period. Thereafter, Parent intends to
review such information as part of a comprehensive review of the Company's
business, operations, capitalization and management with a view to optimizing
the Company's potential contribution to Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
current plans or proposals which relate to or would result in any of the
following: an extraordinary corporate transaction, 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 present Board of Directors or management of the
Company; any material change in the Company's dividend policy; or any other
material change in the Company's corporate structure or business.
Notwithstanding the foregoing, promptly after the Offeror acquires a majority
of the Shares, the Offeror will be entitled to designate such number of
directors on the Board of Directors of the Company as will make the percentage
of the Company's directors designated by the Offeror equal to the percentage of
the aggregate voting power of the Shares held by Parent or any of its
Subsidiaries. In addition, assuming the designation of directors as aforesaid
and so long as there are holders of Shares other than Parent or any of its
subsidiaries, Parent expects that the Board of Directors would not declare
dividends on the Shares.
13. The Merger Agreement; the Stockholder Agreements; and the Stockholder and
Purchase Agreement.
The following summary of certain provisions of the Merger Agreement, the
Stockholder Agreements and the Stockholder and Purchase Agreement, copies of
which are filed as exhibits to the Schedule 14D-1, is qualified in its entirety
by reference to the text of such agreements.
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The Merger Agreement
The Offer. The Offeror commenced the Offer in accordance with the terms of
the Merger Agreement. Each of the Company, Parent and the Offeror have agreed
to use its reasonable best efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed
on itself with respect to the Offer and the Merger and shall promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon any of them in connection with the Offer and
the Merger. Each of the Company, Parent and the Offeror shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to take all
reasonable actions necessary to obtain (and shall cooperate with each other in
obtaining) any license, permit, consent, approval, authorization,
qualification and order of any governmental entity or other public or private
third party required to be obtained or made by Parent, the Offeror or the
Company or any of their subsidiaries in connection with the Offer and the
Merger or the taking of any action contemplated thereby or by the Merger
Agreement, except that no party need agree to hold separate or divest itself
of any assets or agree to any restrictions in their businesses as currently or
proposed to be conducted.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL,
the Offeror shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of the Offeror shall
cease and the Company shall continue as the Surviving Corporation and shall
succeed to and assume all the rights and obligations of the Offeror and the
Company in accordance with the DGCL. At the Effective Time, the Charter and
the Bylaws of the Company shall be the Charter and By-Laws of the Surviving
Corporation, and the directors of the Offeror shall become the directors of
the Surviving Corporation and the officers of the Company shall become the
officers of the Surviving Corporation.
Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of the Offeror, the Company or the holders
of any securities of the Offeror or the Company, each Share and each Nonvoting
Share (other than Shares and Nonvoting Shares owned by the Company, any
subsidiary of the Company, Parent, the Offeror or any other direct or indirect
wholly owned subsidiary of Parent (other than Shares in trust accounts,
custodial accounts and the like that are beneficially owned by third parties)
immediately prior to the Effective Time or by stockholders, if any, who are
entitled to and who properly exercise dissenter's rights under the DGCL) shall
be converted into the right to receive from the Surviving Corporation, in
cash, without interest, the Offer Price. Each share of stock of the Offeror
issued and outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of stock of the Offeror, be converted into and become
one fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Offeror. These
representations and warranties relate, among other things, to organization,
good standing and corporate power of the Company and its subsidiaries; capital
structure; authority to enter into the Merger Agreement and to consummate the
transactions contemplated thereby; required consents and approvals; no
violations of laws or agreements; filings made by the Company and Pamida with
the Commission under the Securities Act and the Exchange Act (including
financial statements included in the documents filed by the Company and Pamida
under these acts); the absence of certain events since January 31, 1999;
actions and proceedings; benefit plans and employees and employment practices;
certain labor matters; accuracy of certain information; property matters;
intellectual property matters; tax matters; environmental matters; certain
agreements; insurance and workers' compensation; certain payments and the
absence of certain business practices; licenses and permits; letters of credit
and similar matters; brokers; and the opinion of the Company's financial
advisors.
The Offeror and Parent have also made customary representations and
warranties to the Company. These representations and warranties relate, among
other things, to the Offeror's and Parent's organization and authority to
enter into the Merger Agreement, the Stockholder Agreements and the
Stockholder and Purchase Agreement and to consummate the transactions
contemplated thereby; required consents and approvals and no violations;
accuracy of information supplied; brokers; financing and operations of the
Offeror.
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Covenants Relating to the Conduct of Business. During the period from the
date of the Merger Agreement to the date of the election or appointment of
Parent's designees to the Board of Directors of the Company as described under
"Board Representation" below, the Company has agreed as to itself and its
subsidiaries, except as otherwise expressly contemplated or permitted by the
Merger Agreement or except to the extent Parent shall otherwise consent in
writing (such consent, in the case of clauses (e)(iii) and (f) below, not to be
unreasonably withheld or delayed) not to:
(a) amend or otherwise change, directly or indirectly, its Constituent
Documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of the Company or any subsidiary (other than
the issuance of Shares upon the conversion of Nonvoting Shares or upon
exercise of options to purchase Shares outstanding on the date of the
Merger Agreement in accordance with their current terms), or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including
any phantom interest), of the Company or any subsidiary, or (ii) any assets
of the Company or any subsidiary (including the real property owned,
leased, used or occupied by the Company or any subsidiary or any interest
therein), except for sales in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock, except for such declarations, set asides, dividends and
other distributions made by any subsidiary to the Company;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock
(excluding, however, redemptions or purchases of shares of capital stock of
any subsidiary of the Company pursuant to contractual commitments entered
into before the date of the Merger Agreement and disclosed in connection
therewith);
(e) (i) acquire (including by merger, consolidation, or acquisition of
stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets other than in the ordinary course of business
consistent with past practice; (ii) incur or modify any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, pledge in respect of or otherwise as an accommodation become
responsible for the obligations of any person, or make any loans, advances
or capital contributions, except in the ordinary course of business
consistent with past practice for the purchase of goods for resale; (iii)
enter into any contract or agreement requiring annual payments in excess of
$50,000 or payments in excess of $100,000 in the aggregate, other than any
contract or agreement with a term of less than one year entered into in the
ordinary course of business consistent with past practice; (iv) terminate,
cancel, extend or request any material change in, or agree to any material
change in, any real property lease or material contract, except in the
ordinary course of business consistent with past practice, or waive,
release or assign any material rights or claims; or (v) authorize capital
commitments, except in accordance with a capital expenditure plan which is
reasonably acceptable to Parent;
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company or any
subsidiary who are not officers of the Company, or grant or modify any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or
any subsidiary (other than in connection with hiring and terminating
employees in the ordinary course of the Company's business or pursuant to a
plan, policy or agreement existing as of the date of the Merger Agreement
and disclosed in connection therewith), or establish, adopt, enter into or
amend any collective bargaining agreement, any material bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, retention, termination or
severance plan, benefit, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee or circulate to any
employee any details of any proposal to adopt or amend any such plan or
make, authorize or approve the payment of any extraordinary amount to any
outside advisor, attorney or
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consultant in all cases, except as required by law, including any
obligation to maintain tax-qualified status or as may be required by any
plan as of the date of the Merger Agreement;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect to
accounting policies or procedures (including procedures with respect to the
payment of accounts payable and collection of accounts receivable), except
for a planned change from retail accounting to cost accounting or as may be
required by law or generally accepted accounting principles;
(h) prepare or file any tax return inconsistent with past practice or,
on any such tax return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar tax returns in prior periods, except as
may be required by the change referred to in (g) above, or settle or
compromise any federal, state, local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and
its consolidated subsidiaries, or subsequently incurred in the ordinary
course of business consistent with past practice;
(j) settle or compromise any pending or threatened suit, action or claim
that is material or which relates to any of the transactions contemplated
by the Merger Agreement; or
(k) announce an intention, enter into any formal or informal agreement,
or otherwise make a commitment to do any of the foregoing.
No Solicitation. The Company shall not, nor shall it permit any of the
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of the subsidiaries to (i) solicit or
initiate, or encourage, directly or indirectly, any inquiries relating to, or
the submission of, any Takeover Proposal (as defined below), (ii) participate
in any discussions or negotiations regarding, or furnish to any person any
information or data with respect to or access to the properties of, or take any
other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal or approve
or recommend or resolve to approve or recommend any Takeover Proposal; provided
that the Company or its directors may (i) comply with Rule 14e-2 and Rule 14d-9
promulgated under the Exchange Act with regard to a tender or exchange offer or
(ii) refer a third party to the appropriate section of the Merger Agreement or
make a copy of such section available to any third party; and, prior to the
acceptance for payment of Shares pursuant to the Offer, if the Board of
Directors of the Company reasonably determines that a Takeover Proposal from a
person (including any person with whom the Company or its representatives have
had discussions prior to April 28, 1999) constitutes a Superior Proposal (as
defined below) or may reasonably be expected to lead to a Superior Proposal
from such person, then the Company may, in response to an unsolicited request
therefor and subject to compliance with its obligations under the Merger
Agreement, (1) furnish information with respect to the Company and its
subsidiaries to, and participate in discussions and negotiations directly or
through its representatives with, such person, subject to a customary
confidentiality agreement (as determined by the Company's independent legal
counsel) with such person and (2) make such public disclosures as shall be
required under applicable law, if and to the extent the Board of Directors
determines in good faith, after receiving the advice of independent legal
counsel, that such action is required in the exercise of fiduciary duties of
the Board of Directors under applicable law. For purposes of the Merger
Agreement, "Takeover Proposal" means any bona fide proposal or offer, whether
in writing or otherwise, from any person other than Parent, the Offeror or any
affiliates thereof to acquire beneficial ownership (as defined under Rule 13(d)
of the Exchange Act) of all or a material portion of the assets of the Company
or any of its material subsidiaries or 30% or more of any class of equity
securities of the Company or any of its material subsidiaries pursuant to a
merger, consolidation or other business combination, sale of shares of capital
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stock, sale of assets, tender offer, exchange offer or similar transaction with
respect to either the Company or any of its material subsidiaries, including
any single or multi-step transaction or series of related transactions
contemplated by the Merger Agreement, which is structured to permit such third
party to acquire beneficial ownership of any material portion of the assets of
or 30% or more of the equity interest in either the Company or any of its
material subsidiaries, and "Superior Proposal" means a bona fide proposal by a
third party that was not solicited or initiated, or encouraged, directly or
indirectly, by the Company, any of the subsidiaries or any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of the subsidiaries, except as and to the
extent permitted by the Merger Agreement, to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, more than a majority of
the Shares then outstanding or all or substantially all of the assets of the
Company or to acquire, directly or indirectly, the Company by merger or
consolidation, and otherwise on terms which the Board of Directors of the
Company determines in good faith to be more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger
(after receiving advice from the Company's independent financial advisor that
the value of the consideration provided for in such proposal is fair from a
financial point of view to the holders of Shares and Nonvoting Shares), for
which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company, based on advice
from the Company's independent financial advisor, is reasonably capable of
being financed by such third party and which, in the good faith judgment of the
Board of Directors is reasonably likely to be consummated within a period of
time not materially longer in duration than the period of time reasonably
believed to be necessary to consummate the Offer and Merger, it being
understood that a tender offer with terms and conditions substantially similar
to those set forth herein will satisfy the requirement above with respect to
the time period within which such tender offer must be consummated.
The Merger Agreement provides further that, the Company must advise Parent
orally and in writing of (i) any Takeover Proposal or any inquiry with respect
to or which could lead to any Takeover Proposal received by any officer or
director of the Company or, to the knowledge of the Company, any financial
advisor, attorney or other advisor or representative of the Company, (ii) the
material terms of such Takeover Proposal (including a copy of any written
proposal), and (iii) the identity of the person making any such Takeover
Proposal or inquiry no later than one full business day following receipt of
such Takeover Proposal or inquiry. The Company is required to keep Parent
informed of the status and details of any such Takeover Proposal or inquiry.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed not to
terminate, amend, modify or waive any provision of any standstill agreement to
which the Company or any of its subsidiaries is a party (other than any
involving Parent) without the written consent of Parent. The Company has also
agreed to enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreements, including obtaining injunctions to prevent
any breaches of such agreements, and to enforce specifically the terms and
provisions thereof in any court of the United States or any state thereof
having jurisdiction.
Stock Based Compensation. Prior to the purchase of Shares pursuant to the
Offer, the Company will take actions necessary and appropriate to cause all
options to purchase Shares that are outstanding immediately prior to the
Effective Time to vest and to be fully exercisable immediately prior to the
Effective Time and will make all reasonable efforts to cause each option to
purchase Shares that is outstanding at the Effective Time to be cancelled at
the Effective Time. In consideration of such cancellation, each holder of an
option to purchase Shares will be entitled to receive an amount equal to (A)
the product of (1) the number of Shares subject to such option and (2) the
excess, if any, of the Offer Price over the exercise price per share for the
purchase of Shares subject to such option, minus (B) all applicable federal,
state and local taxes required to be withheld in respect of such payment. The
amounts payable pursuant to the Merger Agreement will be paid as soon as
reasonably practicable following the Effective Time.
The Company has also agreed to take all actions necessary to provide that,
effective as of the Effective Time, each of the Company's stock option plans
and any other equity-based plans maintained with respect to the
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Shares will be terminated, the provisions in any other plan, program,
agreement or arrangement providing for the issuance, transfer or grant of any
capital stock of the Company or any interest in respect of any capital stock
of the Company will be deleted, and no holder of an option to purchase Shares
or any participant in any stock option plan will have any right to receive any
shares of capital stock of the Company, Parent, the Offeror or the Surviving
Corporation.
Indemnification. Pursuant to the Merger Agreement, Parent and the Offeror
agreed that from and after the Effective Time, the Surviving Corporation will
indemnify and hold harmless all past and present officers and directors of the
Company and of its subsidiaries to the same extent and in the same manner such
persons are indemnified as of the date of the Merger Agreement by the Company
pursuant to the DGCL or the Constituent Documents for acts or omissions
occurring at or prior to the Effective Time.
Parent has also agreed to cause the Surviving Corporation to provide, for a
period of not less than six years from the Effective Time, the Company's
current directors and officers an insurance and indemnification policy that
provides coverage for events occurring prior to the Effective Time that is
substantially similar to the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation will not be required to pay
an annual premium for the director's and officer's insurance in excess of 200%
of the per annum premiums paid by the Company for the policy year that
includes the date of the Merger Agreement, but in any case will purchase the
greatest amount of coverage available for a cost not exceeding such amount.
In addition to maintaining the current levels of indemnification, Parent
and the Offeror have agreed that, if the Surviving Corporation or Parent
consolidates with or merges into any other person and is not the continuing or
surviving corporation or entity or transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper and sufficient provision will be made so that the successors and
assigns of the Surviving Corporation or Parent will succeed to the obligations
under the Merger Agreement described above.
Board Representation. The Merger Agreement provides that after the purchase
by the Offeror of Shares pursuant to the Offer, Parent will be entitled to
designate at its option up to that number of directors of the Company's Board
of Directors as will make Parent's representation on the Company's Board of
Directors equal to the percentage of the outstanding Shares held by Parent or
any of its subsidiaries and the Company shall, at such time, subject to the
applicable provisions of the Constituent Documents, cause Parent's designees
to be so elected by its existing Board of Directors. However, in the event
that the Offeror's designees are elected to the Board of Directors of the
Company, until the Effective Time, such Board of Directors shall have at least
two directors who are Continuing Directors. "Continuing Directors" means (i)
directors on the date of the Merger Agreement or (ii) any successor of a
Continuing Director who is (A) unaffiliated with, and not a designee or
nominee, of Parent or the Offeror, and (B) recommended to succeed a Continuing
Director by a majority of the Continuing Directors then on the Board of
Directors of the Company, and in each case under clauses (i) and (ii), who is
not an employee of the Company. In connection with the foregoing, the Company
will promptly, at the option of Parent, either increase the size of the
Company's Board of Directors and/or obtain the resignation of such number of
its current directors as is necessary to enable Parent's designees to be
elected or appointed to the Company's Board of Directors as provided above.
From and after the time that Parent's designees constitute a majority of the
Board and prior to the Effective Time, any amendment or modification to the
Merger Agreement, any amendment to the Constituent Documents inconsistent with
the Merger Agreement, any termination of the Merger Agreement by the Company
and certain other actions may only be effected by the action of a majority of
the Continuing Directors; provided, that, if there are no Continuing
Directors, such actions may be effected by majority vote of the entire Board
of Directors of the Company.
Conditions Precedent. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction (or waiver by each party)
prior to the Effective Time of the following conditions: (i) if required by
applicable law or the Constituent Documents, the stockholders of the Company
shall have approved the Merger
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Agreement; (ii) any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired; (iii) no
foreign, United States or state governmental authority or other agency or
commission or foreign, United States or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect (which order or
other action the parties to the Merger Agreement will use their reasonable
efforts to vacate or lift) and has the effect of making the consummation of the
Merger illegal under applicable law; and (iv) the Offeror shall have accepted
for payment and purchased Shares pursuant to the Offer; provided that this
condition will be deemed to have been satisfied if the Offeror fails to accept
for payment or pay for Shares pursuant to the Offer in breach of the terms of
the Merger Agreement.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the approval of the
terms of the Merger Agreement by the stockholders of the Company: (a) by mutual
written consent of Parent and the Company; (b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the conditions to the Offer as
set forth in this Offer to Purchase (see Section 15) the Offer shall have
terminated or expired in accordance with its terms without the Offeror's having
accepted for payment any Shares pursuant to the Offer or (y) the Offeror shall
not have accepted for payment any Shares pursuant to the Offer prior to August
31, 1999 (provided that the right to terminate the Merger Agreement pursuant to
this clause (b)(i) shall not be available to any party whose failure to perform
any of its obligations under the Merger Agreement results in the failure of any
such condition to the Offer or if the failure of such condition results from
facts or circumstances that constitute a breach of any representation or
warranty under the Merger Agreement by such party) or (ii) if any governmental
entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Shares pursuant to the Offer and such order, decree
or ruling or other action shall have become final and nonappealable (provided
that the party seeking to terminate the Merger Agreement pursuant to this
clause (b)(ii) shall have used all commercially reasonable efforts to remove
such order, decree, ruling, judgment or injunction, it being understood that in
no event shall Parent, the Offeror, the Company or the Surviving Corporation be
required to hold separate or divest any of their respective assets or agree to
any restrictions in their businesses as currently or proposed to be conducted);
(c) by Parent or the Offeror prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation, warranty,
covenant or other agreement contained in the Merger Agreement which (i) would
give rise to the failure of condition (d) described below in Section 15 and
(ii) cannot be or has not been cured within 20 days after the giving of written
notice to the Company by Parent or the Offeror; (d) by Parent or the Offeror
prior to the purchase of Shares pursuant to the Offer if either Parent or the
Offeror is entitled to terminate the Offer as a result of the occurrence of any
event set forth in paragraph (f) described below in Section 15; (e) by the
Company if the Board of Directors of the Company determines in good faith that
a Takeover Proposal constitutes a Superior Proposal and the Board of Directors
of the Company determines in good faith, after receiving the advice of
independent legal counsel, that the failure to approve such Takeover Proposal
and to terminate the Merger Agreement would constitute a breach of its
fiduciary duties under applicable law; provided, that it has complied with the
notice and other provisions of the Merger Agreement and it complies with
requirements of the Merger Agreement relating to payment of Expenses and the
Termination Fee (each as defined below under "Fees and Expenses"); and provided
further that the Company may not terminate the Merger Agreement pursuant to
this clause (e) unless and until 72 hours have elapsed following the delivery
to Parent of a written notice of such determination by the Board of Directors
of the Company; (f) by the Company prior to the purchase of Shares pursuant to
the Offer if (i) any of the representations or warranties of Parent or the
Offeror set forth in the Merger Agreement that are qualified as to materiality
shall not be true and correct in any respect or any such representations or
warranties that are not so qualified shall not be true and correct in any
material respect or (ii) Parent or the Offeror shall have failed to perform in
any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of Parent or the Offeror to be
performed or complied with by it under the Merger Agreement and such untruth,
incorrectness or failure cannot be or has not been cured within 20 days after
the giving of written notice to Parent or the Offeror, as applicable; or (g) by
the Company, if the Offer has not been timely commenced. In the event of a
termination of the Merger Agreement
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by either the Company or Parent, the Merger Agreement shall become void
(except for certain specified provisions, including those pertaining to the
payment of certain expenses and fees and except for certain confidentiality
obligations of the parties) and there shall be no liability or obligation on
the part of Parent, the Offeror or the Company or their respective affiliates,
officers or directors, other than for liability for any willful breach of a
representation or warranty contained in the Merger Agreement or the breach of
any covenant or agreement contained in the Merger Agreement.
Fees and Expenses. Except as provided in the Merger Agreement, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with the Offer, the Merger and the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses.
The Merger Agreement provides that, so long as neither Parent nor the
Offeror is in breach of any of their material obligations under the Merger
Agreement, the Company will pay, or cause to be paid, in same day funds to
Parent the following amounts under the circumstances and at the times set
forth as follows: (i) if Parent or the Offeror terminates the Merger Agreement
in accordance with the provisions described in clause (d) under "Termination"
above and, if such termination is because of the withdrawal, modification or
change in the Board of Director's recommendation of the Offer, the Merger or
the Merger Agreement, and if prior to the time of such withdrawal,
modification or change, a Takeover Proposal shall have been made (other than a
Takeover Proposal made prior to the date of the Merger Agreement), the Company
shall pay the Expenses of Parent and a $5 million termination fee (the
"Termination Fee") upon demand; (ii) if the Company terminates the Merger
Agreement in accordance with the provision described in clause (e) under
"Termination" above, the Company shall pay the Termination Fee concurrently
with such termination and the Expenses of Parent upon demand; and (iii) if
Parent or the Offeror terminates the Merger Agreement under clause (c) under
"Termination" above and, at the time of such termination, a Takeover Proposal
shall have been made (other than a Takeover Proposal made prior to the date of
the Merger Agreement), the Company shall pay the Expenses of Parent, upon
demand; in addition, if concurrently therewith or within nine months after
such termination, (A) the Company shall enter into a merger agreement,
acquisition agreement or similar agreement with respect to a Takeover Proposal
or a Takeover Proposal is consummated, involving any party (1) with whom the
Company had any discussions with respect to a Takeover Proposal, (2) to whom
the Company furnished information with respect to or with a view to a Takeover
Proposal or (3) who had submitted a proposal or expressed any interest
publicly in a Takeover Proposal, in the case of each of clauses (1), (2) and
(3), after April 28, 1999 and prior to such termination, or (B) the Company
enters into a merger agreement, acquisition agreement or similar agreement
with respect to a Superior Proposal, or a Superior Proposal is consummated,
then, in the case of either (A) or (B) above, the Company shall pay the
Termination Fee upon the earlier of the execution of such agreement or upon
consummation of such Takeover Proposal or Superior Proposal.
For purposes of the Merger Agreement, "Expenses" means documented
reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of
Parent in connection with the Offer, the Merger or the consummation of any of
the transactions contemplated by the Merger Agreement, including all
reasonable fees and expenses of law firms, commercial banks, investment
banking firms, accountants, experts and consultants to Parent.
The Stockholder Agreements
Pursuant to the Stockholder Agreements, each Tendering Stockholder has
agreed that (a) such Tendering Stockholder will vote the Shares held by such
Tendering Stockholder in favor of the Merger and the Merger Agreement; (b)
such Tendering Stockholder will vote his Shares against (i) any other merger
agreement or merger, consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any other Takeover Proposal or (ii) any amendment of the
Company's Constituent Documents or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger
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Agreement; (c) such Tendering Stockholder will not (i) sell, transfer, pledge,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, their Shares to
any person other than the Offeror or the Offeror's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal; (d) such
Tendering Stockholder will not, and will not permit any investment banker,
attorney or other adviser or representative of such Tendering Stockholder to,
(i) directly or indirectly solicit, initiate or encourage the submission of,
any Takeover Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal; and (e) so long as the Merger
Agreement has not been terminated, the Tendering Stockholder will tender
pursuant to the Offer and not withdraw the Shares owned by such Tendering
Stockholders.
The Stockholder Agreements terminate upon the earliest of (i) the Effective
Time, (ii) the termination of the Merger Agreement in accordance with its
terms; provided, however, that the Stockholder Agreements will not terminate
until 60 days after termination pursuant to clause (ii) immediately above if
(A) the Merger Agreement is terminated by Parent or the Offeror pursuant to
clause (d) of "Termination" above because of the withdrawal, modification or
change in the recommendation by the Board of Directors of the Company of the
Offer, the Merger and the Merger Agreement or because the Board of Directors
has adopted a resolution to that effect, if prior to the time of such
withdrawal, modification or change or the adoption of such resolution, a
Takeover Proposal shall have been made (other than a Takeover Proposal made
prior to the date of the Stockholder Agreements), (B) the Merger Agreement has
been terminated by Parent or the Offeror pursuant to clause (d) of
"Termination" above because of the Board of Director's recommendation of a
Takeover Proposal, or because the Board of Directors has adopted a resolution
to effect such recommendation, or (C) the Merger Agreement is terminated by
the Company pursuant to clause (e) under "Termination" above or (iii) the
Merger Agreement is amended in a manner adverse to the Tendering Stockholder
without the Tendering Stockholder's consent, which consent shall not be
unreasonably withheld or delayed (the "Stockholder Agreement Termination
Date").
Stockholder and Purchase Agreement
Pursuant to the Stockholder and Purchase Agreement, Venture Partners has
agreed that (a) it will vote its Shares in favor of the Merger and the Merger
Agreement; (b) it will vote its Shares against (i) any other merger agreement
or merger, consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any other Takeover Proposal or (ii) any amendment of the
Company's Constituent Documents or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement; (c) it will not (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
(including any profit sharing arrangement) with respect to the sale, transfer,
pledge, assignment or other disposition of, its Shares to any person other
than the Offeror or the Offeror's designee or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, in connection,
directly or indirectly, with any Takeover Proposal; (d) it will not, and will
not permit any investment banker, attorney or other adviser or representative
of such Tendering Stockholder to, (i) directly or indirectly solicit, initiate
or encourage the submission of, any Takeover Proposal or (ii) directly or
indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
and (e) so long as the Merger Agreement has not been terminated, Venture
Partners will tender pursuant to the Offer and not withdraw its Shares.
In addition, Venture Partners has granted Parent an irrevocable option (the
"Option") to purchase from time to time the Nonvoting Shares at a price of
$11.50 per share. The Option may be exercised, in whole but not
31
<PAGE>
in part, at any time after (i) the termination of the Merger Agreement if the
Merger Agreement is terminated by Parent or the Offeror pursuant to clause (d)
of "Termination" above because of the withdrawal modification or change in the
recommendation by the Board of Directors of the Company of the Offer, the
Merger and the Merger Agreement or because the Board of Directors has adopted a
resolution to that effect, if prior to the time of such withdrawal,
modification or change or the adoption of such resolution, a Takeover Proposal
shall have been made (other than a Takeover Proposal made prior to the date of
the Stockholder and Purchase Agreement), (ii) the Merger Agreement has been
terminated by Parent or the Offeror pursuant to clause (d) of "Termination"
above because of the Board of Director's recommendation of a Takeover Proposal,
or because the Board of Directors has adopted a resolution to effect such
recommendation, (iii) the Merger Agreement is terminated by the Company
pursuant to clause (e) under "Termination" or (iv) after the occurrence of an
event described in paragraph (g) of Section 15 below (the termination described
in clauses (i), (ii) and (iii) being referred to as the "Termination Trigger
Events"). The Offeror is required to exercise the Option in whole, but not in
part, immediately after the acceptance for purchase by the Offeror of Shares
pursuant to the Offer.
The Option terminates on the earliest of (i) the termination of the Merger
Agreement pursuant to paragraph (d) of "Termination" above other than a
termination that constitutes a Termination Trigger Event or a termination as a
result of the occurrence of the event described in paragraph (g) of Section 15
below, (ii) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event described
in paragraph (g) of Section 15 below or (iii) the amendment of the Merger
Agreement in a manner adverse to Venture Partners without the consent of
Venture Partners, which consent shall not be unreasonably withheld or delayed.
Venture Partners' other obligations under the Stockholder and Purchase
Agreement terminate upon the termination of the Option.
14. Dividends and Distributions.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, from the date of the Merger Agreement
through the Effective Time, (x) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed distributions in respect of any
of its capital stock, other than dividends paid by a wholly owned subsidiary of
the Company, (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or (z) purchase, redeem or
otherwise acquire any shares of its capital stock or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities.
15. Certain Conditions to the Offeror's Obligations.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Offeror's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to
pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any Shares tendered pursuant to
the Offer, and may amend the Offer consistent with the terms of the Merger
Agreement or terminate the Offer and not accept for payment any tendered
Shares, if (i) there shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would
constitute at least 51% of the Shares on a fully diluted basis (assuming the
exercise of all options to purchase common stock of the Company, and the
conversion or exchange of all securities convertible or exchangeable into,
Shares outstanding upon the expiration of the Offer but not assuming the
conversion of the Nonvoting Shares) ("Minimum Condition"), (ii) any applicable
waiting period under the HSR Act shall not have expired or been terminated, or
(iii) at any time on or after the date of the Merger Agreement and prior to the
Expiration Date, any of the following events shall occur and be continuing:
(a) there shall be threatened or pending any suit, action or proceeding
by a federal, state, or foreign governmental entity (i) seeking to prohibit
or impose any material limitations on the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material
portion of the businesses or assets of the Company and its subsidiaries
taken as a whole, or Parent and its subsidiaries, taken as a whole,
32
<PAGE>
(ii) seeking to compel the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole, (iii) challenging the acquisition by Parent or the Offeror of any
Shares pursuant to the Offer, the Stockholder Agreements or the Stockholder
and Purchase Agreement, (iv) seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Agreement, the Stockholder
Agreements or the Stockholder and Purchase Agreement (including the voting
provisions under the Stockholder Agreements and the Stockholder and
Purchase Agreement), (v) seeking to obtain from the Company or any
subsidiary any damages that would be reasonably likely to have a Material
Adverse Effect, (vi) seeking to impose material limitations on the ability
of the Offeror or Parent, or rendering the Offeror unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the
Offer, the Stockholder Agreements or the Stockholder and Purchase Agreement
and the Merger, (vii) seeking to impose material limitations on the ability
of the Offeror effectively to exercise full rights of ownership of the
Shares, including the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders, or (viii) which
otherwise would have a Material Adverse Effect on the Company or, as a
result of the Offer or the Merger, a material adverse effect on Parent and
its subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
governmental entity, other than the application to the Offer or the Merger
of applicable waiting periods under the HSR Act, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (viii) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or in the Nasdaq National Market System, for a
period in excess of three hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchanges
not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) any limitation by any United
States governmental authority or agency that has a material adverse effect
generally on the extension of credit by banks or other financial
institutions, or (iv) in the case of any of the situations in clauses (i)
through (iii) inclusive, existing on the date hereof, a material
acceleration or worsening thereof; or
(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of
consummation of the Offer as though made on or as of such date (except for
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such
period) or the Company shall have breached or failed to perform or comply
with any obligation, agreement or covenant required by the Merger Agreement
to be performed or complied with by it except, in each case where the
failure of such representations and warranties to be true and accurate, or
the failure to perform or comply with such obligations, agreements or
covenants, do not, individually or in the aggregate, have a Material
Adverse Effect on the Company or a materially adverse effect on the ability
to consummate the Offer or the Merger; or
(e) there shall have occurred any events or changes which have had or
would reasonably be expected to have or constitute, individually or in the
aggregate, a Material Adverse Effect on the Company; or
(f) the Board (i) shall have withdrawn, or modified or changed in a
manner adverse to Parent or the Offeror (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger or the
Agreement, (ii) shall have recommended a Takeover Proposal or (iii) shall
have adopted any resolution to effect any of the foregoing; or
(g) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, the Offeror or their affiliates or any
group of which any of them is a member, shall have acquired or announced
its intention to acquire beneficial ownership (as determined pursuant to
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the
Shares, or Venture Partners or its affiliates or any group of which
33
<PAGE>
any of them is a member shall have increased or announced its intention to
increase its beneficial ownership of Shares by more than 1%; provided that
the conversion of Nonvoting Shares into Shares shall not be an increase in
the beneficial ownership of Shares; or
(h) any party to any of the Stockholder Agreements or the Stockholder
and Purchase Agreement other than Parent or the Offeror shall have breached
or failed to perform any of its agreements under such agreement or breached
any of its representations and warranties in such agreements or any such
agreements shall not be valid, binding and enforceable, except for such
breaches or failures or failures to be valid, binding and enforceable that
do not materially and adversely affect the benefits expected to be received
by Parent or the Offeror under the Stockholder Agreements or the
Stockholder and Purchase Agreement; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms; which in the sole judgment of Parent or the Offeror, in any such
case, and regardless of the circumstances (including any action or inaction
by Parent or the Offeror not otherwise in breach of the Agreement) giving
rise to such condition makes it inadvisable to proceed with the Offer
and/or with such acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and the Offeror
and may, subject to the terms of the Merger Agreement, be waived by Parent and
the Offeror in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or the Offeror 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.
16. Certain Legal Matters.
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such
matter, subject, however, to the Offeror's right to decline to purchase Shares
if any of the conditions specified in Section 15 shall have occurred. 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 adverse
consequences might not result to the Company's business or that certain parts
of the Company's business might not have to be disposed of if any such
approvals were not obtained or other action taken.
U.S. Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-day waiting period following the filing by Parent of a
Premerger Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Department of Justice, Antitrust Division (the "Antitrust Division") or the
Federal Trade Commission ("FTC") or unless early termination of the waiting
period is granted. Parent made such a filing on Thursday, May 13, 1999. If,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material concerning the
Offer, then the waiting period will be extended through the tenth day after the
date of substantial compliance by all parties receiving such requests.
Complying with a request for additional information or documentary material can
take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition
of the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of the Company
or its subsidiaries or Parent or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no
34
<PAGE>
assurance that a challenge to the Offer, the consummation of the Merger, the
sale of the Shares and Nonvoting Shares pursuant to the Stockholder and
Purchase Agreement or the agreements set forth in the Stockholder Agreements on
antitrust grounds will not be made, or, if such a challenge is made, of the
result thereof.
If any applicable waiting period under the HSR Act applicable to the Offer
has not expired or been terminated prior to the Expiration Date, the Offeror
will not be obligated to proceed with the Offer or the purchase of any Shares
not theretofore purchased pursuant to the Offer. See Section 15.
State Takeover Laws. The Company is incorporated under the laws of the State
of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents an
"interested stockholder" (including a person who owns or has the right to
acquire 15% or more of the outstanding voting shares of a corporation) from
engaging in a "business combination" (defined to include mergers and certain
other actions) with a Delaware corporation for a period of three years
following the date such person became an interested stockholder unless, among
other things, the "business combination" is approved by the Board of Directors
of such corporation prior to such date. Pursuant to Article Eleventh of the
Charter, the Company has elected not to be governed by Section 203;
accordingly, none of the Offer, the Merger or the other transactions
contemplated by the Merger Agreement are subject to Section 203.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Offeror does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, the Offeror will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws 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, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Offeror might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such event,
the Offeror may not be obligated to accept for payment any Shares tendered. See
Section 15.
17. Fees and Expenses.
Neither the Offeror nor Parent, nor any officer, director, stockholder,
agent or other representative of the Offeror or Parent will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager and the Information Agent) for soliciting tenders of Shares pursuant to
the Offer. Brokers, dealers, commercial banks and trust companies and other
nominees will, upon request, be reimbursed by the Offeror for customary mailing
and handling expenses incurred by them in forwarding materials to their
customers.
Parent and the Offeror have engaged Merrill Lynch as the Dealer Manager in
connection with the Offer and as financial advisor to Parent in connection with
its effort to acquire the Company. Parent has agreed to pay Merrill Lynch (in
its capacity as Dealer Manager and financial advisor) a fee of $750,000,
$500,000 of which is contingent upon the consummation of the Offer. In
addition, Parent has agreed to reimburse Merrill Lynch for its out-of-pocket
expenses related to its engagement, including the fees and expense of its
counsel, and has agreed to indemnify Merrill Lynch against certain liabilities
and expenses, including under the federal securities laws.
The Offeror has retained D.F. King & Co., Inc. as Information Agent and
American Stock Transfer & Trust Company as Depositary in connection with the
Offer. The Information Agent and the Depositary will receive reasonable and
customary compensation for their services hereunder and reimbursement for their
reasonable out-of-pocket expenses. The Depositary will also be indemnified by
the Offeror against certain liabilities in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telex, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners of
Shares.
35
<PAGE>
18. Miscellaneous.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making
or acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer
to Purchase or in the Letter of Transmittal and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror or Parent.
The Offeror and Parent have filed with the Commission the Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated
thereunder, furnishing certain information with respect to the Offer. The
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth with respect to the Company in Section 8 (except that they will not be
available at the regional offices of the Commission).
ShopKo Merger Corp.
May 17, 1999
36
<PAGE>
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF PARENT AND THE OFFEROR
Directors and Executive Officers of Parent. Set forth below are the name,
current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of Parent. Unless otherwise indicated, each
such person's business address is 700 Pilgrim Way, Green Bay, Wisconsin 54304.
All persons listed below are citizens of the United States of America.
DIRECTORS
<TABLE>
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- ------------------------------------
<S> <C> <C>
Dale P. Kramer Chairman of the Board. Mr. Kramer
was President and Chief Executive
Officer of Parent from February,
1991 to March, 1999.
Jack W. Eugster Musicland Stores Corporation Chairman, President and Chief Execu-
10400 Yellow Circle Drive tive Officer of Musicland Stores
Minnetonka, MN 55343 Corporation, a retail music and home
video company, since 1986.
Jeffrey C. Girard Girard & Co. President of Girard & Co., a private
250 Prairie Center Drive consulting company, and Adjunct Pro-
Suite 212 fessor at the Carlson School of Man-
Eden Prairie, MN 55347 agement, University of Minnesota,
since 1997. He served as Executive
Vice President and Chief Financial
Officer of Supervalu Inc. from Octo-
ber, 1992 to July, 1997.
William J. Podany President and Chief Executive Offi-
cer of Parent since March, 1999. Mr.
Podany was President and Chief Oper-
ating Officer of Parent's retail
stores from November, 1997 to March,
1999, and Executive Vice President
of Parent from November, 1994 to
March, 1999. From 1992 to 1994, Mr.
Podany was Executive Vice President-
Merchandise of Carter Hawley Hale
Stores, Inc., a federation of four
department store chains.
Dr. James L. Reinertsen CareGroup Healthcare System Chief Executive Officer of CareGroup
375 Longwood Ave. Healthcare System, a provider of
Boston, MA 02215 healthcare services, since July,
1998. He was the Chief Executive Of-
ficer of Health System Minnesota
from 1994 to July, 1998. He was
Chairman of the Institute for Clini-
cal Systems Integration in 1993.
William J. Tyrell Mr. Tyrell was President of Parent
from March, 1973 to February, 1991
and Chairman of Parent from Febru-
ary, 1991 to August, 1991, when he
retired.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- ------------------------------------
<S> <C> <C>
Mr. Tyrell, whose term as a director
expires at Parent's 1999 Annual
Meeting of Shareholders, is retiring
from Parent's Board of Directors and
will not stand for reelection.
Stephen E. Watson Gander Mountain, L.L.C. President and Chief Executive Offi-
4567 West 80th Street cer of Gander Mountain, L.L.C., a
Bloomington, MN 55437 private specialty retailer of out-
door recreational equipment and
clothing, since November, 1997. Mr.
Watson held various executive offi-
cer positions with Dayton-Hudson
Corporation and its predecessors
from 1972 until his retirement in
March, 1996.
Gregory H. Wolf Humana, Inc. An officer of Humana, Inc., a pro-
500 West Main Street vider of healthcare products and
Louisville, KY 40201 services, since October, 1995, he
first served as Senior Vice Presi-
dent of Sales and Marketing, as
Chief Operating Officer from July,
1996 to September, 1996, as Presi-
dent from September, 1996 through
November, 1997 and as President,
Chief Executive Officer and Director
since December, 1997. Prior to join-
ing Humana, Mr. Wolf had been em-
ployed by EMPHESYS Financial Group,
Inc. and its affiliates since 1988,
where he most recently served as
President. In October, 1995,
EMPHESYS was acquired by Humana.
EXECUTIVE OFFICERS
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- ------------------------------------
<S> <C> <C>
Dale P. Kramer Chairman of the Board
William J. Podany President and Chief Executive Offi-
cer
Michael J. Bettiga Senior Vice President, General Mer-
chandise Manager, Retail Health
Services. From February, 1995 to No-
vember, 1997 Mr. Bettiga was Senior
Vice President Health Services.
Prior to that, he was Vice President
Health Services, a position he held
since October, 1993.
Paul A. Burrows Senior Vice President, Chief Infor-
mation Officer. Mr. Burrows was
First Vice President/Chief Informa-
tion Officer with Coldwell Banker
Corp. from June, 1996 to November,
1997. Prior to that, Mr. Burrows was
employed with Broadway Stores, Inc.
(formerly Carter Hawley Hale Stores,
Inc.) for 13 years, most recently as
Senior Vice President, Information
Services.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- ------------------------------------
<S> <C> <C>
Roger J. Chustz Senior Vice President, General Mer-
chandise Manager, Apparel and Prod-
uct Development
Ingrid A. Davis Senior Vice President of Stores. Ms.
Davis joined Parent in February,
1997 as Vice President Special Pro-
jects. Prior to that, Ms. Davis was
with the Target division of Dayton
Hudson Corp. as Director of Super
Target Stores. She also held a vari-
ety of operations management posi-
tions with Best Price Clothing
Stores, Inc., Conran's Habitat and
the Lerner Division of The Limited,
Inc.
Paul H. Freischlag, Jr. Senior Vice President, Chief Finan-
cial Officer since July, 1998. Mr.
Freischlag was Treasurer and Vice
President for Royal Ahold, Zaandam,
The Netherlands from July, 1996 to
July, 1998. Prior to that, he was
with The Stop & Shop Companies in
Boston, Massachusetts for nine
years, most recently as Vice Presi-
dent and Treasurer.
Steven T. Harig Senior Vice President, Planning, Re-
plenishment and Analysis, Distribu-
tion and Transportation
Gary A. Hillerman Senior Vice President, General Mer-
chandise Manager, Hardlines since
February, 1997. Mr. Hillerman was
Vice President/Divisional Merchan-
dise Manager of Linens and Domestics
from March, 1996 to February, 1997.
Prior thereto, he was Divisional
Merchandise Manager at Dillards in
Ohio since 1991.
Michael J. Hopkins Senior Vice President, General Mer-
chandise Manager, Home and Hardlines
since November, 1995. From 1992 to
1995, Mr. Hopkins was Senior Vice
President, Merchandise Planning and
Distribution at Broadway Stores,
Inc. (formerly Carter Hawley Hale
Stores, Inc.).
Rodney D. Lawrence Senior Vice President, Store Market-
ing since May, 1996. Mr. Lawrence
was Vice President, Store Planning
with Broadway Stores, Inc. from 1994
to 1996 and Director of Store Plan-
ning with Carter Hawley Hale Stores,
Inc. in Los Angeles from 1992 to
1994.
David A. Liebergen Senior Vice President, Human Re-
sources and Internal Communication
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- ------------------------------------
<S> <C> <C>
L. Terry McDonald Senior Vice President, Marketing
since July, 1994. Mr. McDonald was
Senior Vice President, Marketing
with Payless Shoe Source from 1988
to 1994.
Richard D. Schepp Senior Vice President, General Coun-
sel and Secretary since November,
1997. Mr. Schepp served as Vice
President Legal Affairs/Secretary
from October, 1995 to November, 1997
and has held several other positions
within the Company's Legal Depart-
ment since October, 1992.
</TABLE>
Directors and Executive Officers of Offeror. Set forth below are the name
of each executive officer and director of the Offeror. The present principal
occupation or employment and material positions held by each such person
during the past five years is included above under "Directors and Executive
Officers of Parent." Each such person's business address is 700 Pilgrim Way,
Green Bay, Wisconsin 54304. All persons listed below are citizens of the
United States of America.
DIRECTORS
<TABLE>
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name During Past Five Years
- ---- ------------------------------------
<S> <C> <C>
Dale P. Kramer Chairman of the Board
EXECUTIVE OFFICERS
<CAPTION>
Present Principal Occupation or Em-
ployment and Material Positions Held
Name During Past Five Years
- ---- ------------------------------------
<S> <C> <C>
Dale P. Kramer Chairman of the Board
William J. Podany President and Chief Executive Offi-
cer
Paul H. Freischlag, Jr. Senior Vice President and Chief Fi-
nancial Officer
Richard D. Schepp Senior Vice President, General Coun-
sel and Secretary
Jeffery R. Simons Vice President, Controller and Trea-
surer
</TABLE>
40
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail:
By Facsimile
Transmission:
By Hand/Overnight
Delivery:
40 Wall Street, 46th (Eligible Institutions 40 Wall Street, 46th
Floor New York, NY 10005 Only) Floor New York, NY 10005
(Attention: (718) 234-5001 Confirm by (Attention:
Reorganization Telephone: Reorganization Department)
Department)
(718) 921-8200 For
Information Call:
(718) 921-8200
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. Stockholders may also
contact their broker, dealer, commercial 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, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 290-6432
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1314
(212) 449-8971 (Call Collect)
<PAGE>
Exhibit (a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
PAMIDA HOLDINGS CORPORATION
Pursuant to the Offer to Purchase
Dated May 17, 1999
by
SHOPKO MERGER CORP.
a wholly owned subsidiary of
SHOPKO STORES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 14, 1999,
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile
Transmission:
40 Wall Street, 46th By Hand/Overnight
Floor (Eligible Institutions Delivery:
Only)
New York, New York 10005
(Attention: (718) 234-5001 40 Wall Street, 46th
Reorganization Floor
Department)
Confirm by Telephone: New York, New York 10005
(Attention:
Reorganization
Department)
(718) 921-8200
For Information Call:
(718) 921-8200
----------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE, TO A NUMBER OTHER THAN AS SET FORTH ABOVE, DOES
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE
THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Pamida
Holdings Corporation, a Delaware corporation (the "Company"), if certificates
for Shares (as defined below) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase dated May 17, 1999 (the
"Offer to Purchase")) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by American Stock Transfer &
Trust Company (the "Depositary") at The Depositary Trust Company (the "Book-
Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of
the Offer to Purchase (as defined below). Delivery of documents to the Book-
Entry Transfer Facility does not constitute delivery to the Depositary.
<PAGE>
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase),
or who cannot comply with the book-entry transfer procedures on a timely
basis, must tender their Shares pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase. See Instruction 2.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
Name(s) and
Address(es)
of
Registered
Holder(s)
(Please
fill in, if Shares Tendered
blank) (Attach additional list if necessary)
- ----------- -----------------------------------------------
Share Number of Shares
Certificate Represented by Number of Shares
Number(s)* Certificate(s)* Tendered**
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
Total Shares
- ------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account No. ________________________________________________________________
Transaction Code No. _______________________________________________________
[_]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 Tendering Stockholder(s) ________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Window Ticket Number (if any) ______________________________________________
Name of Institution which Guaranteed Delivery ______________________________
If delivery is by book-entry transfer, please check this box: [_]
Account No. _______________________________________________________________
Transaction Code No. _______________________________________________________
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to ShopKo Merger Corp., a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of ShopKo Stores,
Inc., a Wisconsin corporation (the "Parent"), the above-described shares of
common stock, par value $.01 per share (the "Shares"), of Pamida Holdings
Corporation, a Delaware corporation (the "Company"), pursuant to the Offeror's
offer to purchase all of the outstanding Shares at a purchase price of $11.50
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, receipt of which
is hereby acknowledged, and in this Letter of Transmittal (which, together
with the Offer to Purchase, and any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of May 10, 1999
(the "Merger Agreement"), among the Parent, the Offeror, and the Company.
Subject to and effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers
to or upon the order of the Offeror all right, title and interest in and to
all the Shares that are being tendered hereby and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all such other Shares or securities), 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
all such other Shares or securities), or transfer ownership of such Shares
(and all such other Shares or securities) on the account books maintained by
the Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Offeror, (b) present such Shares (and all such other Shares or securities)
for transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and all
such other Shares or securities), all in accordance with the terms of the
Offer.
The undersigned hereby irrevocably appoints each designee of the Offeror as
the agent, attorney-in-fact and proxy of the undersigned, each with full power
of substitution, to exercise all voting and other rights of the undersigned in
such manner as each such attorney and proxy or his substitute shall in his
sole judgment deem proper, with respect to all of the Shares tendered hereby
which have been accepted for payment by the Offeror prior to the time of any
vote or other action (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares) at any meeting of
stockholders of the Company (whether annual or special and whether or not an
adjourned meeting), any actions by written consent in lieu of any such meeting
or otherwise. This power of attorney and proxy is irrevocable, is coupled with
an interest in the Shares and is granted in consideration of, and is effective
upon, the acceptance for payment of such Shares by the Offeror in accordance
with the terms of the Offer. Such acceptance for payment shall revoke any
other power of attorney, proxy or written consent granted by the undersigned
at any time with respect to such Shares (and all such other Shares or other
securities or rights), and no subsequent powers of attorney or proxies will be
given or written consents will be executed by the undersigned (and if given or
executed, will not be deemed effective). The undersigned understands that in
order for Shares to be deemed validly tendered, immediately upon the
acceptance for payment of such Shares, the Offeror or its designee must be
able to exercise full voting rights with respect to such Shares and other
securities, including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that when the same are accepted for payment by the
Offeror, the Offeror will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Offeror to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and all such other Shares or other securities or
rights).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. This tender is irrevocable,
provided that Shares tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless theretofore accepted for payment
as provided in the Offer to Purchase, may also be withdrawn at any time after
July 15, 1999.
3
<PAGE>
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares accepted for payment, and
return any Shares not tendered or not accepted for payment, in the name(s) of
the undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
accepted for payment and return any certificates for Shares not tendered or
not accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the purchase price of
any Shares purchased and return any Shares not tendered or not purchased in
the name(s) of, and deliver said check and any certificates to, the person(s)
so indicated. Stockholders tendering Shares by book-entry transfer may request
that any Shares not accepted for payment be returned by crediting such account
maintained at the Book-Entry Transfer Facility as such stockholder may
designate by making an appropriate entry under "Special Payment Instructions."
The undersigned recognizes that the Offeror has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof if the Offeror does not accept for payment any of
the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or certificates Shares purchased or certificates
for Shares not tendered or not for Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to
name of someone other than the someone other than the undersigned
undersigned or if Shares tendered or to the undersigned at an
hereby and delivered by book-entry address other than that shown
transfer which are not accepted below the undersigned's
for payment are to be returned by signature(s).
credit to an account at the Book-
Entry Transfer Facility other than
designated above.
Mail check and/or certificates to:
Name ______________________________
(Please Print)
Issue Check and/or Certificates
to:
Address ___________________________
Name ______________________________ -----------------------------------
(Please Print)
-----------------------------------
Address ___________________________ (Zip Code)
----------------------------------- -----------------------------------
(Zip Code) (Taxpayer Identification or Social
Security No.)
----------------------------------- (See Substitute Form W-9)
-----------------------------------
(Taxpayer Identification or Social
Security No.)
(See Substitute Form W-9)
[_]Credit Shares delivered by
book-entry transfer and not
purchased to the account set
forth below
4
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on all Letters of Transmittal must be guaranteed by a firm that is a bank,
broker, dealer, credit union, savings association or other entity which is a
member in good standing of the Securities Transfer Agents Medallion Program or
by any other bank, broker, dealer, credit union, savings association or other
entity which is an "eligible guarantor institution," as such term is defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each of
the foregoing constituting an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. See Instruction 5. If the
certificates are registered in the name of a person or persons other than the
signer of this Letter of Transmittal, or if payment is to be made or delivered
to, or certificates evidencing unpurchased Shares are to be issued or returned
to, a person other than the registered owner or owners, then the tendered
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates or stock powers, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
herein. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined in the Offer to Purchase) is utilized, if the
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for
all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility of all
Shares delivered electronically, as well as a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and any other
documents required by this Letter of Transmittal, or an Agent's Message in the
case of a book-entry delivery, must be received by the Depositary at one of
its addresses set forth on the front page of this Letter of Transmittal prior
to the Expiration Date. Stockholders who cannot deliver their Shares and all
other required documents to the Depositary prior to the Expiration Date must
tender their Shares pursuant to the guaranteed delivery procedures set forth
in Section 3 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 Offeror, must be received by the Depositary prior to
the Expiration Date; and (c) the certificates for all tendered Shares, in
proper form for tender, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The term "trading day" is any day on which the American Stock Exchange is open
for business.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and risk of the tendering stockholder. Shares will
be deemed delivered only when actually received by the Depositary (including,
in the case of a book-entry transfer, by a confirmation of a book-entry
transfer). 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. By executing this Letter of Transmittal
(or a facsimile thereof), the tendering shareholder waives any right to
receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
5
<PAGE>
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by
the old certificate will be sent to the person(s) signing this Letter of
Transmittal unless otherwise provided in the appropriate box marked "Special
Payment Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as promptly as practicable following the Expiration Date. All
Shares represented by certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different 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 is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s), in which case the certificate(s)
for such Shares tendered hereby must be endorsed, or accompanied by,
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the certificate for such Shares. Signatures
on any 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 the Shares tendered hereby, the certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Offeror of the authority of such person so to act must be
submitted.
6. Stock Transfer Taxes. The Offeror will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. If, however, payment of the purchase price is
to be made to, or Shares not tendered or not purchased are to be returned in
the name of, any person other than the registered holder(s), then the amount
of any stock transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) 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 Instruction. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
6
<PAGE>
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such stockholder may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above.
8. Substitute Form W-9. Under U.S. Federal income tax law, a tendering
stockholder whose 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, which is provided below, unless an exemption
applies. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to a $50 penalty and to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares.
9. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to
avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
10. Requests for Assistance or Additional Copies. Questions and requests
for assistance may be directed to the Dealer Manager or the Information Agent
at the addresses and telephone numbers set forth on the back cover of this
Letter of Transmittal. Additional copies of the Offer to Purchase and this
Letter of Transmittal and related materials may be obtained from the
Information Agent or the Dealer Manager at their respective addresses or
telephone numbers set forth below.
11. Waiver of Conditions. The conditions of the Offer may be waived by the
Offeror (subject to certain limitations in the Merger Agreement), in whole or
in part, at any time or from time to time, in the Offeror's sole discretion.
12. Lost, Destroyed, Mutilated, or Stolen Certificates. If any
certificate(s) representing Shares has been lost, destroyed, mutilated, or
stolen, the shareholder should promptly notify the Depositary. The stockholder
will then be instructed as to the steps to be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed, mutilated or
stolen certificates have been followed.
Important: This Letter of Transmittal or a facsimile copy hereof (together
with certificates or confirmation of book-entry transfer and all other
required documents) or a Notice of Guaranteed Delivery must be received by the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such shareholder is
an individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
7
<PAGE>
withholding will be reduced by the amount of tax withheld. If backup
withholding results in an overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form certifying that the TIN provided on the Substitute
Form W-9 is correct.
What Number to Give the Depositary
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report.
8
<PAGE>
SIGN HERE
(Complete Substitute Form W-9 below)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Signature(s) of Owner(s)
Names(s) __________________________________________________________________
---------------------------------------------------------------------------
Capacity (full title)______________________________________________________
Address ___________________________________________________________________
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Include Zip Code)
---------------------------------------------------------------------------
Area Code and Telephone Number ____________________________________________
Tax Identification or Social Security Number ______________________________
(See Substitute Form W-9)
Dated: ____________________________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
set forth full title and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s) ___________________________________________________
Name ______________________________________________________________________
Name of Firm ______________________________________________________________
Address ___________________________________________________________________
---------------------------------------------------------------------------
(Include Zip Code)
---------------------------------------------------------------------------
Area Code and Telephone Number ____________________________________________
Dated: ____________________________________________________________________
9
<PAGE>
PAYER'S NAME: [ ]
- -------------------------------------------------------------------------------
Part I--PLEASE PROVIDE TIN:
YOUR TIN IN THE BOX AT ------------------------
RIGHT AND CERTIFY BY Social Security
SIGNING AND DATING BELOW Number or Employer
Identification Number
-----------------------------------------------------------
SUBSTITUTE Part II--For Payees exempt from backup withholding, see
Form W-9 the enclosed Guidelines for Certification of Taxpayer
Department of the Identification Number on Substitute Form W-9 and
Treasury, complete as instructed therein.
Internal Revenue
Service -----------------------------------------------------------
Payer's Request Certification--Under penalties of
for perjury, I certify that:
Taxpayer
Identification (1) The number shown on this form is my correct TIN (or
Number ("TIN") I am waiting for a number to be issued to me); and
and Certification
(2) I am not subject to backup withholding because (a) I
am exempt from backup withholding or (b) I have not
been notified by the Internal Revenue Service
("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividend, or (c) the IRS has notified me that I am
no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
under reporting 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 were no longer subject to
backup withholding, do not cross out item (2). (Also see the instructions in
the enclosed Guidelines.)
-----------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
SIGNATURE: DATE:
------------------------- ----------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR
TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to
me, and either (1) I have mailed or delivered an application to receive a
TIN to the appropriate IRS Center or Social Security Administration Officer
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a TIN by the time of payment, 31% of all
payments pursuant to the Offer made to me thereafter will be withheld until
I provide a number.
SIGNATURE: DATE:
---------------------------------------------- ----------------
10
<PAGE>
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 290-6432
The Dealer Manager for the Offer is:
Merrill Lynch & Co
World Financial Center
North Tower
New York, New York 10281-1314
(212) 449-8971 (Call Collect)
<PAGE>
Exhibit (a)(3)
[Merrill Lynch & Co. Logo] World Financial Center
North Tower
New York, New York
10281-1314
(212) 449-8971 (Call
Collect)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
PAMIDA HOLDINGS CORPORATION
at
$11.50 Net Per Share
by
SHOPKO MERGER CORP.
a wholly owned subsidiary of
SHOPKO STORES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIREAT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 14, 1999, UNLESS THE OFFER IS EXTENDED.
May 17, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by ShopKo Merger Corp., a Delaware corporation (the
"Offeror") and a wholly owned subsidiary of ShopKo Stores, Inc., a Wisconsin
corporation ("Parent"), to act as Dealer Manager in connection with the
Offeror's offer to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Pamida Holdings Corporation, a Delaware
corporation (the "Company"), at a purchase price of $11.50 per Share, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 17, 1999 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer")
enclosed herewith. The Offer is being made in connection with the Agreement
and Plan of Merger, dated as of May 10, 1999, among Parent, the Offeror and
the Company (the "Merger Agreement"). Holders of Shares whose certificates for
such Shares (the "Certificates") are not immediately available or who cannot
deliver their Certificates and all other required documents to American
Transfer & Trust Company (the "Depositary") or complete the procedures for
book-entry transfer prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your
nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer Shares
constituting at least 51% of the Shares that are outstanding determined on a
fully diluted basis (but not assuming the conversion of the nonvoting common
stock, par value $.01 per share, of the Company). See Section 15 of the Offer
to Purchase.
<PAGE>
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated May 17, 1999.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from Steven S. Fishman, the
Chairman of the Board, President and Chief Executive Officer of the
Company, together with a Solicitation/Recommendation Statement on Schedule
14D-9 filed with the Securities and Exchange Commission by the Company and
mailed to the shareholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Certificates and all other required documents are not immediately
available or cannot be delivered to the Depositary prior to the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for book-
entry transfer cannot be completed prior to the Expiration Date.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 14, 1999, UNLESS
THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $11.50 per Share, net to the seller in cash
without interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, June 14, 1999, unless the Offer is extended.
4. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger (as defined in the Offer to
Purchase), has determined that the terms of the Offer and the Merger are
fair to and in the best interests of the Company's stockholders and
recommends that the holders of Shares accept the Offer and tender their
Shares pursuant to the Offer.
5. 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, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
In order to accept the Offer, (i) a duly executed and properly completed
Letter of Transmittal (or facsimile thereof) and any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase) and any other required documents should be
sent to the Depositary and (ii) Certificates representing the tendered Shares
should be delivered or such Shares should be tendered by book-entry transfer,
all in accordance with the instructions set forth in the Letter of Transmittal
and Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender must
be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
2
<PAGE>
Neither the Offeror, Parent nor any officer, director, shareholder, agent
or other representative of the Offeror will pay any fees or commissions to any
broker, dealer or other person (other than the Dealer Manager and the
Information Agent as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. The Offeror will, however, upon
request, reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. The Offeror
will pay or cause to be paid any transfer taxes payable on the transfer of
Shares to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
D.F. King & Co., Inc., the Information Agent for the Offer, 77 Water Street,
New York, New York 10005 (212-269-5550) or Merrill Lynch & Co., World
Financial Center, North Tower, New York, New York 10281-1314 (212-449-8971).
Requests for copies of the enclosed materials may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth above.
Very truly yours,
Merrill Lynch, Pierce, Fenner &
Smith
Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, THE OFFEROR, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
PAMIDA HOLDINGS CORPORATION
at
$11.50 Net Per Share
by
SHOPKO MERGER CORP.
a wholly owned subsidiary of
SHOPKO STORES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 14, 1999, UNLESS THE OFFER IS EXTENDED.
May 17, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 17,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer"), relating to an offer by ShopKo Merger Corp., a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of ShopKo Stores,
Inc., a Wisconsin corporation (the "Parent"), to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Pamida
Holdings Corporation, a Delaware corporation (the "Company"), at a purchase
price of $11.50 per Share, net to the seller in cash, without interest, upon
the terms and subject to the conditions set forth in the Offer. Also enclosed
is a letter to stockholders of the Company from Steven S. Fishman, the
Chairman, President and Chief Executive Officer of the Company, together with
a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to stockholders
of the Company. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of May 10, 1999, among Parent, the Offeror and the
Company (the "Merger Agreement"). This material is being forwarded to you as
the beneficial owner of Shares carried by us in your account but not
registered in your name.
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 by you to tender Shares held by us for
your account.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or time
will not permit all required documents to reach the Depositary (as defined in
the Offer to Purchase) prior to the Expiration Date (as defined in the Offer
to Purchase) or the procedure for book-entry transfer cannot be completed on a
timely basis, such Shares may nevertheless be tendered according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase. See Instruction 1 of the Letter of Transmittal. Delivery of
documents to the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) in accordance with the Book-Entry Transfer Facility's procedures
does not constitute delivery to the Depositary.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account,
upon the terms and conditions set forth in the Offer.
<PAGE>
Please note the following:
1. The tender price is $11.50 per Share, net to you in cash without
interest.
2. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger (as defined in the Offer to
Purchase), has determined that the terms of the Offer and the Merger are
fair to and in the best interests of the Company's stockholders and
recommends that the holders of Shares accept the Offer and tender their
Shares pursuant to the Offer.
3. The Offer is being made for all of the outstanding Shares.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, June 14, 1999, unless the Offer is extended.
5. The Offer is conditioned upon there being validly tendered and not
withdrawn prior to the expiration of the Offer Shares constituting at least
51% of the Shares that are outstanding determined on a fully diluted basis
(but not assuming the conversion of the nonvoting common stock, par value
$.01 per share, of the Company). The Offer is also subject to satisfaction
of other terms and conditions set forth in the Offer to Purchase.
6. 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, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
If you wish to have us tender any or all of the Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form contained in this letter. An envelope to return your instruction to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. Please forward
your instructions to us as soon as possible to allow us ample time to tender
your Shares on your behalf prior to the expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Offeror by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PAMIDA HOLDINGS CORPORATION
BY
SHOPKO MERGER CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated May 17, 1999 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") in connection with
the offer by ShopKo Merger Corp., a Delaware corporation (the "Offeror") and a
wholly owned subsidiary of ShopKo Stores Inc., a Wisconsin corporation, to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Shares"), of Pamida Holdings Corporation, a Delaware corporation (the
"Company").
This will instruct you to tender to the Offeror the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to be Tendered:* _ SIGN HERE
-------------------------------------
-------------------------------------
Account Number: _____________________ Signature(s)
-------------------------------------
Date: _______________________________ -------------------------------------
(Print Name(s))
-------------------------------------
(Print Address(es))
-------------------------------------
-------------------------------------
(Area Code and Telephone Number(s))
-------------------------------------
(Taxpayer Identification or
Social Security Number(s))
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
Exhibit (a)(5)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
PAMIDA HOLDINGS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIREAT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 14, 1999 UNLESS THE OFFER IS EXTENDED.
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of common stock, par
value $.01 per share (the "Shares"), of Pamida Holdings Corporation, a
Delaware corporation (the "Company"), are not immediately available or if 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 (as defined in the Offer to Purchase). Such form may be
delivered by hand, overnight delivery, facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase, dated May 17, 1999 (the
"Offer to Purchase").
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile By Hand/Overnight Delivery:
Transmission:
40 Wall Street, 40 Wall Street, 46th Floor
46th Floor (Eligible New York, New York 10005
New York, New York Institutions Only) (Attention: Reorganization
10005 (718) 234-5001 Department)
(Attention:
Reorganization Confirm by
Department) Telephone:
(718) 921-8200
For Information
Call:
(718) 921-8200
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUMENTS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE,
DOES NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to ShopKo Merger Corp., a Delaware
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase, and the related Lettter of Transmittal, receipt of which
are hereby acknowledged, the number of Shares of the Company indicated below,
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
Number of Shares: ___________________ SIGN HERE
Name(s) of Record Holder(s):
Certificate No(s) (if available):
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
(Please Print)
If Securities will be tendered by Address(es): ________________________
book-entry transfer: ________________ -------------------------------------
- ------------------------------------- (Zip Code)
- ------------------------------------- Area Code and Telephone No(s):
-------------------------------------
Name of Tendering Institution:
- ------------------------------------- Signature(s): _______________________
-------------------------------------
Account No.: at GUARANTEE
Dated: ______________________________
(Not to be used for signature guarantee)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallin Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, (i) represents that the tender of Shares effected hereby
complies with Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, and (ii) guarantees the delivery to the Depositary of the
certificates representing the Shares tendered hereby in proper form for
transfer, or, in the case of book-entry delivery of Shares, a Book-Entry
Confirmation (as defined in the Offer to Purchase), in each case with delivery
of a properly completed and duly executed Lettter of Transmittal (or manually
signed facsimile(s) thereof) and any other required documents, or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery of Shares, all within three trading days of the date hereof. A
"trading day" is any day on which the American Stock Exchange is open for
business.
Name of Firm: _______________________ Title: ______________________________
- -------------------------------------
(Authorized Signature) Name: _______________________________
Address: ____________________________ (Please Print or Type)
- ------------------------------------- Area Code and Telephone No.: ________
(Zip Code)
Dated: ______________________________
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--CERTIFICATES SHOULD BE
SENT WITH THE LETTER OF TRANSMITTAL
2
<PAGE>
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- -----------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds, the
first individual
on the account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult, or if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor
guardian or committee for a or incompetent
designated ward, minor or person(3)
incompetent person
7. a.A revocable savings The grantor-
trust account (in which trustee(1)
grantor is also trustee)
b.Any "trust" account that The actual
is not a legal or valid owner(1)
trust under State law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
--------
<S> <C>
9. A valid trust, estate or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A Broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local governmental school
district or prison) that
receives agricultural
program payments
</TABLE>
---------------------------------------
- ---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF 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 Card, or Form SS-
4, Application for Employer Identification Number (for businesses and all
other entities), or Form W-7 for Individual Taxpayer Identification Number
(for alien individuals required to file U.S. tax returns), at an office of the
Social Security Administration or the Internal Revenue Service.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on all payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any political 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 entity registered at all times during the tax year 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 alien partner.
. PPayments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. PPayments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
. PPayments of tax-exempt interest (including exempt-interest dividends un-
der section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see 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 the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
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 sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) 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 im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell these securities. The Offer is made only by the Offer to Purchase
and the related Letter of Transmittal and is not being made to (nor will tenders
be accepted from) holders of Shares in any jurisdiction in which the Offer or
the acceptance thereof would not be in compliance with the securities laws of
such jurisdiction. In those jurisdictions where securities laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Offeror by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash all Outstanding Shares of Common Stock
of
PAMIDA HOLDINGS CORPORATION
at $11.50 Net Per Share
by
SHOPKO MERGER CORP.
a wholly owned subsidiary of
SHOPKO STORES, INC.
ShopKo Merger Corp., a Delaware corporation (the "Offeror") and a wholly
owned subsidiary of ShopKo Stores, Inc., a Wisconsin corporation (the "Parent"),
is offering to purchase all of the shares of common stock, par value $.01 per
share (the "Shares"), of Pamida Holdings Corporation, a Delaware corporation
(the "Company"), for $11.50 per Share, net to the seller in cash without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated May 17, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
========================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JUNE 14, 1999, UNLESS THE OFFER IS EXTENDED.
========================================================================
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer Shares
constituting at least 51% of the Shares that are outstanding determined on a
fully diluted basis (but not assuming the conversion of Nonvoting Shares (as
defined below)), (ii) any waiting period under the HSR Act (as defined in the
Offer to Purchase) applicable to the purchase of Shares pursuant to the Offer
having expired or having been terminated prior to the expiration of the Offer,
and (iii) the satisfaction of certain other terms and conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of May 10, 1999 (the "Merger Agreement") among Parent, the Offeror and the
Company. The Merger Agreement provides that, among other things, after the
purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with the relevant
provisions of the Delaware General Corporation Law, as amended, the Offeror will
be merged with and into the Company (the "Merger"). At the effective time of the
Merger (the "Effective Time"), each Share and each share of nonvoting common
stock, par value $.01 per share (the "Nonvoting Shares"), of the Company that is
issued and outstanding immediately prior to the Offer (other than Shares and
Nonvoting Shares owned by the Company, any subsidiary of the Company, Parent,
the Offeror or any other direct or indirect wholly owned subsidiary of Parent
(other than Shares
<PAGE>
in trust accounts, custodial accounts and the like that are beneficially owned
by third parties) or Shares with respect to which appraisal rights are properly
exercised under Delaware law) will be converted into the right immediately prior
to the Effective Time to receive $11.50 (or any higher price that may be paid
for each Share pursuant to the Offer) in cash, without interest thereon.
In connection with the Merger Agreement, Parent and the Offeror entered
into Stockholder Agreements, each dated as of May 10, 1999 (the "Stockholder
Agreements"), with each of the directors of the Company who together
beneficially own approximately 4.7% of the Shares that are outstanding on a
fully diluted basis (but not assuming the conversion of the Nonvoting Shares).
Pursuant to the Stockholder Agreements, the directors have agreed, among other
things, to tender all of their Shares pursuant to the Offer. Parent and the
Company have also entered into a Stockholder and Purchase Agreement dated as of
May 10, 1999 (the "Stockholder and Purchase Agreement") with 399 Venture
Partners, Inc. ("Venture Partners"), which beneficially owns approximately 14.0%
of the Shares that are outstanding on a fully diluted basis (but not assuming
the conversion of the Nonvoting Shares) and all of the Nonvoting Shares, of the
Company that are outstanding. Pursuant to the Stockholder and Purchase
Agreement, Venture Partners has agreed, among other things, to tender all of its
Shares pursuant to the Offer and has granted the Offeror an irrevocable option
to purchase all of its Shares and all of its Nonvoting Shares, at a purchase
price of $11.50 per share, exercisable upon the occurrence of certain events.
Parent and the Offeror have agreed to exercise the Option and purchase all of
the Shares (to the extent not tendered) and all of the Nonvoting Shares from
Venture Partners immediately after the purchase of Shares pursuant to the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER
AND TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn, if
and when the Offeror gives oral or written notice to American Stock Transfer &
Trust Company (the "Depositary") of the Offeror's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which shall act as
agent for tendering stockholders for the purpose of receiving payment from the
Offeror and transmitting payment to the tendering stockholders. Payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message (as defined in the Offer to Purchase) and
(iii) any other documents required by the Letter of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Offeror's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Monday, June 14, 1999 (or any other time then
set as the Expiration Date), the Offeror may, subject to the terms of the Merger
Agreement, (i) extend the Offer and, subject to applicable withdrawal rights,
retain all tendered
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<PAGE>
Shares until the expiration of the Offer as so extended, (ii) subject to
complying with applicable rules and regulations of the Securities and Exchange
Commission, accept for payment all Shares so tendered and not extend the Offer,
or (iii) terminate the Offer and not accept for payment any Shares and return
all tendered Shares to tendering stockholders. The term "Expiration Date" shall
mean 12:00 Midnight, New York City time, on Monday, June 14, 1999, unless the
Offeror shall have extended the period of time for which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Offeror, shall expire.
Subject to the limitations set forth in the Offer and the Merger Agreement,
the Offeror reserves the right, at any time or from time to time in its sole
discretion, to extend the period during which the Offer is open by giving oral
or written notice of such extension to the Depositary and by making a public
announcement of such extension. Under no circumstances will interest on the
purchase price of Shares be paid by the Offeror. There can be no assurance that
the Offeror will exercise its right to extend the Offer. Any extension of the
period during which the Offer is open will be followed, as promptly as
practicable, by public announcement thereof, such announcement to be issued not
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 and all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable, except that Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and, unless theretofore accepted for payment, may also be
withdrawn at any time after July 15, 1999. For a withdrawal to be effective, a
written or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth on the back cover of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder if different from the name of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered for the account of an Eligible Institution (as defined in the
Offer to Purchase), the signature on the notice of withdrawal must be guaranteed
by an Eligible Institution. All questions as to the form and validity (including
time of receipt) of a notice of withdrawal will be determined by the Offeror, in
its sole discretion, and its determination shall be final and binding on all
parties.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided to the Offeror its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
mailed to brokers, dealers, commercial 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.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
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<PAGE>
Any questions or requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent or the Dealer Manager as set forth
below, and copies will be furnished promptly at the Offeror's expense. No fees
or commissions will be payable to brokers, dealers or other persons other than
the Information Agent and the Dealer Manager for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 290-6432
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1314
(212) 449-8971 (Call Collect)
May 17, 1999
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<PAGE>
Exhibit (a)(8)
ShopKo
NEWS RELEASE
For further information:
Media - Sheree Olson
(920) 429-4186
Investors - Vicki Shamion
(920) 429-7039
SHOPKO STORES, INC. TO ACQUIRE
OMAHA-BASED PAMIDA HOLDINGS CORPORATION
147 STORES TO CONTINUE OPERATING AS PAMIDA
GREEN BAY, WIS. (May 11, 1999) ShopKo Stores, Inc. (NYSE: SKO) and Pamida
Holdings Corporation (ASE: PAM) today jointly announced the signing of a
definitive agreement for ShopKo to acquire Pamida in a transaction that values
Pamida at approximately $375 million, including the assumption of $265 million
in debt and capitalized lease obligations. ShopKo expects the transaction to be
immediately accretive without synergies. The board of directors of each company
has approved the transaction.
Under the terms of the transaction, a subsidiary of ShopKo will commence a
tender offer for all of Pamida's outstanding voting common shares at a price of
$11.50 per share. Each of Pamida's directors and its principal shareholder have
agreed to support the transaction and to tender their respective shares.
Pamida's principal shareholder has also granted ShopKo an irrevocable option to
purchase its voting and non-voting common shares, under certain circumstances,
at the tender offer price. The tender offer is contingent upon customary
conditions, including the tender of at least 51 percent of Pamida's outstanding
voting stock on a fully diluted basis (but not assuming conversion of the non-
voting shares.) The tender offer is expected to commence on or about May 17,
1999 and the acquisition is expected to close in early July, 1999, at which time
a subsidiary of ShopKo will be merged into Pamida with non-tendered shares being
converted into
page 1
Pamida #1
<PAGE>
the right to receive $11.50 per share. ShopKo will consummate the transaction
with cash on hand, and plans to refinance Pamida's debt with a combination of
proceeds from the ProVantage initial public offering, and new ShopKo debt and
equity offerings.
Merrill Lynch & Co. has rendered a fairness opinion to the ShopKo board of
directors and will act as dealer manager for the tender offer. Johnson Rice &
Company L.L.C. has served as Pamida's financial advisor and has rendered a
fairness opinion to the Pamida board of directors.
Growth Potential of the Pamida Concept
"With our acquisition of Pamida, ShopKo is fulfilling its promise of aggressive
growth to our shareholders, and at the same time we are adding a retail format
with significant potential for expansion," said William J. Podany, ShopKo
president and chief executive officer. "Pamida is a small-town rural retail
concept that offers great growth potential across the United States. ShopKo's
financial strength, effective business practices and proven core competencies
will enable Pamida to improve its performance and grow while retaining its
identity."
Pamida Holdings Corporation, which recorded sales of $672 million in the fiscal
year ended January 31, 1999, operates 147 stores in 15 Midwestern, North Central
and Rocky Mountain states. Approximately 92 percent of the stores operate in
markets with trade populations of less than 20,000. ShopKo Stores, Inc.
operates 158 stores in 19 Midwest, Western Mountain and Pacific Northwest
states, located in markets with trade populations of 20,000 to more than
300,000. "Pamida is an excellent complement to ShopKo's upscale specialty
discount retail strategy which has proven very successful in mid-size and
suburban markets. We have identified more than 500 small rural markets that
could support a Pamida retail store. These markets are too small for ShopKo's
upscale specialty
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Pamida #1
<PAGE>
discount format, but consumers in these small towns have a strong desire for a
broad array of discount merchandise. The Pamida retail strategy of convenience
is a natural fit for these rural markets," Podany said.
Refinancing Savings and Operating Synergies
ShopKo expects to immediately reduce Pamida's cost structure by leveraging
ShopKo's investment grade credit rating and financial strength to refinance
Pamida's debt at lower interest rates. Significant operating efficiencies are
also expected to be realized within one year by leveraging ShopKo's core
competencies in retail health services, technology, global sourcing
capabilities, logistics, and employee training and development.
"We intend to optimize the synergies between ShopKo and Pamida, thereby
providing a greater return to our shareholders," said Podany. "Pamida will
operate as an autonomous value-driven convenience retail concept managed and
operated by the Pamida team."
Pamida will continue to be headquartered in Omaha, Nebraska. "This acquisition
represents an exciting first step toward significant growth for both ShopKo and
Pamida," said Steve Fishman, Pamida president and chief executive officer.
"ShopKo's operating concepts, leadership model, philosophies and principles will
allow the Pamida team to focus on being a high performance retailer serving the
needs of customers in smaller rural communities."
During the past eighteen months, ShopKo has opened 28 new stores, including 17
former Jacks stores acquired with the purchase of the Quincy, Illinois based
Penn-Daniels Corporation, ten former Venture stores, and one former Target
location. The company has also announced plans for the partial IPO of
ProVantage Health
page 3
Pamida #1
<PAGE>
Services, Inc., ShopKo's leading health benefit management company. ShopKo will
report first quarter sales and earnings on Thursday, May 13, 1999.
ShopKo Stores, Inc., a Fortune 500 company headquartered in Green Bay, Wis., is
a leading specialty discount retailer operating 158 stores in 19 states,
primarily in the Midwest, Western Mountain and Pacific Northwest regions. The
company also serves the rapidly growing managed health care industry through its
wholly-owned subsidiary, ProVantage Health Services, Inc. ProVantage is a
leading health benefit management company providing health benefit management
services, pharmacy mail services, vision benefit management services and health
information and clinical support services. For more information about ShopKo or
ProVantage, visit our web site at www.shopko.com.
This press release contains forward-looking statements within the meaning of the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995,
including statements regarding projected cost savings and realization of
synergies. Such statements are subject to important factors which could cause
ShopKo's actual results to differ materially from those anticipated by the
forward-looking statements. These factors include those referenced in ShopKo's
current Annual Report on Form 10-K or as may be described from time to time in
ShopKo's subsequent SEC filings.
#####
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Pamida #1
<PAGE>
Exhibit (a)(9)
NEWS RELEASE
For further information:
Media - Sheree Olson
Shopko Stores Inc., (920) 429-4186
Commences Tender Offer Investors - Vicki Shamion
For Pamida Holdings Corporation (920) 429-7039
GREEN BAY, WIS, (May 17, 1999) ShopKo Stores, Inc. (NYSE: SKO) today announced
that its wholly owned subsidiary has commenced its previously announced tender
offer for all of the common stock, par value $.01 per share, of Pamida Holdings
Corporation, at $11.50 per share, net to the seller, in cash. The tender offer
is being made pursuant to an Agreement and Plan of Merger dated as of May 10,
1999. The tender offer is scheduled to expire on Monday, June 14, 1999.
American Stock Transfer & Trust Company is the Depositary for the tender offer.
D.F. King & Co., Inc. is the Information Agent. The Dealer Manager is Merrill
Lynch & Co.
ShopKo Stores, Inc., a Fortune 500 company headquartered in Green Bay, Wis., is
a leading specialty discount retailer operating 158 stores in 19 states,
primarily in the Midwest, Western Mountain and Pacific Northwest regions. The
company also serves the rapidly growing managed health care industry through its
wholly-owned subsidiary, ProVantage Health Services, Inc. ProVantage is a
leading health benefit management company providing health benefit management
services, pharmacy mail services, vision benefit management services and health
information and clinical support services. For more information about ShopKo or
ProVantage, visit our web site at www.shopko.com.
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
SHOPKO STORES, INC.,
SHOPKO MERGER CORP.
and
PAMIDA HOLDINGS CORPORATION
Dated as of May 10, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER
SECTION 1.01 The Offer............................................... -2-
SECTION 1.02 Company Action.......................................... -4-
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.............................................. -6-
SECTION 2.02 Effective Time; Closing................................. -6-
SECTION 2.03 Effect of the Merger.................................... -6-
SECTION 2.04 Certificate of Incorporation; Bylaws.................... -6-
SECTION 2.05 Directors and Officers.................................. -6-
SECTION 2.06 Conversion of Securities................................ -7-
SECTION 2.07 Stock Options........................................... -7-
SECTION 2.08 Surrender of Shares; Stock Transfer Books............... -8-
SECTION 2.09 Dissenting Shares....................................... -10-
SECTION 2.10 Withholding Taxes....................................... -10-
SECTION 2.11 Merger Without Meeting of Shareholders.................. -11-
SECTION 2.12 Further Assurances...................................... -11-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries............ -11-
SECTION 3.02 Certificate of Incorporation and Bylaws................. -12-
SECTION 3.03 Capitalization.......................................... -12-
SECTION 3.04 Authority Relative to this Agreement.................... -14-
SECTION 3.05 No Conflict; Required Filings and Consents.............. -14-
SECTION 3.06 Compliance.............................................. -15-
SECTION 3.07 SEC Filings; Financial Statements....................... -16-
SECTION 3.08 Absence of Certain Changes or Events.................... -17-
SECTION 3.09 Absence of Litigation................................... -17-
SECTION 3.10 Employee Benefit Plans.................................. -17-
SECTION 3.11 Labor Matters........................................... -20-
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement........ -20-
SECTION 3.13 Real Properties......................................... -21-
SECTION 3.14 Personal Property....................................... -23-
SECTION 3.15 Trademarks, Patents and Copyrights...................... -23-
i
<PAGE>
SECTION 3.16 Taxes................................................... -24-
SECTION 3.17 Environmental Matters................................... -25-
SECTION 3.18 Contracts............................................... -26-
SECTION 3.19 Insurance; Workers' Compensation........................ -27-
SECTION 3.20 Certain Payments; Absence of Certain Business Practices. -28-
SECTION 3.21 Licenses and Permits.................................... -28-
SECTION 3.22 Letters of Credit, Surety Bonds, Guarantees............. -28-
SECTION 3.23 Brokers................................................. -28-
SECTION 3.24 Opinion of Financial Advisor............................ -29-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01 Corporate Organization.................................. -29-
SECTION 4.02 Authority Relative to this Agreement.................... -29-
SECTION 4.03 No Conflict; Required Filings and Consents.............. -30-
SECTION 4.04 Offer Documents; Proxy Statement........................ -30-
SECTION 4.05 Brokers................................................. -31-
SECTION 4.06 Financing............................................... -31-
SECTION 4.07 Operations of Purchaser................................. -31-
ARTICLE V
CONDUCT OF BUSINESS PENDING THE PURCHASER'S ELECTION DATE
SECTION 5.01 Conduct of Business by the Company Pending the
Purchaser's Election Date............................... -31-
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting........................... -34-
SECTION 6.02 Proxy Statement......................................... -34-
SECTION 6.03 Company Board Representation; Section 14(f)............. -35-
SECTION 6.04 Access to Information; Confidentiality.................. -36-
SECTION 6.05 No Solicitation......................................... -36-
SECTION 6.06 Third Party Standstill Agreements....................... -37-
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.. -38-
SECTION 6.08 Notification of Certain Matters......................... -39-
SECTION 6.09 Further Action; Reasonable Efforts...................... -39-
SECTION 6.10 Public Announcements.................................... -40-
SECTION 6.11 Confidentiality Agreement............................... -40-
SECTION 6.12 State Takeover Laws..................................... -40-
SECTION 6.13 Employment Covenant..................................... -41-
SECTION 6.14 Real Estate Transfer and Gains Tax...................... -41-
ii
<PAGE>
SECTION 6.15 Retirement of Certain Outstanding Indebtedness............... -41-
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger..................................... -42-
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.................................................. -43-
SECTION 8.02 Effect of Termination........................................ -45-
SECTION 8.03 Fees and Expenses............................................ -45-
SECTION 8.04 Amendment.................................................... -46-
SECTION 8.05 Waiver....................................................... -46-
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements... -46-
SECTION 9.02 Notices...................................................... -46-
SECTION 9.03 Certain Definitions.......................................... -47-
SECTION 9.04 Severability................................................. -50-
SECTION 9.05 Entire Agreement, Assignment................................. -51-
SECTION 9.06 Parties in Interest.......................................... -51-
SECTION 9.07 Specific Performance......................................... -51-
SECTION 9.08 Waiver of Jury Trial......................................... -51-
SECTION 9.09 Governing Law................................................ -51-
SECTION 9.10 Headings..................................................... -51-
SECTION 9.11 Counterparts................................................. -51-
SECTION 9.12 Certain Undertakings by Parent............................... -51-
iii
<PAGE>
Exhibit A -- Form of Stockholder Agreement
Exhibit B -- Form of Stockholder and Purchase Agreement
Disclosure Schedule
Section 3.01 -- Subsidiaries of the Company
Section 3.03 -- Capitalization and Stock Option Plans
Section 3.05 -- Certain Effects of the Offer and the Merger
Section 3.06 -- Compliance
Section 3.07 -- SEC Filings; Financial Statements
Section 3.08 -- Certain Developments
Section 3.09 -- Legal Proceedings
Section 3.10 -- Employee Benefit Plans
Section 3.11 -- Labor Matters
Section 3.13 -- Real Properties
Section 3.14 -- Personal Property
Section 3.15 -- Trademarks, Patents and Copyrights
Section 3.16 -- Taxes
Section 3.17 -- Environmental Matters
Section 3.18 -- Material Contracts
Section 3.19 -- Insurance Policies and Workers' Compensation
Section 3.22 -- Letters of Credit, Surety Bonds, Guaranties
Section 5.01 -- Conduct of Business
Annex A -- Conditions of the Offer
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of May 10, 1999 (this
"Agreement"), by and among ShopKo Stores, Inc., a Wisconsin corporation
("Parent"), ShopKo Merger Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and Pamida Holdings Corporation, a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent and Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all of the
issued and outstanding shares of Common Stock, par value $0.01 per share, of the
Company (the "Shares") for $11.50 per Share (such amount being hereinafter
referred to as the "Offer Price") net to the seller in cash, subject to
withholding of taxes, if applicable, upon the terms and subject to the
conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of the Company (the "Board") has
unanimously approved the making of the Offer and resolved and agreed to
recommend that holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each approved the merger (the "Merger") of Purchaser with and into the
Company in accordance with the General Corporation Law of the State of Delaware
("Delaware Law") following the consummation of the Offer and upon the terms and
subject to the conditions set forth herein; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's and Purchaser's willingness to enter
into this Agreement (i) Parent and certain holders of Shares have entered into
Stockholder Agreements (the "Share Stockholder Agreements") in the form attached
as Exhibit A and (ii) Parent and the sole holder of shares of Nonvoting Common
Stock, par value $0.01 per share, of the Company (the "Nonvoting Shares") have
entered into a Stockholder and Purchase Agreement (together with the Share
Stockholder Agreements, the "Stockholder Agreements") in the form attached as
Exhibit B;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
<PAGE>
ARTICLE I
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events or
circumstances set forth in Annex A hereto shall have occurred or be existing,
Purchaser agrees to, and Parent agrees to cause Purchaser to, commence, within
the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five business days after the first public
announcement of the execution hereof. Parent and Purchaser agree that the right
and obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the conditions (the "Offer
Conditions") that (i) the number of Shares validly tendered and not withdrawn
prior to the expiration of the Offer, combined with the Shares already owned by
Parent, Purchaser or any of their affiliates, constitute at least 51% of the
then outstanding Shares determined on a fully diluted basis (assuming the
exercise of all options to purchase Shares and the conversion or exchange of all
securities convertible or exchangeable into Shares but not assuming the
conversion of the Nonvoting Shares into Shares) at the expiration of the Offer
(the "Minimum Condition") and (ii) the other conditions set forth in Annex A
shall have been satisfied. Purchaser expressly reserves the right to waive any
such condition, to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that Parent and Purchaser agree that no change may be made without the
consent of the Company which decreases the Offer Price, which changes the form
of consideration to be paid in the Offer, which reduces the maximum number of
Shares to be purchased in the Offer, which alters the terms of the Minimum
Condition, which waives the Minimum Condition, which otherwise modifies or
amends the conditions to the Offer or any other term of the Offer in a manner
that is adverse to the holders of the Shares or Nonvoting Shares, which imposes
conditions to the Offer in addition to those set forth in Annex A hereto or,
except as provided in the next sentence, which extends the expiration date of
the Offer. Notwithstanding the foregoing, Purchaser may, without the consent of
the Company, so long as this Agreement has not been terminated in accordance
with its terms, (i) extend the Offer, if at the scheduled or extended expiration
date of the Offer any of the Offer Conditions shall not be satisfied or waived,
until such time as such conditions are satisfied or waived, (ii) 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, (iii) if all Offer Conditions are satisfied or
waived but the number of Shares tendered is at least equal to 85%, but less than
90%, of the then outstanding number of Shares, extend the Offer for any reason
on one or more occasions for an aggregate period of not more than five business
days beyond the latest expiration date that would otherwise be permitted under
clause (i) or (ii) of this sentence and (iv) extend the Offer until July 2, 1999
unless (A) the event of default which would arise under Section 8.1(j) of the
Loan Agreement (as defined below) because of Purchaser's purchase of Shares
pursuant to the Offer has been waived or (B) the
-2-
<PAGE>
termination fee under Section 10.2(e) of the Loan Agreement has been reduced to
$1.25 million or less (provided, that if Purchaser extends the Offer pursuant to
this clause (iv), Purchaser shall be deemed to have irrevocably waived the
condition set forth in paragraph (d) of Annex A, insofar as such paragraph
relates to representations and warranties of the Company, and the condition set
forth in paragraph (e) of Annex A), in the case of each of clauses (i) through
(iv), subject in each case to the right of Parent, Purchaser or the Company to
terminate this Agreement pursuant to the terms hereof. Parent and Purchaser
agree that if at any scheduled expiration date of the Offer, the Minimum
Condition, the HSR Condition (as defined in Annex A) or the condition set forth
in paragraph (d) of Annex A shall not have been satisfied, but at such scheduled
expiration date all the conditions set forth in paragraphs (a), (b), (c), (e),
(f), (g) and (h) shall then be satisfied, at the request of the Company
(confirmed in writing), Purchaser shall extend the Offer from time to time,
subject to the right of Parent, Purchaser or the Company to terminate this
Agreement pursuant to the terms hereof. Subject to the terms and conditions of
the Offer and this Agreement, Purchaser shall, and Parent shall cause Purchaser
to, accept for payment, and pay for, all Shares validly tendered and not
withdrawn pursuant to the Offer that Purchaser becomes obligated to accept for
payment and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer, and in any event in compliance with the obligations
respecting prompt payment pursuant to Rule 14e-1(c) under the Exchange Act. The
Offer Price shall, subject to applicable withholding of taxes, be net to the
seller in cash, upon the terms and subject to the conditions of the Offer. The
obligations of Purchaser to commence the Offer and to accept for payment and to
pay for Shares validly tendered on or prior to the expiration of the Offer and
not withdrawn shall be subject only to the Offer Conditions. Parent shall not,
and shall cause Purchaser not to, cause the Offer to expire unless Parent
terminates this Agreement prior to or on the date of the expiration of the
Offer.
(b) Parent and Purchaser agree, subject to the terms and conditions
set forth herein, that, as soon as reasonably practicable on the date of
commencement of the Offer, Parent and Purchaser will file with the SEC a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. Parent and Purchaser
agree that the Schedule 14D-1 will contain or will incorporate by reference an
offer to purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent and Purchaser will take all steps necessary to ensure that
the Offer Documents (i) will comply in all material respects with the provisions
of applicable federal and state securities laws and (ii) will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they are made, not misleading. Parent,
Purchaser and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which shall have become false or
misleading, and Parent and Purchaser further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
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The Company and its counsel shall be given a reasonable opportunity to review
and comment upon the Offer Documents prior to their filing with the SEC or
dissemination to stockholders of the Company. Each of Parent and Purchaser
agrees to provide the Company and its counsel with copies of any written
comments that Parent, Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents and written statements describing
telephone conversations with the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments or such conversations and
to cooperate with the Company and its counsel in responding to any such
comments. Parent and Purchaser agree to use their reasonable best efforts to
respond promptly to the SEC.
SECTION 1.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that (i) the Board, at a
meeting duly called and held on May 10, 1999, has unanimously (A) determined
that this Agreement and the transactions contemplated by this Agreement,
including each of the Offer and the Merger, are fair to and in the best
interests of the stockholders of the Company and has declared this Agreement and
the transactions contemplated by this Agreement to be advisable, (B) approved
this Agreement and the transactions contemplated by this Agreement, including
the Merger, and (C) recommended that the holders of Shares accept the Offer and
that the stockholders of the Company approve and adopt this Agreement and the
transactions contemplated by this Agreement, including the Merger, and (ii)
Johnson Rice & Company, L.L.C. has delivered to the Board a written opinion to
the effect that, as of the date of such opinion, the consideration to be
received by the holders of Shares (other than Parent, Purchaser and their
affiliates) pursuant to each of the Offer and the Merger and the holders of
Nonvoting Shares (other than Parent, Purchaser and their affiliates) pursuant to
the Merger is fair to such holders of Shares and Nonvoting Shares from a
financial point of view. The Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Board described in the immediately
preceding sentence; provided, however, that such recommendation and the
resolutions with respect thereto may be withdrawn, modified or amended to the
extent the Board determines in good faith, after receiving the advice of
independent legal counsel, that such action is required in the exercise of the
Board's fiduciary duties under applicable law. Any such withdrawal, modification
or amendment shall not constitute a breach of this Agreement but shall not
otherwise affect any of the rights of Parent or Purchaser under this Agreement.
(b) The Company agrees, subject to the terms and conditions set forth
herein, that it will file, as soon as reasonably practicable on the date of
commencement of the Offer, with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing, subject only to the right to withdraw, modify or
amend such recommendation as and to the extent provided in Section 1.02(a), the
recommendation of the Board described in Section 1.02(a) and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable federal securities laws. The Company will
take all steps necessary to ensure that the Schedule 14D-9 (i) will comply in
all material respects with the provisions of applicable federal and state
securities laws and (ii) will not contain any untrue statement of a material
fact or
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omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The Company, Parent and Purchaser agree to correct
promptly any information provided by any of them for use in the Schedule 14D-9
which shall have become false or misleading, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
14D-9 and all amendments and supplements thereto prior to their filing with the
SEC or dissemination to stockholders of the Company. The Company agrees to
provide Parent and its counsel with copies of any written comments that the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 and written statements describing telephone conversations with
the SEC or its staff with respect to the 14D-9 promptly after the receipt of
such comments or such conversations and to cooperate with Parent, Purchaser and
their counsel in responding to any such comments. The Company agrees to use its
reasonable best efforts to respond promptly to the SEC.
(c) The Company shall cause its transfer agent to promptly furnish
Purchaser with mailing labels containing the names and addresses of all record
holders of Shares and with security position listings of Shares held in stock
depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and beneficial owners of Shares and securities
convertible into Shares. The Company shall cause its transfer agent to furnish
Purchaser with such additional information (including updated listings and
computer files of stockholders, mailing labels and security position listings)
and such other assistance as Parent, Purchaser or their agents 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 Offer or the Merger, Parent and Purchaser shall hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated in accordance with Section 8.01, will promptly
deliver to the Company the original and all copies of such information then in
their possession.
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ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Delaware Law, at the Effective
Time (as hereinafter defined), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease, and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Delaware.
SECTION 2.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as is required by, and executed
in accordance with the relevant provisions of, Delaware Law. The Merger shall
become effective upon such filing or at such time thereafter as is provided in
the Certificate of Merger as the Company and Parent shall agree (the "Effective
Time"). Prior to such filing, a closing shall be held at the offices of Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, or such other place
as the parties shall agree, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. (a) The Restated
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by applicable law and such
Certificate of Incorporation.
(b) The Bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
SECTION 2.05 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving
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Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified,
or until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
SECTION 2.06 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the Shares:
(a) Each Share and each Nonvoting Share issued and outstanding
immediately prior to the Effective Time (other than any Shares and Nonvoting
Shares to be canceled pursuant to Section 2.06(b) and Dissenting Shares (as
defined in Section 2.09)) shall be canceled and shall be converted automatically
into the right to receive from the Surviving Corporation an amount in cash equal
to the price paid in the Offer (the "Merger Consideration"), payable, without
interest, to the holder of such Share or Nonvoting Share, upon surrender, in the
manner provided in Section 2.08, of the certificate that formerly evidenced such
Share or such Nonvoting Share (the "Certificates");
(b) Each Share and each Nonvoting Share owned by Parent, Purchaser,
the Company or any direct or indirect wholly owned subsidiary of Parent or of
the Company (other than Shares in trust accounts, custodial accounts and the
like that are beneficially owned by third parties) immediately prior to the
Effective Time shall be canceled and retired without any conversion thereof, and
no payment or distribution shall be made with respect thereto; and
(c) Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one fully-paid and non-assessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
SECTION 2.07 Stock Options. (a) The Company shall take all actions
necessary and appropriate to cause all options to purchase any shares of capital
stock of the Company (in each case, an "Option") that are outstanding
immediately prior to the Effective Time, whether or not then exercisable, to
become fully exercisable immediately prior to the Effective Time. Prior to the
Effective Time, the Company shall make all reasonable efforts to cause each
Option outstanding at the Effective Time to be canceled at the Effective Time,
in consideration for which the holder thereof shall be entitled to receive an
amount equal to (i) the product of (x) the number of shares of capital stock of
the Company subject to such Option and (y) the excess, if any, of the Merger
Consideration over the exercise price per share for the purchase of the shares
of capital stock of the Company subject to such Option, minus (ii) all
applicable federal, state and local taxes required to be withheld in respect of
such Option. Parent shall pay or cause the Company to pay the amounts payable
pursuant to this Section 2.07(a) as soon as reasonably practicable following the
Effective Time with funds provided by Parent. The cancellation of each Option in
exchange for the consideration contemplated by this Section 2.07(a) shall be
deemed a release of any and all rights the holder of an Option had or may have
had in respect thereof.
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(b) The Company shall take all actions necessary and appropriate so
that all stock option or other equity-based plans maintained with respect to the
Shares, including the plans listed in Section 3.03 of the Disclosure Schedule
("Stock Option Plans"), shall terminate as of the Effective Time and the
provisions in any other Plan providing for the issuance, transfer or grant of
any capital stock of the Company or any interest in respect of any capital stock
of the Company shall be deleted as of the Effective Time, and the Company shall
take all actions necessary and appropriate to ensure that following the
Effective Time no holder of an Option or any participant in any Stock Option
Plan shall have any right thereunder to acquire any capital stock of the
Company, Parent, Purchaser or the Surviving Corporation.
(c) Prior to the Effective Time, the Company shall (i) use its
commercially reasonable efforts (but not including any payment to holders of
Options) to obtain all necessary consents from, and provide (in a form
acceptable to Parent) any required notices to, holders of Options, and (ii)
amend the terms of the applicable Stock Option Plan and any then outstanding
Options, in each case as is necessary to give effect to the provisions of
Sections 2.07(a) and (b).
SECTION 2.08 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Parent shall designate American Stock Transfer & Trust
Company or such other bank or trust company as shall be reasonably acceptable to
the Company to act as agent (the "Paying Agent") for the holders of Shares and
Nonvoting Shares in connection with the Merger to receive the funds to which
holders of Shares and Nonvoting Shares shall become entitled pursuant to Section
2.06(a), and Parent shall deposit with such Paying Agent an amount sufficient to
pay the aggregate Merger Consideration. The Paying Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration out of the amount so
deposited by Parent to holders of Shares entitled thereto. The amount deposited
by Parent with the Paying Agent shall not be used for any other purpose. Such
funds shall be invested by the Paying Agent as directed by the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America or of any agency thereof and backed
by the full faith and credit of the United States of America or in commercial
paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc.
or Standard & Poor's Ratings Group, respectively. Any and all amounts earned on
such funds shall be paid over to the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares or Nonvoting Shares entitled to receive the Merger
Consideration pursuant to Section 2.06(a) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal (or, if such Shares or
Nonvoting Shares are uncertificated, such other form of evidence of record
ownership as is required by the Paying Agent). Upon surrender to the Paying
Agent of a Certificate (or, with respect to uncertificated Shares or Nonvoting
Shares, such other evidence of record ownership as is required by the Paying
Agent), together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other
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documents as may be required pursuant to such instructions, the holder of such
Certificate (or uncertificated Share or Nonvoting Share, as the case may be)
shall be entitled to receive in exchange therefor the Merger Consideration
(subject to withholding of taxes, if applicable) for each Share and Nonvoting
Share formerly evidenced by such Certificate (or uncertificated Share and
Nonvoting Share, as the case may be), and such Certificate (or uncertificated
Share or Nonvoting Share, as the case may be) shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate (or uncertificated Share or Nonvoting Share, as the
case may be) for the benefit of the holder of such Certificate (or
uncertificated Share or Nonvoting Share, as the case may be). If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate (or uncertificated Share or Nonvoting Share, as
the case may be) is registered on the stock transfer books of the Company, it
shall be a condition of payment to the holder of a Certificate that it be
endorsed properly or, with respect to Certificates and uncertificated Shares and
Nonvoting Shares, otherwise be in proper form for transfer and that, with
respect to Certificates and uncertificated Shares and Nonvoting Shares, the
person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder thereof or shall have established to the satisfaction
of the Surviving Corporation that such taxes either have been paid or are not
applicable.
(c) At any time following 90 days after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to holders of Shares or Nonvoting Shares (including all interest and
other income received by the Paying Agent in respect of all funds made available
to it) and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them (or, if such
Shares or Nonvoting Shares are uncertificated, such other form of evidence of
record ownership as is required by the Paying Agent), without any interest
thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor
the Paying Agent shall be liable to any holder of a Share or a Nonvoting Share
for any Merger Consideration delivered in respect of such Share or Nonvoting
Share to a public official pursuant to any abandoned property, escheat or other
similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares or Nonvoting Shares on the
records of the Company. From and after the Effective Time, the holders of Shares
and Nonvoting Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares and Nonvoting Shares except
as otherwise provided herein or by applicable law.
(e) If any Certificate shall have been lost, stolen or destroyed,
then, upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or
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destroyed and, if reasonably required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall pay in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration pursuant to this
Agreement.
SECTION 2.09 Dissenting Shares. Notwithstanding any other provision of
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and which are held by stockholders who shall have not voted
in favor of the Merger or consented thereto in writing and who properly shall
have demanded appraisal for such shares in accordance with Delaware Law
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration. Such stockholders instead shall
be entitled to receive payment of the appraised value of such Shares held by
them in accordance with the provisions of Delaware Law, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their rights to appraisal of
such Shares under Delaware Law shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.08, of the Certificate or Certificates (or,
if such Shares are uncertificated, such other form of evidence of record
ownership as is required by the Paying Agent) that, immediately prior to the
Effective Time, evidenced such Shares. The Company shall give Parent (i) prompt
notice of any written demands for appraisal of any Shares, attempted withdrawals
of such demands and any other instruments served pursuant to Delaware Law and
received by the Company relating to stockholders' rights of appraisal, and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Parent, voluntarily make any payment with respect to,
or settle or offer to settle, any such demand for payment.
SECTION 2.10 Withholding Taxes. Parent and Purchaser shall be entitled
to deduct and withhold, or cause the Paying Agent to deduct and withhold, from
the Merger Consideration payable to a holder of Shares or Nonvoting Shares
pursuant to the Merger any withholding and stock transfer Taxes and such amounts
as are required under the Internal Revenue Code of 1986, as amended (the
"Code"), or any applicable provision of state, local or foreign Tax law. To the
extent that amounts are so withheld by Parent or Purchaser, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares or Nonvoting Shares in respect of which such
deduction and withholding was made by Parent or Purchaser and Parent shall
provide, or cause the Paying Agent to provide, to the holders of such Shares and
Nonvoting Shares written notice of the amounts so deducted or withheld.
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SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
the foregoing, if Purchaser, or any other direct or indirect subsidiary of
Parent, shall acquire at least 90 percent of the outstanding Shares and at least
90 percent of the outstanding Nonvoting Shares, then the parties hereto agree to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after expiration of the Offer without a meeting
of shareholders of the Company, in accordance with Section 253 of the Delaware
Law.
SECTION 2.12 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Company or Purchaser, or (b) otherwise to carry out the purposes
of this Agreement, then the Surviving Corporation and its proper officers and
directors or their designees hereby are authorized to execute and deliver, in
the name and on behalf of either of the Company or Purchaser, all such deeds,
bills of sale, assignments and assurances and to do, in the name and on behalf
of either the Company or Purchaser, all such other acts and things as may be
necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of the Company or
Purchaser, respectively, and otherwise to carry out the purposes of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and Pamida, Inc., a Delaware corporation ("Pamida" and, together with
the other subsidiaries of the Company and Pamida, the "Subsidiaries" and each a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary, other than Pamida, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
except where the failure to be so organized, existing and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined below). Each of the Company and each Subsidiary (a) has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being conducted
and (b) is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where the failure to have such
power, authority or approvals or to be so qualified or licensed and in good
standing would not, individually or in the aggregate, have a
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Material Adverse Effect. When used in connection with the Company or any
Subsidiary, the term "Material Adverse Effect" means any effect that is or is
reasonably likely to be materially adverse to the business, results of
operations, financial condition, assets or liabilities (including contingent
liabilities), employee relationships or customer or supplier relationships of
the Company and the Subsidiaries taken as a whole; provided, that any such
effect that is the result of general industry or economic changes, is the result
of a "change of control" under the Loan Agreement that arises upon the
consummation of the Offer or is the result of a "change of control" or an event
of default pursuant to Section 6.1(a)(v) under the Notes (as defined below) that
arises upon the consummation of the Offer shall not constitute a Material
Adverse Effect. A true and complete list of all the Subsidiaries, together with
the jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary and the name of any person other than the Company or a Subsidiary
that owns capital stock of any Subsidiary, is set forth in Section 3.01 of the
Disclosure Schedule dated the date hereof, which has been delivered on the date
of this Agreement by the Company to Parent (the "Disclosure Schedule"). Except
as disclosed in such Section 3.01, the Company does not directly or indirectly
beneficially 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, partnership, limited liability company, joint venture or other
business association or entity.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has
heretofore furnished or made available to Parent a complete and correct copy of
the Certificate of Incorporation and the Bylaws or equivalent organizational
documents, each as amended to date (the "Constituent Documents"), of the Company
and each Subsidiary. The Constituent Documents of the Company and the
Subsidiaries are in full force and effect. Neither the Company nor any
Subsidiary is in violation of any provision of its Constituent Documents. The
Constituent Documents of the Subsidiaries of the Company do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such Subsidiaries.
SECTION 3.03 Capitalization. (a) The authorized capital stock of the
Company consists of:
(i) 25,000,000 Shares;
(ii) 4,000,000 Nonvoting Shares;
(iii) 514 shares of 16.25% Senior Cumulative Preferred Stock, par
value $1.00 per share, of the Company ("Senior Preferred
Shares"); and
(iv) 1,627 shares of 14.25% Junior Cumulative Preferred Stock, par
value $1.00 per share, of the Company ("Junior Preferred
Shares").
(b) As of the date hereof:
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(i) 6,026,495 Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable;
(ii) 3,050,473 Nonvoting Shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable and
owned of record by 399 Venture Partners, Inc.;
(iii) no Shares are held in the Company's treasury;
(iv) no Nonvoting Shares are held in the Company's treasury;
(v) no Senior Preferred Shares or Junior Preferred Shares are
issued and outstanding or held in the Company's treasury;
(vi) no Shares or Nonvoting Shares are held by the Subsidiaries;
(vii) 179,997 Shares are reserved for issuance pursuant to
outstanding grants or awards under the Stock Option Plans that
are vested and exercisable;
(viii) 265,280 Shares are reserved for issuance pursuant to
outstanding grants or awards under the Stock Option Plans that
are not vested and exercisable; and
(ix) 3,050,473 Shares are reserved for issuance upon conversion of
the Nonvoting Shares.
Except as set forth in this Section 3.03 or in Section 3.03 of the Disclosure
Schedule, as of the date of this Agreement: (i) no shares of capital stock or
other voting securities of the Company are issued, reserved for issuance or
outstanding; (ii) there are no stock appreciation rights, phantom stock units,
restricted stock grants, contingent stock grants or Plans which grant awards of
any of the foregoing, and there are no other outstanding contractual rights to
which the Company is a party the value of which is based on the value of Shares;
and (iii) all outstanding Shares which may be issued upon grants or awards under
the Stock Option Plans or upon conversion of the Nonvoting Shares will be, when
so issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights.
(c) Section 3.03 of the Disclosure Schedule sets forth a list, as of
the date hereof, of the names of each person holding options under the Stock
Option Plans, and the number of shares purchasable under such options, the
exercise price of such options, the date such options were granted and the date
on which such options expire. Following the Effective Time, no holder of Options
will have any right to receive shares of common stock of the Surviving
Corporation upon the exercise of Options.
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(d) Each outstanding share of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable, and, except as
set forth in Section 3.03 of the Disclosure Schedule, each such share owned by
the Company or another Subsidiary is owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever.
(e) Except as set forth in this Section 3.03 or Section 3.03 of the
Disclosure Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of capital stock of, or other equity interests
in, the Company or any Subsidiary or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Subsidiary or
any other person.
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated by this Agreement, including all actions required to be taken by
the Company hereunder in connection with the Merger and the Offer. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated by this Agreement (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding Shares and the
filing of the Certificate of Merger). The affirmative vote of the holders of
Nonvoting Shares is not required for the approval and adoption of this
Agreement. The Company has elected, pursuant to Article Eleventh of its Restated
Certificate of Incorporation, not to be governed by Section 203 of the Delaware
Law; accordingly, none of the Offer, the Merger or the other transactions
contemplated by this Agreement are subject to such Section 203. This Agreement
and has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) the remedy of specific performance and injunctive relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 3.05 No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 3.05 of the Disclosure Schedule, assuming the Merger is
duly approved by the holders of a majority of the outstanding Shares, the
execution, delivery and performance of this
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Agreement by the Company does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof by the
Company will not, (i) conflict with or violate the Constituent Documents of the
Company or any Subsidiary, (ii) assuming that the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
3.05 of the Disclosure Schedule are duly and timely obtained or made, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) conflict with, result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the loss
of a material benefit under, or result in the creation of a lien or other
encumbrance of any nature on any property or asset of the Company or any
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound or
affected, except, in cases of (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or registration, declaration or
filing with, or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and state
takeover laws, the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), and filing of the Certificate of Merger
pursuant to Delaware Law, and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Offer or the Merger, or otherwise
prevent the Company from performing its obligations under this Agreement, and
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the
Disclosure Schedule, neither the Company nor any Subsidiary is in default or
violation of (i) any law, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or subject, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any property or asset of the Company or
any Subsidiary is bound or affected, except for any such defaults or violations
that would not, individually or in the aggregate, (x) have a Material Adverse
Effect, or (y) prevent or delay consummation of the Offer or the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement.
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SECTION 3.07 SEC Filings; Financial Statements. (a) Each of the
Company and Pamida has filed all forms, reports and documents required to be
filed by it with the SEC since December 31, 1996, and the Company has heretofore
delivered or made available to Parent, in the form filed with the SEC, (i) the
Company's and Pamida's Annual Reports on Form 10-K for the fiscal years ended
February 2, 1997, February 1, 1998 and January 31, 1999, (ii) all proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) held since December 31, 1996, and (iii) all other forms, reports and
other registration statements (other than Quarterly Reports on Form 10-Q with
respect to fiscal quarters ending prior to February 1, 1999 and Registration
Statements on Form S-8) filed by the Company or Pamida with the SEC since
December 31, 1995 (the forms, reports and other documents referred to in clauses
(i), (ii) and (iii) above being referred to herein, collectively, as the "SEC
Reports"). The SEC Reports (i) were prepared in accordance with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder and, at the time they were filed (or at the effective date thereof
with respect to registration statements under the Securities Act), complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder applicable to such SEC Reports, and (ii) did not, at the time they
were filed (or at the effective date thereof with respect to registration
statements under the Securities Act), 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 made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary other than Pamida is
required to file any form, report or other document with the SEC.
(b) The financial statements of the Company and Pamida, as
applicable, included in the SEC Reports as of the dates of such SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") in the United States applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
consolidated Subsidiaries and Pamida and its consolidated subsidiaries,
respectively, as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at January 31, 1999
including the notes thereto, in Section 3.07 of the Disclosure Schedule or in
any SEC Report filed by the Company or Pamida after January 31, 1999, neither
the Company nor any Subsidiary has any material liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except for (i) liabilities and obligations incurred in
the ordinary course of business consistent with past practice since January 31,
1999 and (ii) liabilities incurred in connection with or by reason of the
transactions contemplated by this Agreement.
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(d) The Company has heretofore furnished or made available to Parent
complete and correct copies of all amendments and modifications (if any) that
have not been filed by the Company or Pamida with the SEC to all agreements,
documents and other instruments that previously had been filed by the Company or
Pamida with the SEC and are currently in effect.
SECTION 3.08 Absence of Certain Changes or Events. Since January 31,
1999, except as set forth in Section 3.08 of the Disclosure Schedule or as
contemplated by this Agreement or disclosed in any SEC Report filed since
January 31, 1999 and prior to the date of this Agreement, the Company and the
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and there has not been (i) any Material
Adverse Effect on the Company, (ii) any material change by the Company in its
accounting methods, principles or practices, (iii) any declaration, setting
aside or payment of any dividend or other distribution with respect to the
Company's capital stock or any redemption, purchase or other acquisition of any
of its securities, (iv) any material increase in or establishment of any
material bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other material
increase in the compensation payable or to become payable to any officers or key
employees of the Company or any Subsidiary, except in the ordinary course of
business consistent with past practice, or (v) any preparation or filing of any
Tax Return (as defined below) materially inconsistent with past practice or, on
any such Tax Return, the taking of any position, making of any election, or
adopting of any method that is inconsistent with positions taken, elections made
or methods used in preparing or filing similar Tax Returns in prior periods.
SECTION 3.09 Absence of Litigation. Except as set forth in Section
3.09 of the Disclosure Schedule or in the SEC Reports filed prior to the date
hereof, (a) there is no claim, suit, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary, or any property or asset of the Company or any Subsidiary, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect and (b) neither the Company
nor any Subsidiary nor any property or asset of the Company or any Subsidiary is
subject to any order, writ, judgment, injunction, decree, determination or award
having, individually or in the aggregate, a Material Adverse Effect. As of the
date hereof there is no claim, suit, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary, or any property or asset of the Company or any Subsidiary, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, which seeks to, or is reasonably likely to, prevent
or delay the consummation of the Offer or the Merger or otherwise prevent the
Company from performing its obligations under this Agreement.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10(a) of the
Disclosure Schedule contains a true and complete list of all employee benefit
plans (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"))
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and all other material employee benefit arrangements or payroll practices,
including bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement or severance plans, programs or policies, and all employment,
termination or severance contracts to which the Company or any Subsidiary is a
party, with respect to which the Company or any Subsidiary has any material
obligation or which are maintained, contributed to or sponsored by the Company
or any Subsidiary for the benefit of any current or former employee, officer or
director of the Company or any Subsidiary (collectively, the "Plans"). Except as
set forth in Section 3.10(a) of the Disclosure Schedule, neither the Company,
nor any Subsidiary nor any trade or business (whether or not incorporated) which
is or has ever been under common control, or which is or has ever been treated
as a single employer, with the Company or any Subsidiary under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate") has within the last six years
contributed or been obligated to contribute to an "employee pension plan", as
defined in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of
the Code, or a multiemployer plan, as defined in Section 3(37) of ERISA
("Multiemployer Plan"). The Company has previously furnished or made available
to Parent a true and complete copy of each Plan (and all amendments thereto) and
a true and complete copy of each material document prepared in connection with
each Plan, including to the extent applicable (i) a copy of each trust or other
funding arrangement (and all amendments thereto), (ii) each summary plan
description and summary of material modifications, (iii) the three most recently
filed Internal Revenue Service ("IRS") Forms 5500 and all schedules and
attachments thereto, (iv) the most recently received IRS determination letter
for each such Plan, and (v) the most recently prepared actuarial valuation
report and financial statement in connection with each such Plan.
(b) Except as set forth in Section 3.10(b) of the Disclosure
Schedule, any Plan intended to qualify under Section 401 of the Code is the
subject of a favorable IRS determination letter, and nothing has occurred with
respect to the operation of any such Plan which is reasonably likely to cause
the loss of such qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code which liability, penalty or tax would
have a Material Adverse Effect, individually or in the aggregate.
(c) Except as set forth in Section 3.10(c) of the Disclosure
Schedule, (i) the Plans have been maintained in accordance with their terms and
in material compliance with all provisions of ERISA and the Code (including
rules and regulations thereunder) and other applicable federal and state laws
and regulations; (ii) neither the Company nor any Subsidiary nor, to the
Company's knowledge, any "party in interest" or "disqualified person" with
respect to the Plans has engaged in a non-exempt "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA; (iii) to the
Company's knowledge, no fiduciary has any liability for breach of fiduciary duty
or any other failure to act or comply in connection with the administration or
investment of the assets of any Plan; (iv) there are no pending actions, claims
or lawsuits which have been asserted or instituted against the Plans, the assets
of any of the trusts under such plans or the plan sponsor or the plan
administrator, or, to the Company's knowledge, against any fiduciary of the
Plans with respect to the operation of such plans (other than routine
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benefit claims), nor does the Company or any Subsidiary have knowledge of facts
which could reasonably be expected to form the basis for any such claim or
lawsuit which, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect; and (v) all amendments and actions required to bring
the Plans into conformity in all material respects with all of the applicable
provisions of the Code, ERISA and other applicable laws have been made or taken
except to the extent that such amendments or actions are not required by law to
be made or taken until a date after the Effective Time.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Plans or by law (without regard to any waivers granted under Section 412 of
the Code) to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extension), except where the failure to make such contributions by such date
would not, individually or in the aggregate, have a Material Adverse Effect, and
all contributions for any period ending on or before the Effective Time which
are not yet due will have been paid or accrued on the Company's financial
statements filed with the SEC Reports on or prior to the Effective Time.
(e) Except as set forth in Section 3.10(e) of the Disclosure
Schedule, none of the Plans provide for post-employment life or health insurance
benefits or coverage for any participant or any beneficiary of a participant,
except as may be required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA") and at the expense of the participant or the
participant's beneficiary. Each of the Company, any Subsidiary and any ERISA
Affiliate which maintains a "group health plan" within the meaning of Section
5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
(f) Except as set forth in Section 3.10(f) of the Disclosure
Schedule, no stock or other security issued by the Company or any Subsidiary
forms or has formed a material part of the assets of any Plan.
(g) Except as set forth in Section 3.10(g) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, on account
of any plan, agreement or arrangement in effect prior to the Effective Time (i)
result in any payment of severance, unemployment compensation or any other
payment becoming due to any director or any employee of the Company or any of
the Subsidiaries under any Plan or otherwise from the Company or any of the
Subsidiaries, (ii) increase any benefits otherwise payable under any Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
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(h) Except as disclosed in Section 3.10(h) of the Disclosure
Schedule, the Company and the Subsidiaries do not have any unfunded liabilities
under pension, retirement or other employee benefit plans, programs or
arrangements maintained outside the United States by the Company or any of the
Subsidiaries for the employees thereof.
SECTION 3.11 Labor Matters. None of the employees of the Company or
any Subsidiary the ("Employees") is represented in his or her capacity as an
employee of the Company or any Subsidiary by any labor organization, and neither
the Company nor any Subsidiary has entered into any collective bargaining
agreement or union contract recognizing any labor organization as the bargaining
agent of any Employees. To the knowledge of the Company, there is no union
organization activity involving any of the Employees, pending or threatened.
Since December 31, 1995, or except as set forth in Section 3.11 of the
Disclosure Schedule, there has never been union representation involving any of
the Employees and there are no picketing, strikes, slowdowns, work stoppages,
other job actions, lockouts, arbitrations, grievances or other labor disputes
involving any of the Employees, pending or threatened. Except as disclosed in
Section 3.11 of the Disclosure Schedule, there are no material complaints,
charges or claims against the Company or any Subsidiary pending or, to any of
their knowledge, threatened which could be brought or filed with any public or
governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment or failure to employ by the Company or any Subsidiary of any
individual. Except as set forth in Section 3.11 of the Disclosure Schedule, the
Company and the Subsidiaries are in material compliance with all laws,
regulations and orders relating to the employment of labor, including all such
laws, regulations and orders relating to wages, hours, the Worker Adjustment and
Retraining Notification Act and any similar state or local "mass layoff" or
"plant closing" law ("WARN"), collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and payment
of withholding and/or social security taxes. There has been no "mass layoff" or
"plant closing" as defined by WARN with respect to the Company and any
Subsidiary within the six months prior to the Effective Time.
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement. None of
the Schedule 14D-9, the information supplied by the Company specifically for
inclusion in the Offer Documents or the information to be filed by the Company
in connection with the Offer pursuant to Rule 14f-1 promulgated under the
Exchange Act (the "Information Statement") shall, at the respective times the
Schedule 14D-9, the Offer Documents, the Information Statement or any amendments
or supplements thereto are filed with the SEC or are first published, sent or
given to stockholders of the Company, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading. The proxy
statement to be sent to the stockholders of the Company in connection with the
Special Stockholders' Meeting (as defined in Section 6.01) (such proxy
statement, as amended or supplemented, being referred to herein as the "Proxy
Statement") shall not, at the date the Proxy Statement is first mailed to
stockholders of the Company or at the time of the Special Stockholders' Meeting
and the Effective Time, and, with respect to the Information
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Statement at the time Shares are accepted for payment in the Offer, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading or, with respect to the Proxy Statement, necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Special Stockholders' Meeting which shall have become false or
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent, Purchaser or any
of their representatives which is contained in any of the foregoing documents or
the Offer Documents. The Schedule 14D-9, the Information Statement and the Proxy
Statement shall comply in all material respects as to form with the requirements
of the Exchange Act.
SECTION 3.13 Real Properties. (a) The Company or the Subsidiaries own
(i) fee simple title to each of the real properties identified in Section
3.13(a) of the Disclosure Schedule (the "Fee Properties") and (ii) a leasehold
estate that is created under the real property leases (including all amendments,
supplements and modifications thereto) identified in Section 3.13(c) of the
Disclosure Schedule (the "Real Property Leases") and all of the buildings,
structures and other improvements located thereon, if so indicated, which are
all of the real estate properties owned, leased, used or occupied by them
(collectively, the "Company Properties").
(b) Except as set forth in Section 3.13(b) of the Disclosure
Schedule, no other Person has any ownership interest in any of the Fee
Properties and/or Real Property Leases, and there are no encumbrances,
easements, liens, rights, mortgages or deeds of trust, options, leases,
subleases, licenses, claims against title, charges which are liens, security
interests or other encumbrances on title ("Encumbrances") which, with respect to
each Company Property, would materially interfere with or prohibit the present
use thereof. To the knowledge of the Company, none of the Company Properties are
located within a flood plain, any designated wetlands or similar areas. To the
knowledge of the Company, none of the buildings, structures or other
improvements (including parking lots and roadways) comprising the Company
Properties encroach on any public or private lands or easements and rights-of-
way or violate any building lines or setback requirements.
(c) Section 3.13(c) of the Disclosure Schedule sets forth a true,
accurate and complete list of all of the Real Property Leases and the parties
thereto, annual rental, expiration date, renewal options and location of the
Company Properties governed by such Real Property Leases. True, accurate and
complete copies of the Real Property Leases (including all riders, schedules and
exhibits thereto and amendments thereof), together with the Company's complete
file pertaining to each of such Real Property Leases, have been made available
to Parent. Each of the Real Property Leases is valid, binding, enforceable and
in full force and effect and has not been modified or supplemented orally except
as disclosed in Section 3.13(c) of the Disclosure Schedule. Except as set forth
in Schedule 3.13(c) of the Disclosure Schedule, there exists no default under
any Real Property Lease by the Company or any Subsidiary, nor any event which
with notice or lapse of time or both would constitute a default thereunder by
the Company, any
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Subsidiary or any landlord thereunder except as would not materially and
adversely affect the use of the property by the Company or the Subsidiary, as
the case may be.
(d) Except as provided in Section 3.13(d) of the Disclosure Schedule,
to the knowledge of Company (i) no condemnation or rezoning proceedings are
pending or threatened with respect to any of the Company Properties and (ii) no
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated by the continued maintenance, operation or use of any buildings or
other improvements on any of the Company Properties in the manner such Company
Properties, buildings and improvements are currently maintained, operated and
used or by the continued maintenance, operation or use of the parking areas
except for violations, with respect to each Company Property, which would not
materially interfere with or prohibit the present use of such Company Property.
The Company Properties are not subject to any rights of way, written agreements,
laws, ordinances and regulations affecting building use or occupancy, or
reservations of an interest in title (collectively "Property Restrictions") or
Encumbrances, except for (i) Property Restrictions and Encumbrances set forth in
Section 3.13(d) of the Disclosure Schedule and (ii) Property Restrictions
imposed or promulgated by law or any governmental body or authority with respect
to real property, including zoning regulations, which do not materially
adversely affect the current use of any Company Property and which permit the
use of the Company Properties for their current uses and would permit the
operation of a retail pharmacy thereon.
(e) Except as provided in Section 3.13(e) of the Disclosure Schedule,
the Company has no knowledge (i) that any certificate, permit or license from
any governmental authority having jurisdiction over any of the Company
Properties or any agreement, easement or other right which is necessary to
permit the lawful use and operation of the buildings and improvements on any of
the Company Properties in the manner such Company Properties, buildings and
improvements are currently maintained, operated and used has not been obtained
and is not in full force and effect, or of any pending threat of modification or
cancellation of any of same which would have a material adverse effect on such
Company Property, (ii) of any written notice of any violation of any federal,
state or municipal law, ordinance, order, regulation or requirement materially
and adversely affecting any of the Company Properties issued by any governmental
authority, (iii) of any material defects relating to any Company Property which,
if known to a potential buyer, would have a material adverse effect on the
market value of such Company Property, (iv) of any Company Property whose
building systems are not in working order so as to have a material adverse
effect on such Company Property, or (v) of any physical damage to any Company
Property which would have a material adverse effect on such Company Property for
which there is no insurance in effect covering the cost of the restoration. To
the knowledge of the Company, all public utilities, including water, sewer, gas,
electric, telephone and drainage facilities, give adequate service to each of
the Company Properties to support the current use and operations thereon and all
such utilities are located either within the boundaries of the Company
Properties, lands dedicated to public use or within a recorded perpetual
easement for such purpose. To the knowledge of the Company, each of the Company
Properties has direct legal vehicular access to and from publicly dedicated
streets.
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(f) Except as set forth in Section 3.13(f) of the Disclosure
Schedule, neither the execution, delivery and performance by the Company or the
Subsidiaries of this Agreement or any other agreements executed by the Company
or the Subsidiaries in connection with the transactions contemplated by this
Agreement nor the consummation of such transactions will (i) violate, conflict
with, result in a breach of, result in a default under or noncompliance with,
create rights of acceleration, termination or cancellation, or cause any
forfeiture or impairment of any rights under, the Real Property Leases or under
any agreement relating to the Real Property Leases or any of the Company
Properties or (ii) require the consent, approval or act of, or the making of any
filing with, any Person under the Real Property Leases or any agreement relating
to the Real Property Leases or any of the Company Properties. Except as set
forth in Section 3.13(f) of the Disclosure Schedule, none of the Company
Properties is subject to any restriction on the sale, disposition, transfer,
change in control or financing thereof or release of financing thereon.
SECTION 3.14 Personal Property. (a) The Company and the Subsidiaries
have good and marketable title to, or valid leasehold interests in, all their
personal properties and assets reasonably required to conduct their respective
businesses as currently conducted or as contemplated to be conducted, except as
set forth in Section 3.14(a) of the Disclosure Schedule and except where the
failure to have such title or leasehold interest would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) Section 3.14(b) of the Disclosure Schedule lists all personal
property leases (including all amendments and modifications thereto) pursuant to
which the Company or any of the Subsidiaries leases personal property, the lease
payments for which are more than $100,000 annually, true, correct and complete
copies of which have previously been delivered or made available to Parent. All
leases of personal property leased for the use or benefit of the Company or any
Subsidiary to which the Company or any Subsidiary is a party and all amendments
and modifications thereto are in full force and effect and have not been
modified or amended, and there exists no default under any such lease by the
Company or any Subsidiary, nor any event which with notice or lapse of time or
both would constitute a default thereunder by the Company or any Subsidiary,
except as would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.15 Trademarks, Patents and Copyrights. Except as set forth
in Section 3.15(a) of the Disclosure Schedule, the Company and the Subsidiaries
own all right, title and interest (free and clear of any liens or encumbrances)
to, or possess valid licenses (including the right to use, license, sublicense,
sell, manufacture, have made, transfer or distribute) as necessary under, the
material Patent Rights, Trademarks, Copyrights, Trade Secrets, Software and
other proprietary rights and information used or held for use in connection with
the business of the Company and the Subsidiaries as currently conducted, and
there are no assertions or claims, or threatened assertions or claims,
challenging the validity of, or the Company's or the Subsidiaries' right to use,
any of the foregoing which, individually or in the aggregate, would have a
Material Adverse Effect. Section 3.15(b) of the Disclosure Schedule lists all
the material
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Intellectual Property owned or used by the Company or any Subsidiary and
specifies the number and date of each applicable registration, or application to
register, and identifies any licensees, assignees or users, other than the
Company, of any of such Intellectual Property. Section 3.15(c) of the Disclosure
Schedule lists each agreement pursuant to which any material Patent Rights,
Trademarks, Copyrights, Trade Secrets or Software is licensed to the Company or
any Subsidiary as licensee for use in the business of the Company and the
Subsidiaries as currently conducted. To the knowledge of the Company, the
conduct of the business of the Company and the Subsidiaries as currently
conducted does not conflict with, infringe upon, or violate, in any way any
Patent Rights, license, Trademarks, Trade Secrets, Copyright, Software or any
other intellectual property right of any third party except for conflicts that,
individually or in the aggregate, would not have a Material Adverse Effect.
SECTION 3.16 Taxes. Except as set forth in Section 3.16 of the
Disclosure Schedule:
(a) The Company and the Subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) or combined or unitary group of
which the Company or any Subsidiary is a member, has timely filed all material
Tax Returns required to be filed by them and paid all Taxes shown to be due on
such Tax Returns. All such Tax Returns are true, correct and complete in all
material respects. The Company and the Subsidiaries have given or otherwise made
available to the Purchaser or Parent all federal and state income tax returns
for periods ending, or transactions consummated, on or after December 31, 1995;
provided, however, that with respect to certain returns for the fiscal year
ended January 31, 1999, the Company provided the most current drafts, if any.
Except to the extent adequately reserved for in accordance with GAAP, all
material Taxes due and payable by the Company and the Subsidiaries have been
timely paid. Since January 31, 1999, neither the Company nor the Subsidiaries
have incurred any liability for Taxes other than in the ordinary course of
business for which adequate reserves have been or will be established on
subsequent unaudited financial statements.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of the Subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and the Subsidiaries, and no issue has been raised in
any examination which, by application of similar principles, could be expected
to result in the proposal or assertion of a material Tax deficiency for any
other year not so examined, except to the extent adequate reserves have been
established therefor. No waivers or comparable consents of the time to assess
any Taxes are outstanding, and no power of attorney granted by the Company or
any Subsidiary with respect to any Taxes is currently in force. No material
issues relating to Taxes have been raised in writing by any governmental
authority during any presently pending audit or examination.
(c) There are no liens or encumbrances for Taxes on any of the assets
of the Company or the Subsidiaries (other than for current taxes not yet due and
payable).
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(d) To the knowledge of the Company, the Company and the Subsidiaries
have complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes.
(e) None of the Company or the Subsidiaries has filed a consent under
Section 341(f) of the Code.
(f) No payment or other benefit, and no acceleration of the vesting
of any options, payments or other benefits, will be, as a direct or indirect
result of the transactions contemplated by this Agreement, an "excess parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the regulations thereunder, and none of the Company or the
Subsidiaries is a party to any agreement that could obligate it to make any
payments that would not be deductible by reason of Section 280G or Section
162(m) of the Code.
(g) Neither the Company nor, since the date of its acquisition by the
Company, any Subsidiary is a party to any tax allocation or tax sharing
agreement or any closing agreement or similar agreement relating to Taxes with
any taxing authority.
(h) To the knowledge of the Company, no federal, state, local or
foreign audits or other administrative proceedings or court proceedings are
presently pending with regard to any federal, state, local or foreign Taxes or
Tax Returns of the Company or any of the Subsidiaries, and neither the Company
nor any of the Subsidiaries has received a written notice of any pending or
threatened audit or proceeding.
(i) To the knowledge of the Company, the Company has not been (and
will not be) a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the 5-year period ending on the
consummation of the Offer.
(j) Neither the Company nor the Subsidiaries have ever been a member
of any affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company), and the Company and
the Subsidiaries have no liability for Taxes of any other person under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state, local or foreign law)
other than as a member of a group the common parent of which was the Company.
SECTION 3.17 Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "Hazardous
Substances" means any substance, material or waste which is regulated,
classified or otherwise characterized as hazardous, toxic, a pollutant,
contaminant or words of similar meaning or effect by any governmental authority
of the United States, including petroleum or petroleum products, asbestos, urea
formaldehyde and polychlorinated biphenyls; (ii) "Environmental Law" means any
applicable federal, state, local, or foreign law (including common law),
statute, code, ordinance, rule, regulation or other requirement relating to the
protection of the environment, natural
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resources, or public or employee health and safety and includes the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 33 U.S.C.
ss. 2601 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.,
the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et
seq., the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., as such laws have
been amended or supplemented, and the regulations promulgated pursuant thereto,
and all analogous state or local statutes.
(b) Except as described in the SEC Reports filed prior to the date
hereof or Section 3.17 of the Disclosure Schedule or as, individually or in the
aggregate, would not have a Material Adverse Effect: (i) to the knowledge of the
Company, the Company and each Subsidiary is in material compliance with all
applicable Environmental Laws; (ii) no judicial or administrative proceedings
are pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary alleging the violation of or seeking to impose liability
pursuant to any Environmental Law and, there are no investigations pending or,
to the knowledge of Company, threatened against the Company or any Subsidiary or
any real property owned, operated or leased by or for the Company or any
Subsidiary, which in any case could reasonably be expected to give rise to
liabilities under Environmental Laws; (iii) to the knowledge of the Company
there are no facts, circumstances or conditions relating to, arising from or
attributable to the Company or any Subsidiary or any real property currently or
formerly owned, operated or leased by or for the Company or the Subsidiary
(including the Company Properties) that are reasonably likely to result in the
Company or any Subsidiary incurring material liabilities under Environmental
Laws; and (iv) the Company has provided Parent with or made available to Parent
copies of all environmentally related audits, assessments, studies, reports,
analyses, and results of investigations of the any real property currently or
formerly owned, operated or leased by the Company or any of the Subsidiaries
(including the Company Properties) that are in the possession, custody or
control of the Company. Except as described in Section 3.17 of the Disclosure
Schedule, to the knowledge of the Company there are no underground storage tanks
under the control of the Company or the Subsidiaries or any friable asbestos-
containing materials at any real property owned, operated or leased by or for
the Company or the Subsidiaries (including the Company Properties), the presence
of which are reasonably likely to result in the Company or the Subsidiaries
incurring material liabilities under Environmental Laws.
SECTION 3.18 Contracts. (a) Except as set forth in the SEC Reports
filed prior to the date of this Agreement or Section 3.18 of the Disclosure
Schedule, neither the Company nor any of the Subsidiaries is a party to or bound
by any (i) "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the SEC), (ii) non-competition agreement or any
other agreement or obligation which purports to limit in any respect the manner
in which, or the localities in which, all or any material portion of the
business of the Company and the Subsidiaries, taken as a whole, may be
conducted, (iii) transaction, agreement, arrangement or understanding with any
affiliate of the Company or such Subsidiary that would be required to be
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disclosed under Item 404 of Regulation S-K promulgated by the SEC, (iv) voting
or other agreement governing how any Shares shall be voted, (v) acquisition,
merger, asset purchase or sale agreement, (vi) agreement which provides for, or
relates to, the incurrence by the Company or any Subsidiary of indebtedness for
borrowed money (including any interest rate or foreign currency swap, cap,
collar, hedge or insurance agreements, or options or forwards on such
agreements, or other similar agreements for the purpose of managing the interest
rate or foreign exchange risk associated with its financing), or (vii) contract
or other agreement which would prohibit or materially delay the consummation of
the Merger or any of the transactions contemplated by this Agreement (all
contracts of the type described in clauses (i) through (vii) being referred to
herein as "Material Contracts"). Each Material Contract is valid and binding on
the Company (or, to the extent a Subsidiary of the Company is a party, such
Subsidiary) and is in full force and effect, and the Company and each Subsidiary
have performed all obligations required to be performed by them to date under
each Material Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. Except as
set forth in Section 3.18 of the Disclosure Schedule, neither the Company nor
any Subsidiary of the Company is in default or knows of, or has received notice
of, any violation or default under (nor, to the knowledge of the Company, does
there exist any condition which with the passage of time or the giving of notice
or both would result in such a violation or default under) any Material
Contract, except any such default or violation that, individually or in the
aggregate, would not have a Material Adverse Effect.
(b) Except as disclosed in the SEC Reports filed prior to the date of
this Agreement or in Section 3.18 of the Disclosure Schedule or as provided for
in this Agreement, neither the Company nor any of the Subsidiaries is a party to
any oral or written (i) employment, severance, retention or termination
agreements or consulting agreements not terminable on 30 days' or less notice,
(ii) union or collective bargaining agreement, (iii) agreement with any
executive officer or other key employee of the Company or any of the
Subsidiaries the benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any of the Subsidiaries of the nature contemplated by this Agreement,
(iv) agreement with respect to any executive officer or other key employee of
the Company or any of the Subsidiaries providing any term of employment or
compensation guarantee or (v) agreement or plan, including any stock option,
stock appreciation right, restricted stock or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.19 Insurance; Workers' Compensation. (a) Section 3.19 of the
Disclosure Schedule sets forth a list of each currently effective material
insurance policy issued in favor of the Company and each Subsidiary, the
identity of the respective insurance carriers and a description of the policy
type. All premiums due and payable in respect of such policies have been paid,
and such policies are in full force and effect and free from any right granted
by the Company or a Subsidiary of termination on the part of the insurance
carriers, except as provided in the
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respective policies, except for any failure to be in full force and effect or
free from such rights that would not, individually or in the aggregate, have a
Material Adverse Effect. The Company has provided or made available to Parent
information requested by Parent with respect to the workers' compensation
experience as of January 31, 1999 of the Company and each Subsidiary since
December 31, 1995.
(b) Neither the Company nor any Subsidiary has received any notice of
cancellation with respect to any of its insurance policies, and, since December
31, 1995, neither the Company nor any Subsidiary has been refused any insurance
coverage sought or applied for, in each case where such cancellation or refusal,
individually or in the aggregate, would have a Material Adverse Effect.
SECTION 3.20 Certain Payments; Absence of Certain Business Practices.
No director, officer, employee or agent of the Company or any Subsidiary, nor
any other person acting on behalf of Company or any Subsidiary, has made or
caused to be made any payments to government officials in violation of the laws
of the United States or any other jurisdiction; and, as of the date hereof, no
federal, state, local or foreign government agency or entity has notified the
Company or any Subsidiary of any pending or threatened investigation of any
payment made by or on behalf of the Company or any Subsidiary of, or alleged to
be of, the type described in the immediately preceding sentence, except for any
such payments or investigations that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.21 Licenses and Permits. The Company and each Subsidiary
have obtained all governmental licenses and permits necessary to conduct their
respective businesses in accordance with past practice, except for failures
that, individually or in the aggregate, would not have a Material Adverse
Effect, and there are no appeals nor any other actions pending to revoke any
such licenses or permits. To the knowledge of the Company, such licenses and
permits are valid and in full force and effect, and no such licenses or permits
will be terminated or materially impaired or become terminable as a result of
the transactions contemplated by this Agreement, except for those that,
individually or in the aggregate, would not have a Material Adverse Effect.
SECTION 3.22 Letters of Credit, Surety Bonds, Guarantees. Section 3.22
of the Disclosure Schedule and attachment 3.13(b)(A) to the Disclosure Schedule
list, as of the date hereof, all standby letters of credit, performance or
payment bonds, guaranty arrangements and surety bonds of any nature involving
amounts in excess of $25,000 relating to the Company or any Subsidiary.
SECTION 3.23 Brokers. No broker, finder or investment banker (other
than Johnson Rice & Company, L.L.C.) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Johnson Rice &
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Company, L.L.C. pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated by this Agreement.
SECTION 3.24 Opinion of Financial Advisor. The Company has received
the opinion of Johnson Rice & Company, L.L.C. to the effect that, as of the date
of this Agreement, the consideration to be received in the Offer and the Merger
by the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be, delivered to Parent. The
Company has been authorized by Johnson Rice & Company, L.L.C. to permit the
inclusion of such opinion in its entirety in the Offer Documents and the
Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form and
substance reasonably satisfactory to Johnson Rice & Company, L.L.C. and its
counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the Company that:
SECTION 4.01 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business, operations,
financial condition, assets or liabilities (including contingent liabilities),
employee relationships or customer or supplier relationships of Parent and its
subsidiaries, taken as a whole.
SECTION 4.02 Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and the Stockholder Agreements, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the Stockholder
Agreements by Parent and Purchaser and the consummation by Parent and Purchaser
of the transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize this Agreement or
the Stockholder Agreements or to consummate the transactions contemplated by
this Agreement (other than with respect to the Merger, the filing of the
Certificate of Merger). Each of this Agreement and the Stockholder Agreements
has been duly and validly executed and delivered by Parent and Purchaser and,
assuming the due authorization, execution and delivery by the other parties
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thereto, constitutes a legal, valid and binding obligation of each of Parent and
Purchaser enforceable against each of Parent and Purchaser in accordance with
its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement and the Stockholder
Agreements by Parent and Purchaser do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement by Parent and Purchaser will not, (i) conflict with or violate
the Articles or Certificate of Incorporation or Bylaws of either Parent or
Purchaser, (ii) assuming that required filings under the HSR Act are made by the
appropriate parties, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) conflict with, result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except, in cases of (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a material
adverse effect on the business, operations, financial condition, assets or
liabilities (including contingent liabilities) of Parent and its subsidiaries,
taken as a whole.
(b) The execution and delivery of each of this Agreement and the
Stockholder Agreements by Parent and Purchaser do not, and the performance of
this Agreement by Parent and Purchaser will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act, and the filing of the Certificate of Merger as required by
Delaware Law, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Offer or the Merger, or otherwise prevent
Purchaser from performing its obligations under this Agreement.
SECTION 4.04 Offer Documents; Proxy Statement. Neither the Offer
Documents nor any other document filed or to be filed by or on behalf of Parent
or Purchaser with the SEC in connection with the transactions contemplated by
this Agreement, will not, at the time such documents are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading. The
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information supplied by Parent specifically for inclusion in the Schedule 14D-9,
the Information Statement or the Proxy Statement will not, on the date such
document (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, with respect to the Information Statement, at the
time Shares are accepted for payment in the Offer, and with respect to the Proxy
Statement at the time of the Special Stockholders' Meeting and at the Effective
Time, contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Stockholders' Meeting which shall
have become false or misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in any
of the foregoing documents or the Offer Documents. The Offer Documents shall
comply in all material respects as to form with the requirements of the Exchange
Act.
SECTION 4.05 Brokers. No broker, finder or investment banker (other
than Merrill Lynch, Pierce, Fenner & Smith Incorporated) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Purchaser.
SECTION 4.06 Financing. Parent and Purchaser will have available to
them, upon consummation of the Offer and at the Effective Time, immediately
available funds necessary to consummate all of the transactions contemplated by
this Agreement and will use such funds for such purpose subject to the
conditions of this Agreement.
SECTION 4.07 Operations of Purchaser. Purchaser has been formed solely
for the purpose of engaging in the transactions contemplated hereby and prior to
the Effective Time will have engaged in no other business activities and will
have incurred no liabilities or obligations other than as contemplated herein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE PURCHASER'S ELECTION DATE
SECTION 5.01 Conduct of Business by the Company Pending the
Purchaser's Election Date. The Company covenants and agrees that, between the
date of this Agreement and the election or appointment of Parent's designees to
the Board pursuant to Section 6.03 upon the purchase by Purchaser of any Shares
pursuant to the Offer (the "Purchaser's Election Date"), unless Parent shall
otherwise agree in writing, the Company shall, and shall cause the Subsidiaries
to, use all commercially reasonable efforts to conduct their
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respective businesses in all material respects only in the ordinary course of
business consistent with past practice, and the Company shall use all
commercially reasonable efforts consistent with good business judgment under the
current circumstances to preserve intact the business organization of the
Company and the Subsidiaries, to keep available the services of the current
officers, employees and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with
customers, suppliers, vendors, distributors and other persons with which the
Company or any Subsidiary has business relations to the end that their goodwill
and ongoing businesses shall be unimpaired in all material respects at the
Effective Time. By way of amplification and not limitation, except as otherwise
required by applicable law or as contemplated by this Agreement or by Section
5.01 of the Disclosure Schedule, the Company agrees that neither the Company nor
any Subsidiary shall, between the date of this Agreement and the Purchaser's
Election Date, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent (provided that with respect to
clauses (e)(iii) and (f) below, such consent shall not be unreasonably withheld
or delayed):
(a) amend or otherwise change, directly or indirectly, its
Constituent Documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of the Company or any Subsidiary (other than the
issuance of Shares upon the conversion of Nonvoting Shares or upon exercise of
Options outstanding on the date of this Agreement in accordance with their
current terms), or any options, warrants, convertible securities or other rights
of any kind to acquire any shares of such capital stock, or any other ownership
interest (including any phantom interest), of the Company or any Subsidiary, or
(ii) any assets of the Company or any Subsidiary (including the Company
Properties or any interest therein), except for sales in the ordinary course of
business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except for such declarations, set asides, dividends and
other distributions made by any Subsidiary to the Company;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock (excluding,
however, redemptions or purchases of shares of capital stock of the Subsidiaries
pursuant to contractual commitments entered into before the date of this
Agreement and disclosed in Schedule 3.03 of the Disclosure Schedule);
(e) (i) acquire (including by merger, consolidation, or acquisition
of stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof or any material
amount of assets other than in the ordinary course of business consistent with
past practice; (ii) incur or modify any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, pledge in respect of or
otherwise as an accommodation become responsible for the obligations of any
person, or make any loans, advances or capital contributions, except in the
ordinary course of business
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consistent with past practice for the purchase of goods for resale; (iii) enter
into any contract or agreement requiring annual payments in excess of $50,000 or
payments in excess of $100,000 in the aggregate, other than any contract or
agreement with a term of less than one year entered into in the ordinary course
of business consistent with past practice; (iv) terminate, cancel, extend or
request any material change in, or agree to any material change in, any Real
Property Lease or Material Contract, except in the ordinary course of business
consistent with past practice, or waive, release or assign any material rights
or claims; or (v) authorize capital commitments, except in accordance with a
capital expenditure plan which is reasonably acceptable to Parent;
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past practices in
salaries or wages of employees of the Company or any Subsidiary who are not
officers of the Company, or grant or modify any severance or termination pay to,
or enter into any employment or severance agreement with, any director, officer
or other employee of the Company or any Subsidiary (other than in connection
with hiring and terminating employees in the ordinary course of the Company's
business or pursuant to a Plan, policy or agreement existing as of the date
hereof and disclosed in Section 3.10 of the Disclosure Schedule), or establish,
adopt, enter into or amend any collective bargaining agreement, any material
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, retention, termination
or severance plan, benefit, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee or circulate to any employee
any details of any proposal to adopt or amend any such plan or make, authorize
or approve the payment of any extraordinary amount to any outside advisor,
attorney or consultant in all cases, except as required by law, including any
obligation to maintain tax-qualified status or as may be required by any Plan as
of the date hereof;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect to
accounting policies or procedures (including procedures with respect to the
payment of accounts payable and collection of accounts receivable), except for a
planned change from retail accounting to cost accounting or as may be required
by law or GAAP;
(h) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods, except as may be
required by the change referred to in (g) above, or settle or compromise any
federal, state, local or foreign income Tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries, or subsequently incurred in the ordinary course of business
consistent with past practice;
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(j) settle or compromise any pending or threatened suit, action or
claim that is material or which relates to any of the transactions contemplated
by this Agreement; or
(k) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting. The Company, acting
through the Board, shall, in accordance with applicable law and its Constituent
Documents, unless not required under applicable "short-form" merger provisions
of Delaware Law (i) duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following consummation of the
Offer for the purpose of considering and taking action on this Agreement and the
transactions contemplated by this Agreement (the "Special Stockholders'
Meeting") and (ii) (A) include in the Proxy Statement the [unanimous]
recommendation of the Board that the stockholders of the Company approve and
adopt this Agreement and the transactions contemplated by this Agreement,
including the Merger; provided, that such recommendation may be withdrawn,
modified or amended to the extent the Board determines in good faith, after
receiving the advice of independent legal counsel, that such action is required
in the exercise of the Board's fiduciary duties under applicable law (any such
withdrawal, modification or amendment shall not constitute a breach of this
Agreement but shall not otherwise affect any of the rights of Parent or
Purchaser under this Agreement), and (B) unless the recommendation of the Board
has been withdrawn pursuant to the preceding clause, use all reasonable efforts
to obtain such approval and adoption. At the Special Stockholders' Meeting (or
by consent if a stockholders meeting is not required), Parent and Purchaser
shall cause all Shares then owned by them and their subsidiaries to be voted in
favor of the approval and adoption of this Agreement and the transactions
contemplated by this Agreement, including the Merger.
SECTION 6.02 Proxy Statement. As soon as practicable following
consummation of the Offer, the Company shall file the Proxy Statement with the
SEC under the Exchange Act, unless the Special Stockholders' Meeting is not
required under applicable "short-form" merger provisions of Delaware Law, and
shall use its best efforts to have the Proxy Statement cleared by the SEC.
Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC or its staff with respect to the Proxy
Statement and of any requests by the SEC or its staff for any amendment or
supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC or its staff and written statements describing
telephone conversations with the SEC or its staff. The Company shall give
Parent and
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its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all responses
to requests for additional information and replies to comments and conversations
prior to their being filed with, or sent to, the SEC. Each of the Company,
Parent and Purchaser agrees to use all reasonable efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of,
requests by and conversations with the SEC or its staff and to cause the Proxy
Statement and all required amendments and supplements thereto to be mailed to
the holders of Shares entitled to vote at the Special Stockholders' Meeting at
the earliest practicable time.
SECTION 6.03 Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Parent shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board as shall
give Parent representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding, and the Company shall, at such
time, subject to the applicable provisions of the Constituent Documents,
promptly take all actions necessary to cause Parent's designees to be elected as
directors of the Company, including increasing the size of the Board or securing
the resignations of incumbent directors or both. At such times, the Company
shall use all reasonable efforts to cause persons designated by Parent to
constitute the same percentage as persons designated by Parent shall constitute
of the Board with respect to (i) each committee of the Board (some of whom may
be required to be independent as required by applicable law or requirements of
the American Stock Exchange), (ii) each board of directors of each Subsidiary,
and (iii) each committee of each such board, in each case only to the extent
permitted by applicable law.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03, including, if requested by
Parent, mailing to its stockholders the Information Statement containing the
information required under Section 14(f) and Rule 14f-1 as an annex to the
Schedule 14D-9 to fulfill such obligations. Parent or Purchaser shall supply to
the Company and be solely responsible for any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 6.03 are in
addition to, and shall not limit, any rights which Purchaser, Parent or any of
their affiliates may have as a holder or beneficial owner of Shares as a matter
of applicable law with respect to the election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 6.03, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the Effective
Time, be Continuing Directors. From and after the time, if any, that Parent's
designees constitute a majority of the Board and prior to the Effective Time,
any amendment or modification of this Agreement, any amendment to the Company's
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Constituent Documents inconsistent with this Agreement, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder, any waiver of any condition to the
Company's obligations hereunder or any of the Company's rights hereunder or
other action by the Company hereunder may be effected only by the action of a
majority of the Continuing Directors of the Company, which action shall be
deemed to constitute the action of any committee specifically designated by the
Board to approve the actions contemplated by this Agreement and the transactions
contemplated by this Agreement and the full Board; provided, that, if there
shall be no Continuing Directors, such actions may be effected by majority vote
of the entire Board. The Continuing Directors together shall have the right to
retain, at the Company's expense, one law firm and a financial advisor if they,
in their reasonable discretion, deem it necessary. Any Continuing Director
shall have the authority to initiate or act on behalf of the Company to carry
out any of the provisions of this Section 6.03(c).
SECTION 6.04 Access to Information; Confidentiality. (a) The Company
shall (and shall cause each of the Subsidiaries to) afford to the
Representatives of Parent reasonable access on reasonable prior notice to the
Company's Chief Executive Officer, Chief Financial Officer or Chief Operating
Officer during normal business hours, throughout the period prior to the earlier
of the Effective Time or the termination of this Agreement, to all of its
properties, offices, employees, contracts, commitments, books and records
(including Tax Returns) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities laws
and shall (and shall cause each of the Subsidiaries to) furnish promptly to
Parent such additional financial and operating data and other information as to
its and the Subsidiaries' respective businesses and properties as Parent may
from time to time reasonably request. Parent and Purchaser will make all
reasonable efforts to minimize any disruption to the businesses of the Company
and the Subsidiaries which may result from the requests for access to properties
and employees and for data and information hereunder.
(b) Parent agrees that all information obtained by Parent or
Purchaser pursuant to this Section 6.04 shall be kept confidential, by
Purchaser, by Parent and by any other party which is to be afforded access
pursuant to Section 6.04(a), in accordance with the confidentiality agreement,
dated February 22, 1999 (the "Confidentiality Agreement"), between Parent and
the Company, and Parent shall comply with its obligation under the
Confidentiality Agreement to return all documents, work papers and other written
materials and any copies thereof obtained or made by Parent or its
representatives in the event of the termination of this Agreement without the
purchase of any Shares in the Offer.
SECTION 6.05 No Solicitation. (a) The Company shall not, nor shall
it permit any of the Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of the Subsidiaries to (i)
solicit or initiate, or encourage, directly or indirectly, any inquiries
relating to, or the submission of, any Takeover Proposal, (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
information or data with respect to or access to the properties of, or take any
other action to knowingly facilitate the making of any proposal that
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constitutes, or may reasonably be expected to lead to, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal or approve
or recommend or resolve to approve or recommend any Takeover Proposal; provided,
however, that nothing contained in this Section 6.05(a) shall prohibit the
Company or its directors from (i) complying with Rule 14e-2 and Rule 14d-9
promulgated under the Exchange Act with regard to a tender or exchange offer or
(ii) referring a third party to this Section 6.05(a) or making a copy of this
Section 6.05(a) available to any third party; and provided, further, that prior
to the acceptance for payment of Shares pursuant to the Offer, if the Board
reasonably determines that a Takeover Proposal from a Person (including any
Person with whom the Company or its representatives have had discussions prior
to April 28, 1999) constitutes a Superior Proposal or may reasonably be expected
to lead to a Superior Proposal from such Person, then the Company may, in
response to an unsolicited request therefor and subject to compliance with
Section 6.05(b), (1) furnish information with respect to the Company and the
Subsidiaries to, and participate in discussions and negotiations directly or
through its representatives with, such Person, subject to a customary
confidentiality agreement (as determined by the Company's independent legal
counsel) with such Person and (2) make such public disclosures as shall be
required under applicable law, if and to the extent the Board determines in good
faith, after receiving the advice of independent legal counsel, that such action
is required in the exercise of the Board's fiduciary duties under applicable
law. Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer or director of
the Company or any of the Subsidiaries or any financial advisor, attorney or
other advisor or representative of the Company or any of the Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or any
of the Subsidiaries or otherwise, shall be deemed to be a breach of this Section
6.05(a) by the Company.
(b) The Company shall advise Parent orally and in writing of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal received by any officer or director of the Company or, to the
knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal or inquiry no later than one full business day
following receipt of such Takeover Proposal or inquiry. The Company will keep
Parent informed of the status and details of any such Takeover Proposal or
inquiry.
SECTION 6.06 Third Party Standstill Agreements. During the period
from the date of this Agreement through the Effective Time, the Company shall
not terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of the Subsidiaries is a party
(other than any involving Parent) without the written consent of Parent. During
such period, the Company agrees to enforce, to the fullest extent permitted
under applicable law, the provisions of any such agreements, including obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction.
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SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
Constituent Documents on the date hereof, which provisions shall not be amended,
repealed or otherwise modified in any manner that would adversely affect the
rights thereunder of the individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement).
(b) The Company shall, and from and after the Effective Time, the
Surviving Corporation shall, indemnify and hold harmless each present and former
director, officer or employee of the Company or any of the Subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees and disbursements), judgments, losses,
claims, damages and liabilities incurred in connection with, and amounts paid in
settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted, brought
or filed (x) arising out of or pertaining to the transactions contemplated by
this Agreement or (y) otherwise with respect to any acts or omissions or alleged
acts or omissions occurring at or prior to the Effective Time to the same extent
as such persons are entitled to indemnification as of the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent permitted under applicable law and the Constituent Documents or
indemnification agreements in effect on the date hereof and listed in Section
3.10 of the Disclosure Schedule, including provisions relating to the
advancement of expenses incurred in the defense of any claim, action, suit,
proceeding or investigation. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time must be reasonably satisfactory to the Surviving Corporation,
and (ii) the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld). The Indemnified Parties as a group may retain only
one law firm to represent them with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
The indemnity agreements of the Surviving Corporation in this Section 6.07 shall
extend, on the same terms to, and shall inure to the benefit of and shall be
enforceable by, each person or entity who controls, or in the past controlled,
any present or former director, officer or employee of the Company or any of the
Subsidiaries.
(c) Not later than 30 days after the consummation of the Offer, the
Surviving Corporation shall procure, at no expense to the beneficiaries,
directors' and officers' liability insurance policies (the "New Insurance")
covering for a period of six years after the Effective Time those persons who
are currently covered by the Company's directors' and officers' liability
insurance policies (the "Current Insurance") and providing coverage (including
amounts of coverage, amounts of deductibles, employment practices liability and
other terms) that are no less
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favorable than the terms contained in the Current Insurance; provided, however,
that the Surviving Corporation shall not be required to expend annually for the
New Insurance amounts in excess of 200% of the per annum premiums paid by the
Company for the Current Insurance for the policy year that includes the date of
this Agreement, and provided further, that if the annual premiums for the New
Insurance exceed such 200% amount, then the Surviving Corporation shall be
obligated to obtain a policy with the greatest amount of coverage available for
a cost not exceeding such 200% amount. The Surviving Corporation will maintain
the New Insurance continuously in effect for such six year period and will not
cancel the Current Insurance unless and until the New Insurance has been
procured. If the New Insurance is provided under any insurance policies other
than a "run-off" of the Company's existing insurance policies, then such new
policies shall be in form and substance and with insurance carriers reasonably
satisfactory to the Continuing Directors.
(d) This Section 6.07 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
(e) If the Surviving Corporation or Parent or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 6.07, proper and
sufficient provision shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall succeed to the obligations set forth in
this Section 6.07, and none of the actions described in clauses (i) or (ii) of
this sentence shall be taken until such provision is made.
SECTION 6.08 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which causes any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.09 Further Action; Reasonable Efforts. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the transactions contemplated by
this Agreement, (ii) use all reasonable efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
commercially reasonable efforts
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to obtain all licenses, permits (including environmental permits), consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company and the Subsidiaries as are necessary
for the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger and including 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 entity vacated or
reversed, and (iii) except as contemplated by this Agreement, use all
commercially reasonable efforts not to take any action, or enter into any
transaction, which would cause any of its representations or warranties
contained in this Agreement to be untrue or result in a breach of any covenant
made by it in this Agreement. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Parent and the Company shall use
all reasonable efforts to take all such action. Notwithstanding the foregoing,
in no event shall Parent, Purchaser, the Company or the Surviving Corporation be
required to hold separate or divest any of their respective assets or agree to
any restrictions in their businesses as currently or proposed to be conducted.
(b) Without in any way limiting the provisions of Section 6.09(a),
the Company and the Subsidiaries shall, if and to the extent requested by
Parent, reasonably cooperate with Parent (including by executing and delivering
such documents and instruments, and by taking such other actions as may be
reasonably requested by Parent) in connection with the Parent obtaining title
insurance, surveys and/or estoppel letters or otherwise in connection with the
transactions contemplated by this Agreement (including the issuance of any non-
imputation endorsement).
SECTION 6.10 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction and shall
not issue any such press release or make any such public statement without the
prior approval of the Chief Executive Officer of both Parent and the Company,
except as may be required by law or any listing agreement with a national
securities exchange to which Parent or the Company is a party, in which case
reasonable advance notice shall be given to the other party where practicable.
SECTION 6.11 Confidentiality Agreement. Assuming the Minimum
Condition has been satisfied, upon the acceptance for payment of Shares pursuant
to the Offer, the Confidentiality Agreement shall be deemed to have terminated
without further action by the parties thereto.
SECTION 6.12 State Takeover Laws. If any state takeover statute
becomes or is deemed to become applicable to the Offer, the Stockholder
Agreements, the acquisition of Shares pursuant to the Offer or the Merger, the
Company shall take all action necessary to render such statute inapplicable to
all of the foregoing to the extent that the Company is able to do so.
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SECTION 6.13 Employment Covenant. (a) Parent shall provide each
employee of the Company with credit for all service with or credited by the
Company under each of Parent's employee benefit plans, programs and arrangements
for purposes of eligibility, vesting and, to the extent not prohibited by
applicable regulation, calculation of benefits (except to the extent crediting
such service would result in the duplication of benefits). Nothing herein
obligates Parent to maintain any Plan, program or arrangement which it otherwise
has the ability to terminate.
(b) Parent, at its discretion, shall cause the Surviving Corporation
to either (i) provide for a period of one year after the Effective Time health
and other welfare benefits that are substantially equivalent to those benefits
provided to employees of the Company and its Subsidiaries on the date hereof; or
(ii) provide health and other welfare benefits that are substantially equivalent
to those provided to other employees of Parent and on the same terms and
conditions as are applicable to other employees of Parent. Parent shall cause
the Surviving Corporation to honor the terms of those employment, severance pay,
retention bonus and long-term incentive award agreements of the Company and its
Subsidiaries and the Deferred Compensation Plan of Pamida which are disclosed in
Section 3.10 of the Disclosure Schedule.
SECTION 6.14 Real Estate Transfer and Gains Tax. Parent and the
Company agree that either the Company or the Surviving Corporation will pay any
foreign, state or local tax which is attributable to the transfer of the
beneficial ownership of the Company's or the Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any Tax
Returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and the
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and the Subsidiaries shall be
determined by Parent in its reasonable discretion. Parent shall timely provide
the Company or the Surviving Corporation with sufficient funds for the payment
of such Gains Taxes.
SECTION 6.15 Retirement of Certain Outstanding Indebtedness. (a) At
any time after the purchase by Purchaser of Shares pursuant to the Offer and
prior to the Effective Time, Parent shall be entitled to require the Company to
(i) terminate, or cause the applicable Subsidiary or Subsidiaries to terminate,
the Amended and Restated Loan and Security Agreement dated July 2, 1998 by and
among Congress Financial Corporation (Southwest) and BankAmerica Business
Credit, Inc., as Lenders, Congress Financial Corporation (Southwest), as Agent
for the Lenders, and Pamida and Seaway Importing Company, as Borrowers (the
"Loan Agreement") and (ii) redeem or discharge, or cause Pamida to redeem or
discharge, the 11 3/4% Senior Subordinated Notes due 2003 of Pamida and the
related Indenture dated as of March 15, 1993 (the "Indenture") by and among
Pamida, as Issuer, the Company as Guarantor, and State Street Bank and Trust
Company, as Trustee (collectively the "Notes"). If Parent requires any such
termination, redemption or discharge, Parent shall deposit or cause to be
deposited with the Company or with any wholly owned Subsidiary of the Company,
as directed by the Company, the
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amount of money and/or U.S. Government Obligations (as defined in the Notes)
that is reasonably necessary to enable the Company to comply with such request.
Parent shall have the opportunity to participate in all aspects of any such
termination, redemption or discharge.
(b) If, after the purchase by Purchaser of Shares pursuant to the
Offer and prior to the Effective Time, the obligations of the Company and Pamida
under the Loan Agreement are declared to be immediately due and payable under
Section 8.2(a) thereof on account of the occurrence of an event of default under
Section 8.1(j) thereof, then Parent shall deposit or cause to be deposited with
the Company or Pamida (i) the amount of money necessary to pay all amounts owing
by the Company or Pamida under the Loan Agreement and, if the Notes are declared
immediately due and payable under Section 6.2 of the Indenture on account of the
occurrence of an event of default under Section 6.1(a)(v) of the Indenture, (ii)
the amount of money necessary to pay all amounts owing by Pamida under the Notes
and the Indenture. Any money so deposited shall be used to pay all the amounts
so owing under the Loan Agreement, the Notes or the Indenture.
(c) If, after the purchase by Purchaser of Shares pursuant to the
Offer and prior to the Effective Time, the holders of any Notes elect to have
Pamida purchase their Notes under Section 4.15 of the Indenture, then Parent
shall deposit or cause to be deposited with Pamida the amount of money necessary
to effect such purchases.
(d) Any money or U.S. Government Obligations deposited by Parent
pursuant to Section 6.15(a), (b) or (c) shall be made available to the Company
or the applicable Subsidiary or Subsidiaries either (i) on terms no less
favorable to the Company as provided in the Loan Agreement or the Notes, as
applicable, or (ii) on terms approved by the Board, if prior to the Purchaser's
Election Date, or the Continuing Directors, if after the Purchaser's Election
Date.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement, including the Merger,
shall have been approved and adopted by the affirmative vote of the stockholders
of the Company (unless the vote of the stockholders is not required by Delaware
Law) as required under the Constituent Documents or Delaware Law;
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(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
(which order or other action the parties hereto shall use their reasonable
efforts to vacate or lift) and has the effect of making the consummation of the
Merger illegal under applicable law; and
(d) Offer. Purchaser or its permitted assignee shall have accepted
for payment and purchased all Shares validly tendered and not withdrawn pursuant
to the Offer, provided that this condition will be deemed to have been satisfied
if Purchaser fails to accept for payment or pay for Shares pursuant to the Offer
in breach of the terms hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Purchaser's having accepted for payment any
Shares pursuant to the Offer or (y) Purchaser shall not have accepted
for payment any Shares pursuant to the Offer prior to August 31, 1999;
provided, however, that the right to terminate this Agreement pursuant
to this Section 8.01(b)(i) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results
in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute a breach
of any representation or warranty under this Agreement by such party;
or
(ii) if any governmental entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise
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prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer and such order, decree or ruling or other action
shall have become final and nonappealable; provided, that the party
seeking to terminate this Agreement pursuant to this clause (ii) shall
have used all commercially reasonable efforts to remove such order,
decree, ruling, judgment or injunction, it being understood that in no
event shall Parent, Purchaser, the Company or the Surviving
Corporation be required to hold separate or divest any of their
respective assets or agree to any restrictions in their businesses as
currently or proposed to be conducted.
(c) by Parent or Purchaser prior to the purchase of Shares pursuant
to the Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement (unless such
breach was directly caused by an act or omission of Parent or Purchaser) which
(i) would give rise to the failure of a condition set forth in paragraph (d) of
Annex A to this Agreement and (ii) cannot be or has not been cured within 20
days after the giving of written notice thereof to the Company by Parent or
Purchaser;
(d) by Parent or Purchaser prior to the purchase of Shares pursuant
to the Offer if either Parent or Purchaser is entitled to terminate the Offer as
a result of the occurrence of any event set forth in paragraph (f) of Annex A to
this Agreement;
(e) by the Company if the Board determines in good faith that a
Takeover Proposal constitutes a Superior Proposal and the Board determines in
good faith, after receiving the advice of independent legal counsel, that the
failure to approve such Takeover Proposal and to terminate this Agreement would
constitute a breach of the Board's fiduciary duties under applicable law;
provided that the Company has complied with all provisions of Section 6.05,
including the notice provisions therein, and that it has complied with the
requirements of Section 8.03 relating to the payment (including the timing of
any payment) of the Expenses and the Termination Fee to the extent required by
Section 8.03; and provided, further, that the Company may not terminate this
Agreement pursuant to this Section 8.01(e) unless and until 72 hours have
elapsed following delivery to Parent of a written notice of such determination
by the Board.
(f) by the Company prior to the purchase of Shares pursuant to the
Offer if (i) any of the representations or warranties of Parent or Purchaser set
forth in this Agreement that are qualified as to materiality shall not be true
and correct in any respect or any such representations or warranties that are
not so qualified shall not be true and correct in any material respect, or (ii)
Parent or Purchaser shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of Parent or Purchaser to be performed or complied with by
it under this Agreement and such untruth, incorrectness or failure cannot be or
has not been cured within 20 days after the Company's giving of written notice
to Parent or Purchaser, as applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.01.
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The right of any party hereto to terminate this Agreement pursuant to
this Section 8.01 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 8.02 Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 8.01,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Purchaser or any of their
respective affiliates, officers or directors (except for Section 6.04(b),
Section 6.10, Section 8.03 and Article IX, which shall survive the termination);
provided, however, that nothing contained in this Section 8.02 shall relieve any
party hereto from any liability for any willful breach of a representation or
warranty contained in this Agreement or the breach of any covenant or agreement
contained in this Agreement.
SECTION 8.03 Fees and Expenses. (a) Except as provided in this
Section 8.03, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement, including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses.
(b) Provided that neither Parent nor Purchaser shall be in breach of
any of their material obligations under this Agreement, the Company shall pay,
or cause to be paid, in same day funds to Parent (x) the Expenses and (y) the
Termination Fee under the circumstances and at the times set forth as follows:
(i) if Parent or Purchaser terminates this Agreement under Section
8.01(d) and, if such termination is because of the withdrawal, modification
or change in the Board's recommendation of the Offer, the Merger or this
Agreement, and if prior to the time of such withdrawal, modification or
change, a Takeover Proposal shall have been made (other than a Takeover
Proposal made prior to the date hereof), the Company shall pay the Expenses
and the Termination Fee upon demand;
(ii) if the Company terminates this Agreement under Section 8.01(e),
the Company shall pay the Termination Fee concurrently with such
termination and the Expenses upon demand;
(iii) if Parent or Purchaser terminates this Agreement under Section
8.01(c) and at the time of any such termination, a Takeover Proposal shall
have been made (other than a Takeover Proposal made prior to the date
hereof), (x) the Company shall pay the Expenses upon demand, and (y) if
concurrently therewith or within nine months thereafter (A) the Company
enters into a merger agreement, acquisition agreement or similar agreement
with respect to a Takeover Proposal, or a Takeover Proposal is consummated,
involving any party (1) with whom the Company had any discussions with
respect to a
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Takeover Proposal, (2) to whom the Company furnished information with
respect to or with a view to a Takeover Proposal or (3) who had submitted a
proposal or expressed any interest publicly in a Takeover Proposal, in the
case of each of clauses (1), (2) and (3), after April 28, 1999 and prior to
such termination, or (B) the Company enters into a merger agreement,
acquisition agreement or similar agreement with respect to a Superior
Proposal, or a Superior Proposal is consummated, then, in the case of
either (A) or (B) above, the Company shall pay the Termination Fee upon the
earlier of the execution of such agreement or upon consummation of such
Takeover Proposal or Superior Proposal.
SECTION 8.04 Amendment. Subject to applicable Law, this Agreement may
be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the transactions contemplated by this Agreement by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share or Nonvoting Share shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time, subject
to Section 6.03(c), any party hereto may (i) extend the time for the performance
of any obligation or other act of any other party hereto, (ii) waive any
inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any agreement
or condition contained herein which may be legally waived. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and Section 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(b), 6.10, 8.02, 8.03 and
Article IX shall survive termination indefinitely.
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SECTION 9.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt or refusal by the addressee
thereof) by delivery in person, by a recognized overnight courier, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
if to Parent or Purchaser:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
if to the Company:
Pamida Holdings Corporation
8800 F Street
Omaha, NE 68127
Attention: Steven F. Fishman
with a copy to:
Abrahams Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, NE 68114
Attention: Howard J. Kaslow
and
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke
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SECTION 9.03 Certain Definitions; Interpretation. (a) For purposes
of this Agreement, the following terms have the meaning specified in this
Section 9.03 and shall be equally applicable to both the singular and plural
forms:
"affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner" with respect to any Shares or Nonvoting Shares
means a person who shall be deemed to be the beneficial owner of such Shares or
Nonvoting Shares (i) that such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) that such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) that are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
or person with whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any Shares or Nonvoting Shares.
"business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining
a date when any payment is due, any day on which banks are not required or
authorized to close in the City of New York.
"Continuing Director" means (i) any member of the Board of Directors
of the Company as of the date hereof, or (ii) any successor of a Continuing
Director who is (A) unaffiliated with, and not a designee or nominee, of Parent
or Purchaser, and (B) recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board of Directors of the Company, and
in each case under clauses (i) and (ii), who is not an employee of the Company.
"control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
"Copyrights" means United States and foreign copyrights, copyrightable
works, and mask works, whether registered or unregistered, and pending
applications to register the same.
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"Expenses" means documented reasonable out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all reasonable fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to Parent.
"Intellectual Property" means Copyrights, Patent Rights, Trademarks
and Trade Secrets.
"Patent Rights" means United States and foreign patents, patent
applications, patent or invention disclosures, and improvements thereto,
continuations, continuations-in-part, divisions and reissues.
"person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or government,
political subdivision, agency or instrumentality of a government.
"Representative" means, with respect to any person, such person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such person or its
subsidiaries).
"Software" means computer software programs and software systems,
including all databases, compilations, tool sets, compilers, higher level or
"proprietary" languages, related documentation and materials and all updates,
enhancements, modifications and derivative works thereto, including in source
code and object code form.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent, Purchaser or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more intermediaries.
"Superior Proposal" means a bona fide proposal by a Third Party that
was not solicited or initiated, or encouraged, directly or indirectly, by the
Company, any of the Subsidiaries or any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of the Subsidiaries, except as and to the extent permitted by Section
6.05, to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than a majority of the Shares then outstanding or all or
substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Board determines in good faith to be more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger (after
receiving advice from the Company's independent financial advisor that the value
of the consideration provided for in such proposal is fair from a financial
point of view to the holders
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of Shares and Nonvoting Shares), for which financing, to the extent required, is
then committed or which, in the good faith judgment of the Board, based on
advice from the Company's independent financial advisor, is reasonably capable
of being financed by such third party and which, in the good faith judgment of
the Board is reasonably likely to be consummated within a period of time not
materially longer in duration than the period of time reasonably believed to be
necessary to consummate the Offer and Merger, it being understood that a tender
offer with terms and conditions substantially similar to those set forth herein
will satisfy the requirement above with respect to the time period within which
such tender offer must be consummated.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any person other than Parent, Purchaser or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as defined
under Rule 13(d) of the Exchange Act) of all or a material portion of the assets
of the Company or any of its material Subsidiaries or 30% or more of any class
of equity securities of the Company or any of its material Subsidiaries pursuant
to a merger, consolidation or other business combination, sale of shares of
capital stock, sale of assets, tender offer, exchange offer or similar
transaction with respect to either the Company or any of its material
Subsidiaries, including any single or multi-step transaction or series of
related transactions contemplated by this Agreement, which is structured to
permit such Third Party to acquire beneficial ownership of any material portion
of the assets of or 30% or more of the equity interest in either the Company or
any of its material Subsidiaries.
"Tax" means all federal, state, local or foreign taxes, fees, duties,
tariffs, levies, imposts, or other charges of any kind (together with any
interest, penalties, additions to tax or additional amounts imposed by any
taxing authority with respect thereto), including (i) taxes or other charges on
or with respect to income, franchise, gross receipts, property, sales, use,
profits, capital stock, payroll, employment, social security, workers
compensation, unemployment compensation or net worth, taxes or charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added or gains
taxes; license registration and documentation fees; and customs duties, tariffs
and similar charges of any kind whatsoever, and (ii) any joint, consolidated,
combined, unitary or transferee liability in respect of taxes or any liability
for taxes imposed by tax sharing, tax indemnity or similar agreement, contract
or arrangement.
"Tax Return" means any report, return, document, declaration or any
other information or filing required to be supplied to any taxing authority with
respect to Taxes.
"Termination Fee" means $5 million.
"Trademarks" means United States, state and foreign trademarks,
service marks, logos, designs, slogans, symbols, trade dress, trade names and
Internet domain names, and other source-identifying designations or devices, and
any combinations or variations thereof, whether registered or unregistered, and
pending applications to register any of the foregoing.
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<PAGE>
"Trade Secrets" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, discoveries, inventions, formulae, reports, data,
customer lists, mailing lists, business plans, or other proprietary information.
(b) Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, then all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05 Entire Agreement, Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes, except for the Stockholder Agreements and as set forth in
Section 6.04(b), all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Purchaser may assign all or any of its rights and obligations hereunder to
any wholly owned subsidiary of Parent provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations.
SECTION 9.06 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.07 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity. Any proceeding to seek specific performance shall be
brought exclusively in the Delaware Chancery Court, such remedy being in
addition to any other remedy to which any party is entitled at law or in equity.
Each party hereto waives any right to a trial by jury in connection with any
such action, suit or proceeding and waives any objection based on forum non
conveniens or any other objection to venue thereof.
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SECTION 9.08 Waiver of Jury Trial. To the extent permitted by
applicable law, the parties hereby irrevocably waive any and all rights to trial
by jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
SECTION 9.09 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 9.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.12 Certain Undertakings by Parent. Parent shall be
responsible for the performance of, and, if necessary, shall perform, or cause
to be performed each obligation of Purchaser or the Surviving Corporation, or
either of their permitted successors and assigns, under this Agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SHOPKO STORES, INC.
By: /s/ William J. Podany
-------------------------------------
Name: William J. Podany
Title: President and Chief Executive
Officer
SHOPKO MERGER CORP.
By: /s/ William J. Podany
------------------------------------
Name: William J. Podany
Title: President and Chief Executive
Officer
PAMIDA HOLDINGS CORPORATION
By: /s/ Steven S. Fishman
------------------------------------
Name: Steven S. Fishman
Title: Chairman of the Board and Chief
Executive Officer
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ANNEX A
CONDITIONS OF THE OFFER
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Merger (the "Agreement") of which this
Annex A is a part. Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any Shares tendered pursuant to the Offer, and may amend the
Offer consistent with the terms of the Agreement or terminate the Offer and not
accept for payment any tendered Shares, if (i) the Minimum Condition shall not
have been satisfied, (ii) any applicable waiting period under the HSR Act has
not expired or been terminated (the "HSR Condition"), or (iii) at any time on or
after the date of the Agreement and prior to the acceptance for payment of
Shares, any of the following events shall occur and be continuing:
(a) there shall be threatened or pending any suit, action or
proceeding by a federal, state, or foreign governmental entity (i) seeking to
prohibit or impose any material limitations on the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material portion of
the businesses or assets of the Company and its subsidiaries taken as a whole,
or Parent and its subsidiaries, taken as a whole, (ii) seeking to compel the
Company or Parent to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, (iii) challenging the acquisition
by Parent or Purchaser of any Shares pursuant to the Offer or the Stockholder
Agreements, (iv) seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Agreement or the Stockholder Agreements (including the
voting provisions thereunder), (v) seeking to obtain from the Company or any
Subsidiary any damages that would be reasonably likely to have a Material
Adverse Effect, (vi) seeking to impose material limitations on the ability of
Purchaser or Parent, or rendering Purchaser unable, to accept for payment, pay
for or purchase some or all of the Shares pursuant to the Offer or the
Stockholder Agreements and the Merger, (vii) seeking to impose material
limitations on the ability of Purchaser effectively to exercise full rights of
ownership of the Shares, including the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, or (viii) which
otherwise would have a Material Adverse Effect on the Company or, as a result of
the Offer or the Merger, a material adverse effect on Parent and its
subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any governmental
entity, other than the application to the Offer or
A-1
<PAGE>
the Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (viii) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or in the Nasdaq National Market System, for a period in
excess of three hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iii) any limitation by any United States governmental authority or agency that
has a material adverse effect generally on the extension of credit by banks or
other financial institutions, or (iv) in the case of any of the situations in
clauses (i) through (iii) inclusive, existing on the date hereof, a material
acceleration or worsening thereof; or
(d) the representations and warranties of the Company set forth in
the Agreement shall not be true and accurate as of the date of consummation of
the Offer as though made on or as of such date (except for those representations
and warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period) or the Company shall have breached or
failed to perform or comply with any obligation, agreement or covenant required
by the Agreement to be performed or complied with by it except, in each case
where the failure of such representations and warranties to be true and
accurate, or the failure to perform or comply with such obligations, agreements
or covenants, do not, individually or in the aggregate, have a Material Adverse
Effect on the Company or a materially adverse effect on the ability to
consummate the Offer or the Merger; or
(e) there shall have occurred any events or changes which have had or
would reasonably be expected to have or constitute, individually or in the
aggregate, a Material Adverse Effect on the Company; or
(f) the Board (i) shall have withdrawn, or modified or changed in a
manner adverse to Parent or Purchaser (including by amendment of the Schedule
14D-9) its recommendation of the Offer, the Merger or the Agreement, (ii) shall
have recommended a Takeover Proposal or (iii) shall have adopted any resolution
to effect any of the foregoing; or
(g) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or announced its intention to
acquire beneficial ownership (as determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of the Shares, or 399 Venture Partners,
Inc. or its affiliates or any group of which any of them is a member shall have
increased or announced its intention to increase its beneficial ownership of
Shares by more
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<PAGE>
than 1%; provided that the conversion of Nonvoting Shares into Shares shall not
be an increase in the beneficial ownership of Shares.
(h) any party to any of the Stockholder Agreements other than Parent
or Purchaser shall have breached or failed to perform any of its agreements
under such agreement or breached any of its representations and warranties in
such agreements or any such agreements shall not be valid, binding and
enforceable, except for such breaches or failures or failures to be valid,
binding and enforceable that do not materially and adversely affect the benefits
expected to be received by Parent or Purchaser under the Stockholder Agreements;
or
(i) the Agreement shall have been terminated in accordance with its
terms; which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser not otherwise in breach of the Agreement) giving rise to such
condition makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived by Parent or Purchaser, in whole or in part, at any
time and from time to time, in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
A-3
<PAGE>
EXHIBIT A
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance,
<PAGE>
rule or regulation applicable to the Stockholder or to the Stockholder's
property or assets. Except for informational filings with the SEC, no
consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic, foreign or
supranational, is required by or with respect to the Stockholder in
connection with the execution and delivery of this Agreement or the
consummation by the Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate,
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<PAGE>
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the
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<PAGE>
Board has adopted a resolution to effect any of the foregoing, as
provided in paragraph f(iii) of Annex A to the Merger Agreement, if
prior to the time of such withdrawal, modification or change or the
adoption of such resolution, a Takeover Proposal (as defined in the
Merger Agreement) shall have been made (other than a Takeover Proposal
made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section
8.01(e) thereof (the termination described in clauses (i), (ii) and
(iii) being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum
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<PAGE>
non conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
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<PAGE>
(c) if to Stockholder, to:
[Name]
[Address]
with a copy (which shall
not constitute notice) to:
[Name]
[Address]
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take
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<PAGE>
an action consistent herewith or required hereby, the validity, legality
and enforceability of the remaining provisions and obligations contained or
set forth herein shall not in any way be affected or impaired thereby,
unless the foregoing inconsistent action or the failure to take an action
constitutes a material breach of this Agreement or makes the Agreement
impossible to perform in which case this Agreement shall terminate. Except
as otherwise contemplated by this Agreement, to the extent that a party
hereto took an action inconsistent herewith or failed to take action
consistent herewith or required hereby pursuant to an order or judgment of
a court or other competent authority, such party shall incur no liability
or obligation unless such party did not in good faith seek to resist or
object to the imposition or entering of such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
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<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: ___________________________________
Name:
Title:
SHOPKO MERGER CORP.
By: ___________________________________
Name:
Title:
STOCKHOLDER
___________________________________
Name:
Number of Shares owned by the Stockholder on the date
hereof:
_________
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
_________
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<PAGE>
EXHIBIT B
STOCKHOLDER AND PURCHASE AGREEMENT
----------------------------------
STOCKHOLDER AND PURCHASE AGREEMENT (this "Agreement"), dated as of May
10, 1999, among ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo
Merger Corp., a Delaware corporation and a wholly owned subsidiary of Parent
("Purchaser"), and the undersigned stockholder (the "Stockholder") of Pamida
Holdings Corporation, a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares and that number of shares of Nonvoting Common Stock, par value $0.01
per share, of the Company (the "Nonvoting Shares") appearing on the signature
page hereof (such Shares and Nonvoting Shares, as they may be adjusted by any
stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company (each, an "Adjustment Event") being referred to herein as the
"Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Purchase of Shares.
(a) Grant of Option. The Stockholder hereby grants Purchaser an
irrevocable option (the "Option") to purchase all of the Subject Shares for
a purchase price of $11.50 per share (the "Per Share Purchase Price"). The
obligation to pay upon exercise of the Option shall be the joint and
several obligation of Parent and Purchaser. In the event of an Adjustment
Event, the Per Share Purchase Price shall be adjusted appropriately.
(b) Exercisability. Subject to paragraph (c) below, the Option may
be exercised by Purchaser, in whole but not in part, at any time:
<PAGE>
(i) after the termination of the Merger Agreement, if (A) the
Merger Agreement is terminated under Section 8.01(d) thereof because
of the withdrawal, modification or change in the recommendation by the
Board (as defined in the Merger Agreement) of the Offer, the Merger
and the Merger Agreement, as provided in paragraph f(i) of Annex A to
the Merger Agreement, or because the Board has adopted a resolution to
effect any of the foregoing, as provided in paragraph f(iii) of Annex
A to the Merger Agreement, and (B) prior to the time of such
withdrawal, modification or change or the adoption of such resolution,
a Takeover Proposal (as defined in the Merger Agreement) shall have
been made (other than a Takeover Proposal made prior to the date
hereof); or
(ii) after the termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) after the termination of the Merger Agreement under
Section 8.01(e) thereof; or
(iv) after the occurrence of an event described in paragraph (g)
of Annex A to the Merger Agreement.
(the termination described in clauses (i), (ii) and (iii) being referred
to herein as the "Termination Trigger Events").
(c) Termination of Option. The Option shall terminate upon the
earliest of:
(i) the termination of the Merger Agreement pursuant to Section
8.01 thereof, other than a termination that constitutes a Termination
Trigger Event or a termination as a result of the occurrence of an
event described in paragraph (g) of Annex A to the Merger Agreement;
or
(ii) 60 days following any termination of the Merger Agreement
that constitutes a Termination Trigger Event or the occurrence of an
event described in paragraph (g) of Annex A to the Merger Agreement
(or if, at the expiration of such 60-day period the Option cannot be
exercised by reason of any applicable judgment, decree, order, law or
regulation, or because the applicable waiting period under the HSR Act
has not expired or been terminated, 10 business days after such
impediment to exercise shall have been removed or shall have become
final and not subject to appeal, but in no event under this clause
(ii) later than 90 days after the date of termination of the Merger
Agreement); or
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<PAGE>
(iii) the amendment of the Merger Agreement in a manner adverse
to the Stockholder without the Stockholder's consent, which consent
shall not be unreasonably withheld or delayed.
(d) Exercise Notice. If Purchaser wishes to exercise the Option,
Purchaser shall deliver to Company a written notice (an "Exercise Notice").
The closing of the purchase of Subject Shares ("Closing") shall occur at a
place, on a date and at a time designated by Parent in the Exercise Notice
delivered at least two business days prior to the date of the Closing.
(e) Sale. If the Option becomes exercisable upon a Termination
Trigger Event, then, at the option of Purchaser and in lieu of any exercise
of the Option, Purchaser may require the Stockholder to sell the Subject
Shares pursuant to any Takeover Proposal then pending and to remit to
Purchaser with respect to each Subject Share sold the gross proceeds from
such sale less the Per Share Purchase Price. If Purchaser exercises its
rights pursuant to this Section 1(e), then upon such remittance the Option
shall terminate.
(f) Mandatory Exercise of Option. Parent and Purchaser, jointly and
severally, agree to exercise the Option in whole, but not in part, and to
acquire from the Stockholder all of the Subject Shares at the Per Share
Purchase Price (as adjusted in the event of an Adjustment Event)
immediately after the purchase by Purchaser of Shares pursuant to the
Offer, with the Closing with respect to such exercise and acquisition to
take place immediately after the closing of the purchase of Shares pursuant
to the Offer.
2. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and
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<PAGE>
delivery of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares or Nonvoting
Shares other than the Subject Shares.
3. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
(b) Securities Act. The Subject Shares will be acquired in
compliance with, and Purchaser will not offer to sell or otherwise dispose
of any Subject Shares so acquired by it in violation of any of, the
registration requirements of the Securities Act of 1933, as amended.
4. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares that are Shares in
favor of the Merger, the approval of the Merger Agreement and the approval
of the terms thereof and each of the other transactions contemplated by the
Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares that are Shares
against (i) any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction
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<PAGE>
would in any manner impede, frustrate, prevent or nullify the Merger, the
Merger Agreement or any of the other transactions contemplated by the
Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal , or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares that are Shares.
(f) In the event of a Takeover Proposal, the Stockholder shall, as
soon as practicable after receipt of a written request from Parent or
Purchaser (in the sole discretion of Parent or Purchaser) and to the
fullest extent permissible under the Restated Certificate of Incorporation
of the Company, as amended (the "Restated Certificate of Incorporation"),
convert any Nonvoting Shares into Shares pursuant to the terms of Part 4 of
the Restated Certificate of Incorporation, and any Nonvoting Shares so
converted into Shares shall be treated for all purposes as Shares subject
to the terms and restrictions of this Agreement. Notwithstanding the
previous sentence, the Stockholder agrees not to convert any of the
Nonvoting Shares into Shares without the prior written consent of Parent.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
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<PAGE>
6. Termination. This Agreement shall terminate upon the earlier of:
(i) the Effective Time; or (ii) the termination of the Option.
7. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in
the Merger Agreement, all costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto waives any right to a trial
by jury in connection with any such action, suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
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<PAGE>
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(c) if to Stockholder, to:
399 Venture Partners, Inc.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: M. Saleem Muqaddam
with a copy (which shall
not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person
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<PAGE>
other than Parent, Purchaser or the Stockholder, or their permitted
successors or assigns, any rights or remedies under or by reason of this
Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any
way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of
this Agreement or makes the Agreement impossible to perform in which case
this Agreement shall terminate. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not
in good faith seek to resist or object to the imposition or entering of
such order or judgment.
-8-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: ___________________________________
Name:
Title:
SHOPKO MERGER CORP.
By: ___________________________________
Name:
Title:
STOCKHOLDER
By: ___________________________________
Name:
Title:
Number of Shares owned by the Stockholder on the date
hereof:
907,387
-------
Number of Nonvoting Shares owned by the Stockholder on
the date hereof:
3,050,473
---------
-9-
<PAGE>
Exhibit (c)(2)
STOCKHOLDER AND PURCHASE AGREEMENT
----------------------------------
STOCKHOLDER AND PURCHASE AGREEMENT (this "Agreement"), dated as of
May 10, 1999, among ShopKo Stores, Inc., a Wisconsin corporation ("Parent"),
ShopKo Merger Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and the undersigned stockholder (the "Stockholder") of
Pamida Holdings Corporation, a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares and that number of shares of Nonvoting Common Stock, par value $0.01
per share, of the Company (the "Nonvoting Shares") appearing on the signature
page hereof (such Shares and Nonvoting Shares, as they may be adjusted by any
stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company (each, an "Adjustment Event") being referred to herein as the
"Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Purchase of Shares.
(a) Grant of Option. The Stockholder hereby grants Purchaser an
irrevocable option (the "Option") to purchase all of the Subject Shares for
a purchase price of $11.50 per share (the "Per Share Purchase Price"). The
obligation to pay upon exercise of the Option shall be the joint and
several obligation of Parent and Purchaser. In the event of an Adjustment
Event, the Per Share Purchase Price shall be adjusted appropriately.
(b) Exercisability. Subject to paragraph (c) below, the Option may
be exercised by Purchaser, in whole but not in part, at any time:
(i) after the termination of the Merger Agreement, if (A) the
Merger Agreement is terminated under Section 8.01(d) thereof because
of the withdrawal,
<PAGE>
modification or change in the recommendation by the Board (as defined
in the Merger Agreement) of the Offer, the Merger and the Merger
Agreement, as provided in paragraph f(i) of Annex A to the Merger
Agreement, or because the Board has adopted a resolution to effect any
of the foregoing, as provided in paragraph f(iii) of Annex A to the
Merger Agreement, and (B) prior to the time of such withdrawal,
modification or change or the adoption of such resolution, a Takeover
Proposal (as defined in the Merger Agreement) shall have been made
(other than a Takeover Proposal made prior to the date hereof); or
(ii) after the termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) after the termination of the Merger Agreement under Section
8.01(e) thereof; or
(iv) after the occurrence of an event described in paragraph (g)
of Annex A to the Merger Agreement.
(the termination described in clauses (i), (ii) and (iii) being referred to
herein as the "Termination Trigger Events").
(c) Termination of Option. The Option shall terminate upon the
earliest of:
(i) the termination of the Merger Agreement pursuant to Section
8.01 thereof, other than a termination that constitutes a Termination
Trigger Event or a termination as a result of the occurrence of an
event described in paragraph (g) of Annex A to the Merger Agreement;
or
(ii) 60 days following any termination of the Merger Agreement
that constitutes a Termination Trigger Event or the occurrence of an
event described in paragraph (g) of Annex A to the Merger Agreement
(or if, at the expiration of such 60-day period the Option cannot be
exercised by reason of any applicable judgment, decree, order, law or
regulation, or because the applicable waiting period under the HSR Act
has not expired or been terminated, 10 business days after such
impediment to exercise shall have been removed or shall have become
final and not subject to appeal, but in no event under this clause
(ii) later than 90 days after the date of termination of the Merger
Agreement); or
-2-
<PAGE>
(iii) the amendment of the Merger Agreement in a manner adverse
to the Stockholder without the Stockholder's consent, which consent
shall not be unreasonably withheld or delayed.
(d) Exercise Notice. If Purchaser wishes to exercise the Option,
Purchaser shall deliver to Company a written notice (an "Exercise Notice").
The closing of the purchase of Subject Shares ("Closing") shall occur at a
place, on a date and at a time designated by Parent in the Exercise Notice
delivered at least two business days prior to the date of the Closing.
(e) Sale. If the Option becomes exercisable upon a Termination
Trigger Event, then, at the option of Purchaser and in lieu of any exercise
of the Option, Purchaser may require the Stockholder to sell the Subject
Shares pursuant to any Takeover Proposal then pending and to remit to
Purchaser with respect to each Subject Share sold the gross proceeds from
such sale less the Per Share Purchase Price. If Purchaser exercises its
rights pursuant to this Section 1(e), then upon such remittance the Option
shall terminate.
(f) Mandatory Exercise of Option. Parent and Purchaser, jointly and
severally, agree to exercise the Option in whole, but not in part, and to
acquire from the Stockholder all of the Subject Shares at the Per Share
Purchase Price (as adjusted in the event of an Adjustment Event)
immediately after the purchase by Purchaser of Shares pursuant to the
Offer, with the Closing with respect to such exercise and acquisition to
take place immediately after the closing of the purchase of Shares pursuant
to the Offer.
2. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and
-3-
<PAGE>
delivery of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares or Nonvoting
Shares other than the Subject Shares.
3. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
(b) Securities Act. The Subject Shares will be acquired in
compliance with, and Purchaser will not offer to sell or otherwise dispose
of any Subject Shares so acquired by it in violation of any of, the
registration requirements of the Securities Act of 1933, as amended.
4. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares that are Shares in
favor of the Merger, the approval of the Merger Agreement and the approval
of the terms thereof and each of the other transactions contemplated by the
Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares that are Shares
against (i) any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction
-4-
<PAGE>
would in any manner impede, frustrate, prevent or nullify the Merger, the
Merger Agreement or any of the other transactions contemplated by the
Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal , or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares that are Shares.
(f) In the event of a Takeover Proposal, the Stockholder shall, as
soon as practicable after receipt of a written request from Parent or
Purchaser (in the sole discretion of Parent or Purchaser) and to the
fullest extent permissible under the Restated Certificate of Incorporation
of the Company, as amended (the "Restated Certificate of Incorporation"),
convert any Nonvoting Shares into Shares pursuant to the terms of Part 4 of
the Restated Certificate of Incorporation, and any Nonvoting Shares so
converted into Shares shall be treated for all purposes as Shares subject
to the terms and restrictions of this Agreement. Notwithstanding the
previous sentence, the Stockholder agrees not to convert any of the
Nonvoting Shares into Shares without the prior written consent of Parent.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
-5-
<PAGE>
6. Termination. This Agreement shall terminate upon the earlier of:
(i) the Effective Time; or (ii) the termination of the Option.
7. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in
the Merger Agreement, all costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto waives any right to a trial
by jury in connection with any such action, suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
-6-
<PAGE>
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(c) if to Stockholder, to:
399 Venture Partners, Inc.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: M. Saleem Muqaddam
with a copy (which shall
not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person
-7-
<PAGE>
other than Parent, Purchaser or the Stockholder, or their permitted
successors or assigns, any rights or remedies under or by reason of this
Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any
way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of
this Agreement or makes the Agreement impossible to perform in which case
this Agreement shall terminate. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not
in good faith seek to resist or object to the imposition or entering of
such order or judgment.
-8-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: /S/ WILLIAM J. PODANY
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
By: /S/ WILLIAM J. PODANY
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
By: /S/ M. SALEEM MUQADDEM
---------------------------------------------
Name: M. Saleem Muqaddem, 399 Venture Partners,
Inc.
Title:
Number of Shares owned by the Stockholder on the date
hereof:
907,387
---------
Number of Nonvoting Shares owned by the Stockholder on
the date hereof:
3,050,473
-----------
-9-
<PAGE>
Exhibit (c)(3)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for informational filings with the SEC, no consent,
approval, order or
<PAGE>
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, is required by or with
respect to the Stockholder in connection with the execution and delivery of
this Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
-2-
<PAGE>
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the Board has adopted a resolution to
effect any of the foregoing, as provided in paragraph f(iii) of Annex
A to the Merger Agreement, if prior to the time of such withdrawal,
modification or change or the adoption of such resolution, a Takeover
-3-
<PAGE>
Proposal (as defined in the Merger Agreement) shall have been made
(other than a Takeover Proposal made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section
8.01(e) thereof (the termination described in clauses (i), (ii) and
(iii) being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto waives any right to a trial
by jury in connection with any such action, suit or proceeding.
-4-
<PAGE>
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(c) if to Stockholder, to:
L. David Callaway, III
c/o Pamida Holdings Corporation
8800 F Street
Omaha, NE 68127
-5-
<PAGE>
with a copy (which shall
not constitute notice) to:
Abrahams Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, NE 68114
Attention: Howard J. Kaslow
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of
-6-
<PAGE>
the remaining provisions and obligations contained or set forth herein
shall not in any way be affected or impaired thereby, unless the foregoing
inconsistent action or the failure to take an action constitutes a material
breach of this Agreement or makes the Agreement impossible to perform in
which case this Agreement shall terminate. Except as otherwise contemplated
by this Agreement, to the extent that a party hereto took an action
inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability or obligation
unless such party did not in good faith seek to resist or object to the
imposition or entering of such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: /s/ William J. Podany
-----------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
By: /s/ William J. Podany
-----------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
/s/ L. David Callaway, III
--------------------------------------------------
Name: L. David Callaway, III
Number of Shares owned by the Stockholder on the date
hereof:
0
-------------
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
0
-------------
-8-
<PAGE>
Exhibit (c)(4)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for informational filings with the SEC, no consent,
approval, order or
<PAGE>
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, is required by or with
respect to the Stockholder in connection with the execution and delivery of
this Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
----------------------------
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
-2-
<PAGE>
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that Purchaser may assign any
or all of its rights, interests and obligations hereunder, in its sole
discretion, to Parent or, with the consent of the Stockholder, which consent
shall not be unreasonably withheld or delayed, to any direct or indirect wholly
owned subsidiary of Parent. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns and, in the case of the Stockholder,
the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the Board has adopted a resolution to
effect any of the foregoing, as provided in paragraph f(iii) of Annex
A to the Merger Agreement, if prior to the time of such withdrawal,
modification or change or the adoption of such resolution, a Takeover
-3-
<PAGE>
Proposal (as defined in the Merger Agreement) shall have been made
(other than a Takeover Proposal made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section 8.01(e)
thereof (the termination described in clauses (i), (ii) and (iii)
being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
------------------
(a) Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto waives any right to a trial
by jury in connection with any such action, suit or proceeding.
-4-
<PAGE>
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(c) if to Stockholder, to:
Stuyvesant P. Comfort
c/o Alchemy Partners
20 Bedfordbury
London, England WC2N4BL
-5-
<PAGE>
with a copy (which shall
not constitute notice) to:
Abrahams Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, NE 68114
Attention: Howard J. Kaslow
(d) Parties in Interest. This Agreement shall inure to the benefit of
and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
(i) Capitalized Terms. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of
-6-
<PAGE>
the remaining provisions and obligations contained or set forth herein
shall not in any way be affected or impaired thereby, unless the foregoing
inconsistent action or the failure to take an action constitutes a material
breach of this Agreement or makes the Agreement impossible to perform in
which case this Agreement shall terminate. Except as otherwise contemplated
by this Agreement, to the extent that a party hereto took an action
inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability or obligation
unless such party did not in good faith seek to resist or object to the
imposition or entering of such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: /s/ William J. Podany
-----------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
By: /s/ William J. Podany
-----------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
/s/ Stuyvesant P. Comfort
------------------------------------
Name: Stuyvesant P. Comfort
Number of Shares owned by the Stockholder on the date
hereof:
204,067
--------
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
0
-------------
-8-
<PAGE>
Exhibit (c)(5)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets.
<PAGE>
Except for informational filings with the SEC, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic, foreign or supranational, is required by or
with respect to the Stockholder in connection with the execution and
delivery of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate,
-2-
<PAGE>
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares at the request of Purchaser if the Stockholder's tender
is required to enable Purchaser to (i) satisfy the Minimum Condition under
the Merger Agreement or (ii) acquire 90 percent of the outstanding Shares.
4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
-3-
<PAGE>
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the Board has adopted a resolution to
effect any of the foregoing, as provided in paragraph f(iii) of Annex
A to the Merger Agreement, if prior to the time of such withdrawal,
modification or change or the adoption of such resolution, a Takeover
Proposal (as defined in the Merger Agreement) shall have been made
(other than a Takeover Proposal made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section 8.01(e)
thereof (the termination described in clauses (i), (ii) and (iii)
being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the
-4-
<PAGE>
defense, that there is an adequate remedy at law. Each party hereby
irrevocably submits to the exclusive jurisdiction of the Delaware Chancery
Court in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
-5-
<PAGE>
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(c) if to Stockholder, to:
Steven S. Fishman
Pamida Holdings Corporation
8800 F Street
Omaha, NE 68127
with a copy (which shall
not constitute notice) to:
Abrahams Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, NE 68114
Attention: Howard J. Kaslow
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
-6-
<PAGE>
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any
way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of
this Agreement or makes the Agreement impossible to perform in which case
this Agreement shall terminate. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not
in good faith seek to resist or object to the imposition or entering of
such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: /s/ William J. Podany
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
By: /s/ William J. Podany
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
/s/ Steven S. Fishman
---------------------------------------------
Name: Steven S. Fishman
Number of Shares owned by the Stockholder on the date
hereof:
65,798
--------
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
82,124
--------
-8-
<PAGE>
Exhibit (c)(6)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets.
<PAGE>
Except for informational filings with the SEC, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic, foreign or supranational, is required by or
with respect to the Stockholder in connection with the execution and
delivery of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate,
-2-
<PAGE>
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the
-3-
<PAGE>
Board has adopted a resolution to effect any of the foregoing, as
provided in paragraph f(iii) of Annex A to the Merger Agreement, if
prior to the time of such withdrawal, modification or change or the
adoption of such resolution, a Takeover Proposal (as defined in the
Merger Agreement) shall have been made (other than a Takeover Proposal
made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section
8.01(e) thereof (the termination described in clauses (i), (ii) and
(iii) being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in
the Merger Agreement, all costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum
-4-
<PAGE>
non conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
-5-
<PAGE>
(c) if to Stockholder, to:
M. Saleem Muqaddam
c/o 399 Venture Partners, Inc.
399 Park Ave., 14th Floor
New York, NY 10043
with a copy (which shall
not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
-6-
<PAGE>
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any
way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of
this Agreement or makes the Agreement impossible to perform in which case
this Agreement shall terminate. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not
in good faith seek to resist or object to the imposition or entering of
such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
/s/ William J. Podany
By: ___________________________________
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
/s/ William J. Podany
By: ___________________________________
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
/s/ M. Saleem Muqaddam
_______________________________________
Name: M. Saleem Muqaddam
Number of Shares owned by the Stockholder on the date
hereof:
20,000
------
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
0
------
-8-
<PAGE>
Exhibit (c)(7)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets.
<PAGE>
Except for informational filings with the SEC, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic, foreign or supranational, is required by or
with respect to the Stockholder in connection with the execution and
delivery of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate,
-2-
<PAGE>
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign any or all of its rights, interests and obligations hereunder, in its
sole discretion, to Parent or, with the consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed, to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns and, in the case of the
Stockholder, the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the
-3-
<PAGE>
Board has adopted a resolution to effect any of the foregoing, as
provided in paragraph f(iii) of Annex A to the Merger Agreement, if
prior to the time of such withdrawal, modification or change or the
adoption of such resolution, a Takeover Proposal (as defined in the
Merger Agreement) shall have been made (other than a Takeover Proposal
made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section
8.01(e) thereof (the termination described in clauses (i), (ii) and
(iii) being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
(a) Expenses. Except as otherwise expressly provided herein or in
the Merger Agreement, all costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum
-4-
<PAGE>
non conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
-5-
<PAGE>
(c) if to Stockholder, to:
Peter J. Sodini
c/o Pamida Holdings Corporation
8800 F Street
Omaha, NE 68127
with a copy (which shall
not constitute notice) to:
Abrahams Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, NE 68114
Attention: Howard J. Kaslow
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
-6-
<PAGE>
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any
way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of
this Agreement or makes the Agreement impossible to perform in which case
this Agreement shall terminate. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not
in good faith seek to resist or object to the imposition or entering of
such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: /s/ William J. Podany
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
By: /s/ William J. Podany
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
/s/ Peter J. Sodini
-------------------------------------------------
Name: Peter J. Sodini
Number of Shares owned by the Stockholder on the date
hereof:
1,000
-----
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
0
-----
-8-
<PAGE>
Exhibit (c)(8)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as May 10, 1999, among
ShopKo Stores, Inc., a Wisconsin corporation ("Parent"), ShopKo Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the undersigned stockholder (the "Stockholder") of Pamida Holdings Corporation,
a Delaware corporation (the "Company").
WHEREAS, Parent, Purchaser and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Purchaser for any and all shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Purchaser (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of Shares appearing on the signature page hereof (such shares, as they may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event") being referred to
herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets.
<PAGE>
Except for informational filings with the SEC, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic, foreign or supranational, is required by or
with respect to the Stockholder in connection with the execution and
delivery of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no Shares other than
the Subject Shares and owns no shares of Nonvoting Common Stock, par value
$0.01 per share, of the Company.
2. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
(a) Authority. Parent and Purchaser hereby represent and warrant to
the Stockholder that each of Parent and Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser. This
Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser
enforceable in accordance with its terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
----------------------------
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate,
-2-
<PAGE>
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Purchaser or Purchaser's designee or (ii)
enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover
Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or (iii)
enter into any agreement with respect to or approve or recommend any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that Purchaser may assign any
or all of its rights, interests and obligations hereunder, in its sole
discretion, to Parent or, with the consent of the Stockholder, which consent
shall not be unreasonably withheld or delayed, to any direct or indirect wholly
owned subsidiary of Parent. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns and, in the case of the Stockholder,
the heirs, executors and administrators of the Stockholder.
5. Termination. This Agreement shall terminate upon the earliest of
the following events (each a "Termination Event"):
(a) the Effective Time;
(b) the termination of the Merger Agreement pursuant to Section 8.01
thereof, other than:
(i) a termination under Section 8.01(d) thereof because of the
withdrawal, modification or change in the recommendation by the Board
(as defined in the Merger Agreement) of the Offer, the Merger and the
Merger Agreement, as provided in paragraph f(i) of Annex A to the
Merger Agreement, or because the
-3-
<PAGE>
Board has adopted a resolution to effect any of the foregoing, as
provided in paragraph f(iii) of Annex A to the Merger Agreement, if
prior to the time of such withdrawal, modification or change or the
adoption of such resolution, a Takeover Proposal (as defined in the
Merger Agreement) shall have been made (other than a Takeover Proposal
made prior to the date hereof); or
(ii) a termination of the Merger Agreement if the Merger
Agreement is terminated under Section 8.01(d) thereof because of the
Board's recommendation of a Takeover Proposal, as provided in
paragraph f(ii) of Annex A to the Merger Agreement, or because the
Board has adopted a resolution to effect such recommendation, as
provided in paragraph f(iii) of Annex A to the Merger Agreement; or
(iii) a termination of the Merger Agreement under Section 8.01(e)
thereof (the termination described in clauses (i), (ii) and (iii)
being referred to herein as the "Termination Trigger Events");
(c) 60 days following any termination of the Merger Agreement that
constitutes a Termination Trigger Event or the occurrence of an event
described in paragraph (g) of Annex A to the Merger Agreement; or
(d) the amendment of the Merger Agreement in a manner adverse to the
Stockholder without the Stockholder's consent, which consent shall not be
unreasonably withheld or delayed.
6. General Provisions.
------------------
(a) Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Chancery Court in any action, suit
or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such courts
(and waives any objection based on forum
-4-
<PAGE>
non conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, by
recognized national delivery service or sent by certified or registered
mail, postage prepaid, and shall be deemed to be given upon receipt at the
following address, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent, to:
ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
(b) if to Purchaser, to:
ShopKo Merger Corp.
c/o ShopKo Stores, Inc.
700 Pilgrim Way
Green Bay, WI 54307-9060
Attention: Richard D. Schepp
with a copy (which shall
not constitute notice) to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Dennis V. Osimitz
-5-
<PAGE>
(c) if to Stockholder, to:
Frank A. Washburn
c/o Pamida Holdings Corporation
8800 F Street
Omaha, NE 68127
with a copy (which shall
not constitute notice) to:
Abrahams Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, NE 68114
Attention: Howard J. Kaslow
(d) Parties in Interest. This Agreement shall inure to the benefit of
and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Purchaser or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement among the parties 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. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of
a waiver, by an instrument signed on behalf of the party waiving
compliance.
(f) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
-6-
<PAGE>
(i) Capitalized Terms. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any
way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of
this Agreement or makes the Agreement impossible to perform in which case
this Agreement shall terminate. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not
in good faith seek to resist or object to the imposition or entering of
such order or judgment.
7. No Limitations on Actions of the Stockholder as a Director, Officer or
Employee. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require the Stockholder to
take or in any way limit any action that the Stockholder may take to discharge
the Stockholder's duties as a director, officer or employee of the Company,
including fiduciary duties.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Stockholder has
caused this Agreement to be signed by its officer thereunto duly authorized and
the Stockholder has signed this Agreement, all as of the date first written
above.
SHOPKO STORES, INC.
By: /s/ William J. Podany
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
SHOPKO MERGER CORP.
By: /s/ William J. Podany
---------------------------------------------
Name: William J. Podany
Title: President and Chief Executive Officer
STOCKHOLDER
/s/ Frank A. Washburn
---------------------------------------
Name: Frank A. Washburn
Number of Shares owned by the Stockholder on the date
hereof:
13,100
--------
Number of Shares that can be acquired by the
Stockholder upon exercise of options held by the
Stockholder on the date hereof:
21,133
--------
-8-
