<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
RULE 14d-100
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
SUNSHINE-JR. STORES, INC.
(NAME OF SUBJECT COMPANY)
EZS ACQUISITION CORPORATION
E-Z SERVE CORPORATION
(BIDDER)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
867830101
(CUSIP NUMBER OF CLASS OF SECURITIES)
E-Z SERVE CORPORATION
2550 NORTH LOOP WEST, SUITE 600
HOUSTON, TEXAS 77092
ATTENTION: MR. JOHN T. MILLER
(713) 684-4300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
WITH A COPY TO:
MR. JOHN L. KEFFER
BRACEWELL & PATTERSON, L.L.P.
711 LOUISIANA STREET, SUITE 2900
HOUSTON, TEXAS 77002-2781
(713) 223-2900
------------------------
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
Transaction valuation* Amount of filing fee**
$20,419,800 $4,083.96
</TABLE>
- ---------------
* Based on the offer to purchase all of the outstanding shares of common stock
of the Subject Company at $12.00 cash per share, the number of shares
outstanding and the number of options outstanding as reported in the Annual
Report on Form 10-K of the Subject Company for the year ended December 29,
1994.
** 1/50 of 1% of the Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: ____________________ Filing party: ____________________
Form or registration no.:___________________ Date filed: ______________________
================================================================================
<PAGE> 2
CUSIP No. 867830101 14D-1 Page 1 of Pages
--- ---
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
EZS Acquisition Corporation; E-Z Serve Corporation
76-0472274; 75-2168773
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
BK, AF, WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) or 2(f) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware; Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES* / /
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
-0%-
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON*
CO; CO
- --------------------------------------------------------------------------------
<PAGE> 3
This Tender Offer Statement on Schedule 14D-1 relates to the 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 all of the outstanding shares of common stock, par value
$.10 per share (the "Shares"), of Sunshine-Jr. Stores, Inc., a Florida
corporation (the "Company"), at a purchase price of $12.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 19, 1995 (the "Offer to
Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the
related Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"), a copy of which is attached hereto as Exhibit (a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Sunshine-Jr. Stores, Inc. The
information set forth in Section 8 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is common stock, par value $.10 per share. The information set forth in
the Introduction (the "Introduction") to the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by the Purchaser and Parent. The
information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase and in Schedule I thereto is
incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor Parent
nor, to the best knowledge of the Purchaser and Parent, any of the persons
listed in Schedule I to the Offer of Purchase (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 9 ("Certain Information Concerning
the Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference. Except as set forth in Section 9 of the Offer to Purchase, since
January 1, 1992, there have been no transactions which would be required to be
disclosed under this Item 3(a) between either the Purchaser or Parent or, to the
best knowledge of the Purchaser and Parent, any of the persons listed in
Schedule I to the Offer to Purchase and the Company or any of its executive
officers, directors or affiliates.
(b) The information set forth in Section 9 ("Certain Information Concerning
the Purchaser and Parent"), Section 11 ("Contacts with the Company; Background
of the Offer") and Section 12 ("Purpose of the Offer; The Merger Agreement; The
Escrow Agreement; The Shareholders Agreement; Other Matters") of the Offer to
Purchase is incorporated herein by reference. Except as set forth in Section 9,
Section 11 and Section 12 of the Offer to Purchase, since January 1, 1992, there
have been no contacts, negotiations or transactions which would be required to
be disclosed under this Item 3(b) between either the Purchaser or Parent or any
of their respective subsidiaries or, to the best knowledge of the Purchaser and
Parent, any of the persons listed in Schedule I to the Offer to Purchase, and
the Company or its affiliates concerning a merger, consolidation or acquisition,
a tender offer or other acquisition of securities, an election of directors or a
sale or other transfer of a material amount of assets.
2
<PAGE> 4
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction, Section 11
("Contacts with the Company; Background of the Offer"), Section 12 ("Purpose of
the Offer; The Merger Agreement; The Escrow Agreement; The Shareholders
Agreement; Other Matters"); Section 13 ("Dividends and Distributions") and
Section 7 ("Effect of the Offer on the Market for the Shares, Stock Quotation
and Exchange Act Registration") of the Offer to Purchase is incorporated herein
by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 9 ("Certain
Information Concerning the Purchaser and Parent") of and Schedule I to the Offer
to Purchase is incorporated herein by reference. Except as set forth in the
Introduction and Section 9 of and Schedule I to the Offer to Purchase, neither
the Purchaser nor Parent nor, to the best knowledge of the Purchaser and Parent,
any of the persons listed in Schedule I to the Offer to Purchase or any
associate or majority-owned subsidiary of the Purchaser or Parent or any of the
persons so listed beneficially owns or has any right to acquire, directly or
indirectly, any Shares.
(b) The information set forth in the Introduction and Section 9 ("Certain
Information Concerning the Purchaser and Parent") of and Schedule I to the Offer
to Purchase is incorporated herein by reference. Except as set forth in the
Introduction and Section 9 of and Schedule I to the Offer to Purchase, neither
the Purchaser nor Parent nor, to the best knowledge of the Purchaser and Parent,
any of the persons or entities referred to above or any executive officer,
director or subsidiary of the foregoing has effected any transactions in the
Shares during the past 60 days.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 10 ("Source and
Amount of Funds"), Section 11 ("Contacts with the Company; Background of the
Offer"), Section 12 ("Purpose of the Offer; The Merger Agreement; The Escrow
Agreement; The Shareholders Agreement; Other Matters") and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference. Except
as set forth in the Introduction and Sections 9, 10, 11, 12 and 16 of the Offer
to Purchase, neither the Purchaser nor Parent nor, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I to the Offer to
Purchase has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company (including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any such securities, joint ventures, loans or
option arrangements, puts or calls, guarantees of loans, guarantee agreements or
any giving or withholding of proxies).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction, Section 10 ("Source and
Amount of Funds") and Section 16 ("Fees and Expenses") of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Although the Purchaser and Parent do not believe that their financial
condition or the financial condition of their affiliates is material to a
decision by a security holder of the Company whether to sell, tender or hold
Shares, selected consolidated financial information with respect to Parent is
included in Section 9 ("Certain Information Concerning the Purchaser and
Parent") of the Offer to Purchase and such information is incorporated herein by
reference.
3
<PAGE> 5
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; The Escrow Agreement; The Shareholders Agreement; Other
Matters") of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of June 15, 1995, among
the Purchaser, Parent and the Company, and the Shareholders Agreement dated as
of June 15, 1995 among Parent, the Purchaser and certain shareholders of the
Company, copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1)
and (c)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
99.(a)(1) Offer to Purchase dated June 19, 1995.
99.(a)(2) Letter of Transmittal.
99.(a)(3) Notice of Guaranteed Delivery.
99.(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees from the Information Agent.
99.(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
99.(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.(a)(7) Summary Advertisement as published on June 19, 1995.
99.(a)(8) Press Release issued by the Company on June 15, 1995.
99.(b)(1) Subscription Agreement dated June 13, 1995, among Parent and
certain shareholders of Parent.
99.(b)(2) Credit and Guaranty Agreement dated January 17, 1995 by and among
Parent, certain banks as lenders and Societe Generale as agent,
as amended.
99.(b)(3) Amendment No. 2 and Waiver No. 1 to Credit and Guaranty Agreement
dated as of June 15, 1995, among E-Z Serve Convenience Stores,
Inc., Parent, certain banks as lenders and Societe Generale, as
agent.
99.(c)(1) Agreement and Plan of Merger dated as of June 15, 1995, by and
among the Purchaser, Parent and the Company.
99.(c)(2) Shareholders Agreement dated as of June 15, 1995, by and among
Parent, the Purchaser and certain shareholders of the Company.
99.(c)(3) Escrow Agreement dated as of June 15, 1995, by and between Parent
and the Company.
99.(c)(4) 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.
(d) None.
(e) Not applicable.
(f) None.
4
<PAGE> 6
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
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
Date: June 19, 1995
5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- ---------
<S> <C> <C>
99.(a)(1) Offer to Purchase dated June 19, 1995..................................
99.(a)(2) Letter of Transmittal..................................................
99.(a)(3) Notice of Guaranteed Delivery..........................................
99.(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees
from the Information Agent.............................................
99.(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.................................................
99.(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9....................................................
99.(a)(7) Summary Advertisement as published on June 19, 1995....................
99.(a)(8) Press Release issued by the Company on June 15, 1995...................
99.(b)(1) Subscription Agreement dated June 13, 1995, among Parent and certain
shareholders of Parent.................................................
99.(b)(2) Credit and Guaranty Agreement dated January 17, 1995 by and among
Parent, certain banks as lenders and Societe Generale as agent, as
amended................................................................
99.(b)(3) Amendment No. 2 and Waiver No. 1 to Credit and Guaranty Agreement dated
as of June 15, 1995, among E-Z Serve Convenience Stores, Inc., Parent,
certain banks as lenders and Societe Generale, as agent................
99.(c)(1) Agreement and Plan of Merger dated as of June 15, 1995, by and among
the Purchaser, Parent and the Company..................................
99.(c)(2) Shareholders Agreement dated as of June 15, 1995, by and among Parent,
the Purchaser and certain shareholders of the Company..................
99.(c)(3) Escrow Agreement dated as of June 15, 1995, by and between Parent and
the Company............................................................
99.(c)(4) 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........................
</TABLE>
6
<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.
19
<PAGE> 22
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
20
<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
21
<PAGE> 24
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.
22
<PAGE> 25
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,
23
<PAGE> 26
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
24
<PAGE> 27
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.
25
<PAGE> 28
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)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES
OF
SUNSHINE-JR. STORES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates evidencing shares, par value $.10 per share (the
"Shares"), of Sunshine-Jr. Stores, Inc., a Florida corporation (the "Company"),
are not immediately available or if the procedure for book-entry transfer cannot
be completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase). This form may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution (as defined in Section 2 of the Offer to Purchase).
See Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
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 NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
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, 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 in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure set forth in
Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: _____________________________________ Name(s) of Record Holder(s):
Certificate Nos. (if available) ______________________________________________________
______________________________________________________ ______________________________________________________
(PLEASE TYPE OR PRINT)
Address(es): _________________________________________
/ / Check box if Shares will be tendered by book-entry
transfer) ______________________________________________________
ZIP CODE ______________
______________________________________________________
Name of Tendering Institutions Area Code and Tel. No.: ______________________________
Account Number: ______________________________________ Signature(s): ________________________________________
Dated: _____________________________________ , 1995 ______________________________________________________
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., or which is a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution", as such term is defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended,
hereby guarantees to deliver to the Depositary, at its address listed above,
either the certificates evidencing the Shares tendered hereby, in proper form
for transfer, or a Book-Entry Confirmation (as defined in Section 2 of the Offer
to Purchase) of a transfer of such Shares, in any case together with a properly
completed and duly executed Letter of Transmittal, or a manually signed
facsimile thereof, with any required signature guarantees, or an Agent's Message
(as defined in the Offer to Purchase) in the case of book-entry transfer, and
any other documents required by the Letter of Transmittal within five American
Stock Exchange, Inc. trading days after the date hereof.
<TABLE>
<S> <C>
______________________________________________________ ______________________________________________________
Name of Firm Authorized Signature
______________________________________________________ ______________________________________________________
Address Title
______________________________________________________ Name: ________________________________________________
Zip Code Please Type or Print
______________________________________________________ Dated: _________________________________________, 1995
Area Code and Telephone No.
</TABLE>
DO NOT SEND CERTIFICATES EVIDENCING SHARES WITH THIS NOTICE. SHARE
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT 99.(a)(4)
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)(5)
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.(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of the
account or, if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor
is the only contributor, the
minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent person(3)
ward, minor or incompetent
person
7. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
- ------------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
- ------------------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>
------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business or "doing
business as" name. Furnish the owner's social security number or the
employer identification number of the sole proprietorship.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, check the box "Awaiting TIN" in Part 3, sign and date the Form, and give
it to the requester. Generally, you will then have 60 days to obtain a taxpayer
identification number and furnish it to the requester. If the requester does not
receive your taxpayer identification number within 60 days, backup withholding,
if applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), an individual retirement
plan, or a custodial account under section 403(b)(7).
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, RETURN IT TO THE
PAYER AND SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a), 6045
and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to Internal Revenue Service. The Internal Revenue
Service uses the numbers for identification purposes. Payers must be given the
numbers whether or not recipients are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
Exhibit 99.(a)(7)
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)(8)
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.(b)(1)
SUBSCRIPTION AGREEMENT
E-Z Serve Corporation
2550 North Loop West, Suite 600
Houston, Texas 77092
Gentlemen:
Subject to the terms and conditions stated herein, Phemus Corporation
and Intercontinental Mining & Resources Incorporated (the "Subscribers") shall
purchase, and the Corporation shall issue and sell to the Subscribers, an
aggregate of 120,000 shares of Series G Convertible Redeemable Preferred Stock
("Series G Stock") of E-Z Serve Corporation ("Corporation"), at a price of
$100.00 per share of Series G Stock ("Subscription Price") in the amounts
evidenced on the signature page hereto. This Subscription Agreement (the
"Subscription Agreement") is entered into in connection with the tender offer
(the "Offer") to be made by EZS Acquisition Corporation, a wholly-owned
subsidiary of the Corporation ("Sub"), to acquire all of the capital stock of
Sunshine-Jr. Stores, Inc. ("SJS"). If the Corporation fails to make a public
announcement of the Offer on or before June 30, 1995, if the closing of the
Offer fails to occur on or before September 30, 1995, or if the Corporation
receives funds from its senior lender to fund the Offer, either Subscriber or
the Corporation may, at their or its election and notwithstanding anything to
the contrary contained in this Subscription Agreement, terminate this
Subscription Agreement and thereafter each of the parties shall be relieved of
all further obligations and liabilities hereunder.
1. CLOSING. The Corporation shall give Subscribers at least two
days prior notice of the closing of the Offer (the "Closing Date"). Upon such
notice, the Subscribers shall tender the amounts set forth below such
Subscriber's name on the signature page hereto in immediately available funds
by wire transfer to an account designated by the Corporation ("Subscription
Consideration"). The Corporation shall hold the Subscription Consideration in
escrow in such account and shall accept the subscriptions hereunder
simultaneously with the closing of the Offer. Upon the Corporation's
acceptance of the Subscription Consideration, the Corporation shall deliver the
certificates representing the Series G Stock in full and complete payment of
the Subscription Price.
2. FEES. Upon execution of this Subscription Agreement, the
Corporation shall pay to the Subscribers an aggregate commitment fee of
$120,000 in cash divided among the Subscribers as set forth on the signature
pages hereof ("Commitment Fee"). In addition, upon the Corporation's
acceptance of the Subscription Consideration, the Corporation shall pay to the
Subscribers an aggregate additional commitment fee of $360,000 in cash divided
among the Subscribers as set forth on the signature pages
<PAGE> 2
hereof ("Additional Commitment Fee"). Each of such payments by the Corporation
shall be made by wire transfer to an account designated by the appropriate
Subscriber.
3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF SUBSCRIBERS.
Each Subscriber, severally as to itself and not jointly, hereby represents and
warrants to the Corporation as follows:
i. The acquisition of the Series G Stock by the
Subscriber is for the Subscriber's own account, is for investment
purposes, and is not with a view to, or for offer or sale for the
Corporation in connection with, the distribution of any of the Series
G Stock. The Subscriber is not participating and does not have a
participation in any such distribution or the underwriting of any such
distribution.
ii. The Subscriber has no present intention of selling or
otherwise disposing of any of the Series G Stock in violation of
applicable securities laws.
iii. The Subscriber hereby represents that it is an
accredited investor as such term is defined in Rule 501(a) (17 C.F.R.
Section 230.501(a)) of Regulation D promulgated under the Securities
Act of 1933, as amended ("Securities Act").
4. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBERS. Each
Subscriber, severally as to itself and not jointly, hereby further represents
and warrants to the Corporation as follows: The Subscriber has the corporate
power and authority to enter into this Subscription Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery by Subscriber of this Subscription Agreement and the
performance by Subscriber of its obligations hereunder have been duly
authorized by all requisite corporate action, and this Subscription Agreement
constitutes the legal, valid and binding obligation of Subscriber, enforceable
in accordance with its terms.
5. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation hereby represents and warrants to the Subscribers as follows:
i. The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is duly licensed or qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in
which the nature of the business transacted by it or the character of
the properties owned or leased by it requires such licensing or
qualification, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business or assets of
the Corporation taken as a whole. The Corporation has the corporate
power and authority to own and
-2-
<PAGE> 3
hold its properties and to carry on its business as now conducted and
as proposed to be conducted, to execute, deliver and perform this
Subscription Agreement and to issue, sell and deliver the Series G
Stock.
ii. The execution and delivery by the Corporation of this
Subscription Agreement, the performance by the Corporation of its
obligations hereunder and the issuance, sale and delivery of the
Series G Stock have been duly authorized by all requisite corporate
action, do not require the approval of the Corporation's stockholders
and will not violate any provision of law, any order of any court or
other agency of government, the Amended and Restated Certificate of
Incorporation of the Corporation, as amended, or the Bylaws of the
Corporation, as amended, and will not result in a material violation
of any provision of any indenture, agreement or other instrument to
which the Corporation, or any of its properties or assets, is bound,
or materially conflict with, result in a material breach of or
constitute (with due notice or lapse of time or both) a material
default under any such indenture, agreement or other instrument, other
than breaches or defaults which have been waived in writing, or result
in the creation or imposition of any license, charge, restriction,
claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Corporation which would have a material
adverse effect on the Corporation.
iii. Attached hereto as Exhibit "A" is a true and correct
copy of the Certificate of Designation for the Series G Stock, as
approved by the Board of Directors of the Corporation, that will
govern the terms of the Series G Stock upon the filing of such
certificate with the Secretary of State of Delaware on or before the
Closing Date.
iv. The issuance, sale or delivery of the Series G Stock
is not subject to any preemptive right of stockholders of the
Corporation or to any right of first refusal or other right in favor
of any person that has not been waived.
v. This Subscription Agreement has been duly executed
and delivered by the Corporation and constitutes the legal, valid and
binding obligation of the Corporation, enforceable in accordance with
its terms. The Series G Stock when issued, will be duly authorized,
validly issued, fully paid and nonassessable and will not be subject
to any lien, encumbrance or charge of any kind.
vi. Subject to the accuracy of the representations and
warranties of the Subscribers set forth in Sections 3 hereof, no
registration or filing with, or
-3-
<PAGE> 4
consent or approval of or other action by, any federal, state or other
governmental agency or instrumentality is or will be necessary for the
valid execution, delivery and performance by the Corporation of this
Subscription Agreement or the issuance, sale and delivery of the
Series G Stock.
6. CONDITIONS TO FUNDING BY SUBSCRIBERS. The respective
obligation of each Subscriber to consummate the purchase of Series G Stock
hereunder is subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
i. The Corporation shall have performed in all material
respects all of its obligations hereunder required to be performed by
it at or prior to the Closing Date;
ii. The representations and warranties of the Corporation
contained in this Subscription Agreement shall be true in all material
respects on the Closing Date as though made on and as of the Closing
Date.
iii. The Corporation, Sub and SJS shall have entered into
an Agreement and Plan of Merger providing for the merger of Sub with
and into SJS after the consummation of the Offer ("Merger Agreement");
iv. The Corporation, Sub and certain shareholders of SJS
holding a approximately 76% of the outstanding capital stock of SJS
shall have entered into a Shareholders Agreement whereby such
shareholders will have agreed to tender such shares to Sub in the
Offer ("Shareholders Agreement");
v. each party to the Merger Agreement and Shareholders
Agreement shall have performed in all material respects all of its
respective obligations required to be performed by it thereunder at or
prior to date of the closing of the Offer;
vi. all accrued and unpaid dividends on the outstanding
shares of the Company's $6.00 Convertible Preferred Stock, Series C
through April 1, 1995 (the last dividend payment date as set forth in
the Certificate of Designation of the $6.00 Convertible Preferred
Stock, Series C, as amended) have been declared and paid;
vii. Subscribers shall have received a legal opinion from
the Corporation's counsel in form and substance satisfactory to
Subscribers; and
-4-
<PAGE> 5
viii. The Registration Rights Agreement dated as of March
25, 1992, as amended, among Phemus Corporation, Intercontinental
Mining & Resources Incorporated, Quadrant Capital Corp. shall be
amended to include the shares of common stock issuable upon conversion
of the Series G Preferred Stock.
7. CONDITIONS TO CORPORATION'S OBLIGATIONS. The obligation of
the Corporation to consummate the sale of Series G Stock hereunder is subject
to the satisfaction or waiver at or prior to the Closing Date of the following
conditions:
i. Each Subscriber shall have performed in all material
respects all of its obligations hereunder required to be performed by
it at or prior to the Closing Date;
ii. The representations and warranties of each Subscriber
contained in this Subscription Agreement shall be true in all material
respects on the Closing Date as though made on and as of the Closing
Date.
8. COVENANTS OF THE CORPORATION. For so long as the
Corporation's Common Stock is registered under the Securities Act of 1933, as
amended ("Securities Act"), the Corporation, for as long as any Subscriber may
comply with Rule 144 under the Securities Act in order to sell Common Stock to
the public without registration thereunder, will make available to the
Subscriber the benefit of certain rules and regulations of the Commission which
may permit the Subscriber to sell Common Stock to the public without
registration under the Securities Act by (1) making and keeping "current public
information" "available" (as both such terms are defined in Rule 144 under the
Securities Act) at all times, (2) timely filing with the Commission, in
accordance with all rules and regulations applicable thereto, all reports and
other documents (x) required of the Corporation for Rule 144, as it may be
amended from time to time (or any rule, regulation or statute replacing Rule
144), to be available and (y) required to be filed under Section 15(d) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), notwithstanding
that the Corporation's duty to file such reports or documents may be suspended
or otherwise terminated under the express terms of such provision, and (3) upon
request by any Subscriber, furnishing the Subscriber a written statement by the
Corporation that it has complied with the reporting requirements of the
Exchange Act and Rule 144, together with a copy of the most recent annual or
quarterly report of the Corporation and such reports and documents filed by the
Corporation with the Commission as may reasonably be requested by the
Subscriber in order that the Subscriber may avail itself of any rule or
regulation of the Commission allowing sales of Common stock without
registration under the Securities Act.
-5-
<PAGE> 6
9. STATE LEGENDS. If a Subscriber is a resident of the State of
New York, such Subscriber must read the legend set forth below:
NO INFORMATION REGARDING THIS OFFERING HAS BEEN REVIEWED BY
THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY
GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
10. SURVIVAL. All representations, warranties, understandings,
covenants and agreements contained in this Subscription Agreement shall survive
the acceptance of this Subscription Agreement by the Corporation, the delivery
of the Series G Stock to the applicable Subscriber, and the dissolution of a
Subscriber.
11. GOVERNING LAW. This Subscription Agreement shall be governed
by, construed under, and enforced in accordance with the laws of the State of
Texas.
12. NOTICES. Any notice, request, instruction, correspondence or
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to the Corporation, addressed to:
E-Z Serve Corporation
2550 North Loop West, Suite 600
Houston, Texas 77092
Attention: Mr. Neil H. McLaurin
Telecopy: (713) 684-4367
If to the Subscribers, addressed as set forth on the
signature pages hereof.
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All notices by telecopier shall
-6-
<PAGE> 7
be confirmed promptly after transmission in writing by certified mail or
personal delivery. Any party may change any address to which notice is to be
given to it by giving notice as provided above of such change of address.
13. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Subscription
Agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth specifically herein or contemplated hereby. No supplement, modification
or waiver of this Subscription Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise
any right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Subscription
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
14. BINDING EFFECT AND ASSIGNMENT. This Subscription Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; but neither this Subscription
Agreement nor any of the rights, benefits or obligations hereunder shall be
assigned, by operation of law or otherwise, by any party hereto without the
prior written consent of the other parties; provided, however, that any
Subscriber may assign its rights and obligations hereunder to any affiliated
entity, provided that such affiliated entity confirms in writing the
representations and warranties contained herein and its obligation to be bound
by the terms hereof, and the Corporation specifically consents to such future
assignment. Nothing in this Subscription Agreement, express or implied, is
intended to confer upon any person or entity other than the parties hereto and
their respective permitted successors and assigns, any rights, benefits or
obligations hereunder.
15. SEVERABILITY. If any provision of the Subscription Agreement
is rendered or declared illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by decree of a court of last resort, the
Corporation and the Subscribers shall promptly meet and negotiate substitute
provisions for those rendered or declared illegal or unenforceable, but all of
the remaining provisions of this Subscription Agreement shall remain in full
force and effect.
-7-
<PAGE> 8
16. HEADINGS. The headings of the sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Subscription Agreement.
17. EXECUTION. This Subscription Agreement may be executed in
multiple counterparts each of which shall be deemed an original and all of
which shall constitute one instrument.
IN WITNESS WHEREOF, this Subscription Agreement has been executed this
13th day of June, 1995.
SUBSCRIBERS:
PHEMUS CORPORATION
By: /s/ John M. Sallay
-----------------------------------
Name: John M. Sallay
By: /s/ Michael R. Eisenson
-----------------------------------
Name: Michael R. Eisenson
Address of principal executive office:
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02210-2203
Attention: Mr. John M. Sallay
Telecopy: (617) 523-1063
Shares of Series G Stock: 90,000
Subscription Consideration: $9,000,000
Commitment Fee: $90,000
Additional Commitment Fee: $270,000
-8-
<PAGE> 9
INTERCONTINENTAL MINING &
RESOURCES INCORPORATED
By: /s/ John R. Schoemer
---------------------
Name: John R. Schoemer
Title: Attorney-in-Fact
Address of principal executive office:
c/o P.M.M. Services (B.V.I.) Limited
P. O. Box 438
Tropic Isle Building
Wickhams Cay
Road Town, Tortola
British Virgin Islands
Attention:______________________
Telecopier:
Shares of Series G Stock: 30,000
Subscription Consideration: $3,000,000
Commitment Fee: $30,000
Additional Commitment Fee: $90,000
AGREED AND ACCEPTED:
E-Z SERVE CORPORATION
By: /s/ Neil H. McLaurin
---------------------
Neil H. McLaurin
President
Date: June 13, 1995
-9-
<PAGE> 10
EXHIBIT "A"
E-Z SERVE CORPORATION
CERTIFICATE OF DESIGNATION
PREFERENCES AND RIGHTS OF
SERIES G CONVERTIBLE REDEEMABLE PREFERRED STOCK
Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware
Neil H. McLaurin hereby certifies that he is the President and Chief
Executive Officer of E-Z Serve Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), and in accordance with the provisions of Section 151(g) thereof
does hereby further certify as follows:
That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), the Board of Directors of the
Corporation on June 13, 1995 adopted the following resolution creating 200,000
shares of preferred stock designated as Series G Convertible Redeemable
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of preferred stock of the Corporation
be, and it hereby is, created, and that the designation and amount thereof and
the voting powers, preferences and relative, participating, optional and other
special rights of shares of such series, and the qualifications, limitations,
or restrictions thereof are as follows:
SECTION 1--Designation of Series--The series shall be designated
"Series G Convertible Redeemable Preferred Stock" (hereinafter called "Series G
Preferred Stock").
SECTION 2--Number of Shares--The number of shares of Series G
Preferred Stock is 200,000 of the par value of $.01 per share, which number of
shares, the Board of Directors may increase or decrease, but not decrease below
the number of shares of Series G Preferred Stock then outstanding.
SECTION 3--Dividends--The holders of Series G Preferred Stock shall be
entitled to receive out of any funds legally available therefor, when and as
declared by
<PAGE> 11
the Board of Directors, cumulative dividends at the rate per share set forth
below to be paid semi-annually.
Dividends shall be declared and paid per share on the dividend payment
dates set forth in Section 4 below in the following amounts per share:
<TABLE>
<S> <C>
December 30, 1995 $ 8.50
June 30, 1996 $ 9.00
December 30, 1996 $ 9.50
June 30, 1997 and on each dividend
payment date thereafter $10.00
</TABLE>
Such dividends will be paid in additional fully paid and nonassessable
shares of Series G Preferred Stock. The calculation of the number of shares of
such Series G Preferred Stock issuable by the Corporation shall be based on the
quotient of the dividend payable and the value per share of Series G Preferred
Stock equal to $100 per share. No fractional interest in shares of Series G
Preferred Stock shall be issued as a dividend payment. Each holder of Series G
Preferred Stock who otherwise would have been entitled to a fractional share of
Series G Preferred Stock as a dividend payment on the aggregate number of
shares of Series G Preferred Stock for which such holder is entitled to receive
dividends will receive, in lieu of such fractional share, a cash amount
determined by multiplying such fraction of a share by $100.
If a dividend upon any shares of Series G Preferred Stock, or any
other outstanding stock of the Corporation ranking on a parity with the Series
G Preferred Stock as to dividends is in arrears: no stock of the Corporation
ranking on a parity with or junior to the Series G Preferred Stock as to
dividends may be (a) redeemed pursuant to a sinking fund or otherwise, except
by means of a redemption pursuant to which all outstanding shares of the Series
G Preferred Stock and all stock of the Corporation ranking on a parity with the
Series G Preferred Stock as to dividends are redeemed, or (b) purchased or
otherwise acquired for any consideration by the Corporation except pursuant to
an acquisition made pursuant to the terms of one or more offers to purchase all
of the outstanding shares of the Series G Preferred Stock and all stock of the
Corporation ranking on a parity with the Series G Preferred Stock as to
dividends (which offers shall describe such proposed acquisition of all such
parity stock). The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under this Section 3,
purchase or otherwise acquire such shares at such time and in such manner.
-2-
<PAGE> 12
SECTION 4--Dividend Payments Dates; Cumulation Date--The dates at
which dividends on the Series G Preferred Stock will be declared and paid are
June 30 and December 30, of each year beginning on December 30, 1995; provided,
however, that to the extent the declaration and payment of dividends on Series
G Preferred Stock are restricted by law, such dividends shall accrue and be
cumulative from the applicable dividend payment date and shall be payable to
holders of record, as of a date fixed by the Board of Directors of the
Corporation which is not less than ten (10) nor more than sixty (60) days prior
to the date such dividend is paid, once such dividends may be paid in
accordance with law. At such time, dividends shall be declared and paid
through the date of declaration regardless of the date of the last dividend
payment date. Any dividends not paid on the applicable dividend payment date
due to restrictions of law as set forth above, shall accrue at the applicable
rate compounded daily.
SECTION 5--Redemption--The Corporation may from time to time redeem in
cash all or any part of the Series G Preferred Stock at the option of the
Corporation at $100 per share plus an amount equal to all accrued and unpaid
dividends through the redemption date including dividends from the last
dividend payment date through the date of redemption (together, the "Redemption
Price"). The Corporation shall redeem all of the then outstanding shares of
Series G Preferred Stock at the Redemption Price on ______________, 2005.
Notice of every such redemption shall be mailed, postage prepaid, to
the holders of record of the Series G Preferred Stock to be redeemed at their
respective addresses then appearing on the books of the Corporation, not less
than thirty (30) days nor more than sixty (60) days prior to the date fixed for
such redemption which shall be specified therein. At any time after notice has
been given as above provided, the Corporation may deposit the aggregate
redemption price of the shares of Series G Preferred Stock to be redeemed with
any bank or trust company, having capital and surplus of more than Fifty
Million Dollars ($50,000,000), named in such notice, directed to be paid to the
respective holders of the shares of Series G Preferred Stock so to be redeemed,
in amounts equal to the redemption price of all shares of Series G Preferred
Stock so to be redeemed, on surrender of the stock certificate or certificates
held by such holders, and upon the making of such deposit such holders shall
cease to be stockholders with respect to such shares, and after such notice
shall have been given and such deposit shall have been made such holders shall
have no interest in or claim against the Corporation with respect to such
shares except only (i) the right to receive such money from such bank or trust
company without interest or (ii) the right to exercise, before the redemption
date, any unexpired privileges of conversion. In case less than all of the
outstanding shares of Series G Preferred Stock are to be redeemed, the
redemption shall be allocated pro rata, according to their share ownership,
among all holders of shares of Series G Preferred Stock. If the holders of
shares of Series G Preferred Stock which
-3-
<PAGE> 13
shall have been called for redemption shall not, within ten years after such
deposit, claim the amount deposited for the redemption thereof, any such bank
or trust company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company and the Corporation shall be
relieved of all responsibility in respect thereof and to such holders.
Upon any redemption of shares of Series G Preferred Stock, the shares
of Series G Preferred Stock so redeemed shall have the status of authorized but
unissued shares of the Corporation's preferred stock, unclassified as to
series, and the number of shares of preferred stock which the Corporation shall
have authority to issue shall not be decreased by the redemption of shares of
Series G Preferred Stock.
SECTION 6--Liquidation Preference--The holders of Series G Preferred
Stock shall, in case of any liquidation, dissolution or winding up of the
affairs (a "Liquidation") of the Corporation, be entitled to receive in full
out of the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the common stock, par value
$0.01 per share ("Common Stock") or any other shares ranking junior to the
Series G Preferred Stock, an amount equal to $100 per share plus in each case a
cash amount equal to all accrued and unpaid dividends including dividends from
the last dividend payment date through the date of Liquidation. If upon any
Liquidation of the Corporation, the assets available for distribution to the
holders of Series G Preferred Stock and any other stock of the Corporation
which shall then be outstanding and which shall be on a parity with the Series
G Preferred Stock upon Liquidation (hereinafter in this paragraph called the
"Total Amount Available") shall be insufficient to pay the holders of all
outstanding shares of Series G Preferred Stock and all other such parity stock
the full amounts (including all dividends accrued and unpaid) to which they
shall be entitled by reason of such Liquidation of the Corporation, then there
shall be paid to the holders of the Series G Preferred Stock in connection with
such Liquidation of the Corporation, an amount equal to the product derived by
multiplying the Total Amount Available times a fraction, the numerator of which
shall be the full amount to which the holders of the Series G Preferred Stock
shall be entitled under the terms of this Section 6 by reason of such
Liquidation of the Corporation and the denominator of which shall be the total
amount which would have been distributed by reason of such Liquidation of the
Corporation with respect to the Series G Preferred Stock and all other stock
ranking on a parity with the Series G Preferred Stock upon Liquidation then
outstanding had the Corporation possessed sufficient assets to pay the full
amount which the holders of all such stock would be entitled to receive in
connection with such Liquidation of the Corporation.
-4-
<PAGE> 14
The merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it shall be deemed to
be a dissolution, liquidation or winding up, voluntary or involuntary, for the
purposes of this Section 6, unless such merger or consolidation does not result
in the "change of control" of the Corporation. As used herein, a "change of
control" is deemed to have occurred at such time as any person acquires
beneficial ownership of shares of stock of the Corporation entitling such
person to exercise 50% or more of the total voting power of all classes of
stock of the Corporation entitled to vote in elections of directors. For
purposes of this Section 6, the sale, lease or conveyance of all or
substantially all the property or business of the Corporation shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary.
SECTION 7--Ranking--The Series G Preferred Stock shall rank in right
of payment of dividends and as to distributions in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, (i) junior to the Corporation's $6.00 Convertible Preferred Stock,
Series C, par value $0.01 per share, and (ii) senior to the Corporation's
currently authorized Common Stock or any other capital stock ranking junior to
the Series G Preferred Stock (collectively, the "Other Capital Stock").
Whenever reference is made to shares "ranking prior to the Series G
Preferred Stock" or "on a parity with the Series G Preferred Stock," such
reference shall mean and include all shares of the Corporation in respect of
which the rights of the holders thereof as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation are given
preference over, or rank on an equality with (as the case may be), the rights
of the holders of Series G Preferred Stock; and whenever reference is made to
shares "ranking junior to the Series G Preferred Stock," such reference shall
mean and include all shares of the Corporation in respect of which the rights
of the holders thereof as to the payment of dividends and as to distributions
in the event of a voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation are junior and subordinate to the rights
of the holders of Series G Preferred Stock.
SECTION 8--Dividends on and Redemption of Junior Stock--In no event so
long as any Series G Preferred Stock shall be outstanding shall any dividends,
except a dividend payable in Common Stock or other shares ranking junior to the
Series G Preferred Stock, be paid or declared or any distribution be made on
the Common Stock or any other shares ranking junior or pari passu with the
Series G Preferred Stock, nor shall any Common Stock or any other shares
ranking junior to or pari passu with the Series G Preferred Stock be purchased,
retired or otherwise acquired by the Corporation (except out of the proceeds of
the sale of Common Stock or other shares ranking junior
-5-
<PAGE> 15
to the Series G Preferred Stock) unless all accrued and unpaid dividends on
Series G Preferred Stock shall have been declared and paid.
SECTION 9--Voting Rights--Prior to the Conversion Date and except as
otherwise specifically provided herein or as required by law, no voting rights
shall attach to the ownership of Series G Preferred Stock. On and after the
Conversion date and except as otherwise specifically provided herein or as
required by law, the holder of each share of Series G Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such share of Series G Preferred Stock can be converted at the
record date for determination of the stockholders entitled to vote on such
matters, or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is obtained, such votes to be
counted together with all other shares of stock of the Corporation having
voting power in the election of directors and not separately as a class. In
the case of the second sentence of this Section 9, the record holders of Series
G Preferred Stock shall be entitled to the same notice of any stockholders'
meeting to which the record holders of Common Stock are entitled, in accordance
with the Bylaws of the Corporation.
SECTION 10--Conversion--All or any part of the shares of Series G
Preferred Stock shall be convertible at the option of the holders of Series G
Preferred Stock at any time after _____________, 1996 [ONE YEAR AFTER FILING OF
CERTIFICATE OF DESIGNATION AND ISSUANCE OF SERIES G PREFERRED STOCK]
("Conversion Date") at the principal office of the Corporation located in
Houston, Texas, or at the offices of such duly appointed transfer agents for
the Series G Preferred Stock, if any, as the Board of Directors of the
Corporation may determine, into fully paid and non-assessable shares
(calculated to the nearest 1/100 of a share) of Common Stock of the Corporation
at the rate of 100 shares of Common Stock for each share of Series G Preferred
Stock; provided, however, that if the holder has, as provided in the next
succeeding paragraph, given written notice of conversion and the Corporation,
within 30 days following such notice, has given notice of the redemption of the
shares of Series G Preferred Stock to be converted, such right of conversion
shall cease and terminate as to the shares called for redemption, unless
default shall be made in the payment of the redemption price, in which case the
shares shall then be immediately convertible without the giving of any further
notice; and provided, further, that if notice of redemption is given by the
Corporation at any time other than within the 30 days following the
Corporation's receipt of a holder's notice of conversion, the right of
conversion shall cease and terminate as to the shares called for redemption, at
the close of business on the business day immediately preceding the date fixed
for redemption, unless default shall be made in the payment of the redemption
price. The rate at which shares of Common Stock shall be deliverable in
exchange for shares of Series G Preferred Stock upon conversion thereof is
hereinafter referred to as the "conversion rate" for the Series G Preferred
-6-
<PAGE> 16
Stock. The conversion rate shall be subject to adjustment from time to time in
certain instances as hereinafter provided, except that no adjustment shall be
made unless by reason of the happening of any one or more of the events
hereinafter specified, the conversion rate then in effect shall be changed by
1% or more, but any adjustment of less than 1% that would otherwise be required
then to be made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, together with adjustment or
adjustments so carried forward, amounts to 1% or more, provided that such
adjustment shall be made in all events (regardless of whether or not the amount
thereof or the cumulative amount thereof amounts to 1% or more) upon the
happening of one or more of the events specified in either paragraph (a) or
paragraph (d) of this Section 10, or not later than three (3) years after the
happening of the events specified in paragraphs (b), (c) or (e) of this Section
10.
Before any holder of Series G Preferred Stock shall be entitled to
convert the same into Common Stock, he shall (i) give written notice to the
Corporation at the principal office of the Corporation that such holder elects
to convert said Series G Preferred Stock on a day specified therein that is at
least 30 days subsequent to the Corporation's receipt of such written notice
and shall also state therein the name or names in which such holder wishes the
certificate or certificates for Common Stock to be issued, and (ii) on the day
specified by the holder in its written notice for conversion, surrender the
certificate or certificates for such Series G Preferred Stock at the principal
office of the Corporation or at the office of any transfer agent appointed as
aforesaid, which certificate or certificates, if the Corporation shall so
request, shall be duly endorsed to the Corporation or in blank.
The Corporation, as soon as practicable after such surrender of
certificates for Series G Preferred Stock accompanied by the written statement
above prescribed, will issue and deliver at the principal office of the
Corporation in Houston, Texas, or at the office of any transfer agent appointed
as aforesaid, to the person for whose account such Series G Preferred Stock was
so surrendered, or to his nominee or nominees, certificates for the number of
full shares of Common Stock to which he shall be entitled as aforesaid,
together with a cash adjustment for any fraction of a share as hereinafter
stated, if not evenly convertible. Such conversion shall be deemed to have
been made as of the date of such surrender of the Series G Preferred Stock to
be converted; and the person or persons entitled to receive the Common Stock
issuable upon conversion of such Series G Preferred Stock shall be treated for
all purposes as the record holder or holders of such Common Stock on such date.
The conversion rate for the Series G Preferred Stock shall be subject
to adjustment from time to time as follows:
-7-
<PAGE> 17
(a) If the Corporation shall at any time pay a dividend on its
Common Stock in Common Stock, subdivide its outstanding shares of Common Stock
into a larger number of shares or combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in effect
immediately prior thereto shall be adjusted so that each share of Series G
Preferred Stock shall thereafter be convertible into the number of shares of
Common Stock which the holder of a share of Series G Preferred Stock would have
been entitled to receive after the happening of any of the events described
above had such share been converted immediately prior to the happening of such
event. An adjustment made pursuant to this paragraph (a) shall become
effective retroactively to the record date in the case of a dividend and shall
become effective on the effective date in the case of a subdivision or
combination.
(b) If the Corporation shall issue rights or warrants to all
holders of shares of Common Stock for the purpose of entitling them (for a
period not exceeding forty-five (45) days from the date of issuance) to
subscribe for or purchase shares of Common Stock at a price per share less than
the average market price per share (determined as provided below) of the Common
Stock on the record date for the determination of the stockholders entitled to
receive such rights or warrants, then in each such case unless the holders of
shares of the Series G Preferred Stock shall be permitted to subscribe for or
purchase shares of Common Stock on the same basis as though such shares of
Series G Preferred Stock had been converted into shares of Common Stock
immediately prior to such record date, the number of shares of Common Stock
into which each share of the Series G Preferred Stock shall thereafter be
convertible shall be determined by multiplying the number of shares of Common
Stock into which each share of Series G Preferred Stock was convertible on the
date immediately preceding such record date by a fraction the numerator of
which shall be the sum of the number of shares of Common Stock outstanding on
such record date and the number of additional shares of Common Stock so offered
for subscription or purchase, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on such record date and the
number of shares of Common Stock which the aggregate offering price of the
total number of shares so offered would purchase at such average market price;
provided, however, in the event that all the shares of Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights or
warrants, upon the exercise of such rights or warrants the number of shares of
Common Stock into which each share of Series G Preferred Stock shall thereafter
be convertible shall be readjusted to the number of shares which would have
been in effect had the numerator and the denominator of the foregoing fraction
and the resulting adjustment been made based upon the number of shares of
Common Stock actually delivered upon the exercise of such rights or warrants
rather than upon the number of shares of Common Stock offered for subscription
or purchase. For the purposes of this paragraph (b) and paragraph (e), the
number of shares of Common
-8-
<PAGE> 18
Stock at any time outstanding shall not include shares held in the treasury of
the Corporation or by any subsidiary of the Corporation.
For the purpose of any computation under this Section 10, the average
market price per share of Common Stock on any date shall be the average of the
daily closing prices for the fifteen (15) consecutive trading days commencing
twenty (20) trading days before the earlier of the date in question or the
trading day before the "ex date", if any, with respect to the issuance or
distribution requiring such computation. The term "ex date", when used with
respect to any issuance or distribution, means the first trading day on which
the Common Stock trades regular way in the market from which the closing price
is then to be determined in accordance with the following sentence without the
right to receive such issuance or distribution. For the purpose of any
computation under this Section 10, the market price per share of Common Stock
shall mean the closing price on such day. The closing price for each day shall
be the last sales price regular way or, in case no such sale takes place on
such day, the average of the closing bid and asked prices regular way, in
either case on the American Stock Exchange Composite Tape or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors of the Corporation for the purpose.
(c) If the Corporation shall distribute to the holders of Common
Stock (i) any rights or warrants to subscribe for or purchase any security of
the Corporation (other than those referred to in paragraph (b) above) or any
evidence of indebtedness or other securities of the Corporation (other than
Common Stock), or (ii) cash or other assets (other than any regular quarterly
dividend payable solely in cash that may from time to time be fixed by the
Board of Directors of the Corporation), having a fair market value (as
determined in good faith in a resolution adopted by the Board of Directors of
the Corporation, which shall be conclusive evidence of such fair market value)
in an amount during any 12-month period equal to 3% or more of an amount
determined by multiplying the number of shares of Common Stock outstanding on
the record date for the determination of holders of Common Stock entitled to
receive such distribution, by the average market price per share (determined as
provided in paragraph (b) above) of the Common Stock on such record date, then
in each such case the number of shares of Common Stock into which each share of
Series G Preferred Stock shall thereafter be convertible shall be determined by
multiplying the number of shares of Common
-9-
<PAGE> 19
Stock into which each share of Series G Preferred Stock was theretofore
convertible on the day immediately preceding the record date for the
determination of the stockholders entitled to receive such distribution by a
fraction the numerator of which shall be the average market price per share
(determined as provided in paragraph (b) above) of the Common Stock on such
record date and the denominator of which shall be such average market price per
share less the then fair market value (as determined by the Board of Directors
of the Corporation as provided above) of the portion of the cash or other
assets, rights, warrants, evidences of indebtedness or other securities so
distributed applicable to one (1) share of Common Stock. Such adjustment shall
become effective retroactively to immediately after the record date. The
reclassification (including any reclassification upon a merger in which the
Corporation is the continuing corporation) of Common Stock into securities
which include both Common Stock and other securities shall be deemed to involve
(i) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed
to be "the record date for the determination" above); and (ii) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
(d) In case of any capital reorganization or any reclassification
of the capital stock of the Corporation (other than any reclassification
referred to in paragraph (c) above) or in case of the consolidation or merger
of the Corporation with any other person (other than a merger which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or in case of any sale or conveyance of all
or substantially all of the assets of the Corporation, the person formed by
such consolidation or resulting from such capital reorganization,
reclassification or merger or which acquires such assets, as the case may be,
shall make provision in the articles or certificate of incorporation of such
person such that each share of Series G Preferred Stock shall thereafter be
convertible only into the kind and amount of shares of stock, other securities,
cash and other property receivable upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale or conveyance,
as the case may be, by a holder of the number of shares of Common Stock into
which such share of Series G Preferred Stock was convertible immediately prior
to such capital reorganization, reclassification of capital stock,
consolidation, merger, sale or conveyance, assuming (i) such holder of Common
Stock of the Corporation is not a person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("constituent entity"), or an affiliate of a constituent entity, and (ii) such
person failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such capital
reorganization, reclassification of capital stock, consolidation, merger, sale
or
-10-
<PAGE> 20
transfer and, in any case appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein set forth
with respect to rights and interests thereafter of the holder of the Series G
Preferred Stock, to the end that the provisions set forth herein (including the
specified changes in and other adjustments of the conversion rate) shall
thereafter be applicable, as near as reasonably may be, in relation to any
shares of stock or other securities or other property thereafter deliverable
upon the conversion of the Series G Preferred Stock.
(e) If the Corporation shall issue or sell any shares of its
Common Stock for a consideration per share less than the market price
(determined as provided in paragraph (b) above) on the date of such issue or
sale, then upon such issue or sale, the number of shares of Common Stock into
which each share of the Series G Preferred Stock shall thereafter be
convertible shall be determined by multiplying the number of shares of Common
Stock into which each share of Series G Preferred Stock was convertible on the
date immediately preceding such issue or sale by a fraction the denominator of
which shall be the sum of (i) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the market price at the
time of such issue or sale plus (ii) the consideration received by the
Corporation upon such issue or sale, and the numerator of which shall be the
product derived by multiplying the market price at the time of such issue or
sale times the number of shares of Common Stock outstanding immediately after
such issue or sale.
Notwithstanding the foregoing, no adjustment of the number of shares
of Common Stock into which each share of the Series C Preferred Stock is
convertible shall be made in connection with the issuance or sale by the
Corporation of any shares of Common Stock issued or sold (A) upon exercise of
any stock options granted by the Corporation pursuant to any stock option plan
of the Corporation, or otherwise issued or sold as compensation to any officer,
director or employee of the Corporation or any of its subsidiaries, (B) upon
the conversion into Common Stock of or issuance of additional shares of the
Corporation's $6.00 Convertible Preferred Stock, Series C, or (C) upon the
exercise of warrants issued pursuant to that certain Warrant Subscription
Agreement dated as of April 21, 1993, among the Corporation, Phemus Corporation
and Intercontinental Mining & Resources Incorporated.
In the event that at any time, as a result of any adjustment made
pursuant to subparagraphs (a) to (e) above, the holder of any Series G
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of the Corporation other than shares of Common Stock, the
number and type of such other shares so receivable upon conversion of any share
of Series G Preferred Stock shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent
-11-
<PAGE> 21
as practicable to the provisions contained in subparagraphs (a) to (e) above,
with respect to the Common Stock.
The Corporation shall at all times reserve and keep available, out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Series G Preferred Stock, such number of shares as shall
from time to time be sufficient to effect the conversion of all shares of
Series G Preferred Stock from time to time outstanding. The Corporation shall
from time to time, in accordance with the laws of Delaware, use its good faith
best efforts to increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion of all the then outstanding Series G
Preferred Stock.
No fractions of shares of Common Stock are to be issued upon
conversion, but in lieu thereof the Corporation will pay therefor, in cash, an
amount equal to the product of such fraction multiplied by the closing price
(determined as provided in the last sentence of paragraph (b) above) of the
Common Stock on the business day next preceding the day of conversion. If more
than one certificate representing Series G Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full shares
issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Series G Preferred Stock so surrendered.
The Corporation will pay any and all issue and other taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of Series G Preferred Stock pursuant hereto. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of Common Stock in a name other
than that in which the Series G Preferred Stock so converted was registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax,
or has established, to the satisfaction of the Corporation, that such tax has
been paid.
SECTION 11--Effects of Conversion on Capital and Surplus--Upon
conversion of Series G Preferred Stock the stated capital of the Common Stock
issued upon such conversion shall be the aggregate par value thereof, and the
stated capital and capital surplus (capital in excess of par or stated value)
of the Corporation shall be correspondingly increased or reduced to reflect the
difference between the stated capital of the Series G Preferred Stock so
converted and the par or stated value of the Common Stock issued upon
conversion.
-12-
<PAGE> 22
SECTION 12--Covenants--In addition to any other rights provided by
law, the Corporation shall not, without first obtaining the affirmative vote or
written consent of the holders of not less than 66 2/3% of the shares of Series
G Preferred Stock:
a. amend or repeal any provision of the Corporation's
Certificate of Incorporation or amend or repeal the Bylaws or any
associated document in a manner which adversely affects the rights,
preferences, or privileges of the Series G Preferred Stock or the
holders thereof; provided, however, that, for the purposes of this
clause only, (i) the amendment of the Amended and Restated Certificate
of Incorporation, as amended, of the Corporation so as to authorize or
create, or to increase the authorized or outstanding amount of, any
shares of any class ranking junior to the Series G Preferred Stock
shall not be deemed to affect adversely the voting powers, rights or
preferences of the holders of Series G Preferred Stock;, and (ii) the
amendment of the provisions of the Bylaws so as to increase the number
of Directors of the Corporation, shall be deemed to affect adversely
the voting powers, rights or preferences of the holders of Series G
Preferred Stock;
b. authorize, create or increase the authorized amount
of or issue any shares of any class, or any security convertible into
shares of any class, ranking on a parity with or senior to the Series
G Preferred Stock; or
c. issue any additional shares of Series G Preferred
Stock other than pro rata to holders of record of the Series G
Preferred Stock pursuant to Section 2 hereof.
SECTION 13--Board Representation--For so long as any shares of Series
G Preferred Stock are outstanding (the "Series G Period"), the holders of the
Series G Preferred Stock shall have the right, voting together as a class
separate and apart from any other class of capital stock of the Corporation, to
nominate and elect to the Corporation's Board, two individuals (the "Series G
Nominees") identified by written notice executed by the holders of at least a
majority of the outstanding Series G Preferred Stock. During the Series G
Period, the following shall apply:
(1) Upon the initial issuance of the Series G Preferred
Stock, the Corporation's Board of Directors shall increase the number
of directors by two and appoint the Series G Nominees to fill those
two vacancies on the Board.
(2) At any Annual or Special Meeting of the Corporation's
stockholders (or in connection with any written consent executed in
lieu thereof) at which the Board of Directors of the Corporation is to
be elected, if a quorum
-13-
<PAGE> 23
consisting of the holders of a majority of the Series G Preferred
Stock are present in person or by proxy (or the holders of a majority
of the Series G Preferred Stock have executed a consent in lieu
thereof), the Series G Nominees shall be nominated and elected as two
of the directors by the vote as a class of the Series G Preferred
Stock with each share of Series G Preferred Stock entitled to one
vote. Once elected, the Series G Nominees shall serve until the
Series G Period terminates, subject to their reelection each year by
the Series G Preferred Stock, as provided for herein, at any annual or
special meeting of the Corporation at which directors are elected.
The holders of the Common Stock shall elect the remaining members of
the Board of Directors in accordance with the Amended and Restated
Certificate of Incorporation, as amended, and Bylaws of the
Corporation.
(3) No Series G Nominee may be removed from the Board
without the consent of the holders of a majority of the Series G
Preferred Stock voting together as a class with each share of Series G
Preferred Stock having one vote. Any vacancy on the Board caused by
the death, resignation or removal of any Series G Nominee shall be
filled promptly by another person nominated by the holders of a
majority of the Series G Preferred Stock at a Special Meeting of the
Corporation's stockholders held for that purpose or by the remaining
directors then in office.
(4) Upon the end of the Series G Period, the term of
office of the Series G Nominees shall terminate, the right of the
Series G Preferred Stock to nominate the Series G Nominees shall
expire, and the Series G Nominees shall be removed as members of the
Board in accordance with the Bylaws of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate of Designation and do affirm the foregoing as true under the
penalties of perjury this ____ day of ___________, 1995.
-----------------------------
Neil H. McLaurin
President and Chief Executive Officer
-14-
<PAGE> 1
EXHIBIT 99.(b)(2)
$60,000,000
CREDIT AND GUARANTY AGREEMENT,
dated as of January 17, 1995,
among
E-Z SERVE CONVENIENCE STORES, INC.
as Borrower,
E-Z SERVE CORPORATION,
as Guarantor,
CERTAIN FINANCIAL INSTITUTIONS,
as Lenders,
and
SOCIETE GENERALE,
as Agent for the Lenders.
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
LETTERS OF CREDIT AND NOTES
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.1.1. Term Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.1.2. Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.1.3. Letter of Credit Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.2. Lenders Not Permitted or Required To Make Credit Extensions . . . . . . . . . . . . . . . . . . . . . 35
2.2.1. Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.2.2. Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.2.3. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.3. Optional Reduction of the Commitment Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.4. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.5. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.6. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.7. Issuance Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.7.1. Other Lenders' Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.7.2. Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.7.3. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.7.4. Deemed Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.7.5. Nature of Reimbursement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.8. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.1.1. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.1.2. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.2. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2.2. Post-Default Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.2.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.3.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.3.2. Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.3.3. Agent's Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.2. Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.3. Increased Costs, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.7. Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.8. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.9. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1. Initial Credit Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.1.1. Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.1.2. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.1.3. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.1.4. Required Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.1.5. Consummation of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.1.6. Financial Information, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.1.7. Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.1.8. Pledged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.1.9. UCC Search Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.1.10. Security Agreements, Filings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.1.11. Solvency Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.1.12. Closing Date Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.1.13. Reliance Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.1.14. Evidence of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.1.15. Payment of Outstanding Indebtedness, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.1.16. Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.1.17. Stockholders Letter of Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.1.18. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.1.19. Delivery of Petroleum Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.1.20. Agent's Closing Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.1.21. Time Saver Operating Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.1.22. Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.1.23. Tax Allocation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.1.24. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.1.25. Satisfactory Legal Form, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.2. All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.2.1. Compliance with Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.2.2. Credit Extension Request, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.2. Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.3. Government Approval, Regulation, Compliance with Law, etc. . . . . . . . . . . . . . . . . . . . . . . 61
6.4. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.6. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.7. Litigation, Labor Controversies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.13. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.14. Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.15. Expropriation and Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.16. Intellectual Property Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.17. Ownership of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.18. Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.19. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.20. Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.21. Burdensome Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.1.1. Financial Information, Reports, Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.1.2. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.1.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.1.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.1.6. Environmental Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.1.7. Transfer of Petroleum Convenience Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.1.8. Beverage License Certification Date; Merger of Time Saver and the Borrower . . . . . . . . . . . . . . 78
7.1.9. As to Intellectual Property Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.1.10. Future Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.1.11. Springing Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.1.12. Gasoline Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.1.13. Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.1.14. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.2.1. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.2.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.2.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
7.2.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
7.2.6. Restricted Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
7.2.7. Capital Expenditures, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
7.2.8. Rental Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
7.2.9. Take or Pay Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
7.2.10. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7.2.11. Asset Dispositions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7.2.12. Modification of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7.2.13. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7.2.14. Negative Pledges, Restrictive Agreements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
7.2.15. Management and Director Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.2.16. Environmental Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.2.17. Fiscal Year End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.2.18. Activities of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.2.19. Activities of Certain Subsidiaries of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
8.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
8.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
8.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 97
8.1.4. Non-Performance of Other Covenants and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 97
8.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
8.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
8.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.1.8. Change in Control; Stockholders Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.1.9. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.1.10. Impairment of Security, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.1.11. Beverage Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE IX
GUARANTY
9.1. The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
9.2. Guaranty Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
9.3. Reinstatement in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.4. Waiver by the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.5. Postponement of Subrogation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.6. Stay of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
ARTICLE X
THE AGENT
10.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
10.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
10.5. Credit Extensions by SG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
10.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
10.7. Loan Documents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.8. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
11.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
11.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
11.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.8. Execution in Counterparts, Effectiveness, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes . . . . . . . . . . . . . . . 111
11.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.11.3. Certain Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
11.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
11.13. Certain Collateral and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
11.14. Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
11.15. Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
11.16. Waiver of Jury Trial, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
</TABLE>
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages
SCHEDULE III - Capital Expenditure Levels II and III
SCHEDULE IV - Administrative Information
EXHIBIT A - Form of Revolving Note
EXHIBIT B - Form of Term Note
EXHIBIT C-1 - Form of Borrowing Request
EXHIBIT C-2 - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Issuance Request
EXHIBIT E - Form of Borrowing Base Certificate
EXHIBIT F - Form of Compliance Certificate
EXHIBIT G-1 - Form of Parent Pledge Agreement
EXHIBIT G-2 - Form of Borrower Pledge Agreement
EXHIBIT H-1 - Form of Borrower Security Agreement
EXHIBIT H-2 - Form of Petroleum Security Agreement
EXHIBIT H-3 - Form of Parent Security Agreement
EXHIBIT H-4 - Form of Time Saver Security Agreement
EXHIBIT J-1 - Form of Petroleum Guaranty
-v-
<PAGE> 7
EXHIBIT J-2 - Form of Time Saver Guaranty
EXHIBIT K - Form of Petroleum Note
EXHIBIT L - Form of Closing Date Certificate
EXHIBIT M - Form of CFO/CEO Solvency Certificates
EXHIBIT N - Form of Stockholders Letter of Understanding
EXHIBIT O - Form of Lender Assignment Agreement
EXHIBIT P - Form of Opinion of Counsel to the Obligors
-vi-
<PAGE> 8
CREDIT AND GUARANTY AGREEMENT
CREDIT AND GUARANTY AGREEMENT, dated as of January 17, 1995, among E-Z
SERVE CONVENIENCE STORES, INC., a Delaware corporation (the "Borrower"),
E-Z SERVE CORPORATION, a Delaware corporation (the "Parent"), the various
financial institutions as are or may become parties hereto (collectively, the
"Lenders") and SOCIETE GENERALE ("SG"), as agent (in such capacity, the
"Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower is a direct, wholly-owned Subsidiary (such
capitalized term and other capitalized terms used in these recitals without
definition shall have the meanings provided for in Section 1.1) of the
Parent which also owns as a direct, wholly-owned Subsidiary, E-Z Serve Petroleum
Marketing Inc., a Delaware corporation ("Petroleum");
WHEREAS, pursuant to an Agreement, dated as of December 1, 1994 (as
heretofore amended with the consent of the Required Lenders, the "Purchase
Agreement"), between Dillon Companies, Inc., a Kansas corporation (the
"Seller"), and the Borrower, the Borrower has agreed to acquire all of
the issued and outstanding shares of capital stock of Time Saver Stores, Inc., a
Kansas corporation, which is a wholly-owned Subsidiary of the Seller ("Time
Saver") for an aggregate purchase price of $29,960,000, excluding
post-closing adjustments (the "Acquisition");
WHEREAS, the Borrower is engaged (including, after the Acquisition,
indirectly through Time Saver) in the business of owning and operating
convenience stores and Petroleum is engaged in the business of owning and
operating gasoline stations and, subject to the provisions of Section
7.1.8 hereof, convenience stores; and
WHEREAS, in order to consummate the Acquisition, to refinance term
Indebtedness (including interest thereon) currently outstanding in the amount of
$12,873,418 and any outstanding revolving Indebtedness and to fund ongoing
operations of the Borrower, Petroleum and Time Saver, the Borrower desires to
obtain from the Lenders
(a) Term Loan Commitments pursuant to which Term Loans will be
made to the Borrower on the date the Acquisition is consummated in an
aggregate principal amount not to exceed $45,000,000;
(b) Revolving Loan Commitments pursuant to which Revolving
Loans will be made from time to time in a maximum aggregate principal
amount at any one time outstanding not
<PAGE> 9
to exceed the lesser of $15,000,000 and the Borrowing Base Amount in
effect at such time; and
(c) Letter of Credit Commitments pursuant to which the Issuer
will issue Letters of Credit from time to time in a maximum aggregate
Stated Amount at any one time outstanding not to exceed $5,000,000;
provided that, in any event, the aggregate outstanding principal amount
of all Revolving Loans, together with the aggregate amount of all
Letter of Credit Outstandings, shall not at any one time exceed the
lesser of $15,000,000 and the Borrowing Base Amount in effect at such
time; and
WHEREAS, in order to induce the Lenders, each Issuer and the Agent to
enter into this Agreement and to make Credit Extensions hereunder, the Parent
and certain of its Subsidiaries have agreed to deliver the Security Agreements,
the Pledge Agreements and the Guaranties, as the case may be, to secure all of
the Obligations; and
WHEREAS, the Lenders and the Issuer are willing, on the terms and
subject to the conditions hereinafter set forth (including Article V), to extend
such Commitments and make such Loans to the Borrower and issue (or participate
in) Letters of Credit for the account of the Borrower;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):
"Account" means any "account" (as that term is defined in Section 9-106
of the U.C.C.).
"Account Debtor" is defined in clause (d) of the definition of
"Eligible Account".
"Acquisition" is defined in the second recital.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person has, directly or indirectly,
-2-
<PAGE> 10
(a) power to vote 10% or more of the securities (on a fully
diluted basis) or other interests having ordinary voting power for the
election of directors or managing general partners;
(b) power to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise; or
(c) beneficial ownership of 10% or more of any class of the
voting stock of such Person or 10% or more of all outstanding equity
interests in such Person.
For purposes of this Agreement and the other Loan Documents, DLJ and its
Affiliates shall be Affiliates of the Borrower.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 10.4.
"Agreement" means this Credit Agreement, as amended, supplemented,
restated or otherwise modified from time to time.
"Authorized Officer" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating
interest rate determined by reference to the SG Base Rate.
"Beverage License" means any authorization, permit, consent, approval,
franchise, concession, ordinance, registration, certificate, license, agreement
or other right filed with, granted by, or entered into by a federal, state or
local governmental authority which permits or authorizes the sale or
distribution of any alcoholic beverage.
"Beverage License Certification Date" means the date as of which (a)
the Borrower and, to the extent required by applicable law, the Parent have all
or substantially all Beverage Licenses necessary to permit, at the convenience
stores owned or operated by Time Saver, the sale and distribution of the
alcoholic beverages sold or distributed at such convenience stores as of the
Effective Date, including all consents and approvals, if any, necessary to take
into account effectuation of the Acquisition and the Merger, and (b) the Agent
shall have received (i) a certificate duly executed by the chief financial
Authorized Officer of the Parent certifying the foregoing, together with (ii)
all documents related thereto that the Agent may reasonably request. For the
purposes of the preceding clause (a), "substantially all Beverage Licenses"
shall not be construed to
-3-
<PAGE> 11
mean less than all the Beverage Licenses necessary to permit, at 90% of the
convenience stores owned or operated by Time Saver as of the Effective Date, the
sale and distribution of the alcoholic beverages sold or distributed at such
convenience stores as of the Effective Date; provided that such 90% may
include each convenience store as to which the Borrower, after the exercise of
its best efforts, has not obtained all such Beverage Licenses, to the extent (i)
the applicable governmental authority has represented to and assured the
Borrower that any such Beverage Licenses are forthcoming, (ii) such convenience
store has not suffered any interruption in its sales of alcoholic beverages as a
result thereof and (iii) the Borrower has represented the foregoing in the
certificate referred to in clause (b) of the preceding sentence.
"Borrower" is defined in the preamble.
"Borrower Pledge Agreement" means the Pledge Agreement executed and
delivered pursuant to clause (b) of Section 5.1.8, substantially in the form of
Exhibit G-2 hereto, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Borrower Security Agreement" means the Borrower Security Agreement
executed and delivered pursuant to Section 5.1.10, substantially in the form of
Exhibit H-1 hereto, together with the Security Agreement (Trademark) related
thereto, in each case as amended, supplemented, restated or otherwise modified
from time to time.
"Borrowing" means the Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period, made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.1.
"Borrowing Base Amount" means, at any time, an amount equal to the sum
of, without duplication,
(a) 80% of the aggregate amount of all Eligible Accounts at
such time; and
(b) 50% of the aggregate amount of all Eligible Inventory at
such time.
The Borrowing Base Amount shall initially be computed by the Borrower in each
Borrowing Base Certificate delivered from time to time to the Agent pursuant to
Section 5.1.22 and clause (d) of Section 7.1.1. The Agent shall have the right
to review such computations and if, in the Agent's reasonable judgment, such
computations have not been computed in accordance with the terms of this
Agreement, the Agent shall have the right to adjust such computations.
-4-
<PAGE> 12
"Borrowing Base Certificate" means a certificate duly completed and
executed by the chief accounting or financial Authorized Officer of the
Borrower, substantially in the form of Exhibit E hereto, together with such
changes thereto as the Agent may from time to time reasonably request for the
purpose of monitoring the Borrower's compliance therewith.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
C-1 hereto.
"Business Acquisition" means (a) any Investment in the capital stock of
any Person or (b) any acquisition of the assets of any Person pursuant to a
transaction not in the ordinary course of such Person's business.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying
of any LIBO Rate Loan, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollars
are carried on in the interbank eurodollar market of the Agent's LIBOR
Office.
"Capital Expenditure Level" means, with respect to any Fiscal Year and
for purposes of Section 7.2.7, Capital Expenditure Level I, Capital Expenditure
Level II, Capital Expenditure Level III or Capital Expenditure Level IV, based
on the Fixed Charge Coverage Ratio as of the last day of such Fiscal Year and
EBITDA for such Fiscal Year, in accordance with the following clauses (a) and
(b):
(a) with respect to any Fiscal Year, if EBITDA for such Fiscal
Year is equal to or greater than the amount set forth below opposite
such Fiscal Year, Capital Expenditure Level I shall be applicable to
such Fiscal Year so long as the Fixed Charge Coverage Ratio as of the
last day of such Fiscal Year is equal to or greater than the ratio set
forth below opposite such Fiscal Year:
<TABLE>
<CAPTION>
Minimum EBITDA Minimum Fixed Charge
for Capital Coverage Ratio for
Expenditure Capital Expenditure
Fiscal Year Level I Level I
----------- -------------- --------------------
<S> <C> <C>
1995 $24,500,000 1.00:1.00
1996 29,800,000 1.10:1.00
</TABLE>
-5-
<PAGE> 13
<TABLE>
<S> <C> <C>
1997 32,600,000 1.25:1.00
1998 35,200,000 1.30:1.00
1999 38,000,000 1.40:1.00
2000 41,300,000 1.50:1.00
2001 44,500,000 1.50:1.00
</TABLE>
(b) if Capital Expenditure Level I shall not be applicable to a
Fiscal Year in accordance with the preceding clause (a), then (i) the
Capital Expenditure Level set forth opposite the highest level of
EBITDA set forth in Schedule III hereto with respect to such Fiscal
Year that has been met by the Parent and its Subsidiaries with respect
to such Fiscal Year shall be applicable to such Fiscal Year so long as
the Fixed Charge Coverage Ratio as of the last day of such Fiscal Year
(the " Subject Fixed Charge Coverage Ratio") is equal to or greater
than the ratio set forth in Schedule III hereto opposite such Capital
Expenditure Level; provided that, if such Subject Fixed Charge Coverage
Ratio is not equal to or greater than such ratio set forth in Schedule
III hereto, then Capital Expenditure Level IV shall be applicable to
such Fiscal Year.
"Capital Expenditures" means, for any period, without duplication, the
sum of
(a) the aggregate amount of all expenditures of the Parent and
its Subsidiaries (including the Borrower and its Subsidiaries) (i) for
fixed or capital assets made during such period which, in accordance
with GAAP, would be classified as capital expenditures and (ii) to the
extent not included in the preceding subclause (i), in respect
of Business Acquisitions made during such period; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"Capitalized Lease Liabilities" means all monetary obligations of the
Parent or any of its Subsidiaries (including the Borrower and its Subsidiaries)
under any leasing or similar arrangement which, in accordance with GAAP, would
be classified as capitalized leases, and, for purposes of this Agreement and
each other Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
-6-
<PAGE> 14
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after the date of issuance, issued or guaranteed by the United
States Government;
(b) commercial paper, maturing not more than nine months from
the date of issuance and rated at least A-1 by Standard & Poor's
Ratings Group or P-1 by Moody's Investors Service, Inc., which is
issued by
(i) a corporation (other than an Affiliate of any
Obligor) organized under the laws of any state of the United
States or of the District of Columbia, or
(ii) any Lender or any Affiliate thereof;
(c) any certificate of deposit or bankers acceptance, maturing
not more than one year after such time, which is issued by (i) a Lender
or (ii) a commercial banking institution that (A) is a member of the
Federal Reserve System, (B) has a combined capital and surplus and
undivided profits of not less than $1,000,000,000 and (C) has
outstanding short-term debt securities which are rated at least A-1 by
Standard & Poor's Ratings Group or P-1 by Moody's Investors Services,
Inc.;
(d) any repurchase agreement entered into with any Lender (or
other commercial banking institution of the stature referred to in
clause (c)) secured by a fully perfected Lien in any obligation
thereunder of the type described in any of clauses (a) through (c),
having a market value at the time such repurchase agreement is entered
into of not less than 100% of the repurchase obligation thereunder of
such Lender or other commercial banking institution; or
(e) any money market mutual fund with a daily right of
redemption and a net asset value of $1.00 per share substantially all
the assets of which are comprised of investments of the types described
in the preceding clauses (a) through (d).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
-7-
<PAGE> 15
"Change in Control" means
(a) the failure of the Stockholders at any time (i) to own
beneficially free and clear of all Liens at all times, at least 52.35%
of the issued and outstanding shares of common stock of the Parent
(both voting and non-voting), on a fully diluted basis, and (ii) to
have and exercise voting power for the election of at least a majority
of the board of directors of the Parent;
(b) the direct or indirect acquisition by any Person or a group
(as such term is defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended), other than the Stockholders, of beneficial
ownership (as such term is defined in Rule 13D-3 promulgated under the
Securities Exchange Act of 1934, as amended) of 25% or more of the
outstanding shares of common stock of the Parent;
(c) the failure of the Parent at any time to own beneficially
100% of the issued and outstanding shares of common stock of the
Borrower (both voting and non-voting) free and clear of all Liens
(other than Liens in favor of the Agent arising pursuant to the Parent
Pledge Agreement), on a fully diluted basis; or
(d) a change in the majority of the board of directors of the
Parent unless approved by the then majority of the board of directors
of the Parent.
"Clean-Down Period" is defined in Section 3.1.2(e).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means any assets of the Borrower or any of its
Subsidiaries or of any other Obligor subject to a Lien pursuant to any Loan
Document.
"Commitment" means, as the context may require, a Lender's Revolving
Loan Commitment, Term Loan Commitment or Letter of Credit Commitment.
"Commitment Amount" means, as the context may require, either the
Revolving Loan Commitment Amount, the Term Loan Commitment Amount or the Letter
of Credit Commitment Amount.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (b)
through (d) of Section 8.1.9; or
-8-
<PAGE> 16
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or
(ii) the giving of notice by the Agent, acting at the
direction of the Required Lenders, to the Borrower that the
Commitments have been terminated.
"Compliance Certificate" means a certificate duly executed by the chief
accounting or financial Authorized Officer of the Parent, substantially in the
form of Exhibit F hereto, together with such changes thereto as the Agent may
from time to time reasonably request for the purpose of monitoring the
Borrower's and the Parent's compliance with the financial covenants contained
herein.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The principal amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice duly executed by an
Authorized Officer of the Borrower, substantially in the form of Exhibit C-2
hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Parent or any Subsidiary, are treated as a single employer under Section 414(b)
or 414(c) of the Code or Section 4001 of ERISA.
"Credit Extension" means, as the context may require,
(a) the making of a Loan by a Lender; or
(b) the issuance of any Letter of Credit, the extension of any
Stated Expiry Date of any existing Letter
-9-
<PAGE> 17
of Credit or the increase in the Stated Amount of any existing Letter
of Credit, in each case by an Issuer.
"Credit Extension Request" means, as the context may require, any
Borrowing Request or Issuance Request.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Delight" means Delight Distributing and Sales Co., Inc., a Louisiana
corporation.
"Disbursement" is defined in Section 2.7.2.
"Disbursement Date" is defined in Section 2.7.2.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"DLJ" means DLJ Capital Corporation.
"Dollar" and the symbol "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such on Schedule IV hereto or designated in a Lender
Assignment Agreement, or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender to each other Person party hereto.
"EBIT" means, for any period, the sum, without duplication, of
(a) Net Income for such period;
plus
(b) the amounts deducted, in determining Net Income for such
period, for
(i) all income taxes paid by, or accrued to be paid by, the
Parent and its Subsidiaries during such period in respect of
such period (assuming utilization of all available Net
Operating Losses to the extent permitted by the Code),
plus
-10-
<PAGE> 18
(ii) Interest Expense for such period.
"EBITDA" means, for any period, the sum, without duplication, for such
period, of
(a) EBIT;
plus
(b) the amount deducted, in determining Net Income for such
period, for amortization and depreciation of assets of the Parent and
its Subsidiaries during such period.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Eligible Account" means, at any time of determination thereof, any
Account of the Borrower or any other Subsidiary of the Parent as to which each
of the following requirements has been fulfilled to the reasonable satisfaction
of the Agent:
(a) the Borrower or such Subsidiary has lawful and absolute
title to such Account, free and clear of all Liens other than the Liens
in favor of the Agent for the benefit of the Lenders;
(b) the Agent has a security interest in such Account, which
security interest is legal, valid, binding, perfected and first
priority under the U.C.C.; provided, however, that
(i) no Account as to which any United States federal or
state governmental agency or instrumentality is the Account
Debtor may be an Eligible Account, except to the extent the
Borrower or such Subsidiary has complied with the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Section 3727; 41
U.S.C. Section 15), by delivering to the Agent a notice of
assignment in favor of the Agent under such Act and in
compliance with applicable provisions of 31 C.F.R. Section
7-103.8 and 41 C.F.R. Section 1-30.7, or with similar state
law; and
(ii) no Account as to which any other government or agency
of such government (including any foreign governmental
authority or agency) is the Account Debtor may be an Eligible
Account;
(c) the Borrower or such Subsidiary has the full and
unqualified right to assign and grant a Lien in such Account to the
Agent;
-11-
<PAGE> 19
(d) such Account is payable in Dollars and is a legal, valid,
binding and enforceable obligation of the Person who is obligated under
such Account (the "Account Debtor");
(e) if such Account is subject to any dispute, setoff,
counterclaim or other claim or defense on the part of the Account
Debtor denying liability under such Account, the portion of such
Account so subject shall be excluded from Eligible Accounts;
(f) such Account is evidenced by an invoice or marketer's sales
report rendered to the Account Debtor and evidences monetary
obligations;
(g) such Account is a bona fide Account which arose in the
ordinary course of business, and with respect to which,
(i) in the case of an Account arising from the sale of
goods, such goods have been shipped or delivered to and not
rejected by the Account Debtor, such Account was created as a
result of a sale on an absolute basis and not on a consignment,
approval or sale-and-return basis and all other actions
necessary to create a binding obligation on the part of the
Account Debtor for such Account have been taken, and
(ii) in the case of an Account relating to the sale of
services, such services have been performed or completed and
not rejected by the Account Debtor and all other actions
necessary to create a binding obligation on the part of the
Account Debtor have been taken;
(h) with respect to such Account, the Account Debtor is not
(i) an Affiliate of the Borrower, the Parent or any of
their respective Subsidiaries,
(ii) organized or located in a jurisdiction other than the
United States, or
(iii) the subject of any reorganization, bankruptcy,
receivership, custodianship or insolvency or any other
condition of the type described in clauses (b) through (d) of
Section 8.1.9;
(i) such Account is not outstanding more than 60 days past the
due date with respect thereto;
(j) no payment with respect to such Account made by check has
been returned for insufficient funds;
-12-
<PAGE> 20
(k) such Account has not been placed with a lawyer or other
agent for collection;
(l) if the Borrower, the Parent or any of their respective
Subsidiaries is indebted to such Account Debtor, unless the Borrower,
the Parent or the relevant Subsidiary, (as the case may be) on the one
hand, and such Account Debtor, on the other hand, have entered into an
agreement whereby the Account Debtor is prohibited from exercising any
right of setoff with respect to the Accounts of the Borrower and the
other Subsidiaries of the Parent, Eligible Accounts shall exclude an
amount equal to the amount of such indebtedness; and
(m) such Account has such other characteristics or criteria as
the Agent, in its reasonable discretion, may specify in writing to the
Borrower from time to time.
"Eligible Inventory" means, at any time of determination thereof, any
Inventory of the Borrower or any other Subsidiary of the Parent arising in the
ordinary course of business and as to which each of the following requirements
has been fulfilled to the reasonable satisfaction of the Agent:
(a) such Inventory is located in the United States;
(b) the Borrower or such Subsidiary has full and unqualified
right to assign and grant a Lien in such Inventory to the Agent for the
benefit of the Lenders;
(c) the Borrower or such Subsidiary has full and lawful title
to such Inventory, free and clear of all Liens, other than any Liens in
favor of the Agent for the benefit of the Lenders;
(d) the Agent has a security interest in such Inventory, which
security interest is legal, valid, binding, perfected and first
priority under the U.C.C.;
(e) none of such Inventory shall consist of (i) items in the
custody of third parties for processing or manufacture, (ii) items in
the Borrower's or such Subsidiary's possession but intended by the
Borrower or such Subsidiary for return to the suppliers thereof, (iii)
items belonging to third parties that have been consigned to the
Borrower or such Subsidiary or are otherwise in the Borrower's or such
Subsidiary's custody or possession or (iv) items in the Borrower's or
such Subsidiary's custody and possession on a sale-on-approval or
sale-or-return basis or subject to any other repurchase or return
agreement; and
-13-
<PAGE> 21
(f) none of such Inventory (i) is obsolete, unsalable, damaged
or otherwise unfit for sale or further processing in the ordinary
course of business or (ii) has remained unsold in inventory for more
than three months or beyond the manufacturer's expiration or "sale by"
or similar date.
"Environmental Laws" means all applicable federal, state, county,
parish or local statutes, laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders) relating to
public health and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Excess Cash Flow" means, for any Fiscal Year, the excess for such
Fiscal Year of
(a) the sum, determined for such Fiscal Year, of
(i) EBITDA;
plus
(ii) the aggregate proceeds received by the Parent and its
Subsidiaries during such Fiscal Year on account of business
interruption insurance, to the extent not included in EBITDA;
over
(b) the sum, determined for such Fiscal Year, of
(i) Capital Expenditures permitted by Section 7.2.7 made or
incurred by the Parent and its Subsidiaries and paid in cash
during such Fiscal Year;
plus
(ii) all prepayments and repayments of Term Loans made
pursuant to Section 3.1.1 or 3.1.2 (other than pursuant to
Section 3.1.2(c)(ii)(B));
plus
-14-
<PAGE> 22
(iii) all income taxes paid by the Parent and its
Subsidiaries in cash during such Fiscal Year in respect of such
Fiscal Year;
plus
(iv) Interest Expense paid in cash during such Fiscal Year;
plus
(v) to the extent not reflected in EBITDA and to the extent
previously reserved against on the consolidated financial
statements of the Parent and its Subsidiaries, the excess of
(A) the aggregate amount of payments made by the Parent and its
Subsidiaries during such Fiscal Year in respect of
environmental remediation over (B) the aggregate amount of
payments received by the Parent and its Subsidiaries from
governmental authorities administering any trust or similar
fund relating to protection of the environment.
"Excess Insurance Proceeds" means the insurance proceeds received by
the Agent pursuant to clause (d) of Section 7.1.4.
"Facility" means (a) any real property, fixture or appurtenance owned
or operated by the Parent or any of its Subsidiaries (including the Borrower or
any of its Subsidiaries) or predecessors in interest, (b) any stationary source
of air pollution or any air pollution control equipment owned or operated by the
Parent or any of its Subsidiaries or predecessors in interest, (c) any source of
water pollution (including indirect sources to sewer systems) or any water
pollution control equipment owned or operated by the Parent or any of its
Subsidiaries or predecessors in interest, (d) all contiguous property under the
control of the Parent or any of its Subsidiaries or predecessors in interest,
(e) any building, structure, installation, equipment, pipe or pipeline
(including any pipe into a sewer or publicly owned treatment works), well, pit,
pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle,
rolling stock, or aircraft owned or operated by the Parent or any of its
Subsidiaries or predecessors in interest, and (f) any site or area where a
hazardous substance provided to or generated by the Parent or any of its
Subsidiaries or predecessors in interest has been deposited, stored, disposed
of, or placed, or otherwise come to be located; but does not include any
consumer product in consumer use or any vessel.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
-15-
<PAGE> 23
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by SG from three federal funds brokers of
recognized standing selected by it.
"Fee Letter" means the confidential fee letter, dated December 21,
1994, from SG, addressed to, and agreed and accepted by, the Borrower and the
Parent.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on the last Sunday of each December. References to a Fiscal Year with a
number corresponding to any calendar year (e.g., "Fiscal Year 1995") refer to
the Fiscal Year ending during such calendar year.
"Fixed Charge Coverage Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of:
(a) EBITDA for the Rolling Period ending on such day minus all
Capital Expenditures of the Parent and its Subsidiaries incurred or
committed to be incurred during such Rolling Period;
to
(b) the sum of
(i) Interest Expense for such Rolling Period;
plus
(ii) all scheduled repayments of Term Loans made pursuant
to Section 3.1.2(b) during such Rolling Period;
plus
(iii) all income taxes paid by the Parent and its
Subsidiaries during such Rolling Period in respect of such
Rolling Period (assuming utilization of all available Net
Operating Losses (to the extent permitted by the Code)).
-16-
<PAGE> 24
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Funded Debt" means, as of any date of determination, any Indebtedness
of the Parent and its Subsidiaries of a type described in clause (a), (b) (to
the extent actually drawn) or (c) of the definition of Indebtedness, or any
Contingent Liability of the Borrower or any of its Subsidiaries in respect of
any such type of Indebtedness, which
(a) is in respect of the Term Loans;
(b) matures more than one year from such date of
determination;
(c) matures within one year from such date of determination but
is renewable or extendible, at the option of the Borrower or any such
Subsidiary, as the case may be, to a date more than one year from such
date; or
(d) arises under a revolving credit or similar agreement which
obligates the lender or lenders thereof to extend such Indebtedness
during a period of more than one year from such date.
"Funded Debt to EBITDA Ratio" means, as of the last day of any Rolling
Period, the ratio of:
(a) Funded Debt as at the last day of such Rolling Period;
to
(b) EBITDA for such Rolling Period.
"GAAP" is defined in Section 1.4.
"Gross Profit Margin" means, as of the last day of any Fiscal Quarter,
the percentage obtained by dividing (a) the excess of total sales of the Parent
and its Subsidiaries for the Rolling Period ending on such day over cost of
goods sold of the Parent and its Subsidiaries for such Rolling Period (in each
case, as determined in accordance with GAAP) by (b) total sales of the Parent
and its Subsidiaries for such Rolling Period (as determined in accordance with
GAAP).
"Gross Transaction Proceeds" means gross cash payments received by the
Parent or any of its Subsidiaries pursuant to the Purchase Agreement in excess
of $250,000 in the aggregate (including any cash payments received by way of any
adjustment to the purchase price provided for therein and any indemnity
payments), other than any such cash payments in respect of
-17-
<PAGE> 25
indemnity payments which reimburse the Parent or any of its Subsidiaries for
liabilities and costs previously paid by the Parent or such Subsidiary.
"Guaranteed Obligations" is defined in Section 9.1.
"Guarantor" means the Parent.
"Guaranty" means, as the context may require, the Petroleum Guaranty
and the Time Saver Guaranty.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under Rate Protection Agreements.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause such Obligor
-18-
<PAGE> 26
to be in default of any of its obligations under Section 7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of contract
interpretation to the effect that where general words are followed by a specific
listing of items the general words shall not be given their widest meaning,
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money, all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments and all capital stock which has redemption
provisions exercisable at the option of the holder thereof in whole or
in part for cash;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person with respect to each Hedging
Obligation;
(f) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse; and
(g) all Contingent Liabilities of such Person in respect of any
of the foregoing.
-19-
<PAGE> 27
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner thereof or has direct liability in the nature of a general
partner.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Intellectual Property Collateral" has the meaning provided for such
term in the Security Agreements.
"Interest Coverage Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of:
(a) EBITDA for the Rolling Period ending on such day,
to
(b) Interest Expense for such Rolling Period.
"Interest Expense" means, for any period, the aggregate consolidated
interest expense of the Parent and its Subsidiaries for such period, as
determined in accordance with GAAP, including, without duplication, net
obligations of the Parent and its Subsidiaries (including fees) in respect of
Rate Protection Agreements and the portion of any Capitalized Lease Liabilities
of the Parent and its Subsidiaries allocable to interest expense, in each case
paid or payable during such period.
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.4 or 2.5
and ending on (but excluding) the day which is one, three or six months
thereafter (or, if such month has no numerically corresponding day, on the last
Business Day of such month), as the Borrower may select in its relevant notice
pursuant to Section 2.4 or 2.5; provided, however, that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than five different dates;
(b) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a month, in which case such Interest Period shall
end on the Business Day next preceding the day on which such Interest
Period would otherwise end); and
-20-
<PAGE> 28
(c) the Borrower shall not be permitted to select, and there
shall not be applicable, any Interest Period that would be broken by
reason of a mandatory payment of Term Loans required pursuant to
clause (b) of Section 3.1.2 or any Interest Period for
any Loan which would end later than the Stated Maturity Date for such
Loan.
"Inventory" means any "inventory" (as defined in Section 9-109(4) of
the U.C.C.) of any Person.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person incurred in
connection with loans or advances made by others to such Person; and
(c) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Issuance Request" means a Letter of Credit request and certificate
duly executed by an Authorized Officer of the Borrower, substantially in the
form of Exhibit D hereto.
"Issuer" means SG in its capacity as issuer of the Letters of Credit.
At the request of SG, another Lender or an Affiliate of SG may issue one or more
Letters of Credit hereunder, in which case the term "Issuer" as used herein
shall refer to each of SG, any such Lender and any such Affiliate of SG.
"Lender Assignment Agreement" means a lender assignment agreement in
substantially the form of Exhibit O hereto.
"Lender" is defined in the preamble.
"Letter of Credit" is defined in clause (a) of Section 2.1.3.
"Letter of Credit Commitment" means, with respect to the Issuer, the
Issuer's obligation to issue Letters of Credit
-21-
<PAGE> 29
pursuant to Section 2.7 and, with respect to each of the other Lenders, the
obligations of each such Lender to participate in such Letters of Credit
pursuant to Section 2.7.1.
"Letter of Credit Commitment Amount" means, on any date, $5,000,000, as
such amount may be permanently reduced from time to time pursuant to Section
2.3.
"Letter of Credit Outstandings" means, on any date, an amount equal to
the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding Letters of Credit;
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO Rate" is defined in Section 3.2.1.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule IV hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender as designated from time to time by
notice from such Lender to the Borrower and the Agent, whether or not outside
the United States, which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, either a Revolving Loan or a
Term Loan.
"Loan Document" means this Agreement, the Notes, the Petroleum Note,
the Letters of Credit, the Fee Letter, the Borrower Security Agreement, the
Parent Security Agreement, the
-22-
<PAGE> 30
Petroleum Security Agreement, the Time Saver Security Agreement, the Parent
Pledge Agreement, the Borrower Pledge Agreement, the Petroleum Guaranty, the
Time Saver Guaranty, the Stockholders Letter of Understanding, each Rate
Protection Agreement with a Lender, each Lender Assignment Agreement and each
other agreement, instrument or document executed and delivered pursuant to or in
connection with this Agreement and the other Loan Documents (including the
agreements executed from time to time by Subsidiaries of the Borrower pursuant
to Section 7.1.10, the agreements executed from time to time by Borrower and its
Subsidiaries pursuant to Section 7.1.11 and the promissory notes evidencing
Indebtedness permitted by clause (h) of Section 7.2.2).
"marketers" means those business locations as to which Petroleum or any
other Subsidiary of the Parent only operates or owns the equipment and inventory
relating to the sale and distribution of gasoline products.
"Memorandum" means the E-Z Serve Corporation Financing Proposal,
heretofore delivered to the Agent and the Lenders by the Parent.
"Merger" is defined in Section 7.1.8.
"Merger Certificate" is defined in Section 7.1.8.
"Net Debt Proceeds" means, in the case of the issuance, incurrence,
placement or sale of any Indebtedness (other than Indebtedness in respect of the
Notes) of the type referred to in clause (a) of the definition thereof (whether
pursuant to a public or private offering), permitted to be outstanding pursuant
to Section 7.2.2 or otherwise permitted with the prior consent of the Required
Lenders from and after the Effective Date, the excess of
(a) the gross cash proceeds received by the Parent or any of
its Subsidiaries from such issuance, incurrence, placement or sale of
permitted Indebtedness (including any cash payments received by way of
deferred payment of principal pursuant to a permitted promissory note
or installment receivable or otherwise, but only as and when received);
over
(b) in connection with the issuance, incurrence, placement or
sale of permitted Indebtedness, (i) all reasonable and customary fees
and expenses actually paid by the Parent or its Subsidiaries (except as
provided in clause (ii)) and (ii) underwriters' discounts and
commissions not payable to the Parent, any of its Subsidiaries or any
of
-23-
<PAGE> 31
their Affiliates (other than underwriters' discounts and commissions
payable (x) to DLJ or any of its Affiliates if such discounts and
commissions are the same as the usual and customary discounts and
commissions of DLJ and its Affiliates to Persons which are not their
Affiliates or (y) to any other Stockholder or its Affiliates if such
discounts and commissions would be reasonable and customary if charged
in arm's length transactions by recognized investment banking
institutions which provide underwriting and placement services in the
ordinary course of their business).
"Net Disposition Proceeds" means the excess of
(a) the gross cash proceeds (other than proceeds from any sale
of Inventory of the Parent or any of its Subsidiaries in the ordinary
course of their business) received by the Parent or any of its
Subsidiaries from any Permitted Disposition with a purchase price in
excess of $250,000 (such purchase price to be determined in the same
manner as the purchase price of a Permitted Business Acquisition (as
set forth in clause (b) of the definition thereof)), including any cash
payments received by way of a deferred payment of principal pursuant to
a permitted note or installment receivable or otherwise, but only when
and as received;
over
(b) (i) all reasonable and customary fees and expenses with
respect to legal, investment banking, brokerage, accounting and other
professional fees actually incurred by the Parent and its Subsidiaries
in connection with such Permitted Disposition which have not been paid
to Affiliates of the Parent or any of its Subsidiaries (other than fees
and expenses payable (x) to DLJ or any of its Affiliates if such fees
and expenses are the same as the usual and customary fees and expenses
of DLJ and its Affiliates to Persons which are not their Affiliates or
(y) to any other Stockholder or its Affiliates if such fees and
expenses would be reasonable and customary if charged in arm's length
transactions by recognized investment banking institutions which
provide merger and acquisition advice and services in the ordinary
course of their business), (ii) all taxes actually paid or estimated by
the Parent (in good faith) to be payable in cash in connection with
such Permitted Disposition; provided, however, that if, after the
payment of all taxes with respect to such Permitted Disposition, the
amount of estimated taxes, if any, pursuant to clause (ii) above
exceeded the amount of taxes actually paid in cash in respect of such
Permitted Disposition, the aggregate amount of such excess shall be
immediately payable, pursuant to
-24-
<PAGE> 32
clause (c) of Section 3.1.2, as Net Disposition Proceeds, and (iii) if
permitted hereunder or otherwise by the Required Lenders, the aggregate
amount of any Indebtedness of the type referred to in clause (a) of the
definition thereof which is secured by such asset and required to be
repaid from such gross cash proceeds;
provided, however, that such cash proceeds shall not constitute Net Disposition
Proceeds to the extent the Parent or its applicable Subsidiary uses such
proceeds within 365 days of the closing date of such Permitted Disposition to
replace the assets disposed in such Permitted Disposition or to reinvest in
other capital assets reasonably related to the ownership and operation of
convenience stores.
"Net Equity Proceeds" means, in the case of the issuance, placement or
sale of equity securities (whether pursuant to a public or private offering)
from and after the Effective Date, the excess of
(a) the gross cash proceeds received by the Parent or any of
its Subsidiaries or any corporation of which the Parent is a Subsidiary
from such issuance, placement or sale of equity securities (including
any cash payments received by way of deferred payment of principal
pursuant to a permitted promissory note or installment receivable or
otherwise, but only as and when received);
over
(b) in connection with such issuance, placement or sale of such
equity securities, all (i) reasonable and customary fees and expenses
actually paid by the Parent or its Subsidiaries or the Parent or any
corporation of which the Parent is a Subsidiary (except as provided in
clause (ii)) and (ii) underwriters' discounts and commissions not
payable to the Parent, any of its Subsidiaries or any of their
Affiliates (other than underwriters' discounts and commissions payable
(x) to DLJ or any of its Affiliates if such discounts and commissions
are the same as the usual and customary discounts and commissions of
DLJ and its Affiliates to Persons which are not their Affiliates or (y)
to any other Stockholder or its Affiliates if such discounts and
commissions would be reasonable and customary if charged in arm's
length transactions by recognized investment banking institutions which
provide underwriting and placement services in the ordinary course of
their business).
"Net Income" means, for any period, all amounts (exclusive of all
amounts in respect of any extraordinary gains or losses) which, in accordance
with GAAP, would be included as net income
-25-
<PAGE> 33
on the consolidated statements of income of the Parent and its Subsidiaries for
such period.
"Net Operating Loss" means all net operating losses incurred by the
Parent and its Subsidiaries, as shown on any federal tax return (as amended or
otherwise modified) filed or to be filed by the Parent.
"Note" means, as the context may require, either a Revolving Note or a
Term Note.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document.
"Obligor" means the Parent and any of its Subsidiaries (including the
Borrower and any of its Subsidiaries).
"Organic Document" means, relative to any Obligor, its articles or
certificate of incorporation, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its authorized shares of
capital stock.
"Parent" is defined in the preamble.
"Parent Pledge Agreement" means the Pledge Agreement (Parent) executed
and delivered pursuant to clause (b) of Section 5.1.8, substantially in the form
of Exhibit G-1 hereto, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Parent Security Agreement" means the Parent Security Agreement
executed and delivered pursuant to Section 5.1.10, substantially in the form of
Exhibit H-3 hereto, together with the Security Agreement (Trademark) related
thereto, in each case as amended, supplemented, restated or otherwise modified
from time to time.
"Participant" is defined in Section 11.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which the
Parent or any Subsidiary or any corporation, trade or business that is, along
with the Parent or any Subsidiary, a member of a Controlled Group, may have
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of
-26-
<PAGE> 34
ERISA at any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under Section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite the name of such Lender on Schedule II hereto or set forth in a duly
executed Lender Assignment Agreement, as such percentage may be adjusted from
time to time pursuant to Lender Assignment Agreement(s) executed by such Lender
and its Assignee Lender(s) and delivered pursuant to Section 11.11.
"Permitted Business Acquisition" means any Business Acquisition
pursuant to which:
(a) (i) the Borrower acquires all of the capital stock of a
Person engaged solely in the business of owning and operating one or
more convenience stores, (ii) a Subsidiary of the Borrower acquires
assets comprising one or more convenience stores or (iii) with the
prior written consent of the Agent, the Borrower acquires assets
comprising one or more convenience stores (provided that such consent
shall not be required to the extent such assets will be acquired in a
single transaction or series of related transactions (each such
transaction, a " Threshold Acquisition") which relate to five or fewer
locations and do not have a purchase price in excess of $1,000,000
(such purchase price to be determined in the same manner as provided in
the immediately succeeding clause (b));
(b) the purchase price with respect to such Business
Acquisition (inclusive of any deferred portion thereof (which shall,
for the purposes of this clause (b), equal the present value thereof
based on a discount factor equal to the sum of the SG Base Rate and
1.25% on the closing date of such Business Acquisition) and any
securities or other assets issued or transferred and liabilities (other
than current liabilities) assumed), when added to the aggregate
purchase price of all Permitted Business Acquisitions consummated
during the Fiscal Year in which such Business Acquisition would be
consummated, does not exceed $5,000,000;
(c) the Agent shall have received, other than in the case of a
Threshold Acquisition, a certificate executed by the chief financial
Authorized Officer of the Borrower (i) stating that no Default has
occurred and is continuing or would occur upon consummation of such
Business Acquisition and (ii) showing (in reasonable detail and with
appropriate calculations and computations in all respects satisfactory
to the Agent) compliance for the succeeding four fiscal quarters (the
fiscal quarter in which such Business Acquisition would be consummated
being the first such fiscal
-27-
<PAGE> 35
quarter) with the covenants set forth in Section 7.2.4 on a prospective
pro forma basis (after giving effect to such Business Acquisition and
all transactions related thereto); and
(d) the Borrower has complied with the provisions of Section
7.1.10 to the extent such provisions are applicable to the Persons
party to, or otherwise subject to, such Business Acquisition.
"Permitted Disposition" means any sale, lease, transfer or other
disposition of assets of the Borrower or any other Subsidiary of the Parent to
the extent that
(a) the Borrower or such other Subsidiary shall receive only
cash consideration therefor, provided that (i) the Borrower or such
other Subsidiary may receive promissory notes having terms that are
customary for seller-financed transactions, to the extent the aggregate
principal amount of all such promissory notes received by the Borrower
and such other Subsidiaries in any Fiscal Year does not exceed $250,000
and (ii) in the event of a sale of assets comprised of convenience
stores or marketers, the Borrower or such other Subsidiary may obtain
in exchange therefor convenience stores (or, if the assets sold are
marketers, convenience stores or marketers), to the extent the number
of convenience stores so sold does not exceed 15% of the convenience
stores operated by the Borrower and the other Subsidiaries of the
Parent as of the Effective Date and the number of marketers so sold
does not exceed 15% of the marketers operated by such other
Subsidiaries of the Parent as of the Effective Date (each such
transaction, an " Exchange Transaction");
(b) the aggregate fair market value of all such dispositions
(exclusive of any such disposition effectuated as an Exchange
Transaction to the extent of the fair market value of the capital
assets obtained by the Borrower or other such Subsidiary in respect of
such Exchange Transaction) shall not exceed $2,500,000 in any Fiscal
Year;
(c) the Borrower and such other Subsidiaries shall have
received fair value therefor; and
(d) at the time of each such disposition, no Event of Default
shall have occurred and be continuing.
"Permitted Encumbrances" means Liens permitted under Section 7.2.3.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any
-28-
<PAGE> 36
other entity, whether acting in an individual, fiduciary or other capacity.
"Petroleum" is defined in the first recital.
"Petroleum Guaranty" means the Guaranty (Petroleum) executed and
delivered pursuant to Section 5.1.7, substantially in the form of Exhibit J-2
hereto, as the same may be amended, supplemented or otherwise restated from time
to time.
"Petroleum Note" means the revolving promissory note of Petroleum
payable to the Borrower, executed, delivered and pledged to the Agent pursuant
to Section 5.1.19, substantially in the form of Exhibit K hereto (as such
promissory note may be amended, endorsed or otherwise modified from time to time
subject to the terms of the Borrower Pledge Agreement), and also means all other
promissory notes issued from time to time in substitution therefor or renewal
thereof subject to the terms of the Borrower Pledge Agreement.
"Petroleum of California" means E-Z Serve Petroleum Marketing Company
of California, a California corporation.
"Petroleum Security Agreement" means the Petroleum Security Agreement
executed and delivered pursuant to Section 5.1.10, substantially in the form of
Exhibit H-2 hereto, together with the Security Agreement (Trademark) related
thereto, in each case as amended, supplemented, restated or otherwise modified
from time to time.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreements" means, as the context may require, the Parent
Pledge Agreement or the Borrower Pledge Agreement.
"Purchase Agreement" is defined in the second recital.
"Quarterly Payment Date" means the 24th day of each March, June,
September and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Rate Protection Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, currency swap or
exchange agreement or any similar arrangement designed to protect a Person
against fluctuations in interest rates or currency fluctuations and entered
into, from time to time, by the Parent or any of its Subsidiaries.
"Realty" means all right, title and interest of the Borrower, the
Parent and their respective Subsidiaries in any land, buildings, improvements,
fixtures, other interests in real estate and any leasehold interest in any of
the foregoing.
-29-
<PAGE> 37
"Reimbursement Obligation" is defined in Section 2.7.3.
"Release" means any spilling, leaking, pumping, pouring emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
any Hazardous Material or pollutant or contaminant into the environment
(including the abandonment or discarding of barrels, containers, and other
closed receptacles containing any Hazardous Material or pollutant or
contaminant).
"Required Lenders" means, at the time any determination thereof
is to be made, Lenders holding 66 2/3% or more of the then aggregate unpaid
principal amount of the Notes and Letter of Credit Outstandings or, if no such
principal amount or Letter of Credit Outstandings are outstanding, Lenders
having an aggregate Percentage of 66 2/3% or more of the Total Commitment
Amount.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
from time to time.
"Revolving Loan" is defined in Section 2.1.2.
"Revolving Loan Commitment" means, relative to any Lender, such
Lender's obligation to make Revolving Loans pursuant to Section 2.1.2.
"Revolving Loan Commitment Amount" means, on any date, $15,000,000, as
such amount is reduced from time to time pursuant to Section 2.3.
"Revolving Loan Commitment Termination Date" means the earliest of
(a) January 24, 1998;
(b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.3;
(c) the date on which the principal amount of Term Loans are
repaid in full; and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described above, the Revolving Loan Commitments
shall terminate automatically and without any further action.
"Revolving Note" means a promissory note of the Borrower payable to any
Lender, in the form of Exhibit A hereto (as such
-30-
<PAGE> 38
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrower to such Lender
resulting from outstanding Revolving Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Rolling Period" means, as of any date of calculation, the immediately
preceding four full Fiscal Quarters; provided, however, that prior to the first
four full Fiscal Quarters following the date of the initial Credit Extension,
the "Rolling Period" as of any date of calculation shall mean the period from
the date of the initial Credit Extension to such date of calculation.
"Security Agreements" means, as the context may require, the Parent
Security Agreement, the Borrower Security Agreement, the Petroleum Security
Agreement and the Time Saver Security Agreement.
"Seller" is defined in the second recital.
"SG" is defined in the preamble.
"SGA Margin" means, as of the last day of any Fiscal Quarter, the
percentage obtained by dividing (a) selling, general and administrative expenses
(as determined in accordance with GAAP) of the Parent and its Subsidiaries for
the Rolling Period ending on such day by (b) total sales (as determined in
accordance with GAAP) by the Parent and its Subsidiaries for such Rolling
Period.
"SG Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the SG Rate in effect on such day; and
(b) the Federal Funds Rate in effect on such day plus 1/2 of
1%.
The SG Base Rate is not necessarily intended to be the lowest rate of interest
determined by SG in connection with extensions of credit. Changes in the rate of
interest on that portion of any Loans maintained as Base Rate Loans will take
effect simultaneously with each change in the SG Base Rate. The Agent will give
notice promptly to the Borrower and the Lenders of changes in the SG Base Rate.
"SG Rate" means, at any time, the rate of interest then most recently
established by SG in New York, New York as its base rate for U.S. dollars loaned
in the United States.
-31-
<PAGE> 39
"State" means the several states of the United States of America,
including the District of Columbia, and their political subdivisions.
"Stated Amount" of each Letter of Credit means the total amount
available to be drawn under such Letter of Credit upon the issuance thereof.
"Stated Expiry Date" is defined in Section 2.7.
"Stated Maturity Date" means (a) in the case of any Term Loan, January
24, 2002 and (b) in the case of any Revolving Loan, January 24, 1998.
"Stockholders" means DLJ, Phemus Corporation, Tenacqco Bridge
Partnership, Intercontinental Mining & Resources Incorporated and Quadrant
Capital Corp.
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement, dated as of June 1, 1994, among the Stockholders, certain employees
of the Obligors and the Parent.
"Stockholders Letter of Understanding" is defined in Section 5.1.17.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person, or (b) any partnership, joint venture, or other
entity as to which such Person, such Person and one or more of its Subsidiaries
or one or more Subsidiaries of such Person owns more than a 50% ownership,
equity or similar interest or has power to direct or cause the direction of
management and policies, or the power to elect the managing partner (or the
equivalent), of such partnership, joint venture or other entity, as the case may
be.
"Tangible Net Worth" means, at any time, the sum of all amounts
(without duplication) which, in accordance with GAAP, would be included under
paid-in capital and retained earnings on a balance sheet of the Parent and its
Subsidiaries on a consolidated basis at such time after subtracting therefrom
the aggregate amount of any intangible assets of the Parent and its
Subsidiaries, including goodwill, franchises, licenses, patents, trademarks,
trade names, copyrights, service marks and brand names.
-32-
<PAGE> 40
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, real and personal property, production,
sales, use, license, excise, franchise, stamp, leasing, lease, value added,
employment, withholding, transfer, registration, alternative or add-on minimum,
estimated, unemployment, social security, payroll, capital stock or similar
taxes, charges, fees, duties, levies, or other assessments, together with any
interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties.
"Term Loan" is defined in Section 2.1.1.
"Term Loan Commitment" means, relative to any Lender, such Lender's
obligation to make Term Loans pursuant to Section 2.1.1.
"Term Loan Commitment Amount" means, on any date prior to the Term Loan
Commitment Termination Date, $45,000,000.
"Term Loan Commitment Termination Date" means the earlier of
(a) immediately after the making of the initial Credit
Extension; and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (a) or (b), the Term Loan
Commitments shall terminate automatically and without any further action.
"Term Note" means a promissory note of the Borrower payable to any
Lender, in the form of Exhibit B hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Term
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Time Saver" is defined in the second recital.
"Time Saver Guaranty" means the Guaranty (Time Saver) executed and
delivered pursuant to Section 5.1.7, substantially in the form of Exhibit J-3
hereto, as the same may be amended, supplemented, restated or otherwise modified
from time to time.
"Time Saver Security Agreement" means the Time Saver Security Agreement
executed and delivered pursuant to Section 5.1.10, substantially in the form of
Exhibit H-4 hereto, together with the Security Agreement (Trademark) related
thereto, in each case as amended, supplemented, restated or otherwise modified
from time to time.
-33-
<PAGE> 41
"Total Commitment Amount" means the sum, without duplication, of the
Term Loan Commitment Amount and the Revolving Loan Commitment Amount.
"type" means, relative to any Loan, that part of such Loan being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Welfare Plan" means a "welfare plan" (as such term is defined in
Section 3(1) of ERISA), maintained by the Borrower or for which the Borrower or
any of its Subsidiaries has any contractual liability.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and each
other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
LETTERS OF CREDIT AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article V), each Lender severally agrees to make Loans
pursuant to the Commitments described in this Section 2.1.
-34-
<PAGE> 42
SECTION 2.1.1. Term Loan Commitment. On the Business Day the
Acquisition is consummated (but only if the Term Loans are requested to be made
on, or prior to, the Term Loan Commitment Termination Date), each Lender agrees
to make a Loan (relative to such Lender, its "Term Loan") to the Borrower equal
to such Lender's Percentage of the aggregate amount of the Borrowing of Term
Loans requested by the Borrower to be made on such day. The Commitment of each
Lender described in this Section is herein referred to as its "Term Loan
Commitment". No amounts paid or prepaid with respect to Term Loans may be
reborrowed.
SECTION 2.1.2. Revolving Loan Commitment. From time to time on any
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
each Lender agrees to make Loans (relative to such Lender, its "Revolving
Loans") to the Borrower equal to such Lender's Percentage of the aggregate
amount of the Borrowing of Revolving Loans requested by the Borrower to be made
on such day. The Commitment of each Lender described in this Section is herein
referred to as its "Revolving Loan Commitment". On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow the Revolving Loans.
SECTION 2.1.3. Letter of Credit Commitment. From time to time on any
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
the Issuer will
(a) issue one or more standby letters of credit (relative to
such Issuer, its "Letter of Credit") for the account of the Borrower in
respect of obligations of the Borrower or Petroleum in Stated Amounts
requested by the Borrower on such day with a Stated Expiry Date not
later than one year from such requested date of issuance; or
(b) extend the Stated Expiry Date of an existing Letter of
Credit previously issued hereunder to a date not later than the earlier
of (i) the Revolving Loan Commitment Termination Date and (ii) one year
from the date of such extension.
SECTION 2.2. Lenders Not Permitted or Required To Make Credit
Extensions. No Lender shall be permitted or required to make any Loan, and no
Issuer shall be obligated to issue or extend any Letter of Credit, under any
circumstance described below in this Section.
SECTION 2.2.1. Term Loans. No Borrowing of Term Loans shall be made if,
after giving effect thereto, the aggregate outstanding principal amount of all
the Term Loans (a) of all Lenders would exceed the Term Loan Commitment Amount
or (b) of such Lender would exceed such Lender's Percentage of the Term Loan
Commitment Amount.
-35-
<PAGE> 43
SECTION 2.2.2. Revolving Loans. No Borrowing of Revolving Loans shall
be made if, after giving effect thereto, the aggregate outstanding principal
amount of all the Revolving Loans, together with the aggregate amount of all
Letter of Credit Outstandings, (a) of all the Lenders would exceed the lesser of
the Revolving Loan Commitment Amount or the then existing Borrowing Base Amount,
or (b) of such Lender would exceed such Lender's Percentage of the lesser of the
Revolving Loan Commitment Amount or such Lender's Percentage of the then
existing Borrowing Base Amount. On the Effective Date and until the earlier of
the (a) 45th day following the Effective Date and (b) the payment of all
post-closing adjustments provided for in the Purchase Agreement, there shall be
at least $8,000,000 undrawn under the Revolving Loan Commitment Amount; from the
earlier of (a) the 45th day following the Effective Date and (b) the payment of
post-closing adjustments provided for in the Purchase Agreement, until 120 days
following the Effective Date, there shall be at least $3,000,000 undrawn under
the Revolving Loans Commitment Amount; and on the 120th day following the
Effective Date, there shall be at least $8,000,000 undrawn under the Revolving
Loan Commitment Amount.
SECTION 2.2.3. Letters of Credit. No issuance or extension of a Letter
of Credit shall be made if, after giving effect thereto, (a) the aggregate
amount of all Letter of Credit Outstandings would exceed the Letter of Credit
Commitment Amount or (b) the aggregate amount of all Letter of Credit
Outstandings together with the aggregate outstanding principal amount of all
Revolving Loans, would exceed the lesser of the Revolving Loan Commitment Amount
or the then existing Borrowing Base Amount.
SECTION 2.3. Optional Reduction of the Commitment Amounts. The Borrower
may, from time to time on any Business Day occurring after the time of the
initial Credit Extension hereunder, voluntarily reduce the unused amount of the
Revolving Loan Commitment Amount; provided, however, that all such reductions
shall require at least one Business Days' prior notice to the Agent and be
permanent, and any partial reduction of the unused amount of the Revolving Loan
Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral
multiple of $500,000.
SECTION 2.4. Borrowing Procedure. By delivering a Borrowing Request to
the Agent on or before 10:00 a.m. (New York City time) on a Business Day, the
Borrower may from time to time irrevocably request that Base Rate Loans be made
on such Business Day or on another Business Day within five Business Days of
such Business Day, or that LIBO Rate Loans be made on any Business Day not less
than three nor more than five Business Days thereafter. All Loans shall be made
in a minimum aggregate amount of $500,000 and an aggregate integral multiple of
$100,000 or, if less, in the unused amount of the applicable Commitment, and the
proceeds
-36-
<PAGE> 44
of all Loans shall be used solely for the purposes described in Section 4.10. On
the terms and subject to the conditions of this Agreement, each Borrowing shall
be made on the Business Day specified in such Borrowing Request. On or before
1:00 p.m. (New York City time) on such Business Day, each Lender shall deposit
with the Agent same day funds in an amount equal to such Lender's Percentage of
the requested Borrowing. Such deposit will be made to an account which the Agent
shall specify from time to time by notice to the Lenders. To the extent funds
are received from the Lenders, the Agent shall make such funds available to the
Borrower by wire transfer to the accounts the Borrower shall have specified in
its Borrowing Request. No Lender's obligation to make any Loan shall be affected
by any other Lender's failure to make any Loan. On the date of the initial
Credit Extension, only Base Rate Loans will be available.
SECTION 2.5. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 10:00 a.m. (New York
City time) on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than one Business Day's notice in the case of conversions to
Base Rate Loans, or three Business Days' notice in the case of conversions to or
continuations of LIBO Rate Loans, and in either case not more than five Business
Days' notice, that all, or any portion in an aggregate minimum aggregate amount
of $1,000,000 and an aggregate integral multiple of $100,000 be, in the case of
Base Rate Loans converted into LIBO Rate Loans or be, in the case of LIBO Rate
Loans converted into Base Rate Loans or continued as LIBO Rate Loans (in the
absence of delivery of a Continuation/Conversion Notice with respect to any LIBO
Rate Loan at least three Business Days (but not more than five Business Days)
before the last day of the then current Interest Period with respect thereto,
such LIBO Rate Loan shall, on such last day, automatically convert to a Base
Rate Loan); provided, however, that (a) each such conversion or continuation
shall be prorated among the applicable outstanding Revolving Loans of all
Lenders and (b) no portion of the outstanding principal amount of any Loans may
be continued as, or be converted into, LIBO Rate Loans when any Default or any
Event of Default has occurred and is continuing (unless the Required Lenders
otherwise agree in writing).
SECTION 2.6. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
-37-
<PAGE> 45
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Sections 4.1 through 4.5, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.7. Issuance Procedures. By delivering to the Agent an
Issuance Request on or before 10:00 a.m., New York City time, on a Business Day,
the Borrower may, from time to time irrevocably request, on not less than three
nor more than 15 Business Days' notice, that the Issuer issue, increase the
Stated Amount of, or extend the Stated Expiry Date of, as the case may be, a
Letter of Credit in such form as may be requested by the Borrower and approved
by the Issuer, such Letter of Credit to be used solely for the purposes
described in Section 4.10. Each Letter of Credit shall by its terms be stated to
expire on a date (its "Stated Expiry Date") no later than the earlier of (a) one
year (or, in the case of the initial Letter of Credit to be issued hereunder to
Bankers Trust Company, up to 15 months) from the date of issuance (or, if
extendable beyond such period, cancelable upon at least 30 days' notice given by
the Issuer to the beneficiary of such Letters of Credit) and (b) the Revolving
Loan Commitment Termination Date. The Issuer will make available to the
beneficiary thereof the original of each Letter of Credit which it issues
hereunder. Unless notified in writing by the Required Banks before it issues a
Letter of Credit that a Default or Event of Default exists, the Issuer may issue
the requested Letter of Credit in accordance with the Issuer's customary
practices.
SECTION 2.7.1. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) shall be deemed to have irrevocably
and unconditionally purchased (without recourse, representation or warranty), to
the extent of its Percentage, a participation interest in such Letter of Credit
(including the Contingent Liability and any Reimbursement Obligation with
respect thereto), and such Lender shall, to the extent of its Percentage, be
responsible for reimbursing promptly (and in any event within one Business Day
together with interest at the Federal Funds Rate (rounded upward, if necessary,
to the next highest 1/16 of 1%) for each day until reimbursement is made) the
Issuer for Reimbursement Obligations which have not been reimbursed by the
Borrower in accordance with Section 2.7.3 or which have been reimbursed by the
Borrower but have been required to be returned or disgorged by the Issuer. In
addition, such Lender shall, to the extent of its Percentage and so long as it
shall have complied with its obligations under this Section and Section 2.7.3,
be entitled to receive a ratable portion of the Letter of Credit fees payable
pursuant to Section 3.3.2 with respect to each Letter of Credit and of interest
-38-
<PAGE> 46
payable pursuant to Section 3.2 with respect to any Reimbursement Obligation.
SECTION 2.7.2. Disbursements. The Issuer will notify the Borrower and
the Agent promptly of the presentment for payment of any Letter of Credit issued
by the Issuer, together with notice of the date (the "Disbursement Date") such
payment shall be made (each such payment, a "Disbursement"). Subject to the
terms and provisions of such Letter of Credit and this Agreement, the Issuer
shall make such payment to the beneficiary (or its designee) of such Letter of
Credit. Prior to 11:00 a.m. (New York City time) on the first Business Day
following the Disbursement Date, the Borrower will reimburse the Agent, for the
account of the Issuer, for all amounts which the Issuer has disbursed under such
Letter of Credit, together with interest thereon at a rate per annum equal to
the highest rate per annum then in effect pursuant to Section 3.2 for the period
from the Disbursement Date through the date of such reimbursement.
SECTION 2.7.3. Reimbursement. The obligation (a "Reimbursement
Obligation") of the Borrower under Section 2.7.2 to reimburse the Issuer with
respect to each Disbursement (including interest thereon), and, upon the failure
of the Borrower to reimburse the Issuer (or if any reimbursement by the Borrower
must be returned or disgorged by the Issuer for any reason), each Lender's
obligation under Section 2.7.1 to reimburse the Issuer, shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower or such Lender, as the
case may be, may have or have had against the Issuer or any Lender, including
any defense based upon the failure of any Disbursement to conform to the terms
of the applicable Letter of Credit or any non-application or misapplication by
the beneficiary of the proceeds of such Letter of Credit; provided, however,
that after paying in full its Reimbursement Obligation hereunder, nothing herein
shall adversely affect the right of the Borrower or such Lender, as the case may
be, to commence any proceeding against the Issuer for any wrongful Disbursement
made by the Issuer under a Letter of Credit as a result of acts or omissions
constituting gross negligence or wilful misconduct on the part of such Issuer.
SECTION 2.7.4. Deemed Disbursements. Upon the occurrence and during the
continuation of any Default of the type described in Section 8.1.9 or, with
notice from the Agent, upon the occurrence and during the continuation of any
other Event of Default
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn
and available under all Letters of Credit issued and outstanding for
the account of the
-39-
<PAGE> 47
Borrower shall, without demand upon or notice to the Borrower, be
deemed to have been paid or disbursed by the Issuer under such Letters
of Credit (notwithstanding that such amount may not in fact have been
so paid or disbursed); and
(b) upon notification by the Agent to the Borrower of its
obligations under this Section, the Borrower shall be immediately
obligated to reimburse the Issuer for the amount deemed to have been so
paid or disbursed by such Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall be
deposited in cash in an account under the sole control of the Agent and
otherwise on terms satisfactory to the Agent and held as collateral security for
the Obligations in connection with the Letters of Credit issued by the Issuers.
In the case of any such deemed disbursement resulting from the occurrence of a
Default or Event of Default, if such Default or Event of Default has been cured
or waived, the Agent shall return to the Borrower all amounts then on deposit
with the Agent pursuant to this Section which have not been applied to the
partial satisfaction of such Obligations.
SECTION 2.7.5. Nature of Reimbursement Obligations. The Borrower and,
to the extent set forth in Section 2.7.1, each Lender shall assume all risks of
the acts, omissions or misuse of any Letter of Credit by the beneficiary
thereof. The Issuer shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit or any document submitted by any
party in connection with the application for and issuance of a Letter
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or the proceeds thereof in whole or in part, which may prove
to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise; or
-40-
<PAGE> 48
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer or any Lender hereunder. In furtherance
and extension and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by an Issuer in good faith shall be binding
upon the Borrower and each such Lender, and shall not put such Issuer under any
resulting liability to the Borrower or any such Lender, as the case may be.
SECTION 2.8. Notes. Each Lender's Loans under a Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the original applicable Commitment
Amount. The Borrower hereby irrevocably authorizes each Lender to make (or cause
to be made) appropriate notations on the grid attached to such Lender's Notes
(or on any continuation of such grid), which notations, if made, shall evidence,
inter alia, the date of, the outstanding principal of, and the interest rate
applicable to, the Loans evidenced thereby. Such notations shall be rebuttable
presumptive evidence of the matters evidenced thereby; provided, however, that
the failure of any Lender to make any such notations shall not limit or
otherwise affect any Obligations of the Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date
therefor and pursuant to Section 8.2 and Section 8.3. Prior thereto, repayments
and prepayments of Loans shall be made as set forth in this Section 3.1.
SECTION 3.1.1. Voluntary Prepayments. Prior to the Stated Maturity
Date, the Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of all Term
Loans or Revolving Loans; provided, however, that
(a) any such prepayments shall be made pro rata among Loans of
the same type and, if applicable, having the same Interest Period of
all the Lenders;
(b) all such voluntary prepayments shall require at least one
but no more than five Business Days' prior written notice to the Agent;
and
-41-
<PAGE> 49
(c) all such voluntary partial prepayments shall be in an
aggregate minimum amount of (i) $1,000,000 and an integral multiple of
$500,000 for Term Loans, and (ii) $500,000 and an integral multiple of
$100,000 for Revolving Loans.
Each voluntary prepayment of Term Loans made pursuant to this Section, shall be
applied, to the extent of such prepayment, in the inverse order of the scheduled
repayments of the Term Loans set forth in clause (b) of Section 3.1.2 and shall
be applied first to any Base Rate Loans outstanding prior to being applied to
any LIBO Rate Loans outstanding. Each prepayment of any Loans made pursuant to
this Section shall be without premium or penalty but subject to Section 4.4.
SECTION 3.1.2. Mandatory Prepayments. Prior to the Stated Maturity
Date,
(a) the Borrower shall, on each date when the sum of (x) the
aggregate outstanding principal amount of all Revolving Loans and (y)
Letter of Credit Outstandings exceeds the lesser of the Revolving Loan
Commitment Amount (as it may be reduced from time to time) and the then
existing Borrowing Base Amount, make a mandatory prepayment of all
Revolving Loans in an amount equal to such excess;
(b) the Borrower shall, on each date set forth below, make a
scheduled repayment of the aggregate outstanding principal amount of
all Term Loans in the amount set forth opposite each such date:
<TABLE>
<CAPTION>
Amount of Required
Repayment Date Principal Repayment
-------------- -------------------
<S> <C>
January 24, 1996 $ 2,000,000
July 24, 1996 $ 2,000,000
January 24, 1997 $ 2,000,000
July 24, 1997 $ 3,250,000
January 24, 1998 $ 3,250,000
July 24, 1998 $ 3,750,000
January 24, 1999 $ 3,750,000
July 24, 1999 $ 4,000,000
January 24, 2000 $ 4,000,000
July 24, 2000 $ 4,000,000
January 24, 2001 $ 4,000,000
July 24, 2001 $ 4,500,000
January 24, 2002 $ 4,500,000;
</TABLE>
(c) the Parent or the Borrower, as the case may be, shall, (i)
on the date of receipt by it or any of its Subsidiaries of any Gross
Transaction Proceeds, Net Disposition Proceeds, Net Equity Proceeds,
Net Debt Proceeds
-42-
<PAGE> 50
or Excess Insurance Proceeds and (ii) on the date of delivery of the
audited financial statements pursuant to clause (b) of Section 7.1.1
(and, in any event, on the date 90 days after the end of each Fiscal
Year), in the case of Excess Cash Flow, apply (A) 100% of all such
Gross Transaction Proceeds, Net Disposition Proceeds, Net Equity
Proceeds, Excess Insurance Proceeds and Net Debt Proceeds, as the case
may be, and (B) 75% of all such Excess Cash Flow, to make a mandatory
prepayment of the Term Loans to be applied to the installments thereof
in the inverse order of the scheduled repayments of the Term Loans; and
(d) the Borrower shall, immediately upon any acceleration of
the Stated Maturity Date of any Loans pursuant to Section 8.2 or
Section 8.3, repay all (or if only a portion of the Loans are
accelerated thereunder, such portion of) the Loans; and
(e) the Borrower shall prepay Revolving Loans so that the
aggregate outstanding principal amount of all Revolving Loans
outstanding does not exceed $3,000,000 during a five consecutive
calendar day period during each calendar month, commencing 120 days
after the Effective Date (each such period, a " Clean-Down Period").
Each prepayment of any Loans made pursuant to this Section shall be made without
premium or penalty, except as specified herein.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Subject to Sections 2.4 and 2.5, the Borrower may
elect, pursuant to an appropriately delivered Borrowing Request or
Continuation/Conversion Notice, that Loans comprising a Borrowing accrue
interest at a rate per annum:
(a) on that portion maintained from time to time as Base Rate
Loans, equal to the sum of the SG Base Rate from time to time in effect
plus 1.25%; and
(b) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus 2.5%;
provided, however, that if the Merger and the Beverage License Certification
Date shall not have occurred within 90 days of the Effective Date, such interest
rates appearing directly above shall increase by the Additional Margin appearing
below until the effectiveness of the Merger and the occurrence of the Beverage
License Certification Date as follows:
-43-
<PAGE> 51
<TABLE>
<CAPTION>
Days after Additional
Effective Date Margin
-------------- ----------
<S> <C>
90 to 119 1%
120 to 149 2%
150 or more 3%
</TABLE>
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
LIBO Rate
LIBO Rate = -------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Agent on the basis of the LIBOR Reserve Percentage in
effect on, and the applicable rates furnished to and received by the Agent from
SG, two Business Days before the first day of such Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to SG's LIBOR Office in the London,
England interbank market at or about 11:00 a.m. (London, England time) two
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period, and in an amount approximately equal to the
amount of SG's LIBO Rate Loan and for a period approximately equal to such
Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the reserve requirements (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of or including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
All LIBO Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such LIBO
Rate Loan.
-44-
<PAGE> 52
SECTION 3.2.2. Post-Default Rates. From and after the occurrence of any
Event of Default, the Borrower shall pay, but only to the extent permitted by
law, interest (after as well as before judgment) on such amounts at a rate per
annum equal to the rate per annum otherwise in effect (including any Additional
Margin in effect) plus a further margin of 2% per annum.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Loan on the principal amount so
paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
90 days, on the 90th day of such Interest Period); and
(e) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date therefor, upon acceleration or
otherwise) shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non- refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the Agent,
for the pro rata account of each Lender of Revolving Loans, for the period
(including any portion thereof when the Revolving Loan Commitment is suspended
by reason of the Borrower's inability to satisfy any condition of Article V)
commencing on the Effective Date and continuing through the Revolving Loan
Commitment Termination Date, a commitment fee at the rate of 1/2 of 1% per annum
on such Lender's Percentage of the sum of the average daily undrawn and unused
portion of the Revolving Loan Commitment Amount. The Revolving Loan Commitment
shall be considered to be used by the amount of the Letter of Credit
Outstandings. Such commitment fees shall be payable by the Borrower in arrears
on each Quarterly Payment Date, commencing with the first Quarterly Payment Date
following the
-45-
<PAGE> 53
Effective Date, and on the Revolving Loan Commitment Termination Date.
SECTION 3.3.2. Letter of Credit Fee. The Borrower agrees to pay to the
Agent, for the pro rata account of the Issuer and each other Lender of Revolving
Loans, a Letter of Credit fee in an amount equal to 2.5% multiplied by the
Stated Amount of all Letters of Credit outstanding, such fee to be paid
quarterly in arrears on each Quarterly Payment Date and on the Revolving Loan
Commitment Termination Date. The Borrower further agrees to pay to the Issuer
(a) on the date of (x) the issuance of each Letter of Credit, (y) each increase
in the Stated Amount thereof and (z) each extension (automatic or otherwise) of
the Stated Expiry Date thereof, an issuance fee in an amount equal to the
greater of (i) $500 and (ii) 1/4 of 1% of the Stated Amount thereof (or increase
in such Stated Amount) and (b) all costs and expenses incurred by the Issuer in
connection with such Letter of Credit.
SECTION 3.3.3. Agent's Fees, etc. The Borrower agrees to pay to the
Agent for its own account, fees in the amounts, on the dates and in the manner
set forth in the Fee Letter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Agent,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as, or to convert any Loan into, a
LIBO Rate Loan, the obligations of such Lender to make, continue, maintain or
convert any such LIBO Rate Loan shall, upon such determination, forthwith be
suspended until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all outstanding LIBO Rate Loans of
such Lender shall automatically convert into Base Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion.
SECTION 4.2. Deposits Unavailable. If the Agent shall have determined
that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to SG in its relevant market; or
(b) by reason of circumstances affecting SG's relevant market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans,
-46-
<PAGE> 54
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
SECTION 4.3. Increased Costs, etc. (a) The Borrower agrees to reimburse
each Lender for any increase in the cost to such Lender of, or any reduction in
the amount of any sum receivable by such Lender in respect of, making,
continuing or maintaining (or of its obligation to make, continue or maintain)
any Loans as, or of converting (or of its obligation to convert) any Loans into,
LIBO Rate Loans (including but not limited to any imposition or effectiveness of
reserve requirements not already included in the LIBO Rate Reserve Percentage
but excluding increases in Taxes and taxes expressly excluded from Taxes
pursuant to the first sentence of Section 4.6, as to which the provisions of
Section 4.6 shall control) that arise in connection with any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in, after the Effective Date, of, any law or regulation, directive,
guideline, decision or request (whether or not having the force of law) of any
court, central bank, regulator or other governmental authority. Such Lender
shall promptly notify the Agent and the Borrower in writing of the occurrence of
any such event, such notice to state, in reasonable detail, the reasons therefor
and the additional amount required fully to compensate such Lender for such
increased cost or reduced amount. Such additional amounts shall be paid by the
Borrower directly to such Lender promptly (and, in any event, within 15 Business
Days of receipt of such notice), and such notice shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
(b) If at any time the introduction or effectiveness of or any change
in any applicable law, rule or regulation (including without limitation those
announced or published prior to the date of this Agreement), or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any request or directive issued by any such authority (whether or not
having the force of law) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against letters of
credit issued, or participated in, by any Issuer or Lender, or (ii) impose on
any Issuer or Lender any other conditions affecting this Agreement or any Letter
of Credit; and the result of any of the foregoing is to increase the cost to any
Issuer or Lender of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuer or
Lender hereunder with respect to Letters of Credit, then, within ten days of the
receipt of the notice referred to below (which
-47-
<PAGE> 55
notice shall be given by the respective Issuer or Lender promptly after it
determines such increased cost or reduction is applicable to Letters of Credit
or its participation therein) to the Borrower by the respective Issuer or Lender
(a copy of which notice shall be sent by such Issuer or Lender to the Agent),
the Borrower shall pay to such Issuer or Lender such additional amount or
amounts as will compensate such Issuer or Lender for such increased cost or
reduction. A notice submitted to the Borrower by such Issuer or Lender, setting
forth the basis for the calculation of such additional amount or amounts
necessary to compensate such Issuer or Lender as aforesaid shall be conclusive
and binding on the Borrower absent manifest error.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss (other than the loss of any payments in
respect of the 1.25% and 2.5% margins referred to in clauses (a) and (b),
respectively, of Section 3.2.1) or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance
with the Borrowing Request therefor as a result of the conditions
precedent to such Loans not being satisfied or as a result of the
Borrower attempting to revoke such Borrowing Request; or
(c) any Loans not being continued as, or converted into LIBO
Rate Loans in accordance with the Continuation/ Conversion Notice
therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall promptly (and, in any event, within 15 Business Days
of receipt of such notice) pay directly to such Lender such amount as will (in
the determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other
-48-
<PAGE> 56
governmental authority affects or would affect the amount of capital required or
expected to be maintained by any Lender or Issuer or any Person controlling such
Lender or Issuer, and such Lender or Issuer determines (in its sole and absolute
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of its Commitments or the Loans made by such Lender or (to the
extent, if any, not covered by Section 4.3(b) hereof) Letters of Credit issued
or participated in by such Lender or Issuer is reduced to a level below that
which such Lender, Issuer or such controlling Person (to the extent, if any, not
covered by Section 4.3(b) hereof) could have achieved but for the occurrence of
any such circumstance, then, in any such case upon notice from time to time by
such Lender or Issuer to the Borrower, the Borrower shall immediately pay
directly to such Lender or Issuer additional amounts sufficient to compensate
such Lender or Issuer or such controlling Person for such reduction in rate of
return. A statement of such Lender or Issuer as to any such additional amount or
amounts (including calculations thereof in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, such Lender or Issuer may use any method of averaging
and attribution that it (in its sole and absolute discretion) shall deem
applicable.
SECTION 4.6. Taxes. All payments by the Borrower hereunder and under
all other Loan Documents shall be made free and clear of and without deduction
for any present or future income, excise, stamp or franchise taxes and other
taxes, fees, duties or withholdings or other charges of any nature whatsoever
imposed by any taxing authority, but excluding franchise taxes, taxes imposed on
or measured by any Lender's net income or receipts or similar taxes (such
non-excluded items, solely for purposes of this Section, being called
"Charges"). In the event that any withholding or deduction from any payment to
be made by the Borrower hereunder is required in respect of any Charges pursuant
to any applicable law, rule or regulation (whether such law, rule or regulation
is in effect at the Effective Date or is enacted or implemented at any time
thereafter), then the Borrower will
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(iii) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
-49-
<PAGE> 57
Moreover, if any Charges are directly asserted against the Agent, any Lender or
any Issuer with respect to any payment received by the Agent, such Lender or
such Issuer hereunder, the Agent or such Lender may pay such Charges and the
Borrower will promptly pay such additional amounts (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
such person after the payment of such Charges (including any Charges on such
additional amount) shall equal the amount such person would have received had
not such Charges been asserted.
If the Borrower fails to pay any Charges when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders and the Issuer, the required receipts or other required
documentary evidence, the Borrower shall indemnify the Lenders and the Issuer
for any incremental Charges, interest or penalties that may become payable by
any Lender as a result of any such failure. For purposes of this Section, a
distribution hereunder by the Agent or any Lender or the Issuer to or for the
account of any Lender or the Issuer shall be deemed a payment by the Borrower.
Each Lender which is not a United States Person for Federal income tax
purposes agrees, to the extent that (i) all income realized by such Lender in
respect of any loan or this Agreement is, or is expected to be, effectively
connected with the conduct by such Lender of a trade or business in the United
States and is includable in gross income of such Lender for the relevant tax
year or (ii) such Lender is entitled to a total or partial exemption from
withholding that is required to be evidenced by United States Internal Revenue
Service Form 1001 or 4224, to deliver to the Agent and the Borrower, from time
to time as requested to the Agent and the Borrower, such Form 1001 or 4224
("Exemption Certificate") or any applicable successor form thereto, completed in
a manner reasonably satisfactory to the Agent and the Borrower.
If a Lender which is not a United States person for federal income tax
purposes has not delivered an Exemption Certificate to the Borrower on or before
its first participation as Lender hereunder or within a reasonable period of
time thereafter, then the Borrower shall not have any obligation to indemnify
such Lender for charges (including related penalties, interest and expenses)
imposed by the United States or any political subdivision thereof pursuant to
this section.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to or in respect of this
Agreement, the Notes, each Letter of Credit or any other Loan Document shall be
made by the Borrower to the Agent for the pro rata account of the Lenders
entitled to receive such payment. All such payments required to be made to the
Agent shall be made, without setoff, deduction or counterclaim, not
-50-
<PAGE> 58
later than 11:00 a.m. (New York City time), on the date due, in same day or
immediately available funds, to such account as the Agent shall specify from
time to time by notice to the Borrower. Funds received after that time shall be
deemed to have been received by the Agent on the next succeeding Business Day.
The Agent shall promptly remit in same day funds to each Lender its share, if
any, of such payments received by the Agent for the account of such Lender. All
interest and fees (including any Post- Default Rate interest payments made
pursuant to Section 3.2.2) shall be computed on the basis of the actual number
of days (including the first day but excluding the last day) occurring during
the period for which such interest or fee is payable over a year comprised of
360 days (or, in the case of interest on Base Rate Loans, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period" with
respect to LIBO Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment. The Agent is authorized to charge any account
maintained by the Borrower with it for any Obligations owing to it or any of the
Lenders.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms of
Sections 4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share of payments
pursuant to Section 4.7, then or therewith obtained by all Lenders, such Lender
shall purchase from the other Lenders such participations in Credit Extensions
made by them (without recourse, representation or warranty) as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which
has sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery together with
an amount equal to such selling Lender's ratable share (according to the
proportion of (a) the amount of such selling Lender's required repayment to the
purchasing Lender to (b) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable
-51-
<PAGE> 59
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any
Event of Default and with the consent of the Required Lenders, to the extent
permitted under applicable law, appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) each of the Borrower and the Parent hereby grants to each Lender a
continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of the Borrower and the Parent then or thereafter maintained
with such Lender; provided, however, that any such appropriation and application
shall be subject to the provisions of Section 4.8 (each Lender agreeing promptly
to notify the Borrower or the Parent, as the case may be, and the Agent after
any such setoff and application made by such Lender; but the failure to give
such notice shall not affect the validity of such setoff and application). The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff under applicable law or otherwise)
which such Lender may have.
SECTION 4.10. Use of Proceeds. The Borrower shall apply all the
proceeds of the initial Credit Extension to (a) pay its purchase price
obligations in connection with the Acquisition (the aggregate purchase price not
to exceed $29,960,000 (excluding post-closing adjustments provided for in the
Purchase Agreement)), (b) pay the transaction costs and expenses incurred by the
Borrower in connection with the Acquisition and this Agreement and provide
working capital to the Borrower, and (c) repay the Indebtedness of the Borrower
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule in an amount not to exceed $13,000,000; provided, however, that the
aggregate amount of Credit Extension proceeds used for all of such purposes
shall not exceed $47,000,000. The proceeds from all subsequent Credit Extensions
shall be applied (a) for working capital and general corporate purposes of the
Borrower, (b) to make revolving loans from time to time by the Borrower to
Petroleum, and (c) for issuing Letters of Credit for working capital and general
corporate purposes of the Borrower and its Subsidiaries and Petroleum.
-52-
<PAGE> 60
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Credit Extension. The obligations of the Lenders
and, if applicable, the Issuer to fund the initial Credit Extension shall be
subject to the prior or concurrent fulfillment of each of the conditions
precedent set forth in this Section 5.1 to the satisfaction of the Agent.
SECTION 5.1.1. Resolutions, etc. The Agent shall have received from the
Parent, the Borrower, Petroleum and each other Obligor party to a Loan Document,
a certificate, dated the date of the initial Credit Extension, of its Secretary
or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
(b) each Organic Document of the Parent, the Borrower,
Petroleum and each such other Obligor; and
(c) the incumbency and signatures of the officers of the
Parent, the Borrower, Petroleum and each such other Obligor authorized
to act with respect to this Agreement, the Notes and each other Loan
Document as is to be executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary or Assistant Secretary of the
Parent, the Borrower, Petroleum and each other Obligor canceling or amending
such prior certificate.
SECTION 5.1.2. Agreement. The Agent shall have received, with
counterparts for each Lender identified on the signature pages hereto, this
Agreement duly executed by each Lender, the Agent and an Authorized Officer of
the Borrower.
SECTION 5.1.3. Delivery of Notes. The Agent shall have received, for
the account of each Lender entitled thereto, its Term Note and Revolving Note,
dated the date of the initial Credit Extension, and duly executed and delivered
by an Authorized Officer of the Borrower.
SECTION 5.1.4. Required Consents and Approvals. All required consents
and approvals shall have been obtained and be in full force and effect with
respect to the transactions contemplated hereby and the Acquisition from (a) all
relevant governmental authorities and regulatory bodies and (b) any other Person
whose consent or approval the Agent reasonably deems
-53-
<PAGE> 61
necessary or appropriate to effect the transactions contemplated hereby and by
the Acquisition.
SECTION 5.1.5. Consummation of the Acquisition. The Agent shall
have received evidence satisfactory to it that the Purchase Agreement has not
been amended, modified or supplemented without the Required Lenders' prior
written consent; that all conditions precedent to the consummation of the
transactions contemplated by the Purchase Agreement have been fully satisfied
or, with the prior written consent of the Required Lenders waived; and that the
Acquisition has been consummated in accordance with all the terms of the
Purchase Agreement. In addition, the Borrower shall have delivered or caused to
be delivered to the Agent counterparts for each Lender of the following:
(a) Resolutions. Resolutions of the Boards of Directors
of the Parent, the Borrower and Seller, each certified by the Secretary
or an Assistant Secretary of the Parent, the Borrower and the Seller,
as the case may be, duly adopted and in full force and effect on the
date of the initial Credit Extension, authorizing the execution,
delivery and performance by the Parent, the Borrower and the Seller of
the Purchase Agreement and all other agreements, documents and
instruments being delivered in connection therewith; and
(b) Certificates. A certificate from an Authorized
Officer of the Borrower to the effect that attached thereto are true
and correct copies of the Purchase Agreement (including all schedules
and annexes thereto) and each of the agreements, documents,
instruments, opinions, filings, consents and approvals executed and
delivered, and furnished or filed, pursuant to the Purchase Agreement.
SECTION 5.1.6. Financial Information, etc. The Agent shall have
received prior to the Effective Date, with counterparts for each Lender,
(a) audited financial statements for the Parent and its
Subsidiaries for the fiscal year ending December 26, 1993 and for their
prior two fiscal years, in each case prepared in accordance with GAAP
consistently applied and free of any Impermissible Qualification;
(b) unaudited financial statements for the Parent and its
Subsidiaries for the eleven-month period ending in November of 1994,
and unaudited financial statements of Time Saver and its Subsidiaries
for the fiscal quarter ending on or about September 30, 1994, certified
by the chief financial Authorized Officer of each such Person (except
with respect to the financial statements of Time Saver, which shall be
certified by the chief financial Authorized
-54-
<PAGE> 62
Officer of the Borrower to the best of his knowledge), in each case
prepared in accordance with GAAP consistently applied (subject to
normal year-end audit adjustments); and
(c) a pro forma consolidated balance sheet for
the Parent and its Subsidiaries, satisfactory in form and substance to
the Agent and the Lenders, certified by the chief financial Authorized
Officer of the Borrower and the Parent, as the case may be, giving
effect to the consummation of the Acquisition and all the transactions
contemplated by this Agreement and the other Loan Documents.
SECTION 5.1.7. Guaranties. The Agent shall have received the
Petroleum Guaranty and the Time Saver Guaranty, dated as of the date of the
initial Credit Extension, duly executed by Petroleum and Time Saver,
respectively.
SECTION 5.1.8. Pledged Property. The Agent shall have received:
(a) the Parent Pledge Agreement, dated as of the date of the
initial Credit Extension, duly executed by the Parent;
(b) the Borrower Pledge Agreement, dated as of the date of the
initial Credit Extension, duly executed by the Borrower;
(c) the original certificates evidencing all of the issued and
outstanding shares of capital stock required to be pledged pursuant to
the terms of the Pledge Agreements, which certificates shall be
accompanied by undated stock powers duly executed in blank by each
relevant Pledgor; and
(d) the original promissory notes evidencing intercompany
Indebtedness required to be pledged pursuant to the terms of the
Borrower Pledge Agreement, duly endorsed in blank by such Pledgor in
favor of the Agent.
SECTION 5.1.9. UCC Search Results. The Agent shall have
received certified copies of Uniform Commercial Code Requests for Information or
Copies (Form UCC-11), or a similar search report certified by a party acceptable
to the Agent, dated a date reasonably near (but prior to) the date of the
initial Credit Extension, listing all effective financing statements and, to the
extent requested by the Agent, tax liens and judgment liens which name the
Borrower, the Parent, Petroleum, Time Saver or, to the extent requested by the
Agent, the Seller as the debtor and which are filed in the jurisdictions in
which filings are to be made pursuant to this Agreement and the other Loan
Documents, and in such other jurisdictions as the Agent may reasonably request,
together with copies of such financing statements (none of which
-55-
<PAGE> 63
(other than financing statements (i) filed pursuant to the terms hereof in favor
of the Agent, if such Form UCC-11 or search report, as the case may be, is
current enough to list such financing statements, (ii) being terminated pursuant
to the termination statements referred to in Section 5.1.15 or (iii) in
respect of protective filings or Liens permitted under Section 7.2.3)
shall cover any of the Collateral).
SECTION 5.1.10. Security Agreements, Filings, etc. The Agent
shall have received executed counterparts of the Borrower Security Agreement,
the Parent Security Agreement, the Time Saver Security Agreement and the
Petroleum Security Agreement, each dated as of the date of the initial Credit
Extension duly executed by the Borrower, the Parent, Time Saver and Petroleum,
as appropriate, together with executed copies of U.C.C. financing statements
naming the Borrower, the Parent and Petroleum, as appropriate, as the debtor and
the Agent as the secured party, filed under the U.C.C. of all jurisdictions as
may be necessary or, in the opinion of the Agent, desirable to perfect the first
priority security interest of the Agent pursuant to the Security Agreements,
together with evidence satisfactory to the Agent of the filing (or delivery for
filing) of appropriate trademark.
SECTION 5.1.11. Solvency Certificates. The Agent shall have
received, with copies for each Lender, solvency certificates in substantially
the form of Exhibit M attached hereto, duly executed by the chief
executive officer and chief financial Authorized Officer of the Borrower,
Petroleum and the Parent, dated the date of the initial Credit Extension and
expressly permitting the Agent and the Lenders to rely thereon.
SECTION 5.1.12. Closing Date Certificates. The Agent shall have
received, with copies for each Lender, a closing date certificate in
substantially the form of Exhibit L attached hereto, duly executed by
the chief financial or executive Authorized Officer of the Borrower and the
Parent, and dated the date of the initial Credit Extension, in which certificate
the Borrower and the Parent shall agree and acknowledge that the statements made
therein shall be true and correct representations and warranties of the Borrower
and the Parent as of such date. All documents and agreements appended to such
Closing Date Certificate shall be in form and substance satisfactory to the
Agent and the Lenders.
SECTION 5.1.13. Reliance Letters. The Agent shall have received
from legal counsel to the Seller the opinions rendered in connection with the
Acquisition, which opinions shall provide that the Agent and the Lenders may
rely thereon.
SECTION 5.1.14. Evidence of Insurance. The Agent shall have received
evidence of the insurance coverage required to be maintained pursuant to Section
7.1.4, which insurance shall have
-56-
<PAGE> 64
been reviewed by one or more of the Agent's risk managers and be satisfactory to
the same, together with a satisfactory insurance broker's letter or letters as
to the compliance of the same with the requirements of this Agreement.
SECTION 5.1.15. Payment of Outstanding Indebtedness, etc. The
Agent shall have received satisfactory evidence that all the Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, have been paid in full and
all obligations with respect thereto have been terminated and that all Liens
securing payment of any such Indebtedness have been released (including a
termination and release letter executed by Bankers Trust Company). In addition,
the Agent shall have received all Uniform Commercial Code Form UCC-3 termination
statements and mortgage releases or other instruments as may be suitable or
appropriate in connection with the foregoing.
SECTION 5.1.16. Stockholders Agreement. The Agent shall have
received a copy of the Stockholders Agreement, together with all amendments,
supplements and modifications, if any, thereto, duly executed by each
Stockholder and the Parent.
SECTION 5.1.17. Stockholders Letter of Understanding. The Stockholders
shall have entered into a letter agreement (the "Stockholders Letter of
Understanding") in substantially the form of Exhibit N attached hereto.
SECTION 5.1.18. Opinions of Counsel. The Agent shall have received
opinions, dated the date of the initial Credit Extension and addressed to the
Agent and all the Lenders, from
(a) Bracewell & Patterson, L.L.P., counsel to the Obligors,
substantially in the form of Exhibit P hereto; and
(b) Louisiana local counsel for personal property matters in
form and substance satisfactory to the Agent.
SECTION 5.1.19. Delivery of Petroleum Note. The Agent shall have
received the original Petroleum Note in substantially the form of Exhibit K
hereto, duly executed and delivered by the Parent and pledged to the Agent under
the terms of the Borrower Pledge Agreement.
SECTION 5.1.20. Agent's Closing Fees, Expenses, etc. The Agent shall
have received for its own account, and for the account of each Lender, as the
case may be, all fees, costs and expenses due and payable pursuant to Sections
3.3 and, if then invoiced, 10.3.
-57-
<PAGE> 65
SECTION 5.1.21. Time Saver Operating Cash. The Agent shall have
received satisfactory evidence (i) that immediately prior to the Effective Date
and the Acquisition, Time Saver shall have had at least $2,000,000 of operating
cash in its accounts or (ii) in the event Time Saver shall not have had
$2,000,000 in its accounts immediately prior to the Effective Date and the
Acquisition, that the difference between such $2,000,000 and the amount of
operating cash actually in such accounts immediately prior to the Effective Date
and Acquisition shall be reflected as a credit to the Borrower pursuant to a
post-closing adjustment under the Purchase Agreement.
SECTION 5.1.22. Borrowing Base Certificate. The Agent shall
have received, with counterparts for each Lender, an initial Borrowing Base
Certificate from the Borrower, dated the date of the initial Credit Extension
and calculated as of a recent date satisfactory to the Agent, duly executed and
delivered by an Authorized Officer of the Borrower.
SECTION 5.1.23. Tax Allocation Agreement. The Agent shall have received
satisfactory evidence that the Tax Allocation Agreement dated as of July 31,
1992, between the Parent and TOC Retail, Inc. has been terminated.
SECTION 5.1.24. Closing Date. The initial Credit Extension shall have
occurred in accordance with the terms of this Agreement on or prior to January
31, 1995.
SECTION 5.1.25. Satisfactory Legal Form, etc. All documents executed or
submitted pursuant hereto on or prior to the Effective Date by or on behalf of
the Borrower or any of its Subsidiaries or any other Obligors shall be
satisfactory in form and substance to the Agent, the Lenders and their counsel;
the Agent, the Lenders and their counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent, the Lenders or their
counsel may reasonably request.
SECTION 5.2. All Credit Extensions. The obligation of each Lender and
Issuer to make any Credit Extension (including the initial Credit Extension)
shall be subject to the fulfillment of each of the conditions precedent set
forth in this Section 5.2 to the satisfaction of the Agent:
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension, the following statements shall
be true and correct:
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7) and those set
forth in the other Loan Documents shall be true and correct in all
material respects with the same effect as if then made (unless stated
to relate solely to an
-58-
<PAGE> 66
earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7,
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or,
to the knowledge (after due inquiry) of the Parent or the
Borrower, threatened against the Parent or any of its
Subsidiaries (including the Borrower or any of its
Subsidiaries) which has a reasonable likelihood of materially
and adversely affecting the Parent's or the Borrower's
consolidated business, operations, assets, revenues, properties
or prospects, which purports to affect the legality, validity
or enforceability of this Agreement, the Notes or any other
Loan Document or, in the case of the initial Credit Extension,
seeks to restrain, enjoin or otherwise prevent the consummation
of, or to recover damages or obtain relief as a result of, the
transactions contemplated by or in connection with the
Acquisition, this Agreement or the other Loan Documents; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section
6.7 which has a reasonable likelihood of materially and
adversely affecting the consolidated businesses, operations,
assets, revenues, properties or prospects of the Parent and its
Subsidiaries taken as a whole or the Borrower and its
Subsidiaries taken as a whole;
(c) the sum of the (i) aggregate outstanding principal amount
of all Revolving Loans and (ii) aggregate amount of Letter of Credit
Outstandings does not exceed the lesser of the Revolving Loan
Commitment Amount (as such amount may be reduced from time to time) and
the Borrowing Base Amount in effect at such time; and
(d) no Default shall have then occurred and be continuing.
SECTION 5.2.2. Credit Extension Request, etc. The Agent shall
have received a Borrowing Request if Loans are being requested or an Issuance
Request if a Letter of Credit is being requested or extended. Each of the
delivery of a Borrowing Request or Issuance Request and the acceptance by the
Borrower of the proceeds of such Credit Extension shall constitute a
-59-
<PAGE> 67
representation and warranty by the Borrower that on the date of such Credit
Extension (both immediately before and after giving effect to such Credit
Extension and the application of the proceeds thereof) the statements made in
Section 5.2.1 are true and correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, each Issuer and the Agent to enter into
this Agreement and to make Credit Extensions hereunder, the Borrower and the
Parent jointly and severally represent and warrant to the Agent, each Issuer and
each Lender as set forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower and each of its
Subsidiaries and each other Obligor (a) is a corporation validly organized and
existing and in good standing under the laws of the jurisdiction of its
incorporation and (b) is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of its business
requires such qualification except where the failure to be so qualified or in
good standing could not reasonably be expected to have a material adverse effect
on the financial condition, operations, assets, business, properties, revenues
or prospects of the Borrower and its Subsidiaries taken as a whole or the Parent
and its Subsidiaries taken as a whole, and has full power and authority and
holds all requisite governmental licenses, permits and other approvals to enter
into and perform its Obligations under this Agreement, the Notes and each other
Loan Document to which it is a party and to own and hold under lease its
property and to conduct its business substantially as currently conducted by it
except where the failure to hold a governmental license, permit, or other
approval to own or hold under lease its property and to conduct its business
substantially as currently conducted could not reasonably be expected to have a
material adverse effect on the financial condition, operations, assets,
business, properties, revenues or prospects of the Borrower and its Subsidiaries
taken as a whole or the Parent and its Subsidiaries taken as a whole.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower and the Parent of this Agreement, the
Notes and each other Loan Document executed or to be executed by it, and the
execution, delivery and performance by each other Obligor of each Loan Document
executed or to be executed by it, are within the Borrower's, the Parent's and
each such Obligor's corporate powers, have been duly authorized by all necessary
corporate action, and do not
-60-
<PAGE> 68
(a) contravene or result in a default under the Borrower's, the
Parent's or any such Obligor's Organic Documents;
(b) contravene or result in a default under any contractual
restriction, law or governmental regulation or court decree or order
binding on the Borrower, the Parent or any such Obligor; or
(c) result in, or require the creation or imposition of, any
Lien on any of any Obligor's properties other than the Liens created
under the Loan Documents in favor of the Agent.
SECTION 6.3. Government Approval, Regulation, Compliance with Law, etc.
No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other Person (other than
the filing of UCC-1 financing statements in the appropriate jurisdictions) is
required for (a) the due execution, delivery or performance by the Borrower, the
Parent or any other Obligor of this Agreement, the Notes or any other Loan
Document to which it is a party, (b) the grant by the Borrower and each
applicable Obligor of the security interests, pledges and Liens granted by the
Loan Documents, or (c) the perfection of or the exercise by the Agent of its
rights and remedies under this Agreement or any other Loan Document.
SECTION 6.4. Validity, etc. This Agreement and each of the Notes has
been duly executed and delivered, and each other Loan Document executed by the
Borrower, and the Parent, as the case may be, will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower, and the Parent, as the case may be, enforceable in accordance with
their respective terms; and each Loan Document executed pursuant hereto by each
other Obligor will, on the due execution and delivery thereof by such Obligor,
be the legal, valid and binding obligation of such Obligor enforceable in
accordance with its terms, subject in each case to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally, and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
Each of the Loan Documents which purports to create a security interest creates
a valid first priority security interest in the Collateral subject thereto,
subject only to Liens permitted by Section 7.2.3, securing the payment of the
Obligations.
SECTION 6.5. Financial Information. The financial statements delivered
pursuant to Sections 5.1.6(a) and (b) (and, in the case of the financial
statements of Time Saver, to the Borrower's best knowledge) have been prepared
in accordance with
-61-
<PAGE> 69
GAAP consistently applied (including application of Financial Accounting
Statement No. 106) and such financial statements and the pro forma balance
sheets delivered pursuant to clause (c) of Section 5.1.6 present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended. The Parent and
its Subsidiaries have no material liabilities, including as to contingencies and
unusual or forward commitments, that are not disclosed in the foregoing
financial statements or the footnotes thereto or set forth in Item 6.5 ("Certain
Material Liabilities") of the Disclosure Schedule. The pro forma balance sheet
delivered pursuant to clause (c) of Section 5.1.6 have been prepared in
accordance with the requirements of GAAP for the preparation of pro forma
financial statements.
SECTION 6.6. No Material Adverse Change. (a) Since the date of the
financial statements described in clause (a) of Section 5.1.6, there has been no
material adverse change in the financial condition, operations, assets,
business, properties, revenues or prospects of the corporations or businesses
covered thereby.
(b) From and after the date of the initial Credit Extension, there has
been no material adverse change in the financial condition, operations, assets,
business, properties, revenues or prospects of either the Parent and its
Subsidiaries or the Borrower and its Subsidiaries, in each case, taken as a
whole.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding,
or labor controversy affecting the Parent or any of its Subsidiaries (including
the Borrower or any of its Subsidiaries) or any other Obligor, or any of their
respective properties, businesses, assets or revenues, which could reasonably be
expected to materially adversely affect the financial condition, operations,
assets, business, properties, revenues or prospects of the Borrower and its
Subsidiaries taken as a whole or the Parent and its Subsidiaries taken as a
whole, except as disclosed in Item 6.7 ("Litigation") of the Disclosure
Schedule, or which purports to affect the legality, validity or enforceability
of this Agreement, the Notes or any other Loan Document.
SECTION 6.8. Subsidiaries. The Parent has no direct Subsidiaries except
the Borrower and Petroleum. The Borrower has no Subsidiaries except Time Saver
and Delight and those Subsidiaries, if any, which it may acquire or create after
the date of the initial Credit Extension in accordance with the provisions
hereof. Petroleum has no Subsidiaries except Petroleum of California.
-62-
<PAGE> 70
SECTION 6.9. Ownership of Properties. Except as set forth in Item 6.9
("Ownership of Properties") of the Disclosure Schedule, the Borrower and the
Parent, and each of their respective Subsidiaries, own good and marketable title
to all of their properties and assets, have valid fee or leasehold interests in
all property, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) which could interfere in the conduct of their businesses as currently
conducted.
SECTION 6.10. Taxes. The Parent and each of its Subsidiaries
(including the Borrower and its Subsidiaries) have filed (a) all returns and
reports required by law to have been filed by or with respect to it in
connection with federal, state and local income taxes (including any predecessor
or prior consolidated group of which it may have been a member) and (b) all
other returns and reports with respect to Taxes required by law to have been
filed to the extent (as to this clause (b)) the failure to do so could
reasonably be expected to have a material adverse effect on the financial
condition, operations, assets, business, properties, revenues or prospects of
the Parent and its Subsidiaries taken as a whole or the Borrower and its
Subsidiaries taken as a whole. All federal, state and local income taxes (as
described above) that are owing have been paid in full and all other Taxes and
governmental charges that are owing have been paid in full to the extent the
failure to do so could reasonably be expected to have a material adverse effect
on the financial condition, operations, assets, business, properties or
prospects the Parent and its Subsidiaries taken as a whole or the Borrower and
its Subsidiaries taken as a whole, except in each such case any such taxes or
charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Credit Extension hereunder, no
steps have been taken to terminate any Pension Plan, and no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Except as disclosed in Item 6.11 ("Employee Benefit
Plans") of the Disclosure Schedule, neither the Borrower nor any member of the
Controlled Group or any other Obligor has any contingent liability with respect
to any post-retirement benefit
-63-
<PAGE> 71
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in Item
6.12 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries have been, and continue to be, owned or
leased by the Borrower, the Parent and such Subsidiaries in compliance
in all material respects with all Environmental Laws;
(b) there have been no past, and there are no pending or, to
the best knowledge of the Parent and the Borrower, threatened
(i) claims, complaints, notices or requests for
information received by the Borrower, the Parent or any of
their respective Subsidiaries with respect to any alleged
violation of any Environmental Law, as to which the Agent has
not received written notice, or
(ii) complaints, notices or inquiries to the Borrower,
the Parent or any of their respective Subsidiaries regarding
potential liability under any Environmental Law or, with regard
to contamination, any common or civil law, as to which the
Agent has not received written notice;
(c) there is no claim, complaint, notice, request for
information or inquiry that has been received by or made to the
Borrower, the Parent or any of their respective Subsidiaries with
respect to any alleged violation of any Environmental Law or regarding
potential liability under any Environmental Law or, with regard to
contamination, any common or civil law, which, singly or in aggregate,
could reasonably be expected to have a material adverse effect on the
financial condition, operations, assets, business, properties, revenues
or prospects of the Borrower and its Subsidiaries taken as a whole or
the Parent and its Subsidiaries taken as a whole;
(d) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the
Borrower, the Parent or any of their respective Subsidiaries that,
singly or in the aggregate, could reasonably be expected to have a
material adverse effect on the financial condition, operations, assets,
business, properties, revenues or prospects of the Borrower
-64-
<PAGE> 72
and its Subsidiaries taken as a whole or the Parent and its
Subsidiaries taken as a whole;
(e) the Borrower, the Parent and their respective Subsidiaries
have been issued and are in compliance in all material respects with
all permits, certificates, approvals, licenses and other authorizations
relating to environmental matters and necessary or desirable for their
businesses;
(f) no property now or previously owned or leased by the
Borrower, the Parent or any of their respective Subsidiaries is listed
or proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
(g) there are no underground storage tanks (including petroleum
storage tanks) that are abandoned or that have been inactive for
greater than one year on or under any property now or previously owned
or leased by the Borrower, the Parent or any of their respective
Subsidiaries;
(h) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries that do not have leak detection systems
as required by and in compliance in all material respects with all
Environmental Law;
(i) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries that have Released or suffered Release(s)
of Hazardous Materials that, singly or in the aggregate, could
reasonably be expected to have a material adverse effect on the
financial condition, operations, assets, business, properties, revenues
or prospects of the Borrower and its Subsidiaries taken as a whole or
the Parent and its Subsidiaries taken as a whole;
(j) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries that have Released Hazardous Materials
and have not or would not qualify and be eligible for the funding
(subject to applicable deductibles) of the cleanup of Release(s) and
third party liability by a State fund;
-65-
<PAGE> 73
(k) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries that have Release(s) the cleanup of which
will or is reasonably expected to exceed the maximum funding of cleanup
by a State fund;
(l) there are no septic systems, cess pools, underground
systems or underground injection wells on or under any property now or
previously owned or leased by the Borrower, the Parent or any of their
respective Subsidiaries that have Released or suffered Releases of
Hazardous Materials which, singly or in the aggregate, could reasonably
be expected to have a material adverse effect on the financial
condition, operations, assets, business, properties, revenues or
prospects of the Borrower and its Subsidiaries taken as a whole or the
Parent and its Subsidiaries taken as a whole;
(m) there are no fuel pumps, underground storage tanks, or
above ground storage tanks, including petroleum storage tanks, on or
under any property now owned or leased by the Borrower, the Parent or
any of their respective Subsidiaries that required or are reasonably
expected to be required to be modified, upgraded or replaced to include
emission control devices in a manner (including as to costs and
expenses) that, singly or in the aggregate, could reasonably be
expected to have a material adverse effect on the financial condition,
operations, assets, business, properties, revenues or prospects of the
Borrower and its Subsidiaries taken as a whole or the Parent and its
Subsidiaries taken as a whole;
(n) any tank or pump replacement program of the Borrower, the
Parent or any of their respective Subsidiaries, singly or in the
aggregate, is not reasonably expected to have a material adverse effect
on the financial condition, operations, assets, business, properties,
revenues or prospects of Borrower and its Subsidiaries taken as a whole
or the Parent and its Subsidiaries taken as a whole;
(o) neither the Parent nor any Subsidiary of the Parent
(including the Borrower and its Subsidiaries) has directly transported
or directly arranged for the transportation of any Hazardous Material
to any location which is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar
state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material
claims against the Parent or such
-66-
<PAGE> 74
Subsidiary thereof for any remedial work, damage to natural resources
or personal injury, including claims under CERCLA;
(p) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Borrower, the Parent or any of their respective Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to
have, a material adverse effect on the financial condition, operations,
assets, business, properties, revenues or prospects of the Borrower and
its Subsidiaries taken as a whole or the Parent and its Subsidiaries
taken as a whole; and
(q) no conditions (other than those covered in the preceding
clauses (a) through (p)) exist at, on or under any
property now or previously owned or leased by the Borrower, the Parent
or any of their respective Subsidiaries which, with the passage of
time, or the giving of notice or both, would give rise to any material
liability under any Environmental Law.
SECTION 6.13. Accuracy of Information. (a) All factual
information heretofore or contemporaneously furnished by or on behalf of the
Borrower and the Parent in writing to the Agent or any Lender for purposes of or
in connection with this Agreement or any transaction contemplated hereby is, and
all other such factual information hereafter furnished by or on behalf of the
Borrower and the Parent to the Agent or any Lender, will be, when taken as a
whole true and accurate in every material respect on the date as of which such
information is dated or certified and, as to information delivered before the
Effective Date, as of the date of execution and delivery of this Agreement by
the Agent and such Lender, and such information is not, when taken as whole or
shall not be, as the case may be, incomplete by omitting to state any material
fact necessary to make such information not misleading.
(b) All written information prepared by any consultant or professional
advisor on behalf of the Parent or any of its Subsidiaries which was furnished
to the Agent or any Lender in connection with the preparation, execution and
delivery of this Agreement (including, without limitation, the Memorandum) has
been reviewed by the Borrower and the Parent, and nothing has come to the
attention of the Borrower and the Parent in the context of such review which
would lead it to believe that such information (or the assumptions on which such
information is based) is not, taken as a whole, true and correct in all material
respects or that such information, taken as a whole, omits to state any material
fact necessary to make such information not misleading in any material respect.
-67-
<PAGE> 75
(c) Insofar as any of the information described above includes
assumptions, estimates, projections or opinions, the Borrower and the Parent
have reviewed such matters and nothing has come to the attention of the Borrower
and the Parent in the context of such review which would lead it to believe that
such assumptions, estimates, projections or opinions, omit to state any material
fact necessary to make such assumptions, estimates, projections or opinions not
reasonable or not misleading in any material respect. All projections and
estimates have been prepared in good faith on the basis of reasonable
assumptions and represent the best estimate of future performance by the party
supplying the same.
SECTION 6.14. Purchase Agreement. As of the Effective Date, the
Purchase Agreement has not been amended or otherwise modified except as
disclosed in Item 6.14 ("Amendments to Purchase Agreement") of the
Disclosure Schedule, true and complete copies of which have heretofore been
delivered to the Lenders. All representations and warranties by the Borrower
under the Purchase Agreement are true and correct in all material respects as of
the date hereof as if made on the date hereof and, to the best knowledge of the
Borrower and its Subsidiaries, all representations and warranties by the Seller
under the Purchase Agreement are true and correct in all material respects as of
the date hereof as if made on the date hereof.
SECTION 6.15. Expropriation and Condemnation. Not more than
fifteen locations as to which any Realty is located is the subject of a
condemnation, expropriation or other taking by any federal, state, provincial,
municipal or other competent authority or a notice or proceeding in respect
thereof.
SECTION 6.16. Intellectual Property Collateral. With respect to
any Intellectual Property Collateral the loss, impairment or infringement of
which might have a material adverse effect on the financial condition,
operations, assets, business, properties, revenues or prospects of the Borrower
and its Subsidiaries taken as whole or the Parent and its Subsidiaries taken as
a whole:
(a) such Intellectual Property Collateral is subsisting and has
not been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and
enforceable;
(c) the Borrower and the other Subsidiaries of the Parent have
made all necessary filings and recordations to protect their respective
interests in such Intellectual Property Collateral, including
recordations of all such interests in the Intellectual Property
Collateral in the
-68-
<PAGE> 76
United States Patent and Trademark Office and/or the United States
Copyright Office;
(d) the Borrower and the other Subsidiaries of the Parent are
the exclusive owners of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral (except for
Liens created under the Loan Documents) and no claim has been made that
the use of such Intellectual Property Collateral does or may violate
the asserted rights of any third party except for claims that could not
reasonably be expected to have a material adverse effect on the
financial condition, operations, assets, business, properties, revenues
or prospects of the Borrower and its Subsidiaries taken as a whole or
the Parent and its Subsidiaries taken as a whole; and
(e) the Borrower and the other Subsidiaries of the Parent have
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
in the United States.
SECTION 6.17. Ownership of Stock. The Parent owns free and
clear of all Liens (other than any Lien pursuant to the Parent Pledge
Agreement), 100% of the outstanding shares of common stock (whether voting or
non-voting) of the Borrower and Petroleum on a fully diluted basis. Until the
effective date of the Merger Certificate, the Borrower owns free and clear of
all Liens (other than any Lien pursuant to the Borrower Pledge Agreement), 100%
of the outstanding shares of common stock (whether voting or non-voting) of Time
Saver on a fully diluted basis. There are no outstanding options, warrants or
convertible securities with respect to the shares of common stock of the
Borrower or Time Saver.
SECTION 6.18. Absence of Default. Neither the Parent nor any of
its Subsidiaries is (i) in default as of the Effective Date in the payment of
(or in the performance of any obligation applicable to) any Indebtedness, except
as disclosed in Item 6.18 ("Absence of Default") in the Disclosure
Schedule or (ii) in violation of any law or governmental regulation or court
decree or order, except where such violation could not reasonably be expected to
have a material adverse effect on the financial condition, operations, assets,
business, properties, revenues or prospects of the Borrower and its Subsidiaries
taken as a whole or the Parent and its Subsidiaries taken as a whole.
SECTION 6.19. Regulations G, U and X. Neither the Parent nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for
-69-
<PAGE> 77
the purpose of purchasing or carrying "margin stock". None of the proceeds of
any Loan or any Letter of Credit will be used for the purpose of, or be made
available by the Borrower in any manner to any other Person to enable or assist
such Person in, directly or indirectly purchasing or carrying "margin stock".
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section with such meanings.
SECTION 6.20. Government Regulation. Neither the Parent nor any
of its Subsidiaries is an "investment company" nor a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 6.21. Burdensome Agreements. Neither the Parent nor any
of its Subsidiaries is or will be a party to any instrument or subject to any
charter or other corporate restriction which could have a materially adverse
effect on its financial condition, operations, assets, business, properties,
revenues or prospects.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower and the Parent jointly
and severally agree with the Agent, each Issuer and each Lender that, until all
Commitments have terminated and all Obligations have been paid and performed in
full, the Borrower and the Parent will perform the obligations set forth in this
Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
Borrower and the Parent will furnish, or will cause to be furnished, to each
Lender and the Agent copies of the following financial statements, reports,
notices and information:
(a) as soon as available and in any event within 35 days after
the end of each month of each Fiscal Year of the Parent, (i) a monthly
financial report for such month and consolidated balance sheets of the
Parent and its Subsidiaries as of the end of such month and
consolidated statements of earnings of the Parent and its Subsidiaries
for such month and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such month, setting forth in
each case in comparative form the consolidated figures for the
corresponding periods of the
-70-
<PAGE> 78
previous Fiscal Year (it being acknowledged that such figures for
corresponding periods of the previous Fiscal Year shall not include the
operations of Time Saver until delivery of the financial statements for
February of 1996), certified by the chief financial Authorized Officer
of the Parent in a manner acceptable to the Agent and (ii) a
certificate, executed by the chief financial Authorized Officer of the
Parent showing the amount of intercompany Indebtedness outstanding at
the end of such month.
(b)(i) as soon as available and in any event within 90 days
after the end of each Fiscal Year of the Parent, a copy of the annual
audit report for such Fiscal Year for the Parent and its Subsidiaries,
including therein consolidated and consolidating balance sheets of the
Parent and its Subsidiaries as of the end of such Fiscal Year and
consolidated and consolidating statements of earnings and consolidated
statements of cash flow of the Parent and its Subsidiaries for such
Fiscal Year, in each case certified (without any Impermissible
Qualification) by KPMG Peat Marwick or other independent public
accountants of nationally recognized standing as fairly presenting, in
accordance with GAAP consistently applied, the financial condition,
results of operations and cash flows of the Parent and its Subsidiaries
at the end of such Fiscal Year and for the Fiscal Year then ended,
together with a certificate, executed by the chief financial Authorized
Officer of the Borrower, showing (in reasonable detail and with
appropriate calculations and computations in all respects satisfactory
to the Agent) the calculation of Excess Cash Flow, and (ii) as soon as
available and in any event within 120 days after the end of each Fiscal
Year of the Parent, all management letters and internal control and
similar memoranda prepared by the accountants certifying the financial
statements of the Parent for such Fiscal Year;
(c) as soon as available and in any event within 45 days after
the end of each Fiscal Quarter of each Fiscal Year of the Parent, (i) a
quarterly financial report and consolidated balance sheets of the
Parent and its Subsidiaries as of the end of such Fiscal Quarter and
consolidated statements of earnings and consolidated statements of cash
flow of the Parent and its Subsidiaries for such Fiscal Quarter and for
the period commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter, setting forth in each case in
comparative form the consolidated figures for the corresponding periods
of the previous Fiscal Year (it being acknowledged that such figures
for corresponding periods of the previous Fiscal Year shall not include
the operations of Time Saver until delivery of the financial statements
for the first Fiscal Quarter of the 1996 Fiscal Year) certified
-71-
<PAGE> 79
by the chief financial Authorized Officer of the Parent in a manner
acceptable to the Agent and (ii) a Compliance Certificate, executed by
the chief financial Authorized Officer of the Parent, showing (in
reasonable detail and with appropriate calculations and computations in
all respects satisfactory to the Agent) compliance with the financial
covenants set forth in Section 7.2.4;
(d) as soon as available and in any event within 15 days after
the end of each calendar month, a Borrowing Base Certificate calculated
as of the last day of the immediately preceding month;
(e) as soon as possible and in any event within three Business
Days after knowledge of an Authorized Officer of the occurrence of any
Default, a statement of the chief financial Authorized Officer of the
Borrower setting forth details of such Default and the action which the
Borrower has taken and proposes to take with respect thereto;
(f) as soon as possible and in any event within three Business
Days after (x) the occurrence of any materially adverse development
with respect to any litigation, action, proceeding, or labor
controversy described in Section 6.7 or (y) the commencement of any
labor controversy, litigation, action, proceeding of the type described
in Section 6.7, notice thereof and, at the Agent's request, copies of
all documentation relating thereto;
(g) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any class of its security holders
generally, in their capacities as such, and all reports and
registration statements which the Borrower or any of its Subsidiaries
files with the Securities Exchange Commission or any securities
exchange;
(h) immediately upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under Section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Borrower furnish a
bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan which could
result in the incurrence by the Borrower of any material liability,
fine or penalty, or any material increase in the contingent liability
of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating
thereto;
-72-
<PAGE> 80
(i) promptly when available and, in any event, (x) at least 30
days prior to the last day of each Fiscal Year, a preliminary budget in
form and scope reasonably satisfactory to the Agent for the next
succeeding Fiscal Year, and (y) within 30 days after the beginning of
each Fiscal Year, a definitive budget in form and scope satisfactory to
the Agent for such Fiscal Year, in each case in reasonable detail for
the relevant Fiscal Year and setting forth the principal assumptions
upon which such budget is based; and
(j) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries or the Parent or any of its Subsidiaries as any Lender
through the Agent may from time to time reasonably request, including
in respect of establishing the eligibility of the Accounts and
Inventory comprising the Eligible Accounts and Eligible Inventory
included in each Borrowing Base Certificate delivered pursuant to this
Agreement.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower and the Parent
will, and will cause each of their respective Subsidiaries to:
(a) comply in all respects with all governmental rules and
regulations and all other applicable laws, rules, regulations and
orders (except where the failure to so comply could not reasonably be
expected to have a material adverse effect on the financial condition,
operations, assets, business, properties, revenues or prospects of the
Borrower and its Subsidiaries taken as a whole or the Parent and its
Subsidiaries taken as a whole), such compliance to include the
maintenance and preservation of its corporate existence (except to the
extent permitted under Section 7.2.10) and qualification as a
foreign corporation in any jurisdiction where the Borrower or the other
Subsidiaries of the Parent have assets or conduct business, except
where failure to maintain and preserve such existence or qualification
would not materially adversely affect the Borrower's or the Parent's
consolidated financial condition, operations, assets, business,
revenues, properties or prospects; and
(b) comply in all material respects with all governmental rules
and regulations and all other material applicable laws, rules,
regulations and orders relating to taxation, including the payment,
before the same become delinquent, of (i) all federal, state and local
income taxes and (ii) all other taxes, assessments and governmental
charges except in each such case to the extent being diligently
contested in good faith by appropriate
-73-
<PAGE> 81
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
The Parent will continue to file a consolidated federal income tax return of the
"affiliated group" of corporations of which the Parent is the "common parent
corporation" (as such terms are defined in Section 1504(a)(1) of the Code) for
each taxable year of the Parent and will cause each of its Subsidiaries to
consent to each such filing.
SECTION 7.1.3. Maintenance of Properties. The Borrower and the
Parent will, and will cause each of their respective Subsidiaries to, maintain,
preserve, protect and keep their respective properties in good repair, working
order and condition (except to the extent sold, transferred or otherwise
disposed of pursuant to a Permitted Disposition), and make necessary and proper
repairs, renewals (including lease payments on leasehold properties) and
replacements so that the business carried on in connection therewith may be
properly conducted at all times (including the maintenance of convenience stores
consistent with the specifications set forth in the Memorandum), unless the
Borrower or the Parent, as the case may be, determines in good faith that the
continued maintenance of any of its properties is no longer economically
desirable (provided that any such determination with respect to any property
material to the operations of the Borrower or any other Subsidiary of the Parent
shall be made only after consultation with the Agent). Without limiting the
effect of any provision contained in the immediately preceding sentence, and in
furtherance thereof, the Borrower and the Parent, unless otherwise directed by
the Required Lenders, will, and will cause each of their respective Subsidiaries
to, make Capital Expenditures for each Fiscal Year set forth below in an
aggregate amount equal to or greater than (subject to Section 7.2.7) the
amount set forth opposite such Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C>
1995 $8,400,000
1996 6,700,000
1997 6,700,000
1998 6,700,000
1999 4,500,000
2000 4,500,000
2001 4,500,000
</TABLE>
SECTION 7.1.4. Insurance. (a) The Borrower and the Parent shall
maintain, and shall cause each of their respective Subsidiaries to maintain,
with responsible and reputable
-74-
<PAGE> 82
insurance carriers licensed to write insurance, insurance with respect to all
their property, business and assets against such casualties and contingencies
and of such types and in such amounts as is customary in the case of similar
businesses.
(b) All premiums on insurance policies required under this Section
shall be paid by the Parent and its Subsidiaries. Each policy for property
insurance maintained by the Parent and its Subsidiaries shall (i) name the Agent
(as Agent for the Lenders) as loss payee under a lenders loss payable clause,
(ii) provide that no cancellation, reduction in amount or material change in
coverage thereof or any portion thereof shall be effective until at least 30
days after receipt by the Agent of written notice thereof, (iii) provide that
any notice under such policies relating to cancellation, reduction or material
change in coverage or the occurrence of any loss in excess of $250,000 shall be
simultaneously delivered to the Agent and (iv) be reasonably satisfactory in all
other respects to the Agent. Each policy for liability insurance maintained by
the Parent and its Subsidiaries shall (i) name the Agent as an additional
insured, (ii) provide that no cancellation, reduction in amount or material
change in coverage thereof or any portion thereof shall occur by reason of any
breach of any representation or warranty, nor shall any thereof be effective
until at least 30 days after receipt by the Agent of written notice thereof,
(iii) provide that any notice under such policies relating to cancellation,
reduction or material change in coverage or the occurrence of any loss in excess
of $250,000 shall be simultaneously delivered to the Agent and (iv) be
reasonably satisfactory in all other respects to the Agent.
(c) The Borrower will deliver, and the Parent will cause its
Subsidiaries to deliver, to the Agent, promptly upon request, (i) the originals
of all policies evidencing all insurance required to be maintained under clause
(a) or certificates thereof by the insurers together with a counterpart of each
policy, (ii) a satisfactory insurance broker's letter as to the adequacy of the
insurance being maintained by the Parent and its Subsidiaries and as to the
compliance of the same with the requirements of this Section and (iii) evidence
as to the payment of all premiums then due thereon (or with respect to any
insurance policies providing for payment other than by a single lump sum, all
installments for the current year due thereon to such date), provided that
neither the Agent nor any Lender shall be deemed by reason of its custody of
such policies to have knowledge of the contents thereof. The Borrower will also
deliver, and the Parent will also cause its Subsidiaries to deliver, to the
Agent not later than five days prior to the expiration of any policy a binder or
certificate of the insurer evidencing the replacement thereof.
-75-
<PAGE> 83
(d) If a Default or Event of Default has not occurred and is
continuing, all proceeds of property insurance (other than any such proceeds
which reimburse the Borrower or any other applicable Subsidiary of the Parent
for environmental liabilities or remediation costs previously paid by the
Borrower or such Subsidiary) paid on account of the loss of or damage to any
property or asset of the Parent or any of its Subsidiaries shall be paid to the
Borrower or other applicable Subsidiary of the Parent, and the Borrower or such
Subsidiary shall use such proceeds within 365 days thereafter to repair, restore
or replace such property or asset or to reinvest in other capital assets
reasonably related to the ownership and operation of convenience stores. With
respect to any casualty or other covered occurrence in which the aggregate
proceeds of property insurance receivable by the Borrower or any other
applicable Subsidiary of the Parent (other than any such proceeds which
reimburse the Borrower or such Subsidiary for environmental liabilities or
remediation costs previously paid by the Borrower or such Subsidiary) exceeds
$250,000, to the extent the Borrower or such Subsidiary elects not to apply such
insurance proceeds for the repair, replacement or restoration of such property
or asset or for reinvestment in capital assets reasonably related to the
ownership and operation of convenience stores, or such insurance proceeds are
not in fact so applied within 365 days, all of such unutilized insurance
proceeds shall be delivered by the Borrower or such Subsidiary (and the Parent
shall cause such Subsidiary to so deliver) to the Agent and shall constitute
"Excess Insurance Proceeds," to be applied as a mandatory prepayment of the Term
Loans pursuant to clause (c) of Section 3.1.2. Notwithstanding any provision to
the contrary in this Agreement or any other Loan Document, if an Event of
Default has occurred and is continuing, all proceeds of property insurance
(including business interruption insurance) shall be payable directly to the
Agent and the Agent in its sole discretion may treat such proceeds as "Excess
Insurance Proceeds" or, subject to the consent of the Required Lenders, permit
the use of such proceeds to repair, restore or replace the property or asset
which suffered the loss for which such proceeds are being paid.
SECTION 7.1.5. Books and Records. (a) The Borrower and the Parent will,
and will cause each of their respective Subsidiaries to, keep books and records
which accurately reflect all of their respective business affairs and
transactions.
(b) The Borrower and the Parent will, and will cause each of their
respective Subsidiaries to, permit the Agent and each Lender or any of their
representatives, at reasonable times and intervals and upon reasonable notice,
to visit all of their respective offices, to discuss their respective financial
matters with their respective officers and independent public accountant and
consultants (and the Borrower and the Parent hereby authorize such independent
public accountant and consultants to discuss
-76-
<PAGE> 84
such financial matters with each Lender or its representatives whether or not
any representative of the Borrower or Parent is present) and to examine (and, at
the expense of the Borrower, copy extracts from) any of their respective books
or other corporate records (including computer records).
(c) The Borrower shall pay any fees of such independent public
accountant and consultants incurred in connection with the Agent's or any
Lender's exercise of its rights pursuant to this Section. The Agent, in its sole
discretion and at the sole expense of the Borrower, may conduct such audits and
examinations of the books and records of the Parent and its Subsidiaries as the
Agent reasonably deems necessary or advisable.
SECTION 7.1.6. Environmental Covenant. The Borrower and the Parent
will, and will cause each of their respective Subsidiaries to,
(a) use and operate all of its facilities and properties in
compliance in all material respects with all Environmental Laws, keep
(and, when applicable, obtain in a timely manner) all necessary
material permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain
in compliance in all material respects therewith, and handle all
Hazardous Materials (including the disposition and storing thereof) in
compliance in all material respects with all applicable Environmental
Laws;
(b) respond to all Releases in accordance with law and in a
manner that assures and will assure that, to the maximum extent
commercially practicable, State funds pay for the response to Releases;
(c) promptly notify the Agent and provide copies upon receipt
of all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with
Environmental Laws; and
(d) provide such information and certifications which the Agent
may reasonably request from time to time to evidence compliance with
this Section.
SECTION 7.1.7. Transfer of Petroleum Convenience Stores. On or
prior to June 30, 1995, (i) the Parent shall cause Petroleum to transfer to the
Borrower all of the 128 convenience stores disclosed on Item 7.1.7
("Petroleum Convenience Stores") of the Disclosure Schedule and (ii) the Parent
shall cause Petroleum to transfer to the Borrower all right and title to the
trademark entitled "E-Z Serve", U.S. Trademark Registration Numbers 1,680,040
and 1,668,187, in each case free and clear of all Liens, charges or claims
(other than Permitted Encumbrances)
-77-
<PAGE> 85
and in a manner and pursuant to legal documentation (including legal opinions)
reasonably satisfactory to the Agent.
SECTION 7.1.8. Beverage License Certification Date; Merger of Time
Saver and the Borrower. On or prior to the 180th day following the Effective
Date, (i) the Beverage License Certification Date shall have occurred and (ii)
Time Saver shall have merged with and into the Borrower pursuant to a
certificate of merger (the "Merger Certificate"), with the Borrower
being the surviving corporation (the "Merger"), in a manner reasonably
satisfactory to the Agent. The Agent shall receive evidence satisfactory to it
that the Merger has been consummated in accordance with all the terms of the
Merger Certificate. In addition, the Borrower shall have delivered or caused to
be delivered to the Agent counterparts for each Lender of the following:
(a) Resolutions. Resolutions of the Boards of Directors
and, to the extent required by applicable law, stockholders of each
party to the Merger Certificate, each certified by the Secretary or an
Assistant Secretary of such party, duly adopted and in full force and
effect on the date of the Merger, authorizing the execution, delivery
and performance by such party of the Merger Certificate and all other
agreements, documents and instruments being delivered in connection
therewith.
(b) Certificates. A certificate from an Authorized
Officer of the Borrower to the effect that attached thereto are true
and correct copies of the Merger Certificate and each of the
agreements, documents, instruments, opinions, filings, consents and
approvals executed and delivered, and furnished or filed, pursuant to
the Merger Certificate.
(c) Merger Certificate, etc. A true copy of the Merger
Certificate that has been duly completed and stamp filed by the
Secretary of State of Delaware and Kansas.
(d) Opinion of Counsel. Opinion of legal counsel for
the Borrower relating to the Merger, which legal opinion shall be in
form and substance reasonably satisfactory to the Agent.
SECTION 7.1.9. As to Intellectual Property Collateral. (a) The
Borrower shall not, and the Parent shall not permit any of its other
Subsidiaries to, unless the Borrower or such Subsidiary shall reasonably and in
good faith determine that any of its Intellectual Property Collateral is of
negligible economic value to it (provided that any such determination with
respect to any trademark or other mark used in connection with the name of any
convenience store or gasoline station shall be made only after consultation with
the Agent), do any act, or omit to do any act,
-78-
<PAGE> 86
whereby any of such Intellectual Property Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
(b) The Borrower or the Parent shall notify the Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any material item of the Intellectual Property Collateral may become abandoned
or dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any foreign counterpart thereof or any court) regarding the ownership
of the Borrower or any other Subsidiary of the Parent of any material item of
the Intellectual Property Collateral or the Borrower's or such Subsidiary's
right to register the same or to keep and maintain and enforce the same.
(c) In no event shall the Borrower or any other Subsidiary of the
Parent, or any of their respective agents, employees, designees or licensees,
file an application for the registration of any Intellectual Property Collateral
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Agent, and upon request of
the Agent, executes and delivers any and all agreements, instruments, documents
and papers as the Agent may reasonably request to evidence the Agent's security
interest in such Intellectual Property Collateral and the goodwill and general
intangibles of the Borrower or such Subsidiary relating thereto or represented
thereby.
(d) The Borrower shall take, and the Parent shall cause its
Subsidiaries to take, all necessary steps, including in any proceeding before
the United States Patent and Trademark Office, the United States Copyright
Office, to maintain and pursue any application (and to obtain the relevant
registration) filed with respect to, and to maintain any registration of, any
material item of the Intellectual Property Collateral, including the filing of
applications for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment of fees
and taxes (except to the extent that dedication, abandonment or invalidation is
permitted under the foregoing clauses (a), (b) and (c)).
SECTION 7.1.10. Future Subsidiaries. Without limiting the
effect of any provision contained herein (including Section
7.2.5), upon any Person becoming, after the Effective Date, either a
direct or indirect Subsidiary of the Borrower, or upon the Parent or the
Borrower acquiring additional capital stock of any existing Subsidiary having
voting rights or contingent voting rights
-79-
<PAGE> 87
(a) such Person shall become a party to (x) a guaranty in
substantially the form of the Time Saver Guaranty, and
(y) a security agreement in substantially the form of the Time Saver
Security Agreement, if not already a party to any of the foregoing,
with such modifications as the Agent may reasonably request, in a
manner satisfactory to the Agent;
(b) the Borrower and the applicable Subsidiary shall, pursuant
to the Borrower Pledge Agreement, or the Parent and the applicable
Subsidiary shall, pursuant to the Parent Pledge Agreement, as the case
may be, pledge to the Agent
(i) all of the outstanding shares of such capital
stock of such Subsidiary owned directly by it, along with
undated stock powers for such certificates, executed in blank
(or, if any such shares of capital stock are uncertificated,
confirmation and evidence satisfactory to the Agent that the
security interest in such uncertificated securities has been
perfected by the Agent in accordance with Section 8-313 and
Section 8-321 of the U.C.C. or any similar law which may be
applicable); and
(ii) all notes (if any) evidencing intercompany
Indebtedness in favor of the Borrower and each such Subsidiary
(which shall be in substantially the form of Attachment A to
the Borrower Pledge Agreement), as the case may be;
(c) the Agent shall have received from each such Subsidiary
certified copies of Uniform Commercial Code Requests for Information or
Copies (Form UCC-11), or a similar search report certified by a party
acceptable to the Agent, dated a date reasonably near (but prior to)
the date of any such Person becoming a direct or indirect Subsidiary of
the Borrower, listing all effective financing statements, tax liens and
judgment liens which name such Person as the debtor and which are filed
in the jurisdictions in which filings are to be made pursuant to this
Agreement and the other Loan Documents, and in such other jurisdictions
as the Agent may reasonably request, together with copies of such
financing statements (none of which (other than financing statements
(i) filed pursuant to the terms hereof in favor of the Agent, if such
Form UCC-11 or search report, as the case may be, is current enough to
list such financing statements, (ii) being terminated pursuant to
termination statements that are to be delivered on or prior to the date
such Person becomes such Subsidiary or (iii) in respect of protective
filings or Liens permitted under Section 7.2.3) shall cover any
of the Collateral); and
-80-
<PAGE> 88
(d) the Agent shall have received from each such Subsidiary
executed copies of U.C.C. financing statements naming each such
Subsidiary as the debtor and the Agent as the secured party, suitable
for filing under the U.C.C. of all jurisdictions as may be necessary
or, in the reasonable opinion of the Agent, desirable to perfect the
first priority security interest of the Agent pursuant to the security
agreement entered into by such Subsidiary, together with evidence
satisfactory to the Agent of the filing (or delivery for filing) of
appropriate trademark, copyright and patent security supplements,
together, in each case, with such opinions of legal counsel for the Borrower
relating thereto, which legal opinions shall be in form and substance reasonably
satisfactory to the Agent.
SECTION 7.1.11. Springing Liens. Within 60 days after (a) any
judgment or order for the payment of money is rendered against the Borrower or
any of its Subsidiaries or any other Obligor and an amount in excess of
$1,000,000 in respect of such payment is not covered in full by insurance
maintained with responsible insurance carriers, (b) the occurrence of any Event
of Default or (c) the Funded Debt to EBITDA Ratio being greater than (i) with
respect to the third and fourth Fiscal Quarters of the 1995 Fiscal Year, 2.85 to
1.00, (ii) with respect to each Fiscal Quarter of the 1996 Fiscal Year, 2.375 to
1.00 and (iii) with respect to each Fiscal Quarter thereafter, 1.90 to 1.00, at
the direction of the Agent (at the request of the Required Lenders), the
Borrower and the Parent shall, and shall cause each of their respective
Subsidiaries to, take all steps necessary, at their own cost and expense, to (a)
grant the Agent a first priority leasehold Lien on operating facilities
(including renewals) and a first priority mortgage Lien on real property,
fixtures, buildings and improvements thereon and (b) obtain title insurance
coverage on such property in an amount, containing such terms and exceptions and
issued by an insurance company, acceptable to the Agent in the Agent's
reasonable discretion (together with such favorable legal opinions with respect
thereto as the Agent may reasonably request).
SECTION 7.1.12. Gasoline Purchases. Without limiting the effect
of Section 7.2.1, each of the Borrower and Petroleum will purchase gasoline only
to satisfy its own retail and wholesale requirements, will not engage in
speculative trading or trade in gasoline futures for speculative purposes and
will not purchase or sell futures contracts or enter into any commodities
derivative transactions of any kind.
SECTION 7.1.13. Rate Protection. Within 90 days of the Effective Date,
the Borrower shall have in effect interest rate swap, hedge, cap, collar or
similar arrangements with any Lender or Lenders satisfactory in form and
substance (including as to
-81-
<PAGE> 89
the counterparty thereto) and pursuant to documentation satisfactory to the
Agent in a notional amount equal to or greater than $20,000,000, and shall
maintain such arrangements in full force and effect until the third anniversary
of the Effective Date.
SECTION 7.1.14. Further Assurances. The Borrower and the Parent agree
that from time to time, at the expense of the Borrower and the Parent, the
Borrower and the Parent will, and will cause each of their respective
Subsidiaries to, promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or
desirable, or that the Agent may reasonably request, in order to perfect and
protect the assignments, security interests and Liens granted or purported to be
granted under the Loan Documents or to enable the Agent to exercise and enforce
its rights and remedies under this Agreement or any other Loan Document with
respect to any Collateral. Without limiting the generality of the foregoing, the
Borrower and the Parent will, and will cause each of their respective
Subsidiaries to
(a) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may request, in order to
perfect and preserve the assignments, security interests and Liens
granted or purported to be granted under the Loan Documents;
(b) furnish to the Agent, at the request of the Agent, an
opinion of counsel acceptable to the Required Lenders to the effect
that all financing or continuation statements have been filed, and all
other action has been taken, to perfect and validate continuously from
the date hereof the assignments, security interests and Liens granted
under the Loan Documents; and
(c) furnish to the Agent, from time to time at the Agent's
request, statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral
as the Agent may reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest
under the Loan Documents, the Borrower and the Parent and each of their
respective Subsidiaries hereby authorize the Agent to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of the Borrower, the Parent or any such
Subsidiary where permitted by law. A carbon, photographic or other reproduction
of this Agreement or any financing statement covering the Collateral or any part
thereof
-82-
<PAGE> 90
shall be sufficient as a financing statement where permitted by law.
SECTION 7.2. Negative Covenants. The Borrower and the Parent jointly
and severally agree with the Agent, each Issuer and each Lender that, until all
Commitments have terminated and all Obligations have been paid and performed in
full, the Borrower and the Parent will perform the obligations set forth in this
Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower and the Parent will
not, and will not permit any of their respective Subsidiaries to, engage in any
business activity, except those described in the third recital and such
activities as may be incidental or related thereto and activities incidental or
related to the consummation of the Acquisition.
SECTION 7.2.2. Indebtedness. The Borrower and the Parent will not, and
will not permit any of their respective Subsidiaries to, create, incur, assume
or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
(b) until the date of the initial Credit Extension,
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of
the Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(d) Indebtedness (other than Indebtedness described in the
immediately preceding clause (c)) in an aggregate principal amount not
to exceed $2,000,000 at any time outstanding in respect of (i)
Indebtedness which is incurred by the Borrower or any other Subsidiary
of the Parent to a vendor to finance its acquisition of any assets
permitted to be acquired pursuant to Section 7.2.7 and (ii) Capitalized
Lease Liabilities to the extent permitted by Section 7.2.7;
(e) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, but excluding
all Indebtedness incurred through the borrowing of money and all
Contingent Liabilities);
(f) Indebtedness in respect of Rate Protection Agreements with
a Lender and entered into solely with
-83-
<PAGE> 91
respect to the Credit Extensions or, as to currency matters, for
protection in connection with the Borrower's ordinary course of
business;
(g) Indebtedness in an aggregate principal amount not to exceed
$15,000,000 at any time outstanding in respect of the Petroleum Note;
(h) Indebtedness of Time Saver owing to the Borrower in an
aggregate principal amount not to exceed $1,000,000 at any time
outstanding; provided such Indebtedness is evidenced by a
promissory note pledged to the Agent pursuant to the terms of the
Borrower Pledge Agreement; and
(i) other Indebtedness in an aggregate amount not exceeding
$1,000,000 at any time;
provided, however, that no Indebtedness pursuant to clauses (d) and (i) may be
incurred if, after giving effect to the incurrence thereof, any Default shall
have occurred and be continuing.
SECTION 7.2.3. Liens. The Borrower and the Parent will not, and
will not permit any of their respective Subsidiaries to, create, incur, assume
or suffer to exist any Lien upon any of its property, revenues or assets,
whether now owned or hereafter acquired, except:
(a) Liens securing payment of the Obligations granted pursuant
to any Loan Document;
(b) Liens granted to secure payment of Indebtedness described
in clause (c) of Section 7.2.2 to the extent such Liens are identified
in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure Schedule;
(c) Liens granted to secure payment of the Indebtedness of the
type permitted and described in clause (d) of Section 7.2.2 and
covering only those assets acquired with the proceeds of such
Indebtedness;
(d) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(e) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which
-84-
<PAGE> 92
adequate reserves in accordance with GAAP shall have been set aside on
its books;
(f) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits (excluding any Liens in
favor of a Pension Plan or PBGC), or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 15 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies; and
(h) easements, rights-of-way, zoning and similar restrictions
and other similar encumbrances or title defects which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower or
its Subsidiaries.
SECTION 7.2.4. Financial Condition. The Borrower and the Parent will
not permit:
(a) the Interest Coverage Ratio, as of the last day of each
Fiscal Quarter set forth below, to be less than the ratio set forth
opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
Minimum Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
<S> <C>
The second Fiscal
Quarter of the 1995
Fiscal Year 2.5:1.00
The third and fourth
Fiscal Quarters of the
1995 Fiscal Year 3.0:1.00
Each Fiscal Quarter of
the 1996 Fiscal Year 4.0:1.00
Each Fiscal Quarter of
the 1997 Fiscal Year 5.0:1.00
Each Fiscal Quarter of
the 1998 Fiscal Year 6.0:1.00
</TABLE>
-85-
<PAGE> 93
<TABLE>
<CAPTION>
Minimum Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
<S> <C>
Each Fiscal Quarter of
the 1999 Fiscal Year 7.0:1.00
Each Fiscal Quarter of
the 2000 Fiscal Year 7.0:1.00
Each Fiscal Quarter of
the 2001 Fiscal Year 7.0:1.00
</TABLE>
(b) the Fixed Charge Coverage Ratio, as of the last day of each
Fiscal Quarter set forth below, to be less than the ratio set forth
opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
Minimum Fixed Charge
Fiscal Quarter Coverage Ratio
-------------- --------------
<S> <C>
The second Fiscal Quarter
of the 1995 Fiscal Year 1.00:1.00
The third Fiscal Quarter
of the 1995 Fiscal Year 1.00:1.00
The fourth Fiscal Quarter
of the 1995 Fiscal Year 1.00:1.00
The first Fiscal Quarter
of the 1996 Fiscal Year 1.05:1.00
The second Fiscal Quarter
of the 1996 Fiscal Year 1.10:1.00
The third Fiscal Quarter
of the 1996 Fiscal Year 1.05:1.00
The fourth Fiscal Quarter
of the 1996 Fiscal Year 1.10:1.00
The first Fiscal Quarter
of the 1997 Fiscal Year 1.15:1.00
The second Fiscal Quarter
of the 1997 Fiscal Year 1.20:1.00
The third Fiscal Quarter
of the 1997 Fiscal Year 1.20:1.00
The fourth Fiscal Quarter
of the 1997 Fiscal Year 1.25:1.00
</TABLE>
-86-
<PAGE> 94
<TABLE>
<CAPTION>
Minimum Fixed Charge
Fiscal Quarter Coverage Ratio
-------------- --------------
<S> <C>
The first Fiscal Quarter
of the 1998 Fiscal Year 1.25:1.00
The second Fiscal Quarter
of the 1998 Fiscal Year 1.25:1.00
The third Fiscal Quarter
of the 1998 Fiscal Year 1.30:1.00
The fourth Fiscal Quarter
of the 1998 Fiscal Year 1.30:1.00
The first Fiscal Quarter
of the 1999 Fiscal Year 1.30:1.00
The second Fiscal Quarter
of the 1999 Fiscal Year 1.35:1.00
The third Fiscal Quarter
of the 1999 Fiscal Year 1.35:1.00
The fourth Fiscal Quarter
of the 1999 Fiscal Year 1.40:1.00
The first Fiscal Quarter
of the 2000 Fiscal Year 1.40:1.00
The second Fiscal Quarter
of the 2000 Fiscal Year 1.45:1.00
The third Fiscal Quarter
of the 2000 Fiscal Year 1.45:1.00
The fourth Fiscal Quarter
of the 2000 Fiscal Year 1.45:1.00
The first Fiscal Quarter
of the 2001 Fiscal Year 1.40:1.00
The second Fiscal Quarter
of the 2001 Fiscal Year 1.45:1.00
The third Fiscal Quarter
of the 2001 Fiscal Year 1.45:1.00
The fourth Fiscal Quarter
of the 2001 Fiscal Year 1.45:1.00
</TABLE>
-87-
<PAGE> 95
(c) the Gross Profit Margin, as of the last day of each Fiscal
Quarter set forth below, to be less than the percentage set forth
opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
Calendar Month Gross Profit Margin
-------------- -------------------
<S> <C>
The second Fiscal Quarter
of the 1995 Fiscal Year 14.5%
The third Fiscal Quarter
of the 1995 Fiscal Year 18.5%
The fourth Fiscal Quarter
of the 1995 Fiscal Year 18.5%
Each Fiscal Quarter
of the 1996 Fiscal Year 19.0%
Each Fiscal Quarter
of the 1997 Fiscal Year 19.5%
Each Fiscal Quarter
of the 1998 Fiscal Year 20.0%
Each Fiscal Quarter
of the 1999 Fiscal Year 20.5%
Each Fiscal Quarter
of the 2000 Fiscal Year 21.0%
Each Fiscal Quarter
of the 2001 Fiscal Year 21.5%
</TABLE>
(d) the Funded Debt to EBITDA Ratio, as of the last day of each
Fiscal Quarter set forth below, to be greater than the ratio set forth
opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
Maximum Funded Debt
Fiscal Quarter to EBITDA Ratio
-------------- -------------------
<S> <C>
The second Fiscal Quarter
of the 1995 Fiscal Year 6.0:1.00
The third Fiscal Quarter
of the 1995 Fiscal Year 3.0:1.00
The fourth Fiscal Quarter
of the 1995 Fiscal Year 3.0:1.00
Each Fiscal Quarter
of the 1996 Fiscal Year 2.5:1.00
</TABLE>
-88-
<PAGE> 96
<TABLE>
<CAPTION>
Maximum Funded Debt
Fiscal Quarter to EBITDA Ratio
-------------- -------------------
<S> <C>
Each Fiscal Quarter
of the 1997 Fiscal Year 2.0:1.00
Each Fiscal Quarter
of the 1998 Fiscal Year 2.0:1.00
Each Fiscal Quarter
of the 1999 Fiscal Year 2.0:1.00
Each Fiscal Quarter
of the 2000 Fiscal Year 2.0:1.00
Each Fiscal Quarter
of the 2001 Fiscal Year 2.0:1.00
</TABLE>
(e) the Tangible Net Worth at any time to be less than the sum of
(i) $55,000,000
plus
(ii) 50% of Net Income for each Fiscal Quarter of
each Fiscal Year commencing with the 1995 Fiscal Year without
deduction for losses;
(f) the SGA Margin, as of the last day of each Fiscal Quarter,
commencing with the second Fiscal Quarter of the 1995 Fiscal Year, to
be greater than 3.8%.
SECTION 7.2.5. Investments. The Borrower and the Parent will
not, and will not permit any of their respective Subsidiaries to, make, incur,
assume or suffer to exist any Investment in any other Person, except:
(a) the Parent's Investment existing on the Effective Date in
the Borrower and Petroleum;
(b) the Borrower's Investment existing on the Effective Date in
Time Saver and Time Saver's Investment existing on the Effective Date
in Delight;
(c) Petroleum's Investment existing on the Effective Date in
Petroleum of California;
(d) Cash Equivalent Investments;
-89-
<PAGE> 97
(e) without duplication, Investments permitted as Indebtedness
pursuant to clauses (g) and (h) of Section 7.2.2;
(f) without duplication, Investments permitted as Permitted
Business Acquisitions pursuant to Section 7.2.7 (including any
Subsidiary of the Borrower formed for the sole purpose of effectuating
a Permitted Business Acquisition so long as the Borrower shall have
complied with the provisions of Section 7.1.10 in respect of such
Subsidiary);
(g) promissory notes received as consideration in respect of
Permitted Dispositions (subject to the limitations set forth in the
definition thereof), to the extent pledged to the Agent for the benefit
of the Agent and the Lenders; and
(h) other Investments in an aggregate amount at any one time
not to exceed $250,000;
provided, however, that
(i) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and
(ii) no Investment otherwise permitted by clause (e) shall be
permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
SECTION 7.2.6. Restricted Payments, etc. (a) On and at all times after
the Effective Date, the Borrower
(i) will not declare, pay or make any dividend or distribution
(in cash, property or obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of the Borrower or on any
warrants, options or other rights with respect to any shares of any
class of capital stock (now or hereafter outstanding) of the Borrower
(other than dividends or distributions payable in its common stock or
warrants to purchase its common stock or split-ups or reclassifications
of its stock into additional or other shares of its common stock) or
apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other
retirement of, or agree or permit any of its Subsidiaries to purchase
or redeem, any shares of any class of capital stock (now or hereafter
outstanding) of the Borrower, or warrants,
-90-
<PAGE> 98
options or other rights with respect to any shares of any class of
capital stock (now or hereafter outstanding) of the Borrower; and
(ii) will not, and will not permit any of its Subsidiaries to,
make any deposit for any of the purposes described in the preceding
clause (a)(i).
(b) On and at all times after the Effective Date, the Parent
(i) will not declare, pay or make any dividend or distribution
(in cash, property or obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of the Parent or on any
warrants, options or other rights with respect to any shares of any
class of capital stock (now or hereafter outstanding) of the Parent
(other than dividends or distributions payable in its common stock or
warrants to purchase its common stock or split-ups or reclassifications
of its stock into additional or other shares of its common stock) or
apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other
retirement of, or agree or permit any of its Subsidiaries to purchase
or redeem, any shares of any class of capital stock (now or hereafter
outstanding) of the Parent, or warrants, options or other rights with
respect to any shares of any class of capital stock (now or hereafter
outstanding) of the Parent; and
(ii) will not, and will not permit any of its Subsidiaries to,
make any deposit for any of the purposes described in the preceding
clause (b)(i).
SECTION 7.2.7. Capital Expenditures, etc. The Borrower and the Parent
will not, and will not permit any of their respective Subsidiaries to, make or,
without duplication, commit to make Capital Expenditures in any Fiscal Year,
except
(a) Capital Expenditures (other than Capitalized Lease
Liabilities) of the Borrower and other Subsidiaries of the Parent which
do not aggregate in any Fiscal Year in excess of the amount set forth
opposite such Fiscal Year under the Capital Expenditure Level
applicable to such Fiscal Year, plus an amount equal to insurance
proceeds (other than business interruption insurance proceeds) which
are reinvested in accordance with Section 7.1.4 in capital assets of
the Borrower or other applicable Subsidiary which suffered such loss:
-91-
<PAGE> 99
<TABLE>
<CAPTION>
Capital Capital Capital Capital
Fiscal Expenditure Expenditure Expenditure Expenditure
Year Level I Level II Level III Level IV
---- ------- -------- --------- --------
<S> <C> <C> <C> <C>
1995 $17,500,000 $14,200,000 $10,500,000 $8,400,000
1996 17,000,000 13,600,000 10,200,000 6,700,000
1997 14,500,000 11,600,000 8,700,000 6,700,000
1998 14,500,000 11,600,000 8,700,000 6,700,000
1999 15,000,000 12,000,000 9,000,000 4,500,000
2000 15,400,000 12,300,000 9,200,000 4,500,000
2001 15,800,000 12,600,000 9,500,000 4,500,000
</TABLE>
provided, however, that, during any Fiscal Year, commencing with the
1996 Fiscal Year, in which Capital Expenditure Level I is in effect,
the Borrower and such other Subsidiaries may make or, without
duplication, commit to make, additional Capital Expenditures (other
than Capitalized Lease Liabilities) in an amount not to exceed 25% of
Excess Cash Flow for the immediately preceding Fiscal Year; provided
further, however, that the Borrower and such other Subsidiaries may not
make any Business Acquisition unless such Business Acquisition is a
Permitted Business Acquisition; and
(b) Capitalized Lease Liabilities which do not aggregate in any
Fiscal Year in excess of $500,000.
SECTION 7.2.8. Rental Obligations. The Borrower and the Parent will
not, and will not permit any of their respective Subsidiaries to, enter into at
any time any arrangement which does not create a Capitalized Lease Liability and
which involves the leasing by the Borrower or any other Subsidiary of the Parent
from any lessor of any real or personal property (or any interest therein),
except arrangements which, together with all other such arrangements which shall
then be in effect, will not require the payment of an aggregate amount of
rentals by the Borrower and such other Subsidiaries of the Parent in excess of
(excluding escalations resulting from a rise in the consumer price or similar
index) $15,000,000 for any Fiscal Year; provided, however, that any calculation
made for purposes of this Section shall exclude any amounts required to be
expended for maintenance and repairs, insurance, taxes, assessments, and other
similar charges.
SECTION 7.2.9. Take or Pay Contracts. The Borrower and the Parent will
not, and will not permit any of their respective Subsidiaries to, enter into or
be a party to any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms requires that
payment be
-92-
<PAGE> 100
made by the Borrower, the Parent or any such Subsidiary regardless of whether
such materials, supplies, other property or services are delivered or furnished
to it.
SECTION 7.2.10. Consolidation, Merger, etc. Other than the consummation
of the Merger and any merger in connection with a transfer satisfying the
requirements of Section 7.1.7, the Borrower and the Parent will not, and will
not permit any of their respective Subsidiaries to, liquidate or dissolve,
consolidate or amalgamate with, or merge into or with, any other Person, or
purchase or otherwise acquire all or any substantial part of the assets or stock
of any Person (or of any division thereof) other than pursuant to a Permitted
Business Acquisition.
SECTION 7.2.11. Asset Dispositions, etc. The Borrower and the Parent
will not, and will not permit any of their respective Subsidiaries to, sell,
transfer, lease, contribute or otherwise convey or dispose of, or grant options,
warrants or other rights with respect to, all or any part of its assets
(including accounts receivable and capital stock of Subsidiaries) to any Person,
except
(a) if such sale, transfer, lease, contribution or conveyance
is of Inventory in the ordinary course of its business;
(b) if such disposition is a Permitted Disposition; or
(c) if such assets are worn or obsolete and the net book value
of such assets, together with the net book value of all other assets
sold, transferred, leased, contributed or conveyed by the Borrower, the
Parent or any of their respective Subsidiaries pursuant to this clause
during the Fiscal Year in which such assets are to be sold,
transferred, leased, contributed or conveyed, does not exceed $250,000
in the aggregate.
SECTION 7.2.12. Modification of Certain Agreements. Neither the
Borrower nor the Parent will consent to any amendment, supplement or other
modification of any of the terms or provisions contained in, or applicable to,
the Purchase Agreement, the Merger Certificate or the Stockholders Agreement,
other than any such amendment, supplement or other modification which is
immaterial and which could not adversely affect the Agent or any Lender.
SECTION 7.2.13. Transactions with Affiliates. The Borrower and the
Parent will not, and will not permit any of their respective Subsidiaries to,
enter into, or cause, suffer or permit to exist any arrangement or contract
with, any of its other Affiliates unless such arrangement or contract is on fair
and reasonable terms and is an arrangement or contract of the
-93-
<PAGE> 101
kind which would be entered into by a prudent Person in the position of the
Borrower or such Subsidiary with a Person which is not one of its Affiliates (it
being acknowledged that transactions between the Parent or any of its
Subsidiaries, on the one hand, and any Stockholder or any of its Affiliates, on
the other hand, involving the provision of financial, investment banking,
management, consulting or underwriting services by such Stockholder or any of
its Affiliates shall not be prohibited by this Section to the extent that the
fees payable (x) to DLJ or its Affiliates do not exceed the usual and customary
fees of DLJ or its Affiliates charged to Persons that are not Affiliates of DLJ
and its Affiliates or (y) to any other Stockholder or its Affiliates do not
exceed the fees charged by recognized investment banking institutions which
provide financial, investment banking, management, consulting or underwriting
services in the ordinary course of their business, whether through direct equity
ownership, warrants, contract rights or otherwise).
SECTION 7.2.14. Negative Pledges, Restrictive Agreements, etc. The
Borrower and the Parent will not, and will not permit any of their respective
Subsidiaries to, enter into any agreement (excluding this Agreement and any
other Loan Document) prohibiting:
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired (other than
pursuant to an agreement governing Indebtedness permitted by clause (d)
of Section 7.2.2 to the extent such agreement relates solely to the
assets financed with the proceeds of such Indebtedness), or the ability
of the Borrower or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document; or
(b) the ability of any Subsidiary of the Borrower to make any
payments, directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of management
and other intercompany charges, expenses and accruals or other returns
on investments, or any other agreement or arrangement which restricts
the ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower.
In addition, the Borrower and the Parent will not, and will not permit
any of their respective Subsidiaries to, enter into any tax sharing agreement or
similar arrangement unless the same shall have been reviewed by and consented to
by the Agent (such consent not to be unreasonably withheld).
-94-
<PAGE> 102
SECTION 7.2.15. Management and Director Fees, Expenses, etc. The
Borrower and the Parent will not, and will not permit any of their respective
Subsidiaries to:
(a) pay management, advisory, consulting or other similar fees,
other than (i) fees payable to the Lenders or any of their affiliates,
(ii) fees payable on the date of the initial Credit Extension and
disclosed to the Agent, and (iii) fees payable to consultants engaged
on arm's-length basis; or
(b) reimburse any Affiliates for any expenses unless the same
shall be otherwise permitted hereunder and shall be reasonable and
documented in reasonable detail.
SECTION 7.2.16. Environmental Liens. The Borrower and the Parent will
not, and will not permit any of their respective Subsidiaries to, allow any Lien
imposed pursuant to any law, rule, regulation or order relating to any Hazardous
Material (including the disposal thereof) to be imposed or to remain on any real
property owned or operated by the Borrower, the Parent or any of their
respective Subsidiaries, except as contested in good faith by appropriate
proceedings for which adequate reserves have been established and are being
maintained on its books.
SECTION 7.2.17. Fiscal Year End. Neither the Borrower nor the Parent
shall change its fiscal year to end on any date other than on the last Sunday of
December.
SECTION 7.2.18. Activities of the Parent. Without limiting the effect
of any provision contained in this Article VII, the Parent will not engage in
any business activity other than its continuing ownership of all the shares of
capital stock of the Borrower and Petroleum and its compliance with the
obligations applicable to it under the Loan Documents. Without limiting the
generality of the immediately preceding sentence, the Parent will not (a)
create, incur, assume or suffer to exist any Indebtedness (other than
Indebtedness in respect of the guaranty contained in Article IX), (b) create,
assume, or suffer to exist any Lien upon, or grant any options or other rights
with respect to, any of its revenues, property or other assets, whether now
owned or hereafter acquired (other than pursuant to the Loan Documents), (c)
wind-up, liquidate or dissolve itself (or suffer to exist any of the foregoing),
consolidate or amalgamate with or merge into or with any other Person, or
convey, sell, transfer, lease or otherwise dispose of all or any part of its
assets, in one transaction or a series of transactions, to any Person or
Persons, (d) create, incur, assume or suffer to exist any Investment in any
Person other than (i) as provided in clause (a) of Section 7.2.5 and (ii) in
respect of any additional equity Investments in the Borrower or (e) permit to be
taken any action that would result in a Change in Control. The Parent agrees not
-95-
<PAGE> 103
to commence or cause the commencement of any of the actions described in clause
(b), (c) or (d) of Section 8.1.9 of this Agreement with respect to any of its
Subsidiaries.
SECTION 7.2.19. Activities of Certain Subsidiaries of the Parent.
Without limiting the effect of any provision contained in this Article VII:
(a) Petroleum of California will not engage in any business
activity other than owning and operating gasoline stations in
California and Arizona; and
(b) Delight will not engage in any business activity other than
the operation of the merchandise distribution warehouse located at 508
Time Saver Avenue, Harahan, Louisiana.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall default
(a) in the payment or prepayment when due of any principal of
any Loan;
(b) in the payment when due of any interest or fees and such
default shall remain unremedied for a period in excess of three
Business Days; and
(c) in the payment when due of any other Obligation and such
default shall continue unremedied for a period of 10 Business Days.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Agent or any Lender
pursuant to this Agreement or any such other Loan Document (including any
certificates delivered pursuant to Article V) is or shall be incorrect when made
in any material respect. Any representation or warranty of the Seller under the
Purchase Agreement shall have been incorrect when made which could reasonably be
expected to have a material adverse effect on the financial condition,
operations, assets, business, properties, revenues or prospects
-96-
<PAGE> 104
of the Borrower and its Subsidiaries taken as a whole or the Parent and its
Subsidiaries taken as a whole.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower or the Parent shall default in the due performance and observance
of any of their obligations under clause (e) of Section 7.1.1, Section 7.1.7,
Section 7.1.8, Section 7.1.10, Section 7.1.11, Section 7.1.13 or Section 7.2 or
any other Obligor shall default in the performance of any of its obligations in
respect of such Sections as such Sections are incorporated by reference or
otherwise in any Loan Document to which such Obligor is a party.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of (a) any agreement
contained in Section 7.1.1 not covered in Section 8.1.3 and such default shall
continue unremedied for a period of 10 days from the earlier of the date an
Authorized Officer of an Obligor has actual knowledge thereof and the receipt by
an Obligor of written notice thereof from the Agent, or (b) any other agreement
contained herein or in any other Loan Document (other than items covered by
Section 8.1.3) executed by it, and such default shall continue unremedied for a
period of 30 days from the earlier of the date an Authorized Officer of an
Obligor has actual knowledge thereof and the receipt by an Obligor of written
notice thereof from the Agent.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Subsidiaries or any
other Obligor having a principal amount, individually or in the aggregate, in
excess of $1,000,000, or a default shall occur in the performance or observance
of any obligation or condition with respect to such Indebtedness if the effect
of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of
money in excess of $2,000,000 shall be rendered against the Borrower or any of
its Subsidiaries or any other Obligors and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 45 consecutive days during
which a stay of enforcement of such judgment or
-97-
<PAGE> 105
order, by reason of a pending appeal, bond or otherwise, shall not be
in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by the Borrower any member of
its Controlled Group, any other Obligor, or any other Person to
terminate a Pension Plan if, as a result of such termination, the
Borrower or any such member could be required to make a contribution to
such Pension Plan, or could reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of $1,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien on property of the Borrower or
any of its Controlled Group under Section 302(f) of ERISA.
SECTION 8.1.8. Change in Control; Stockholders Letter. Any Change in
Control shall occur or there is a breach of the Stockholders Letter of
Understanding.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any of its
Subsidiaries or any other Obligor shall
(a) generally fail to pay debts as they become due, or admit in
writing its inability to pay debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator, or other custodian for the Borrower
or any of its Subsidiaries or any other Obligor or any property of any
thereof, or make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the involuntary appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower
or any of its Subsidiaries or any other Obligor or for a substantial
part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within thirty
days;
(d) permit or suffer to exist the involuntary commencement of,
or voluntarily commence, any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or
insolvency laws, or permit or suffer to exist the involuntary
commencement of, or voluntarily commence, any dissolution, winding up
or liquidation proceeding, in each case, by or against the Borrower or
any of its Subsidiaries or any other Obligor,
-98-
<PAGE> 106
provided that if not commenced by the Borrower or such Subsidiary or
any other Obligor such proceeding shall be consented to or acquiesced
in by the Borrower or such Subsidiary or any other Obligor, or shall
result in the entry of an order for relief or shall remain for thirty
days undismissed; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. Without the consent of the
Lenders, any Loan Document, or any Lien granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of the Borrower or any Obligor party thereto; the Borrower, any other Obligor or
any other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien securing
any Obligation shall, in whole or in part, cease to be a perfected first
registered priority Lien.
SECTION 8.1.11. Beverage Licenses. The Borrower and each other
Subsidiary of the Parent which owns or operates convenience stores shall fail at
any time to have in full force and effect Beverage Licenses necessary to permit,
at 75% or more of the convenience stores owned or operated by the Borrower and
such Subsidiaries which sold and distributed alcoholic beverages as of the
Effective Date (exclusive of convenience stores sold by the Borrower or any such
Subsidiary) and, if acquired or opened after the Effective Date, which sold and
distributed alcoholic beverages on the date of such acquisition or opening, the
sale and distribution of the alcoholic beverages so sold or distributed on such
respective dates.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (b) through (d) of Section 8.1.9 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (b) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the outstanding principal
amount of the Loans and other Obligations to be due and payable and/or the
Commitments (if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of
-99-
<PAGE> 107
such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Commitments shall terminate.
ARTICLE IX
GUARANTY
SECTION 9.1. The Guaranty. The Parent hereby unconditionally and
irrevocably guarantees the full and prompt payment when due, whether at stated
maturity, by acceleration or otherwise (including all amounts which would have
become due but for the operation of the automatic stay under Section 362(a) of
the Federal Bankruptcy Code, 11 U.S.C. 362(a), and the operation of Sections
502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. Section 502(b)
and Section 506(b)), of the following (collectively, the "Guaranteed
Obligations"),
(a) all Obligations of the Borrower and each other Obligor to
the Agent and each of the Lenders now or hereafter existing under this
Agreement and each other Loan Document, whether for principal,
interest, fees, expenses or otherwise; and
(b) all other Obligations to the Agent and each of the Lenders
now or hereafter existing under any of the Loan Documents, whether for
principal, interest, fees, expenses or otherwise.
The obligations of the Parent under this Article IX constitute a guaranty of
payment when due and not of collection, and the Parent specifically agrees that
it shall not be necessary or required that the Agent, any Lender or any holder
of any Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor (or any other Person)
before or as a condition to the obligations of the Parent under this Article IX.
SECTION 9.2. Guaranty Unconditional. The obligations of the Parent
under this Article IX shall be construed as a continuing, absolute,
unconditional and irrevocable guaranty of payment and shall remain in full force
and effect until all the Guaranteed Obligations have been indefeasibly paid in
full in cash and all Commitments shall have permanently terminated. The Parent
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the agreement, instrument or document under which they arise,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or any of
the Lenders with respect thereto. The liability
-100-
<PAGE> 108
of the Parent hereunder shall be absolute and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, the Notes, any Rate Protection Agreement with a Lender or
any other Loan Document or any other agreement or instrument relating
to any thereof;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
compromise, renewal, extension, acceleration or release with respect
thereto, or any other amendment or waiver of or any consent to
departure from this Agreement, the Notes, any Rate Protection Agreement
with a Lender or any other Loan Document;
(c) any addition, exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) the failure of the Agent or any Lender
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person (including any other guarantor) under the
provisions of this Agreement, any Note, any Rate Protection
Agreement with a Lender or any other Loan Document or
otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any of the
Guaranteed Obligations;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of this
Agreement, any Note, any Rate Protection Agreement with a Lender or any
other Loan Document;
(f) any defense, set-off or counter-claim which may at any time
be available to or be asserted by the Borrower or any other Obligor
against the Agent or any Lender;
(g) any reduction, limitation, impairment or termination of the
Guaranteed Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and the Parent hereby waives any right to or claim of) any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability
-101-
<PAGE> 109
of, or any other event or occurrence affecting, the Guaranteed
Obligations or otherwise; or
(h) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor or any surety or guarantor.
SECTION 9.3. Reinstatement in Certain Circumstances. If at any time any
payment in whole or in part of any of the Guaranteed Obligations is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower, any other Obligor or otherwise, the Parent's
obligations under this Article IX with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
SECTION 9.4. Waiver by the Parent. The Parent irrevocably waives
promptness, diligence, notice of acceptance hereof, presentment, demand, protest
and any other notice with respect to any of the Guaranteed Obligations, as well
as any requirement that at any time any action be taken by any Person against
the Borrower or any other Person.
SECTION 9.5. Postponement of Subrogation, etc. The Parent will not
exercise any rights which it may acquire by way of rights of subrogation by any
payment made hereunder or otherwise, until the prior payment, in full and in
cash, of all Guaranteed Obligations. Any amount paid to the Parent on account of
any such subrogation rights prior to the payment in full of all Guaranteed
Obligations shall be held in trust for the benefit of the Lenders and each
holder of a Note and shall immediately be paid to the Agent and credited and
applied against the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of this Agreement; provided, however, that if
(a) the Parent has made payment to the Lenders and each holder
of a Note of all or any part of the Guaranteed Obligations, and
(b) all Guaranteed Obligations have been paid in full and all
Commitments have been permanently terminated,
each Lender and each holder of a Note agrees that, at the Parent's request, the
Agent, on behalf of the Lenders and the holders of the Notes, will execute and
deliver to the Parent appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Parent of an interest in the Guaranteed Obligations resulting from such
payment by the Parent. In furtherance of the foregoing, for so long as any
Guaranteed Obligations or Commitments remain outstanding, the Parent shall
-102-
<PAGE> 110
refrain from taking any action or commencing any proceeding against the Borrower
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in the respect of payments to
any Lender or any holder of a Note.
SECTION 9.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under this Agreement or any Note
is stayed upon the occurrence of any event referred to in Section 8.1.9 with
respect to the Borrower, all such amounts otherwise subject to acceleration
under the terms of this Agreement shall nonetheless be payable by the Parent
hereunder forthwith.
ARTICLE X
THE AGENT
SECTION 10.1. Actions. Each Lender hereby appoints SG as Agent under
and for purposes of this Agreement, the Notes and each other Loan Document. Each
Lender authorizes the Agent to act on behalf of such Lender under this
Agreement, the Notes and each other Loan Document and, in the absence of other
written instructions from the Required Lenders received from time to time by the
Agent (with respect to which the Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Without limiting the effect of
the preceding sentences of this Section 10.1, each Lender authorizes the Agent
to act as collateral agent and to hold and accept title to all liens and
security interests granted to the Agent by the Borrower, the Parent or any other
Obligor for the ratable benefit of the Agent and the Lenders, in order to
exercise remedies on behalf of the Lenders in connection with the enforcement of
such liens and security interests in accordance with the provisions of the Loan
Documents. Each Lender hereby indemnifies (which indemnity shall survive any
termination of this Agreement) the Agent, pro rata according to such Lender's
Percentage, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against, the Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which the Agent is not
reimbursed by the Borrower; provided, however, that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the negligence
or wilful misconduct of the Agent. The Agent
-103-
<PAGE> 111
shall not be required to take any action hereunder, under the Notes or under any
other Loan Document, or to prosecute or defend any suit in respect of this
Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Agent shall be
or become, in the determination of the Agent, inadequate, the Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given; provided, however,
that no Lender shall be required to indemnify the Agent, with respect to any
obligation, loss, damage, claim, cost or expense for which the Agent would be
entitled to indemnification hereunder, in an amount which would be greater than
such Lender's Percentage of the aggregate amount of such obligation, loss,
damage, claim, cost or expense.
SECTION 10.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. (New
York City time), on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Agent, such Lender and
the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 10.3. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
negligence, nor responsible for any recitals or warranties herein or therein,
nor for the effectiveness, enforceability, validity or due execution of this
Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing
-104-
<PAGE> 112
which the Agent believes to be genuine and to have been presented by a proper
Person.
SECTION 10.4. Successor. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all Lenders. If no successor
Agent shall have been appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as the Agent, the provisions of
(a) this Article X shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this
Agreement; and
(b) Section 11.3 and Section 11.4 shall continue to inure to
its benefit.
SECTION 10.5. Credit Extensions by SG. SG shall have the same rights
and powers with respect to (x) the Loans made by it or any of its Affiliates,
and (y) the Notes held by it or any of its Affiliates as any other Lender and
may exercise the same as if it were not the Agent. SG and each of its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not the Agent hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to
-105-
<PAGE> 113
time any rights and privileges available to it under this Agreement or any other
Loan Document.
SECTION 10.7. Loan Documents, etc. Each Lender hereby authorizes the
Agent to enter into the applicable Loan Documents and to take all action
contemplated thereby. Each Lender agrees that no Lender shall have any right
individually to seek to realize upon the security granted by any Loan Document,
it being understood and agreed that such rights and remedies may be exercised
solely by the Agent for the benefit of the Lenders and the Agent upon the terms
of the Loan Documents. The Agent shall determine (after consultation with the
Required Lenders (provided that, in the case there are only two Lenders at the
time of such determination, such consultation will be with each such Lender))
the manner in which proceeds of Collateral will be applied to the Obligations
(after the payment of fees and expenses as set forth in the Loan Documents).
SECTION 10.8. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request given to the Agent by the Borrower or the
Parent and required to be delivered to the Lenders pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower or the
Parent). The Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Agent from the Borrower for distribution to the Lenders by the Agent in
accordance with the terms of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Agent (acting only at the direction or with
the authority of the Required Lenders); provided, however, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of
"Required Lenders", increase any Commitment Amount or the Percentage of
any Lender, reduce any fees described in Article III, change the time
for payment of fees to the Lenders described in Article III, or release
all or any substantial part of the collateral security, except as
-106-
<PAGE> 114
otherwise specifically provided in any Loan Document, shall be made
without the consent of each Lender affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment under Section 3.1.2(b) of principal of, or interest
on, any Loan or Reimbursement Obligation (or reduce the principal
amount of or rate of interest on any Loan or Reimbursement Obligation)
or extend any Commitment Termination Date without the consent of the
holder of that Note evidencing such Loan;
(d) increase the Stated Amount of any Letter of Credit unless
consented to by each Issuer; or
(e) affect adversely the interests, rights or obligations of
the Agent in its capacity as Agent or the Issuer in its capacity as
Issuer, without the consent of the Agent or the Issuer, as the case may
be.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder. The
remedies provided in this Agreement are cumulative, and not exclusive of
remedies provided by law.
SECTION 11.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and addressed, delivered or transmitted to such party at its address or
telecopy number set forth on Schedule IV hereto (or set forth in a Lender
Assignment Agreement) or at such other address or telecopy number as may be
designated by such party in a notice to the other parties given in accordance
with this Section. Any notice, if mailed and properly addressed and sent return
receipt requested with postage prepaid, shall be deemed given three Business
Days after posting; any notice, if sent by prepaid overnight express shall be
deemed delivered on the next Business Day; any notice, if transmitted by
telecopy, shall be deemed given when sent, with confirmation of receipt; any
notice, if transmitted by hand, shall be deemed received when delivered.
-107-
<PAGE> 115
SECTION 11.3. Payment of Costs and Expenses. The Borrower and the
Parent jointly and severally agree to pay on demand all reasonable expenses of
the Agent (including the reasonable fees and out-of-pocket expenses of counsel
to the Agent, including any legal counsel and consultants, if any, who may be
retained in connection with the transactions contemplated hereby by the Agent)
in connection with
(a) the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, and the Lenders' and the Agent's
consideration of their rights and remedies hereunder or in connection
herewith from time to time whether or not the transactions contemplated
hereby or thereby are consummated;
(b) the filing, recording, refiling or rerecording of the
Pledge Agreements, the Security Agreements (and any supplements
thereto) and any other security instruments executed in connection with
the transactions contemplated hereby and/or U.C.C. financing statements
relating thereto and all amendments, supplements and modifications to
any thereof and any and all other documents or instruments of further
assurance required to be filed or recorded or refiled or rerecorded by
the terms hereof or of the Pledge Agreements or the Security Agreements
or such other documents; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower and the Parent jointly and severally further agree to pay, and to
save the Agent and the Lenders harmless from all liability for, any stamp or
other taxes which may be payable in connection with the execution or delivery of
this Agreement, the borrowings hereunder, or the issuance of the Notes or any
other Loan Documents. The Borrower and the Parent jointly and severally also
agree to reimburse the Agent and each Lender upon demand for all reasonable
out-of-pocket expenses (including attorneys' fees and legal expenses, including
allocated fees and expenses of internal counsel) incurred by the Agent or such
Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations (including the Obligations of the Parent under
Article IX). The Borrower and the Parent jointly and severally also agree to
reimburse the Agent on demand for all administration, audit and monitoring
expenses incurred in connection with the Borrowing Base and
-108-
<PAGE> 116
determinations in respect thereof. The Borrower and the Parent jointly and
severally further agree to reimburse the Agent on demand for all other
administration, audit and monitoring expenses incurred after the occurrence of
an Event of Default in connection with this Agreement and the other Loan
Documents.
SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower and the Parent jointly and severally hereby indemnify, exonerate
and hold the Agent and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (including allocated fees and expenses of
internal counsel) (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or with any
Letter of Credit;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article V not to fund
any Borrowing);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower, the Parent or any
of their respective Subsidiaries of all or any portion of the stock or
assets of any Person, whether or not the Agent or such Lender is party
thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by the Borrower, the
Parent or any of their respective Subsidiaries of any Hazardous
Material;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower, the Parent or any of their
respective Subsidiaries of any Hazardous Material (including, without
limitation, any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under any Environmental Law,
-109-
<PAGE> 117
the costs of defending and or counterclaiming or claiming over against
third parties in respect of any action or matter, and any cost,
liability or damage arising out of a settlement of any action entered
into by the Agent), regardless of whether caused by, or within the
control of, the Borrower, the Parent or any such Subsidiary;
(f) Environmental Laws relating to the Borrower, the Parent or
any of their respective Subsidiaries, including the assertion of any
lien thereunder;
(g) any order, consent, decree, settlement, judgement or
verdict arising from the deposit, storage, disposal, burial, dumping,
injection, spilling, leaking, or other placement or release in, on or
from the Realty of any Hazardous Material (including without limitation
any order under the Environmental Laws to clean-up or decommission),
whether or not such deposit, storage, disposal, burial, dumping,
injecting, spillage, leaking or other placement or release in, on or
from the Realty of any Hazardous Material:
(i) results by, through or under the Borrower, the
Parent or any of their respective Subsidiaries; or
(ii) occurred with the knowledge and consent of the
Borrower, the Parent or any of their respective Subsidiaries;
or
(iii) occurred before or after the Effective Date,
whether with or without the knowledge of the Borrower, the
Parent or any of their respective Subsidiaries; or
(h) the failure to maintain insurance coverage required by
Section 7.1.4;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower and the Parent
each hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 11.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 11.3 and 11.4, and the obligations of the Lenders under
Section 10.1, shall in each case survive any termination of this Agreement, the
payment in full of all the Obligations and the termination of all the
Commitments. The representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the
-110-
<PAGE> 118
execution and delivery of this Agreement and each such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower, the Parent and each initial Lender
(or notice thereof satisfactory to the Agent) shall have been received by the
Agent and notice thereof shall have been given by the Agent to the Borrower, the
Parent and each Lender.
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT AND THE
NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral, with
respect thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) neither the Borrower nor the Parent may assign or transfer
its rights or obligations hereunder without the prior written consent
of the Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or
-111-
<PAGE> 119
sell participations in, its Loans and Commitments to one or more other Persons
in accordance with this Section 11.11.
SECTION 11.11.1. Assignments. (a) Any Lender, upon notice to the
Borrower and with the written consent of the Agent (which consent shall not be
unreasonably withheld or delayed), may at any time assign and delegate all or
any fraction of such Lender's Loans, Commitments and Letter of Credit
participations to one or more commercial banks or other financial institutions
(each Person described in either of the foregoing clauses as the Person to whom
such assignment and delegation is to be made being hereinafter referred to as an
"Assignee Lender"), all or any fraction of such Lender's total Loans,
Commitments and Letter of Credit participations (which assignment and delegation
shall be of a constant, and not a varying, percentage of all the assigning
Lender's Loans and Commitments) in a minimum aggregate amount of $5,000,000 (or,
if less, the total of such Lender's Commitment Amount); provided, however, that
the Borrower, each other Obligor and the Agent shall be entitled to continue to
deal solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until
(i) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Agent by such Lender and such Assignee Lender;
(ii) such Assignee Lender shall have executed and delivered to
the Borrower and the Agent a Lender Assignment Agreement, accepted by
the Agent; and
(iii) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower shall execute and
deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments
-112-
<PAGE> 120
hereunder, replacement Notes in the principal amount of the Loans and
Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Notes. The
assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to
the Borrower. Accrued interest on that part of the predecessor Notes evidenced
by the new Notes, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the predecessor Notes
evidenced by the replacement Notes shall be paid to the assignor Lender. Accrued
interest and accrued fees shall be paid at the same time or times provided in
the predecessor Notes and in this Agreement. Such assignor Lender or such
Assignee Lender must also pay a processing fee to the Agent upon delivery of any
Lender Assignment Agreement in the amount of $3,000. Any attempted assignment
and delegation not made in accordance with this Section 11.11.1 shall be null
and void.
(b) Notwithstanding clause (a), any Lender may assign and pledge all or
any portion of its Loans and Notes and other rights to a Federal Reserve Bank as
collateral security; provided, however, that no such assignment under this
clause (b) shall release the assignor Lender from any of its obligations
hereunder.
SECTION 11.11.2. Participations. (a) Any Lender may at any time without
the consent of the Borrower or the Agent (but with prior written notice to the
Borrower and the Agent) sell to one or more commercial banks or other Persons
(each of such commercial banks and other Persons being herein called a
"Participant") participating interests in any of the Loans, Commitments, or
other interests of such Lender hereunder; provided, however, that
(i) no participation contemplated in this Section 11.11.2 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(ii) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(iii) the Borrower and each other Obligor and the Agent shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and each
of the other Loan Documents;
(iv) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be
-113-
<PAGE> 121
entitled to require such Lender to take or refrain from taking any
action hereunder or under any other Loan Document, except that such
Lender may agree with any Participant that such Lender will not,
without such Participant's consent, take any actions of the type
described in clause (b) or (c) of Section 11.1; and
(v) the Borrower shall not be required to pay any amount under
clause (b) of this Section that is greater than the amount which it
would have been required to pay had no participating interest been
sold.
(b) The Borrower acknowledges and agrees that each Participant, for
purposes of Sections 4.3, 4.4, 4.5, 4.6, 11.3 and 11.4, shall be considered a
Lender, subject to clause (v) above.
SECTION 11.11.3. Certain Other Provisions. (a) The Borrower and the
Parent authorize each Lender to disclose to any participant or assignee (each, a
"Transferee") and any prospective Transferee, subject to the agreement of such
Transferee or prospective Transferee to comply with Section 11.14 hereof, any
and all financial and other information in such Lender's possession concerning
the Borrower, the Parent or any of their respective Subsidiaries which has been
delivered to such Lender by any such Person pursuant to or in connection with
this Agreement or which has been delivered to such Lender by any such Person in
connection with such Lender's credit evaluation of the Borrower, the Parent or
any of their respective Subsidiaries prior to entering into this Agreement.
(b) If, pursuant to this Section, any interest in this Agreement or any
Loan or Note is transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee (other than any Participant), and
may cause any Participant, concurrently with the effectiveness of such transfer,
(i) to represent to the transferor Lender (for the benefit of the transferor
Lender, the Agent and the Borrower) that under applicable law and treaties, no
taxes will be required to be withheld by the Agent, the Borrower or the
transferor Lender with respect to any payments to be made to such Transferee in
respect of the Loans, (ii) to furnish to the transferor Lender, the Agent and
the Borrower either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Transferee claims entitlement to whole
or partial exemption from U.S. Federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the transferor Lender, the
Agent and the Borrower) to provide the transferor Lender, the Agent and the
Borrower a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
-114-
<PAGE> 122
and regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
SECTION 11.12. Other Transactions. Nothing contained herein shall
preclude either the Agent or any other Lender from engaging in any transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower, the Parent or any of their respective Affiliates in which the
Borrower, the Parent or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 11.13. Certain Collateral and Other Matters. (a) The Agent is
authorized on behalf of all the Lenders, without the necessity of any notice to
or further consent from the Lenders, from time to time to take any action with
respect to any Collateral or the Loan Documents which may be necessary to
perfect and maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to the Loan Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any security interest or Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Commitments and
Letters of Credit and payment in full in cash of all principal of and interest
on the Loans, all fees payable pursuant to Section 3.3 and 11.3, all
Reimbursement Obligations (including interest thereon) and all other fees, costs
and expenses that are payable under this Agreement or under any other Loan
Document and have been invoiced (in which case the Lenders hereby authorize the
Agent to execute, and the Agent agrees to execute, reasonable releases in
connection with this Agreement (other than, in any event, as to items stated to
survive the termination of this Agreement)); (ii) constituting property sold or
to be sold or disposed of as part of or in connection with any disposition
permitted hereunder; (iii) constituting property in which the Borrower or any
Subsidiary of the Borrower owned no interest at the time the security interest
and/or Lien was granted or at any time thereafter; (iv) constituting property
leased to the Borrower or any Subsidiary of the Borrower under a lease which has
expired or been terminated in a transaction permitted under this Agreement or is
about to expire and which has not been, and is not intended by the Borrower or
such Subsidiary to be, renewed or extended; (v) consisting of an instrument
evidencing Indebtedness or other debt instrument, if the Indebtedness evidenced
thereby has been paid in full; or (vi) if approved, authorized or ratified in
writing by the Required Lenders or, if required by Section 11.1, each Lender.
Upon request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of collateral pursuant to
this Section.
-115-
<PAGE> 123
SECTION 11.14. Confidential Information. The Agent and each Lender
agree to hold all non-public information (which has been identified as such by
the Borrower to the Agent and each Lender) obtained pursuant to this Agreement
and the other Loan Documents in accordance with its customary procedures for
handling confidential information, provided that disclosure of such confidential
information may be made (a) to the Affiliates, examiners, directors,
shareholders, accountants, auditors, counsel and other professional advisors of
the Agent and each Lender, (b) in connection with any assignment or
participation to an Assignee Lender or Participant, as the case may be, so long
as such Assignee Lender or Participant has previously agreed to these
confidentiality provisions, or (c) as required or requested by any governmental
agency, authority or representative, or pursuant to any court order, legal
process or applicable law, rule or regulation.
SECTION 11.15. Forum Selection and Consent to Jurisdiction. TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, THE BORROWER OR THE PARENT MAY
BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE
BORROWER AND THE PARENT HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH OF THE BORROWER AND
THE PARENT FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. EACH OF THE BORROWER AND THE PARENT HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER OR THE PARENT
HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE
BORROWER AND THE PARENT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
-116-
<PAGE> 124
SECTION 11.16. Waiver of Jury Trial, etc. THE AGENT, THE LENDERS, THE
BORROWER AND THE PARENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, THE BORROWER OR
THE PARENT. THE BORROWER AND THE PARENT ACKNOWLEDGE AND AGREE THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. IN NO EVENT SHALL ANY LENDER
OR THE AGENT BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
-117-
<PAGE> 125
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
E-Z SERVE CONVENIENCE STORES, INC.
as Borrower
By: /s/ John T. Miller
------------------------------
Title: Senior Vice President
E-Z SERVE CORPORATION,
as Guarantor
By: /s/ John T. Miller
------------------------------
Title: Senior Vice President
SOCIETE GENERALE,
as Agent
By: /s/ David I. Brunson
------------------------------
Title: First Vice President
LENDERS
SOCIETE GENERALE
By: /s/ David I. Brunson
------------------------------
Title: First Vice President
BANK OF AMERICA TEXAS, N.A.
By: /s/ Kim A. Ruth
------------------------------
Title: Vice President
<PAGE> 126
SCHEDULE II
PERCENTAGES
<TABLE>
<CAPTION>
Revolving Loan Term Loan
Lender Commitment Commitment
- ------ ---------- ----------
<S> <C> <C>
SOCIETE GENERALE 66.66666667% 66.66666667%
BANK OF AMERICA TEXAS, N.A. 33.33333333% 33.33333333%
----------- -----------
TOTAL 100.00% 100.00%
</TABLE>
<PAGE> 127
SCHEDULE III
CAPITAL EXPENDITURE LEVELS II AND III
<TABLE>
<CAPTION>
Minimum Fixed Capital
Charge Expenditure
Fiscal Year Minimum EBITDA Coverage Ratio Level
- ----------- -------------- -------------- -----
<S> <C> <C> <C>
1995 $22,000,000 1.15:1.00 II
1995 $19,600,000 1.30:1.00 III
1996 $26,800,000 1.30:1.00 II
1996 $23,700,000 1.65:1.00 III
1997 $29,300,000 1.30:1.00 II
1997 $26,000,000 1.35:1.00 III
1998 $31,600,000 1.40:1.00 II
1998 $28,100,000 1.45:1.00 III
1999 $34,000,000 1.50:1.00 II
1999 $30,200,000 1.55:1.00 III
2000 $36,800,000 1.70:1.00 II
2000 $32,700,000 1.75:1.00 III
2001 $39,600,000 1.70:1.00 II
2001 $35,200,000 1.70:1.00 III
</TABLE>
<PAGE> 128
SCHEDULE IV
ADMINISTRATIVE INFORMATION
Borrower
E-Z Serve Convenience Stores, Inc.
2550 North Loop West
Suite 600
Houston, Texas 77092
Attention: John T. Miller
Telecopier No.: 713-684-4367
Guarantor
E-Z Serve Corporation
2550 North Loop West
Suite 600
Houston, Texas 77092
Attention: John T. Miller
Telecopier No.: 713-684-4367
Agent
SOCIETE GENERALE
1221 Avenue of Americas
New York, New York 10019
Term Loan and Revolving Loan Notices:
Attention: Ricky Tretola (Term Loan and Revolving Loan)
Telecopier No.: 212-278-6178
Letter of Credit Notices:
Attention: Jeff Green
Telecopier No.: 212-278-6178
Lenders
SOCIETE GENERALE
Domestic, LIBOR and
Notice Office:
1221 Avenue of Americas
New York, New York 10019
Attention: Ricky Tretola
Telecopier No.: 212-278-6178
<PAGE> 129
BANK OF AMERICA TEXAS, N.A.
Domestic, LIBOR and
Notice Office:
Three Allen Center
333 Clay Street
Suite 3600
Houston, Texas 77002-4183
Attention: Kim Ruth
Telecopier No.: 713-652-3619
-2-
<PAGE> 130
[EXECUTION COPY]
AMENDMENT AGREEMENT NO. 1 TO CREDIT AND GUARANTY AGREEMENT
THIS AMENDMENT AGREEMENT NO. 1 TO CREDIT AND GUARANTY AGREEMENT, dated
as of April 27, 1995 (this " Amendment Agreement"), among E-Z SERVE CONVENIENCE
STORES, INC., a Delaware corporation (the "Borrower"), E-Z SERVE CORPORATION, a
Delaware corporation (the "Guarantor"), the Lenders (as defined below) and
SOCIETE GENERALE ("SG"), as agent (in such capacity, the "Agent") for the
Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantor, the various financial
institutions parties thereto (collectively, the " Lenders") and the Agent have
heretofore entered into a certain Credit and Guaranty Agreement, dated as of
January 17, 1995 (the "Existing Credit Agreement" and, as amended by, and
together with, this Amendment Agreement, the "Credit Agreement"); and
WHEREAS, the Borrower and the Guarantor desire to amend the Existing
Credit Agreement to modify Item 7.2.2(c) ("Ongoing Indebtedness") of the
Disclosure Schedule; and
WHEREAS, the Lenders are willing to consent to such amendment, but
only upon the terms and conditions set forth below (including Article III);
NOW, THEREFORE, in consideration of the amendment and the other
provisions herein obtained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms used in this Amendment Agreement, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
<PAGE> 131
ARTICLE II
AMENDMENT
Subject to receipt by the Agent of counterparts of this Amendment
Agreement duly executed by the Borrower, the Guarantor, the Agent and the
Required Lenders, Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule is hereby amended in its entirety to read as set forth in Exhibit A
hereto, such amendment to be effective as of the Effective Date of the Credit
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Amendment Agreement, the Borrower and the Guarantor jointly and severally
represent and warrant unto the Agent, each Issuer and each Lender as set forth
in this Article III.
SECTION 3.1. Compliance With Warranties. The representations and
warranties set forth herein, in Article VI of the Credit Agreement and in each
other Loan Document delivered in connection herewith or therewith are true and
correct in all material respects with the same effect as if made on and as of
the date hereof (unless stated to relate solely to an earlier date).
SECTION 3.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Borrower and the Guarantor of this
Amendment Agreement, are within the Borrower's and the Guarantor's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(i) contravene either the Borrower's or the Guarantor's Organic Documents, (ii)
contravene or result in a default under any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting either
the Borrower or the Guarantor, or (iii) result in, or require the creation or
imposition of, any Lien (except as contemplated in or created by the Loan
Documents).
SECTION 3.3. Governmental Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance of this Amendment Agreement or the
Credit Agreement.
-2-
<PAGE> 132
SECTION 3.4. Validity, etc. Each of this Amendment Agreement and the
Credit Agreement has been duly executed and delivered by the Borrower and the
Guarantor and constitutes the legal, valid and binding obligation of the
Borrower and the Guarantor enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and to general principles of
equity, regardless of whether enforcement is sought in a proceeding at law or in
equity.
SECTION 3.5. Compliance With Existing Credit Agreement. As of the
execution and delivery of this Amendment Agreement and as of the date hereof,
each of the Borrower, the Guarantor and each other Obligor is in compliance with
all the terms and conditions of the Existing Credit Agreement and the other Loan
Documents to be observed or performed by it, and no Default has occurred and is
continuing.
SECTION 3.6. List of Guaranty Beneficiaries. Attached as Exhibit B
hereto is a list of each of the beneficiaries as of the date hereof of the
guaranties referred to in Item 7.2.2(c) ("Ongoing Indebtedness") of the
Disclosure Schedule.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.1. Ratification of and Limited Amendment to the Credit
Agreement. This Amendment Agreement shall be deemed to be an amendment to the
Existing Credit Agreement, and the Existing Credit Agreement, as amended hereby,
is hereby ratified, approved and confirmed in each and every respect. Except as
specifically amended or modified herein, the Existing Credit Agreement shall
continue in full force and effect in accordance with the provisions thereof and
except as expressly set forth herein the provisions hereof shall not operate as
a waiver of or amendment of any right, power or privilege of the Agent and the
Lenders nor shall the entering into of this Amendment Agreement preclude the
Lenders from refusing to enter into any further or future waivers or amendments.
This Amendment Agreement shall be deemed to be a "Loan Document" for all
purposes of the Credit Agreement.
SECTION 4.2. Credit Agreement, References, etc. All references to
the Credit Agreement in any other document, instrument, agreement or writing
shall hereafter be deemed to refer to the Existing Credit Agreement as amended
hereby. As used in the Credit Agreement, the terms "Agreement", "herein",
"hereinafter", "hereunder", "hereto" and words of similar import shall mean,
from and after the date hereof, the Existing Credit Agreement as amended by this
Amendment Agreement.
-3-
<PAGE> 133
SECTION 4.3. Expenses. The Borrower and the Guarantor jointly and
severally agree to pay all out-of-pocket expenses incurred by the Agent and the
Lenders in connection with the preparation, negotiation, execution and delivery
of this Amendment Agreement, including, without limitation, the reasonable fees
and other charges of Mayer, Brown & Platt, as counsel for the Agent.
SECTION 4.4. Headings. The various headings of this Amendment
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment Agreement or any provisions hereof.
SECTION 4.5. Counterparts. This Amendment Agreement may be signed in
any number of separate counterparts, each of which shall be an original, and all
of which taken together shall constitute one instrument.
SECTION 4.6. Governing Law; Entire Agreement. THIS AMENDMENT
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. This Amendment Agreement constitutes the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersedes any prior agreements, written or oral, with respect thereto. This
Amendment Agreement and the provisions contained herein may be modified only by
an instrument in writing executed by the Borrower, the Agent and the Required
Lenders.
-4-
<PAGE> 134
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
E-Z SERVE CONVENIENCE STORES, INC.,
as the Borrower
By: /s/ JOHN T. MILLER
--------------------------------
Title: Senior Vice President
E-Z SERVE CORPORATION,
as the Guarantor
By: /s/ JOHN T. MILLER
--------------------------------
Title: Senior Vice President
SOCIETE GENERALE,
as the Agent
By: /s/ DAVID BRUNSON
--------------------------------
Title: First Vice President
LENDERS
SOCIETE GENERALE
By: /s/ DAVID BRUNSON
--------------------------------
Title: First Vice President
BANK OF AMERICA TEXAS, N.A.
By: /s/ KIM A. RUTH
--------------------------------
Title: Vice President
-5-
<PAGE> 135
EXHIBIT A
TO AMENDMENT
AGREEMENT NO. 1
ITEM 7.2.2(c)
Ongoing Indebtedness
<TABLE>
<CAPTION>
Balance @
1. Name Inception Date 12/31/94 Maturity
---- -------------- -------- --------
<S> <C> <C> <C>
C. T. Allen August 1980 $448,030 July 2000
*TPI Capital Leases March 1992 $1,590,000 February 2002
Shareholders August 1992 $25,000 July 1997
</TABLE>
* secured indebtedness
2. Obligations of the Parent under guarantees of any of its Subsidiaries'
obligations to trade creditors in an aggregate amount outstanding not to exceed
$10,000,000; provided that (i) all such guaranties are limited as to the amount
and are for a term of no more than one year and (ii) the identity of the
beneficiaries of such guaranties is provided in writing to the Agent.
-6-
<PAGE> 136
EXHIBIT B
TO AMENDMENT
AGREEMENT NO. 1
E-Z SERVE CORPORATION
OUTSTANDING CORPORATE GUARANTIES
1. American Express Travel Related Services Co.
2. Travelers Express
3. Dean Foods Company (T.G. Lee Foods/McArthur Dairy)
4. McLane Company, Inc.
5. Phibro Energy USA, Inc.
6. Placid Refining Company
7. Star Enterprise
8. Petroleum Traders Corporation
9. American Express Travel Related Services Co. (MoneyGram)
10. American Express Travel Related Services Co. (Money Order)
11. Placid Refining Company
12. Carolina Convenience Corporation
-7-
<PAGE> 1
Exhibit 99.(b)(3)
AMENDMENT NO. 2 AND WAIVER NO. 1 TO
CREDIT AND GUARANTY AGREEMENT
THIS AMENDMENT NO. 2 AND WAIVER NO. 1 TO CREDIT AND GUARANTY
AGREEMENT, dated as of June 15, 1995 (this "Amendment and Waiver Agreement"),
among E-Z SERVE CONVENIENCE STORES, INC., a Delaware corporation (the
"Borrower"), E-Z SERVE CORPORATION, a Delaware corporation (the "Guarantor"),
the Lenders (as defined below) and SOCIETE GENERALE ("SG"), as agent (in such
capacity, the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantor, the various financial
institutions parties thereto (collectively, the " Lenders") and the Agent have
heretofore entered into a certain Credit and Guaranty Agreement, dated as of
January 17, 1995 (the "Existing Credit Agreement" and, as amended by Amendment
Agreement No. 1 to Credit and Guaranty Agreement, dated as of April 27, 1995,
and together with this Amendment and Waiver Agreement, the "Credit Agreement");
and
WHEREAS, the Guarantor and EZS Acquisition Corporation, a Delaware
corporation and a direct wholly-owned subsidiary of the Guarantor
("Acquisition"), desire to enter into an Agreement and Plan of Merger with
Sunshine-Jr. Stores, Inc., a Florida corporation ("Target"), in the form
attached hereto as Annex I (the "Merger Agreement"); and
WHEREAS, the Guarantor desires to enter into an Escrow Agreement in
the form attached hereto as Annex II (the "Escrow Agreement") in connection
with the Merger Agreement; and
WHEREAS, the Guarantor desires to cause Acquisition, as contemplated
by the Merger Agreement, to make a tender offer (the "Offer"), upon the terms
and subject to the conditions of the Merger Agreement, to acquire all of the
outstanding shares of common stock, par value $.10 per share (the "Shares"), of
Target, at a price of $12.00 per Share, net to the seller in cash; and
WHEREAS, the Guarantor has entered into a Subscription Agreement with
Phemus Corporation and Intercontinental Mining & Resources Incorporated, a
true, correct and complete copy of
<PAGE> 2
which is attached hereto as Annex III (the "Subscription Agreement"); and
WHEREAS, the Subscription Agreement provides, among other things, for
the receipt by the Guarantor of $12,000,000 in cash to finance, in part, the
consummation of the Offer (the "Equity Financing"); and
WHEREAS, Guarantor desires, assuming consummation of the Offer, to
cause Acquisition to merge into Target in accordance with the terms and
conditions of the Merger Agreement (the "Merger"); and
WHEREAS, the Borrower and the Guarantor desire to obtain amendments
and limited waivers in connection with the foregoing from the Required Lenders,
as more fully set forth herein; and
WHEREAS, the Required Lenders are willing to consent to such
amendments and waiver, but only upon the terms and conditions set forth below
(including Article III);
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined or the context otherwise requires, terms used
in this Amendment and Waiver Agreement, including its preamble and recitals,
have the meanings provided in the Credit Agreement.
ARTICLE II
AMENDMENTS AND LIMITED WAIVERS TO CERTAIN PROVISIONS OF
THE CREDIT AGREEMENT
SECTION 2.1. Amendments and Waivers Relating to Entry into Merger
Agreement. Effective on (and subject to the occurrence of) the Section 2.1
Effective Date (as hereinafter defined), the Lenders and the Agent hereby agree
that certain terms and provisions of the Credit Agreement are amended or waived
to the extent set forth in this Section 2.1.
SECTION 2.1.1. Amendment to Section 1.1 of the Credit Agreement.
Section 1.1 of the Credit Agreement is amended by adding the following terms
and definitions:
-2-
<PAGE> 3
"Acquisition" means EZS Acquisition Corporation, a Delaware
corporation and a direct wholly-owned Subsidiary of the Guarantor.
"Target" means Sunshine-Jr. Stores, Inc., a Florida
corporation.
"Target Indenture" means the Trust Indenture dated June 21,
1994, between Target and NationsBank of Florida, N.A., as Trustee.
SECTION 2.1.2. Amendment to Section 6.8 of the Credit Agreement.
Section 6.8 of the Credit Agreement is amended by deleting the first sentence
thereof and substituting therefor the following sentence: "The Parent has no
direct Subsidiaries except the Borrower, Petroleum and Acquisition." Such
Section 6.8 is further amended by adding the following sentence at the end of
such Section: "Acquisition has no Subsidiaries."
SECTION 2.1.3. Amendment to Section 7.1 of the Credit Agreement.
Section 7.1 of the Credit Agreement is amended by adding the following Section
7.1.15 thereto:
SECTION 7.1.15. Bankruptcy Court Order. The Parent agrees to
use its reasonable best efforts to cause Target to obtain an order
from the U.S. Bankruptcy Court administering Target's Plan of
Reorganization providing that (i) the delivery of a letter of credit
satisfactory in form and substance to the Agent (including, without
limitation, as to face amount) for the benefit of putative Class 7
Creditors holding unresolved Class 7 Claims (as such terms are used in
such Plan of Reorganization) alleviates the need to issue any secured
notes under the Target Indenture to such Class 7 Creditors and (ii)
upon repayment of all secured notes theretofore issued under the
Target Indenture in accordance with the provisions thereof and upon
delivery of such letter of credit, all Class 7 Creditors shall have
been paid in full and all covenants and restrictions set forth in the
Target Indenture and in Section 5.9 of such Plan of Reorganization
shall terminate and be of no further effect.
SECTION 2.1.4. Limited Waiver Regarding Sections 7.2.5, 7.2.7 and
7.2.18 of the Credit Agreement. Compliance by the Guarantor and Acquisition
with the provisions contained in Sections 7.2.5, 7.2.7 and 7.2.18 of the Credit
Agreement are hereby waived to the extent (and only to the extent) necessary to
permit the formation of Acquisition and the entry into the Merger Agreement,
the Subscription Agreement and the agreements
-3-
<PAGE> 4
expressly contemplated thereby, to the extent true, correct and complete copies
thereof have been provided to the Agent prior to the Section 2.1 Effective
Date.
SECTION 2.2. Amendments and Waivers Relating to Consummation of the
Offer. Effective on (and subject to the occurrence of) the Section 2.2
Effective Date (as hereinafter defined), the Lenders and the Agent hereby agree
that certain terms and provisions of the Credit Agreement are amended or waived
(and a certain consent given) to the extent set forth in this Section 2.2.
SECTION 2.2.1. Amendment to Section 1.1 of the Credit Agreement.
Section 1.1 of the Credit Agreement is amended by adding the following terms
and definitions:
"Offer Closing Date" means the date on which Acquisition
purchases at least 76% of the outstanding shares of common stock of
Target pursuant to the tender offer referred to in the Merger
Agreement in accordance with the terms and conditions of the Merger
Agreement and the Offer to Purchase.
"Offer to Purchase" means Acquisition's tender offer statement
on Schedule 14D-1 filed with the Securities and Exchange Commission.
"Second Merger" is defined in Section 7.1.16.
"Second Merger Date" means the date on which the
Second Merger is consummated.
"Series C Preferred Stock" means the $6.00 Convertible
Preferred Stock, Series C, of the Parent, par value $.01 per share.
"Series G Preferred Stock" means the Series G Convertible
Redeemable Preferred Stock of the Parent, par value $.01 per share,
issued pursuant to the Subscription Agreement dated as of June 13,
1995, between the Parent, Phemus Corporation and Intercontinental
Mining & Resources Incorporated and the Certificate of Designation of
Preferences and Rights attached thereto.
"Target Debt Documents" means the Target Indenture and each
other agreement and document relating to Indebtedness of Target
described in clause (c) of Section 7.2.2 to the extent true, correct
and complete copies thereof have been furnished to the Agent.
-4-
<PAGE> 5
SECTION 2.2.2. Amendment to Section 1.4 of the Credit Agreement.
Section 1.4 of the Credit Agreement is amended by adding the following two
sentences at the end thereof:
The parties hereto agree to enter into negotiations in order to amend
as of the Second Merger Date the ratios and amounts set forth in
Sections 7.1.11, 7.2.4, 7.2.7 and 7.2.8 (and any definitions contained
in Section 1.1 to the extent affected by any such amendment to such
ratios and amounts) for the purpose of establishing criteria which
evaluate the financial condition of the Parent and its Subsidiaries
(inclusive of Target) on a substantially similar basis as the criteria
evidenced by the ratios and amounts set forth in Sections 7.1.11,
7.2.4, 7.2.7 and 7.2.8 in effect prior to the Offer Closing Date
(which criteria were established without taking into account the
assets, liabilities, operations, expenditures and income of Target).
Prior to the Second Merger Date, (i) the Borrower and the Parent will
furnish, or will cause to be furnished to each Lender and the Agent
(x) the financial statements, reports, notices and information
referred to in clauses (a), (b) and (c) of Section 7.1.1 on a basis
which does not take into account the assets, liabilities, operations,
expenditures and income of Target, but otherwise in accordance with
the provisions contained in such clauses and (y) together with the
furnishing of each such financial statement, report, notice and item
of information, a financial statement, report, notice or other item of
information (and on the same basis), as the case may be, which
provides as to Target the same information as the financial statement,
report, notice or other item being furnished pursuant to clauses (a),
(b) and (c) of Section 7.1.1, (ii) the covenants set forth in Sections
7.1.11, 7.2.4, 7.2.7 and 7.2.8 shall be calculated without taking into
account the assets, liabilities, operations, expenditures and income
of Target and (iii) the Parent and Target shall comply with the
provisions of Sections 7.2.4A and 7.2.7A.
SECTION 2.2.3. Limited Waiver Regarding Section 3.1.2 of the Credit
Agreement. Compliance by the Guarantor and Acquisition with the provisions
contained in Section 3.1.2 of the Credit Agreement is waived to the extent (and
only to the extent) necessary to permit the Guarantor and Acquisition to
receive the proceeds of the Equity Financing without requiring the payment of
such proceeds to the Agent as a mandatory prepayment of the Term Loans.
-5-
<PAGE> 6
SECTION 2.2.4. Amendment to Section 3.1.2 of the Credit Agreement.
Clause (e) of Section 3.1.2 of the Credit Agreement is amended by adding after
the amount "$3,000,000" the parenthetical "(or, for each of the first full 12
calendar months following the Offer Closing Date, $5,000,000)".
SECTION 2.2.5. Limited Waiver Regarding Section 4.10 of the Credit
Agreement. Compliance by the Guarantor with the provisions contained in
Section 4.10 of the Credit Agreement is waived to the extent (and only to the
extent) necessary to permit the Borrower to make a Borrowing of Revolving Loans
in an amount not to exceed $3,400,000 for the purpose of making a loan to the
Guarantor, so long as the proceeds of such loan are (i) immediately contributed
by the Guarantor to Acquisition as a capital contribution and (ii) are
necessary to finance the purchase of the Shares to be acquired on the Offer
Closing Date (after application of the proceeds of the Equity Financing and the
proceeds of the loans referred to in Section 2.2.18); provided that, if
required by the Agent, such Revolving Loans shall constitute a tranche of Loans
separate and distinct from the Term Loans and Revolving Loans theretofore made
or capable of being made under the Credit Agreement (and the Revolving Loan
Commitment would be reduced by the amount of such tranche), which tranche would
be secured by the pledge referred to in Section 3.2.3, and the Guarantor and
the Borrower hereby agree to execute and deliver such documents and instruments
as the Agent deems reasonably necessary to effectuate the foregoing (including,
without limitation, a further amendment to the Credit Agreement and the
delivery of promissory notes evidencing indebtedness under such new tranche).
SECTION 2.2.6. Amendment to Section 6.5 of the Credit Agreement.
Section 6.5 of the Credit Agreement is amended by adding after the first
sentence thereof the following sentence: "To the Parent's best knowledge, the
audited balance sheet, statement of operations and statement of cash flows for
Target for the fiscal year ending December 29, 1994, and the unaudited balance
sheet, statement of operations and statement of cash flows for Target for the
fiscal quarter ending March 30, 1995, present fairly the financial condition of
Target as at the dates thereof and the results of its operations for the
periods then ended."
SECTION 2.2.7. Amendment to Section 6.8 of the Credit Agreement.
Section 6.8 of the Credit Agreement is amended by adding the words "except
Target" at the end of the last sentence of such Section.
SECTION 2.2.8. Limited Waiver Regarding Section 6.19 of the Credit
Agreement. Any misrepresentation under Section 6.19 of
-6-
<PAGE> 7
the Credit Agreement resulting from consummation of the transactions referred
to in Section 2.2.5 hereof is waived.
SECTION 2.2.9. Limited Waiver Regarding Section 7.1.4 of the Credit
Agreement. Compliance by the Guarantor and Target with the provisions
contained in Sections 7.1.4(b) and (d) of the Credit Agreement relating to (i)
the Agent being named a loss payee under a lenders loss payable clause
contained in any insurance policy maintained by Target, (ii) the Agent being
named an additional insured under any such insurance policy or (iii) the Term
Loans being prepaid with insurance proceeds payable to Target is waived to the
extent and for so long as (and only to the extent and for so long as) a Target
Debt Document would be contravened or a default thereunder would arise as a
result of complying with such provisions.
SECTION 2.2.10. Limited Waiver Regarding Section 7.1.9(c) of the
Credit Agreement. Compliance by the Guarantor and Target with the provisions
contained in Section 7.1.9(c) of the Credit Agreement, insofar as such
provisions relate to assets or rights of Target, is waived to the extent and
for so long as (and only to the extent and for so long as) a Target Debt
Document would be contravened or a default thereunder would arise as a result
of complying with such provisions.
SECTION 2.2.11. Limited Waiver Regarding Section 7.1.10 of the Credit
Agreement. Compliance by the Guarantor and Target with the provisions
contained in Section 7.1.10 of the Credit Agreement is waived to the extent and
for so long as (and only to the extent and for so long as) a Target Debt
Document would be contravened or a default thereunder would arise as a result
of complying with such provisions.
SECTION 2.2.12. Limited Waiver Regarding Section 7.1.11 of the Credit
Agreement. Compliance by the Guarantor and Target with the provisions
contained in Section 7.1.11 of the Credit Agreement, insofar as such provisions
relate to the granting by Target of Liens on its assets, is waived to the
extent and for so long as (and only to the extent and for so long as) a Target
Debt Document would be contravened or a default thereunder would arise as a
result of complying with such provisions.
SECTION 2.2.13. Amendment to Section 7.1 of the Credit Agreement.
Section 7.1 of the Credit Agreement is amended by adding the following Section
7.1.16 thereto:
SECTION 7.1.16. Merger of Target and the Borrower. Each of
the Parent and the Borrower agrees to cause the corporation which
survives the merger of Acquisition with and into Target to be merged
with and into the Borrower, with the Borrower being the
-7-
<PAGE> 8
surviving corporation (the "Second Merger"), in a manner reasonably
satisfactory to the Agent (including as to delivery to the Agent of
the certificates, opinions and other documents referred to in Section
7.1.8, mutatis mutandis), as soon as practicable following the
obtaining of financing sufficient to repay all Indebtedness relating
to the Target Indenture, which financing shall in all respects be
satisfactory to the Lenders (including, without limitation, as to
amount, term, amortization, interest rate, covenants, defaults and
remedies), and the obtaining, to the extent required by applicable
law, of all or substantially all Beverage Licenses necessary to
permit, at the convenience stores owned or operated by Target, the
sale and distribution of the alcoholic beverages sold or distributed
at such convenience stores as of the Section 2.1 Effective Date,
including all consents and approvals, if any, necessary to take into
account effectuation of the Second Merger.
SECTION 2.2.14. Amendment to Section 7.1.12 of the Credit Agreement.
Section 7.1.12 of the Credit Agreement is amended by adding the word ", Target"
after the word "Borrower".
SECTION 2.2.15. Amendment to Section 7.2.2 of the Credit Agreement.
Clause (c) of Section 7.2.2 of the Credit Agreement is amended by adding the
following phrase at the end thereof: "and Indebtedness existing as of the
Offer Closing Date which is identified in Item 7.2.2(c)(Supp) ("Ongoing Target
Indebtedness") of the Disclosure Schedules".
SECTION 2.2.16. Amendment to Section 7.2.3 of the Credit Agreement.
Clause (b) of Section 7.2.3 of the Credit Agreement is amended by adding the
following phrase at the end thereof: "or Item 7.2.2(c)(Supp) ("Ongoing Target
Indebtedness") of the Disclosure Schedule".
SECTION 2.2.17. Limited Waiver Regarding Sections 7.2.5 and 7.2.7 of
the Credit Agreement. Compliance by Acquisition with the provisions contained
in Sections 7.2.5 and 7.2.7 of the Credit Agreement is waived to the extent
(and only to the extent) necessary to permit Acquisition to purchase Shares
pursuant to the Offer (including not applying the purchase price of such Shares
against the Capital Expenditure Levels relating to such Section 7.2.7).
SECTION 2.2.18. Limited Waiver Regarding Sections 7.2.5 and 7.2.6(a)
of the Credit Agreement. Compliance by the Borrower with the provisions
contained in Sections 7.2.5 and 7.2.6(a) of the Credit Agreement is waived to
the extent (and only to the extent) necessary to permit the Borrower to lend in
cash to the
-8-
<PAGE> 9
Guarantor (i) the maximum amount of the $2,500,000 escrow established pursuant
to the Escrow Agreement which may be released in accordance with the terms of
the Escrow Agreement and (ii) to the extent necessary to purchase Shares on the
Offer Closing Date after application of the proceeds of the Equity Financing,
an amount not exceeding $5,000,000 less the amount lent pursuant to the
immediately preceding clause (i) (unless otherwise required to be distributed
pursuant to the terms of the Escrow Agreement); provided, however, that such
amounts are immediately contributed by the Guarantor to Acquisition as a
capital contribution and used by Acquisition solely to purchase Shares pursuant
to the Offer.
SECTION 2.2.19. Amendment to Section 7.2.6(b) of the Credit
Agreement. Clause (i) of Section 7.2.6(b) of the Credit Agreement is amended
by adding at the end thereof the following proviso: "provided, however, that
the Parent may, with respect to any shares of Series C Preferred Stock or
Series G Preferred Stock, declare and pay dividends thereon in the form of
additional shares of Series C Preferred Stock or Series G Preferred Stock,
respectively, in accordance with the terms of such Series C Preferred Stock or
Series G Preferred Stock, as the case may be".
SECTION 2.2.20. Amendment to Section 7.2.12 of the Credit Agreement.
Section 7.2.12 of the Credit Agreement is amended by adding after the words
"Merger Certificate" the phrase ", any Organic Document of any Obligor".
SECTION 2.2.21. Amendment to Section 7.2.14 of the Credit Agreement.
Clause (b) of Section 7.2.14 of the Credit Agreement is amended by deleting the
initial reference therein to "Borrower" and substituting therefor a reference
to "Parent".
SECTION 2.2.22. Limited Waiver Regarding Section 7.2.14 of the Credit
Agreement. Compliance by the Guarantor and Target with the provisions
contained in clause (a) of Section 7.2.14 of the Credit Agreement, insofar as
such provisions relate to properties, revenues or assets of Target, is waived
to the extent and for so long as (and only to the extent and for so long as) a
Target Debt Document would be contravened or a default thereunder would arise
as a result of complying with such provisions.
SECTION 2.2.23. Amendments to Section 7.2 of the Credit Agreement.
(a) Section 7.2 of the Credit Agreement is amended by adding the following
Section 7.2.4A immediately after Section 7.2.4 of the Credit Agreement:
-9-
<PAGE> 10
SECTION 7.2.4A Financial Condition. The Parent will not
permit:
(a) the Target Interest Coverage Ratio (as defined
below), as of the last day of each calendar year, to be less
than 3.0:1.0.
(b) the Target Fixed Charge Coverage Ratio (as
defined below), as of the last day of each calendar year, to
be less than 1.0:1.0.
(c) the Target Funded Debt to EBITDA Ratio (as
defined below), as of the last day of each calendar year set
forth below, to be greater than the ratio set forth opposite
such Fiscal Year:
<TABLE>
<CAPTION>
Maximum Funded Debt to
Year EBITDA Coverage Ratio
---- ----------------------
<S> <C>
1995 3.6 : 1.0
1996 2.5 : 1.0
1997 2.0 : 1.0
1998 and thereafter 1.5 : 1.0
</TABLE>
(d) For the purposes of this Section 7.2.4A, the following
terms have the following meanings:
"Target EBIT" means, for any period, the sum, without
duplication, of
(a) Target Net Income for such period;
plus
(b) the amounts deducted, in determining
Target Net Income for such period, for
(i) all income taxes paid by, or
accrued to be paid by, Target during such
period in respect of such period (assuming
utilization of all available Target Net
Operating Losses to the extent permitted by
the Code),
plus
(ii) Target Interest Expense for such
period.
-10-
<PAGE> 11
"Target EBITDA" means, for any period, the sum,
without duplication, for such period, of
(a) Target EBIT;
plus
(b) the amount deducted, in determining
Target Net Income for such period, for amortization
and depreciation of assets of Target during such
period.
"Target Fixed Charge Coverage Ratio" means, as of the
last day of any Fiscal Quarter, the ratio of:
(a) Target EBITDA for the Rolling Period
ending on such day minus all Capital Expenditures of
Target incurred or committed to be incurred during
such Rolling Period;
to
(b) the sum of
(i) Target Interest Expense for such
Rolling Period;
plus
(ii) all scheduled repayments of
Target Funded Debt during such Rolling Period;
plus
(iii) all income taxes paid by Target
during such Rolling Period in respect of such
Rolling Period (assuming utilization of all
available Target Net Operating Losses (to the
extent permitted by the Code)).
"Target Funded Debt" means, as of any date of
determination, any Indebtedness of Target of a type described
in clause (a), (b) (to the extent actually drawn) or (c) of
the definition of Indebtedness, or any Contingent Liability of
Target in respect of any such type of Indebtedness, which
-11-
<PAGE> 12
(a) matures more than one year from such
date of determination;
(b) matures within one year from such date
of determination but is renewable or extendible, at
the option of Target to a date more than one year
from such date; or
(c) arises under a revolving credit or
similar agreement which obligates the lender or
lenders thereof to extend such Indebtedness during a
period of more than one year from such date.
"Target Funded Debt to EBITDA Ratio" means, as of the
last day of any Rolling Period, the ratio of:
(a) Target Funded Debt as at the last day of
such Rolling Period;
to
(b) Target EBITDA for such Rolling Period.
"Target Interest Coverage Ratio" means, as of the
last day of any Fiscal Quarter, the ratio of:
(a) Target EBITDA for the Rolling Period
ending on such day,
to
(b) Target Interest Expense for such Rolling
Period.
"Target Interest Expense" means, for any period, the
aggregate consolidated interest expense of Target for such
period, as determined in accordance with GAAP, including,
without duplication, net obligations of Target (including
fees) in respect of Rate Protection Agreements and the portion
of any Capitalized Lease Liabilities of Target allocable to
interest expense, in each case paid or payable during such
period.
"Target Net Income" means, for any period, all
amounts (exclusive of all amounts in respect of any
extraordinary gains or losses) which, in accordance with GAAP,
would be included as net
-12-
<PAGE> 13
income on the statements of income of Target for such period.
"Target Net Operating Loss" means all net operating
losses incurred by Target, as shown on any federal tax return
(as amended or otherwise modified) filed or to be filed by
Target.
(b) Section 7.2 of the Credit Agreement is further amended by adding
the following Section 7.2.7A immediately after Section 7.2.7 of the Credit
Agreement:
SECTION 7.2.7A. Capital Expenditures, etc. The Parent will not
permit Target to make or, without duplication, commit to make Capital
Expenditures in any Fiscal Year, except Capital Expenditures which do
not aggregate in any calendar year in excess of the amount set forth
below opposite such calendar year:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1995 $3,000,000
1996 $5,100,000
1997 $2,200,000
1998 $2,200,000
1999 $1,800,000
2000 $ 600,000
2001 $ 700,000
2002 $2,000,000
</TABLE>
SECTION 2.2.24. Amendment to Disclosure Schedule of the Credit
Agreement. Item 6.9 ("Ownership of Properties"), Item 6.12 ("Environmental
Matters") and Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure Schedule
are supplemented by the items set forth in Annex IV hereto.
SECTION 2.2.25. Consent. Consent is given to the modifications to
the Guarantor's Organic Documents necessary to permit the changes in the
Guarantor's Board of Directors required by Section 13 of the Certificate of
Designation Preferences and Rights attached as Exhibit A to the Subscription
Agreement.
SECTION 2.3. Waivers Relating to Consummation of the Offering.
Effective on (and subject to the occurrence of) the Section 2.3 Effective Date
(as hereinafter defined), the Lenders and the Agent hereby agree that certain
terms and provisions of the Credit Agreement are waived to the extent set forth
in this Section 2.3. .
SECTION 2.3.1. Limited Waiver Regarding Sections 7.2.10 of the Credit
Agreement. Compliance by the Guarantor, Acquisition
-13-
<PAGE> 14
and Target with the provisions contained in Section 7.2.10 of the Credit
Agreement are hereby waived to the extent (and only to the extent) necessary to
permit the merger of Acquisition with and into Target, with Target being the
surviving entity.
SECTION 2.4. Acknowledgement. Notwithstanding anything to the
contrary contained herein or implied hereby, or any course of conduct, course of
dealing, statements (whether oral or written) or any action of the Agent or any
Lender, the Lenders shall have no commitment to finance any amount in respect of
the Offer, the Merger, the Second Merger or any refinancing of indebtedness
necessary therefor other than the ability of the Borrower to make a Borrowing of
Revolving Loans, subject to the terms and conditions of the Credit Agreement
(including Article V thereof), in an amount not to exceed $3,400,000 in
connection with consummation of the Offer.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Conditions to Effectiveness of Section 2.1. The
amendments and limited waivers set forth in Section 2.1 shall become effective
upon the prior or concurrent satisfaction of each of the conditions precedent
set forth in this Section 3.1 (the first date as of which each such condition
has been satisfied being herein called the "Section 2.1 Effective Date").
SECTION 3.1.1. Execution of Counterparts. The Agent shall have
received counterparts of this Amendment and Waiver Agreement duly executed by
the Borrower, the Guarantor, the Agent and the Required Lenders, each of which
counterparts shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.
SECTION 3.1.2. Guaranty of Acquisition, The Agent shall have
received a guaranty of Acquisition, duly executed by Acquisition, substantially
in the form of the Petroleum Guaranty, provided that such guaranty shall
terminate upon effectiveness of the merger of Acquisition with and into Target
in accordance with the terms of the Merger Agreement.
SECTION 3.1.3. Pledge of Shares of Acquisition. The Guarantor and
Acquisition shall have complied with the provisions of clause (b) of Section
7.1.10 of the Credit Agreement (Acquisition being the applicable Subsidiary
referred to therein).
SECTION 3.1.4. Assignment of Rights. The Agent shall have received a
security agreement duly executed by Acquisition in
-14-
<PAGE> 15
form and substance satisfactory to the Agent, pursuant to which Acquisition
shall have assigned its rights, interests and benefits under the Merger
Agreement and all related instruments and documents as security for the
Obligations, together with executed copies of U.C.C. financing statements
naming Acquisition as the debtor, and the Agent as the secured party, suitable
for filing under the U.C.C. of all jurisdictions as may be necessary or, in the
opinion of the Agent, desirable to perfect the first priority security interest
of the Agent pursuant to such security agreement.
SECTION 3.1.5. Amendment and Waiver Fee. The Borrower shall have paid
to the Agent, for the pro rata account of each Lender in accordance with their
respective Commitment Amounts, a non-refundable amendment and waiver fee in the
amount of $50,000.
SECTION 3.1.6. Target Debt Documents. The Agent shall have received
true, correct and complete copies of each Target Debt Document.
SECTION 3.1.7. Resolutions, etc. The Agent shall have received from
Acquisition, a certificate, dated the Section 2.1 Effective Date, of its
Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery and performance of each
Loan Document to be executed by it;
(b) each of its Organic Documents; and
(c) the incumbency and signatures of its officers authorized
to act with respect to each Loan Document to be executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary or Assistant Secretary of
Acquisition cancelling or amending such prior certificate.
SECTION 3.2. Conditions to Effectiveness of Section 2.2. The
amendments and limited waivers set forth in Section 2.2 shall become effective
upon the prior or concurrent satisfaction of each of the conditions precedent
set forth in this Section 3.2 (the first date as of which each such condition
has been satisfied being herein called the "Section 2.2 Effective Date").
SECTION 3.2.1. Satisfaction of Conditions to Offer. Each condition
to the purchase of Shares pursuant to the Offer shall have been duly satisfied
without giving effect to any waiver or amendment thereof; the per Share
purchase price paid by Acquisition for Shares shall not exceed $12.00; the
Shares to be
-15-
<PAGE> 16
purchased (and the certificates representing such Shares, other than book-entry
Shares which have been deposited with a book-entry transfer facility) shall
have been validly tendered to Acquisition, free of all restrictions to purchase
imposed by applicable law or otherwise, and such Shares shall not have been
withdrawn and shall be available for purchase in accordance with the terms and
conditions set forth in Annex A to the Merger Agreement.
SECTION 3.2.2. Equity Financing. Net cash proceeds of not less than
$12,000,000 in the aggregate in respect of the Equity Financing shall have been
contributed to Acquisition as a capital contribution and used by Acquisition
solely to purchase Shares pursuant to the Offer.
SECTION 3.2.3. Pledge of Shares. The Agent shall have received a
pledge agreement duly executed by Acquisition in form and substance
satisfactory to the Agent (the "Tender Offer Pledge Agreement"), and all Shares
owned by Acquisition and its Affiliates shall have been duly and validly
pledged to the Agent for the benefit of the Lenders under the Tender Pledge
Agreement and certificates representing all such Shares, together with stock
powers or other appropriate instruments of transfer executed in blank or in
favor of the Agent, shall be in the actual possession of the Agent or, in the
case of book-entry Shares, transferred into an account of the Agent maintained
with the applicable book-entry transfer facility.
SECTION 3.2.4. No Modification of Agreements. Neither the Guarantor
nor Acquisition shall have consented to any amendment, supplement or other
modification of any of the terms or provisions contained in, or applicable to,
the Merger Agreement, the Offer to Purchase, the Subscription Agreement or any
instrument or document relating thereto, other than any such amendment,
supplement or other modification which is immaterial and which could not
adversely affect the Agent or any Lender.
SECTION 3.2.5. Revolving Loans. Without limiting the effect of
Article V of the Credit Agreement, to the extent the proceeds of any Revolving
Loans (in an amount not to exceed $3,400,000) are to be used to purchase Shares
pursuant to the Offer, the borrowing of any such Revolving Loans shall be
subject to satisfaction of the conditions set forth in the Credit Agreement.
SECTION 3.2.6. Regulations G, U and X. The making of any loan
referred to in Section 3.2.5 hereof, the use of the proceeds thereof, and the
security arrangements in connection therewith (including the Tender Offer
Pledge Agreement) will not result in a violation of F.R.S. Board Regulation G,
U or X, as in effect on the date hereof or as in effect on the Section 2.2
Effective Date
-16-
<PAGE> 17
in the event of any change therein having applicability on such date, and the
Guarantor, Acquisition, the Borrower and each entity providing debt or equity
funds for the Offer or the Merger shall be in compliance with such regulations.
The Borrower and Acquisition shall have delivered to each of the Lenders a
statement in conformity with the requirements of Federal Reserve Form U-1.
SECTION 3.2.7. No Prepayment Events. The Agent shall be satisfied
that the consummation of the Offer, the Merger and the transactions relating
thereto will not require any prepayment or redemption or repurchase of, or
result in any default under or acceleration of the maturity of, any
Indebtedness or material lease obligations of Target.
SECTION 3.3. Conditions to Effectiveness of Section 2.3. The limited
waiver set forth in Section 2.3 shall become effective upon the prior or
concurrent satisfaction of each of the conditions precedent set forth in this
Section 3.3 (the first date as of which each such condition has been satisfied
being herein called the "Section 2.3 Effective Date", and, together with the
Section 2.1 Effective Date and the Section 2.2 Effective Date, the "Effective
Dates").
SECTION 3.3.1. Consummation of the Merger. The Merger shall have
been duly and validly consummated pursuant to the terms of the Merger
Agreement, without any waivers, supplements, modifications or amendments with
respect thereto, except to the extent consented to by the Required Lenders, and
the Guarantor shall own all the capital stock of the entity surviving the
Merger ("New Target"; references herein to Target shall be deemed to include
New Target following the Merger), free and clear of any Liens or encumbrances
of any nature, other than those referred to below in Section 3.3.2.
SECTION 3.3.2. Pledge of Shares of New Target. The Guarantor shall
have complied with the provisions of clause (b) of Section 7.1.10 of the Credit
Agreement (New Target being the applicable Subsidiary referred to therein).
SECTION 3.4. Conditions to Effectiveness of Sections 2.1, 2.2 and 2.3.
The occurrence of each Effective Date is also subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 3.4.
SECTION 3.4.1. Representations and Warranties. The Agent shall have
received a certificate executed by the chief financial Authorized Officer of
each of the Guarantor and the Borrower certifying that the representations and
warranties set forth in Article IV hereof are true and correct.
-17-
<PAGE> 18
SECTION 3.4.2. Opinion of Counsel. The Agent shall have received an
opinion, dated the applicable Effective Date and addressed to the Agent and all
Lenders, from Bracewell & Patterson, L.L.P, as to such matters as the Agent may
reasonably request, in form and substance reasonably satisfactory to the Agent.
SECTION 3.4.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower, the Guarantor or any
other Obligor shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Amendment and Waiver Agreement, the Borrower and the Guarantor jointly and
severally represent and warrant unto the Agent, each Issuer and each Lender as
set forth in this Article IV.
SECTION 4.1. Compliance With Warranties. The representations and
warranties set forth in Article VI of the Credit Agreement and in each other
Loan Document delivered in connection herewith or therewith are true and correct
in all material respects with the same effect as if made on and as of the date
hereof and each Effective Date (unless stated to relate solely to an earlier
date).
SECTION 4.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by each of the Borrower and the Guarantor of
this Amendment and Waiver Agreement and each Loan Document to be executed by it
in connection with the terms and conditions hereof, and the execution, delivery
and performance by each of Acquisition and Target of each Loan Document to be
executed by it in connection with the terms and conditions hereof, are within
the Borrower's, the Guarantor's, Acquisition's and Target's corporate powers,
have been duly authorized by all necessary corporate action, and do not (i)
contravene the Borrower's, the Guarantor's, Acquisition's or Target's Organic
Documents, (ii) contravene or result in a default under any contractual
restriction, law or governmental regulation or court decree or order binding on
or affecting the Borrower, the Guarantor, Acquisition or Target or (iii) result
in, or require the creation or imposition of, any Lien (except as contemplated
in or created by the Loan Documents).
-18-
<PAGE> 19
SECTION 4.3. Governmental Approval, Regulation, etc. No authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person (other than the filing
of U.C.C. financing statements in the appropriate jurisdictions) is required for
(a) the due execution, delivery or performance by the Borrower, the Guarantor,
Acquisition or Target of this Amendment and Waiver Agreement or any other Loan
Document delivered in connection with the terms and conditions hereof to which
it is a party, (b) the grant by each such Obligor of the security interests,
pledges and Liens granted by such Loan Documents, or (c) the perfection of or
the exercise by the Agent of its rights and remedies under this Amendment and
Waiver Agreement or any other such Loan Document.
SECTION 4.4. Validity, etc. This Amendment and Waiver Agreement and
each other Loan Document to be executed and delivered by the Borrower, the
Guarantor, Acquisition or Target, as the case may be, will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrower, the Guarantor, Acquisition or Target, as the case may be,
enforceable in accordance with their respective terms; and each such Loan
Document executed pursuant hereto by each such Obligor will, on the due
execution and delivery thereof by such Obligor, be the legal, valid and binding
obligation of such Obligor enforceable in accordance with its terms, subject in
each case to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally,
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law). Each of such Loan Documents
which purports to create a security interest creates a valid first priority
security interest in the Collateral subject thereto, subject only to Liens
permitted by Section 7.2.3, securing the payment of the Obligations.
SECTION 4.5. Compliance With Credit Agreement. As of the execution
and delivery of this Amendment and Waiver Agreement and as of each Effective
Date, each of the Borrower, the Guarantor and each other Obligor is in
compliance with all the terms and conditions of the Credit Agreement and the
other Loan Documents to be observed or performed by it, and no Default has
occurred and is continuing.
SECTION 4.6. Merger Agreement. All representations and warranties by
the Guarantor and Acquisition under the Merger Agreement are true and correct as
of the date hereof and each Effective Date as if made on such date (unless
stated to relate solely to an earlier date) and, to the best knowledge of the
Guarantor and its Subsidiaries, all representations and warranties by Target
under the Merger Agreement are true and
-19-
<PAGE> 20
correct as of the date hereof and each Effective Date as if made on such date
(unless stated to relate solely to an earlier date).
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Ratification of Credit Agreement. The Credit Agreement,
as expressly amended by the terms hereof, is hereby ratified, approved and
confirmed in each and every respect. Except as specifically amended herein, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof and except as expressly set forth herein the provisions
hereof shall not operate as a waiver of any right, power or privilege of the
Agent and the Lenders nor shall the entering into of this Amendment and Waiver
Agreement preclude the Lenders from refusing to enter into any further or future
amendments or waivers. This Amendment and Waiver Agreement shall be deemed to
be a "Loan Document" for all purposes of the Credit Agreement.
SECTION 5.2. Credit Agreement, References, etc. All references to the
Credit Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as modified hereby. As
used in the Credit Agreement, the terms "Agreement", "herein", "hereinafter",
"hereunder", "hereto" and words of similar import shall mean, from and after the
applicable Effective Date, the Credit Agreement as modified by this Amendment
and Waiver Agreement.
SECTION 5.3. Expenses. The Borrower and the Guarantor jointly and
severally agree to pay all out-of-pocket expenses incurred by the Agent and the
Lenders in connection with the preparation, negotiation, execution and delivery
of this Amendment and Waiver Agreement, including, without limitation, the
reasonable fees and other charges of Mayer, Brown & Platt, as counsel for the
Agent.
SECTION 5.4. Headings. The various headings of this Amendment and
Waiver Agreement are inserted for convenience only and shall not affect the
meaning or interpretation of this Amendment and Waiver Agreement or any
provisions hereof.
SECTION 5.5. Governing Law; Entire Agreement. THIS AMENDMENT AND
WAIVER AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. This Amendment and Waiver Agreement constitutes
the entire understanding among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreements, written or oral, with respect
thereto. This Amendment and Waiver
-20-
<PAGE> 21
Agreement and the provisions contained herein may be modified only by an
instrument in writing executed by the Borrower, the Agent and the Required
Lenders.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
-21-
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
E-Z SERVE CONVENIENCE STORES, INC.,
as the Borrower
By: /s/ John T. Miller
-------------------------------
Title: Senior Vice President
E-Z SERVE CORPORATION,
as the Guarantor
By: /s/ John T. Miller
-------------------------------
Title: Senior Vice President
SOCIETE GENERALE,
as the Agent
By: /s/ David Brunson
-------------------------------
Title: First Vice President
LENDERS
SOCIETE GENERALE
By: /s/ David Brunson
-------------------------------
Title: First Vice President
BANK OF AMERICA TEXAS, N.A.
By: Kirk Sweet
-------------------------------
Title: Senior Vice President
-22-
<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.
3
<PAGE> 10
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.
4
<PAGE> 11
(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
5
<PAGE> 12
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
6
<PAGE> 13
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
7
<PAGE> 14
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
8
<PAGE> 15
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
9
<PAGE> 16
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.
10
<PAGE> 17
(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
11
<PAGE> 18
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
12
<PAGE> 19
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).
13
<PAGE> 20
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
14
<PAGE> 21
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
15
<PAGE> 22
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
16
<PAGE> 23
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.
17
<PAGE> 24
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.
18
<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;
-2-
<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:
-3-
<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;
-4-
<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
-5-
<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)
SUNSHINE-JR. STORES, INC.
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, ananlyses,
compilations, studies or information developed or prepared by or for Investor
or its Represenatives 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 advance
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, 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.
1O. 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 ifs terms and therefore agrees that the
Company shall be entitled to specific enforcement of such covenants 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
