EXHIBIT 99.1
STOCK BUYBACK AND
SECONDARY OFFERING AGREEMENT
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AGREEMENT dated April 24, 1997, among ShopKo Stores, Inc., a Minnesota
corporation ("SK"), SUPERVALU INC., a Delaware Corporation ("SV"), and
Supermarket Operators of America, Inc., a Delaware corporation and wholly-owned
subsidiary of SV ("SOA").
WHEREAS, SV is the beneficial owner of 14,731,667 shares of common stock,
par value $0.01 per share, of SK ("Common Stock") and SOA is the record owner of
such shares;
WHEREAS, subject to the terms and conditions of this Agreement, SV desires
to cause SOA to sell to SK 8,174,387 shares of Common Stock and to sell to the
public in an underwritten offering 6,557,280 shares of Common Stock; and
WHEREAS, subject to the terms and conditions of this Agreement, SK desires
to purchase from SOA 8,174,387 shares of Common Stock and to facilitate such
underwritten offering;
NOW, THEREFORE, the parties hereby agree as follows:
1. Purchase and Sale of Common Stock; Closing. Subject to the terms and
conditions of this Agreement, SV will cause SOA to sell, transfer and convey to
SK, and SK will purchase from SOA, 8,174,387 shares of Common Stock at a
purchase price of $18.35 per share (the "Buyback"). The closing of the Buyback
(the "Closing") shall be held at the place and time of the closing of the
Secondary Offering (as hereinafter defined) (the "Closing Date"). At the
Closing, (i) SOA will deliver to SK certificates representing 8,174,387 shares
of Common Stock, with appropriate stock powers attached, properly signed and
with any necessary documentary or transfer tax stamps duly affixed and canceled,
and (ii) SK will pay to SOA the amount of $150,000,001.45 by wire transfer of
immediately available funds to an account designated by SV in writing on or
before the second business day prior to the Closing Date.
2. Conditions to the Buyback.
A. Secondary Offering; Corporate Law Compliance. The obligation of
each of SOA and SK to consummate the Buyback is subject to the
satisfaction or waiver of the conditions that (i) the Secondary
Offering shall have been consummated and (ii) the Buyback is in
compliance with Section 302A.551 of the Minnesota Business
Corporation Act.
B. Market Out. The obligation of SK to consummate the Buyback is
further subject to the satisfaction or waiver of the conditions
that (i) there shall not have occurred any material adverse change
in the financial markets in the United States or any outbreak of
hostilities or escalation thereof or other calamity or crisis,
(ii) trading in the Common Stock shall not have been suspended or
materially limited by the Securities and Exchange Commission or
the New York Stock Exchange, (iii) trading generally on the New
York Stock Exchange shall not have been suspended, limited or
restricted or minimum or maximum prices for trading shall not have
been fixed, or maximum range for prices for securities shall not
have been required, by said exchange or by order of the Securities
and Exchange Commission or any other governmental authority, and
(iv) a banking moratorium shall not have been declared by either
Federal or New York authorities.
3. Pre-Closing Covenants.
A. Secondary Offering.
i. SK shall file as promptly as practicable following the date
hereof (but not later than May 23, 1997), and shall use all
reasonable efforts to cause to be declared effective as
soon as possible after such filing, a registration
statement under the Securities Act of 1933, as amended, for
a public offering by SOA of 6,557,280 shares of Common
Stock (the "Secondary Offering") and for an underwriters
over-allotment option of up to 983,592 shares of Common
Stock which SK hereby agrees to grant (the "Green Shoe").
ii. SK, SV and SOA agree that Xxxxxxx Xxxxx & Co. will be the
lead underwriter and that Xxxxxxx Sachs & Co., and up to
two additional firms to be selected by SK will be co-
managing underwriters. SK shall cooperate with the
underwriters in the sale of Common Stock in the Secondary
Offering.
iii. SV and SOA agree to enter into an underwriting agreement
for the Secondary Offering so long as the price to the
public is at or above $18.35 per share.
iv. SK, SV and SOA each agrees to negotiate in good faith and
enter into an underwriting agreement relating to the
Secondary Offering and Green Shoe containing provisions, as
to itself, as are customary in such transactions, and
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perform in good faith its obligations under such
underwriting agreement.
v. Printing shall be arranged and coordinated by SK.
B. SV Board Seats. SV shall cause each of Xxxxxxx Xxxxxx and Xxxx
Xxxxxx to resign from the Board of Directors of SK, effective
upon the Closing Date, at which time Xxxxxxx Xxxxxx shall no
longer be Chairman of the Board of SK. In anticipation of such
resignations, SK will recruit two new members for the Board of
Directors of SK and will consult with Xxxxxxx Xxxxxx, as Chairman
of the Board, prior to extending any invitations.
C. No Solicitation; Referral of Indications of Interest. Prior to
the Closing Date, SK and SV shall not, and each shall cause its
subsidiaries and its officers, directors, agents, representatives
and Affiliates (as hereinafter defined) not to, directly or
indirectly: initiate, solicit or encourage, or take any action to
facilitate the making of any offer or proposal which constitutes
or is reasonably likely to lead to any Takeover Proposal (as
defined below), or, in the event of any unsolicited Takeover
Proposal, provide any confidential information or data relating
to SK to any Person. SV shall notify SK orally and in writing of
any inquiries, offers or proposals concerning, or which might
lead to, any Takeover Proposal (including, without limitation,
the terms and conditions of any such inquiry, offer or proposal
and the identity of the Person making it), within 24 hours of the
receipt thereof. As used in this Section 3.C, "Takeover Proposal"
shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving a
substantial equity interest in or a substantial portion of the
assets of SK, or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the
assets of, SK.
4. Standstill.
A. During the ten-year period commencing with the Closing, without
the prior written consent of SK, SV agrees that it shall not, nor
shall it permit any of its Affiliates to (nor shall SV agree, or
advise, assist, encourage or provide financing to others, or
permit its Affiliates to agree, or to advise, assist, encourage
or provide financing to others, to), individually or
collectively:
i. acquire or offer to acquire or agree to acquire from any
individual, partnership, joint venture, corporation,
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trust, unincorporated organization or other entity or
government or any department or agency thereof (each, a
"Person"), directly or indirectly, by purchase, merger,
through the acquisition of control of another Person, by
joining a partnership, limited partnership or other "group"
(within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) or
otherwise, beneficial ownership in excess of 1.0% of any
equity securities of SK, or direct or indirect rights
(including convertible securities) or options to acquire
such beneficial ownership (or otherwise act in concert with
respect to any such securities, rights or options with any
Person that so acquires, offers to acquire or agrees to
acquire such securities, rights or options); or
ii. make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" to vote (as such terms are
used in the Regulation 14A promulgated under the Exchange
Act), become a "participant" in any "election contest" (as
such terms are defined in Rule 14A-11 promulgated under the
Exchange Act) or initiate, propose or otherwise solicit
stockholders of SK for the approval of any stockholder
proposals, in each case with respect to SK; or
iii. form, join, in any way participate in, or encourage the
formation of, a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any voting
securities of SK; or
iv. deposit any securities of SK into a voting trust, or subject
any securities of SK to any agreement or arrangement with
respect to the voting of such securities, or other agreement
or arrangement having similar effect; or
v. alone or in concert with others, seek, or encourage or
support any effort, to control the management, Board of
Directors, business, policies, affairs or actions of SK; or
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vi. request, in any way which will require or result in a public
disclosure, SK (or any directors, officers, employees or
agents of SK), directly or indirectly, to amend, waive or
modify any provision of this Section 4.
B. For purposes hereof, "Affiliates" shall mean as applied to any
Person means any other Person directly or indirectly controlled
by that Person. The term "control" (including, with correlative
meanings, the term "controlled") as applied to any Person, means
the possession, directly or indirectly, of the power to vote
fifteen percent (15%) or more of the voting stock (or in the case
of a Person which is not a corporation, fifteen percent (15%) or
more of the ownership interest, beneficial or otherwise) of such
Person or otherwise, jointly or with other directors and/or
executives, to direct or cause the direction of the management
and policies of that Person, whether through the ownership of
voting stock or other ownership interest, by contract or
otherwise.
5. Other Covenants.
A. Expenses if Closing Occurs.
i. If the Closing occurs, each of SV and SK shall bear its own
expenses relating to the Buyback. (For purposes of this
Section 5, SV's expenses shall include those of SOA.)
ii. If the Closing occurs, expenses of SV and SK relating to the
Secondary Offering shall be borne by SK, provided that if
the aggregate offering price to the public in the Secondary
Offering exceeds $123,604,728.00, then SV shall bear such
expenses (a) to the extent of such excess (if the excess is
less than such expenses) or (b) in their entirety (if the
excess equals or exceeds such expenses). Notwithstanding the
foregoing, each of SV and SK shall bear the fees and expense
reimbursement of its own counsel, and SK shall bear the
costs of its "road show" presentations. "Expenses of SV and
SK relating to the Secondary Offering" shall mean
underwriting spreads and out-of-pocket costs for
reimbursable expenses of the underwriters, filing fees,
printing costs, NYSE listing fees, messenger and delivery
expenses, and fees and expenses of SK's independent
certified public accountant.
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B. Expenses if Closing Does Not Occur Because SV Declines to Proceed
With Secondary Offering If the Closing does not occur because SV
declines to enter into the underwriting agreement with respect to
the Secondary Offering, then SV shall bear all the out-of-pocket
expenses of SV and SK relating to the Secondary Offering (as
described above), other than the fees and expense reimbursement
of SK's counsel.
C. Expenses if Closing Does Not Occur For Any Other Reason. If the
Closing does not occur for any reason other than as a result of a
breach or other than as contemplated by Section 5.B., then each
of SV and SK shall bear its own expenses relating to the Buyback
and the Secondary Offering. It is agreed that the following
expenses shall be common expenses to be shared equally by SV and
SK: filing fees; printing costs; NYSE listing fees.
D. Public Disclosure. As soon as practicable following the execution
and delivery of this Agreement, SV and SK shall issue a joint
press release in the form attached hereto as Exhibit A.
Thereafter, without the prior written consent of the other party,
neither party shall make a public statement regarding the other
party or the transactions contemplated hereby; provided, however,
that without such prior written consent, each party shall be free
to make comments to its shareholders and employees and to
financial analysts and the press which are substantially
consistent with disclosures in the joint press release and in
prior public disclosures; and provided, further, that each party
may file the press release and a copy of this Agreement as part
of a Form 8-K filing under the Exchange Act or other required
regulatory filing and may make any other disclosure required by
law.
6. Termination. This Agreement may be terminated
A. By mutual agreement of SK and SV.
B. By either SK or SV after September 30, 1997.
C. By either SK or SV if there shall have been issued, by a court of
competent jurisdiction, any order, decree or injunction
prohibiting or restraining consummation of either the Buyback or
the Secondary Offering and such order, decree or injunction is
not being appealed or otherwise contested.
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D. By either SK or SV if the price to the public in the Secondary
Offering would be below $18.35 per share and SV has informed SK
that it will not proceed with the Secondary Offering.
7. Miscellaneous.
A. Specific Performance. The parties acknowledge and agree that in
the event of any breach of this Agreement, the parties would be
irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that SK, SV and SOA, in
addition to any other remedy to which it may be entitled at law
or in equity, shall be entitled to compel specific performance of
this Agreement.
B. Integration; No Third Party Beneficiaries; Amendment; Waiver.
This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, whether oral or written,
between the parties hereto with respect to the subject matter
hereof. This Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
This Agreement may not be modified, amended or waived orally, but
only by an instrument in writing signed by the party against whom
enforcement of any such amendment, modification or waiver is
sought. The waiver by any party hereto of a breach of any terms
or provision of this Agreement shall not be construed as a waiver
of any subsequent breach.
C. Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors
and assigns; provided, however, that neither party may assign its
rights or delegate its obligations under this Agreement without
the express prior written consent of the other party.
D. Headings. Section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
E. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall, when executed, be deemed to be
an original and all of which shall be deemed to be one and the
same instrument.
F. Notices. All notices hereunder shall be sufficiently given for
all purposes hereunder if in writing and delivered personally,
sent by documented overnight delivery services or, to the extent
receipt is
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confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below.
Notices to SV and SOA shall be addressed to:
SUPERVALU INC.
00000 Xxxxxx Xxxx Xxxx
X.X. Xxx 000
Xxxx Xxxxxxx, XX 00000
Attention: Chairman and CEO
Telecopy No.: 612/828-8998
with copies to:
SUPERVALU INC.
00000 Xxxxxx Xxxx Xxxx
X.X. Xxx 000
Xxxx Xxxxxxx, XX 00000
Attention: Senior Vice President-Law and
External Affairs
Telecopy No.: 612/828-8998
and
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy No.: 612/340-8738
or at such other address and to the attention of such other
person as SV may designate by written notice to SK.
Notices to SK shall be addressed to:
ShopKo Stores, Inc.
000 Xxxxxxx Xxx
X.X. Xxx 00000
Xxxxx Xxx, XX 00000-0000
Attention: President and CEO
Telecopy No.: 414/496-4225
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with copies to:
ShopKo Stores, Inc.
000 Xxxxxxx Xxx
X.X. Xxx 00000
Xxxxx Xxx, XX 00000-0000
Attention: Vice President-Legal Affairs
Telecopy No.: 414/496-7401
and
Xxxxxxx & Xxxx SC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy No.: 414/273-5198
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Telecopy No.: 312/853-7036
or at such other address and to the attention of such other
persons SK may designate by written notice to SV.
G. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota without
reference to the choice of law principles thereof.
H. Severability. If at any time subsequent to the date hereof any
provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such
provision shall be of no force and effect, but shall not effect
the illegality or unenforceability of any other provision of this
Agreement.
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I. Effect of Termination. A termination of this Agreement as
provided in Section 6 shall not release any party hereto from
liability for any breach of this agreement.
J. Charitable Gift. SK agrees that SOA may make a gift of up to
275,000 shares of Common Stock to SUPERVALU Foundation prior to
the third business day before the effective date of the
registration statement for the Secondary Offering and further
agrees that, at the SUPERVALU Foundation's election, it may sell
all such shares in the Secondary Offering on the same terms and
conditions as SOA. If such gift is made, but SUPERVALU Foundation
does not participate in the Secondary Offering, then the amount
of the Green Shoe and the aggregate offering price referred to in
Section 5.A.ii. shall be appropriately reduced. In any event, if
such gift is made, references herein to 6,557,280 shares shall
likewise be reduced.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of the
parties as of the date first above written by its duly authorized officer.
ShopKo Stores, Inc.
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
President and Chief Executive Officer
SUPERVALU INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Chairman and Chief Executive Officer
Supermarket Operators of America, Inc.
By: /s/
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