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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
SUNSHINE-JR. STORES, INC.
(Name of Subject Company)
SUNSHINE-JR. STORES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
867830101
(CUSIP Number of Class of Securities)
Michael G. Ware
Chief Financial Officer
Sunshine-Jr. Stores, Inc.
109 West 5th Street
P.O. Box 2498
Panama City, Florida 32401
(904) 769-1661
(Name, address and telephone number of person authorized
to receive notices and communications on behalf of the
person(s) filing statement)
Copy to:
T. Malcolm Graham, Esq.
Kirschner, Main, Petrie, Graham, Tanner & Demont
One Independent Drive, Suite 2000
Jacksonville, Florida 32202
(904) 354-4141
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Sunshine-Jr. Stores, Inc., a Florida
corporation (the "Company"). The address of the principal executive offices of
the Company is 109 West 5th Street, Panama City, Florida 32401. The title of the
class of equity securities to which this Statement relates is Common Stock, par
value $.10 per share, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer disclosed in a Tender Offer
Statement on Schedule 14D-1 dated June 19, 1995 (the "Schedule 14D-1"), of EZS
Acquisition Corporation, a Delaware corporation ("Purchaser"), a wholly owned
subsidiary of E-Z Serve Corporation, a Delaware corporation ("Parent"), to
purchase all outstanding Shares at $12.00 per Share, net to the seller in cash
and without interest, upon the terms and conditions set forth in the Purchaser's
Offer to Purchase, dated June 19, 1995 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"), copies of
which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively. The Offer is
being made pursuant to an Agreement and Plan of Merger dated June 15, 1995,
among the Company, Purchaser and Parent (the "Merger Agreement").
The Schedule 14D-1 states that Purchaser's principal executive offices are
located at 2550 North Loop West, Suite 600, Houston, Texas 77092.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) The information set forth under the captions "INTRODUCTION," "Section
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE DEPOSIT AND ESCROW
AGREEMENT; THE SHAREHOLDERS AGREEMENT; OTHER MATTERS," "Section 14. CERTAIN
CONDITIONS OF THE OFFER" and "Section 15. CERTAIN LEGAL MATTERS" in the Offer to
Purchase is incorporated herein by reference.
Pursuant to the Merger Agreement, Parent agreed to cause the Company, after
effectiveness of the Merger (as defined in the Merger Agreement), to honor all
employment, compensatory and employee benefit arrangements with its directors,
officers and key employees in effect as of the date thereof.
In addition, certain contracts, agreements, arrangements or understandings
between the Company or its affiliates and certain of its directors, executive
officers and affiliates are described on pages 2 through 5 and 7 through 9 of
the Company's definitive proxy statement with respect to the Company's Annual
Meeting of Stockholders held on June 2, 1995 (the "Proxy Statement") under the
headings "Security Ownership of Certain Beneficial Owners and Management,"
"Executive Compensation," "Employment Contracts, Termination of Employment and
Change in Control Agreements," "Compensation of Directors" and "Certain
Relationships and Related Transactions." Copies of such portions of such pages
are filed as Exhibit (c)(2) hereto.
Certain information pursuant to Section 14(f) of the Securities Exchange
Act of 1934, as amended, and Rule 14f-1 thereunder is contained in Annex B
hereto.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) At its meeting held on June 15, 1995, the Company's Board of Directors
(the "Board") by unanimous vote determined that the Merger Agreement and the
transactions contemplated thereby, including each of the Offer and the Merger,
are fair to and in the best interests of the holders of the Shares and approved
and adopted the Merger Agreement and the transactions contemplated thereby and
recommended acceptance of the Offer by the stockholders of the Company.
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In reaching their conclusions, the Board considered a number of factors,
including, among other things, the following;
(i) the directors' familiarity with and review of the business,
financial condition, results of operations and prospects of the Company and
the Company's competitive position in its business, as well as general
economic and stock market conditions;
(ii) the terms of the Company's Chapter 11 plan of reorganization,
including restrictions placed on the Company thereunder, and the fact that
the Company is less well capitalized than a number of its competitors, and
the advantages of a combination with Purchaser in enhancing the Company's
growth prospects and competitive position;
(iii) the historical and recent market prices and trading volumes for
the Shares, and the premium represented by the $12.00 payable in the Offer
over such recent market prices;
(iv) the fact that the Offer and the Merger represented the best
transaction available following efforts to solicit interest in the Company,
including the issuance of a June 22, 1994 press release announcing that
holders of approximately 76 percent of the Company's outstanding common
shares had informed the Company that they were seeking to sell their shares
and that the Company was in the process of retaining a financial advisor to
assist it in connection with the possible sale of the Company, together
with the fact that since June 22, 1994, the Company and Hanover Associates
Inc. (one of the Company's financial advisors) have been in contact with
over 25 entities regarding their possible interest in purchasing the
Company and have provided information concerning the Company to
substantially all of these entities;
(vi) the terms of other indications of interest in acquiring the
Company received from other potential purchasers;
(vii) the directors' belief that $12.00 represented the highest price
per Share that could be negotiated with Purchaser, and the assessment of
management and the Board, after consultation with the Company's financial
advisors, as to the likelihood that a third party bidder would be prepared
to pay a significantly higher price for all of the Shares;
(viii) the fact that shareholders of the Company holding approximately
76 percent of the outstanding Shares (the "Shareholders") had expressed
their intention to sell their Shares to the Purchaser and the desirability
of a transaction that resulted in all of the Company's stockholders
receiving the same treatment for their Shares;
(ix) the presentation of NationsBanc Capital Markets, Inc.
("NationsBanc"), which involved various analyses of the Company and its
opinion that the $12.00 per Share consideration to be received by the
stockholders is fair to the Company's stockholders from a financial point
of view as of that date;
(x) the timing of the sale of the Company, and premiums currently
being obtained in comparable transactions;
(xi) the proposed structure of the transaction involving an immediate
cash tender offer for all outstanding Shares to be followed by a merger,
thereby enabling the stockholders to obtain cash for their Shares at the
earliest possible time;
(xii) the terms and conditions of the Merger Agreement, including the
risks of non-consummation; and
(xiii) the terms and conditions of the Shareholders Agreement pursuant
to which the Shareholders have agreed to tender their Shares in the Offer.
The Board also recognized that, while consummation of the Offer and the
Merger will result in all stockholders being entitled to receive $12.00 net in
cash for each of their Shares, it will eliminate the opportunity for current
stockholders to participate in the benefit of increases, if any, in the value of
the
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Company's business and properties following the Merger. Accordingly, the Board
gave consideration to the Company's prospects, as well as its historical results
of operations.
A copy of the written opinion of NationsBanc is included as Annex A hereto.
The written opinion sets forth the information reviewed and the assumptions and
qualifications made by NationsBanc in connection with its opinion, as given
orally and in writing. An affiliate of NationsBanc serves as trustee under the
trust indenture related to the Company's secured notes issued to certain of its
bankruptcy creditors. Shareholders are urged to read the NationsBanc opinion in
its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to letter agreements dated July 8, 1994 and July 7, 1994
(collectively, the "Engagement Letters"), the Company retained Hanover
Associates Inc. ("Hanover") and NationsBanc (collectively, the "Financial
Advisors") to render financial advisory services to the Company. For its
services pursuant to its Engagement Letter, the Company paid NationsBanc an
initial fee of $25,000 and $145,000 upon rendering of the fairness opinion. In
the Engagement Letter with Hanover the Company also agreed that, upon the
consummation of an acquisition of at least 50% of the Shares, a merger or
consolidation of the Company with another person or the acquisition by another
person of substantially all of the assets of the Company (any such transaction,
a "Combination Transaction"), the Company would pay Hanover an amount equal to
1.357% of the aggregate amount of (i) consideration received by the Company
and/or its shareholders, plus (ii) the amount of any debt assumed in connection
with the Combination Transaction, less (iii) the amount of the Company's cash
and marketable securities on the closing date, less (iv) the $100,000 aggregate
initial fees, less (v) the fees paid to NationsBanc. The Company has also agreed
to reimburse the Financial Advisors for the reasonable fees and disbursements of
the Financial Advisors' counsel and all of the Financial Advisors' reasonable
travel and other out-of-pocket expenses incurred in connection with any actual
or proposed transaction or otherwise arising out of the Financial Advisors'
engagement. The Company has also agreed to indemnify the Financial Advisors
against certain expenses and liabilities incurred in connection with their
engagement.
Neither the Company nor any person acting on its behalf currently intends
to employ, retain or compensate any other person to make solicitations or
recommendations to stockholders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past sixty days, no transaction in the Shares has been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, director or affiliate of the Company.
(b) To the best of the Company's knowledge, all of its executive officers
and directors presently intend to tender to Purchaser pursuant to the Offer all
Shares which are held of record or beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
On June 15, 1995, Parent, Purchaser and the Company entered into the Merger
Agreement. A description of the Merger Agreement is incorporated by reference
into Item 3(b).
No negotiation is presently being undertaken or is presently underway by
the Company in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company, (ii) a purchase, sale or transfer of a material amount of assets by the
Company, (iii) a tender offer for or other acquisition of securities by or of
the Company, or (iv) any material change in the present capitalization or
dividend policy of the Company.
Except as described in Items 3(b) and 4, there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer, which relate to or would result in one or more of the matters referred to
in this Item 7.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Inapplicability of Certain Florida Business Corporation Act ("FBCA")
Provisions. As described in Item 4(a), at a meeting held on June 15, 1995, the
Board of Directors approved the Offer, the Merger Agreement and the Merger. Such
approval renders Section 607.0901 of FBCA inapplicable with respect to the
Merger. Section 607.0901 of the FBCA requires that certain business combinations
be approved by the vote of two-thirds of disinterested stockholders. Such
approval also renders inapplicable Section 607.0902 of the FBCA to the Offer and
the Merger. Among other things, Section 607.0902 of the FBCA restricts the
voting rights, pending stockholder approval, of shares acquired in control share
acquisitions in which a person acquires 20% or more of a corporation's shares or
increases its holdings to or above 33 1/3% or 50% of a corporation's shares.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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99.*(a)(1) -- Offer to Purchase, dated June 19, 1995
99.*(a)(2) -- Letter of Transmittal
99. (a)(3) -- Text of Press Release issued by the Company and Purchaser, dated June
15, 1995
99. (a)(4) -- Summary advertisement as published on June 19, 1995
99. (a)(5) -- Opinion of NationsBanc Capital Markets, Inc. dated June 15, 1995
(included in Annex A to this Schedule 14D-9).
99. (a)(6) -- Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees
from the Information Agent.
99. (a)(7) -- Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Nominees.
99. (c)(1) -- Agreement and Plan of Merger, dated as of June 15, 1995, between the
Company, Purchaser and Parent
99. (c)(2) -- Shareholders Agreement, dated June 15, 1995
99. (c)(3) -- Escrow Agreement dated June 15, 1995 among the Company, Parent and
Continental Stock Transfer and Trust Company
99. (c)(4) -- Pages 2 through 5 and 7 through 9 of the Proxy Statement
99. (c)(5) -- Confidentiality Agreement, dated as of January 29, 1993 between
Parent (as assignee of E-Z Serve Management Company) and the Company,
as amended by letter agreement dated June 14, 1995.
99. (c)(6) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 4,
1987, is incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992 (the
"1992 10-K").
99. (c)(7) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 4,
1987, is incorporated by reference to Exhibit 10.2 to the Company's
1992 10-K.
99. (c)(8) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 19,
1971, and Extension or Renewal Agreement dated March 8, 1991, are
incorporated by reference to Exhibit 10.4 to the 1992 10-K.
99. (c)(9) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 19,
1971, and Extension or Renewal Agreement dated March 8, 1991, are
incorporated by reference to Exhibit 10.5 to the 1992 10-K.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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99. (c)(10) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated August 5,
1971, and Extension or Renewal Agreement dated September 23, 1991,
are incorporated by reference to Exhibit 10.6 to the 1992 10-K.
99. (c)(11) -- Employment Agreement between the Company and Ron M. Shouse dated
April 28, 1994, as amended as of July 12, 1994.
99. (c)(12) -- Retention Agreement between the Company and Michael G. Ware dated
July 12, 1994, as amended.
</TABLE>
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* Included in materials mailed to stockholders.
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SIGNATURE
After reasonable 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.
SUNSHINE-JR. STORES, INC.
By: /s/ MICHAEL G. WARE
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Name: Michael G. Ware
Title: Senior Vice President and
Chief Financial Officer
Dated: June 19, 1995
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ANNEX A
[NATIONSBANK LOGO]
June 15, 1995
The Board of Directors
Sunshine-Jr. Stores, Inc.
109 West Fifth Street
Panama City, Florida 32402
Ladies and Gentlemen:
You have asked our opinion as investment bankers as to the fairness, from a
financial point of view, to the holders of the shares of common stock, $.10 par
value per share (the "Common Stock"), of Sunshine-Jr. Stores, Inc., a Florida
corporation ("SJS" or the "Company"), of the consideration to be paid in
connection with the transaction in which E-Z Serve Corporation, a Delaware
corporation ("Parent"), through its wholly-owned subsidiary, EZS Acquisition
Corporation, a Delaware corporation ("Purchaser"), proposes to acquire 100% of
the outstanding shares of the Common Stock for consideration of $12.00 per share
in cash (the "Transaction").
Pursuant to the terms of the Agreement and Plan of Merger (the "Merger
Agreement") among SJS, Parent and Purchaser dated June 15, 1995, Purchaser will,
and Parent will cause Purchaser to, commence a tender offer, subject to certain
terms and conditions, to acquire all the outstanding shares of the Common Stock
for $12.00 per share, net to the seller in cash (the "Tender Offer"), and
thereafter Purchaser, subject to certain terms and conditions and in accordance
with the Florida Business Corporation Act and the Delaware General Corporation
Law, will merge with and into SJS, whereupon, among other things, each then
outstanding share of Common Stock shall be converted into the right to receive
$12.00 per share or any higher price paid in the Tender Offer, net to the seller
in cash. As a condition to the willingness of Parent and Purchaser to enter into
the Merger Agreement, certain shareholders of SJS, Leona J. Lewis, Luther D.
Lewis, Jr., Lana Jane Lewis-Brent, Donna Sue Raines, Paul Brent and American
Financial Corporation (collectively, the "Majority Shareholders") have entered
into a Shareholders Agreement (the "Shareholders Agreement") with the Parent and
Purchaser dated June 15, 1995, pursuant to which the Majority Shareholders have
agreed to, subject to certain terms and conditions, immediately after the
commencement of the Tender Offer, but no later than the close of business on the
third business day after the commencement of the Tender Offer, tender and not
withdraw (and sell upon payment for), pursuant to and in accordance with the
terms of the Tender Offer, all of their respective shares of the Common Stock.
In arriving at our opinion we have reviewed and analyzed, among other
things, the following:
(i) the Merger Agreement and the Shareholders Agreement and considered
the terms and provisions included therein;
(ii) the Annual Reports on Form 10-K of the Company for the fiscal
years ended December 31, 1992, December 30, 1993 and December 29, 1994;
(iii) the quarterly report on Form 10-Q of the Company for the
quarterly period ended March 30, 1995;
(iv) the Second Amended Disclosure Statement With Respect To The
Second Amended Plan of Reorganization Under Chapter 11, Title 11, United
States Code, Proposed By And For Sunshine-Jr. Stores, Inc. d/b/a Sunshine
Supermarkets d/b/a Jr. Food Stores and Exhibits dated March 3, 1994;
(v) certain financial information concerning the business, operations,
assets and prospects of the Company, including financial forecasts and
projections, furnished to us by the senior management of the Company for
purposes of our analysis;
(vi) internal unaudited financial statements of the Company for the
twelve months ended December 29, 1994 provided by management of the Company
and compared such data to the Company's previously provided forecast for
such period;
(vii) reported historical share prices and trading volumes of the
Common Stock;
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(viii) certain publicly available financial and operating data and
stock market performance data of publicly-traded companies we deemed
generally comparable to the Company; and
(ix) to the extent data were publicly available, the terms of
acquisition transactions involving companies we deemed were generally
comparable to the Company.
We have also conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
We have participated in meetings with certain officers and representatives
of the Company and its counsel to discuss the foregoing, including in
particular, certain financial information with respect to the future prospects
of the Company. We have also taken into account our assessment of general
economic, market and financial conditions, as well as our experience in
connection with similar transactions and securities valuation generally.
In the course of our review and in arriving at our opinion, we have, with
your permission, assumed and relied upon the accuracy and completeness of the
financial and other information provided to us by the Company. We have also
relied upon specific representations of management of the Company with respect
to the current and future business prospects of the Company. We have also
assumed that the consideration and material terms of the Transaction will not
change from those set forth in the drafts of the Merger Agreement and
Shareholders Agreement dated June 13, 1995 reviewed by us. We have also assumed
that the unaudited financial statements of the Company for the period ended and
as of March 30, 1995 conform in all material respects to generally accepted
accounting principles and have been prepared in a manner consistent with prior
audited financial statements. With respect to financial forecasts and
projections, we have assumed that they have been reasonably prepared on bases
reflecting management's best currently available estimates and judgments of the
future financial performance of the Company. We have not independently verified
the information upon which we have relied, and we have relied on the assurances
of management of the Company that they are unaware of any material facts that
would make the information provided to us incomplete or misleading. We have not
assumed any responsibility for making, or obtained, any independent evaluations
or appraisals of the properties, assets or facilities of the Company, and we
have not been furnished with any such evaluations or appraisals.
Our opinion is further limited by the terms of our engagement letter with
the Company dated July 7, 1994. Pursuant to that engagement letter, our services
are rendered solely to the Board of Directors of SJS. SJS did not engage us to,
and we did not, seek to identify potential third party purchasers of the Common
Stock, nor have we acted as an agent or fiduciary of the shareholders of the
Company.
The Company agrees that this opinion (the "Opinion") of NationsBanc Capital
Markets, Inc. ("NCMI") shall be used only by or for: (i) the Board of Directors
of the Company in considering the terms of the Transaction, (ii) the
introduction into evidence and other references in connection with any
litigation relating to the Transaction, and (iii) reproduction of the Opinion in
any tender offer recommendation document, proxy statement or similar disclosure
document concerning the Transaction filed by the Company with the Securities and
Exchange Commission. In the event of such use in any tender offer recommendation
document, proxy statement or similar disclosure document, the Company may also
include references to the Opinion, to NCMI and NCMI's relationship to the
Company, Parent and Purchaser (in each case in such form a NCMI shall reasonably
approve). Other than as contemplated by this paragraph, no opinion or advice
(written or oral) of NCMI shall be used, reproduced, disseminated, quoted or
referred to at any time, in any manner or for any purpose, nor shall any public
references be made to NCMI, except with NCMI's prior written consent, which
consent will not be unreasonably withheld.
Based upon and subject to the foregoing, and subject to the various
assumptions and limitations set forth herein, it is our opinion, that, as of the
date hereof, the consideration to be received by the common shareholders of SJS
in the Transaction, is fair, from a financial point of view, to the common
shareholders of SJS.
Very truly yours,
/s/ NationsBanc Capital Markets, Inc.
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NationsBanc Capital Markets, Inc.
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ANNEX B
INFORMATION PROVIDED PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This information is being furnished in connection with the possible
designation by Purchaser, after completion of the Offer, of persons to be
elected to the Board of Directors of the Company other than at a meeting of
shareholders of the Company.
Capitalized terms not otherwise defined in this Annex B have the meanings
given to them in the Schedule 14D-9 to which this Annex B is attached.
There are no present arrangements or understandings with respect to any
change in the Board of Directors of the Company.
VOTING SECURITIES
The Shares are the only class of voting securities of the Company
outstanding. On June 16, 1995, the Company had outstanding 1,701,650 Shares.
Each Share is entitled to one vote on each matter to come before the meetings of
shareholders, including election of directors.
THE BOARD OF DIRECTORS
GENERAL
The current Board of Directors is divided into three classes. One class of
directors is elected each year at the Annual Meeting of Shareholders. Once
elected, absent their death, resignation, retirement, disqualification or
removal from office, directors serve for terms of three years or until their
successors are duly elected and qualified.
CERTAIN INFORMATION WITH RESPECT TO THE PURCHASER DESIGNEES
Purchaser has provided the Company with the following information regarding
those persons who may be designated as directors of the Company following
consummation of the Offer. The Company assumes no responsibility for the
accuracy or completeness of such information.
Neil H. McLaurin, age 50, has been Chairman of the Board of Directors,
President, and Chief Executive Officer of Parent since October, 1990 and has
been a Director and President of Purchaser since its formation in June, 1995.
From 1988 to 1990, Mr. McLaurin served as a consultant for L.B. Consulting Co.,
an investment company in Houston, Texas.
John T. Miller, age 48, has been Senior Vice President, Chief Financial
Officer, and Secretary of Parent since May, 1989 and has been a Vice President
and Secretary of Purchaser since its formation in June, 1995.
Marion H. Blackman, age 54, has been Senior Vice President of Parent since
November 1990. Prior to joining Parent, Mr. Blackman was Senior Vice President
over construction, environmental and real estate for Coastal Mart, a subsidiary
of Coastal Corporation.
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DIRECTORS OF THE COMPANY
The following lists the Company's current directors and sets forth a brief
description of the business experience of each during the past five years.
Dennis C. Raines, age 47, a director since February 1995, is a private
investor. He was Director of Administrative Services for Big Bend Child Care in
Tallahassee, Florida from March 1991 through December 1991. From November 1990
to March 1991, Mr. Raines was a cost analyst for Rose Printing Co., also located
in Tallahassee, Florida. Mr. Raines' wife is the sister of Ms. Lewis Brent. His
term of office expires in 1996.
Paul W. Martin, Jr., age 44, a director since April 1993, is Chairman of
the Board and a member of the Audit Committee. Mr. Martin has been vice
president of acquisitions and development for U.S. Enterprises, Inc., a venture
capital firm located in St. Petersburg, Florida, since 1985. Mr. Martin is a
member of the Audit and Executive Committees. His term of office expires in
1998.
Clyde M. King, age 75, a director since April 1993, is a pharmacist retired
from King Diversified, Inc., located in Panama City Beach, Florida, with whom he
served since 1964. Mr. King is a member of the Audit Committee. His term of
office expires in 1998.
Lana Jane Lewis-Brent, age 49, a director since April 1993, has been
President of Paul Brent Designer, Inc. in Panama City, Florida since April 1991.
From November 1982 to April 1992, Ms. Lewis-Brent served as President and Chief
Executive Officer of the Company and was also Vice Chairman of the Board of
Directors. Ms. Lewis-Brent is also a director of Tootsie Roll Industries, Inc.
Ms. Lewis-Brent is the sister of Mr. Raines' wife. Her term of office expires in
1996.
Joseph A. Pedoto, age 53, a director since April 1993, has been President
of JLM Financial, Inc., an investment banking and tax planning firm located in
Cincinnati, Ohio for the past four years. Previously, he was Executive Vice
President of the United Dairy Farmers, Inc., also in Cincinnati, Ohio since
1965. United Dairy Farmers, Inc., among other things, operates a chain of
convenience stores. Mr. Pedoto is also a director of Provident BanCorp, Inc.
American Financial Corporation, which owns 349,600 shares of the Company's
Common Stock, is a client of JLM Financial, Inc. Mr. Pedoto is a member of the
Audit, Executive and Compensation Committees. His term of office expires in
1997.
Ron M. Shouse, age 53, a director since August 1993, is President and Chief
Executive Officer of the Company. Mr. Shouse was a Regional Director and General
Manager of Convenient Food Marts, Inc., Ohio Division, from September 1990 to
June 1993. Prior to that he was President of Mini Mart Corporation of Fort
Lauderdale, Florida for over two years. Mini Mart Corporation filed a petition
under Chapter 11 of the U.S. Bankruptcy Code on December 23, 1990. Mr. Shouse is
a member of the Compensation and Executive Committees. His term of office
expires in 1997.
ORGANIZATION OF THE BOARD
The Board of Directors maintains three standing committees: an Audit
Committee, a Compensation Committee and an Executive Committee, which are
described below. Members of these committees are elected annually at the Board
Meeting immediately following the Annual Meeting. Under the Company's Bylaws,
the Board of Directors is authorized to designate other members of the Board to
serve in place of absent members of the Executive Committee. The Board of
Directors does not have a nominating committee.
During the fiscal year ended December 29, 1994, the Board held 13 meetings.
The Audit Committee is composed of directors who are not employees of the
Company. As of June 16, 1995, members of the committee are Paul W. Martin,
Joseph A. Pedoto and Clyde M. King. The Audit Committee held one meeting in
1994. The functions performed by the Audit Committee include reviewing the
management letter submitted by the auditors, recommending to the Board the
engagement or discharge of independent auditors, directing and supervising
investigation into matters relating to audit functions, reviewing the degree of
the adequacy of the Company's system of internal accounting controls and
periodically reviewing leases between the Company and certain of its affiliates.
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As of June 16, 1995, the Compensation Committee is composed of Ron M.
Shouse and Joseph A. Pedoto. The function performed by the Compensation
Committee is to recommend the compensation arrangements of the Company's
officers to the Board of Directors. The Compensation Committee did not meet in
1994.
The Executive Committee has and may exercise all the powers of the Board of
Directors when the Board is not in session, except as limited by the Company's
Articles of Incorporation and Bylaws or by Florida law. The Committee did not
meet in 1994, and as of June 16, 1995, has the following members: Paul W.
Martin, Jr., Ron M. Shouse, and Joseph A. Pedoto.
All members of the Board attended at least 75% of the meetings of the Board
and all committees on which they served in 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Messrs. Pedoto and Shouse served on the Compensation Committee during 1993.
Mr. Shouse is President and Chief Executive Officer of the Company.
COMPENSATION OF THE BOARD
The Company's Directors (other than Messrs. Martin and Shouse) receive for
their services as director a $15,000 annual retainer and $2,000 for each meeting
of the Board attended. For information concerning Messrs. Martin and Shouse, see
the Summary Compensation Table below.
EXECUTIVE OFFICERS
Paul W. Martin, Jr. For information on Mr. Martin see "THE BOARD OF
DIRECTORS -- Directors of the Company."
Ron M. Shouse. For information on Mr. Shouse see "THE BOARD OF
DIRECTORS -- Directors of the Company."
Michael G. Ware, Sr. Vice President and Chief Executive Officer. Mr. Ware
joined the Company in July, 1993. Mr. Ware was the Vice President and Chief
Financial Officer of Farm Stores, Inc. located in Miami, Florida, from December
1987 through October 1993. Farm Stores, Inc. filed a petition under Chapter 11
of the U.S. Bankruptcy Code on December 28, 1990.
12
<PAGE> 13
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the name, address (except for certain directors
and executive officers) and beneficial ownership of the Company's Common Stock
as of June 12, 1995, of (i) each person known to the Company to be the
beneficial owner of more than five percent of its Common Stock, which is the
only class of its outstanding securities entitled to vote, (ii) each director of
the Company, (iii) each executive officer of the Company named in the Summary
Compensation Table located below and (iv) all directors and executive officers
as a group. Unless otherwise noted, all shares are owned directly, with sole
voting and dispositive powers.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
------------------- --------- --------
<S> <C> <C>
5% BENEFICIAL OWNERS:
Leona J. Lewis;........................................... 944,984(1) 55.53%
Luther D. Lewis, Jr.;
Lana Jane Lewis-Brent;
and Donna Sue Raines
(the "Lewis Family Group")
Leona J. Lewis............................................ 944,984(1)(2) 55.53%
100 Cherry Street
Panama City, FL 32401
Luther D. Lewis, Jr....................................... 944,984(1)(3) 55.53%
P.O. Box 27334
Panama City, FL 32411 7334
Lana Jane Lewis-Brent..................................... 944,984(1)(4) 55.53%
(Director) 1216 Dewitt Street
Panama City, FL 32401
Donna Sue Raines.......................................... 944,984(1)(5) 55.53%
2018 Forest Glen Street
Tallahassee, FL 32305 5100
American Financial Corporation............................ 349,600(6) 20.54%
and Carl Lindner,
Chairman of the Board
One East Fourth Street
Cincinnati, OH 45202
Dimensional Fund Advisors, Inc. & DFA Investment
Dimensions Group, Inc................................... 85,400(7) 5.02%
1299 Ocean Avenue,
Suite 650
Santa Monica, CA 90401
OTHER DIRECTORS AND NAMED EXECUTIVE OFFICERS
Clyde M. King, Jr......................................... 0 *
Paul W. Martin, Jr........................................ 0 *
Joseph A. Pedoto.......................................... 0 *
Dennis C. Raines.......................................... 944,984(8) 55.53%
Ron M. Shouse............................................. 0 *
Michael G. Ware........................................... 0 *
Directors and Executive Officers as a group (7 persons)... 944,984(9) 55.53%
</TABLE>
- ---------------
* Less than 1%
(1) This information is obtained from documents provided by the Lewis Family
Group. Pursuant to a stockholders agreement, the members of the Lewis
Family Group agreed (a) to vote their shares of Common Stock collectively
as a block only as the majority may agree or, in the absence of such
agreement, as may be determined through arbitration and (b) not to vote
their shares of Common Stock to either remove any member of the Lewis
Family Group from the Company's Board of Directors or to
13
<PAGE> 14
cause the Company to employ any of the Lewis Family Group or members of
their families. The stockholders agreement was entered into on November 30,
1993, pursuant to a settlement agreement terminating prior litigation among
the members of the Lewis Family Group and others related to the shares
beneficially owned by the Lewis Family Group. Also pursuant to this
settlement agreement, (a) the members of the Lewis Family Group agreed to
sell their stock as a block if the majority may so agree, (b) the members
of the Lewis Family Group agreed to sell their shares pro rata if an offer
accepted by the majority is made to purchase more than fifty percent on the
Company's outstanding Common Stock and to purchase on a pro rata basis less
than all of the shares beneficially owned by the Lewis Family Group and (c)
Mrs. Lewis agreed to transfer, immediately proceeding the sale of the
shares beneficially owned by the Lewis Family Group, 82,500 shares of
Common Stock to each of Ms. Raines and Mr. Lewis. The Lewis Family Group
and American Financial Corporation have agreed to tender their shares in
the Offer. See "Item 3. Identity and Background" in the Schedule 14D-9.
(2) Includes 380,521 shares held directly by Mrs. Lewis.
(3) Includes 215,470 shares held directly by Mr. Lewis.
(4) Includes 134,836 shares held directly by Ms. Lewis Brent and 687 held by
her spouse.
(5) Includes 213,470 shares held directly by Ms. Raines.
(6) This information is obtained from a Statement on Schedule 13D, as amended
to date, filed with the Securities and Exchange Commission. Carl H.
Lindner, Chairman of the Board, Chief Executive Officer and principal
shareholder of American Financial Corporation may be deemed to
beneficially own these shares and to share voting and dispositive power
with respect to these shares. The Lewis Family Group and American
Financial Corporation have agreed to tender their shares in the Offer.
See "Item 3. Identity and Background" in the Schedule 14D-9.
(7) This information is obtained from a Statement on Schedule 13G, as amended
to date, filed by Dimensional Fund Advisors, Inc. with the Securities and
Exchange Commission. Dimensional Fund Advisors, Inc. possesses sole voting
and dispositive power with respect to these shares.
(8) Includes the shares beneficially owned by Ms. Raines, who is Mr. Raines'
spouse. See Note 5 above. Mr. Raines disclaims beneficial ownership of
these shares.
(9) Includes all shares described in Note 1 to this Table.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned by Paul W. Martin,
Jr., Ron M. Shouse and Michael G. Ware for the years indicated. During 1994,
there was no other officer of the Company with salary and bonuses exceeding
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2)
--------------------------- ----- --------- --------- ---------------
<S> <C> <C> <C> <C>
Paul W. Martin, Jr................................ 1994 $120,000 $250,000 $ 174,088(2)
Chairman of the Board........................... 1993 100,000
Ron M. Shouse..................................... 1994 175,000 35,000
President and Chief............................. 1993 116,000
Executive Officer
Michael G. Ware................................... 1994 104,128 25,000
Sr. Vice President.............................. 1993 39,716
and Chief Financial Officer
</TABLE>
- ---------------
(1) Certain of the named executive officers received perquisites and personal
benefits valued at less than 10% of total annual salary and bonus.
(2) Reimbursement of taxes with respect to the bonus.
14
<PAGE> 15
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Mr. Shouse is employed pursuant to an employment contract that provides for
an annual salary of $175,000. In July 1994, the Company entered into a retention
agreement with Mr. Shouse providing for a $35,000 bonus payable upon any change
in control of the Company and providing for one year's severance if Mr. Shouse's
employment is terminated under certain circumstances after a change in control
of the Company.
In July 1994, the Company entered into a retention agreement with Mr. Ware
providing for a $35,000 bonus payable upon any change in control of the Company
and providing for one year's severance if Mr. Ware's employment is terminated
under certain circumstances after a change in control of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of April 14, 1995, 109 of the Company's 205 currently operating
convenience stores are leased. Five of these leased convenience stores are
currently leased from major shareholders or directors of the Company. All five
stores are leased from the L.D. Lewis Realty Co., Inc., a corporation owned by
Leona J. Lewis, her daughter Lana Jane Lewis Brent, and the L.D. Lewis family
trust. Two of these stores are leased for a monthly rental of $500 each with the
leases expiring March 31, 1996. One store has two five year options for renewal,
with rent increasing $125 at each renewal. The other store has three five year
options for renewal, with rent increasing for the first two options at $125 and
the remaining option at $100. One store is leased for a monthly rental of $500
expiring September 30, 1996, with three five year options to renew, with rent
increasing at $100 at each renewal. Two stores are leased for a monthly rental
of $940 each and will expire September 30, 1996 with two five year options for
renewal, with rent increasing $100 at each renewal. Management believes that the
terms of the leases are as favorable as leases which could be obtained from
unaffiliated persons.
COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of the Company's common stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the 'SEC') and the
American Stock Exchange. Officers, directors and persons who own more than ten
percent of the Company's common stock are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during and with respect to 1994 and prior years, except
as previously disclosed, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent shareholders were complied
with.
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------
<S> <C>
99.*(a)(1) -- Offer to Purchase, dated June 19, 1995
99.*(a)(2) -- Letter of Transmittal
99. (a)(3) -- Text of Press Release issued by the Company and Purchaser, dated June
15, 1995
99. (a)(4) -- Summary advertisement as published on June 19, 1995
99. (a)(5) -- Opinion of NationsBanc Capital Markets, Inc. dated June 15, 1995
(included in Annex A to this Schedule 14D-9).
99. (a)(6) -- Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees
from the Information Agent.
99. (a)(7) -- Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Nominees.
99. (c)(1) -- Agreement and Plan of Merger, dated as of June 15, 1995, between the
Company, Purchaser and Parent
99. (c)(2) -- Shareholders Agreement, dated June 15, 1995
99. (c)(3) -- Escrow Agreement dated June 15, 1995 among the Company, Parent and
Continental Stock Transfer and Trust Company
99. (c)(4) -- Pages 2 through 5 and 7 through 9 of the Proxy Statement
99. (c)(5) -- Confidentiality Agreement, dated as of January 29, 1993 between
Parent (as assignee of E-Z Serve Management Company) and the Company,
as amended by letter agreement dated June 14, 1995.
99. (c)(6) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 4,
1987, is incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992 (the
"1992 10-K").
99. (c)(7) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 4,
1987, is incorporated by reference to Exhibit 10.2 to the Company's
1992 10-K.
99. (c)(8) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 19,
1971, and Extension or Renewal Agreement dated March 8, 1991, are
incorporated by reference to Exhibit 10.4 to the 1992 10-K.
99. (c)(9) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated March 19,
1971, and Extension or Renewal Agreement dated March 8, 1991, are
incorporated by reference to Exhibit 10.5 to the 1992 10-K.
99. (c)(10) -- Lease Agreement with L. D. Lewis Realty Co., Inc., dated August 5,
1971, and Extension or Renewal Agreement dated September 23, 1991,
are incorporated by reference to Exhibit 10.6 to the 1992 10-K.
99. (c)(11) -- Employment Agreement between the Company and Ron M. Shouse dated
April 28, 1994, as amended as of July 12, 1994.
99. (c)(12) -- Retention Agreement between the Company and Michael G. Ware dated
July 12, 1994, as amended.
</TABLE>
- ---------------
* Included in materials mailed to stockholders.
<PAGE> 1
EXHIBIT 99.(A)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF COMMON STOCK
OF
SUNSHINE-JR. STORES, INC.
AT $12.00 NET PER SHARE
BY
EZS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
E-Z SERVE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
EASTERN DAYLIGHT TIME, ON JULY 20, 1995,
UNLESS EXTENDED AS PROVIDED HEREIN.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER ALL OF THE
SHARES OF COMMON STOCK, WHICH REPRESENT APPROXIMATELY 76% OF THE SHARES OF
SUNSHINE-JR. STORES, INC. ("COMPANY"), OWNED BY THOSE CERTAIN SHAREHOLDERS OF
THE COMPANY WHO ARE PARTIES TO THE SHAREHOLDERS AGREEMENT AMONG SUCH
SHAREHOLDERS, EZS ACQUISITION CORPORATION ("PURCHASER") AND E-Z SERVE
CORPORATION ("PARENT") ("SHAREHOLDER CONDITION").
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE, APPROVED THE
OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares should either (1) complete and sign a Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver such letter of
Transmittal or facsimile and any other required documents to the Depositary and
either deliver the certificates for such shares to the Depositary along with the
Letter of Transmittal or facsimile or deliver such shares pursuant to the
procedure for book-entry transfer set forth in Section 2, or (2) request such
shareholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder having shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such shareholder desires
to tender such shares.
A shareholder who desires to tender shares and whose certificates for such
shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its address and telephone
number set forth on the back cover of this Offer to Purchase.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
INTRODUCTION............................................................................
1. TERMS OF THE OFFER................................................................
2. PROCEDURE FOR TENDERING SHARES....................................................
3. WITHDRAWAL RIGHTS.................................................................
4. ACCEPTANCE FOR PAYMENT AND PAYMENT................................................
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES...........................................
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES................................
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES,
STOCK QUOTATION AND EXCHANGE ACT REGISTRATION.....................................
8. CERTAIN INFORMATION CONCERNING THE COMPANY........................................
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT...........................
10. SOURCE AND AMOUNT OF FUNDS........................................................
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER................................
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE DEPOSIT
AND ESCROW AGREEMENT; THE SHAREHOLDERS AGREEMENT;
OTHER MATTERS.....................................................................
13. DIVIDENDS AND DISTRIBUTIONS.......................................................
14. CERTAIN CONDITIONS OF THE OFFER...................................................
15. CERTAIN LEGAL MATTERS.............................................................
16. FEES AND EXPENSES.................................................................
17. MISCELLANEOUS.....................................................................
</TABLE>
(i)
<PAGE> 3
TO THE HOLDERS OF SHARES OF
SUNSHINE-JR. STORES, INC.:
INTRODUCTION
EZS Acquisition Corporation, a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of E-Z Serve Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.10 per share (the "Shares"), of Sunshine-Jr. Stores, Inc., a Florida
corporation (the "Company"), at $12.00 per Share (the "Offer Price"), net to the
seller in cash, 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"). Shareholders who tender their Shares will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all fees and expenses of Continental Stock
Transfer & Trust Company, which is acting as the Depositary (the "Depositary"),
and D.F. King & Co., Inc., which is acting as Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE, APPROVED THE
OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
NationsBanc Capital Markets, Inc., one of the Company's financial advisors,
has delivered to the Board of Directors of the Company its written opinion to
the effect that the consideration to be received by the public shareholders of
the Company in the Offer and the Merger is fair to such shareholders from a
financial point of view as of the date of delivery of that opinion. That opinion
is set forth in full as an annex to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to the
shareholders of the Company herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, ALL OF THE
SHARES OF COMMON STOCK, WHICH REPRESENT APPROXIMATELY 76% OF THE SHARES OF THE
COMPANY, OWNED BY THOSE CERTAIN SHAREHOLDERS OF THE COMPANY WHO ARE PARTIES TO
THE SHAREHOLDERS AGREEMENT AMONG SUCH SHAREHOLDERS, PURCHASER AND PARENT
("SHAREHOLDER CONDITION").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 15, 1995 (the "Merger Agreement") among Parent, the Purchaser and the
Company pursuant to which, following consummation of the Offer or the expiration
or termination of the Offer under certain circumstances and the satisfaction or
waiver of certain conditions, the Purchaser will be merged with and into the
Company (the "Merger"), with the Company surviving the Merger as a wholly-owned
subsidiary of Parent. In the Merger, each outstanding Share (other than Shares
owned by Parent, the Purchaser or any other subsidiary of Parent), will be
converted into the right to receive $12.00 in cash or any higher price that may
be paid per Share in the Offer (the "Merger Price") without interest. See
Section 12.
The Merger is subject to a number of conditions, including approval and
adoption of the Merger Agreement and the Merger by the shareholders of the
Company, if such approval and adoption is required by applicable law. Under the
Florida Business Corporation Act (the "FBCA") and the Company's Restated
Certificate of Incorporation, the affirmative vote of holders of a majority of
the outstanding Shares is generally required to approve the Merger. However, in
the event that the Purchaser acquires 80% or more of the outstanding Shares
pursuant to the Offer or otherwise, the Purchaser will, upon the terms and
subject to the conditions of the Merger Agreement, cause the Merger to become
effective without a meeting of the shareholders of the Company in accordance
with the short-form merger provisions of the FBCA.
<PAGE> 4
The Parent has also entered into a separate Shareholders Agreement (the
"Shareholders Agreement") with certain of the Company's shareholders (together,
the "Shareholders") pursuant to which the Shareholders have agreed to tender
(and not withdraw) all Shares held by them pursuant to the Offer and have
granted Purchaser a proxy to vote such Shares, if necessary, for the Merger. The
Shareholders presently hold 1,294,584 Shares, or approximately 76.07% of the
outstanding Shares.
The Company has informed the Purchaser that, as of June 15, 1995, there
were 1,701,650 Shares issued and outstanding and no Shares are issuable upon the
exercise of any stock options. Based upon the foregoing, the Purchaser believes
that 1,361,320 Shares constitute 80% of the Shares. Accordingly, if at least
1,361,320 Shares (including the 1,294,584 Shares subject to the Shareholders
Agreement) are validly tendered and not withdrawn prior to the Expiration Date
(as defined in Section 1) and the Purchaser accepts for payment Shares tendered
pursuant to the Offer, the Purchaser will be able to effect the Merger without
submitting the Merger to the shareholders of the Company for approval.
The Merger Agreement and the Shareholders Agreement are more fully
described in Section 12. Certain federal income tax consequences of the sale of
Shares pursuant to the Offer and the exchange of Shares for the Merger Price
pursuant to the Merger are described in Section 5.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 5:00 p.m., Eastern Daylight time, on July 20, 1995,
unless and until the Purchaser, in its sole discretion, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"), the
Purchaser expressly reserves the right, in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events set forth
in Section 14 shall have occurred or shall have been determined by the Purchaser
to have occurred, (1) to extend the period of time during which the Offer is
open, and thereby delay acceptance for payment of and the payment for any
Shares, by giving oral or written notice of such extension to the Depositary and
(2) to amend the Offer in any other respect by giving oral or written notice of
such amendment to the Depositary. THE PURCHASER SHALL NOT HAVE ANY OBLIGATION TO
PAY INTEREST ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE
PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by 5:00 p.m., Eastern Daylight time, on July 20, 1995 (or any other date
or time then set as the Expiration Date), any or all conditions to the Offer
have not been satisfied or waived, the Purchaser reserves the right (but shall
not be obligated), subject to the terms and conditions contained in the Merger
Agreement and the applicable rules and regulations of the Commission, (1) to
terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering shareholders, (2) to waive all unsatisfied
conditions and, subject to complying with the terms of the Merger Agreement and
the applicable rules and regulations of the Commission, accept for payment and
pay for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (3) extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (4) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-l(d) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., Eastern time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rule
14d-4(c) promulgated under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) promulgated under the Exchange Act, which
require that any material change
2
<PAGE> 5
in the information published, sent or given to shareholders in connection with
the Offer be promptly disseminated to shareholders in a manner reasonably
designed to inform shareholders of that change), and without limiting the manner
in which the Purchaser may choose to make any public announcement, the Purchaser
will not have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of any Shares) is delayed in its acceptance for
payment of or payment for other Shares or is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 3.
Moreover, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 promulgated under
the Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of that bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Shareholder Condition), the Purchaser will
disseminate additional tender offer materials and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 promulgated under the Exchange
Act. The minimum period during which an offer must remain open following
material changes in the terms of that offer or information concerning that
offer, other than a change in price or a change in the percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. With respect to a
change in price or a change in the percentage of securities sought, a minimum
period of 10 business days is generally required to allow for adequate
dissemination to shareholders and investor response. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 promulgated
under the Exchange Act.
Consummation of the Offer is conditioned upon satisfaction of the
Shareholder Condition, the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act") and the other
conditions set forth in Section 14 hereof. The Purchaser has reserved the right
(but shall not be obligated) to waive any or all such conditions. However, if
the Purchaser waives or amends the Shareholder Condition during the last five
business days during which the Offer is scheduled to remain open, the Purchaser
will be required to extend the Expiration Date so that the Offer will remain
open for at least 10 business days after the announcement of such waiver or
amendment is first published, sent or given to holders of Shares.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a shareholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase and either certificates for tendered Shares must be received
by the Depositary at that address or those Shares must be delivered pursuant to
the procedure for book-entry transfer set forth below (and a "Book-Entry
Confirmation" (as defined below) must
3
<PAGE> 6
be received by the Depositary), in each case prior to the Expiration Date, or
(2) the tendering shareholder must comply with the guaranteed delivery procedure
set forth below.
The Depositary will establish an account with respect to the Shares at the
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below) in connection with a book-entry transfer of Shares, and any
other documents required by the Letter of Transmittal, must, in any case, be
transmitted to, and received by, the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery procedure set
forth below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the 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
Purchaser may enforce the Letter of Transmittal against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) tendered therewith and that
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (2) those Shares are tendered for the account of a firm that
is a member of the Medallion Signature Guarantee Program or any other "eligible
guarantor institution", as such term is defined in Rule 17Ad-15 promulgated
under the Exchange Act (each, an "Eligible Institution"). In all other cases,
all signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 in the Letter of Transmittal. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or certificates
for Shares not tendered or not accepted for payment are to be issued to a person
other than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instruction 5 in the Letter of
Transmittal.
4
<PAGE> 7
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and that shareholder's certificates for those Shares are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, that shareholder's tender may
be effected if all the following conditions are met:
(1) the tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to those Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal, are received by the Depositary
within five trading days after the date of execution of that Notice of
Guaranteed Delivery. A "trading day" is any day on which the American Stock
Exchange, Inc. (the "AMEX") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary 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
that Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING PAYMENT FOR SUCH SHARES.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of the Purchaser as
such shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of those Shares on or after June 19, 1995. All such proxies shall be considered
coupled with an interest in the tendered Shares. That appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such shareholder as provided herein. Upon that appointment,
all prior powers of attorney and proxies given by that shareholder with respect
to those Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
those Shares or other securities or rights in respect of any annual, special or
adjourned meeting of the Company's shareholders, or otherwise, as they in their
sole discretion deem proper. The Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of those Shares, the Purchaser must be able
to exercise full voting and other rights with respect to those Shares and other
securities or rights, including voting at any meeting of shareholders then
scheduled.
5
<PAGE> 8
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel be unlawful. The Purchaser also reserves the absolute right to waive any
defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder tendering
Shares in the Offer must provide the Depositary with that shareholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that the TIN is correct and that the shareholder is
not subject to backup withholding. Certain shareholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a shareholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on that shareholder and payment of cash to
that shareholder pursuant to the Offer may be subject to backup withholding of
31%. All shareholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Non-corporate
foreign shareholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase and must
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of those
certificates, the serial numbers shown on those certificates must be submitted
to the Depositary and, unless those Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures set forth in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent 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.
6
<PAGE> 9
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. Any determination
concerning the satisfaction of those terms and conditions will be within the
sole discretion of the Purchaser, whose determination will be final and binding
on all tendering shareholders. See Sections 1 and 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-l(c) promulgated under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer).
The Purchaser plans to file a Notification and Report Form with respect to
the Offer under the HSR Act during the week of June 19, 1995. See Sections 9 and
12. The waiting period under the HSR Act with respect to the Offer will expire
at 11:59 p.m., Eastern Daylight time, on the fifteenth calendar day following
such filing, unless early termination of the waiting period is granted. In
addition, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material. If such a
request is made, that waiting period will expire at 11:59 p.m., Eastern Daylight
time, on the 10th day after substantial compliance with that request. See
Section 15 for additional information concerning the HSR Act and the
applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
those Shares (or timely Book-Entry Confirmation of a transfer of those Shares as
set forth in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and (3) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any shareholder pursuant to the Offer will be the highest
per Share consideration paid to any other shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of those Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering shareholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-l(c) promulgated under the
Exchange Act, which requires that a tender offeror pay the consideration offered
or return the tendered securities promptly after the termination or withdrawal
of a tender offer), the Depositary may, nevertheless, on behalf of the
Purchaser, retain tendered Shares, and those Shares may not be withdrawn except
to the extent tendering shareholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering shareholder (or, in the case of
Shares delivered by book-entry transfer of those Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedure set forth
in Section 2, those Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable after the expiration
or termination of the Offer.
7
<PAGE> 10
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by shareholders of the Company pursuant to the Merger) will be
taxable transactions for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For federal income
tax purposes, a tendering shareholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the shareholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the shareholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer. If tendered Shares are held by a tendering shareholder as capital
assets, gain or loss recognized by the tendering shareholder will be capital
gain or loss, which will be long-term capital gain or loss if the tendering
shareholder's holding period for those Shares exceeds one year.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless that shareholder provides its
TIN and certifies that number is correct or properly certifies that it is
awaiting a TIN. A shareholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each shareholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to that shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO
SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. HOLDERS OF
SHARES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR
TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE,
LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
8
<PAGE> 11
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the AMEX under the symbol "SJS." The following
table sets forth, for each of the periods indicated, the high and low reported
closing sales prices per Share.
<TABLE>
<CAPTION>
SALES PRICE
-----------------
HIGH LOW
---- ---
<S> <C> <C>
1993:
First Quarter (ended April 1).................................. $ 5 1/8 $2 15/16
Second Quarter (ended July 1).................................. 4 1/4 2 1/2
Third Quarter (ended September 30)............................. 4 7/8 2 7/8
Fourth Quarter (ended December 30)............................. 7 1/2 4 5/8
1994:
First Quarter (ended March 29)................................. $11 1/8 $6 1/8
Second Quarter (ended June 29)................................. 10 6 5/8
Third Quarter (ended September 29)............................. 13 7 3/8
Fourth Quarter (ended December 29)............................. 12 8 5/8
1995:
First Quarter (ended March 30)................................. $10 1/2 $8 5/8
Second Quarter (through June 14, 1995)......................... 10 3/4 8 3/4
</TABLE>
On June 15, 1995, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing sale
price of the Shares on the AMEX was $10 1/4 per Share. On June 16, 1995, the
last full day of trading before the commencement of the Offer, the reported
closing sale price of the Shares on the AMEX was $11 3/4 per Share. SHAREHOLDERS
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 29, 1994 (the "1994 Form 10-K"), no dividends were declared by
the Company for 1994 or 1993, and none are expected to be declared during 1995.
The terms of the Company's Trust Indenture dated June 21, 1994, between the
Company and NationsBank of Florida, N.A., as trustee (the "Indenture") prohibit
the payment of dividends until the Company's Class 7 Creditors (as defined in
the Company's Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy
Code (the "Plan of Reorganization")) have been paid in full.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the AMEX for continued inclusion
on the AMEX, which require that (i) an issuer have at least 200,000 shares
publicly held, (ii) there are at least 300 round lot shareholders of record, or
(iii) there is at least $1 million of aggregate market value of shares publicly
held. According to the Company, as of March 28, 1995, the aggregate market value
of the Shares held by nonaffiliates was $3,594,961 and 1,701,650 Shares were
outstanding, of which 407,066 were held by nonaffiliates. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the AMEX for continued inclusion in the AMEX, the market for
Shares could be adversely affected.
If the AMEX were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price quotations would be reported by such exchange or through
the NASDAQ Stock Market or other sources. The extent of the public market
therefor and the availability of such quotations would depend, however, upon
such factors as the number of shareholders and/or the aggregate market value of
such securities remaining at such time, the interest in
9
<PAGE> 12
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration under the Exchange Act as described below, and other
factors. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer Price. The
Purchaser currently intends to seek to cause the Company to be delisted in
accordance with the rules promulgated by the AMEX as soon after consummation of
the Offer as the requirements for such delisting are met.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its shareholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of these securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended, may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for that termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be listed on the AMEX and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The Company is a Florida corporation with its principal executive
offices at 109 West Fifth Street, Panama City, Florida. According to the 1994
Form 10-K, the Company is in the business of operating convenience stores under
the trade name "Jr. Food Stores." As of March 30, 1995, the Company operated 205
convenience stores in five states.
On December 18, 1992, the Company filed a voluntary petition in the U.S.
Bankruptcy Court for the Middle District of Florida (Tampa Division) for
reorganization under Chapter 11 of the Bankruptcy Code. The Company's Plan of
Reorganization, which became effective on June 21, 1994, provides for the
payment of all liabilities outstanding at December 18, 1992, over specified
periods with interest, and allows shareholders to retain their equity interests.
In the process of formulating its Plan of Reorganization, the Company made
a decision to reduce its geographical operating area to a core market area
generally comprising the Florida Panhandle, north-central Florida, southern
Alabama and southern Mississippi. In furtherance of this Plan of Reorganization,
the Company has sold or closed 52 stores since December 31, 1993. The Company's
convenience stores are designed to attract customers on an 18- or 24-hour basis
seven days per week. All stores (with the exception of five) offer self-service
gasoline and merchandise, which includes a selection of food staples,
convenience foods, snacks, tobacco products, soft drinks, beer, wine, dairy
goods and health and beauty aids. In addition, 24 Jr. Food Stores include deli
facilities.
10
<PAGE> 13
In July 1994, the Company's majority shareholders informed the Company of
their intention to sell their shares, and the Company retained financial
advisors to assist it in considering the possible sale of the Company. Since
that time, the Company has engaged in discussions with a number of prospective
purchasers for the Company.
Historical Financial Information. Set forth below is certain selected
financial information with respect to the Company excerpted or derived from the
information contained in the 1994 Form 10-K and the Company's Quarterly Report
on Form 10-Q for the period ended March 30, 1995. More comprehensive financial
information is included in the reports and other documents filed by the Company
with the Commission, and the following summary is qualified in its entirety by
reference to those reports and those other documents and all the financial
information (including any related notes) contained therein. Those reports and
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information."
SUNSHINE-JR. STORES, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS FISCAL YEAR ENDED
ENDED ENDED ------------------------------
3/30/95 3/31/94 12/29/94 12/30/93 12/31/92
------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenue................... $ 37,122 $ 41,059 $166,359 $209,285 $225,727
Income (loss) before
reorganization items and
provision for income
taxes...................... $ (143) $ (91) $ 1,554 $ 2,264 $ (4,960)
Income (loss) before income
taxes...................... $ (261) $ 648 $ 2,858 $ (247) $ (8,635)
Net income (loss)............. $ (261) $ 544 $ 2,558 $ (319) $ (8,735)
Net income (loss) per common
share...................... $ (0.15) $ 0.32 $ 1.50 $ (0.19) $ (5.13)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR ENDED
ENDED -------------------
3/30/95 12/29/94 12/30/93
------------ -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current assets....................................... $ 23,315 $ 24,869 $ 28,693
Total assets......................................... $ 60,162 $ 61,856 $ 57,014
Current liabilities.................................. $ 17,307 $ 18,261 $ 16,515
Liabilities subject to compromise.................... $ 0 $ 0 $ 30,117
Long-term debt (non-current)......................... $ 18,988 $ 19,400 $ 0
Shareholders' equity................................. $ 11,909 $ 12,170 $ 9,612
</TABLE>
Available Information. The Company is subject to the informational
reporting requirements of the Exchange Act and, in accordance therewith, is
required to file reports and other information with the Commission relating to
its business, financial condition and other matters. Information as of
particular dates concerning the Company's directors and officers, their
remuneration, Shares sold to them, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. Those reports, proxy
statements and other information are available for inspection at the public
reference facilities of the Commission located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
11
<PAGE> 14
10048. Copies are obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, a Delaware corporation, was organized to acquire the Company and has not
conducted any unrelated activities since its organization. The principal offices
of the Purchaser and Parent are located at 2550 North Loop West, Suite 600,
Houston, Texas 77092. All shares of capital stock of the Purchaser are owned by
Parent.
At March 26, 1995, Parent, through its wholly-owned subsidiaries, operated
544 and franchised 14 convenience stores, mini-marts and gas marts under the
names of E-Z Serve, Majic Market, Taylor Food Mart, Time Saver and others. The
Company also retails motor fuels at 488 of its convenience stores and at 236
non-company operated retail outlets. In addition to marketing motor fuels,
company operated convenience stores are engaged in retail merchandising of
traditional grocery and non-grocery lines associated with such stores. All of
the stores are located in the southern United States, with the largest portion
in Texas, Georgia, Louisiana and Florida.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted or derived from the information
contained in Parent's Annual Report on Form 10-K for the fiscal year ended
December 25, 1994, and Quarterly Report on Form 10-Q for the period ended March
26, 1995. Parent is subject to the periodic informational reporting requirements
of the Exchange Act. More comprehensive financial information is included in the
reports and other documents filed by Parent with the Commission, and the
following summary is qualified in its entirety by reference to those reports and
those other documents and all the financial information (including any related
notes) contained therein.
E-Z SERVE CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS FISCAL YEAR ENDED
ENDED ENDED ------------------------------
3/26/95 3/27/94 12/25/94 12/26/93 12/27/92
------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total Revenues................ $148,402 $133,660 $563,191 $605,595 $434,314
Net Income (loss)............. $ 609 $ 56 $ 5,087 $ 16,881 $(25,664)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR ENDED
ENDED -------------------
3/26/95 12/25/94 12/26/93
------------ -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current assets..................................... $ 53,184 $ 45,951 $ 44,112
Total assets....................................... $166,148 $127,861 $126,645
Current liabilities................................ $ 44,841 $ 38,377 $ 44,655
Long-term debt..................................... $ 44,799 $ 14,652 $ 15,892
</TABLE>
Neither the Purchaser nor Parent (collectively, the "Corporate Entities")
or, to the best knowledge of the Corporate Entities, any of the persons listed
in Schedule I attached hereto, or any associate or majority-owned
12
<PAGE> 15
subsidiary of the Corporate Entities, beneficially owns any equity security of
the Company, and neither of the Corporate Entities nor, to the best knowledge of
the Corporate Entities, any of the other persons referred to above, nor any of
the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as described in this Offer to Purchase, there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I attached hereto, on the one
hand, and the Company or any of its directors, officers or affiliates, on the
other hand, that are required to be disclosed pursuant to the rules and
regulations of the Commission and none of the Corporate Entities or, to the best
knowledge of the Corporate Entities, any of the persons listed in Schedule I has
any contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
neither of the Corporate Entities nor, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I attached hereto have been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or were parties to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
were or are 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 those laws. The name, business address, present
principal occupation or employment, five-year employment history and citizenship
of each of the directors and executive officers of the Purchaser and Parent are
set forth in Schedule I attached hereto.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required to purchase all outstanding Shares
pursuant to the Offer and the Merger and to pay fees and expenses related to the
Offer and the Merger is estimated to be approximately $21.2 million. The
Purchaser plans to obtain all funds needed to purchase all outstanding Shares
through a capital contribution which will be made by Parent to the Purchaser.
Parent plans to obtain funds for such capital contribution from an intercompany
loan from a subsidiary of Parent of $5.0 million, from the draw down of up to
$3.4 million by a subsidiary of Parent from a revolving credit agreement with
such subsidiary's senior lender (as described below) and pursuant to the sale of
$12 million of preferred stock of Parent to Phemus Corporation and
Intercontinental Mining & Resources Incorporated or their designated affiliates
(collectively, the "Subscribers"). Such purchase and sale shall be made in
accordance with the Subscription Agreement ("Subscription Agreement") among
Parent and the Subscribers. Fees and expenses of approximately $0.8 million will
be paid by a subsidiary of Parent from cash on hand.
Pursuant to the Subscription Agreement, upon notice by the Parent, the
Subscribers will, subject to the satisfaction of the Shareholder Condition and
other customary conditions, purchase 120,000 shares of preferred stock of Parent
in an amount totaling $12 million. Upon the execution of the Subscription
Agreement, Parent paid the Subscribers an aggregate commitment fee of $120,000,
and upon the Parent's acceptance of the subscription funds, Parent must pay the
Subscribers an additional commitment fee of $360,000.
The Series G Convertible Redeemable Preferred Stock ("Series G Preferred
Stock") to be issued pursuant to the Subscription Agreement and in accordance
with its Certificate of Designation shall rank junior to the other outstanding
shares of preferred stock of Parent but senior to Parent's outstanding common
stock as to dividends and liquidation preference. Upon liquidation, the holders
of the Series G Preferred Stock shall be entitled to $100.00 per share and any
accrued but unpaid dividends. The Series G Preferred Stock shall pay cumulative
dividends beginning six months after the issuance thereof at an annual rate of
17% and increasing by 0.5% semi-annually up to 20%. Dividends are payable in
additional shares of the Series G Preferred Stock.
A Subscriber's Series G Preferred Stock is convertible into shares of
Parent's common stock at any time one year after the issuance of the Series G
Preferred Stock upon notice by a Subscriber at a rate of 100 shares of common
stock per share of Series G Preferred Stock. When the Series G Preferred Stock
is convertible, the holders thereof will have voting rights as if such Series G
Preferred Stock was converted. The Series G
13
<PAGE> 16
Preferred Stock is also redeemable in whole or in part at any time at the option
of the Parent. Upon issuance of the Series G Preferred Stock, the holders
thereof will be entitled to elect two additional members of the board of
directors of the Parent.
THE FOREGOING DESCRIPTION OF THE TERMS AND PROVISIONS OF THE SUBSCRIPTION
AGREEMENT AND THE CERTIFICATE OF DESIGNATION OF THE SERIES G PREFERRED STOCK
ATTACHED AS AN EXHIBIT THERETO IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT THEREOF, WHICH IS FILED AS AN EXHIBIT TO THE SCHEDULE 14D-1 FILED BY
PARENT AND THE PURCHASER WITH THE COMMISSION IN CONNECTION WITH THE OFFER, AND
IS AVAILABLE FOR INSPECTION AND COPYING AT THE PRINCIPAL OFFICE OF THE
COMMISSION IN THE MANNER DESCRIBED IN SECTION 8.
On January 17, 1995, E-Z Serve Convenience Stores, Inc., a wholly-owned
subsidiary of Parent ("EZCON"), entered into a Credit and Guaranty Agreement
("Credit Agreement") with a group of banks (the "Lenders") and with Societe
Generale as agent (the "Agent"). The Credit Agreement provides for a term loan
of $45,000,000 ("Term Loan") and a $15,000,000 revolving line of credit
("Revolver"). The Term Loan matures on January 24, 2002, and the Revolver
matures on January 24, 1998. Both loans bear interest, payable quarterly at the
stated and effective rate of the prime rate plus 1.25%, and, with proper notice
to the Agent, both can be converted to LIBOR loans at LIBOR plus 2.5%. The
Credit Agreement requires that a notional amount of at least $20,000,000 of the
Term Loan be rate protected, as defined, through January 17, 1998.
The Term Loan and Revolver are secured by Parent's pledge of all the
capital stock of, and by guarantees from, its subsidiaries. The guarantee by
Purchaser of the obligations of EZCON will terminate at the Effective Time. In
connection with the Credit Agreement, the Lenders have received a security
interest in the equipment, inventories and receivables of Parent and its
subsidiaries, and a right to be granted liens on all the real property,
fixtures, buildings and improvements of Parent and its subsidiaries, if certain
events, including any event of default, should occur. Provisions of the Credit
Agreement require Parent and its subsidiaries to remain within the limits of
certain defined financial covenants, and impose various restrictions on
distributions, business transactions, contractual obligations, capital
expenditures and lease obligations. Such liens will not be required with respect
to the assets of the Company prior to the defeasance of the Indenture.
The Term Loan requires semi-annual principal payments each January 24 and
July 24 (first payment January 24, 1996) as follows: $2,000,000 each in January
and July, 1996 and January, 1997; $3,250,000 each in July, 1997 and January,
1998; $3,750,000 each in July, 1998 and January, 1999; $4,000,000 each in July,
1999, January and July, 2000 and January, 2001 with two final payments of
$4,500,000 in July, 2001 and January, 2002. The Credit Agreement further states
that 100% of certain transaction proceeds, as defined, shall be immediately
applied as a mandatory prepayment of the Term Loan in the inverse order of
maturity, and further, that 75% of excess cash flow, as defined, shall be
applied 90 days after the end of each fiscal year as a mandatory prepayment of
the Term Loan in the inverse order of maturity.
The Revolver can be used for working capital purposes and for issuance of a
maximum of $5,000,000 of letters of credit. The Revolver has a "clean-down"
provision whereby, during a five consecutive calendar day period of each
calendar month, the aggregate outstanding borrowing cannot exceed $3,000,000
(or, for the first 12 calendar months following the consummation of the Offer,
$5,000,000). As of June 5, 1995, there were no cash draws on the Revolver.
Pursuant to the terms of the Amendment No. 2 and Waiver No. 1 to Credit and
Guaranty Agreement dated June 15, 1995, the Lenders and the Agent approved the
draw down of $3.4 million under the Revolver for purchasing the Shares subject
to the following material conditions, each of which the Purchaser expects will
be satisfied at the closing of the Offer: (1) no defaults under the Credit
Agreement shall have occurred and be continuing; and (2) all of the
representations and warranties in the Credit Agreement and related documents
shall be true and correct in all material respects.
14
<PAGE> 17
Parent intends to cause EZCON to seek from its Lenders and the Agent prior
to the closing of the Offer an amendment to the Credit Agreement that would
increase the amount available for borrowing under the Credit Agreement to permit
Purchaser to purchase the Shares without the proceeds of the sale of the Series
G Preferred Stock. In the event such an amendment is obtained, the Subscription
Agreement will be terminated. Neither the Lenders nor the Agent have made any
commitments with respect to increasing the amount EZCON may borrow under the
Credit Agreement, and there can be no assurance that such an increase will be
obtained.
THE FOREGOING DESCRIPTION OF THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT, AS AMENDED, IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT THEREOF, WHICH IS FILED AS AN EXHIBIT TO THE SCHEDULE 14D-1 FILED BY PARENT
AND THE PURCHASER WITH THE COMMISSION IN CONNECTION WITH THE OFFER, AND IS
AVAILABLE FOR INSPECTION AND COPYING AT THE PRINCIPAL OFFICE OF THE COMMISSION
IN THE MANNER DESCRIBED IN SECTION 8.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
Following the Company's bankruptcy filing in December, 1992, Neil McLaurin,
President and Chief Executive Officer of Parent, contacted a large supplier of
the Company who was a member of the creditors' committee that has been organized
as a result of the bankruptcy (the "Creditors' Committee") to express Parent's
interest in acquiring the Company. On January 27, 1993, Neil McLaurin, President
and Chief Executive Officer of Parent, met with members of the Creditors'
Committee in Atlanta to present background information on Parent and Parent's
interest in acquiring the Company. The Creditors' Committee suggested that
Parent contact the Company, and on January 29, 1993, Parent, through one of its
wholly-owned subsidiaries, executed a Confidentiality Agreement with the Company
in preparation for Parent commencing due diligence with respect to the Company's
business operations. Officers of Parent conducted brief due diligence at the
Company's headquarters on July 15, 1993. On July 20, 1993, Mr. McLaurin and John
Miller, Senior Vice President and Chief Financial Officer of Parent, met with
Paul Martin, Chairman of the Board of the Company, in Mr. Martin's Tampa office
to discuss Parent's proposed acquisition of the Company.
Initially, the Parent pursued the possibility of acquiring the assets of
the Company through the bankruptcy court with the approval of the Creditors'
Committee. On July 30, 1993, Mr. McLaurin and Mr. Miller had a conference call
with the Creditors' Committee to explore the acquisition of the Company. Parent
sent a letter to Mr. Martin dated August 4, 1993, outlining the process for
Parent's proposed acquisition through a consensual plan of reorganization
proposed by the Company's unsecured creditors. Parent also sent a letter dated
August 24, 1993, to the Creditors' Committee outlining the terms of the proposed
acquisition of the Company. By letter dated October 7, 1993, Parent amended the
proposed acquisition terms of its August 24, 1993 letter to the Creditors
Committee.
On August 27, 1993, the Company filed a proposed plan of reorganization
with the Bankruptcy Court. As a result of that filing, Parent believed that the
equity of the Company would probably survive the bankruptcy unimpaired and that
negotiations, if any, should be with the equity holders. Parent commenced
negotiations with the Company and on March 7, 1994, delivered a letter to Joseph
Pedoto, a director of the Company, in which Parent outlined a proposal to
acquire all of the capital stock of the Company for $10.00 per share. On March
10, 1994, Mr. Pedoto responded to Parent's proposal by requesting a more
definitive proposal.
After continued communications between the parties, Parent delivered a
letter dated July 13, 1994, to H. McIntyre Gardner, a financial advisor to the
Company, wherein Parent indicated its interest in acquiring all of the
outstanding capital stock of the Company at an increased price of $17.00 per
share, subject to the completion of Parent's due diligence. On July 19, 1994,
the Company executed an amended proposal wherein the Company agreed not to
solicit any new offers for a period of ten days. A due diligence period
commenced and representatives of Parent visited the Company in Panama City from
July 25 to July 29, 1994.
Based on Parent's due diligence, Parent amended its acquisition proposal on
August 8, 1994, to a price of $10.00 per share. Mr. Gardner responded on August
9, 1994, with a counter proposal of $12.00 per share plus
15
<PAGE> 18
cash from the sale of certain of the Company's assets. Parent declined the
counter proposal and negotiations ceased.
Communications were reestablished in February, 1995 between Mr. Miller and
Mr. Gardner. On April 12 and 13, 1995, representatives of Parent visited the
Company's offices to update Parent's prior due diligence. Based on the due
diligence and continued negotiations, on April 21, 1995, Parent indicated its
interest in making an acquisition proposal at $12.00 per share.
Mr. McLaurin and Mr. Pedoto continued discussions and on June 2, 1995,
Parent made a preliminary proposal to acquire the Company's equity at a price of
$12.00 per share of the Company, subject to further due diligence, completion of
financing arrangements and completion of definitive agreements. Negotiation of
definitive agreements continued through June 12 and on June 13, 1995, the terms
of the transactions were presented to and authorized and adopted by the Board of
Directors of Parent. The terms of the transactions were presented to and
authorized and adopted by the Board of Directors of the Company at a meeting
held on June 15, 1995. Following such approvals, the Merger Agreement, the
Deposit and Escrow Agreement and the Shareholders Agreement were executed and
delivered, and the transaction was publicly announced on June 15, 1995.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE ESCROW AGREEMENT; THE
SHAREHOLDERS AGREEMENT; OTHER MATTERS
PURPOSE OF THE OFFER
The purpose of the Offer is to acquire control of the Company. Upon
consummation of the Offer, the Purchaser and Parent intend to acquire any
remaining equity interest in the Company not acquired in the Offer by
consummating the Merger.
THE MERGER AGREEMENT
The Offer. The Merger Agreement provides that the Offer will be subject
only to the conditions set forth in Section 14 of this Offer to Purchase, any of
which conditions may be waived in the sole discretion of the Purchaser, and
that, upon the terms and subject to the satisfaction or waiver of such
conditions to the Offer, the Purchaser will accept for payment all Shares
properly tendered pursuant thereto as soon as legally permissible following the
consummation thereof and following such consummation will pay for all such
Shares as promptly as practicable.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions set forth therein, the Merger will become effective upon the
filing with the Delaware Secretary of State and the Florida Secretary of State
of a certificate or articles of merger or other appropriate documents or such
other time as the Purchaser and the Company shall agree (the "Effective Time").
Following the Merger, the separate corporate existence of the Purchaser will
cease, the Company will be the surviving corporation in the Merger and will
continue to be governed by the laws of the State of Florida and will succeed to
and assume all the rights and obligations of the Purchaser. The corporation
surviving the Merger is sometimes hereinafter referred to as the "Surviving
Corporation." The Merger will have the effects set forth in the Delaware General
Corporation Law, the FBCA and the Merger Agreement.
Directors and Officers. The Merger Agreement provides that the directors
and officers of the Purchaser at the Effective Time will, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected and qualified or until
their earlier resignation or removal in accordance with the Restated Certificate
of Incorporation and Bylaws of the Surviving Corporation.
Effect on Capital Stock. The Merger Agreement provides that, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof:
(1) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent, the Purchaser or any
other direct or indirect subsidiary of Parent) will be converted into
16
<PAGE> 19
the right to receive the Merger Price, in cash, will cease to be
outstanding, will automatically be cancelled and retired and will cease to
exist; and each holder of a share certificate (a "Certificate") formerly
representing any Shares will cease to have any rights with respect thereto,
except the right to receive, without interest, the aggregate Merger Price
therefor upon the surrender of such Certificate.
(2) Each Share issued and outstanding immediately prior to the
Effective Time and owned by Parent or its affiliates and each Share issued
and held by the Company immediately prior to the Effective Time will cease
to be outstanding, will automatically be cancelled and retired without
payment of any consideration therefor and will cease to exist.
(3) Each share of common stock of the Purchaser issued and outstanding
immediately prior to the Effective Time will be converted into and
thereafter evidence one validly issued, fully paid and nonassessable share
of the capital stock of the Surviving Corporation, with such shares
thereafter constituting all of the issued and outstanding shares of the
capital stock of the Surviving Corporation.
Interim Operations of the Company. The Merger Agreement provides that from
the date of the Merger Agreement until the Effective Time, except to the extent
permitted by the Merger Agreement, or except to the extent that the Purchaser
consents in writing, the Company will not:
(1) issue or sell or agree to issue or sell any securities; amend its
Restated Certificate of Incorporation or By-laws; split, combine or
reclassify any outstanding capital stock; declare, set aside or pay any
dividend in respect of its capital stock; or purchase, redeem or otherwise
acquire any securities of the Company;
(2) transfer, lease, license, sell, mortgage, pledge, dispose of or
encumber any assets other than in the ordinary course of business; incur or
modify any indebtedness or other liability, other than current liabilities
incurred in the ordinary course of business; acquire by merger,
reorganization, consolidation or purchase substantially all of the assets
of, or otherwise acquire any business or organization or division thereof;
liquidate into or otherwise combine with any other person or entity;
(3) increase the compensation of any director, officer or other
employee except in the ordinary course of business and in accordance with
past practices or pursuant to any employment agreement; grant any severance
or termination pay except as required or permitted under existing
agreements or plans; establish, extend or amend any employee benefit plan
except to the extent required by law;
(4) settle or compromise any material claim or litigation for an
amount more than 25% in excess of applicable reserves therefor or, except
in the ordinary course of business, modify, amend or terminate any of its
material contracts or waive, release or assign any material rights or
claims;
(5) change its application of accounting principles in any material
respect; or
(6) authorize or enter into an agreement to do any of the actions
referred to in paragraphs (1) through (5) above or any similar actions.
Acquisition Proposals. The Merger Agreement provides that the Company
shall not and the Company shall use its reasonable best efforts to cause its
affiliates, officers, directors, employees, agents and representatives
(including, without limitation, any investment banking, proxy solicitation,
legal or accounting firm retained by the Company or any member or employee of
the foregoing) ("Agents") not to, directly or indirectly, take or continue
taking any action to solicit, encourage or facilitate any Takeover Proposal (as
defined below) or any inquiry or action that may reasonably be expected to lead
to, any Takeover Proposal, including soliciting, initiating or conducting
negotiations with, or providing any information to, any person (other than the
Purchaser or an affiliate of the Purchaser) concerning any actual or potential
Takeover Proposal; provided, however, that the Company may furnish information
to and participate in negotiations with a third party that proposes to acquire
100% of the Shares at a price and on terms that the Company believes are more
favorable to the Company's shareholders than the transactions contemplated by
the Merger Agreement (a "Superior Proposal"). "Takeover Proposal" is defined as
a proposal for a merger or other business combination, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any proposal or offer to acquire in any manner a 10% or
greater equity interest in the
17
<PAGE> 20
Company or a substantial portion of its assets. Nothing contained in the Merger
Agreement shall prohibit the Company or its Board of Directors from (i) taking
and disclosing to the Company's shareholders a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making such disclosure to the Company's shareholders
which in the reasonable judgment of the Company's Board of Directors is required
under applicable law or (ii) failing to make or withdrawing its recommendation
if there exists a Superior Proposal and entering into a definitive agreement
with respect to a Superior Proposal.
Consents. The Merger Agreement also provides that each party will use its
reasonable efforts to obtain as soon as practicable all consents of third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by the Merger Agreement. Each of the Parent, Purchaser
and the Company will use its reasonable efforts to take all action, and to do
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by the Merger
Agreement. In case at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of the Merger Agreement, the
proper officers and directors of each party to the Merger Agreement shall take
all such action. If approval of the Company's shareholders is required by law
for the consummation of the Merger, the Purchaser shall vote all Shares over
which it exercises voting power to be voted in favor of the merger at any
meeting of the shareholders called for the purpose or to sign any consent in
lieu of such a meeting.
Access. Between the date of the Merger Agreement and the Effective Time,
the Company (i) will give Parent and its authorized representatives such
reasonable access during regular business hours to all its stores, offices,
warehouses and other facilities and its books and records as they may reasonably
require, (ii) will permit Parent and its authorized representatives to make such
inspections as they may reasonably require, and (iii) will cause its officers to
furnish Parent with such financial and operating data and other information and
assistance with respect to the business and properties of the Company as Parent
may from time to time reasonably request. Until the Effective Time, Parent will
hold and will cause its affiliates, consultants and advisors to hold any
information which they receive in connection with the transactions contemplated
by the Merger Agreement in strict confidence in accordance with and subject to
the terms of the Confidentiality Agreement dated as of January 29, 1993, between
Parent (as assignee of E-Z Serve Management Company) and the Company, as amended
by letter agreement dated June 14, 1995.
Employees. The Merger Agreement provides that Parent shall cause the
Surviving Corporation to honor all incentive, bonus, profit sharing,
compensation, severance, termination, pension, retirement, employment or other
employee benefit contracts, agreements, arrangements, policies, plans and
commitments of the Company in effect as of the date of the Merger Agreement
which are applicable to any employee or former employee or any director or
former director of the Company for benefits earned through the closing date of
the Merger.
Insurance and Indemnification. The Merger Agreement provides that for
three years after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless each person who as
of the date of the Merger Agreement has served as a director or officer of the
Company (the "Indemnified Parties") against any losses, claims, damages,
expenses, judgments, and amounts paid in settlement in connection with any third
party claim arising from actions taken or omissions to act as directors or
officers of the Company by such Indemnified Parties prior to the Effective Time,
including, without limitation, any third party claim arising from actions taken
or omission to act as directors or officers of the Company by such Indemnified
Parties prior to the Effective Time, including, without limitation, any claim
which arises out of or pertains to any of the transactions contemplated by the
Merger Agreement ("Claim" or "Claims") (i) to the fullest extent permitted under
Florida or other applicable law or (ii) as provided in the Company's Restated
Certificate of Incorporation or Bylaws as of the date of the Merger Agreement,
which provisions shall survive the Merger and shall continue in full force and
effect without amendment or modification in any respect adverse to the
Indemnified Parties (except as required by law) for a period of not less than
three years from the Effective Time. In the event any Claims are asserted
pursuant to clause (ii) of the preceding sentence within such three-year period,
all rights to indemnification in respect of any such Claims shall continue until
disposition of any and all such Claims. Neither Purchaser, the Company nor the
18
<PAGE> 21
Surviving Corporation shall be liable for any settlements effected without its
consent, which consent shall not be unreasonably withheld.
The Merger Agreement also provides that for a period of three years after
the Effective Time, Parent will cause the Surviving Corporation to use its
reasonable best efforts to maintain in effect the current policies of officers'
and directors' liability insurance maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such officers and directors) with respect to claims arising from
facts or events which occurred before the Effective Time; provided however, that
in no event shall the Surviving Corporation be required to expend more than an
amount in the aggregate equal to 250% of the current annual premiums paid by the
Company for such insurance and, in the event the cost of such coverage shall
exceed that amount, the Surviving Corporation shall purchase as much coverage as
possible for such amount.
Representations. If at any time prior to the Effective Time, any party
determines that any representation or warranty of the Company set forth in the
Merger Agreement or any information set forth in any of the Company's schedules
attached to the Merger Agreement is inaccurate or incomplete in any material
respect, such party shall notify in writing the other parties, and the Company
may by notice unilaterally amend the affected schedule, representation or
warranty in order to correct such inaccuracy or incompleteness. If the change
effected by such amendment constitutes a Material Adverse Effect (as defined in
the Merger Agreement) when compared to the information reflected in the prior
representations and warranties and schedules, Parent or the Purchaser may,
within five business days following notice of such amendment, terminate the
Merger Agreement.
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time (1)
by mutual written consent of Parent, Purchaser and the Company; (2) by Purchaser
or the Company if any court of competent jurisdiction in the United States or
other United States governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other action shall have become
final and nonappealable; (3) if, without fault of the terminating party, the
Effective Time shall not have occurred on or before November 30, 1995; (4) if
any party to the Merger Agreement has breached its obligations, covenants,
agreements or representations and warranties in the Merger Agreement in any
material respect; (5) by the Company at any time, prior to the purchase of
Shares pursuant to the Offer, if (i) the Company shall have entered into a
binding definitive agreement with respect to a Superior Proposal and (ii) the
Company has complied with the non-solicitation provisions of the Merger
Agreement; or (6) by the Purchaser if (i) the Company or any of its affiliates
or Agents has engaged in any discussions or negotiations with any other person
(other than Parent or its affiliates) relating to a Takeover Proposal (other
than as permitted under the Merger Agreement), (ii) the Board of Directors has
withdrawn or modified in a manner adverse to Parent or Purchaser its approval or
recommendation of the Merger Agreement or the Offer or the Merger or has
approved or recommended any Superior Proposal or shall have resolved to do any
of the foregoing, or (iii) more than 50% of the Shares fail to have been
tendered pursuant to the Offer or fail to vote in favor of the Merger Agreement
at any meeting at which the Merger Agreement is presented for approval of the
Company's shareholders.
Break-up Fee. If the Merger Agreement is terminated (a) by the Company if
the Company shall have entered into a binding definitive agreement with respect
to a Superior Proposal or (b) by Purchaser if the Board of Directors of the
Company has withdrawn or modified in a manner adverse to Parent or Purchaser its
approval or recommendation of the Merger Agreement, the Offer or the Merger, or
has approved or recommended any Superior Proposal or if the Company shall have
breached its obligations to effect the Merger following satisfaction of the
conditions to the Company's obligations to effect the Merger, and shall have
failed to cure such breach within five days after notice from Parent of such
breach, then the Company shall promptly, but in no event later than one business
day after such termination or the end of such five-day period, pay Purchaser a
fee of $1,701,650 (the "Fee"). Notwithstanding the foregoing, the Company shall
have no obligation to pay the Fee if Purchaser or Parent shall be in material
breach of the Merger Agreement.
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THE ESCROW AGREEMENT
In connection with the Merger Agreement, Parent and the Company have
entered into an Escrow Agreement dated June 15, 1995 (the "Escrow Agreement"),
pursuant to which Parent caused the deposit in escrow with the escrow agent the
sum of $2.5 million in accordance with the terms of the Escrow Agreement. The
escrow agent will hold such funds until the Company or Parent shall deliver a
certificate requesting disbursal. If (i) the Company has not breached its
obligations, covenants, agreements or representations and warranties in the
Merger Agreement in any material respect, (ii) no shareholder has breached any
obligations, covenants, agreements or representations and warranties under the
Shareholders Agreement in any material respect, and (iii) Parent has breached
its obligations, covenants, agreements or representations and warranties in the
Escrow Agreement in any material respect, then upon termination of the Merger
Agreement for any reason, such funds shall be paid to the Company. If the Merger
Agreement is terminated under any circumstance other than as described in the
preceding sentence, such funds shall be paid to Parent.
The Escrow Agreement provides for the indemnification of the escrow agent
for all losses, costs, damages, expenses, liabilities and attorneys' fees
suffered or incurred by the Escrow Agent as a result of the Escrow Agreement,
except any such losses, costs, damages, expenses, liabilities or attorneys' fees
that arise as a result, directly or indirectly, of the Escrow Agent's gross
negligence or willful misconduct.
THE SHAREHOLDERS AGREEMENT
On June 15, 1995, Parent and the Purchaser entered into the Shareholders
Agreement with the Shareholders, pursuant to which the Shareholders have, among
other things, agreed to tender all Shares held by them pursuant to the Offer
pursuant to the terms and conditions described below.
Tender of Shares. Pursuant to the Shareholders Agreement, the Shareholders
have agreed to tender and not withdraw (and sell upon payment for) all of the
Shares held by them pursuant to and in accordance with the terms of the Offer.
Transfer of Shares. During the term of the Shareholders Agreement, except
as otherwise provided therein, the Shareholders have agreed that they will not
offer to sell, sell, pledge or otherwise dispose of or transfer any interest in
or encumber any of the Shares held by them; acquire any Shares or other
securities of the Company (otherwise than in connection with a stock dividend,
stock split, recapitalization, combination, exchange of shares, merger,
consolidation, reorganization or other change or transaction as a result of
which shares, other securities, cash or property shall be issued in respects of
the Shares, in which case any such additional shares or securities will be
deemed Shares and included in the Shares subject to the Shareholders Agreement);
deposit the Shares into a voting trust, enter into a voting agreement or
arrangement with respect to the Shares or grant any proxy or power of attorney
with respect to the Shares; or enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition or
sale, assignment or other disposition of or transfer of any interest in or the
voting of any Shares or any other securities of the Company.
Voting of Shares. Pursuant to the Shareholders Agreement, each Shareholder
irrevocably has appointed Purchaser, or any nominee thereof, with full power of
substitution, during and for the term of the Shareholders Agreement, as such
Shareholder's true and lawful attorney and proxy, for and in such Shareholder's
name, place and stead, to vote each Share at any annual, special or adjourned
meeting of the shareholders of the Company (including the right to sign such
Shareholder's name (as shareholder) to any consent, certificate or other
document relating to the Company which the laws of the State of Florida may
require or permit) (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval and adoption of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
the Shareholders Agreement and any actions required in furtherance thereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, agreement, representation or warranty
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<PAGE> 23
of the Company under the Merger Agreement; and (iii) against the following
actions (other than the Merger and the other transactions contemplated by the
Merger Agreement):
(a) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company;
(b) a sale, lease or transfer of a material amount of assets of the
Company, or a reorganization, recapitalization, dissolution or liquidation
of the Company;
(c)(1) any change in a majority of the persons who constitute the
Board of Directors of the Company as of the date of the Shareholders
Agreement; (2) any change in the present capitalization of the Company or
any amendment of the Company's Restated Certificate of Incorporation or
By-laws, as amended to date; (3) any other material change in the Company's
corporate structure or business; or (4) any other action which, in the case
of each of the matters referred to in clauses (c)(1), (2), (3) and (4), is
intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, or adversely affect the Merger and the other transactions
contemplated by the Shareholders Agreement and the Merger Agreement;
provided, however, that nothing contained in the Shareholders Agreement
shall prohibit or restrain any Shareholder from complying with his or her
fiduciary obligations as a director or officer of the Company, as advised
in writing by independent counsel.
The proxy and power of attorney is deemed by the parties to the
Shareholders Agreement to be a proxy and power coupled with an interest. Each
Shareholder, pursuant to the Shareholders Agreement, has revoked all and any
other proxies with respect to such Shareholder's Shares which he or she may have
made or granted.
No Solicitation. During the term of the Shareholders Agreement, each
Shareholder agreed that he or she shall not take any action to solicit,
encourage or facilitate any takeover proposal, or any inquiry or action that may
reasonably be expected to lead to, any takeover proposal (as defined in the
Merger Agreement), including soliciting, initiating or conducting negotiations
with or providing any information to, any person (other than Parent or any
affiliate) concerning any actual or potential takeover proposal; provided,
however, nothing contained in the Shareholders Agreement shall prohibit any
Shareholder from taking any such action solely in his or her capacity as a
director of the Company to the extent permitted under Section 6.2 of the Merger
Agreement.
Termination. If the purchase of the Shares pursuant to the Offer shall not
have occurred, the Shareholders Agreement shall terminate upon the termination
of the Merger Agreement.
THE FOREGOING DESCRIPTION OF THE TERMS AND PROVISIONS OF THE MERGER
AGREEMENT, THE ESCROW AGREEMENT AND THE SHAREHOLDERS AGREEMENT ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE FULL TEXTS THEREOF, WHICH ARE FILED AS
EXHIBITS TO THE SCHEDULE 14D-1 FILED BY PARENT AND THE PURCHASER WITH THE
COMMISSION IN CONNECTION WITH THE OFFER, AND ARE AVAILABLE FOR INSPECTION AND
COPYING AT THE PRINCIPAL OFFICE OF THE COMMISSION IN THE MANNER DESCRIBED IN
SECTION 8.
OTHER MATTERS
Plans or Proposals of Parent. As part of its due diligence investigation
of the Company, Parent has conducted a detailed review of the Company and its
assets, corporate structure, operations, properties, policies, management and
personnel and, subject to the terms of the Merger Agreement, intends to continue
such review after commencement of the Offer. Although Parent has not reached any
definitive conclusion concerning the conduct of the business of the Company
after the Merger, Parent is considering possible courses of action including a
downsizing of the Company's corporate headquarters to take advantage of
economies of scale available through the consolidation of general corporate
functions at Parent's corporate headquarters and the closure or sale of certain
convenience stores due to insufficient cash flows at such stores. Upon
completing its review of the Company, Parent may decide to adopt one or more of
such courses of action and will consider what, if any, additional changes in the
business of the Company would be desirable in light of
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the circumstances then existing, and reserves the right to take such actions or
effect such changes as it deems desirable. Such changes could include changes in
the Company's assets, corporate structure, capitalization, operations,
properties, policies, management and personnel. Upon the consummation of the
Merger, the officers and directors of Purchaser will become the officers and
directors of the Surviving Corporation.
Pursuant to the Company's Plan of Reorganization, secured promissory notes
(the "Secured Notes") were issued to holders of allowed unsecured claims that
were not otherwise classified under the Plan of Reorganization (referred to as
"Class 7 Creditors") equal to 100% of the allowed amount of such claims. The
Secured Notes were issued under and are subject to the provisions of the
Indenture. The Secured Notes are secured by a first priority lien on
substantially all of the Company's real and personal property, including all of
the Company's leasehold interests, but excluding the Company's cash, accounts
receivable, inventory, and certain specified property with a value of $8
million. The Indenture and the Plan of Reorganization contain provisions
prohibiting the Company from making payments, dividends and/or distributions to
shareholders, and from merging with and into another corporation when the
Company is not the surviving entity.
The outstanding principal balance on the Secured Notes was $14,778,843, as
of March 30, 1995. In addition, there are claims subject to objections pending
in the Bankruptcy Court (the "Unresolved Claims") that may, if allowed, become
entitled to Secured Notes. These Unresolved Claims include miscellaneous claims
of approximately $1,246,712, wage claims of approximately $913,635, personal
injury claims of approximately $2,292,052, and workers compensation claims of
approximately $585,835.
At the time the objections to the Unresolved Claims are resolved by the
Bankruptcy Court, but only to the extent the Unresolved Claims become allowed
unsecured claims, the holders of such allowed unsecured claims will be entitled
to receive Secured Notes. The amount of the Secured Notes will be equal to the
allowed amount of such claims. The personal injury claims and workers
compensation claims are covered by various insurance policies and programs.
Accordingly, personal injury claims and workers compensation claims will receive
payment from the applicable insurance policy or program, and will not receive
Secured Notes. In the event insurance coverage is insufficient to pay the
allowed personal injury claims and workers compensation claims in full, Secured
Notes will be issued in an amount equal to the difference between the allowed
amount of the claim and the available insurance coverage.
Under the terms of the Merger Agreement, the Company will use its
reasonable best efforts to file as promptly as practicable following the
execution of the Merger Agreement the appropriate motion or motions with the
Bankruptcy Court seeking an expedited judicial determination that the prepayment
of the Secured Notes and the tender of an amount through the posting of a letter
of credit sufficient to pay any Unresolved Claims that are subsequently allowed,
is sufficient performance pursuant to the Plan of Reorganization and the
Indenture to satisfy and discharge the Indenture and thereby release any liens
created by the security documents issued thereunder, and eliminate the
restrictions against making payments, dividends or distributions to shareholders
and certain mergers. The filing of such a motion will be made upon Parent's
receipt from a suitable financing source of a commitment, subject to the
conditions stated therein, to provide an amount sufficient to prepay the Secured
Notes and post a letter of credit to pay any Unresolved Claims that are
subsequently allowed. In the event the Bankruptcy Court grants the judicial
determination sought by the Company and such a loan is made, Parent will cause
the Company's assets to be pledged to secure the indebtedness thereunder and may
cause the Company to merge with and into EZCON. The Offer to Purchase and the
Merger are not contingent upon the receipt of any determination by the
Bankruptcy Court or any commitment from any financing source, and there can be
no assurance that such a determination or commitment will be obtained.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company, a sale or transfer of a material amount of
assets of the Company, any change in the Company's present board of directors or
management, any material change in the Company's capitalization or dividend
policy or any other material change in the Company's business or corporate
structure.
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Vote Required to Approve the Merger. The FBCA requires, among other
things, that the adoption of any plan of merger or consolidation must be
approved by the Board of Directors of the Company and generally by the holders
of the Company's outstanding voting securities. The Board of Directors of the
Company has approved the Offer and the Merger; consequently, the only additional
action by the Company that may be necessary to effect the Merger is approval of
its shareholders if the short-form merger procedure described below is not
available. Under the FBCA and the Company's Restated Articles of Incorporation,
the affirmative vote of holders of a majority of the outstanding Shares is
generally required to approve the Merger. However, the FBCA provides that, if a
parent company owns at least 80% of each class of stock of a subsidiary, the
parent company can effect a "short-form" merger with that subsidiary without any
action by the other shareholders of that subsidiary. Accordingly, if, as a
result of the Offer or otherwise, the Shareholder Condition is met and the
Purchaser acquires at least 80% of the Shares, the Purchaser could, and intends
to, effect the Merger without prior notice to, or any action by, any other
shareholder of the Company, except as required under the FBCA. If the Purchaser
acquires, through the Offer or otherwise, voting power with respect to at least
a majority of the outstanding Shares, the Purchaser would have sufficient voting
power to effect the Merger without the vote of any other shareholder of the
Company.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. If the Merger is effected with a vote of the Company's
shareholders and if on the record date fixed to determine the shareholders
entitled to vote, the Shares are listed on the AMEX or other national securities
exchange or are held of record by 2,000 or more of such shareholders, then
holders of Shares will not have dissenters' rights under the FBCA. If, however,
the Merger is consummated with or without the vote of the Company's shareholders
but the Shares are not so listed or designated or are not held of record by at
least 2,000 shareholders, holders of Shares will have certain rights pursuant to
the provisions of Sections 607.1301, 607.1302 and 607.1320 of the FBCA to
dissent and demand determination of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares or the market value of the Shares
could be more or less than the Offer Price or the price provided for in the
Merger Agreement. Section 607.1301(2) of FBCA defines "fair value" as the value
of the shares excluding any appreciation or depreciation in anticipation of the
transaction unless such exclusion would be inequitable.
If any holder of Shares who asserts dissenters' rights under the FBCA fails
to perfect, or effectively withdraws or loses his dissenters' rights, as
provided in the FBCA, the Shares of such shareholder will be converted into the
right to receive the price provided for in the Merger Agreement in accordance
with the Merger Agreement. A shareholder may withdraw his notice of election to
dissent by delivery to Parent of a written withdrawal of his notice of election
to dissent and acceptance of the Merger.
FAILURE TO FOLLOW THE STEPS REQUIRED BY THE FBCA FOR PERFECTING DISSENTERS'
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain going private transactions. The
Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (1)
split, combine or otherwise change the Shares or its capitalization, (2) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (3) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible or
exchangeable into, or rights, warrant or options, conditional or otherwise, to
acquire any of the foregoing, then, subject to the provisions of Section 14,
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the Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible or exchangeable into, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, payable or distributable to
shareholders of record on a date prior to the transfer of the Shares purchased
pursuant to the Offer to the Purchaser or its nominee or transfer on the
Company's stock transfer records, then, subject to the provisions of Section 14
below, (1) the Offer Price may, in the sole discretion of the Purchaser, be
reduced by the amount of any such cash dividend or cash distribution, and (2)
the whole of any such noncash dividend, distribution or issuance to be received
by the tendering shareholders will (i) be received and held by the tendering
shareholders for the account of the Purchaser and will be required to be
promptly remitted and transferred by each tendering shareholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance and
subject to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer Price
the amount or value thereof, as determined by the Purchaser in its sole
discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs, and
nothing herein constitutes a waiver by the Purchaser or Parent of any of their
rights under the Merger Agreement or a limitation of remedies available to the
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement,
neither Parent nor the Purchaser shall be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-l(c) promulgated under the Exchange Act (relating to the Purchaser's
obligations to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer
unless (1) the Shareholder Condition shall have been satisfied, and (2) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated. Furthermore, notwithstanding
any other term of the Offer or the Merger Agreement, the Parent or the Purchaser
shall not be required to accept for payment or to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate or subject to
the terms of the Merger Agreement, amend the Offer and may postpone the
acceptance for payment of Shares pursuant thereto if, at any time on or after
June 15, 1995, and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists:
(a) there shall be instituted or pending any action or proceeding
before any governmental entity, in each case that has a reasonable
likelihood of success, (i) challenging the acquisition by Purchaser of any
Shares, seeking to restrain or prohibit the consummation of the Offer, or
seeking to obtain any damages that are material in relation to the Company;
(ii) seeking to prohibit or limit the ownership or operation by Purchaser
of all or any material portion of the business or assets of the Company or
to compel Purchaser or the Company to dispose of or hold separate all or
any material portion of the business or assets of Purchaser or the Company,
as the result of the transactions contemplated by the Offer or the Merger
Agreement; (iii) seeking to make the purchase of, or payment for, any
Shares illegal or resulting in a delay in the ability of the Purchaser to
accept payment or pay for some or all of the Shares; (iv) seeking to
prohibit Purchaser effectively from acquiring or holding or exercising full
rights of ownership of any Shares, including, without limitation, the right
to vote the Shares purchased by it on all matters properly presented to the
shareholders of the Company, including, but not limited to, the approval of
the Merger Agreement; (v) seeking to prohibit Purchaser from effectively
controlling in any
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material respect the business or operations of the Company; or (vi) which
otherwise is reasonably likely to have a Material Adverse Effect on the
Company; provided, however, that Purchaser shall have used its reasonable
best efforts to avoid the occurrence or continuance of any such condition;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, (i) Purchaser or any of its affiliates or (ii) the
Offer or the Merger, by any governmental entity, legislative body, court,
government or governmental authority or agency, domestic or foreign, that
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (vi) of paragraph (a)
above;
(c) there shall have occurred any event, change, effect or development
having a material adverse effect on the Company;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or the American Stock Exchange, (ii) from the date of this Agreement to the
initial Expiration Date of the Offer, a decline of more than 20% in the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 Index,
(iii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, or (iv) a commencement of a war
or armed hostilities or other national or international calamity directly
or indirectly involving the United States and in each case that would
reasonably be expected to have a Material Adverse Effect on the Company or,
materially adversely affect Purchaser's ability to consummate the Offer in
the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration or worsening thereof;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time
except for those made as of a specified date;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(g) any shareholder party to the Shareholders Agreement shall fail to
perform in any material respect its obligations under the Shareholders
Agreement, including without limitation the obligation to validly tender
and not withdraw prior to the expiration of the Offer all of the Shares
(which in the aggregate represent approximately 76% of the Shares) owned by
such shareholder; or the representations and warranties of any such
shareholder contained therein shall not be true and correct in all material
respects; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms and the Offer shall have been terminated with the consent of the
Company,
which, in the reasonable judgment of the Purchaser, in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Purchaser regardless of the circumstances giving rise to such
condition and may be waived by Purchaser in whole or in part at any time and
from time to time in its discretion. The failure by Purchaser or any other
affiliate of Purchaser 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 other circumstance 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.
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In addition, the obligation of Parent and Purchaser to effect the Merger is
subject to satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) the Merger Agreement shall have been adopted by the affirmative
vote of the requisite shareholders of the Company, if required in
accordance with the Restated Certificate of Incorporation of the Company
and applicable law;
(b) no statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which prohibits the consummation of the
Merger; provided, however, that the parties to the Merger Agreement shall
use their reasonable best efforts to have any such order, decree or
injunction vacated;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired and all other authorizations, consents or
approvals of or terminations or expirations of waiting periods imposed by
any governmental entity necessary for the consummation of the transactions
contemplated by the Merger Agreement shall have been filed, occurred or
been obtained, other than authorizations, consents, orders, approvals,
declarations, filings or expirations, the failure to obtain which in the
aggregate, will not have a Material Adverse Effect on the Company;
(d) there shall not be outstanding any options, warrants, calls,
subscriptions or other rights, including upon conversion of securities or
other agreements or commitments obligating the Surviving Corporation to
issue, transfer or sell any shares of capital stock of the Surviving
Corporation, except as contemplated by the Merger Agreement;
(e) the Company shall have performed in all material respects all of
its obligations under the Merger Agreement required to be performed by it
at or prior to the Effective Time; and
(f) the representations and warranties of the Company contained in the
Merger Agreement shall be true in all material respects on the date of the
closing of the Merger as though made on and as of such date.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, neither the Purchaser nor Parent is
aware of any license or regulatory permit that appears to be material to the
business of the Company, that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action
by any governmental entity that would be required for the acquisition or
ownership of Shares by the Purchaser as contemplated herein. Should any such
approval or other action be required, the Purchaser and Parent currently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws." While, except as otherwise
expressly described in this Section 15, the Purchaser does not presently intend
to delay the acceptance for payment of or payment for Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other actions
were not taken or in order to obtain any such approval or other action. If
certain types of adverse action are taken with respect to the matters discussed
below, the Purchaser could decline to accept for payment or pay for any Shares
tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a
26
<PAGE> 29
potential acquiror from voting on the affairs of a target corporation without
prior approval of the remaining shareholders, provided that such laws were
applicable only under certain conditions.
The FBCA contains certain provisions relating to an "affiliated
transaction." Such a transaction includes any merger of a corporation into a
person who is the beneficial owner of more than 10 percent of the outstanding
voting shares of the corporation (an "Interested Shareholder"). The FBCA
requires that, unless certain exceptions are met, the transaction be approved by
the holders of two-thirds of the voting shares other than the shares owned by
the Interested Shareholder. Such exceptions include where the transaction has
been approved by a majority of the corporation's directors who are not
affiliated or associated with the Interested Shareholder. The Company's Board of
Directors, none of whom are affiliated or associated with the Purchaser or
Parent, has approved the Merger Agreement and the Purchaser's acquisition of
Shares pursuant to the Offer.
The FBCA also contains provisions relating to acquisitions of "control
shares," which is defined as shares that entitle a person to exercise more than
specified proportions of the voting power of a corporation. The voting rights of
such shares are limited if they have been obtained in certain types of
acquisition (a "control-share acquisition"). The FBCA expressly excludes an
acquisition of shares of a public corporation where the acquisition has been
approved by the board of directors of such corporation. The Company's Board of
Directors has approved the Merger Agreement and the Purchaser's acquisition of
Shares pursuant to the Offer.
Based on information supplied by the Company and the Company's
representations and warranties contained in the Merger Agreement, the Purchaser
does not believe that, other than as set out above, any state takeover statutes
purport to apply to the Offer or the Merger. Neither the Purchaser nor Parent
has currently complied with any state takeover statute or regulation. The
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applies to the Offer or the
Merger, the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In such case, the
Purchaser may not be obliged to accept payment or pay for any Shares tendered
pursuant to the Offer.
Antitrust. The purchase of Shares under the Offer may be consummated
following the expiration of a 15-calendar day waiting period following the
filing by Parent of a Notification and Report Form with respect to the Offer,
unless Parent receives a request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. Parent intends to make such filing during the
week of June 19, 1995. If, within the initial 15-day waiting period, either the
Antitrust Division or the FTC requests additional information or material
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., Eastern Daylight time, on the tenth calendar day after the date of
substantial compliance with such request. Only one extension of the waiting
period pursuant to a request for additional information is authorized by the HSR
Act. Thereafter, such waiting period may be extended only by court order or with
the consent of Parent. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
27
<PAGE> 30
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company. Private parties may also bring legal action
under the antitrust laws under certain circumstances. There can be no assurance
that a challenge to the Offer on antitrust grounds will not be made or, if such
a challenge is made, of the result thereof.
Lottery and Liquor Permits. The Company maintains lottery and liquor
permits for the sale of lottery tickets and liquor in those states where such
sales are permitted. The acquisition of the Shares will require Parent to make
certain filings with, and obtain the approval of, certain governmental entities.
16. FEES AND EXPENSES
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and Continental Stock Transfer & Trust Company to serve as the Depositary
in connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person in connection with the solicitation of tenders
of Shares pursuant to the Offer. Brokers, dealers, banks and trust companies
will be reimbursed by the Purchaser upon request for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, "blue sky" or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
will be made on behalf of the Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 promulgated under the Exchange Act, furnishing certain
additional information with respect to the Offer. In addition, the Company has
filed with the Commission the Schedule 14D-9 promulgated pursuant to Rule 14d-9
under the Exchange Act, setting forth its recommendation with respect to the
Offer and the reasons for such recommendation and furnishing certain additional
related information. Such Schedules and any amendments thereto, including
exhibits, should be available for inspection and copies should be obtainable in
the manner set forth in Section 8 (except that they will not be available at the
regional offices of the Commission).
June 19, 1995
EZS ACQUISITION CORPORATION
28
<PAGE> 31
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. Directors and Executive Officers of Parent. The following table sets
forth the name, business address and present principal occupation or employment,
and material occupations, positions, offices or employments for the past five
years, of each director and executive officer of Parent. Each such person is a
citizen of the United States of America and, unless otherwise indicated below,
the business address of each such person is 2550 North Loop West, Suite 600,
Houston, Texas 77092.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ -------------------------------------------------------------
<S> <C>
Neil H. McLaurin
Age 50...................... Director, Chairman of the Board, President and Chief
Executive Officer of Parent since 1990.
Donald D. Beane
Age 49...................... Director of Parent since 1990. Investment Advisor, NewVest
Capital Company, One Hollis St., Ste. 305, Wellesley,
Massachusetts 02181, since 1990.
Shelby R. Gibbs
Age 69...................... Director of Parent since 1992. Retired oil business
executive. 3101 Avalon Place, Houston, Texas 77019.
John M. Sallay
Age 39...................... Director of Parent since 1992. Partner, Harvard Private
Capital Group, Inc., 600 Atlantic Ave., Boston, Massachusetts
02210, since 1990.
John R. Schoemer
Age 55...................... Director of Parent since 1994. Chief Operating Officer,
Quadrant Management, Inc., 127 E. 73rd Street, New York, New
York 10021, since 1991; previously, the Treasurer and Chief
Financial Officer of either the National Football League or
its subsidiary, the World League of American Football.
Larry J. Taylor
Age 52...................... Director of Parent since 1992. President, Salt Fork Company,
Inc. and Anadarko Development Company, 2201 Civic Circle,
Suite 909, Amarillo, Texas 79109 for the last five years.
Paul R. Thompson, III
Age 45...................... Director of Parent since 1992. Managing Director, Donaldson,
Lufkin & Jenrette Securities Corporation, 140 Broadway, New
York, New York 10005 for the last five years.
Marion H. Blackmon
Age 54...................... Senior Vice President, Operations of Parent since 1990.
John T. Miller
Age 48...................... Senior Vice President, Chief Financial Officer and Secretary
of Parent for the last five years.
Harold E. Lambert
Age 56...................... Vice President -- Legal and Assistant Secretary of Parent
since 1992. Mr. Lambert was Vice President and corporate
counsel of E-Z Serve Convenience Stores, Inc. prior to its
acquisition by the Parent.
</TABLE>
S-1
<PAGE> 32
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ -------------------------------------------------------------
<S> <C>
Teresa M. Trout
Age 30...................... Controller of the Parent since 1993 and employed by the
Parent since 1991. Ms. Trout was Controller for First
Security Insurance, a Michigan-based property and casualty
company from 1989 to 1991.
Bob E. Bailey
Age 39...................... Treasurer and Assistant Secretary of Parent since 1990.
</TABLE>
2. Directors and Executive Officers of the Purchaser. The following table
sets forth the name and position with the Purchaser of each director and
executive officer of the Purchaser. Each such person is a citizen of the United
States of America and, unless otherwise indicated below, the business address of
each such person is 2550 North Loop West, Suite 600, Houston, Texas 77092. For
further information regarding such persons, see paragraph 1 above.
<TABLE>
<CAPTION>
NAME POSITION WITH THE PURCHASER
- ------------------------------ -------------------------------------------------------------
<S> <C>
Neil H. McLaurin.............. Director and President
John T. Miller................ Director, Vice President and Secretary
Harold E. Lambert............. Vice President and Assistant Secretary
</TABLE>
S-2
<PAGE> 33
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, bank, trust company or other
nominee to the Depositary at its address set forth below.
THE DEPOSITARY FOR THE OFFER IS:
Continental Stock Transfer & Trust Company
By Hand, Mail or Overnight Courier:
2 Broadway
New York, New York 10004
Attention: 19th Floor
By Facsimile:
(212) 509-5150 ext. 226
To Confirm:
(212) 509-4000
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone number and
location listed below. You may also contact your broker, dealer, bank, trust
company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(212) 269-5550 (collect)
(800) 347-4750 (Toll Free)
S-3
<PAGE> 1
EXHIBIT 99.(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES
OF COMMON STOCK
OF
SUNSHINE-JR. STORES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 19, 1995
BY
EZS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
E-Z SERVE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN
DAYLIGHT TIME, ON JULY 20, 1995, UNLESS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By Hand, Mail or Overnight Courier:
2 Broadway
New York, New York 10004
Attention: 19th Floor
By Facsimile:
(212) 509-5150
To Confirm:
(212) 509-4000 ext. 226
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
(as defined below)) is utilized, if delivery of Shares (as defined below) is to
be made by book-entry transfer to an account maintained by the Depositary at the
Book-Entry Transfer Facility (as defined below) pursuant to the procedure set
forth in Section 2 of the Offer to Purchase. Shareholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders" and
other shareholders are referred to herein as "Certificate Shareholders."
Shareholders whose certificates for Shares are not immediately available or who
cannot deliver either the certificates evidencing, or a Book-Entry Confirmation
(as defined in Section 2 of the Offer to Purchase) with respect to, their Shares
and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares in accordance with the guaranteed delivery procedure set forth in
Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE DEPOSITORY TRUST
<PAGE> 2
COMPANY (THE "BOOK-ENTRY TRANSFER FACILITY") AND COMPLETE THE FOLLOWING
(ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY
BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ________________________________________________
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)_________________________________________________
Window Ticket No. (if any) ____________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution that Guaranteed Delivery __________________________________
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES:
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to EZS Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of E-Z Serve
Corporation, a Delaware corporation ("Parent"), the above-described shares of
common stock, par value $.10 per share (the "Shares"), of Sunshine-Jr. Stores,
Inc., a Florida corporation (the "Company"), pursuant to the Purchaser's offer
to purchase all outstanding Shares at a price of $12.00 per Share, net to the
seller in cash, in accordance with the terms and conditions of the Purchaser's
Offer to Purchase dated June 19, 1995 (the "Offer to Purchase") and this Letter
of Transmittal (which, together with any amendments or supplements thereto or
hereto, collectively constitute the "Offer"), receipt of which is hereby
acknowledged.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith, in accordance with the terms of the Offer
(including, if the Offer is extended or amended, the terms or conditions of any
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Purchaser all right, title and interest
in and to all the Shares that are being tendered hereby and all dividends,
distributions (including any and all other Shares or other securities or rights
issued or issuable) and rights declared, paid or distributed in respect of such
shares on or after June 19, 1995 (collectively, "Distributions"), and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares and
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates evidencing such Shares and all Distributions, together with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (b) present such Shares and all Distributions for transfer on the
Company's books, and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares and all Distributions, all in accordance
with the terms of the Offer.
The undersigned hereby irrevocably appoints Neil H. McLaurin, President of
Purchaser or John T. Miller, Vice President of Purchaser, and each of them, as
the attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's shareholders or otherwise in such manner as each such attorney and
proxy or his substitute shall in his sole discretion deem proper with respect
to, to execute any written consent concerning any matter as each such attorney
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and otherwise to act as each such attorney and proxy or his
substitute shall in his sole discretion deem proper with respect to, all the
Shares tendered hereby that have been accepted for payment by the Purchaser
prior to the time any such vote or other action is taken and all Shares and
other securities issued in Distributions with respect of such Shares, which the
undersigned is entitled to vote. This appointment is effective when, and only to
the extent that, the Purchaser accepts for payment such Shares as provided in
the Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior powers of attorney and proxies
appointed by the undersigned at any time with respect to such Shares and all
Distributions and no subsequent powers of attorney or proxies will be appointed
by the undersigned, or written consent executed (and if given or executed, shall
not be effective) by the undersigned, with respect thereto. The undersigned
understands that in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of those Shares, Purchaser must be
able to exercise full voting and other rights with respect to those Shares and
all Distributions including, without limitation, voting at any meeting of the
Company's shareholders then scheduled.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares and
all Distributions, and, that when the same are accepted for payment by the
Purchaser and paid for, the Purchaser will acquire good and marketable title
thereto, free and clear of all liens, restrictions, claims and encumbrances. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and may
withhold the entire purchase price of the Shares tendered hereby, or deduct from
such purchase price the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
The undersigned understands that the tender of Shares pursuant to any one of
the procedures set forth in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of all Shares purchased, and/or
return any certificates evidencing Shares not tendered or accepted for payment
in the name(s) of the registered holder(s) appearing under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of all Shares
purchased, and/or return any certificates evidencing Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price of all Shares purchased, and/or return any certificates
evidencing Shares not tendered or accepted for payment (and any accompanying
documents, as appropriate) in the name or, and
3
<PAGE> 4
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to the person or persons so indicated. Unless
otherwise indicated herein under "Special Payment Instructions," in the case of
a book-entry delivery of Shares, please credit the account maintained at the
Book-Entry Transfer Facility with any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
4
<PAGE> 5
- ------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or certificate(s) to:
Name
----------------------------------------------------
(Please Print)
----------------------------------------------------
Address
----------------------------------------------------
----------------------------------------------------
(Include Zip Code)
----------------------------------------------------
(Taxpayer Identification or Social Security Number)
- ---------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that indicated above.
Mail check and/or certificate(s) to:
Name
----------------------------------------------------
(Please Print)
----------------------------------------------------
Address
----------------------------------------------------
----------------------------------------------------
(Include Zip Code)
- ---------------------------------------------------------------
/ / Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below.
(Account Number):
---------------------------------------------
5
<PAGE> 6
________________________________________________________________________________
IMPORTANT
SHAREHOLDERS: SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 ON THE REVERSE)
SIGN ___________________________________________________________________________
HERE ___________________________________________________________________________
(Signature(s) of Shareholder(s))
Dated: ________________________, 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If any signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or another acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) ________________________________________________________________________
(Please Print)
Capacity (Full Title) __________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ____________________________________________________
Taxpayer Identification or Social Security No. _________________________________
(See Substitute Form W-9 on reverse side)
________________________________________________________________________________
6
<PAGE> 7
________________________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
(Please Print)
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ____________________________________________________
Dated: ______________________, 1995
Financial Institutions: Place
Medallion Guarantee in Space Below
________________________________________________________________________________
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE
TERMS AND CONDITIONS OF THE OFFER
1. SIGNATURE GUARANTEES. All signatures on this Letter of Transmittal must
be medallion guaranteed by a firm that is a member of the Medallion Signature
Guarantee Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended (each of the foregoing being referred to as an "Eligible
Institution"), unless (a) this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of Shares tendered herewith, and such
holder(s) has (have) completed neither the box entitled "Special Delivery
Instructions" nor the box entitled "Special Payment Instructions" on the reverse
hereof, or (b) such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by shareholders either if certificates for Shares are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Shares is to be made
pursuant to the procedure for book-entry transfer set forth in Section 2 of the
Offer to Purchase. For a shareholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or an
Agent's Message in the case of a book-entry transfer, and any other required
documents, must be received by the Depositary at its address set forth herein
prior to the Expiration Date, and either (i) certificates for tendered Shares
must be received by the Depositary at such address prior to the Expiration Date,
or (ii) Shares must be delivered pursuant to the procedure for book-entry
transfer set forth in Section 2 of the Offer to Purchase and a Book-Entry
Confirmation must be received by the Depositary prior to the Expiration Date, or
(b) the tendering shareholder must comply with the guaranteed delivery procedure
set forth below and in Section 2 of the Offer to Purchase. If Share Certificates
are forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Shareholders whose certificates evidencing Shares are not immediately
available or who cannot deliver their certificates and all other required
documents to the Depositary or complete the procedure for book-entry transfer
prior to the Expiration Date may tender their Shares by properly completing and
duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedure set forth in Section 2 of the Offer to Purchase. Pursuant to
such procedure, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be received
by the Depositary prior to the Expiration Date, and (c) the certificates
evidencing all physically delivered Shares or a Book-Entry Confirmation with
respect to all tendered Shares, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within five American Stock Exchange, Inc. trading
days after the date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile hereof), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
8
<PAGE> 9
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate(s) delivered to the Depositary
are to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In any such case, new certificate(s)
for the remainder of the Shares that were evidenced by the old certificate(s)
will be sent to the registered holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
expiration or termination of the Offer. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTERS OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signatures must correspond with the names as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustee, executor, administrator, guardian, attorney-in-fact, officer
of a corporation or another acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of the authority of such person so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed herein and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered holder(s). Signatures on such certificates
and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates and stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. 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. The Purchaser will pay any stock transfer
taxes with respect to the transfer and sale of Shares to it or upon its order
pursuant to the Offer. If, however, payment of the purchase price is to be made
to, or if certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued in the name of, and/or
certificates evidencing Shares not tendered or not accepted for payment are to
be returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown on the reverse of this Letter of Transmittal, the appropriate boxes
on the reverse of this Letter of Transmittal should be completed. Any
shareholder(s) delivering Shares by book-entry transfer may request that Shares
not accepted for payment be credited to such account maintained at the
Book-Entry Transfer Facility as such stockholder(s) may designate.
8. WAIVER OF CONDITIONS. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered.
9
<PAGE> 10
9. 31% BACKUP WITHHOLDING. Under United States federal income tax law, a
shareholder whose tendered Shares are accepted for payment is required to
provide the Depositary with such shareholder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If such shareholder is an
individual, the TIN is such shareholder's social security number. If the
Depositary is not provided with the correct TIN, the Internal Revenue Service
may subject the shareholder or other payee to a $50 penalty. In addition,
payments that are made to such shareholder or other payee with respect to Shares
purchased pursuant to the Offer may be subject to 31% backup withholding. If
backup withholding applies, the Depositary is required to withhold 31% of any
such payments made to the shareholder or other payee. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld, provided that the
required information is given to the Internal Revenue Service. If backup
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the shareholder or other payee must also complete the Certification portion of
the Substitute Form W-9 in order to avoid backup withholding. Notwithstanding
that the box in Part 3 is checked and the Certification portion of the
Substitute Form W-9 is completed, the Depositary may withhold 31% on all
payments made prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to such shareholder (if
withheld) if a TIN is provided to the Depositary within 60 days.
The shareholder is required to give the Depositary the TIN of the record
owner of the Shares or of the last transferee appearing on the transfers
attached to, or endorsed on, the Shares. If the Shares are in more than one name
or are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 should be directed to the
Information Agent at its address set forth below. Questions or requests for
assistance may also be directed to the Information Agent.
IMPORTANT : THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY HEREOF
(TOGETHER WITH CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH RESPECT TO,
TENDERED SHARES WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED
DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE.
10
<PAGE> 11
PAYER'S NAME: EZS ACQUISITION CORPORATION
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Social Security Number
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN -----------------------------------
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY SIGNING OR
AND DATING BELOW ------------------------------------
Employer Identification Number
----------------------------------------------------------------------------
Department of the Treasury Part 2 -- For payees exempt from backup withholding, see the enclosed
Internal Revenue Service Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed therein.
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CER- Part 3
IDENTIFICATION NUMBER (TIN) TIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,
CORRECT AND COMPLETE.
SIGNATURE Awaiting TIN / /
DATE
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and either (a) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service ("IRS")
center or Social Security Administration office, or (b) I intend to mail
or deliver an application in the near future), and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding; (b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a failure to report all
interest or dividends; or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instructions -- You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return.
<TABLE>
<S> <C>
Signature Date
- --------------------------------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------------------------------
(Include Zip Code)
</TABLE>
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (Collect)
(800) 347-4750 (Toll Free)
11
<PAGE> 1
EXHIBIT 99.(a)(3)
NEWS RELEASE
FOR ADDITIONAL INFORMATION:
For E-Z Serve Corporation
John Miller, Sr. Vice President
800-368-6253 Ext. 304
or 713-684-4304
For Sunshine-Jr. Stores, Inc.
Paul W. Martin, Jr., Chairman of the Board
813-347-8900
FOR IMMEDIATE RELEASE
E-Z SERVE ANNOUNCES OFFER FOR SUNSHINE-JR. STORES, INC.
HOUSTON, (JUNE 15, 1995) - E-Z SERVE CORPORATION (AMEX: "EZS") (E-Z
SERVE) OF HOUSTON, AND SUNSHINE-JR. STORES, INC. (AMEX: "SJS") OF PANAMA
CITY, FLORIDA (SJS), today announced that they have entered into an agreement
pursuant to which E-Z Serve, through a wholly-owned subsidiary, would purchase
all of the outstanding shares of SJS for $12.00 per share in cash, or
approximately $20.4 million. A definitive merger agreement was entered into by
the parties following unanimous approval by SJS' board of directors. SJS,
which operates approximately 205 convenience stores under the trade name "Jr.
Food Stores" in five states, has approximately 1.7 million shares outstanding.
The merger agreement calls for a subsidiary of E-Z Serve to make a
cash tender offer promptly for all outstanding shares of common stock of SJS at
a price of $12.00 per share. The tender offer would be followed as soon as
possible by a cash merger without the consent of the shareholders of SJS if 80%
or more of the shares of SJS are tendered and purchased by E-Z Serve's
subsidiary, and with the consent of such shareholders if less than 80% of such
shares are tendered and purchased. Pursuant to the terms of the merger, each
share of SJS not acquired in the tender offer would be converted into the right
to receive $12.00 in cash. The tender offer is scheduled to commence the week
of June 19, 1995, and will expire, unless extended, on or about July 20, 1995.
E-Z Serve also stated that it has entered into an agreement with
certain shareholders of SJS, pursuant to which such shareholders have agreed to
tender all of their SJS shares, representing approximately 76% of SJS'
outstanding shares, into the E-Z Serve offer, and have granted E-Z Serve's
subsidiary making the offer a proxy to vote such shares in favor of the merger.
Neil McLaurin, President and Chief Executive Officer of E-Z Serve,
stated "Sunshine-Jr. is another excellent strategic fit for E-Z Serve.
Together with our existing locations, including Time Saver which was acquired
in January, we now have good concentration along the Gulf Coast from New
Orleans to Tallahassee."
* * * * * * *
E-Z SERVE CORPORATION (AMEX: "EZS") operates 544 convenience stores, 14
franchisees, and distributes motor fuels through 236 non-company operated
retail outlets in 20 states, predominantly in the Sunbelt.
-end-
<PAGE> 1
Exhibit 99.(a)(4)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated June 19, 1995 and the related Letter of
Transmittal and is being made to all holders of Shares. The Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with that state statute. If, after
that good faith effort, Purchaser cannot comply with that state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in that state. In any jurisdiction, the securities, blue
sky or other laws of which require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of that jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Sunshine-Jr. Stores, Inc.
at
$12.00 Net Per Share
by
EZS Acquisition Corporation,
A Wholly-Owned Subsidiary of
E-Z Serve Corporation
EZS Acquisition Corporation, a Delaware corporation ("Purchaser") and
a wholly-owned subsidiary of E-Z Serve Corporation, a Delaware corporation
("Parent"), is offering to purchase all outstanding shares, par value $.10 per
share (the "Shares"), of Sunshine-Jr. Stores, Inc., a Florida corporation (the
"Company"), at $12.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated June 19,
1995 and in the related Letter of Transmittal (which together constitute the
"Offer"). Following the Offer, Purchaser intends to effect the Merger
described below.
________________________________________________________________________________
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN DAYLIGHT
TIME, ON JULY 20, 1995, UNLESS THE OFFER IS EXTENDED.
________________________________________________________________________________
<PAGE> 2
The Offer is conditioned upon, among other things, (i) the
shareholders of the Company who are parties to the Shareholders Agreement dated
June 15, 1995, among Parent, Purchaser and such shareholders, having tendered
and not withdrawn, the Shares owned by them to Purchaser in accordance with the
Offer, and (ii) the expiration or termination of any applicable antitrust
waiting periods.
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of June 15, 1995 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, among other things, following consummation
of the Offer or the expiration or termination of the Offer under certain
circumstances and the satisfaction or waiver of certain conditions and in
accordance with relevant provisions of the Delaware General Corporation Law and
the Florida Business Corporation Act, Purchaser will be merged with and into
the Company (the "Merger"). Following consummation of the Merger, the Company
will continue as the surviving corporation (the "Surviving Corporation") and
will become a wholly-owned subsidiary of Parent. On the effective date of the
Merger, each outstanding Share (other than Shares owned by Parent, the
Purchaser or any other subsidiary of Parent) will be converted into the right
to receive in cash the amount per Share paid pursuant to the Offer, without
interest. Parent has also entered into a separate agreement with certain of
the Company's shareholders (the "Shareholders"), in which the Shareholders have
agreed to tender 1,294,584 Shares (or approximately 76% of the outstanding
Shares) pursuant to the Offer and have granted Parent a proxy to vote such
shares, if necessary, for the Merger.
Under the Company's Restated Certificate of Incorporation and Florida
law, the affirmative vote of the holders of a majority of the outstanding
Shares is required to approve and adopt the Merger Agreement and the Merger.
If at least 80% of the outstanding Shares are tendered in the Offer and
accepted for payment by Purchaser, Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other shareholder.
The Board of Directors of the Company has, by unanimous vote, approved
the Offer and the Merger and determined that each of the Offer and the Merger
is fair to, and in the best interests of, the Company and its shareholders, and
recommends that shareholders of the Company accept the Offer and tender their
Shares.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to Continental Stock Transfer & Trust Company ("Depositary") of the
Purchaser's acceptance for payment of those Shares pursuant to the Offer.
Payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders whose Shares have been
accepted for payment. In all cases, payment for Shares purchased pursuant to
the Offer will be made only after timely receipt by the Depositary of (a)
certificates evidencing those Shares pursuant to the procedure set forth in
Section 2 of the Offer to Purchase or timely confirmation of book-entry
transfer of those Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in Section 2 of the Offer to Purchase) pursuant
to the procedure set forth in Section 2 of the Offer to Purchase, (b) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees or an Agent's Message (as
defined in Section 2 of the Offer to Purchase) in connection with a book-entry
transfer, and (c) any other documents required by the Letter of Transmittal.
Under no circumstances will interest be paid
-2-
<PAGE> 3
by the Purchaser on the purchase price of Shares, regardless of any delay in
making that payment.
The Purchaser expressly reserves the right, in its sole discretion
(subject to the terms of the Merger Agreement), at any time or from time to
time, and regardless of whether or not any of the events set forth in Section
14 of the Offer to Purchase shall have occurred or shall have been determined
by the Purchaser to have occurred, to extend the period of time during which
the Offer is open and thereby delay acceptance for payment of, and payment for,
any Shares, by giving oral or written notice of that extension to the
Depositary. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares in the event the Purchaser exercises its
right to extend the period of time during which the Offer is open. There can
be no assurance that the Purchaser will exercise its right to extend the Offer.
Any such extension will be followed by a public announcement thereof no later
than 9:00 a.m., Eastern Time, on the next business day after the previously
scheduled expiration date. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering shareholder to withdraw that shareholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
5:00 p.m., Eastern Daylight Time, on July 20, 1995 (or, if the Purchaser shall
have extended the period of time during which the Offer is open, the latest
time and date at which the Offer, as so extended by the Purchaser, shall
expire) and, unless theretofore accepted for payment, may also be withdrawn at
any time after August 18, 1995. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover of the
Offer to Purchase and must specify the name of the person having tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates evidencing Shares have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of those certificates, the serial numbers shown on those
certificates must be submitted to the Depositary and, unless those Shares have
been tendered by an Eligible Institution (as defined in Section 2 of the Offer
to Purchase), the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been delivered pursuant to the
procedure for book-entry transfer set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 2 of the Offer to Purchase at any time
prior to the Expiration Date. All questions as to the form and validity
(including the time of receipt) of any notice of withdrawal will be determined
by Purchaser, in its sole discretion, whose determination shall be final and
binding.
The Company has provided Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists of the
Company or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
-3-
<PAGE> 4
The information required to be disclosed by Rule 14d-6(e)(1)(vii)
promulgated under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons 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
(212) 269-5550 (Collect)
(800) 347-4750 (Toll Free)
June 19, 1995
-4-
<PAGE> 1
EXHIBIT 99.(A)(6)
EZS ACQUISITION CORPORATION
------------------------
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF COMMON STOCK
OF
SUNSHINE-JR. STORES, INC.
AT
$12.00 NET PER SHARE
BY
EZS ACQUISITION CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF
E-Z SERVE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN DAYLIGHT TIME,
ON JULY 20, 1995, UNLESS THE OFFER IS EXTENDED.
June 19, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We write in connection with the offer by EZS Acquisition Corporation (the
"Purchaser") to purchase all outstanding shares of common stock, par value $.10
per share (the "Shares"), of Sunshine-Jr. Stores, Inc., a Florida corporation
(the "Company"), at $12.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Purchaser's Offer to Purchase
dated June 19, 1995 (the "Offer to Purchase") and the related Letter of
Transmittal (which, together with any supplements or amendments thereto,
collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed for your information and use are copies of the following documents:
1. Offer to Purchase dated June 19, 1995;
2. Letter of Transmittal to be used by shareholders of the Company
accepting the Offer and tendering Shares;
3. A Letter to Shareholders of the Company from the Chairman of the Board
and Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
4. A printed form of letter that may be sent to your clients for whose
account you hold shares in your name or in the name of a nominee, with space
provided for obtaining such client's instructions with regard to the Offer;
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or cannot
be delivered to Continental Stock Transfer & Trust Company (the "Depositary") by
the Expiration Date (as defined in the Offer to Purchase);
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
<PAGE> 2
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN DAYLIGHT
TIME, ON JULY 20, 1995, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) the shareholders of
the Company who are parties to the Shareholders Agreement dated June 15, 1995,
among Parent, Purchaser and such shareholders, having tendered and not
withdrawn, the Shares owned by them to Purchaser in accordance with the Offer,
and (ii) the expiration or termination of any applicable antitrust waiting
periods.
The Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger (as defined below) and determined that each of the Offer
and the Merger is fair to, and in the best interests of, the Company and its
shareholders and recommends that shareholders of the Company accept the Offer
and tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 15, 1995 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer or the
expiration or termination of the Offer under certain circumstances and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as a
wholly owned subsidiary of Parent. In the Merger, each outstanding Share (other
than Shares owned by Parent, the Purchaser or any other subsidiary of Parent)
will be converted into the right to receive in cash $12.00 per Share, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or timely Book-Entry Confirmation of a transfer of such
Shares as set forth in Section 2 of the Offer to Purchase), a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
transfer, and any other documents required by the Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedures for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
set forth in Section 2 of the Offer to Purchase.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person in connection with the solicitation of tenders
of Shares pursuant to the Offer. You will be reimbursed upon request for
customary mailing and handling expenses incurred by you in forwarding the
enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at its address and telephone number set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
EZS Acquisition Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT, THE COMPANY OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY
STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
EXHIBIT 99.(A)(7)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF COMMON STOCK
OF
SUNSHINE-JR. STORES, INC.
AT $12.00 NET PER SHARE
BY
EZS ACQUISITION CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF
E-Z SERVE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN DAYLIGHT TIME,
ON JULY 20, 1995, UNLESS THE OFFER IS EXTENDED.
June 19, 1995
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated June 19,
1995 (the "Offer to Purchase") and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to an offer by EZS Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of E-Z Serve
Corporation, a Delaware corporation ("Parent"), to purchase shares of common
stock, par value $.10 per share (the "Shares"), of Sunshine-Jr. Stores, Inc., a
Florida corporation (the "Company"), at $12.00 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 Shareholders of the Company from the
Chairman of the Board and Chief Executive Officer of the Company accompanied by
the Company's Solicitation/Recommendation Statement on Schedule 14D-9.
We are (or our nominee is) 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.
We request instructions as to whether you wish to tender any or all of the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $12.00 per Share, net to the seller in cash
without interest, upon the terms and subject to the conditions set forth in
the Offer.
2. The Board of Directors of the Company has, by unanimous vote,
approved the Offer and the Merger (as defined below) and determined that
each of the Offer and the Merger is fair to and in the best interests of
the Company and its shareholders and recommends that the shareholders of
the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger, dated as of June 15, 1995 (the "Merger Agreement"), among Parent,
the Purchaser and the Company pursuant to which,
<PAGE> 2
following consummation of the Offer or the expiration or termination of the
Offer under certain circumstances and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a wholly-owned
subsidiary of Parent. In the Merger, each outstanding Share (other than
Shares owned by Parent, the Purchaser or any other subsidiary of Parent)
will be converted into the right to receive in cash $12.00 per Share,
without interest, as set forth in the Merger Agreement and described in the
Offer to Purchase.
5. The Offer is conditioned upon, among other things (i) the
shareholders of the Company who are parties to the Shareholders Agreement
dated June 15, 1995, among the Parent, Purchaser and such shareholders have
tendered, and not withdrawn, the Shares owned by them to Purchaser in
accordance with the Offer, and (ii) the expiration or termination of
applicable antitrust waiting periods.
6. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
Daylight time, on July 20, 1995, unless the Offer is extended by the
Purchaser. In all cases, payment for Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates evidencing such Shares (or timely Book-Entry Confirmation of a
transfer of such Shares as set forth in Section 2 of the Offer to
Purchase), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
7. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer. If you wish to have us tender
any or all of your Shares, please so instruct us by completing, executing,
detaching and returning to us the instruction form set forth below. An
envelope to return your instructions to us is enclosed. If you authorize
tender of your Shares, all such Shares will be tendered unless otherwise
specified below. YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED TO US IN AMPLE
TIME TO PERMIT US TO SUBMIT A TENDER 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 is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with that state statute. If, after that good faith effort, Purchaser cannot
comply with that state statute, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of Shares in that state. In any
jurisdiction, the securities, blue sky or other laws of which require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of that jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
SUNSHINE-JR. STORES, INC.
BY EZS ACQUISITION CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated June 19, 1995, of EZS Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of E-Z Serve Corporation, a Delaware
corporation, and the related Letter of Transmittal, relating to shares of common
stock, par value $.10 per share, of Sunshine-Jr. Stores, Inc., a Florida
corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all of the Shares) held by you for the account
of the undersigned upon the terms and subject to the conditions set forth in
such Offer to Purchase and the related Letter of Transmittal.
Dated: ___________________, 1995
Number of Shares to be Tendered*
Shares
_______________________________________
_______________________________________
(Signature(s))
_______________________________________
_______________________________________
Please print name(s)
_______________________________________
Address
_______________________________________
(Include Zip Code)
Area Code and Telephone No. _________
Taxpayer Identification or Social
Security No. ________________________
_________________
* Unless otherwise indicated, it will be assumed that all of the Shares held by
us for your account are to be tendered.
3
<PAGE> 1
EXHIBIT 99.(c)(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 15, 1995
BY AND AMONG
E-Z SERVE CORPORATION,
EZS ACQUISITION CORPORATION
AND
SUNSHINE-JR. STORES, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
THE OFFER
Section 1.1 The Offer.................................................................. 1
Section 1.2 Company Actions............................................................ 2
Section 1.3 Escrow..................................................................... 2
ARTICLE II
THE MERGER
Section 2.1 The Merger................................................................. 2
Section 2.2 Effective Time............................................................. 2
Section 2.3 Effects of the Merger...................................................... 3
Section 2.4 Restated Certificate of Incorporation and Bylaws........................... 3
Section 2.5 Directors.................................................................. 3
Section 2.6 Officers................................................................... 3
Section 2.7 Shareholders' Meeting...................................................... 3
Section 2.8 Merger Without Shareholders' Meeting....................................... 3
ARTICLE III
CONVERSION OF SECURITIES; DISSENTING SHARES; PAYMENT
Section 3.1 Conversion of Securities................................................... 3
Section 3.2 Dissenting Shares.......................................................... 4
Section 3.3 Exchange of Certificates; Payment for Shares............................... 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization............................................................... 5
Section 4.2 Capitalization............................................................. 5
Section 4.3 Subsidiaries............................................................... 5
Section 4.4 Authority Relative to this Agreement....................................... 5
Section 4.5 Consents and Approvals; No Violations...................................... 6
Section 4.6 SEC Reports and Financial Statements....................................... 6
Section 4.7 Absence of Certain Changes................................................. 7
Section 4.8 Litigation................................................................. 7
Section 4.9 Undisclosed Liabilities.................................................... 7
Section 4.10 Employment and Non-Competition Agreements.................................. 7
Section 4.11 Material Contracts......................................................... 7
Section 4.12 Powers of Attorney and Certain Authorized Persons.......................... 7
Section 4.13 Title to and Condition of Property......................................... 7
Section 4.14 Patents, Copyrights, Service Marks and Trademarks.......................... 8
Section 4.15 Insurance.................................................................. 8
Section 4.16 Labor Matters.............................................................. 8
Section 4.17 Employee Benefit Plans..................................................... 8
Section 4.18 Transactions with Affiliates............................................... 9
Section 4.19 Environmental Matters...................................................... 9
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4.20 Tax Matters................................................................ 10
Section 4.21 Takeover Statutes.......................................................... 11
Section 4.22 Offer Documents............................................................ 11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Section 5.1 Organization............................................................... 12
Section 5.2 Authority Relative to this Agreement....................................... 12
Section 5.3 Consents and Approvals..................................................... 12
Section 5.4 Offer Documents............................................................ 12
Section 5.5 No Prior Activities........................................................ 13
Section 5.6 Certain Relationships...................................................... 13
Section 5.7 Financing.................................................................. 13
Section 5.8 SEC Reports and Financial Statements....................................... 13
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company......................................... 14
Section 6.2 No Solicitation............................................................ 15
Section 6.3 Access to Information...................................................... 15
Section 6.4 Reasonable Efforts......................................................... 16
Section 6.5 Consents................................................................... 16
Section 6.6 Public Announcements....................................................... 16
Section 6.7 HSR Act.................................................................... 16
Section 6.8 Employees.................................................................. 16
Section 6.9 Insurance and Indemnification.............................................. 16
Section 6.10 Dissenter's Rights......................................................... 17
Section 6.11 Representation Updates..................................................... 17
Section 6.12 Bankruptcy Court Motions................................................... 17
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger................. 18
Section 7.2 Additional Conditions to the Company's Obligation to Effect the Merger..... 18
Section 7.3 Conditions to the Obligations of Parent and Purchaser to Effect the
Merger..................................................................... 18
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination................................................................ 19
Section 8.2 Effect of Termination...................................................... 19
Section 8.3 Amendment.................................................................. 19
Section 8.4 Extension; Waiver.......................................................... 20
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE IX
MISCELLANEOUS
Section 9.1 Survival of Representations, Warranties and Agreements..................... 20
Section 9.2 Fees and Expenses.......................................................... 20
Section 9.3 Entire Agreement; Assignment............................................... 20
Section 9.4 Validity................................................................... 21
Section 9.5 Notices.................................................................... 21
Section 9.6 Governing Law.............................................................. 21
Section 9.7 Interpretation............................................................. 21
Section 9.8 Parties of Interest........................................................ 21
Section 9.9 Counterparts............................................................... 22
</TABLE>
iii
<PAGE> 5
SCHEDULE OF DEFINED TERMS
<TABLE>
<S> <C>
Agent................................................................................... 15
Agreement............................................................................... 1
Antitrust Division...................................................................... 16
Certificate............................................................................. 3
Claim................................................................................... 16
Closing Date............................................................................ 2
Closing................................................................................. 2
Code.................................................................................... 8
Company Benefit Plans................................................................... 8
Company................................................................................. 1
Confidentiality Agreement............................................................... 16
DGCL.................................................................................... 3
Effective Time.......................................................................... 3
Environmental Claims.................................................................... 9
Environmental Permit.................................................................... 10
Environmental Laws...................................................................... 10
ERISA................................................................................... 8
Exchange Act............................................................................ 6
E-Z CON................................................................................. 13
FBCA.................................................................................... 1
Fee..................................................................................... 20
FTC..................................................................................... 16
Governmental Entity..................................................................... 6
Hazardous Material...................................................................... 10
HSR Act................................................................................. 6
Indemnified Parties..................................................................... 16
Indenture............................................................................... 6
Liabilities............................................................................. 7
Material Contracts...................................................................... 7
Merger.................................................................................. 1
Merger Price............................................................................ 3
NationsBanc............................................................................. 2
Offer Documents......................................................................... 1
Offer................................................................................... 1
Offer to Purchase....................................................................... 1
Parent.................................................................................. 1
Parent SEC Documents.................................................................... 13
Parent Companies........................................................................ 3
Paying Agent............................................................................ 4
Plan of Reorganization.................................................................. 7
Proxy Statement......................................................................... 3
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
Purchaser............................................................................... 1
Schedule 14D-9.......................................................................... 2
SEC Documents........................................................................... 6
SEC..................................................................................... 1
Selling Shareholders.................................................................... 1
Shareholders Agreement.................................................................. 1
Shares.................................................................................. 1
Subscription Agreement.................................................................. 13
Superior Proposal....................................................................... 15
Surviving Corporation................................................................... 2
Takeover Proposal....................................................................... 15
Tax..................................................................................... 10
Tax Returns............................................................................. 10
</TABLE>
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of June 15, 1995,
by and among E-Z SERVE CORPORATION, a Delaware corporation ("Parent"), EZS
ACQUISITION CORPORATION, a Delaware corporation and wholly-owned subsidiary of
Parent ("Purchaser"), and SUNSHINE-JR. STORES, INC., a Florida corporation (the
"Company").
WHEREAS, certain shareholders of the Company have entered into a
Shareholders Agreement ("Shareholders Agreement"), dated as of the date hereof,
with Parent pursuant to which such shareholders (the "Selling Shareholders")
have agreed, subject to certain conditions, to tender 1,294,584 Shares (as
hereinafter defined) into the Offer (as hereinafter defined);
WHEREAS, Purchaser, as contemplated by this Agreement, will, and Parent
will cause Purchaser to, make a tender offer (the "Offer"), upon the terms and
subject to the conditions hereof, to acquire all of the outstanding Shares for
$12.00 per Share, net to the seller in cash. Subject to the terms and conditions
hereof and in accordance with the Florida Business Corporation Act (the "FBCA"),
Purchaser will thereafter merge with and into the Company (the "Merger"),
whereupon, among other things, each then outstanding Share (other than Shares
then owned by the Parent Companies, as hereinafter defined) shall be converted
into the right to receive $12.00 per Share or any higher price paid in the
Offer, net to the seller in cash; and
WHEREAS, the Board of Directors of the Company, has (i) determined that
each of the Offer and the Merger are fair to the shareholders of the Company and
in the best interests of such shareholders, (ii) approved and adopted this
Agreement and the transactions contemplated hereby, and (iii) determined to
recommend acceptance of the Offer and approval and adoption of this Agreement by
the shareholders of the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex "A" attached hereto shall have occurred and be existing,
Purchaser shall, and Parent shall cause Purchaser to, as soon as reasonably
practicable (but in no event later than the date required by law) commence the
Offer to purchase all of the outstanding shares of common stock, par value $.10
per share (the "Shares"), of the Company, at a price of $12.00 per Share, net to
the seller in cash, and, subject to the terms and conditions of the Offer, use
all reasonable efforts to consummate the Offer. Upon the terms and subject to
the conditions of the Offer, Purchaser shall, and Parent shall cause Purchaser
to, accept for payment and pay for Shares which have been validly tendered and
not withdrawn pursuant to the Offer at the earliest time that it is legally
permissible to do so after all conditions to the Offer shall have been satisfied
or waived by Purchaser. The obligations of Purchaser to consummate the Offer and
accept for payment and purchase Shares tendered pursuant to the Offer shall be
subject only to the conditions set forth in Annex "A" attached hereto, any of
which may be waived by Purchaser in its sole discretion.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, Purchaser shall, and Parent shall cause Purchaser to, file with the
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer which will contain an offer to purchase
(the "Offer to Purchase") and a form of the related letter of transmittal
(together with any supplements or amendments thereto, collectively the "Offer
Documents"). The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no
<PAGE> 8
representation is made by Purchaser or Parent with respect to information
supplied by the Company or any of its representatives for inclusion in the Offer
Documents. The Company, Parent and Purchaser each agree promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect.
Section 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer, the Merger and the transactions contemplated hereby, and
represents that (i) the Board, at a meeting duly called and held, (A) determined
that this Agreement and the transactions contemplated hereby, including each of
the Offer and the Merger, are fair to and in the best interests of the Company
and the holders of the Shares and (B) approved and adopted this Agreement and
the transactions contemplated hereby and approved the acquisition of the Shares
by Purchaser pursuant to the Offer and the subsequent Merger so that sections
607.0901 and 607.0902 of the FBCA are not applicable, and, if the Offer is made,
resolved to recommend acceptance of the Offer and adoption of this Agreement by
the shareholders of the Company; and (ii) NationsBanc Capital Markets, Inc.
("NationsBanc") has delivered to the Board its opinion, which will be promptly
confirmed in writing, that, as of the date of the opinion, the consideration to
be received by the holders of Shares pursuant to each of the Offer and the
Merger is fair from a financial point of view to the holders of Shares.
(b) The Company hereby agrees to file with the SEC, after review by the
Purchaser and its counsel, on the date of commencement of the Offer, and
promptly thereafter mail to its shareholders, a Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") containing such
recommendations. The Company hereby consents to the inclusion in the Offer of
the recommendations referred to in this Section 1.2.
(c) In connection with the Offer, the Company will promptly furnish
Purchaser with mailing labels, security position listings and any available
listing or computer file containing the names and addresses of the record
holders of Shares as of a recent date and shall furnish Purchaser with such
information and assistance (including, without limitation, updated lists of
shareholders, mailing labels and lists of securities positions) as Purchaser or
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate any documents in
connection with the Offer or the Merger, Purchaser and its affiliates shall (i)
hold in confidence the information contained in any such labels, listings and
files and will use such information only in connection with the Offer and the
Merger and (ii) if this Agreement is terminated, will, upon request deliver to
the Company all copies of such information in their possession.
Section 1.3 Escrow. As evidence of Parent's good faith intention to
consummate the transactions contemplated hereby, Parent has caused the deposit
of the sum of $2,500,000 (the "Escrow Funds") in an escrow account to be
governed by, and terminable pursuant to, the terms of an Escrow Agreement dated
the date hereof among Parent, the Company and the escrow agent.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the FBCA, Purchaser shall, and Parent shall cause
Purchaser to, be merged with and into the Company as soon as practicable
following the satisfaction or waiver, if permissible, of the conditions set
forth in Article VII hereof. The Merger will occur at a closing (the "Closing")
which will take place at the Effective Time (as hereinafter defined), at such
place as the parties hereto may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date." Following the Merger, the
separate corporate existence of the Purchaser shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all of the rights and obligations of the Purchaser in
accordance with the FBCA.
Section 2.2 Effective Time. The Merger shall become effective upon the
filing with the Delaware Secretary of State and the Florida Secretary of State
of a certificate or articles of merger or other appropriate
2
<PAGE> 9
documents, executed in accordance with the relevant provisions of Delaware
General Corporation Law ("DGCL") and the FBCA, or such other time as Purchaser
and the Company shall agree should be specified in such certificate (the time
the Merger becomes effective being the "Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 607.1106 of the FBCA.
Section 2.4 Restated Certificate of Incorporation and Bylaws. The Bylaws
of the Company as in effect at the Effective Time shall be the Bylaws of the
Surviving Corporation, and the Restated Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Restated Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by law.
Section 2.5 Directors. The directors of Purchaser at the Effective Time
shall be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.6 Officers. The officers of the Purchaser at the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.7 Shareholders' Meeting. If required by applicable law in order
to consummate the Merger, the Company shall, as soon as practicable as soon
after consummation of the Offer, (i) hold a special meeting of its shareholders
for the purpose of approving the Merger and this Agreement, (ii) use reasonable
best efforts to prepare and distribute a proxy statement (the "Proxy Statement")
with respect to such special meeting to its shareholders in accordance with
applicable laws, and (iii) include in such Proxy Statement the recommendation of
its Board of Directors to vote in favor of the Merger and this Agreement.
Section 2.8 Merger Without Shareholders' Meeting. If the holders of the
Shares are permitted to approve the Merger and this Agreement without having a
shareholders meeting, the Purchaser and the Company shall take all necessary and
appropriate actions to cause the Merger to become effective as soon as
practicable after consummation of the Offer, without a meeting of shareholders
of the Company in accordance with the FBCA and the Exchange Act.
ARTICLE III
CONVERSION OF SECURITIES; DISSENTING SHARES; PAYMENT
Section 3.1 Conversion of Securities. (a) Each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
Purchaser, Parent or any direct or indirect subsidiary of Parent (collectively,
the "Parent Companies"), which shall be cancelled) shall, at the Effective Time
and by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder thereof, (i) be converted into the right to receive $12.00
in cash, or any higher price paid per Share in the Offer (the "Merger Price"),
payable to the holders thereof, without interest thereon, (ii) cease to be
outstanding, and (iii) automatically be cancelled and retired and cease to
exist. Each holder of a share certificate (a "Certificate") formerly
representing any Shares shall cease to have any rights with respect thereto,
except the right to receive, without interest, the aggregate Merger Price
therefor upon the surrender of such Certificate in accordance with this Article
III. Each Share issued and outstanding immediately prior to the Effective Time
and owned by any of the Parent Companies and each Share issued and held by the
Company immediately prior to the Effective Time shall cease to be outstanding,
shall automatically be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
(b) Each share of common stock, par value $.01 per share, of Purchaser
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holder thereof, be converted into and shall thereafter evidence one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
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Section 3.2 Dissenting Shares. Holders of shares shall not be entitled to
dissenters rights with respect to the Merger, unless otherwise required by
applicable law.
Section 3.3 Exchange of Certificates; Payment for Shares. (a) Prior to the
Effective Time, Purchaser shall, and Parent shall cause Purchaser to, designate
a bank or trust company reasonably acceptable to the Company to act as Paying
Agent in connection with the Merger (the "Paying Agent"). At or before the
Effective Time, Purchaser shall, and Parent shall cause Purchaser to, deposit in
trust with the Paying Agent cash in an aggregate amount equal to the product of
(A) the number of Shares outstanding immediately prior to the Effective Time
(other than Shares owned by any Parent Company) and (B) the Merger Price. Such
funds shall be invested by the Paying Agent as directed by the Parent, provided
that such investments shall be in obligations of or guaranteed by the United
States of America, in commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Services, Inc. or Standard & Poor's Corporation, respectively,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $100 million, in each
case having a maturity of not more than one year.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder, as of the Effective Time, of a Certificate (i) a form 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 which shall be in such form and have such
other provisions as Parent may reasonably specify, and (ii) instructions for use
in effecting the surrender of the Certificates for payment of the Merger Price
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal duly executed, and any other required documents, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Price, after giving effect to any required tax withholdings, and such
Certificate shall forthwith be cancelled. No interest will be paid or accrued
for the benefit of holders of the Certificates on the Merger Price payable upon
the surrender of the Certificates. If payment of the Merger Price is to be made
to a person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment of the Merger Price to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable.
(c) At any time following one year after the Effective Time, Parent shall
be entitled to require the Paying Agent to deliver to it or the Surviving
Corporation any funds (including any interest received with respect thereto)
which it has made available to the Paying Agent and which have not been
disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect to
the Merger Price payable upon due surrender of their Certificates.
Notwithstanding the foregoing, Parent shall be entitled to receive from time to
time all interest or other amounts earned with respect to any cash deposited
with the Paying Agent as such amounts accrue or become available. The Surviving
Corporation shall pay all charges and expenses, including those of the Paying
Agent, in connection with the exchange of the Merger Price for Shares. Until
surrendered in accordance with the provisions of this Section 3.3, each
Certificate (other than Certificates representing Shares held by the Parent
Companies) shall represent for all purposes the right to receive the Merger
Price multiplied by the number of shares evidenced by such Certificate, without
any interest thereon.
(d) Payment of the Merger Price upon the surrender of Shares in accordance
with this Article III shall be deemed to have satisfied in full all rights
pertaining to such Shares. After the Effective Time, there shall be no transfers
of Shares on the stock transfer books of the Surviving Corporation. If, after
the Effective Time, Certificates are presented to the Surviving Corporation,
they shall be cancelled and exchanged for the Merger Price in accordance with
the procedures set forth in this Article III.
(e) Notwithstanding any other provision of this Agreement, none of Parent,
the Surviving Corporation, the Purchaser or the Paying Agent shall be liable to
any person for any amount properly delivered to a public official upon his
request pursuant to applicable abandoned property, escheat or similar laws.
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(f) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and the posting by such person of a bond in such
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it or the Paying Agent with respect to such
Certificate, the Paying Agent will deliver in exchange for such lost, stolen or
destroyed Certificate the aggregate Merger Price payable with respect thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser and Parent as follows:
Section 4.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
has all requisite corporate power and corporate authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have a Material Adverse Effect on the Company.
As used in this Agreement, any reference to any event, change, effect or
development being a Material Adverse Effect or having a Material Adverse Effect
on or with respect to a person means such event, change, effect or development
materially impairs or adversely affects, directly or indirectly, (i) the
financial condition, properties, business or results of operations of the
Company taken as a whole, except to the extent such effects or changes merely
reflect trends generally affecting the industry in which the Company operates or
(ii) the ability of the Company to perform its obligations hereunder or to
consummate the transactions contemplated hereby. The Company is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except for
failures to be so duly qualified or licensed and in good standing which do not
in the aggregate have a Material Adverse Effect on the Company. Copies of the
Restated Certificate of Incorporation and Bylaws (in each case together with all
amendments and modifications thereto and restatements thereof) of the Company
have heretofore been delivered to Parent, and such copies are accurate and
complete as of the date hereof. The Restated Certificate of Incorporation and
Bylaws of the Company are in full force and effect and the Company is not in
default of the performance, observation or fulfillment of either in any material
respect.
Section 4.2 Capitalization. The authorized capital stock of the Company
consists of 3,000,000 Shares, of which, as of the date hereof, 1,701,650 shares
were issued and outstanding. All the outstanding shares of the Company's capital
stock are duly authorized, validly issued, fully paid and non-assessable and
free of any preemptive rights in respect thereto. Except as set forth on
Schedule 4.2, there are no existing options, warrants, calls, subscriptions, or
other rights or other agreements or commitments of any character relating to the
issued or unissued capital stock of the Company, to which the Company is a party
or by which it may be bound or obligating the Company to issue, transfer or sell
or cause to be issued, transferred or sold any shares of capital stock, or other
equity interests or obligating the Company to grant, extend or enter into any
such option, warrant call, subscription or other right, agreement or commitment.
There are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.
Section 4.3 Subsidiaries. The Company does not own, directly or
indirectly, in excess of 5% of, or any class or series of, the outstanding
equity or debt securities of any corporation or other entity.
Section 4.4 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby 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 so contemplated (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
outstanding Shares if and to the
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extent required by applicable law). This Agreement has been duly and validly
executed and delivered by the Company, and, assuming this Agreement constitutes
a valid and binding obligation of Purchaser and assuming the accuracy of the
representation and warranty contained in Section 5.5 hereof, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
Section 4.5 Consents and Approvals; No Violations. Except for applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the filing of a certificate or articles of merger as required by
the FBCA and the DGCL, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby nor compliance by the Company with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
Restated Certificate of Incorporation or Bylaws of the Company, (ii) except as
listed on Schedule 4.5(ii), require any filing with, or permit, license
(including liquor licenses), authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
other regulatory authority or agency (a "Governmental Entity") (except where the
failure to obtain such permits, licenses, authorizations, consents or approvals
or to make such filings would not have a Material Adverse Effect on the
Company,) (iii) except as reflected on Schedule 4.5(iii), result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration, or creation of any lien or other encumbrance)
under, any of the terms, conditions or provisions of any lease to which the
Company is a party or by which it or its properties or assets may be bound, (iv)
assuming the accuracy of the representation and warranty contained in Section
5.5 hereof and except as reflected on Schedule 4.5(iii), result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration, or creation of any lien or other encumbrance)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, contract, agreement or other instrument or obligation to which the
Company is a party or by which any of it or any of its properties or assets may
be bound, provided that the Surviving Corporation enters into a supplemental
indenture as required by Section 12.01.B.4 of the Trust Indenture dated June 21,
1994 between the Company and NationsBank of Florida, N.A. (the "Indenture"), (v)
except pursuant to the agreements listed on Schedule 4.10, result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration of vesting, or trigger any payment or other
obligation) under, any of the terms, conditions or provisions of any employee
benefit plans, or any grant or award under any employee benefit plan or any
employment agreement, to which the Company is a party or by which it or its
properties or assets may be bound, or (vi) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
properties or assets, except in the case of (iii), (iv), (v) or (vi) for
violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 4.6 SEC Reports and Financial Statements. Except as listed on
Schedule 4.6, the Company has filed with the SEC and has heretofore delivered to
Purchaser, all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 1992, under the Exchange Act or
the Securities Act of 1933 (all such forms, reports, schedules, statements and
other documents, collectively the "SEC Documents"). The SEC Documents, including
without limitation any financial statements or schedules included therein, (a)
at the time filed, or as amended by or reflected in any subsequent filings, did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading and (b) were prepared in all material respects (other than
timeliness) in accordance with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. Except as amended by or reflected in any
subsequent filings, each of the balance sheets (including the related notes)
included in the SEC Documents fairly presents the financial position of the
Company as of the respective date thereof, and the other related statements
(including the related notes) included therein fairly present the results of
operations and changes in financial position of the Company for the respective
periods covered thereby, except, in the case of interim financial statements,
for year-end adjustments, consisting only of normal recurring accruals. Except
as
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amended by or reflected in any subsequent filings, each of the financial
statements (including the related notes) included in the SEC Documents complied
when filed as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and has been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein).
Section 4.7 Absence of Certain Changes. Except as reflected in the
financial statements contained in or otherwise disclosed in the SEC Documents or
on Schedule 4.7, during the period commencing January 1, 1995, (i) there have
been no events, changes, effects or developments having, individually or in the
aggregate, a Material Adverse Effect on the Company and (ii) the Company has not
taken, without Purchaser's consent, any of the actions proscribed by Section 6.1
hereof.
Section 4.8 Litigation. Except as set forth on Schedule 4.8 or disclosed
in the SEC Documents, there are no actions, suits, investigations or proceedings
pending or, to the best knowledge of the Company, threatened against the Company
that, if adversely determined, could reasonably be expected to result in any
claims against or obligations or liabilities of the Company, except for such
obligations and liabilities as, in the aggregate, would not have a Material
Adverse Effect.
Section 4.9 Undisclosed Liabilities. Since December 31, 1994, the Company
has not incurred or otherwise become liable for any direct or indirect
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of or by any person ("Liabilities") except (i) in the ordinary
course of business consistent with past practice, (ii) as reflected in or
referred to in the SEC Documents or in a schedule hereto, or (iii) in connection
with the transactions contemplated by this Agreement. The Company neither knows
nor has any reasonable ground to know of any basis for assertion against the
Company of any Liabilities not adequately reflected, reserved against or given
effect to in the SEC Documents, except for the Liabilities as contemplated by
(and in the maximum amount specified in) Section 9.2 and other Liabilities
which, in the aggregate, would not have a Material Adverse Effect. Schedule 4.9
sets forth a list of claims outstanding as of the date hereof that the Company
disputes (except as noted therein) and which if allowed would be considered
Class 7 claims under the Company's plan of reorganization ("Plan of
Reorganization").
Section 4.10 Employment and Non-Competition Agreements. Except as
specified in Schedule 4.10, the Company is not a party to any employment
agreement, nor a party to or otherwise bound by any non-competition,
non-solicitation or other similar agreement with any of its present or former
employees.
Section 4.11 Material Contracts. All agreements, leases, contracts,
notes, mortgages, indentures, arrangements or other obligations of the Company
material to the Company's business ("Material Contracts") are valid, binding and
enforceable in accordance with their terms except to the extent limited by
bankruptcy or other laws affecting creditors' rights generally and except in
such respects as would not have a Material Adverse Effect. The Company has
fulfilled all of its obligations under the Material Contracts required to be
performed by it prior to the date hereof, except for failures to fulfill its
obligations which, in the aggregate, would not have a Material Adverse Effect.
No default by the Company under any Material Contract has occurred and is
continuing, except for any default which would not give another person the
right, with or without giving of notice or lapse of time, or both, to terminate
or materially modify the terms of such contract. The Company has no knowledge of
any material default or claimed, threatened or alleged material default by any
other party under any term or provision of any Material Contract. Except as
disclosed pursuant to Section 4.5 hereof, no consents or approvals of any party
to any Material Contract are required to be obtained by the Company in
connection with the execution and delivery of this Agreement by the Company and
the consummation of the transactions contemplated hereby.
Section 4.12 Powers of Attorney and Certain Authorized Persons. Except as
set forth on Schedule 4.12, no person holds a power of attorney from the
Company. No person other than the executive officers of the Company is
authorized to borrow money or incur or guarantee indebtedness on behalf of the
Company.
Section 4.13 Title to and Condition of Property. Except as set forth in
Schedule 4.13, the Company has good and indefeasible title or valid leasehold
title, free and clear of all liens, to all real property, buildings, fixtures,
equipment, machinery, tools and other personal property reflected in the SEC
Reports (including the
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financial statements included or incorporated therein) or used in the Company's
business, except for liens and title defects, which, in the aggregate, would not
have a Material Adverse Effect. Except as set forth in Schedule 4.13, all
vehicles and equipment and all other tangible assets and properties owned or
leased by the Company are in good operating condition and repair (ordinary wear
and tear excepted) and are usable in the ordinary course of the Company's
business consistent with past practice and conform in all material respects to
all applicable regulations relating to their use and operation, except for
failures to so conform which, in the aggregate, would not have a Material
Adverse Effect.
Section 4.14 Patents, Copyrights, Service Marks and Trademarks. The
Company is the owner of the entire right, title and interest in and to the trade
and service names specified in Schedule 4.14, except in such respects as would
not have a Material Adverse Effect. The Company is the owner of the entire
right, title and interest in and to all of the patents, copyrights, service
marks, names and trademarks used in the Company's business, except for such
commitments, liens, encumbrances, assignments, licenses, claims and rights of
others as would not in the aggregate have a Material Adverse Effect.
Section 4.15 Insurance. Except in such respects as would not have a
Material Adverse Effect, all insurance coverage applicable to the Company and
the Company's business is in full force and effect, is valid, binding and
enforceable in accordance with its terms against the respective insurers,
insures the Company in reasonably sufficient amounts against all risks usually
insured against by persons operating similar businesses or properties in the
localities where such businesses or properties are located and has been issued
by insurers of recognized responsibility. There is no default under such
coverage nor has there been any failure to give notice or present any claim
under any such coverage in due and timely fashion, except for such defaults and
failures as would not in the aggregate have a Material Adverse Effect. There are
no outstanding unpaid premiums except in the ordinary course of business and no
notice of cancellation, or non-renewal of any such coverage has been received,
except for such unpaid premiums and notices as would not in the aggregate have a
Material Adverse Effect. Except as set forth in Schedule 4.8, the Company does
not know or have reason to know of the occurrence of any event which reasonably
might form the basis of any claim against the Company or its or their assets or
properties of which might increase the insurance premiums payable for any such
coverage, except for such claims and increases as would not in the aggregate
have a Material Adverse Effect. Except for the bond given in connection with the
Company's self-insured worker's compensation program in Florida, there are no
outstanding performance bonds covering the Company or its respective operations
which, individually or in the aggregate, are material to the Company's business.
Section 4.16 Labor Matters. The Company is not a party to, otherwise bound
by or subject to any Liabilities in connection with any collective bargaining
agreement. No strike, slowdown, picketing or work stoppage by any union or other
group of employees against the Company or its assets or properties wherever
located, secondary boycott with respect to its products, lockout of any of its
employees or any other labor trouble, occurrence, event or condition of a
similar character has occurred or, to the Company's knowledge, has been
threatened affecting the Company's business.
Section 4.17 Employee Benefit Plans.
(a) General. All "employee benefit plans," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), incentive plans, unrestricted stock plans, stock option plans, stock
appreciation rights plans and any other similar plans, programs, funds,
contracts or arrangements sponsored, maintained or contributed to by the Company
(collectively the "Company Benefit Plans") for the benefit of the Company's
employees are set forth in Schedule 4.17. All Company Benefit Plans have been
maintained in compliance with ERISA, the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder (the "Code") and all other applicable regulations, except for such
failures to comply which, in the aggregate, would not have a Material Adverse
Effect. There is no current matter, including without limitation, any matter
involving the funding, administration, operation, expenses and funds of the
Company Benefit Plans, which would have a Material Adverse Effect on the Company
Benefit Plans. Except as set forth in Schedule 4.17, the Company does not now,
and has not at any time sponsored, maintained, adopted, contributed or been
obligated to contribute to any employee pension benefit plans, pursuant to
Section 3(2) of ERISA, for the benefit of the Company's
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employees which are or ever were subject to the provisions of Title IV of ERISA
and any defined benefit plan as defined in Section 3(35) of ERISA.
(b) Prohibited Transactions. There has not occurred, nor is any person or
entity contractually bound to enter into, any transaction which constitutes a
prohibited transaction as defined in Section 406 or Section 407 of ERISA or
Section 4975 of the Code with respect to any Company Benefit Plan sponsored by
or maintained by the Company or to which the Company contributes for the benefit
of the Company's employees.
(c) Multi-employer Plan Liability. The Company is not now, or has ever
been, a party to, or become subject to, any collective bargaining agreements
with respect to the Company's employees pursuant to which it has been, is or
will become obligated to contribute to a "multi-employer plan" as that term is
defined in Section 4001(a)(3) of ERISA.
(d) Controlled Group Relationships. The Company is not now, and has never
been, a part of either (A) a controlled group of corporations within the meaning
of Section 414(b) of the Code, (B) a group of trades or businesses under common
control within the meaning of Section 414(c) of the Code, or (C) an affiliated
service group within the meaning of Section 414(m) of the Code, as to which the
Company has incurred, or will incur, any liability material to the financial
condition, properties, businesses or results of operations of the Company. The
Company is not a party to an employee leasing arrangement described in Section
414(n) of the Code or to any arrangement described in Section 414(o) of the
Code.
(e) Reporting and Disclosure Obligations. The Company has filed or caused
to be filed on a timely basis all returns, reports, statements, notices and
other documents required under any applicable regulations with respect to each
Company Benefit Plan, and have delivered or caused to be delivered to every
participant, beneficiary and other party entitled to such material all plan
descriptions, returns, reports, schedules, notices, statements and similar
materials, including without limitation summary descriptions and reports, as are
required under Title I of ERISA and/or the Code, except for failures to file or
deliver which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(f) Additional Plans. The Company has not made any commitment, whether
formal or informal, to create or implement any additional Company Benefit Plans,
or to amend or modify any Company Benefit Plan other than to comply with the
requirements of the Code or ERISA.
Section 4.18 Transactions with Affiliates. Except to the extent described
in Schedule 4.18, no director or officer of the Company or shareholder holding
more than 10% of the voting securities of the Company, or to the Company's
knowledge, any member of the immediate family or any other of the affiliates of
any of the foregoing, owns or has an ownership interest in any corporation or
other entity that is a party to, or in any property which is the subject of,
business arrangements or relationships of any kind with the Company.
Section 4.19 Environmental Matters. Except as set forth in Schedule
4.19(ii) and 4.19(iii) and except for matters which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
(i) no releases of Hazardous Materials have occurred at or from any property
that is the subject of this transaction or that was otherwise owned or used at
any time by the Company or its predecessors for management of Hazardous
Materials; (ii) there are no currently pending or threatened Environmental
Claims against the Company; (iii) there are no releases of petroleum products
from underground storage tanks owned by the Company (or located at any facility
owned or operated by the Company) which have not been reported by the Company to
governmental authorities as set forth on Schedule 4.19(iii); and (iv) there are
no facts, circumstances or conditions that would reasonably be expected to
restrict, under any Environmental Law or Environmental Permit in effect prior to
or at the Effective Time the ownership, occupancy, use or transferability of any
property owned, operated or leased by the Company as presently utilized by the
Company. As used herein:
"Environmental Claims" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, violations or proceedings
related to any applicable Environmental Law or any Environmental Permit brought,
issued or asserted by: (i) a governmental authority for damages, penalties,
removal, response, remedial or other action pursuant to any applicable
Environmental Law, except for notices of noncompliance received by the Company
in the routine course of inspections performed by governmental authorities
which, in
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the aggregate, would not have a Material Adverse Effect; or (ii) a third party
seeking damages for personal injury or property damage resulting from the
release of a Hazardous Material, petroleum or petroleum products at, to or from
any facility of the Company, including but not limited to the Company employees
seeking damages for exposure to Hazardous Materials;
"Environmental Laws" means all federal, state, and local laws, statutes,
ordinances, codes, rules and regulations related to protection of the
environment and/or the handling, use, generation, treatment, storage,
transportation, or disposal of Hazardous Materials;
"Environmental Permit" means all permits, licenses, approvals,
authorizations, or consents required by any governmental authority under any
applicable Environmental Law and includes any and all orders, consent orders or
binding agreements issued or entered into by a governmental authority under any
applicable Environmental Law; and
"Hazardous Material" means any hazardous or toxic substance, material or
waste which is regulated as of the Effective Time by any state or local
governmental authority or the United States, excluding petroleum and petroleum
products but including, without limitation, any material or substance that is:
(i) defined as a "hazardous substance" under applicable state law; (ii)
asbestos; (iii) designated as a "hazardous substance" pursuant to Section 311 of
the Federal Water Pollution Control Act, as amended, 33 U.S.C. sec. 1251 et seq.
(33 U.S.C. sec. 1321); (iv) defined as a "hazardous waste" pursuant to Section
1004 of the federal Resource Conservation and Recovery Act, as amended, 42
U.S.C. sec. 6901 et seq. (42 U.S.C. sec. 6903); (v) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. sec. 9601 et seq. (42
U.S.C. sec. 9601); (vi) defined as a "regulated substance" pursuant to Section
9001 of the federal Resource Conservation and Recovery Act, as amended, 42
U.S.C. sec. 6901 et seq. (42 U.S.C. sec. 6991); or (vii) otherwise regulated
under the Toxic Substances Control Act, 15 U.S.C. sec. 2601, et seq., the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. sec. 1801, et
seq., or the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7
U.S.C. sec. 136, et seq.
Section 4.20 Tax Matters. Except as set forth in Schedule 4.20 or Schedule
4.8
(a) The Company has filed or caused to be filed all federal, state, local,
foreign or other Tax (as hereinafter defined) returns ("Tax Returns") of every
nature required to be filed by them, other than failures to file which, in the
aggregate, would not have a Material Adverse Effect.
(b) Except for extensions of 1994 state and federal income taxes, the
Company has not obtained any extensions of time in which to file any Tax Returns
which have not yet been filed.
(c) Each Tax Return filed by the Company is complete and correct in all
respects, except in such respects as would not have a Material Adverse Effect.
(d) No claim or assertion has been made against the Company by any tax
authority in any jurisdiction in which no Tax Return has been filed by the
Company that the Company is or may be subject to taxation of any sort in that
jurisdiction or otherwise is required to file a Tax Return.
(e) All Taxes owed by the Company (whether or not shown on any Tax Return)
have been timely paid, except for failures to make payment which, in the
aggregate, would not have a Material Adverse Effect. For purposes of this
Agreement, "Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, unemployment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including, but not limited to, taxes
under Section 59A of the Code), customs, duties, capital stock, franchise,
profits, withholding, Social Security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or any other kind of tax whatsoever, including any
interest, addition, penalty or other associated charge thereto, whether disputed
or not.
(f) There are no Tax liens or other security interests or encumbrances of
any type resulting from Tax liabilities on any of the assets of the Company,
other than liens for Taxes not yet due and liens that can be cleared without an
expense to the Company that would have a Material Adverse Effect.
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(g) The Company has withheld and paid all Taxes required to be withheld and
paid in connection with amounts paid or owing to any employee, creditor,
independent contractor or any other party, except for failures to withhold or
pay which, in the aggregate, would not have a Material Adverse Effect.
(h) There is no dispute, claim or any other controversy concerning any Tax
liability of the Company either (A) raised or asserted by any Tax authority in
writing; or (B) whether or not formally asserted or claimed, as to which the
Chief Financial Officer or the Controller of the Company with authority for Tax
matters has any knowledge, except in the case of clause (B) in such respects as
would not have a Material Adverse Effect. The Company has made available to
Purchaser a correct and complete copy of each Federal Income Tax Return,
examination report, statement of deficiency, or any other administrative or
judicial assertion, assessment or determination of Federal Income Tax liability
with respect to the Company.
(i) Except in such respects as would not have a Material Adverse Effect,
each method of Tax accounting employed by the Company is a permissible method of
Tax accounting, validly elected, with respect to the Company. The Company has
not changed, or requested to be permitted to change, any method of Tax
accounting.
(j) The Company has not waived any statute of limitations with respect to
federal or state Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency, except for such waivers or extensions which, by their
terms, have elapsed as of the date of this Agreement.
(k) The Company:
(i) has not filed a consent under Section 341(f) of the Code
concerning collapsible corporation;
(ii) has not made any payments, is not obligated to make any payments,
and is not a party to any agreement that will render it (or the payor of
compensation under the agreement) subject to the provisions of Section 280G
of the Code regarding payments as a result of a change in control;
(iii) has not been a United States real property holding Company
within the meaning of Section 897(c)(2);
(iv) has not failed to disclose on its Tax return any positions taken
therein that could give rise to a substantial understatement of Federal
Income Tax liability within the meaning of Section 6661 of the Code;
(v) is not a party to any Tax allocation or Tax sharing agreement;
(vi) has no material liability for unpaid Taxes because it once was a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code or any similar group defined under a similar provision of state, local
or foreign law) during any part of any tax year within any part of which
any entity other than the Company was also a member of the affiliated
group.
(l) Except in such respects as would not have a Material Adverse Effect,
the unpaid Taxes of the Company do not exceed the reserve for Tax liability
(other than any reserve for deferred Taxes to reflect timing differences between
book and Tax income) set forth on the most recent balance sheets, as adjusted
for time through the Effective Time in accordance with the past reasonable
custom of the Company.
Section 4.21 Takeover Statutes. No "fair price," "moratorium," "control
share acquisition," "affiliate transaction" or other similar antitakeover
statute or regulation is applicable to the Company, the Shares, the Offer, the
Merger or the transactions contemplated thereby or hereby, or, if applicable,
all such statutes and regulations have been rendered of no effect by virtue of
the approval of the actions contemplated herein by the Company's Board of
Directors.
Section 4.22 Offer Documents. None of the information supplied by the
Company or any affiliate of the Company for inclusion in the Offer Documents
will, at the respective times the Offer Documents or any amendments or
supplements thereto or any schedules required to be filed with the SEC in
connection therewith are filed with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
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circumstances under which they were made, not materially misleading. The
Schedule 14D-9 and the Proxy Statement, if any, will comply in all material
respects with the Exchange Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to the
Company as follows:
Section 5.1 Organization. Parent and Purchaser are corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware and have all requisite corporate power and corporate authority and all
necessary governmental approvals to own, lease and operate their properties and
to carry on their business as now being conducted.
Section 5.2 Authority Relative to this Agreement. Each of Parent and
Purchaser has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery and performance of this Agreement and the consummation of
the Merger and of the other transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Purchaser and Parent are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Purchaser and
Parent, and (assuming this Agreement constitutes a valid and binding obligation
of the Company) constitutes a valid and binding obligation of Purchaser and
Parent, enforceable against Purchaser and Parent in accordance with its terms.
Section 5.3 Consents and Approvals. Except for applicable requirements of
the Exchange Act, the HSR Act and the filing of articles of merger as required
by the FBCA and a certificate of merger as required by the DGCL, neither the
execution, delivery or performance of this Agreement by Purchaser and Parent nor
the consummation by Purchaser and Parent of the transactions contemplated hereby
or thereby nor compliance by Purchaser and Parent with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of Purchaser or Parent,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not prevent
or delay the consummation of the Offer or the Merger, or otherwise prevent
Purchaser from performing its obligations under this Agreement), (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which Purchaser or Parent is a party or by which any
of them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser, any of its subsidiaries or any of their properties or assets, except
in the case of (ii), (iii) and (iv) for violations, breaches or defaults which
would not, individually, or in the aggregate, have a Material Adverse Effect on
Parent and its subsidiaries, taken as a whole.
Section 5.4 Offer Documents. The Offer Documents and the Offer will comply
in all material respects with the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is being made by Purchaser
or Parent with respect to any information supplied by the Company or any
affiliates of the Company for inclusion therein. The Offer Documents will not,
at the time (i) of their filing with the SEC, (ii) that they are published, sent
or given, and (iii) Shares are purchased pursuant to the Offer, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not materially misleading;
provided that no representation or warranty is being made by Purchaser or Parent
with respect to any information supplied by the Company or any affiliate of the
Company for inclusion in the Offer Documents. None of the information supplied
by the Purchaser or any affiliate of the Purchaser for inclusion in the Proxy
Statement will, at the time of the special meeting, if necessary, of the
Company's shareholders described in Section 2.7 hereof contain any untrue
statement of a material fact or omit to state any material
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fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading.
Section 5.5 No Prior Activities. Except for its obligations under this
Agreement and the guarantee by Purchaser of the obligations of E-Z Serve
Convenience Stores, Inc. ("E-Z CON"), a wholly-owned subsidiary of Parent, under
E-Z CON's Credit and Guaranty Agreement with a group of banks, which guarantee
will terminate at the Effective Time. Purchaser has not incurred any obligations
or liabilities. Except in connection with seeking to acquire (or engage in the
business conducted by) the Company, Purchaser has not engaged in any business or
activities of any type or kind whatever or entered into any agreement or
arrangements with any person or entity.
Section 5.6 Certain Relationships. Except as set forth on Schedule 14D-1
with respect to the Offer, a draft of which has been delivered to the Company,
and other than this Agreement, the Offer and the Shareholders Agreement and the
transactions contemplated hereby and thereby, (i) neither Purchaser nor any
person affiliated with Purchaser for whom or which information is required to be
provided on Schedule 14D-1 with respect to the Offer has any beneficial interest
in any Shares, (ii) there is no contract, arrangement, understanding or
relationship required to be disclosed pursuant to Item 7 of such Schedule 14D-l,
and (iii) there are no plans or proposals required to be disclosed pursuant to
Item 5 of such Schedule 14D-1.
Section 5.7 Financing. Parent has available to it, from Parent's general
corporate funds, under an existing line of credit to a subsidiary (borrowings
under which may be utilized in part to consummate the transactions contemplated
hereby without further consent of the lenders) and pursuant to the Subscription
Agreement dated June 13, 1995, by and among Parent, Phemus Corporation and
Intercontinental Mining & Resources Incorporated (the "Subscription Agreement"),
funds sufficient to acquire all of the Shares in the Offer and the Merger and to
pay all related fees and expenses. True and correct copies of the (i)
Subscription Agreement and (ii) a waiver from Parent's senior lender that
permits a subsidiary of Parent to draw up to $3.4 million on its existing line
of credit and contributing it to the Purchaser for the purposes of consummating
the transactions contemplated herein, have been delivered to the Company.
Section 5.8 SEC Reports and Financial Statements. The Parent has filed
with the SEC and has heretofore delivered to the Company, all forms, reports,
schedules, statements and other documents required to be filed by it since
December 31, 1992, under the Exchange Act or the Securities Act of 1933 (all
such forms, reports, schedules, statements and other documents, collectively the
"Parent SEC Documents"). The Parent SEC Documents, including without limitation
any financial statements or schedules included therein, (a) at the time filed,
or as amended by any subsequent filings, did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not materially misleading and (b) were
prepared in all material respects in accordance with the applicable requirements
of the Exchange Act and the Securities Act, as the case may be, and the
applicable rules and regulations of the SEC thereunder. Each of the balance
sheets (including the related notes) included in the Parent SEC Documents fairly
presents the financial position of the Company as of the respective date
thereof, and the other related statements (including the related notes) included
therein fairly present the results of operations and changes in financial
position of the Parent for the respective periods covered thereby, except, in
the case of interim financial statements, for year-end adjustments, consisting
only of normal recurring accruals. Each of the financial statements (including
the related notes) included in the Parent SEC Documents complied when filed as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto and has been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as otherwise noted
therein).
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ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company. (a) Except as contemplated
by this Agreement, during the period from the date of this Agreement to the
Effective Time, the Company will conduct its operations according to its
ordinary and usual course of business consistent with past practice, use all
reasonable efforts to preserve intact its current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with them. Without limiting the generality of the foregoing, except as
otherwise contemplated by this Agreement, the Company shall not, without the
prior written consent of Purchaser:
(i) issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants,
commitments, subscriptions rights to purchase or otherwise) or authorize
the issuance, sale or delivery of any stock of any class or any other
securities or any rights, warrants or options to acquire any such stock or
other securities;
(ii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem, purchase or otherwise acquire any securities of
the Company;
(iii) amend its Restated Certificate of Incorporation or Bylaws;
(iv) transfer, lease, license, sell, mortgage, pledge, dispose of or
encumber any assets other than in the ordinary course of business or as set
forth on Schedule 6.1(iv), or incur, amend the terms of or modify any
indebtedness or other liability other than current liabilities incurred in
the ordinary and usual course of business and except as set forth on
Schedule 6.1(iv);
(v) (A) increase in any manner the compensation of any director,
officer or any other employee except in the ordinary course of business and
in accordance with its customary past practices or pursuant to the terms of
an employment agreement; (B) grant any severance or termination pay except
as required or permitted under those agreements, policies or plans listed
in the schedules hereto; or (C) establish, adopt, enter into, extend or
amend, except to the extent required by applicable law, any employee
benefit plan;
(vi) (A) acquire, by merger, reorganization, consolidation or
purchase, substantially all of the assets of, or otherwise acquire, any
business or any organization or division thereof; or (B) except as
contemplated hereby, merge with, liquidate into or otherwise combine with
any other person, corporation, partnership or other entity;
(vii) settle or compromise any material claim or litigation for an
amount more than 25% in excess of applicable reserves therefor or, except
in the ordinary and usual course of business, modify, amend or terminate
any of its Material Contracts or waive, release or assign any material
rights or claims;
(viii) enter into any agreement or make any commitment to do any of
the foregoing; or
(ix) change its application of accounting principles in any material
respect except if such change is required by GAAP or accounting rules
applicable to public companies to be made at such time.
(b) Between the date hereof and through the Effective Time, the Company
will:
(i) perform in all material respects all of its obligations under all
material contracts (except those being contested in good faith) and, except
as set forth in the disclosure schedules hereto or with the prior consent
of the Parent, not enter into, assume or amend any contracts except (i)
contracts in the ordinary course of business and are either cancelable by
the Company on not more than 90 days' notice or involve payment by the
Company of less than $25,000 individually and (ii) renewal of store leases
on substantially similar terms;
(ii) maintain in full force and effect policies of insurance
comparable in scope of coverage to that now maintained by the Company, and
maintain and keep its material properties and equipment in good
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repair, working order and condition, ordinary wear and tear excepted, in
accordance with its customary policies and past practices; and
(iii) use its best efforts to prepare and timely file all federal,
state, local and foreign returns for taxes and other tax reports, filings
and amendments thereto required to be filed by it, and allow the Parent, at
its request, to review all such returns, reports, filings and amendments at
the Company's offices.
Section 6.2 No Solicitation. (a) Until the termination of this Agreement,
the Company shall not, and the Company shall use its reasonable best efforts to
cause its affiliates, officers, directors, employees, agents and representatives
(including, without limitation, any investment banking, proxy solicitation,
legal or accounting firm retained by the Company or any member or employee of
any of the foregoing (each, an "Agent")) not to, directly or indirectly, take or
continue taking any action to solicit, encourage or facilitate any Takeover
Proposal (as defined below) or any inquiry or action that may reasonably be
expected to lead to, any Takeover Proposal, including soliciting, initiating or
conducting negotiations with, or providing any information to, any person (other
than Purchaser or an affiliate of Purchaser) concerning any actual or potential
Takeover Proposal, provided, however, that the Company may furnish information
to and participate in negotiations with a third party that proposes to acquire
100% of the Shares at a price and on terms that the Company believes are more
favorable to the Company's shareholders than the transactions contemplated
hereby (a "Superior Proposal"). As used herein a "Takeover Proposal" means any
proposal for a merger or other business combination, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any proposal or offer to acquire in any manner a 10% or greater
equity interest in the Company or a substantial portion of the assets of the
Company.
(b) Nothing contained in this Agreement shall prohibit the Company or its
Board of Directors from (i) taking and disclosing to the Company's shareholders
a position with respect to a tender offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making such
disclosure to the Company's shareholders which, in the reasonable judgment of
the Company's Board of Directors is required under applicable law or (ii)
failing to make or withdrawing its recommendation referred to herein if there
exists a Superior Proposal and entering into a definitive agreement with respect
to a Superior Proposal. Prior to providing any confidential information to any
person relating to a Takeover Proposal, the Company shall enter into a
confidentiality agreement with such person having substantially the same terms
as the Confidentiality Agreement.
(c) The Company shall immediately cease and cause to be terminated any
existing activities, including discussions or negotiations, with any persons
(other than Parent or its affiliates) conducted heretofore with respect to any
Takeover Proposal (other than a Superior Proposal), and shall take the necessary
steps to inform the individuals and entities referred to in the first sentence
hereof of the obligations undertaken in this Section 6.2. If the Company or any
of its affiliates or Agents has provided any person (other than Parent or from
persons who propose a Superior Proposal) with any confidential information
relating to a Takeover Proposal, the Company shall request the immediate return
or destruction thereof. The Company shall notify Parent immediately if any
inquiries, proposals or offers related to a Takeover Proposal are received by,
any confidential information is requested from, or any negotiations or
discussions related to a Takeover Proposal are sought to be initiated or
continued with, it or (to the best of its knowledge) any individual or entity
referred to in the first sentence of Section 6.2(a), and of the terms and other
details of any such Takeover Proposal or request and shall keep Parent fully
apprised of all developments with respect thereto.
Section 6.3 Access to Information. (a) Between the date of this Agreement
and the Effective Time, the Company will give Parent and its authorized
representatives such reasonable access during regular business hours to all its
stores, offices, warehouses and other facilities and its books and records as
they may reasonably require, will permit Parent and its authorized
representatives to make such inspections as they may reasonably require and will
cause its officers to furnish Parent with such financial and operating data and
other information and assistance with respect to the business and properties of
the Company as Parent may from time to time reasonably request; provided,
however, that Purchaser and its representatives shall take such action as is
deemed necessary in the reasonable opinion of the Company to schedule their
access and visits
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through a designated officer or representative of the Company and in such a way
as to avoid disrupting the normal business of the Company.
(b) Until the Effective Time, Parent will hold and will cause its
affiliates, consultants and advisors to hold any information which they receive
in connection with the transactions contemplated by this Agreement in strict
confidence in accordance with and subject to the terms of the Confidentiality
Agreement dated as of January 29, 1993, between Parent (as assignee of E-Z Serve
Management Company) and the Company, as amended as of June 14, 1995 (the
"Confidentiality Agreement").
Section 6.4 Reasonable Efforts. Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. The Company and Purchaser will execute any
additional instruments necessary to consummate the transactions contemplated
hereby. If approval of the Company's shareholders is required by law for the
consummation of the Merger, Purchaser shall, and shall cause each of its
affiliates to, vote all Shares over which it exercises voting power to be voted
in favor of the merger at any meeting of the shareholders called for the purpose
or to sign any consent in lieu of such a meeting.
Section 6.5 Consents. Parent, Purchaser and the Company each will use its
reasonable efforts to obtain as soon as practicable consents of all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Section 6.6 Public Announcements. Parent, Purchaser and the Company will
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger. Neither Purchaser,
Parent nor the Company shall issue any such press release or make any such
public statement without the approval of the other, except upon advice of
counsel or as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 6.7 HSR Act. The Company, Parent and Purchaser shall, as soon as
practicable, file Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and shall use their best
efforts to respond as promptly as practicable to all inquiries received from the
FTC or the Antitrust Division for additional information or documentation.
Section 6.8 Employees. Parent agrees to cause the Surviving Corporation to
honor, all incentive bonus, profit sharing, compensation, severance,
termination, pension, retirement, employment or other employee benefit
contracts, agreements, arrangements, policies, plans and commitments of the
Company in effect as of the date hereof which are applicable to any employee or
former employee or any director or former director of the Company for any and
all benefits earned through the Closing Date. The Surviving Corporation shall
have no obligation to continue any Company Benefit Plan after the Closing Date;
provided that Parent shall cause the Surviving Corporation to honor the
agreements listed on Schedule 6.8.
Section 6.9 Insurance and Indemnification. (a) For three years after the
Effective Time, Parent shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless each person who as of the date hereof serves
or has served as a director or officer of the Company (the "Indemnified
Parties") against any losses, claims, damages, expenses, judgments, and amounts
paid in settlement in connection with any claim arising from actions taken or
omissions to act as directors or officers of the Company by such Indemnified
Parties prior to the Effective Time, including, without limitation, any claim
arising from actions taken or omission to act as directors or officers of the
Company by such Indemnified Parties prior to the Effective Time, including,
without limitation, any claim which arises out of or pertains to any of the
transactions contemplated by this Agreement ("Claim" or "Claims") (i) to the
fullest extent permitted under Florida or other applicable law or (ii) as
provided in the Company's Restated Certificate of Incorporation or Bylaws as of
the date hereof, which provisions shall survive the Merger and shall continue in
full force and
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effect without amendment or modification in any respect adverse to the
Indemnified Parties (except as required by law) for a period of not less than
three years from the Effective Time. In the event any Claim or Claims are
asserted or made pursuant to clause (ii) of the preceding sentence within such
three-year period, all rights to indemnification in respect of any such Claim or
Claims shall continue until disposition of any and all such Claims. Without
limiting the foregoing, the Company, and after the Effective Time the Surviving
Corporation, shall pay all reasonable out-of-pocket fees and expenses, including
reasonable legal fees, for the Indemnified Parties incurred with respect to the
foregoing to the fullest extent permitted under applicable law promptly as
statements therefor are received by the Company and/or the Surviving
Corporation, provided the person on whose behalf the expenses are paid provides
an undertaking to repay such payments if it is ultimately determined that such
person is not entitled to indemnification. Each Indemnified Party shall give
written notification to the Company or the Surviving Corporation promptly after
any summons or other first legal process shall have been received by such Party
concerning a Claim. Neither Purchaser, the Company nor the Surviving Corporation
shall be liable for any settlements effected without its consent, which consent
shall not be unreasonably withheld.
(b) For a period of three years after the Effective Time, Parent will cause
the Surviving Corporation to use its reasonable best efforts to maintain in
effect the current policies of directors' and officers' liability insurance
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous to such officers
and directors) with respect to claims arising from facts or events which
occurred before the Effective Time; provided however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 6.9(b) more
than an amount in the aggregate equal to 250% of the current annual premiums
paid by the Company for such insurance and, in the event the cost of such
coverage shall exceed that amount, the Surviving Corporation shall purchase as
much coverage as possible for such amount.
Section 6.10 Dissenter's Rights. The Company will not settle, compromise
or pay any amount with respect to any claims for dissenter's rights in
connection with the Merger without the prior written consent of Purchaser.
Section 6.11 Representation Updates. Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if at any time prior to the
Effective Time, any party determines that any representation or warranty of the
Company set forth herein or any information set forth in any of the Company's
schedules attached hereto is inaccurate or incomplete in any material respect,
such party shall notify the other parties, and the Company may by notice
unilaterally amend the affected schedule, representation or warranty in order to
correct such inaccuracy or incompleteness. If the change effected by such
amendment constitutes a Material Adverse Effect (when compared to the
information reflected in the representations and warranties contained herein and
the schedules hereto prior to such amendment), the Parent or the Purchaser may,
within five business days following notice of such amendment, terminate this
Agreement.
Section 6.12 Bankruptcy Court Motions. The Company shall use its
reasonable best efforts to file as promptly as practicable following the date
hereof the appropriate motion or motions with the bankruptcy court having
jurisdiction with respect to the Company's Plan of Reorganization (i) seeking a
judicial determination that the prepayment of the secured notes issued under the
Indenture and the tender of an amount through the posting of a letter of credit
sufficient to pay any remaining Class 7 claims (as defined in the Plan of
Reorganization) to the extent allowed, subject to objections pending in the
bankruptcy court, is sufficient performance pursuant to such Plan of
Reorganization to eliminate the prohibition against payments, dividends and/or
distributions to shareholders and to defease the Indenture and (ii) requesting
that such bankruptcy court hear such motions as soon as practicable after they
are filed.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) This Agreement shall have been adopted by the affirmative vote of
the requisite shareholders of the Company, if required in accordance with
the Restated Certificate of Incorporation of the Company and applicable
law;
(b) No statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which prohibits the consummation of the
Merger; provided, however, that the parties hereto shall use their
reasonable best efforts to have any such order, decree or injunction
vacated; and
(c) Any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired and all other authorizations, consents or
approvals of or terminations or expirations of waiting periods imposed by
any Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement shall have been filed, occurred or been
obtained, other than authorizations, consents, orders, approvals,
declarations, filings or expirations, the failure to obtain which in the
aggregate, will not have a Material Adverse Effect on the Company.
Section 7.2 Additional Conditions to the Company's Obligation to Effect the
Merger. In addition to the conditions set forth in Section 7.1 hereof, the
obligations of the Company to effect the Merger is subject to satisfaction or
waiver at or prior to the Effective Time of the following further conditions:
(a) Purchaser shall have acquired the Shares contemplated to be
acquired by it pursuant to the Shareholders Agreement and shall have
accepted and paid for all Shares tendered in the Offer;
(b) Purchaser shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time; and
(c) The representations and warranties of Parent and Purchaser
contained in this Agreement shall be true in all respects on the Closing
Date as though made on and as of the Closing Date.
Section 7.3 Conditions to the Obligations of Parent and Purchaser to Effect
the Merger. The obligation of Parent and Purchaser to effect the Merger is
subject to the satisfaction of the following further conditions:
(a) there shall not be outstanding any options, warrants, calls,
subscriptions or other rights, including upon conversion of securities or
other agreements or commitments obligating the Surviving Corporation to
issue, transfer or sell any shares of capital stock of the Surviving
Corporation, except as contemplated hereby;
(b) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time; and
(c) the representations and warranties of the Company contained in
this Agreement shall be true in all respects on the Closing Date as though
made on and as of the Closing Date.
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<PAGE> 25
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Purchaser or the Company if (i) any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable,
(ii) without fault of the terminating party, the Effective Time shall not
have occurred on or before November 30, 1995, or (iii) the other party to
this Agreement has breached its obligations, covenants, agreements or
representations and warranties in this Agreement in any material respect;
(c) by the Company at any time, prior to the purchase of Shares
pursuant to the Offer, if (i) the Company shall have entered into a binding
definitive agreement with respect to a Superior Proposal and (ii) the
Company has complied with Section 6.2 hereof; or
(d) by the Purchaser if (i) the Company or any of its affiliates or
Agents has engaged in any discussions or negotiations with any person
(other than Parent or its affiliates) relating to a Takeover Proposal
(other than as permitted by Section 6.2 hereof), (ii) the Board of
Directors of the Company has withdrawn or modified in a manner adverse to
Parent or Purchaser its approval or recommendation of this Agreement, the
Offer or the Merger or has approved or recommended any Superior Proposal or
shall have resolved to do any of the foregoing, or (iii) more than 50% of
the Shares fail to have been tendered pursuant to the Offer or fail to vote
in favor of this Agreement at any meeting at which this Agreement is
presented for approval of the Company's shareholders.
Section 8.2 Effect of Termination. (a) In the event of the termination of
this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith
become void and have no further effect, other than the provisions of Section
6.3(b) hereof, this Section 8.2 and Article IX hereof. Nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement.
(b) If (i) the Company has not breached its obligations, covenants,
agreements or representations and warranties in this Agreement in any material
respect, (ii) no Selling Shareholder has breached any obligations, covenants,
agreements or representations and warranties under the Shareholders Agreement in
any material respect, and (iii) Parent or Purchaser has breached its
obligations, covenants, agreements or representations and warranties in this
Agreement in any material respect, then upon the termination of this Agreement
for any reason, Parent shall promptly sign a certificate substantially in the
form of the certificate attached to the Escrow Agreement, whereupon all of the
Funds (as defined in the Escrow Agreement) shall be paid to the Company. If this
Agreement is terminated under any circumstance other than as described in the
immediately preceding sentence, then the Company shall promptly sign a
certificate substantially in the form of the certificate attached to the Escrow
Agreement, whereupon all of the Funds shall be paid to Parent.
(c) Upon the consummation of the Offer, the Company shall promptly sign and
deliver to the Escrow Agent a certificate substantially in the form attached to
the Escrow Agreement, whereupon a portion of the Funds shall be paid to Parent
in an amount equal to the product of (i) (A) the number of Shares tendered
pursuant to the Offer, divided by (B) 1,701,650, and (ii) the amount of the
Funds.
(d) Any Funds remaining in the custody of the Escrow Agent upon the
consummation of the Merger shall be paid immediately as directed by Parent.
Section 8.3 Amendment. This Agreement may be amended by action taken by
the Company, Parent and Purchaser at any time before or after adoption of the
Merger by the shareholders of the Company but, after any such approval that is
required by law, no amendment shall be made which decreases the cash price
19
<PAGE> 26
per Share or which adversely affects the rights of the Company's shareholders
hereunder without the approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of the parties.
Section 8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein of the other
party or in any document, certificate or writing delivered pursuant hereto, or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Survival of Representations, Warranties and Agreements. The
representations and warranties made herein shall not survive the Merger.
Section 9.2 Fees and Expenses. (a) Except for Hanover Associates, Inc. and
NationsBanc and as previously disclosed by the Company to Parent in writing, the
Company hereby represents and warrants to Parent and Purchaser with respect to
the Company, and, except as previously disclosed by Purchaser to the Company in
writing, Purchaser and Parent hereby represent and warrant to the Company with
respect to Parent and Purchaser, that no person or entity is entitled to receive
from the Company on the one hand, or Purchaser or Parent on the other hand,
respectively, any investment banking, brokerage or finder's fee or fees for
financial consulting or advisory services in connection with this Agreement or
the transactions contemplated hereby.
(b) Except as otherwise provided herein, all legal and other costs and
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(c) If this Agreement is terminated by the Company pursuant to Section
8.1(c) hereof, or by the Purchaser pursuant to Section 8.1(d)(ii) hereof or if
the Company shall have breached its obligations to effect the Merger in
accordance with its terms following the satisfaction of the conditions set forth
in Sections 7.1 and 7.2 hereof, and shall have failed to cure such breach within
five days after notice from Parent of such breach, then the Company shall
promptly, but in no event later than one business day after such termination or
the end of such five day period, pay (or cause the person making the Superior
Proposal to pay) to Purchaser a fee of $1,701,650 (the "Fee"). Notwithstanding
the foregoing, the Company shall have no obligation to pay the Fee if Purchaser
or Parent shall be in material breach of this Agreement.
(d) The payment of the Fee to the Purchaser and the payment of the Escrow
Funds to the Company, if any, are intended by the parties to be payments of
liquidated damages for all of the reasonable transactional fees and expenses
(including, but not limited to, investment adviser fees, investment banking
fees, attorney fees, accounting fees and out-of-pocket expenses) and other
damages actually incurred by such party in the negotiation and execution of this
Agreement or incurred in connection with the transactions contemplated hereby.
The parties agree and stipulate that: (i) the amount of actual damages from the
inability of a party to consummate the transactions contemplated hereby is
difficult or impossible to ascertain and that the amount of payment as
liquidated damages of the Escrow Funds or the Fee is a reasonable estimate of
the damages incurred by the party entitled to such amount, (ii) such liquidated
damages are not a penalty or forfeiture; and (iii) upon payment of such
liquidated damages, no party to this Agreement shall have any further liability.
Section 9.3 Entire Agreement; Assignment. This Agreement (i) together with
the Confidentiality Agreement and the Escrow Agreement, constitute 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,
between the parties or any of them with respect to the subject matter hereof and
(ii) shall not be assigned by operation of law or otherwise, provided that (x)
Parent may assign its rights and obligations to any affiliate of
20
<PAGE> 27
Parent, but no such assignment shall relieve Parent of its obligations hereunder
if such assignee does not perform such obligations and (y) Parent and Purchaser
may assign and grant a security interest in their respective rights and benefits
hereunder (and under any related instruments or documents, including, without
limitation, the Escrow Agreement) for the purposes of securing loans made or to
be made to Parent or any subsidiary of Parent.
Section 9.4 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
Section 9.5 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) by delivery in person, by cable,
telegram, telefax or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
if to Purchaser:
E-Z Serve Corporation
2550 North Loop West, Suite 600
Houston, Texas 77092
Attention: John T. Miller
with a copy to:
Bracewell & Patterson, L.L.P.
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Attention: John L. Keffer, Esq.
Telefax: (713) 221-1212
if to the Company:
c/o Kirschner, Main, Petrie, Graham,
Tanner & Demont, Professional Corporation
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559 (32202 for street address)
Attention: T. Malcolm Graham, Esq.
Telefax: (904) 358-2199
or to such other address as the person to whom notice is given may have been
previously furnished to others in writing in the manner set forth above.
Section 9.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.7 Interpretation. The descriptive headings 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. "Affiliate" and "associate" are
used in this Agreement with the meanings ascribed to them in Rule 12b-2 under
the Exchange Act. As used in this Agreement, "include", "includes" or
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import.
Section 9.8 Parties of 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
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement, except for Sections 3.3, 6.8 and 6.9 hereof (which are intended to be
for the benefit of the persons indicated therein and may be enforced by such
persons).
21
<PAGE> 28
Section 9.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
SUNSHINE-JR. STORES, INC.
By: /s/ PAUL W. MARTIN, JR.
----------------------------------
Name: Paul W. Martin, Jr.
Title: Chairman
E-Z SERVE CORPORATION
By: /s/ JOHN T. MILLER
----------------------------------
Name: John T. Miller
Title: Senior Vice President
EZS ACQUISITION CORPORATION
By: /s/ JOHN T. MILLER
----------------------------------
Name: John T. Miller
Title: Vice President
22
<PAGE> 29
ANNEX "A"
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, 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 obligations to pay for or return tendered Shares after
the termination or withdrawal of the Offer) to pay for any Shares tendered
pursuant to the Offer unless any waiting period applicable to the Offer under
the HSR Act shall have terminated or expired. Furthermore, notwithstanding any
other term of the Offer or this Agreement, Purchaser shall not be required to
accept for payment or pay for any Shares not theretofore accepted for payment or
paid for, and may terminate or subject to the terms of this Agreement, amend the
Offer and may postpone the acceptance for payment of Shares pursuant thereto, if
after the date of this Agreement and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions exists:
(a) there shall be instituted or pending any action or proceeding
before any Governmental Entity, in each case that has a reasonable
likelihood of success, (i) challenging the acquisition by Purchaser of any
Shares, seeking to restrain or prohibit the consummation of the Offer, or
seeking to obtain any damages that are material in relation to the Company;
(ii) seeking to prohibit or limit the ownership or operation by Purchaser
of all or any material portion of the business or assets of the Company or
to compel Purchaser or the Company to dispose of or hold separate all or
any material portion of the business or assets of Purchaser or the Company,
as the result of the transactions contemplated by the Offer or this
Agreement; (iii) seeking to make the purchase of, or payment for, any
Shares illegal or resulting in a delay in the ability of the Purchaser to
accept payment or pay for some or all of the Shares; (iv) seeking to
prohibit Purchaser effectively from acquiring or holding or exercising full
rights of ownership of any Shares, including, without limitation, the right
to vote the Shares purchased by it on all matters properly presented to the
shareholders of the Company, including, but not limited to, the approval of
this Agreement and the Merger; (v) seeking to prohibit Purchaser from
effectively controlling in any material respect the business or operations
of the Company; or (vi) which otherwise is reasonably likely to have a
Material Adverse Effect on the Company; provided, however, that Purchaser
shall have used its reasonable best efforts to avoid the occurrence or
continuance of any such condition;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, (i) Purchaser or any of its affiliates or (ii) the
Offer or the Merger by any Governmental Entity, legislative body, court,
government or governmental authority or agency, domestic or foreign, that
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (vi) of paragraph (a)
above;
(c) there shall have occurred any event, change, effect or development
having a Material Adverse Effect on the Company;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or the American Stock Exchange, (ii) from the date of this Agreement to the
initial Expiration Date of the Offer, a decline of more than 20% in the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 Index,
(iii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, or (iv) a commencement of a war
or armed hostilities or other national or international calamity directly
or indirectly involving the United States and in each case that would
reasonably be expected to have a Material Adverse Effect on the Company or
materially adversely affect Purchaser's ability to consummate the Offer or,
in the case of any of the foregoing existing on the date of this Agreement,
a material acceleration or worsening thereof;
(e) any of the representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality shall not be true
and correct and any such representations and warranties that
<PAGE> 30
are not so qualified shall not be true and correct in any material respect,
in each case as if such representations and warranties were made as of such
time except for those made as of a specified date;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(g) any Selling Shareholder shall fail to perform in any material
respect its obligations under the Shareholders Agreement, including without
limitation the obligation to validly tender and not withdraw prior to the
expiration of the Offer all of the Shares (which in the aggregate represent
approximately 76% of the Shares) owned by the Selling Shareholder; or the
representations and warranties of any Selling Shareholder contained therein
shall not be true and correct in all material respects; or
(h) this Agreement shall have been terminated in accordance with its
terms or the Offer shall have been terminated with the consent of the
Company;
which, in the reasonable judgment of Purchaser, in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser regardless
of the circumstances giving rise to such condition and may be waived by
Purchaser in whole or in part at any time and from time to time in its
discretion. The failure by Purchaser or any other affiliate of Purchaser 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
other circumstance 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.
2
<PAGE> 1
EXHIBIT 99.(c)(2)
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of June 15,
1995, is by and among E-Z SERVE CORPORATION, a Delaware corporation ("Parent"),
EZS ACQUISITION CORPORATION, a Delaware corporation ("Purchaser"), and persons
whose signatures appear on the signature page hereof (collectively referred to
herein as the "Shareholders").
WHEREAS, Sunshine-Jr. Stores, Inc., a Florida corporation (the
"Company"), Parent and Purchaser are contemporaneously herewith entering into
an Agreement and Plan of Merger (the "Merger Agreement") which provides, among
other things, that Purchaser shall be required to make a tender offer (as it
may subsequently be amended, the "Offer"), upon the terms and subject to the
conditions thereof, to acquire all the outstanding shares of common stock, par
value $.10 per share (the "Shares"), of the Company for $12.00 per Share, net
to the seller in cash, and thereafter Purchaser, subject to the terms and
conditions thereof and in accordance with the Florida Business Corporation Act,
will merge with and into the Company (the "Merger"), whereupon, among other
things, each then outstanding Share shall be converted into the right to
receive $12.00 per Share or any higher price paid in the Offer, net to the
seller in cash; and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, Parent and Purchaser have required that the
Shareholders enter into this Agreement, which provides, among other things, for
the Purchaser to acquire all of the Shares held by the Shareholders (the
"Purchase Stock") upon the terms and subject to the conditions of this
Agreement.
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 Shareholders hereby agree as follows:
1. Tender of Shares. Subject to the terms and conditions of this
Agreement, immediately after the commencement of the Offer, but no later than
the close of business on the third business day after the commencement of the
Offer (including the day the Offer is commenced), each Shareholder shall tender
and not withdraw (and sell upon payment for) pursuant to and in accordance with
the terms of the Offer, all of the Purchase Stock owned by such Shareholder.
Upon the purchase of all the Purchase Stock pursuant to the Offer in accordance
with this Agreement, this Agreement shall terminate. The parties acknowledge
that the Purchaser's obligation to accept for payment and pay for the Purchase
Stock in the Offer is subject to all the terms and conditions of the Offer.
<PAGE> 2
2. Representations and Warranties of the Shareholders. The
Shareholders, severally and not jointly, hereby represent and warrant to Parent
and Purchaser (only on such Shareholder's behalf and, to the extent applicable,
with respect to the Shares owned by such Shareholder) as follows:
(a) if the Shareholder is an individual, such Shareholder
has the right, power and capacity to execute and deliver this Agreement and to
consummate the transactions contemplated hereby;
(b) if such Shareholder is a trust, (i) the trust
instrument under which such Shareholder was established is in full force and
effect under the laws of the State of Florida, (ii) such Shareholder has the
requisite power to enter into and perform this Agreement, and (iii) the
execution, delivery and performance of this Agreement by such Shareholder has
been duly and validly authorized;
(c) if the Shareholder is a corporation, (i) such
Shareholder is duly organized, validly existing and in good standing under the
laws of the state of its incorporation, (ii) such Shareholder has the requisite
corporate power to enter into and perform this Agreement, and (iii) the
execution, delivery and performance of this Agreement by such Shareholder has
been duly and validly authorized;
(d) such Shareholder is the lawful beneficial owner of,
and has (or will have when such Shareholder tenders the Purchase Stock pursuant
to the Offer) good, valid and marketable title to, the number of Shares set
forth in Appendix "A" hereto opposite such Shareholder's name, free and clear
of all security interests, liens, charges, encumbrances and rights of others of
any nature whatsoever ("Liens").
(e) the number of Shares set forth in Appendix "A" hereto
opposite such Shareholder's name constitutes all of the securities (as defined,
in Section 3(10) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which definition shall apply for all purposes of this
Agreement) of the Company beneficially owned (as defined in Rule 13d-3 under
the Exchange Act, which meaning shall apply for all purposes of this
Agreement), directly or indirectly, by such Shareholder, excluding any
securities beneficially owned by any of such Shareholder's affiliates or
associates (as such terms are defined in Rule 12b-2 under the Exchange Act,
which definition shall apply for all purposes of this Agreement) as to which
such Shareholder does not have voting or investment power;
(f) such Shareholder is not subject to or obligated under
any provision of (i) any contract, (ii) any license, franchise or permit, or
(iii) any law, regulation, order, judgment or decree that would be breached or
violated by the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby;
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<PAGE> 3
(g) no authorization, consent or approval of, or any
filing with, any public body or authority is necessary for consummation by it
of the transactions contemplated by this Agreement, except under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR Act") and the Exchange Act;
(h) this Agreement has been duly executed and delivered
by such Shareholder and constitutes a legal, valid and binding agreement of
such Shareholder enforceable in accordance with its terms; and
(i) in accordance with Section 1 hereof, the Shareholders
will deliver to Purchaser pursuant to the Offer good and valid title in and to
the Purchase Stock, free and clear of any Liens.
3. Representations and Warranties of Parent and Purchaser.
Parent and Purchaser, jointly and severally, hereby represent and warrant to
the Shareholders as follows:
(a) each of Parent and Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power to enter into and perform this
Agreement;
(b) this Agreement has been duly authorized, executed and
delivered by Parent and Purchaser and constitutes a legal, valid and binding
agreement of Parent and Purchaser, enforceable in accordance with its terms;
(c) neither Parent nor Purchaser is subject to or
obligated under any provision of (i) any contract, (ii) any license, franchise
or permit or (iii) any law, regulation, order, judgment or decree which would
be breached or violated by its execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby;
(d) no authorization, consent or approval of, or any
filing with any public body or authority is necessary for consummation by it of
the transactions contemplated by this Agreement, except under the HSR Act and
the Exchange Act; and
(e) Purchaser is purchasing the Purchase Stock pursuant
to the Offer for investment only and not with a view to any distribution
thereof in violation of the Securities Act of 1933 or any state blue sky or
securities laws.
4. Transfer of Shares. During the term of this Agreement, except
as otherwise provided herein, the Shareholders shall not:
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<PAGE> 4
(a) offer to sell, sell, pledge or otherwise dispose of
or transfer any interest in or encumber with any Lien any of the Purchase
Stock;
(b) acquire any Shares or other securities of the Company
(otherwise than in connection with a transaction of the type described in
Section 5 and any such additional shares or securities shall be deemed Shares
and included in the Shares subject to this Agreement);
(c) deposit the Shares into a voting trust, enter into a
voting agreement or arrangement with respect to the Shares or grant any proxy
or power of attorney with respect to the Shares other than pursuant to this
Agreement; or
(d) enter into any contract, option or other arrangement
or undertaking with respect to the direct or indirect acquisition or sale,
assignment or other disposition of or transfer of any interest in or the voting
of any Shares or any other securities of the Company.
5. Distributions; Adjustment Upon Changes in Capitalization. If
on or after the date of this Agreement there shall occur any cash or stock
dividend, stock split, recapitalization, combination or exchange of shares,
merger, consolidation, reorganization or other change or transaction of or by
the Company as a result of which shares of any class of stock, other
securities, cash or other property shall be issued in respect of any Purchase
Stock, or if any Purchase Stock shall be changed into the same or a different
number of shares of the same or another class of stock or the securities, then,
Purchaser shall receive pursuant to the Offer and the Shareholders are hereby
required to tender pursuant to the Offer, in addition to the Purchase Stock,
all such shares of stock, other securities, cash or other property issued,
delivered or received with respect to such Purchase Stock.
6. Conditions. (a) The obligation of the Shareholders to
consummate the transactions contemplated hereby is subject to the satisfaction
or waiver at or prior to the closing of the Offer of the following conditions:
(i) no statute, rule, regulation, executive order,
decree, or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits the
consummation of the transactions contemplated hereby;
(ii) all authorizations, consents or approvals of or
terminations or expirations of waiting periods imposed by any
governmental entity necessary for the consummation of the transactions
contemplated hereby shall have been filed, occurred or been obtained;
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<PAGE> 5
(iii) Parent and Purchaser shall have performed in all
material respects all of its obligations hereunder and under the
Merger Agreement required to be performed by them at or prior to the
time of payment for the Purchase Stock;
(iv) neither the Company, Purchaser nor Parent shall have
terminated the Merger Agreement; and
(v) the representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects at
the Effective Time as though made on and as of the Effective Time.
(b) The obligations of the Parent and the Purchaser to
consummate the transactions contemplated hereby are subject to the satisfaction
or waiver at or prior to the closing of the Offer of the following conditions:
(i) no statute, rule, regulation, executive order,
decree, or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits the
consummation of the transactions contemplated hereby;
(ii) all authorizations, consents or approvals of or
terminations or expirations of waiting periods imposed by any
governmental entity necessary for the consummation of the transactions
contemplated hereby shall have been filed, occurred or been obtained;
(iii) the Shareholders shall have performed in all material
respects all of their obligations hereunder prior to the Effective
Time, and the Company shall have performed in all material respects
all of its obligations under the Merger Agreement required to be
performed by it at or prior to the Effective Time;
(iv) neither the Company, Purchaser nor Parent shall have
terminated the Merger Agreement; and
(v) the representations and warranties of the
Shareholders contained in this Agreement shall be true in all material
respects at the Effective Time as though made on and as of the
Effective Time.
7. Covenants of the Shareholders. After the date hereof, each
Shareholder agrees that it shall not take any action to solicit, encourage or
facilitate any takeover proposal, or any inquiry or action that may reasonably
be expected to lead to, any takeover proposal (as defined in the Merger
Agreement), including soliciting, initiating or conducting negotiations with or
providing any information to, any person (other than Parent or any affiliate)
concerning any
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<PAGE> 6
actual or potential takeover proposal; provided, however, nothing contained
herein shall prohibit any Shareholder from taking any such action solely in his
or her capacity as a director of the Company to the extent permitted under
Section 6.2 of the Merger Agreement.
8. Voting of Shares. Each Shareholder, by this Agreement, does
hereby constitute and appoint Purchaser, or any nominee thereof, with full
power of substitution, during and for the term of this Agreement, as such
Shareholder's true and lawful attorney and proxy, for and in such Shareholder's
name, place and stead, to vote each share of the Purchase Stock at any annual,
special or adjourned meeting of the shareholders of the Company (and this
appointment shall include the right to sign such Shareholder's name (as
shareholder) to any consent, certificate or other document relating to the
Company which the laws of the State of Florida may require or permit) (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval and adoption of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement and any
actions required in furtherance thereof and hereof; (ii) against any action or
agreement that would result in a breach in any respect of any covenant,
agreement, representation or warranty of the Company under the Merger
Agreement; and (iii) against the following actions (other than the Merger and
the other transactions contemplated by the Merger Agreement):
(a) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company;
(b) a sale, lease or transfer of a material amount of
assets of the Company, or a reorganization, recapitalization, dissolution or
liquidation of the Company;
(c) (1) any change in a majority of the persons who constitute
the board of directors of the Company as of the date hereof; (2) any change in
the present capitalization of the Company or any amendment of the Company's
Restated Certificate of Incorporation or By-laws, as amended to date; (3) any
other material change in the Company's corporate structure or business; or (4)
any other action which, in the case of each of the matters referred to in
clauses (c)(1), (2), (3) and (4), is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or adversely affect the Merger and
the other transactions contemplated by this Agreement and the Merger Agreement;
provided, however, that nothing contained in this Section 8 shall prohibit or
restrain any Shareholder from complying with his or her fiduciary obligations
as a director or officer of the Company, as advised in writing by independent
counsel. This proxy and power of attorney is a proxy and power coupled with an
interest, and each Shareholder declares that it is irrevocable. Each
Shareholder hereby revokes all and any other proxies with respect to such
Shareholder's Shares that may have heretofore made or granted.
-6-
<PAGE> 7
9. Termination. If the purchase of the Purchase Stock pursuant
to the Offer shall not have occurred, this Agreement shall terminate upon the
termination of the Merger Agreement.
10. No Brokers. Each of the Shareholders, Parent and Purchaser
represents, as to itself and its affiliates (other than as disclosed by the
Company pursuant to Section 9.2 of the Merger Agreement), that no agent,
broker, investment banker or other firm or person is or will be entitled to any
broker's or finder's fees or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement and respectively
agrees to indemnify and hold the others harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions
or expenses asserted by any person on the basis of any act or statement alleged
to have occurred or been made by such party or its affiliates.
11. Survival of Representations. The representations, warranties
and agreements made hereunder by the parties to this Agreement shall not
survive the Merger.
12. Best Efforts; Further Assurances. (a) Upon the terms and
subject to the conditions herein provided, each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
(b) From time to time after the tender or purchase of the
Purchase Stock pursuant to the Offer, and without additional consideration, the
Shareholders will execute and deliver, or cause to be executed and delivered,
such additional or further transfers, assignments, endorsements, consents and
other instruments as Parent or Purchaser may reasonably request for the purpose
of effectively carrying out the transactions contemplated by this Agreement or
the Offer, including the transfer of the Purchase Stock to Purchaser after
payment therefor and the release of any and all Liens with respect thereto.
13. Assignment. Neither this Agreement nor any of the rights,
interest or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties, except that (i) Parent may
assign, in its sole discretion, any or all or its rights, interest and
obligations hereunder to any of its direct or indirect wholly-owned
subsidiaries; provided, however, that any such assignment shall not relieve
Parent from its obligations hereunder and (ii) Parent and Purchaser may assign
and grant a security interest in their respective rights, interests and
benefits hereunder (and under any related instruments or documents) for the
purposes of securing loans made or to be made to Parent or any 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 hereto and
their respective successors and permitted assigns.
-7-
<PAGE> 8
14. Specific Performance. The Shareholders acknowledge that, in
the event of any breach by them of this Agreement, Parent would be irreparably
harmed and could not be made whole by monetary damages. It is accordingly
agreed that Parent, in addition to any other remedy to which it may be entitled
at law or in equity, shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and/or to compel specific performance of
this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction.
15. Expenses. All legal and other costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
16. Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
17. 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) by delivery in person, by cable,
telefax, telegram or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
if to Parent:
E-Z Serve Corporation
2550 North Loop West, Suite 600
Houston, Texas 77092
Attention: John T. Miller
if to a Shareholder, to the address set forth opposite such
Shareholder's name on the signature page hereof
or to such other address as the person to whom notice is given may have
previously forwarded to the others in writing in the manner set forth above.
18. Interpretation. The descriptive headings herein are for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement. As used in this Agreement,
"include", "includes", or "including" shall be deemed to be followed by the
words "without limitation" whether or not they are in fact followed by such
words or words of like import.
-8-
<PAGE> 9
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
21. 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 confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
22. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
IN WITNESS WHEREOF, Parent, Purchaser and the Shareholders have duly
executed this Agreement as of the date first above written.
E-Z Serve Corporation
By: /s/ John T. Miller
------------------------------------
Name: John T. Miller
Title: Senior Vice President
EZS Acquisition Corporation
By: /s/ John T. Miller
------------------------------------
Name: John T. Miller
Title: Vice President
-9-
<PAGE> 10
Leona J. Lewis Revocable Trust
By: /s/ Leona J. Lewis
------------------------------------
Name: Leona J. Lewis
Title: Trustee
And By: /s/ Lana Jane Lewis-Brent
--------------------------------
Name: Lana Jane Lewis-Brent
Title: Trustee
Address: 1216 Dewitt Street
Panama City, Florida 32401
Luther D. Lewis, Jr.
/s/ Luther D. Lewis, Jr.
---------------------------------------
Address: Box 27466
Panama City, Florida 32411
Lana Jane Lewis-Brent
/s/ Lana Jane Lewis-Brent
---------------------------------------
Address: 1216 Dewitt Street
Panama City, Florida 32401
-10-
<PAGE> 11
Paul Brent
/s/ Paul Brent
---------------------------------------
Address: 1216 Dewitt Street
Panama City, Florida 32401
Donna Sue Raines
/s/ Donna Sue Raines
---------------------------------------
Address: 2018 Forest Glen Ct.
Tallahassee, Florida 32303
American Financial Corporation
By: /s/ James E. Evans
------------------------------------
Name: James E. Evans
Title: Vice President and
General Counsel
Address:
-11-
<PAGE> 12
APPENDIX "A"
Purchase Stock Ownership
<TABLE>
<CAPTION>
Number of Percent of
Name Shares Equity
---- ----------- ----------
<S> <C> <C>
Lewis Family Group:
Leona J. Lewis Revocable Trust 215,521
Luther D. Lewis, Jr. 297,970*
Lana Jane Lewis-Brent 134,836
Paul Brent 687
Donna Sue Raines 295,970**
-------
TOTAL 944,984 55.53%
American Financial Corporation 349,600 20.54%
-------
GRAND TOTAL 1,294,584 76.07%
=========
</TABLE>
* Includes 82,500 shares presently registered in the name of and held by the
Leona J. Lewis Revocable Trust. Pursuant to a written litigation Settlement
Agreement dated November 30, 1993, such shares (82,500) will be assigned and
delivered by the Trust to Luther D. Lewis, Jr. for his subsequent tender and
sale to Purchaser in accordance with the terms and conditions of the Offer.
**Includes 82,500 shares presently registered in the name of and held by the
Leona J. Lewis Revocable Trust. Pursuant to a written litigation Settlement
Agreement dated November 30, 1993, such shares (82,500) will be assigned and
delivered by the Trust to Donna Sue Raines for her subsequent tender and sale
to Purchaser in accordance with the terms and conditions of the Offer.
-12-
<PAGE> 1
EXHIBIT 99.(c)(3)
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of June 15, 1995,
is by and among E-Z SERVE CORPORATION, a Delaware corporation ("E-Z Serve"),
SUNSHINE-JR. STORES, INC., a Florida corporation ("SJS") and CONTINENTAL STOCK
TRANSFER & TRUST COMPANY ("Escrow Agent").
WHEREAS, E-Z Serve, its subsidiary EZS Acquisition Corporation and SJS
have entered into an Agreement and Plan of Merger (the "Merger Agreement")
relating to the merger of EZS Acquisition Corporation with and into SJS; and
WHEREAS, as a condition to SJS entering into the Merger Agreement, E-Z
Serve has agreed to deposit in escrow with the Escrow Agent the sum of
$2,500,000.00 in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, E-Z Serve, SJS and Escrow Agent hereby agree as follows:
1. Appointment of Escrow Agent. E-Z Serve and SJS hereby appoint
Escrow Agent as the escrow agent under this Agreement and Escrow Agent hereby
accepts such appointment on the terms hereinafter set forth.
2. Deposit of Escrow. The Escrow Agent acknowledges receipt, on
the date hereof, of $2,500,000.00 (which together with any future interest or
earnings thereon are referred to herein as the "Funds") from E-Z Serve.
3. Conditions of Escrow. (a) The Escrow Agent shall hold the
Funds in accordance with the terms hereof and until the Escrow Agent shall have
received a certificate substantially in the form of Exhibit "A" attached hereto
executed by E-Z Serve or SJS, whichever is applicable. Upon receipt of such
certificate, the Escrow Agent shall as promptly as practicable deliver the
Funds in the manner specified in the certificate.
(b) If (i) SJS has not breached its obligations, covenants,
agreements or representations and warranties in the Merger Agreement in any
material respect, (ii) no Selling Shareholder has breached any obligations,
covenants, agreements or representations and warranties under the Shareholders
Agreement in any material respect, and (iii) E-Z Serve has breached its
obligations, covenants, agreements or representations and warranties in this
<PAGE> 2
Agreement in any material respect, then upon termination of the Merger
Agreement for any reason E-Z Serve shall promptly sign and deliver to the
Escrow Agent a certificate substantially in the form of Exhibit "A" attached
hereto, whereupon all of the Funds shall be paid to SJS.
(c) If the Merger Agreement is terminated under any
circumstance other than as described in Section 3(b) hereof, then SJS shall
promptly sign and deliver to the Escrow Agent a certificate substantially in
the form of Exhibit "A" attached hereto, whereupon all of the Funds shall be
paid to E-Z Serve.
(d) Upon the consummation of the Offer, SJS shall promptly
sign and deliver to the Escrow Agent a certificate substantially in the form of
Exhibit "B" attached hereto, whereupon a portion of the Funds shall be paid to
E-Z Serve in an amount equal to the product of (i) (A) the number of Shares
tendered pursuant to the Offer, divided by (B) 1,701,650, and (ii) the amount
of the Funds.
(e) Any Funds remaining in the custody of the Escrow Agent
upon the consummation of the Merger shall be paid immediately as directed by
E-Z Serve.
4. Investment of the Escrowed Funds. (a) The Funds shall be
invested by the Escrow Agent as directed by E-Z Serve, provided that such
investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Services, Inc. or Standard & Poor's Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $100 million, in each case having a
maturity of not more than one year. Escrow Agent shall not be liable for
failure to invest or reinvest Funds absent sufficient written direction.
Unless Escrow Agent is otherwise directed in such written instructions, Escrow
Agent may use a broker-dealer of its own selection, including a broker-dealer
owned by or affiliated with Escrow Agent. It is expressly agreed and
understood by the parties hereto that Escrow Agent shall not in any way
whatsoever be liable for losses on any investments, including, but not limited
to, losses from market risks due to premature liquidation or resulting from
other actions taken pursuant to this Agreement.
(b) The Escrow Agent shall deliver any such interest or
earnings as part of the Funds in accordance with the certificate delivered to
the Escrow Agent.
5. Successor Escrow Agents. The Escrow Agent, or any successor
Escrow Agent, may resign at any time by giving notice in writing to each of SJS
and E-Z Serve and shall be discharged from its duties under this Agreement on
the first to occur of (i) the appointment of a successor Escrow Agent as
provided in this Paragraph 5 or (ii) the expiration of 30 calendar days after
such notice is given. In the event of any resignation, the successor Escrow
Agent
-2-
<PAGE> 3
shall be as approved by both SJS and E-Z Serve, such approval not to be
unreasonably withheld. Any successor Escrow Agent shall deliver to each of SJS
and E-Z Serve a written instrument accepting appointment under this Agreement,
and thereupon it shall succeed to all the rights and duties of the Escrow Agent
hereunder and shall be entitled to receive the Funds.
6. Compensation, Rights, Privileges, Immunities and Liabilities
of the Escrow Agent. The following shall govern the compensation, rights,
privileges, immunities and liabilities of the Escrow Agent:
6.1 Compensation of Escrow Agent. Escrow Agent shall be
compensated for its services by payment to Escrow Agent of a fee in the amount
of $1,500.00, payable upon the date hereof. All compensation and expenses of
Escrow Agent under this Agreement shall be paid one-half by the E-Z Serve and
one-half by SJS. The compensation and expenses of Escrow Agent described in
this Paragraph 6.1 includes all reasonable expenses that shall be incurred by
Escrow Agent in connection with the negotiation and drafting of this Agreement
and performance of such services. Except as otherwise noted, the compensation
of Escrow Agent described in this Paragraph 6.1 covers account acceptance,
set-up and termination expenses, plus usual and customary related
administrative services such as safekeeping, investment, brokerage and related
investment advice and payment of the Escrow Fund specified herein. Activities
on the part of the Escrow Agent requiring excessive administrator time or
out-of-pocket expenses, including reasonable attorney's fees, shall be deemed
extraordinary expenses for which related costs, transaction charges and
additional fees will be billed at Escrow Agent's standard charges for such
items.
6.2 Not Party to Other Agreements. Escrow Agent's duties
hereunder are purely ministerial in nature and Escrow Agent is not a party to
and is not bound by any agreements involving SJS or E-Z Serve other than this
Agreement.
6.3 Indemnification. (a) If Escrow Agent becomes
involved in any suit, litigation or other investigative or legal proceeding in
connection with this Agreement or the Funds, SJS and E-Z Serve, jointly and
severally, shall indemnify and hold the Escrow Agent harmless from all losses,
costs, damages, expenses, liabilities and attorneys' fees suffered or incurred
by the Escrow Agent as a result thereof, except any such losses, costs,
damages, expenses, liabilities or attorneys' fees that arise as a result,
directly or indirectly, of the Escrow Agent's gross negligence or willful
misconduct. Escrow Agent shall not be liable for losses on any investments
made in compliance with this Agreement or with written instructions provided to
it pursuant to the terms of this Agreement, nor for failure to invest absent
written direction as provided herein.
-3-
<PAGE> 4
(b) In agreeing to indemnify and hold the Escrow Agent
harmless as provided herein, SJS and E-Z Serve hereby agree that in any suit,
litigation or other investigative or legal proceeding to which the Escrow Agent
is a party and in which SJS and E-Z Serve are opposing parties, the party
(other than the Escrow Agent) other than the party that ultimately prevails
shall be liable and responsible for the reimbursement of the Escrow Agent for
any of the reimbursable items for which the Escrow Agent is entitled to
indemnification hereunder.
6.4 Acting on Notices. The Escrow Agent shall be
protected in acting on any written notice, request, waiver, consent,
certificate, receipt, authorization, power of attorney, or other paper or
document that the Escrow Agent in good faith believes to be genuine.
6.5 Standard of Care. The Escrow Agent shall not be
liable for anything that it may do or refrain from doing in connection herewith
provided it acts in good faith, is not grossly negligent and does not commit
willful misconduct.
6.6 Consultation with Counsel. The Escrow Agent may
consult with legal counsel in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or its duties
hereunder, and it shall incur no liability and shall be fully protected in
acting in accordance with the opinion and instructions of such counsel.
6.7 Disagreements. In the event of any disagreement
involving SJS or E-Z Serve resulting in adverse claims or demands being made in
connection with the Funds, or in the event the Escrow Agent, in good faith,
shall be in doubt as to what action it should take hereunder, the Escrow Agent
may interplead the Funds into a court of competent jurisdiction, refuse to
comply with any claims or demands on it, or refuse to take any other action
hereunder, so long as such disagreement continues or such doubt exists, and in
such event the Escrow Agent shall not be or become liable to any person for its
failure or refusal to act. The Escrow Agent may refrain from acting until (i)
the rights of all interested parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) all differences shall
have been adjusted and all doubt resolved by agreement by SJS and E-Z Serve,
and the Escrow Agent shall have been notified thereof by a written document
signed by SJS and E-Z Serve. The rights of the Escrow Agent under this
Paragraph 6.7 are cumulative of all other rights that it may have by law or
otherwise.
6.8 Discharge of Obligations. The Escrow Agent, having
transferred the Funds to SJS or E-Z Serve in accordance with this Agreement,
shall be discharged from any further obligation hereunder.
7. Miscellaneous.
-4-
<PAGE> 5
7.1 Notices. Any notice required to be given under the
terms of this Agreement shall be in writing and may be served by mail, postage
prepaid, and addressed to the person or entity to be notified at the
appropriate address specified on the signature page hereof, or by delivering
the same to the person or entity, or by telecopier or telex, addressed to the
person or entity to be notified at such address. Any notice given in any
authorized manner shall be effective (i) when actually received or (ii) if
given by mail as described above, three business days after it is sent.
Addresses may be changed by notice given in the manner provided in this
Paragraph 7.1.
7.2 Defined Terms. Terms not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement.
7.3 Effect of Agreement. This Agreement shall be binding
on, inure to the benefit of and be enforceable by and against SJS, E-Z Serve
and the Escrow Agent and their respective successors and assigns.
7.4 Captions. The Paragraph headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
7.5 Choice of Law. This Agreement shall be interpreted
and construed in accordance with and shall be governed by the laws of the State
of Florida.
7.6 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, E-Z Serve, SJS and Escrow Agent have duly executed
and delivered this Agreement as of the date first above written.
Address: E-Z SERVE CORPORATION
2550 North Loop West
Suite 600
Houston, Texas 77092 By: /s/ JOHN T. MILLER
Attention: John T. Miller -------------------------------
Name: John T. Miller
Title: Senior Vice President
Address: SUNSHINE-JR. STORES, INC.
Kirschner, Main, Petrie,
Graham, Tanner & Demont, P.C.
-5-
<PAGE> 6
One Independent Drive, Suite 2000 By: /s/ PAUL W. MARTIN, JR.
Post Office Box 1559 -------------------------------
Jacksonville, Florida 32201-1559 Name: Paul W. Martin, Jr.
Attention: T. Malcolm Graham Title: Chairman
Address: ESCROW AGENT
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004 By: /s/ WILLIAM F. SEEGRABER
-------------------------------
Attention: William F. Seegraber
Name: William F. Seegraber
Title: Vice President
-6-
<PAGE> 7
EXHIBIT A
TO ESCROW AGREEMENT
CERTIFICATE
In connection with the Escrow Agreement ("Escrow Agreement") dated as
of June 15 1995, by and among E-Z Serve Corporation, a Delaware corporation
("E-Z Serve"), Sunshine-Jr. Stores, Inc., a Florida corporation ("SJS"), and
____________________________ ("Escrow Agent"), [E-Z Serve] [SJS] hereby
certifies to the Escrow Agent that:
IF THE EVENT SPECIFIED IN PARAGRAPH 3(C) SHALL OCCUR, THE
CERTIFICATE OF SJS SHALL PROVIDE AS FOLLOWS:
Escrow Agent is hereby directed to pay the Funds (as defined in the
Escrow Agreement) to E-Z Serve.
[ OR ]
IF THE EVENT SPECIFIED IN PARAGRAPH 3(B) OF THE ESCROW
AGREEMENT SHALL OCCUR, THE CERTIFICATE OF E-Z SERVE SHALL
PROVIDE AS FOLLOWS:
Escrow Agent is hereby directed to pay the Funds (as defined in the
Escrow Agreement) to SJS.
Funds to be released to [E-Z Serve] [SJS] should be credited to
Account Number _________ at _________________________ [Bank], Attention:
________________________.
[E-Z SERVE CORPORATION]
[SUNSHINE-JR. STORES, INC.]
By: _________________________________
Authorized Officer
A-1
<PAGE> 8
EXHIBIT B
TO ESCROW AGREEMENT
CERTIFICATE
In connection with the Escrow Agreement ("Escrow Agreement") dated as
of June 15, 1995, by and among E-Z Serve Corporation, a Delaware corporation
("E-Z Serve"), Sunshine-Jr. Stores, Inc., a Florida corporation ("SJS"), and
____________________________ ("Escrow Agent"), [E-Z Serve] [SJS] hereby
certifies to the Escrow Agent that:
IF THE EVENT SPECIFIED IN PARAGRAPH 3(D) SHALL OCCUR, THE
CERTIFICATE OF SJS SHALL PROVIDE AS FOLLOWS:
Escrow Agent is hereby directed to pay $_________ of the Funds (as
defined in the Escrow Agreement) to E-Z Serve.
Funds to be released to E-Z Serve should be credited to Account Number
_________ at _________________________ [Bank], Attention:
________________________.
SUNSHINE-JR. STORES, INC.
By:_________________________________
Authorized Officer
A-2
<PAGE> 1
EXHIBIT 99.(c)(4)
PROXY STATEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the name, address (except for certain directors
and executive officers) and beneficial ownership of the Company's Common Stock
as of April 14, 1995, of (i) each person known to the Company to be the
beneficial owner of more than five percent of its Common Stock, which is the
only class of its outstanding securities entitled to vote, (ii) each director
of the Company, (iii) each executive officer of the Company named in the
Summary Compensation Table located below and (iv) all directors and
2
<PAGE> 2
executive officers as a group. Unless otherwise noted, all shares are owned
directly, with sole voting and dispositive powers.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENT OF
BENEFICIAL OWNER NUMBER OF SHARES CLASS
------------------- ---------------- ----------
<S> <C> <C>
5% BENEFICIAL OWNERS:
Leona J. Lewis; 944,984(1) 55.53%
Luther D. Lewis, Jr.;
Lana Jane Lewis-Brent;
and Donna Sue Raines
(the "Lewis Family Group")
Leona J. Lewis 944,984(1)(2) 55.53%
100 Cherry Street
Panama City, FL 32401
Luther D. Lewis, Jr. 944,984(1)(3) 55.53%
P.O. Box 27334
Panama City, FL 32411-7334
Lana Jane Lewis-Brent (Director) 944,984(1)(4) 55.53%
1216 Dewitt Street
Panama City, FL 32401
Donna Sue Raines 944,984(1)(5) 55.53%
2018 Forest Glen Street
Tallahassee, FL 32305-5100
American Financial Corporation and Carl 349,600(6) 20.54%
Lindner, Chairman of the Board
One East Fourth Street
Cincinnati, OH 45202
Dimensional Fund Advisors, Inc. & DFA 100,900(7) 5.93%
Investment
Dimensions Group, Inc.
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
</TABLE>
3
<PAGE> 3
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENT OF
BENEFICIAL OWNER NUMBER OF SHARES CLASS
------------------- ---------------- ----------
<S> <C> <C>
OTHER DIRECTORS AND NAMED EXECUTIVE OFFICERS
Clyde M. King, Jr. 0 *
Paul W. Martin, Jr. 0 *
Joseph A. Pedoto 0 *
Dennis C. Raines 944,984(8) 55.53%
Ron M. Shouse 0 *
Michael G. Ware 0 *
Directors and Executive Officers 944,984(9) 55.53%
as a group (7 persons)
</TABLE>
- ---------------------------
*Less than I%
(1) This information is obtained from documents provided by the Lewis
Family Group. Pursuant to a stockholders agreement, the members of the
Lewis Family Group agreed (a) to vote their shares of Common Stock
collectively as a block only as the majority may agree or, in the
absence of such agreement, as may be determined through arbitration
and (b) not to vote their shares of Common Stock to either remove any
member of the Lewis Family Group from the Company's Board of
Directors or to cause the Company to employ any of the Lewis Family,
Group or members of their families. The stockholders agreement was
entered into on November 30, 1993, pursuant to a settlement agreement
terminating prior litigation among the members of the Lewis Family
Group and others related to the shares beneficially owned by the
Lewis Familly Group. Also pursuant to this settlement agreement, (a)
the members of the Lewis Family Group agreed to sell their stock as a
block if the majority may so agree, (b) the members of the Lewis
Family Group agreed to sell their shares pro rata if an offer
accepted by the majority is made to purchase more than fifty percent
on the Company's outstanding Common Stock and to purchase on a pro
rata basis less than all of the shares beneficially owned by the
Lewis Family Group and (c) Mrs. Lewis agreed to transfer, immediately
proceeding the sale of the shares beneficially owned by the Lewis
Family Group, 82,500 shares of Common Stock to each of Ms. Raines and
Mr. Lewis.
(2) Includes 380,521 shares held directly by Mrs. Lewis.
(3) Includes 215,470 shares held directly by Mr. Lewis.
(4) Includes 134,836 shares held directly by Ms. Lewis-Brent and 687 held
by her spouse,
(5) Includes 213,470 shares held directly by Ms. Raines.
(6) This information is obtained from a Statement on Schedule 13D, as
amended to date, filed with the Securities and Exchange Commission.
Carl H. Lindner, Chairman of the Board, Chief Executive Officer and
principal shareholder of American Financial Corporation may be deemed
4
<PAGE> 4
to beneficially own these shares and to share voting and dispositive power with
respect to these shares.
(7) This information is obtained from a Statement on Schedule 13D, as
amended to date, filed by Dimensional Fund Advisors, Inc. with the
Securities and Exchange Commission. Dimensional Fund Advisors, Inc.
possesses sole voting and dispositive power with respect to these
shares.
(8) Includes the shares beneficially owned by Ms. Raines, who is Mr.
Raines' spouse. See Note 5 above. Mr. Raines disclaims beneficial
ownership of these shares.
(9) Includes all shares described in Note 1 to this Table.
5
<PAGE> 5
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned by Paul W. Martin,
Jr., Ron M. Shouse and Michael G. Ware for the years indicated. During 1994,
there was no other officer of the Company with salary and bonuses exceeding
$100,000.
7
<PAGE> 6
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------
Other Annual
Name and Principal Position Year Salary Bonus Compensation(1)
- --------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C>
Paul W. Martin, Jr. 1994 $120,000 $250,000 $174,088(2)
Chairman of the Board 1993 100,000 - -
Ron M. Shouse 1994 175,000 35,000 -
President and 1993 116,000 - -
Chief Executive Officer
Michael G. Ware 1994 104,128 25,000 -
Sr. Vice President and 1993 39,716 - -
Chief Financial Officer
</TABLE>
(1) Certain of the named executive officers received perquisites and personal
benefits valued at less than 1O% of total annual salary and bonus.
(2) Reimbursement of taxes with respect to the bonus.
-----------------------------------
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Mr. Shouse is employed pursuant to an employment contract that provides
for an annual salary of $175,000. In July 1994, the Company entered into a
retention agreement with Mr. Shouse providing for a $35,000 bonus payable upon
any change in control of the Company and providing for one year's severance if
Mr. Shouse's employment is terminated under certain circumstances after a
change in control of the Company.
In July 1994, the Company entered into a retention agreement with Mr.
Ware providing for a $35,000 bonus payable upon any change in control of the
Company and providing for one year's severance if Mr. Ware's employment is
terminated under certain circumstances after a change in control of the
Company.
COMPENSATION OF DIRECTORS
The Company's Directors (other than Messrs. Martin and Shouse) receive
for their services as director a $15,000 annual retainer and $2,000 for each
meeting of the Board attended. For information concerning Messrs. Martin and
Shouse, see the Summary Compensation Table above.
Report of the Compensation Committee
The Company attempts to set salaries in accordance with industry
standards. During 1993 and until June 21, 1994, the Company operated as
debtor-in-possession under Chapter 11 of the U.S. Bankruptcy Code, and
executive compensation was subject to court approval. Accordingly, the
Company's flexibility in instituting incentive compensation plans has been
extremely limited. The Company intends to examine and consider adopting
various bonus and incentive plans in the future. The
8
<PAGE> 7
incentive bonuses paid to Mr. Shouse and Mr. Ware of $35,000 and $25,000,
respectively, in July 1994 were based upon various factors, including the
Company's successful emergence from Chapter 11. In arriving at the terms of
Mr. Shouse's employment arrangement, the Company considered the terms of
change of control provisions contained in employment arrangements entered into
by public companies generally.
Respectfully submitted,
Joseph A. Pedoto
Ron M. Shouse
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Messrs. Pedoto and Shouse served on the Compensation Committee during
1993. Mr. Shouse is President and Chief Executive Officer of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of April 14, 1995, 109 of the Company's 205 currently operating
convenience stores are leased. Five of these leased convenience stores are
currently leased from major shareholders or directors of the Company. All
five stores are leased from the L.D. Lewis Realty Co., Inc., a corporation
owned by Leona J. Lewis, her daughter Lana Jane Lewis-Brent, and the L.D.
Lewis family trust. Two of these stores are leased for a monthly rental of
$500 each with the leases expiring March 31, 1996. One store has two
five-year options for renewal, with rent increasing $125 at each renewal. The
other store has three five-year options for renewal, with rent increasing for
the first two options at $125 and the remaining option at $100. One store is
leased for a monthly rental of $500 expiring September 30, 1996, with three
five-year options to renew, with rent increasing at $100 at each renewal.
Two stores are leased for a monthly rental of $940 each and will expire
September 30, 1996 with two five-year options for renewal, with rent
increasing $100 at each renewal. Management believes that the terms of the
leases are as favorable as leases which could be obtained from unaffiliated
persons.
9
<PAGE> 1
EXHIBIT 99.(c)(5)
[SUNSHINE-JR. STORES, INC. LETTERHEAD]
January 29, 1993
Mr. H.E. Lambert
E-Z Serve Management Company
2550 North Loop West
Suite 600
Houston, TX 77292
Gentlemen:
1. E-Z Serve Management Company ("Investor") has requested, or may
request in the future, certain information from Sunshine-Jr. Stores, Inc. (the
"Company"), regarding the Company's business, operations and financial
condition (the "Information") for the sole purpose of determining whether
Investor wishes to pursue a transaction involving the Company (a
"Transaction"). Investor hereby agrees on behalf of itself and its
Representatives (as hereinafter defined), subject to the further provisions
hereof, for a period of two years from the date of this letter to treat
confidentially all Information the Company furnishes to it or its shareholders,
officers, directors, agents, employees or other representatives (including,
without limitation, attorneys, accountants, experts, consultants, and financial
advisors) (collectively "Representatives").
2. The term "Information" shall include, without limitation, any
and all reports, analyses, compilations, studies and information developed or
prepared by the Company, or by or for Investor that include, refer to, reflect
or are based (in whole or in part) upon the Information or any information
about the Company, but shall not include information, if any, that (a) becomes
generally available to the public in a manner other than as a result of a
disclosure by Investor or its Representatives; (b) was available to Investor on
a non-confidential basis prior to its disclosure to Investor by the Company, or
(c) becomes available to Investor on a non-confidential basis from a source
other than the Company if Investor has no reason to believe such source is
bound by or subject to a confidentiality agreement with the Company or a
confidentiality obligation to the Company.
<PAGE> 2
Mr. H.E. Lambert
January 29, 1993
Page Two
3. Investor agrees that the Information supplied by the Company
will not be used by Investor or its Representatives directly or indirectly
except to evaluate or implement a Transaction, that the Information supplied by
the Company shall be kept strictly confidential for the term set forth above by
Investor and its Representatives and that the Information shall not be used in
any manner that is detrimental or adverse to the Company; provided, however,
that (a) any of the Information supplied by the Company may be disclosed to
such of Investor's Representatives who need to know the Information for the
purpose of evaluating or implementing a Transaction, who shall be informed by
Investor of the confidential and proprietary nature of the Information and who
agree to be bound by the confidentiality provisions of this letter; and (b) any
disclosure of the Information may be made upon the prior written consent of the
Company. Investor further agrees to be fully responsible for any breach of any
provisions of this letter by its Representatives.
4. If Investor or anyone to whom Investor transmits the
Information pursuant to this letter becomes compelled by applicable law or
securities exchange regulation to disclose any of the Information, Investor
will provide the Company with prompt notice of such requirement prior to
disclosure of the Information so that the Company may seek a protective order
or other appropriate remedy or waive a compliance with the provisions of this
letter. In the event that such protective order or other remedy is not
obtained, or that the Company waives compliance with the provisions of this
letter, Investor will furnish only that portion of the Information that it is
advised by written opinion of legal counsel is required by applicable law or
securities exchange regulation, and such disclosure will not result in any
liability hereunder unless such disclosure was caused by or resulted from a
previous disclosure by Investor or by its Representatives that was not
permitted by this letter. Additionally, Investor will exercise its best
efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded such Information that is disclosed.
5. Upon the request of the Company, all of the information will
immediately be returned to the Company, and no copies shall be retained by
Investor or its Representatives; provided, however, that notwithstanding the
foregoing, all copies of any information consisting of reports, analyses,
compilations, studies or information developed or prepared by or for Investor
or its Representatives that include, refer to, reflect or are based upon (in
whole or in part) any Information will be promptly destroyed.
<PAGE> 3
Mr. H.E. Lambert
January 29, 1993
Page Three
6. Investor agrees not to make or to permit any of its
Representatives to make any public disclosure concerning the Company in any
respect, including without limitation that it is having or has had discussions
with the Company; provided, however that Investor may make such disclosure if
it is advised by written opinion of legal counsel that it is required to make
such disclosure by applicable law or securities exchange regulation. In such a
situation, Investor will at the earliest possible moment advise the Company in
writing that it is considering making such disclosure and will disclose only
such information as it is advised by written opinion of counsel is required by
such law or regulation and only after giving the Company as much advanced
notice as possible.
7. Investor understands that the Company makes no representation or
warranty as to the accuracy or completeness of any information furnished by
the Company to Investor or its Representatives. Investor agrees the Company
shall not have any liability to it or any of its Representatives resulting from
the use of the Information by Investor or by them. Solely for the purposes of
this paragraph, the term "Information" is deemed to include all information
furnished by the Company to Investor or its Representatives, regardless of
whether such information is or continues to be subject to the confidentiality
provisions hereof
8. Investor agrees that for a period of two years, Investor shall
not directly or indirectly (i) induce or attempt to induce any of the employees
of the Company to leave their employment or (ii) attempt to employ any of the
employees of the Company.
9. This letter sets forth the entire understanding and agreement
of the parties hereto and supersedes all previous communications, negotiations
and agreements, whether oral or written, with respect to the subject matter
hereof. The parties hereto further agree that unless and until a definitive
written agreement containing mutually satisfactory provisions has been executed
and delivered, neither the Company nor Investor has any legal obligation of any
kind whatsoever with respect to any such Transaction by virtue of this letter
or any other written or oral expression with respect to such Transaction,
except, in the case of this letter, for the matters specifically agreed to
herein.
<PAGE> 4
Mr. H.E. Lambert
January 29, 1993
Page Four
In that connection, except as specifically stated in this letter, neither party
will assert the existence of any contract, agreement, understanding, right,
privilege or obligation of any kind with respect to any possible transaction
unless and until a definite written agreement is concluded between the parties
as described above. For purposes of this paragraph, the term "definitive
written agreement" does not include an executed letter of intent or any other
preliminary written agreement, nor does it include any written or oral
acceptance of an offer or bid by any party hereto.
10. Investor acknowledges that the Company would not have an
adequate remedy at law for money damages if any of the covenants in this letter
were not performed in accordance with its terms and therefore agrees that the
Company shall be entitled to specific enforcement of such convenants in
addition to any other remedy to which it may be entitled, at law or in equity.
11. This agreement shall be governed by and construed in accordance
with the laws of the State of Florida, without giving effect to principles of
conflicts-of-law.
If you are in agreement with the foregoing, please so indicate by
signing, dating and returning one copy of this letter, which will constitute
our agreement with respect to the matters set forth herein.
Very truly yours,
SUNSHINE-JR. STORES, INC.
Agreed to and Accepted by:
E-Z Serve Management Company
By: /s/ LENARD J. MILLER By: /s/ H. E. LAMBERT
--------------------------------- -------------------------------
Lenard J. Miller H. E. Lambert
President/CEO
Date: 1/29/93
<PAGE> 5
June 14, 1995
Mr. Ron M. Shouse
Sunshine-Jr. Stores, Inc.
109 West 5th Street
Panama City, Florida 32401
Dear Mr. Shouse:
This letter will serve to amend, effective as of January 29, 1995, the letter
agreement dated January 29, 1993, between Sunshine-Jr. Stores, Inc. and E-Z
Serve Corporation (as assignee of E-Z Serve Management Company) so as to extend
the provisions of such letter agreement until November 30, 1995.
If Sunshine-Jr. Stores, Inc. is in agreement with the foregoing, please so
indicate by signing, dating and returning one copy of this letter, which will
constitute our agreement with respect to the matters set forth herein.
Very truly yours,
E-Z Serve Corporation
/s/ John T. Miller
John T. Miller
Senior Vice President
<PAGE> 6
Mr. Ron M. Shouse
June 15, 1995
Page 2
AGREED AND ACCEPTED:
Sunshine-Jr. Stores, Inc.
By: /s/ Ron M. Shouse
----------------------------
Ron M. Shouse
President
<PAGE> 1
Exhibit 99.(c)(11)
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 28th day of April,
1994, by and between Sunshine-Jr. Stores, Inc., a Florida corporation
(hereinafter called the "Employer"), and Ron M. Shouse (hereinafter called the
"Employee").
This Employment Agreement replaces that certain Employment Agreement
dated June 21, 1993, between Sunshine-Jr. Stores, Inc. and Ron M. Shouse and,
in addition, becomes in effect when that certain order approving the
Employment motion along with the terms and conditions of employment for Ron M.
Shouse with Sunshine-Jr. Stores, Inc. as signed by Judge Thomas E. Baynes,
Jr. dated July 9, 1993 is no longer in effect, then and at that time, this
Employment Agreement becomes effective.
WITNESSETH:
1. Employment -- The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
2. Term -- Subject to the provisions of termination as hereinafter
provided, the term of this Agreement shall begin on or before April 28, 1994,
and terminate on May 1, 1995; provided, however, that this Employment Agreement
shall be automatically renewed for successive one (1) year terms beginning on
the first day of May and terminating on the last day of April unless either
party gives the other notice to terminate the Employment Agreement at the
expiration of the initial one (1) year term or any subsequent one (1) year
term, which notice must be given at least ninety (90) days prior to the
expiration of any said term.
3. Compensation --
(a) The Employer shall pay to the Employee an annual base salary of
One Hundred Seventy Five Thousand and no/100 Dollars ($175,000.00). Such
salary shall be paid in accordance with Employer's standard payroll payment
procedures in effect for the payment of salaries to Employer's senior officers.
(b) Bonuses, if any, will be at the sole discretion of the Board
of Directors.
(c) Employee shall be entitled to receive such other benefits of
employment as are generally available to Employer's other employees.
4. Duties -- Employee shall serve as the President and Treasurer of the
Employer. Employee shall do and perform all services, acts, or things
necessary or advisable to manage and conduct the business of Employer, subject
always to the policies set by the Board of Directors. Employee shall have such
other duties as may from time to time be reasonable assigned to him by the
Board of Directors of the Employer.
<PAGE> 2
5. Devotion of Full-Time -- During the term hereof, the Employee shall
not engage in or carry on or be employed by, directly or indirectly, any other
business or profession without the approval of the Board of Directors of
Employer; provided, however, that nothing herein contained shall prohibit the
Employee from investing or trading in stocks, bonds, commodities or other
securities or forms of investments, including real property; provided, further,
that such activities do not require an unreasonable amount of time by the
Employee and do not otherwise adversely affect the interest of the Employer.
6. Facilities and Business Expenses --
(a) The Employer shall furnish the office space, stenographic help,
supplies, and such other facilities and services needed by the Employee in
performing his duties on behalf of the Employer.
(b) Employee is authorized to incur on behalf of Employer, and
Employer shall pay for all customary and reasonable expenses incurred by
Employee in the course of his assigned duties for promoting, pursuing or
otherwise furthering the business of Employer, including expenses for travel,
lodging, entertainment and similar items; provided, however, that reimbursement
under this subparagraph shall be subject to such policies that the Board of
Directors may, from time to time, establish; provided further, that
reimbursement under this paragraph shall not be made until and unless the
Employee shall furnish the Employer with an appropriate receipt or such other
document as may reasonably be required by the Employer to substantiate the
nature and amount of the expenses incurred by the Employee.
(c) In addition, Employer shall furnish Employee an automobile
along with all expenses relating to automobile. This automobile will be of
such type, year, and model to be in keeping with the office held by the
Employee.
7. Disability, Illness or Incapacity --
(a) The Employee shall receive full compensation for any period of
disability, illness or incapacity during the term hereof which renders the
Employee at least temporarily unable to perform the services required under
this Agreement; provided, however, that if the Employee's disability, illness
or incapacity extends beyond a period of thirty (30) days, the Employee shall
not be entitled, after the expiration of such thirty (30) day period, to any
further compensation hereunder until he returns to full time service hereunder.
(b) Successive periods of disability, illness or incapacity will be
considered separate periods unless the later period of disability, illness or
incapacity is due to the same or a related cause and commences less than six
(6) months from the ending of the previous period of disability.
(c) If and when the period of disability, illness or incapacity of
the Employee totals forty-five (45) days during a successive six (6) month
period, his employment with the Employer
2
<PAGE> 3
shall terminate. In the event Employer terminates Employee's Employment under
this paragraph because of a physical disability caused by accident or disease,
then such termination shall be deemed to be a termination without cause, to
which the provisions of paragraph 9 shall apply. Notwithstanding the
foregoing, if the Employee and the Employer agree, the Employee may thereafter
be employed by the Employer upon such terms and may be mutually agreeable.
After receiving the payments provided in this paragraph, Employee shall have no
further rights under this Agreement.
(d) Any dispute regarding the existence, extent or continuance of
the disability, illness or incapacity shall be resolved by the determination of
a majority of three competent doctors who are not employees of the Employer,
one of which shall be selected by the Employer, one of which shall be selected
by the Employee and a third selected by the other two doctors.
8. Death During Employment -- If Employee dies during the term of his
employment, Employer shall pay to the estate of the Employee the compensation
which would otherwise be payable to Employee up to the date of his death, plus
three (3) full month's additional compensation. With Employee's permission,
Employer shall provide Employee with a decreasing term life insurance policy
and a disability insurance policy, payable in the manner provided by Employee.
Employer agrees to pay all premiums on the policy during the term on employment
provided in this Agreement. The amount payable under the life insurance policy
and the disability policy shall be equal to the cumulative balance of the base
salary payable to Employee under paragraph 3 (a) above times two from the date
of death or termination due to disability until the expiration of the term in
which Employee's death or termination due to disability occurs. Notwithstanding
the foregoing, Employer shall not be obligated to provide Employee with the
life insurance or disability policy unless Employee qualifies for such policy
under standard underwriting criteria. After receiving the payments provided in
this paragraph, Employee and his estate shall have no further rights under this
Agreement.
9. Termination of Agreement --
(a) This Agreement may be terminated at any time by the Board of
Directors of Employer, but any such termination, other than for cause, shall be
without prejudice to the rights of Employee to continue to receive base salary
as provided in paragraph 3 (a) of this Agreement for the remainder of the term
in which such termination occurs. In such event, base salary shall not be
payable in lump sum, but shall continue to be paid periodically in the same
manner as if said termination had not occurred. In the event of termination
under this paragraph (a), Employee shall not be entitled to receive any other
benefits under this Agreement except Employees major medical and health
insurance will continue in full force for the remainder of the term in which
termination occurs. This insurance will remain in the same type and form as
before termination.
(b) In the event of a termination for cause, Employee shall have no
right to receive any compensation or other benefit for any period subsequent to
such termination except for one (1) months pay immediately following
termination. For purposes of this Agreement, a termination of employment by
Employer shall be considered to be a termination for cause if such termination
is for any of the following reasons: (i) Employee's personal dishonesty,
(ii) willful misconduct,
3
<PAGE> 4
(iii) breach of fiduciary duty involving personal profit, (iv) intentional
failure to perform stated duties, (v) willful violation of any law, rule,
regulation, or order of court (other than a law, rule or regulation as to a
traffic violation or similar offense), (vi) material breach of any provision
of this Agreement, or (vii) substantial dependence, as determined by the Board
of Directors, on any addictive substance, including but not limited to,
alcohol, amphetamines, barbiturates, cocaine, or other narcotic drug.
(c) Employee may elect to terminate this Agreement by delivering
the Employer, at least sixty (60) days prior to the date upon which termination
is desired, written notice of such intention to terminate. Notwithstanding the
preceding sentence, in the event that Employee gives notice under the
provisions of this paragraph (c), Employer shall have the right to relieve the
Employee, in whole or in part, of his duties hereunder (without reduction in
compensation); and, in addition, the Employer shall have the right to
accelerate the date of termination of the Employee's employment.
(d) If the employment of Employee is terminated pursuant to the
provisions of subparagraphs (b), or (c) above, then the Employer shall pay to
Employee any base salary earned under paragraph 3 (a) as outlined by
subparagraph (b) or (c) above but not paid to Employee prior to such
termination. Such payment shall be in full and complete discharge of any and
all liabilities or obligations of Employer to Employee hereunder, and Employee
shall be entitled to no further benefits under this Agreement.
(e) In the event Employer sells substantially all of its assets or
the equity ownership of the Company substantially changes, Employee may elect
to terminate this Agreement by notifying Employer within thirty (30) days after
the completion of such sale or change of equity ownership. In the event of
such termination by Employee, Employee shall be entitle to continue to receive
base salary as provided in paragraph 3 (a) of this Agreement for the remainder
of the term in which such termination occurs. In such event, base salary shall
not be payable in a lump sum, but shall continue to be paid periodically in the
same manner as if said termination had not occurred. In the event of
termination under this paragraph (e) Employee shall not be entitled to receive
any other benefits under this Agreement.
10. Notice -- Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified or
registered mail, return receipt requested, or by nationally recognized
overnight courier, to the parties at the following addresses:
To the Employee at: Mr. Ron M. Shouse
2712 Pembroke Drive
Panama City, FL 32405
To the Employer at: Sunshine-Jr. Stores, Inc.
c/o Paul Martin, Chairman of the Board
6529 Central Avenue
St. Petersburg, FL 33710
4
<PAGE> 5
Either party may change its address by giving notice of its new address
in the manner provided by this paragraph.
11. Waiver of Breach -- The waiver by the Employer of a breach of any
condition of this Agreement by the Employee shall not be construed as a waiver
of any subsequent breach by the Employee.
12. Confidential Information -- Employee agrees to keep in strict
confidence and not to disclose or use for Employee's own or another's benefit
during the term of and after termination of employment, any information not
publicly known (hereinafter known "confidential information") relating to
Employer and its subsidiaries or affiliated companies. For purposes of this
Agreement, confidential information shall include, but shall not be limited to,
any material pertaining to policies and procedures, business and financial
plans, supplier information, customer lists, employees, research efforts, trade
secrets, prospective customer and contact list, sales, sales pricing, and
product lines. Upon termination of employment, Employee agrees to immediately
deliver all materials and all copies of such materials in his possession
containing such confidential information.
13. Assignment -- The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer.
14. Governing Law -- This Agreement shall be governed by the laws of
the State of Florida.
15. Attorney's Fees -- If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees and other legal expenses, including,
but not limited to, attorney's fees and costs incurred in a bankruptcy
proceeding.
16. Entire Agreement -- This Agreement contains the entire agreement of
the parties. It may not be changed orally, but only by the agreement in
writing signed by both parties.
The parties have executed this Agreement the day and year first above
written.
Sunshine-Jr. Stores, Inc.
By: /s/ PAUL MARTIN
----------------------------------------
Its: Chairman of the Board
----------------------------------------
/s/ RON M. SHOUSE
---------------------------------------------
Ron M. Shouse
5
<PAGE> 6
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement is made and entered into as of
the 12th of July, 1994 by and between Sunshine-Jr. Stores Inc., a Florida
corporation ("Employer") and Ron M. Shouse ("Employee") and amends that certain
Employment Agreement dated the 28th day of April, 1994 between Employer and
Employee (the "Employment Agreement").
PREAMBLE
A majority in interest of the Shareholders of Employer are desirous of
selling their equity positions in Employer or otherwise arranging for a sale of
Employer. Under the Employment Agreement, Employee has the right to terminate
his employment with Employer at any time upon sixty (60) days written notice.
Employer has determined that it would not be in the best interest of Employer
for Employee to exercise this right at this time and, therefore, desires to
provide an incentive for Employee not to terminate the Employment Agreement
prior to the completion of the sale of Employer.
NOW, THEREFORE, Employer and Employee hereby agree as follows:
1. Retention Bonus. In order to induce Employee to remain in the
employ of Employer until the closing of the sale in one transaction (or a
series of related transactions) of at least 51% of the shares of stock in
Employer or the sale in one transaction (or a series of related transactions)
of substantially all of the assets of Employer (the "Sale Closing") , Employer
hereby agrees to pay Employee the sum of $35,000 in cash upon the Sale Closing
provided Employee has not, prior to the Sale Closing, been terminated for cause
under paragraph 9(b) of the Employment Agreement or given notice of termination
under paragraph 9(c) of the Employment Agreement.
2. Amendment to Paragraph of 9(e) of Employment Agreement. Paragraph
9(e) of the Employment Agreement is hereby amended in its entirety and
restated as follows:
"(e) Upon the Sale Closing, if Employee is not retained pursuant to
by Employer or its successor in interest or his duties are
substantially changed (including relocation as a condition of continued
employment), Employee may elect by giving notice to Employer or its
successor by registered mail within 30 days of the Sale Closing to
terminate his employment hereunder and to be paid by Employer or its
successor his normal monthly compensation in the amount of $14,583.33
for 12 consecutive months in the same manner as if said termination had
not occurred. In the event of termination under
<PAGE> 7
this paragraph 9 (e) , Employee shall not be entitled to receive any
other benefits under the Employment Agreement (except as described
in this paragraph and paragraph 1 of this Amendment).
3 . The following sentence shall be inserted at the end of paragraph
9(a) of the Employment Agreement:
"Such medical and health insurance shall be continued (i) by Employer
only to the extent of Employer's group insurance then in effect and
only if Employee is eligible to participate in such group insurance
or (ii) if Employee is not eligible to so participate, then only to the
extend Employee elects to receive COBRA benefits, in which case
Employer shall reimburse Employee for the insurance premiums for such
COBRA policy."
4. Entire Agreement. The Employment Agreement as amended by this
Amendment to Employment Agreement contains the entire agreement of the parties
and all of the terms and provisions of the Employment Agreement, except
paragraph 9 (e) which has been restated in its entirety by this Amendment,
remain in full force and effect.
The parties have executed this Amendment to Employment Agreement as of
the day and year first above written.
/s/ [ILLEGIBLE] /s/ RON M. SHOUSE
- ------------------------------------- -----------------------------------
Sunshine-Jr. Stores, Inc. Ron M. Shouse
2
<PAGE> 1
EXHIBIT 99.(c)(12)
RETENTION AGREEMENT
This Retention Agreement is made and entered into as of the 12th of
July, 1994 by and between Sunshine-Jr. Stores Inc. , a Florida corporation
("Employer") and Michael G. Ware ("Employee").
PREAMBLE
A majority in interest of the Shareholders of Employer are desirous of
selling their equity positions in Employer or otherwise arranging for a sale of
Employer. As Employee is an employee at will, Employee has the right to
terminate his employment with Employer at any time. Employer has determined
that it would not be in the best interest of Employer for Employee to exercise
this right at this time and, therefore, desires to provide an incentive for
Employee not to terminate his employment prior to the completion of the sale of
Employer.
NOW, THEREFORE, Employer and Employee hereby agree as follows:
1. Retention Bonus - In order to induce Employee to remain in the
employ of Employer until the closing of the sale in one transaction (or a
series of related transactions) of at least 51% of the shares of stock in
Employer or the sale in one transaction (or a series of related transactions)
of substantially all of the assets of Employer (the "Sale Closing") , Employer
hereby agrees to pay Employee the sum of $35,000 in cash upon the Sale Closing
provided Employee has not, prior to the Sale Closing, been terminated for cause
or given notice of termination.
2 . Severance. Upon the Sale Closing, if Employee is not retained
by Employer or its successor in interest or his duties are substantially changed
(including relocation as a condition of continued employment) , Employee may
elect by giving notice to Employer or its successor by registered mail
within 30 days of the Sale Closing to terminate his employment with Employer
and to be paid by Employer or its successor his normal monthly compensation in
the amount of $10,416.67 for 12 consecutive months in the same manner as if
said termination had not occurred. In the event of termination under this
paragraph, Employee shall not be entitled to receive any other benefits from
Employer except as described in this paragraph and paragraph 1 hereof.
3 . Confidential Information. Employee agrees to keep in strict
confidence and not to disclose or use for Employee's own or another's benefit
during the term of and after termination of employment, any information not
publicly known (hereinafter known "confidential information") relating to
Employer and its subsidiaries or affiliated companies. For purposes of this
Agreement, confidential information shall include, but shall not be limited to,
any material pertaining to policies and procedures, business and financial
plans, supplier information, customer lists, employees, research efforts, trade
secrets, prospective customer and contact lists sales, sales pricing, and
product lines. Upon
<PAGE> 2
termination of employment, Employee agrees to immediately deliver all materials
and all copies of such materials in his possession containing such
confidential information.
4. Assignment. The rights and obligations of the Employer under the
Agreement shall insure to the benefit of and shall be binding upon the
successors and assigns of the Employer.
5. Governing Law. This Agreement shall be governed by the laws of the
State of Florida.
6. Attorney's Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees and other legal expenses, including,
but not limited to, attorney's fees and costs incurred in a bankruptcy
proceeding.
7. Entire Agreement. The Retention Agreement contains the entire
agreement of the parties and may only be changed by any agreement in writing
signed by both parties.
The parties have executed this Retention Agreement as of the day and
year first above written.
/s/ PAUL MARTIN, JR., Chairman /s/ MICHAEL G. WARE
- ------------------------------------- -----------------------------------
Sunshine-Jr. Stores, Inc. Michael G. Ware
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