<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
SCHEDULE TO
Tender Offer Statement Under Section 14(d)(1)
or Section 13(E)(1) of the Securities Exchange Act of 1934
Under
The Securities Exchange Act of 1934
BALANCE BAR COMPANY (offeror)
(Name of Subject Company (issuer))
BB ACQUISITION, INC.
a wholly owned subsidiary of
KRAFT FOODS, INC.
(Names of Filing Persons (identifying status as offeror, issuer or other
person))
------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
------------
057623100
(Cusip Number of Class of Securities)
William J. Eichar
Kraft Foods, Inc.
Three Lakes Drive
Northfield, IL 60093
Telephone: (847) 646-2000
(Name, address and telephone number of
person authorized to receive notices
and communications on behalf of filing persons)
Copy to:
Michael G. Timmers Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Telephone: 312-861-2000
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee
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<S> <C>
$268,364,817 $53,673
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</TABLE>
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*For purposes of calculating amount of filing fee only. This amount assumes
(i) the purchase of all outstanding shares of common stock of Balance Bar
Company and (ii) shares of common stock of Balance Bar Company subject to
options that will be vested and exercisable as of the closing of this
offer. The amount of the filing fee calculated in accordance with Rule 0-11
of the Securities Exchange Act of 1934, as amended, equals 1/50 of 1% of
the transaction value.
[_]Check the 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: N/A Form or Registration No.: N/A
Filing party: N/A Date Filed: N/A
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X]third-party tender offer subject to Rule 14d-1.
[_]issuer tender offer subject to Rule 13e-4.
[_]going-private transaction subject to Rule 13e-3.
[_]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
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<PAGE>
Item l. Summary Term Sheet.
The information set forth in the section of the Offer to Purchase entitled
"Summary Term Sheet" is incorporated herein by reference.
Item 2. Subject Company Information.
(1) The name of the subject company is Balance Bar Company, a Delaware
corporation (the "Company"), and the address of its principal executive
offices is 1015 Mark Avenue, Carpinteria, California 93013. Its telephone
number is (805) 566-0234.
(2) This Statement relates to the offer by BB Acquisition, Inc.
("Purchaser"), a Delaware corporation and a wholly owned subsidiary of Kraft
Foods, Inc., a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock of the Company, par value $0.01 per share (the
"Shares"), at $19.40 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(l) and (a)(2) (which are herein collectively referred to as the "Offer").
The information set forth in the introduction to the Offer to Purchase (the
"Introduction") is incorporated herein by reference.
(3) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in "Price Range of Shares; Dividends" of the Offer to
Purchase and is incorporated herein by reference.
Item 3. Identity and Background of the Filing Person.
(a), (b), (c) The information set forth in "Certain Information Concerning
Parent and Purchaser" and Schedule I of the Offer to Purchase is incorporated
herein by reference.
Item 4. Terms of the Transaction.
(a)(1)(i)-(viii), (xii) The information set forth under "Introduction",
"Background of the Offer; Past Contacts or Negotiations with the Company",
"Purpose of the Offer; Plans for the Company", "The Merger Agreement; Other
Arrangements", "Certain Information Concerning the Company", "Certain Effects
of the Offer" and "Source and Amount of Funds" of the Offer to Purchase is
incorporated herein by reference.
(a)(1) (ix) Not applicable
(x) Not applicable
(xi) Not applicable
(a)(2) Not applicable
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
The information set forth in "Background of the Offer; Past Contacts or
Negotiations with the Company", "The Merger Agreement; Other Arrangements",
"Certain Information Concerning Parent and Purchaser" and "Purpose of the
Offer; Plans for the Company" in the Offer to Purchase is incorporated herein
by reference.
Item 6. Purpose of the Tender Offer and Plans or Proposals.
(a), (c)(1), (4-7) The information set forth in "Introduction," "The
Merger Agreement; Other Arrangements," "Purpose of the Offer; Plans for the
Company," and "Dividends and Distributions" is incorporated herein by
reference.
(c)(2) None
(3)None
1
<PAGE>
Item 7. Source and Amount of Funds or Other Consideration.
(a) The information set forth in "Source and Amount of Funds" of the Offer
to Purchase is incorporated herein by reference.
(b) Not applicable
(d) Not Applicable
Item 8. Interest in Securities of the Subject Company.
The information set forth in "Introduction", "Certain Information
Concerning the Company", "Certain Information Concerning Parent and Purchaser"
and Schedule I of the Offer to Purchase is incorporated herein by reference.
Item 9. Persons/Assets, Retained, Employed, Compensated or Used.
The information set forth in "Introduction" and "Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
Item 10. Financial Statements.
Not applicable
Item 11. Additional Information.
Not applicable
Item 12. Exhibits.
(a)(1) Offer to Purchase dated January 28, 2000.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Joint Press Release issued by Parent and the Company on January 21,
2000, incorporated herein by reference to the Schedule TO filed by the
parties on January 24, 2000.
(a)(8) Summary Advertisement as published in The Wall Street Journal on
January 28, 2000.
(d)(1) Agreement and Plan of Merger, dated as of January 21, 2000, among
Parent, Purchaser and the Company.
(d)(2) Form of Support Agreement.
(g) Not applicable.
(h) Not applicable.
2
<PAGE>
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.
BB Acquisition, Inc.
/s/ William Eichar
By: _________________________________
William Eichar
Name: _______________________________
President
Title: ______________________________
Kraft Foods, Inc.
/s/ William Eichar
By: _________________________________
William Eichar
Name: _______________________________
Vice President, Mergers &
Acquisitions
Title: ______________________________
Dated: January 28, 2000
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Name Page Number
----------- ------------ -----------
<C> <S> <C>
(a)(1) Offer to Purchase dated January 28, 2000............
(a)(2) Letter of Transmittal...............................
(a)(3) Notice of Guaranteed Delivery.......................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees........................
(a)(5) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees............................................
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9........
(a)(7) Joint Press Release issued by Parent and the Company
on January 21, 2000, incorporated herein by
reference to the Schedule TO filed by the parties on
January 24, 2000....................................
(a)(8) Summary Advertisement as published in The Wall
Street Journal on January 28, 2000..................
(d)(1) Agreement and Plan of Merger, dated as of January
21, 2000, among Parent, Purchaser and the Company...
(d)(2) Form of Support Agreement...........................
(g) Not applicable.
(h) Not applicable.
</TABLE>
4
<PAGE>
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
only by the Offer to Purchase, dated January 28, 2000 and the related Letter
of Transmittal and any amendments or supplements thereto, and is being made to
all holders of Shares. 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 securities, blue sky or other laws of such jurisdiction. However, the
Purchaser (as defined below) may, in its discretion, take such action as it
may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Shares in such jurisdiction. In those jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Credit Suisse First Boston Corporation ("Credit Suisse First
Boston" or the "Dealer Manager") or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
Balance Bar Company
at
$19.40 Net Per Share
by
BB Acquisition, Inc.
a wholly owned subsidiary of
Kraft Foods, Inc.
BB Acquisition, Inc., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of Kraft Foods, Inc., a Delaware corporation ("Parent"), is
offering to purchase all of the outstanding shares of common stock, par value
$0.01 per share (the "Shares"), of Balance Bar Company, a Delaware corporation
(the "Company"), at a price of $19.40 per Share, net to the seller in cash
(less any required withholding taxes), without interest thereon, on the terms
and subject to the conditions set forth in the Offer to Purchase, dated
January 28, 2000 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Tendering shareholders who have Shares
registered in their names and who tender directly to American Stock Transfer &
Trust Company (the "Depositary") will not be charged brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares pursuant to the Offer. Shareholders
who hold their Shares through a broker or bank should consult such institution
as to whether it charges any service fees. Purchaser will pay all charges and
expenses of the Dealer Manager, the Depositary, and D.F. King & Co., Inc.,
which is acting as the information agent (the "Information Agent"), incurred
in connection with the Offer. Following the consummation of the Offer, the
Purchaser intends to effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of certain conditions, including (1) there being validly tendered in
accordance with the terms of the Offer and not withdrawn prior to the
expiration date of the Offer a number of Shares which, together with the
Shares then owned by Parent or the Purchaser, represents more than 50% of the
Shares outstanding (the "Minimum Condition") and (2) the expiration or
termination of any waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. The Offer is also subject to the
satisfaction of certain other conditions. See Section 17 of the Offer to
Purchase.
<PAGE>
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of January 21, 2000 (the "Merger Agreement"), among Parent, the Purchaser
and the Company. The purpose of the Offer is for Parent, through the
Purchaser, to acquire a majority voting interest in the Company as the first
step in a business combination. The Merger Agreement provides that, among
other things, the Purchaser will make the Offer and that as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement and in accordance with relevant provisions of the General
Corporation Law of the State of Delaware (the "DGCL"), the Purchaser will be
merged with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned beneficially or of record by Parent or
any subsidiary of Parent or held in the treasury of the Company, all of which
shall be cancelled, and other than Shares which are held by shareholders, if
any, who properly exercise their appraisal rights under the DGCL) will be
cancelled and converted into the right to receive $19.40 in cash, or any
higher price that is paid in the Offer (less any required withholding taxes),
without interest thereon.
Certain shareholders of the Company have entered into Support Agreements
pursuant to which such shareholders have agreed, among other things, to tender
pursuant to the Offer, and not to withdraw, all of their Shares, which
together represent approximately 54% of all outstanding Shares (approximately
51% on a fully-diluted basis). The Board of Directors of the Company has
unanimously approved the Merger Agreement, the Offer and the Merger and
determined that the Offer and the Merger are fair to and in the best interests
of the Company and its shareholders. The Board of Directors of the Company
recommends that the Company's shareholders tender their Shares pursuant to the
Offer and approve and adopt the Merger Agreement.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant
to the Offer. In all cases, on the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting such payment to tendering shareholders. Under no
circumstances will interest on the purchase price of Shares be paid by the
Purchaser because of any delay in making any payment. Payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase), pursuant to the procedures set forth in the Offer to
Purchase, (ii) a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) with all required signature guarantees
or, in the case of a book-entry transfer, an Agent's Message (as defined in
the Offer to Purchase), and (iii) any other documents required by the Letter
of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Purchaser's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on February 25, 2000 (or any other time then set
as the Expiration Date), the Purchaser may, subject to the Merger Agreement as
described below, elect to, (i) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the
Offer, as extended, (ii) subject to complying with applicable rules and
regulations of the Securities and Exchange Commission, accept for payment all
Shares so tendered and not extend the Offer, or (iii) terminate the Offer and
not accept for payment any Shares and return all tendered Shares to tendering
shareholders. The term "Expiration Date" means 12:00 Midnight, New York City
time, on February 25, 2000, unless the Purchaser shall have extended the
period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser shall expire. The Purchaser does not expect to
make a subsequent offering period available following the Expiration Date
pursuant to Rule 14d-11 of the Securities
2
<PAGE>
Exchange Act of 1934, as amended (the "Exchange Act"), although it reserves
the right to do so in its sole discretion.
Subject to the terms and conditions set forth in the Offer to Purchase and
the Merger Agreement and the applicable rules and regulations of the
Securities and Exchange Commission, the Purchaser reserves the right (but will
not be obligated), at any time or from time to time in its sole discretion,
(i) to extend the period during which the Offer is open or (ii) to amend the
Offer in any other respect by giving oral or written notice of such extension
or amendment to the Depositary and by making a public announcement of such
extension or amendment. Except to the extent required by the Merger Agreement,
there can be no assurance that the Purchaser will exercise its right to extend
or amend the Offer. Any extension of the period during which the Offer is open
and will be followed, as promptly as practicable, by public announcement
thereof, such announcement to be issued not later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw such shareholder's Shares.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment pursuant to
the Offer, also may be withdrawn at any time after March 27, 2000. Except as
otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares
made pursuant to the Offer are irrevocable. For a withdrawal of Shares
tendered pursuant to the Offer to be effective, a written, telegraphic, telex
or facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name in which the certificates representing such shares are registered if
different from that of the person who tendered the Shares. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such certificates have been tendered by an Eligible Institution
(as defined in the Offer to Purchase), the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer as set forth in
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account of the Book-Entry Transfer Facility to be credited with
the withdrawn Shares. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in the sole discretion, and its determination will be final and binding on all
parties.
The receipt of cash in exchange for Shares pursuant to the Offer (or the
Merger) will be a taxable transaction for U.S. federal income tax purposes and
may also be a taxable transaction under applicable state, local or foreign tax
laws. Generally, a shareholder who receives cash in exchange for Shares
pursuant to the Offer (or the Merger) will recognize gain or loss for U.S.
federal income tax purposes equal to the difference between the amount of cash
received and such shareholder's adjusted tax basis in the Shares exchanged
therefor. Provided that such Shares constitute capital assets in the hands of
the shareholder, such gain or loss will be capital gain or loss, and will be
long-term capital gain or loss if the holder has held the Shares for more than
one year at the time of sale. The maximum U.S. federal income tax rate
applicable to individual taxpayers on long-term capital gain is 20%, and the
deductibility of capital losses is subject to limitations. All shareholders
should consult with their own tax advisors as to the particular tax
consequences of the Offer and the Merger to them, including the applicability
and effect of the alternative minimum tax and any state, local or foreign
income and other tax laws and of changes in such tax laws. For a more complete
description of certain U.S. federal income tax consequences of the Offer and
the Merger see Section 5 of the Offer to Purchase. The information required to
be disclosed by Paragraph (d)(1) of Rule 14d-6 of the General Rules and
Regulations under the Exchange Act, is contained in the Offer to Purchase and
is incorporated herein by reference.
The Company has provided to the Purchaser its list of shareholders and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of
3
<PAGE>
Transmittal and other related materials are being mailed to record holders of
Shares and will be mailed to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is
made with respect to the Offer.
Questions and requests for assistance and copies of the Offer to Purchase,
the Letter of Transmittal and all other tender offer materials may be directed
to the Information Agent or the Dealer Manager at their respective addresses
and telephone numbers set forth below, and will be furnished promptly at the
Purchaser's expense. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 549-6650
The Dealer Manager for the Offer is:
Credit Suisse First Boston
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 646-4543
January 28, 2000
4
<PAGE>
Offer To Purchase For Cash
All Outstanding Shares of Common Stock
of
Balance Bar Company
at
$19.40 Net Per Share
by
BB Acquisition, Inc.
a wholly owned subsidiary of
Kraft Foods, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED IN ACCORDANCE WITH THE TERMS OF THE OFFER AND NOT WITHDRAWN PRIOR TO
THE EXPIRATION DATE OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE
$0.01 PER SHARE (THE "SHARES"), OF BALANCE BAR COMPANY (THE "COMPANY") WHICH,
TOGETHER WITH THE SHARES OWNED BY KRAFT FOODS, INC. ("PARENT") OR BB
ACQUISITION, INC. ("PURCHASER") REPRESENTS MORE THAN 50% OF THE SHARES
OUTSTANDING AND (II) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, BEFORE THE EXPIRATION DATE OF THE OFFER. THE OFFER IS ALSO SUBJECT TO
THE SATISFACTION OF CERTAIN OTHER CONDITIONS. SEE SECTION 17--"CERTAIN
CONDITIONS OF THE OFFER."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
AGREEMENT AND PLAN OF MERGER DATED AS OF JANUARY 21, 2000 AMONG PARENT,
PURCHASER AND THE COMPANY, THE OFFER AND THE MERGER, AND DETERMINED THAT THE
OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS SHAREHOLDERS. THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS TENDER THEIR SHARES PURSUANT TO THE
OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT.
CERTAIN SHAREHOLDERS OF THE COMPANY HAVE ENTERED INTO SUPPORT AGREEMENTS
PURSUANT TO WHICH SUCH SHAREHOLDERS HAVE AGREED, AMONG OTHER THINGS, TO TENDER
PURSUANT TO THE OFFER, AND NOT TO WITHDRAW, ALL OF THEIR SHARES, WHICH
TOGETHER REPRESENT APPROXIMATELY 54% OF ALL OUTSTANDING SHARES (APPROXIMATELY
51% ON A FULLY-DILUTED BASIS).
IMPORTANT
Any shareholder of the Company wishing to tender Shares in the Offer must
(1) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal and all other required documents to the
Depositary (as defined herein) together with certificates representing the
Shares tendered or follow the procedure for book-entry transfer set forth in
Section 3 or (2) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the shareholder.
A shareholder having Shares registered in the name of a broker, dealer,
commercial bank, trust company, or other nominee must contact such person if
such shareholder wishes to tender such Shares.
Any shareholder of the Company who wishes to tender Shares and cannot
deliver certificates representing such Shares and all other required documents
to the Depositary on or prior to the Expiration Date or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such
Shares pursuant to the guaranteed delivery procedure set forth in Section 3--
"Procedures for Accepting the Offer and Tendering Shares."
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be obtained from the
Information Agent or the Dealer Manager. Shareholders may also contact their
broker, dealer, commercial bank and trust companies or other nominee.
The Dealer Manager for the Offer is:
[CREDIT SUISSEX LOGO]
January 28, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY TERM SHEET........................................................ 1
INTRODUCTION.............................................................. 5
THE TENDER OFFER.......................................................... 7
1. Terms of the Offer.................................................. 7
2. Acceptance for Payment and Payment for Shares....................... 8
3. Procedures for Accepting the Offer and Tendering Shares............. 9
4. Withdrawal Rights................................................... 12
5. Certain United States Federal Income Tax Considerations............. 12
6. Price Range of Shares; Dividends.................................... 13
7. Certain Information Concerning the Company.......................... 14
8. Selected Financial Information...................................... 14
9. Certain Information Concerning Parent and Purchaser................. 16
10. Source and Amount of Funds.......................................... 17
11. Background of the Offer; Past Contacts or Negotiations with the
Company................................................................ 17
12. The Merger Agreement; Other Arrangements............................ 19
13. Purpose of the Offer; Plans for the Company......................... 25
14. Certain Effects of the Offer........................................ 27
15. Dividends and Distributions......................................... 28
16. Extension of Tender Period; Termination; Amendment.................. 28
17. Certain Conditions of the Offer..................................... 29
18. Certain Legal Matters; Regulatory Approvals......................... 30
19. Appraisal Rights.................................................... 32
20. Fees and Expenses................................................... 32
21. Miscellaneous....................................................... 33
SCHEDULE I
Directors and Executive Officers of Parent, Purchaser, Philip Morris
Companies Inc. and Parent's Designees.................................. 34
</TABLE>
ii
<PAGE>
SUMMARY TERM SHEET
BB Acquisition, Inc. is offering to purchase all of the outstanding common
stock of Balance Bar Company for $19.40 per share in cash. The following are
some of the questions you, as a shareholder of Balance Bar Company, may have
and answers to those questions. We urge you to read carefully the remainder of
this offer to purchase and the letter of transmittal because the information
in this summary term sheet is not complete. Additional important information
is contained in the remainder of this offer to purchase and the letter of
transmittal.
.WHO IS OFFERING TO BUY MY SECURITIES?
Our name is BB Acquisition, Inc. We are a Delaware corporation formed for
the purpose of making a tender offer for all of the common stock of Balance
Bar Company. We are a wholly owned subsidiary of Kraft Foods, Inc., a Delaware
corporation. Kraft Foods, Inc. is a wholly owned subsidiary of Philip Morris
Companies Inc., a Virginia corporation. See the "Introduction" to this Offer
to Purchase.
.WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of Balance
Bar Company. See the "Introduction" to this Offer to Purchase.
.HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE
TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $19.40 per share, net to you, in cash. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares
on your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See the "Introduction" to this Offer to Purchase.
.DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Kraft Foods, Inc. will be provided with approximately $268 million, by its
parent company, Philip Morris Companies Inc., which will be used to purchase
all shares validly tendered and not withdrawn in the offer and to provide
funding for the merger which is expected to follow the successful completion
of the offer in accordance with the terms and conditions of the merger
agreement among Balance Bar Company, BB Acquisition, Inc. and Kraft Foods,
Inc. We anticipate that all of these funds will be obtained from the existing
resources and internally generated funds of Philip Morris Companies Inc. See
Section 10--"Source and Amount of Funds" of this Offer to Purchase.
.IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
The form of payment consists solely of cash. We have arranged for all of
our funding to come from the existing resources and internally generated funds
of Philip Morris Companies Inc. Therefore, we do not think our financial
condition is relevant to your decision whether to tender in the offer. See
Section 10--"Source and Amount of Funds" of this Offer to Purchase.
.HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on
February 25, 2000, assuming commencement on January 28, to decide whether to
tender your shares in the offer. Further, if you cannot deliver everything
that is required in order to make a valid tender by that time, you may be able
to use a guaranteed delivery procedure, which is described later in this offer
to purchase. See Section 1--"Terms of the Offer" of this Offer to Purchase.
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.CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that:
--we can extend the offer for up to 10 business days after April 30, 2000,
if as of that date at least 90% of the outstanding shares have not been
tendered; and
--we will extend the offer, without the approval of Balance Bar Company, if
on a scheduled expiration date any of the conditions to our offer are not
satisfied but are capable of being satisfied, however, we are not
required to extend the offer beyond April 30, 2000; and
--we may extend the initial expiration date of the offer to include a
subsequent offering period any time after April 30, 2000. A subsequent
offering period, if one is included, will be an additional opportunity
for shareholders to tender their shares and receive the offer
consideration following the expiration of the offer. However, we do not
currently intend to include a subsequent offering period although we
reserve the right to do so.
See Section 1--"Terms of the Offer" of this Offer to Purchase.
.HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform American Stock Transfer & Trust
Company (which is the depositary for the offer) of that fact and will make a
public announcement of the extension, not later than 9:00 a.m., New York City
time, on the next business day after the day on which the offer was scheduled
to expire. See Section 1--"Terms of the Offer" of this Offer to Purchase.
.WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
--We are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer, together with the shares then owned by us
and Kraft Foods, Inc., represents more than 50% of the shares of Balance
Bar Company outstanding. We may, however, decide to purchase all shares
tendered, even though such number may be 50% or less of the outstanding
shares, in our sole discretion.
--We are not obligated to purchase shares which are validly tendered if,
among other things, there is a material adverse change in Balance Bar
Company or its business or if the applicable waiting period under the
Hart-Scott Rodino Antitrust Improvements Act of 1976 has not expired or
been waived before we accept the shares which have been validly tendered.
See Section 17--"Certain Conditions of the Offer" of this Offer to
Purchase.
.HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal, to American Stock
Transfer & Trust Company, the depositary for the offer, not later than the
time the tender offer expires. If your shares are held in street name, the
shares can be tendered by your nominee through The Depositary Trust Company.
If you cannot get any document or instrument that is required to be delivered
to the depositary by the expiration of the tender offer, you may get a little
extra time to do so by having a broker, a bank or other fiduciary which is a
member of the Securities Transfer Agents Medallion Program or other eligible
institution guarantee that the missing items will be received by the
depositary within three Nasdaq National Market trading days. For the tender to
be valid, however, the depositary must receive the missing items within that
three trading day period. See Section 3--"Procedure for Accepting the Offer
and Tendering Shares" of this Offer to Purchase.
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.UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not by March 27, 2000, agreed to accept your shares for payment, you can
withdraw them at any time after such time until we accept shares for payment.
This right to withdraw will not apply to any subsequent offering period
discussed in Section 1, if one is included. See Section 4--"Withdrawal Rights"
of this Offer to Purchase.
.HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 4--"Withdrawal
Rights" of this Offer to Purchase.
.WHAT DOES THE BALANCE BAR COMPANY BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to an agreement and plan of merger among
us, Kraft Foods, Inc. and Balance Bar Company, which has been approved
unanimously by the Balance Bar Company board of directors. Balance Bar Company
approved the merger agreement, our tender offer and the proposed merger of us
with and into Balance Bar Company, with Balance Bar Company as the surviving
corporation and a wholly owned subsidiary of Kraft Foods, Inc. The Balance Bar
Company board of directors has determined that the offer and the merger are
fair to, and in the best interests of the shareholders of Balance Bar Company.
The Balance Bar Company board of directors recommends that you tender your
shares in the offer. See the "Introduction" to this Offer to Purchase.
.HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Shareholders who own shares representing approximately 54% of the
outstanding common stock of Balance Bar Company (approximately 51% after
taking into consideration unexercised shares and other securities convertible
into common stock) have agreed to tender their shares in the offer.
.IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL
BALANCE BAR COMPANY CONTINUE AS A PUBLIC COMPANY?
No. If the merger takes place, Balance Bar Company no longer will be
publicly owned. Even if the merger does not take place, if we purchase all the
tendered shares, there may be so few remaining shareholders and publicly held
shares that Balance Bar Company common stock will no longer be eligible to be
traded through the Nasdaq National Market or on a securities exchange, there
may not be a public trading market for Balance Bar Company stock, and Balance
Bar Company may cease making filings with the Securities and Exchange
Commission or otherwise cease being required to comply with the SEC rules
relating to publicly held companies. See Section 14--"Certain Effects of the
Offer" of this Offer to Purchase.
.WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE BALANCE BAR COMPANY
SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least a majority of the
outstanding shares of Balance Bar Company, BB Acquisition, Inc. will be merged
with and into Balance Bar Company. If that merger takes place, Kraft Foods,
Inc. will own all of the shares of Balance Bar Company and all remaining
shareholders of Balance Bar Company (other than Kraft Foods, Inc.) will
receive $19.40 per share in cash (or any other higher price per share which is
paid in the offer). See the "Introduction" to this Offer to Purchase.
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.IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, shareholders not tendering in
the offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer. Therefore, if the merger
takes place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier if you tender your
shares. However, if the merger does not take place, the number of shareholders
and of shares of Balance Bar Company which are still in the hands of the
public may be so small that there no longer will be an active public trading
market (or, possibly, there may not be any public trading market) for the
Balance Bar Company common stock. Also, as described above, Balance Bar
Company may cease making filings with the SEC or otherwise being required to
comply with the SEC rules relating to publicly held companies. See the
"Introduction" and Section 14--"Certain Effects of the Offer" of this Offer to
Purchase.
.WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On January 20, 2000, the last trading day before we announced the tender
offer and the possible subsequent merger, the last sale price of Balance Bar
Company common stock reported on the Nasdaq National Market was $14.13 per
share. Between December 31, 1999 and January 20, 2000, the price of a share of
Balance Bar Company common stock ranged between $14.94 and $11.88. We advise
you to obtain a recent quotation for shares of Balance Bar Company common
stock in deciding whether to tender your shares. See Section 6--"Price Range
of Shares; Dividends" of this Offer to Purchase.
.WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call D.F. King & Co., Inc. at (800) 628-8510 (toll free) or Credit
Suisse First Boston Corporation at (800) 646-4543 (toll free). D.F. King &
Co., Inc. is acting as the information agent and Credit Suisse First Boston
Corporation is acting as the dealer manager for our tender offer. See the back
cover of this Offer to Purchase.
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To the Holders of Shares of Common Stock
of Balance Bar Company:
INTRODUCTION
BB Acquisition, Inc. ("Purchaser"), a Delaware corporation and a wholly
owned subsidiary of Kraft Foods, Inc. ("Parent"), hereby offers to purchase
all outstanding shares of common stock, par value $0.01 per share (the
"Shares"), of Balance Bar Company (the "Company") at a price of $19.40 per
Share, net to the seller in cash (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of January 21, 2000 (the "Merger Agreement") among the Company, Purchaser
and Parent. The Merger Agreement provides that Purchaser will be merged with
and into the Company (the "Merger") as soon as practicable following the
satisfaction or waiver of each of the conditions to the Merger set forth in
the Merger Agreement. Following the Merger, the Company will continue as the
surviving corporation (the "Surviving Company"), wholly owned by Parent, and
the separate corporate existence of Purchaser will cease. Pursuant to the
Merger, each Share outstanding immediately prior to the effective time of the
Merger (the "Effective Time") (other than Shares owned beneficially or of
record by Parent or any subsidiary of Parent or held in the treasury of the
Company, all of which will be cancelled, and other than Shares which are held
by shareholders, if any, who properly exercise their appraisal rights under
the Delaware General Corporation Law (the "DGCL")), shall be converted into
the right to receive the per Share price paid in the Offer in cash, without
interest (the "Merger Consideration"). The Merger Agreement is more fully
described in Section 12--"The Merger Agreement; Other Arrangements," which
also contains a discussion of the treatment of stock options.
Tendering shareholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) 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. Shareholders who hold
their Shares through a broker or bank should consult such institution as to
whether it charges any service fees. Parent or Purchaser will pay all charges
and expenses of Credit Suisse First Boston Corporation, as dealer manager
("Credit Suisse First Boston" or the "Dealer Manager"), American Stock
Transfer & Trust Company, as depositary (the "Depositary"), and D.F. King &
Co., Inc., as information agent (the "Information Agent"), incurred in
connection with the Offer. See Section 20--"Fees and Expenses."
The Board of Directors of the Company (the "Company Board") has unanimously
approved the Merger Agreement, the Offer and the Merger, and determined that
the Offer and the Merger are fair to, and in the best interests of, the
Company and its shareholders. The Company Board recommends that the Company's
shareholders tender their Shares pursuant to the Offer and approve and adopt
the Merger Agreement.
Salomon Smith Barney Inc., financial advisor to the Company ("Salomon Smith
Barney"), has delivered to the Company Board a written opinion dated January
21, 2000, to the effect that, as of such date and based on and subject to the
matters stated in such opinion, the $19.40 per Share cash consideration to be
received in the Offer and the Merger by the holders of Shares was fair from a
financial point of view to such holders (other than Parent and its
affiliates). The full text of Salomon Smith Barney's written opinion, which
describes the assumptions made, procedures followed, matters considered and
limitations on the review undertaken, is included as an annex to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
under the Securities Exchange Act of 1934 (the "Exchange Act"), which is being
mailed to shareholders concurrently herewith. Shareholders are urged to read
the full text of such opinion carefully in its entirety.
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The Offer is conditioned upon, among other things, (1) there being validly
tendered in accordance with the terms of the Offer and not withdrawn prior to
the expiration date of the Offer a number of Shares which, together with the
Shares then owned by Parent or Purchaser, represents more than 50% of the
outstanding Shares (the "Minimum Condition") and (2) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), before the
expiration date of the Offer. The Offer is also subject to the satisfaction of
certain other conditions. See Section 17--"Certain Conditions of the Offer."
Pursuant to the Merger Agreement, the Company, as of the close of business
on January 21, 2000, there were outstanding 12,646,276 Shares. Neither Parent,
Purchaser nor any person listed on Schedule I hereto beneficially owns any
Shares. Accordingly, Purchaser believes that the Minimum Condition would be
satisfied if approximately 6,323,139 Shares are validly tendered and not
withdrawn prior to the expiration date of the Offer.
Each of Thomas R. Davidson, James A. Wolfe and Richard G. Lamb have entered
into Support Agreements with the Parent dated as of January 21, 2000 (the
"Support Agreements") relating to an aggregate of 6,999,718 Shares
(approximately 54% of the outstanding Shares and approximately 51% on a fully
diluted basis) over which Messrs. Davidson, Wolfe and Lamb have represented to
Parent that they have voting and dispositive power. Pursuant to the Support
Agreements, among other things, Messrs. Davidson, Wolfe and Lamb have agreed
to tender all such Shares pursuant to the Offer and not withdraw such Shares
as long as the Support Agreements remain in effect. The Support Agreements are
subject to limited termination provisions. See Section 11--"The Merger
Agreement; Other Arrangements--The Support Agreements." As a result of the
Support Agreements, Parent and Purchaser expect the Minimum Condition to be
satisfied at the Expiration Date.
The Merger Agreement provides that upon the acceptance for payment of
Shares pursuant to the Offer, Parent shall be entitled to designate at least
such number of directors, rounded up to the next whole number, on the Company
Board that equals the product of (1) the total number of directors on the
Company Board and (2) the percentage that the aggregate number of Shares
beneficially owned by Parent or its affiliates bears to the total number of
Shares then outstanding, and the Company will, upon request of Parent, take
all actions necessary to cause Parent's designees to be so elected including,
if necessary, seeking the resignations of one or more existing directors;
provided, however, that before the Effective Time, the Company Board will
always have at least two directors who are neither officers, directors,
shareholders or designees of Parent or any of its affiliates. See Section 12--
"The Merger Agreement; Other Arrangements."
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval and adoption of the Merger Agreement by a
majority of the shareholders of the Company. If the Minimum Condition is
satisfied, Purchaser would have sufficient voting power to approve the Merger
without the affirmative vote of any other shareholder of the Company. The
Company has agreed, if required, to cause a meeting of its shareholders to be
held as promptly as practicable following consummation of the Offer for the
purpose of voting on the approval and adoption of the Merger and the Merger
Agreement. Parent and Purchaser have agreed to vote their Shares in favor of
the Merger. See Section 12--"The Merger Agreement; Other Arrangements."
This Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is
made with respect to the Offer.
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THE TENDER OFFER
1. Terms of the Offer
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension
or amendment), Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn as
permitted under Section 4--"Withdrawal Rights." The term "Expiration Date"
means 12:00 midnight, New York City time, on February 25, 2000, unless
Purchaser, in accordance with the Merger Agreement, extends the period during
which the Offer is open, in which event the term "Expiration Date" means the
latest time and date on which the Offer, as so extended, expires.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement and the applicable rules
and regulations of the Securities and Exchange Commission (the "Commission")),
at any time and from time to time, to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw such shareholder's Shares. See Section 4--
"Withdrawal Rights."
Notwithstanding the foregoing, Purchaser cannot, without the Company's
consent, extend the Offer beyond April 30, 2000, except that Parent can extend
the Offer for up to 10 business days if, as of such date, there have not been
tendered at least 90% of the outstanding Shares. In addition, if at any
scheduled expiration date any of the conditions of the Offer has not been
satisfied or waived by Parent, but are capable of being satisfied, Parent will
from time to time extend the Offer until such conditions are satisfied or
waived, provided that Parent will not be required to extend the Offer beyond
April 30, 2000. Subject to the foregoing restrictions, Parent has the right
(but is not obligated), in its sole discretion, to extend the period during
which the Offer is open by giving oral or written notices of extension to the
depositary in such offer and by making a public announcement of such
extension.
Neither Purchaser nor Parent will, without the prior consent of the
Company, decrease the Offer Price or the number of Shares sought pursuant to
the Offer, or otherwise amend or add any term or condition of or to the Offer,
except as otherwise expressly permitted in or contemplated by the Merger
Agreement. The Company will not unreasonably withhold consent to a change in
the Expiration Date. Purchaser can waive any other condition to the Offer in
its discretion.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(d), and 14e-1 under the
Exchange Act, which require that material changes be promptly disseminated to
shareholders in a manner reasonably designed to inform them of such changes)
and without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service.
If Purchaser extends the Offer or if Purchaser is delayed in its acceptance
for payment of or payment (whether before or after its acceptance for payment
of Shares) for Shares or it is unable to pay for Shares pursuant to the Offer
for any reason, then, without prejudice to Purchaser's rights under the Offer,
the Depositary may retain tendered Shares on behalf of Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described herein under Section 4--"Withdrawal
Rights." However, the ability of Purchaser to delay the payment for Shares
that Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of shareholders promptly after
the termination or withdrawal of such bidder's offer, unless such bidder
elects to offer a subsequent offering period (a "Subsequent
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Offering Period") under Rule 14d-11 under the Exchange Act and pays for Shares
tendered during the Subsequent Offering Period in accordance with that
section, and by the terms of the Merger Agreement, which require that
Purchaser pay for Shares that are tendered pursuant to the Offer as soon as
permitted after the Offer.
If 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,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(d) and 14e-1 under the Exchange
Act. The minimum period during which an offer must remain open following
material changes in the terms of such offer or information concerning such
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.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, include a Subsequent Offering Period following the
expiration of the Offer on the Expiration Date. Rule 14d-11 provides that
Purchaser may include a Subsequent Offering Period so long as, among other
things, (1) the Offer remains open for a minimum of 20 business days and has
expired, (2) the Offer is for all outstanding Shares, (3) Purchaser accepts
and promptly pays for all Shares tendered during the Offer, (4) Purchaser
announces the results of the Offer, including the approximate number and
percentage of Shares deposited no later than 9:00 a.m. New York City time on
the next business day after the Expiration Date and immediately begins the
Subsequent Offering Period, (5) Purchaser immediately accepts and promptly
pays for Shares as they are tendered during the Subsequent Offering Period,
and (6) Purchaser pays the Offer Price for all Shares tendered in the
Subsequent Offering Period. Purchaser will be able to include a Subsequent
Offering Period if it satisfies the conditions above. In a public release, the
Securities and Exchange Commission (the "Commission") expressed the view that
the inclusion of a Subsequent Offering Period would constitute a material
change to the terms of the Offer requiring Purchaser to disseminate new
information to shareholders in a manner reasonably calculated to inform them
of such change sufficiently in advance of the Expiration Date (generally five
business days). In the event Purchaser elects to include a Subsequent Offering
Period, it will notify shareholders of the Company consistent with the
requirements of the Commission.
A Subsequent Offering Period, if one is included, is not an extension of
the Offer. A Subsequent Offering Period would be an additional period of time,
following the expiration of the Offer, in which shareholders may tender Shares
not tendered into the Offer. Purchaser does not currently intend to include a
Subsequent Offering Period in the Offer, although it reserves the right to do
so in its sole discretion.
Pursuant to Rule 14d-7 under the Exchange Act, no withdrawal rights will
apply to Shares tendered into a Subsequent Offering Period and no withdrawal
rights apply during the Subsequent Offering Period with respect to Shares
tendered in the Offer and accepted for payment. The same consideration, the
Offer Price, will be paid to shareholders tendering Shares in the Offer or in
a Subsequent Offering Period, if one is included.
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. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's shareholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and will pay for
all Shares validly tendered prior to the Expiration Date and not properly
withdrawn, promptly after the
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Expiration Date. Subject to the Merger Agreement and compliance with Rule 14e-
1(c) under the Exchange Act, Purchaser expressly reserves the right to delay
payment for Shares in order to comply in whole or in part with any applicable
laws, including, without limitation, the HSR Act. See Section 18--"Certain
Legal Matters; Regulatory Approvals."
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit
of the Offer Price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser
and transmitting such payments to tendering shareholders whose Shares have
been accepted for payment.
Under no circumstances will interest on the Offer Price for Shares be paid,
regardless of any delay in making such payment.
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) the
certificates evidencing such Shares (the "Share Certificates") or confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3--"Procedures for
Accepting the Offer and Tendering Shares," (2) the Letter of Transmittal (or a
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 (as defined below) in lieu of the Letter of Transmittal and (3) any
other documents required under the Letter of Transmittal.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased Shares will be returned, without expense to the
tendering shareholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3--"Procedures for Accepting
the Offer and Tendering Shares," such Shares will be credited to an account
maintained at the Book-Entry Transfer Facility), as promptly as practicable
following the expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but any such
transaction or assignment will not relieve Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
3. Procedures for Accepting the Offer and Tendering Shares.
Valid Tenders. In order for a shareholder validly to tender Shares pursuant
to the Offer, either (1) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message in
lieu of the Letter of Transmittal) and any other documents required by the
Letter of Transmittal must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either the
Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date, or (2) the tendering shareholder must comply with the
guaranteed delivery procedures described below. 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, which are the subject of such
9
<PAGE>
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against such participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility 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 at the Book-Entry
Transfer Facility, either the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents, must, in any case, be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering shareholder must comply with
the guaranteed delivery procedure described below.
Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
The method of delivery of Share Certificates, the Letter of Transmittal and
all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and risk of the tendering shareholder, and
the delivery will be deemed made only when actually received by the Depositary
(including, in the case of a book-entry transfer a Book-Entry Confirmation).
If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal where Shares are tendered (1) by a registered holder of Shares who
has not completed either the box labeled "Special Delivery Instructions" or
the box labeled "Special Payment Instructions" on the Letter of Transmittal or
(2) for the account of a firm which is participating in the Security Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program (each an "Eligible
Institution" and collectively "Eligible Institutions"). In all other cases,
all signatures on a Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal. If a Share
Certificate is registered in the name of a person or persons other than the
signer of the Letter of Transmittal, or if payment is to be made or delivered
to, or a Share Certificate not accepted for payment or not tendered is to be
issued, in the name of a person other than the registered holder(s), then the
Share Certificate must be endorsed or accompanied by appropriate duly executed
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on such Share
Certificate or stock powers guaranteed by an Eligible Institution as provided
in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such shareholder's Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered; provided that all of the following conditions are
satisfied:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(3) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a facsimile thereof), properly
10
<PAGE>
completed and duly executed, with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal are received by the
Depositary within three Nasdaq National Market trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) is
received by the Depositary.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of the Share Certificates
evidencing such Shares, or a Book-Entry Confirmation of the delivery of such
Shares, and the Letter of Transmittal (or a 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 any other
documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Subject to the terms of the Merger Agreement, Purchaser
also reserves the absolute right to waive any condition of the Offer or any
defect or irregularity in the tender of any Shares of any particular
shareholder, whether or not similar defects or irregularities are waived in
the case of other shareholders. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of Purchaser, the Dealer Manager, 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. 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.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder
and accepted for payment by Purchaser (with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of this Offer to Purchase). All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior proxies given
by such shareholder with respect to such Shares (and such other Shares and
securities) will be revoked without further action, and no subsequent proxies
may be given nor any subsequent written consent executed by such shareholder
(and, if given or executed, will not be deemed to be effective) with respect
thereto. The designees of Purchaser will, with respect to the Shares for which
the appointment is effective, be empowered to exercise all voting and other
rights of such shareholder as they in their sole discretion may deem proper at
any annual or special meeting of the Company's shareholders or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well
as the tendering shareholder's representation and warranty that (1) such
shareholder owns the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act, (2) the tender of such Shares complies
with Rule 14e-4 and (3) such shareholder has the full power and authority to
tender and assign the Shares tendered, as specified in the Letter of
Transmittal.
11
<PAGE>
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
To prevent backup withholding of United States federal income tax with
respect to payment of the purchase price of Shares purchased pursuant to the
Offer, each shareholder must provide the Depositary with such shareholder's
correct taxpayer identification number or social security number and certify
that such shareholder is not subject to backup federal income tax withholding
by completing the substitute Form W-9 in the Letter of Transmittal. If backup
federal income tax withholding applies to a shareholder, the Depositary is
required to withhold 31% of any payments made to such shareholder. See
Instruction 8 of the Letter of Transmittal.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after March 27, 2000 (or such later date as
may apply if the Offer is extended). If Purchaser extends the Offer, is
delayed in its acceptance for payment of Shares or is unable to accept Shares
for payment pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer, the Depositary may, nevertheless, on
behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering shareholders are entitled to
withdrawal rights as described herein.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must specify the name, address and
taxpayer identification number of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Share Certificates, the serial numbers shown on such
Share Certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution, unless
such Shares have been tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3--"Procedures for Accepting the Offer and Tendering
Shares," any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under 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.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of
the Offer. However, withdrawn Shares may be re-tendered at any time prior to
the Expiration Date by following one of the procedures described in Section
3--"Procedures for Accepting the Offer and Tendering Shares."
No withdrawal rights will apply to Shares tendered into a Subsequent
Offering Period and no withdrawal rights apply during the Subsequent Offering
period with respect to Shares tendered in the Offer and accepted for payment.
See Section 1--"Terms of the Offer."
5. Certain United States Federal Income Tax Considerations.
The receipt of cash pursuant to the Offer or the Merger will constitute a
taxable transaction for U.S. federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and may also constitute a
taxable transaction under applicable state, local, foreign and other tax laws.
As a result, a tendering
12
<PAGE>
shareholder will generally recognize gain or loss for federal income tax
purposes in an amount equal to the difference between the amount of cash
received by the shareholder pursuant to the Offer or the Merger and such
shareholder's aggregate adjusted tax basis in the Shares tendered and
purchased pursuant to the Offer or the Merger. Gain or loss will be calculated
separately for each block of Shares tendered and purchased pursuant to the
Offer or the Merger. If tendered Shares are held by a tendering shareholder as
capital assets (within the meaning of Section 1221 of the Code), any gain or
loss recognized by the tendering shareholder will constitute capital gain or
loss, and will constitute long-term capital gain or loss if the tendering
shareholder held the underlying Shares for more than 12 months as of the date
of disposition.
A shareholder that tenders Shares may be subject to backup withholding
unless the shareholder provides its taxpayer identification number and
certifies that such number is correct or properly certifies that it is
awaiting a taxpayer identification number, or unless an exemption applies. A
shareholder who does not furnish its taxpayer identification number may be
subject to a penalty imposed by the Internal Revenue Service. See Section 3--
"Procedures for Accepting the Offer and Tendering the Shares."
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such 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
Internal Revenue Service. If backup withholding results in an overpayment of
tax, a refund can be obtained by the shareholder upon filing an appropriate
income tax return.
The foregoing discussion may not be applicable with respect to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation or to shareholders who perfect their appraisal rights under the
DGCL 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,
dealers in securities, tax-exempt organizations and financial institutions,
and may not apply to a holder of Shares in light of such holder's individual
circumstances.
The summary of tax consequences set forth above is for general information
only and is based on the law as currently in effect. Shareholders 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.
6. Price Range of Shares; Dividends.
The Shares began trading on the Nasdaq National Market under the symbol
"BBAR" on June 2, 1998. The following table sets forth, for the periods
indicated, the high and low sale prices per Share. Share prices are as
reported on the Nasdaq National Market based on published financial sources.
To date, the Company has paid no dividends on the Shares.
<TABLE>
<CAPTION>
Common Stock
---------------
High Low
------- -------
<S> <C> <C>
Fiscal Year 1998:
Second Quarter (beginning June 2)...................... $14 3/4 $10 3/4
Third Quarter.......................................... 17 3/4 7 1/4
Fourth Quarter......................................... 13 1/4 7 1/2
Fiscal Year 1999:
First Quarter.......................................... 12 1/8 8 1/4
Second Quarter......................................... 7 3/4 4 7/8
Third Quarter.......................................... 7 1/2 5 3/8
Fourth Quarter......................................... 15 5 5/8
Fiscal Year 2000:
First Quarter (through January 27)..................... 19 1/4 11 7/8
</TABLE>
13
<PAGE>
Pursuant to the Merger Agreement, the Company has represented to Parent
that, on January 21, 2000, there were 21,646,276 outstanding Shares.
On January 20, 2000, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the closing price of
the Shares on the Nasdaq National Market was $14.13 per Share. On January 27,
2000, the last full day of trading before the commencement of the Offer, the
closing price of the Shares on the Nasdaq National Market, was $19.19 per
Share. Shareholders are urged to obtain a current market quotation for the
Shares.
7. Certain Information Concerning the Company.
General. The Company is a Delaware corporation with its principal offices
located at 1015 Mark Avenue, Carpenteria, California 93013. The telephone
number of the Company is (805) 566-0234. According to the Company's Form 10-K
for the fiscal year ended December 31, 1998, the Company develops and markets
branded natural food and beverage products in convenient, good-tasting,
balanced nutritional formulations. The Company's product lines are targeted to
a broad consumer base in the health food and beverage market. The Company
markets its products to consumers for a wide variety of uses, included
snacking, meal replacement, fitness, weight management and diabetic nutrition.
The Company sells its products in natural foods, mass merchandise, club,
grocery, convenience, sports and drug stores.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating
to its business, financial condition and other matters. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
Commission by telephoning 1-800-SEC-0330. The Company's filings are also
available to the public on the Commission's Internet site
(http://www.sec.gov). Copies of such materials may also be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such material should also be
available for inspection at the offices of Nasdaq National Market Operations,
1735 K Street, N.W., Washington D.C. 20006.
8. Selected Financial Information.
The following selected consolidated financial data relating to the Company
has been taken or derived from the audited financial statements contained in
the Company's annual reports on Form 10-K for the years ended December 31,
1998 and 1997 and the unaudited operating results provided to Parent for the
year ended December 31, 1999. More comprehensive financial information is
included in the Company's annual report on Form 10-K and quarterly reports on
Form 10-Q and the other documents filed by the Company with the Commission,
and the financial data set forth below is qualified in its entirety by
reference to such reports and other documents and all of the financial
statements and notes contained therein. Such reports and other documents may
be examined and copies may be obtained from the offices of the Commission in
the manner set forth above.
14
<PAGE>
BALANCE BAR COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except ratio and per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1999 1998 1997
----------- ------- -------
(unaudited)
<S> <C> <C> <C>
Income Statement Data:
Sales............................................. $100,855 $81,656 $39,634
Gross Profit...................................... 50,872 39,334 19,833
Net Income........................................ 7,455 5,112 1,660
Basic Earnings Per Share.......................... 0.63 0.48 0.18
Diluted Earnings Per Share........................ 0.58 0.41 0.15
Ratio of Earnings to Fixed Charges................ 151x 41x 44x
<CAPTION>
December 31,
----------------------------
1999 1998 1997
----------- ------- -------
(unaudited)
<S> <C> <C> <C>
Balance Sheet Data:
Current Assets.................................... 30,682 25,846 9,438
Total Assets...................................... 35,511 26,981 10,796
Current Liabilities............................... 7,493 7,054 6,464
Long-Term Debt, net............................... -- -- 228
Book Value Per Share.............................. 2.37 1.76 0.44
</TABLE>
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the Commission or otherwise publicly
available. Although neither Purchaser nor Parent have any knowledge that would
indicate that any statements contained herein based upon such reports and
documents are untrue, neither Purchaser nor Parent takes any responsibility
for the accuracy or completeness of the information contained in such reports
and other documents 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 but that are unknown to Purchaser or Parent.
Certain Projections. The Company does not, as a matter of course, make
public any forecasts as to its future financial performance. However, in
connection with Parent's review of the transactions contemplated by the Offer
and the Merger, the Company has provided Parent with certain projected
financial information concerning the Company. Such information included, among
other things, the Company's projections of consolidated sales, gross profit,
income before income taxes, net income and diluted earnings per share for the
Company for the years 2000 through 2002. Set forth below is a summary of such
projections. These projections should be read together with the financial
statements of the Company referred to herein.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
2000 2001 2002
-------- -------- --------
(in thousands, except
share data)
<S> <C> <C> <C>
Sales.......................................... $147,531 $199,035 $261,638
Gross Profit................................... 72,601 96,258 125,665
Income Before Income taxes..................... 17,780 23,524 30,307
Net Income..................................... 10,490 13,644 17,578
Diluted Earnings Per Share..................... 0.80 1.03 1.32
</TABLE>
It is the understanding of Parent and Purchaser that the projections were
not prepared with a view to public disclosure or compliance with published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts
and are included herein
15
<PAGE>
only because such information was provided to Parent and Purchaser. The
projections do not purport to present operations in accordance with generally
accepted accounting principles and the Company's independent auditors have not
examined or compiled the projections presented herein, and accordingly assume
no responsibility for them. These forward-looking statements (as that term is
defined in the Private Securities Litigation Reform Act of 1995) are subject
to certain risks and uncertainties that could cause actual results to differ
materially from the projections. The Company has advised Purchaser and Parent
that its internal financial forecasts (upon which the projections provided to
Parent and Purchaser were based in part) are, in general, prepared solely for
internal use and capital budgeting and other management decisions, and are
subjective in many respects and thus susceptible to interpretations and
periodic revision based on actual experience and business developments. The
projections also reflect numerous assumptions (not all of which were provided
to Parent and Purchaser), all made by management of the Company, with respect
to industry performance, general business, economic, market and financial
conditions and other matters, including effective tax rates consistent with
historical levels for the Company, all of which are difficult to predict, many
of which are beyond the Company's control and none of which were subject to
approval by Parent or Purchaser. Accordingly, there can be no assurance that
the assumptions made in preparing the projections will prove accurate, and
actual results may be materially greater or less than those contained in the
projections. The inclusion of information the projections herein should not be
regarded as an indication that any of Parent, Purchaser, the Company or their
respective affiliates or representatives considered or consider the
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such. None of Parent, Purchaser, the Company or
any of their respective affiliates or representatives has made, or makes any
representation to any person regarding the ultimate performance of the Company
compared to the information contained in the projections and none of them
intends to update or otherwise revise the projections to reflect circumstances
existing after the date when made or to reflect the occurrence of future
events even in the event that any or all of the assumptions underlying the
projections are shown to be in error. It is expected that there will be
differences between actual and projected results, and actual results may be
materially higher or lower than those projected.
9. Certain Information Concerning Parent and Purchaser.
General. Parent is a Delaware corporation with its principal offices
located at Three Lakes Drive, Northfield, Illinois 60093. The telephone number
of Parent is (847) 646-2000. Parent is the largest processor and marketer of
retail packaged foods in the United States. A wide variety of cheese,
processed meat products, coffee and grocery products are manufactured and
marketed in the United States and Canada by Parent.
Purchaser is a Delaware corporation with its principal offices located at
Three Lakes Drive, Northfield, Illinois 60093. The telephone number of
Purchaser is (847) 646-2000. Purchaser is a wholly owned subsidiary of Parent.
Purchaser was organized on January 18, 2000 and has not carried on any
activities other than in connection with the Merger Agreement.
Philip Morris Companies Inc. is a Virginia corporation with its principal
offices located at 120 Park Avenue, New York, New York 10017. The telephone
number of Philip Morris Companies Inc. is (917) 663-5000. Philip Morris
Companies Inc. is a holding company whose principal wholly-owned subsidiaries,
Philip Morris Incorporated, Philip Morris International Inc., Kraft Foods,
Inc., and Miller Brewing Company, are engaged in the manufacture and sale of
various consumer products. A wholly owned subsidiary of the Company, Philip
Morris Capital Corporation, engages in various financing and investment
activities. Philip Morris Companies Inc. is the largest consumer packaged
goods company in the world. Philip Morris Incorporated is the largest
cigarette company in the United States.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of Philip Morris Companies Inc., Parent and
Purchaser and certain other information are set forth in Schedule I hereto.
16
<PAGE>
Except as described in this Offer to Purchase, (1) none of Parent,
Purchaser nor, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed beneficially owns or has any right to acquire, directly or indirectly,
any Shares and (2) none of Parent, Purchaser nor, to the best knowledge of
Parent and Purchaser, any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, the Support Agreements or as
otherwise described in this Offer to Purchase, none of Parent, Purchaser nor,
to the best knowledge of Parent and Purchaser, any of the persons listed in
Schedule I to this 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 voting
of such securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss,
guarantees of profits, division of profits or loss or the giving or
withholding of proxies.
Except as set forth in this Offer to Purchase, none of Parent, Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed
on Schedule I hereto, has had any business relationship or transaction with
the Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, there
have been no contracts, negotiations or transactions between Parent or any of
its subsidiaries or, to the best knowledge of Parent, any of the persons
listed in Schedule I to this Offer to Purchase, on the one hand, and the
Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets. None of the persons listed in Schedule I have, during the past five
years, been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors). None of the persons listed in Schedule I have,
during the past five years, been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction of
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to federal
or state securities, laws, or a finding of any violation of federal or state
securities laws.
10. Source and Amount of Funds.
The total amount of funds required by Purchaser to purchase Shares pursuant
to the Offer and the Merger is estimated to be approximately $268 million.
Purchaser will obtain such funds from Parent. Parent will obtain such funds
from Philip Morris Companies Inc., its parent company. Philip Morris Companies
Inc. will obtain such funds from internally generated funds.
11. Background of the Offer; Past Contacts or Negotiations with the Company.
On September 24, 1999, the Company had discussions with representatives of
Parent's European division to investigate the possibility of entering into a
business relationship.
In early October 1999, William J. Eichar, Vice President Mergers &
Acquisitions of the Parent, called James A. Wolfe, the President and Chief
Executive Officer of the Company, to express Parent's potential interest in
exploring a business relationship with the Company.
On October 28, 1999, at the invitation of Mr. Wolfe, representatives of the
Company and Parent, including Mr. Wolfe, Mr. Eichar, and Ms. Elizabeth Smith,
the Director of Strategy of Parent's Beverages and Desserts Division, met at
the Company's headquarters in Carpinteria, California to discuss the parties'
respective businesses.
On November 1, 1999, Mr. Eichar received a call from a representative of
Salomon Smith Barney, the Company's financial advisor, notifying him that the
Company had commenced a process to solicit third party indications of interest
in the possible acquisition of the Company.
On November 2, 1999, Parent and Company entered into a confidentiality
agreement and Parent subsequently received an offering memorandum and related
materials about the Company.
17
<PAGE>
As requested in the Company's bid sale process instructions, Parent
submitted a preliminary, non-binding indication of interest on November 17,
1999. On November 30, 1999, representatives of Parent attended a management
presentation by the Company held in Chicago, Illinois. In December 1999 and
early January 2000, representatives of Parent conducted a due diligence
investigation of the Company.
On January 12, 2000, Parent submitted a bid which stated that it was
prepared to make a cash tender offer for all outstanding Shares at $18.95 per
Share, subject to expeditious completion of due diligence, confirmation of
mutually acceptable employment terms and conditions with certain members of
the Company's senior management, execution of the Support Agreements and other
customary conditions.
On January 13, 2000, a representative of Salomon Smith Barney called Mr.
Eichar and a representative of Credit Suisse First Boston Corporation ("Credit
Suisse First Boston"), Parent's financial advisor, to clarify certain issues
relating to Parent's proposal. In the morning of January 14, 2000, the Salomon
Smith Barney representative again called Credit Suisse First Boston to discuss
further the terms of Parent's January 12 bid. Credit Suisse First Boston was
informed that the Company's Board was scheduled to meet that afternoon and
would consider any revision to Parent's proposal made prior to that time.
Credit Suisse First Boston indicated that it would discuss the situation with
Parent immediately and report to Salomon Smith Barney prior to the Board
Meeting. Following discussion with Parent, Credit Suisse First Boston, at
Parent's direction, informed Salomon Smith Barney that Parent was prepared to
increase the amount of its January 12 bid to $19.45 per Share, subject to the
understanding that the Company would have a certain projected level of cash at
the time of the closing of the Merger, and that Parent would, before
commencing negotiations, receive assurances that the Principal Stockholders
would sign the Support Agreements substantially in the form described herein
and that appropriate employment arrangements with senior officers could be
negotiated. Following receipt of such assurances from the Company, O'Melveny &
Myers then forwarded to Parent's counsel revised drafts of the Merger
Agreement and related documents.
Commencing on January 15 to January 19, representatives of Parent and the
Company met in Los Angeles to negotiate a definitive merger agreement and
other ancillary agreements (including the Support Agreements). During such
period and thereafter, representatives of Parent and the Company also met to
complete remaining due diligence.
By January 20, all due diligence issues were addressed in a manner
acceptable to Parent, and Parent proceeded to conclude negotiations with the
Company based on the proposed terms of the transaction as of January 20.
During final review of the Merger Agreement, on the evening of January 20,
representatives of the Company and Parent discussed cash expenditures to be
made by the Company prior to consummation of the Merger that would reduce the
Company's projected net cash as of the projected closing date position by
approximately $0.05 per Share versus previous assumptions used to calculate
the $19.45 per Share proposal. As a result of this anticipated cash reduction,
the Company and Parent agreed to adjust the per Share price to $19.40 per
Share.
On January 20 the Board of Directors of the Company met to review and
approve the Offer, the Merger, the Merger Agreement and the Support
Agreements. Following such meeting, Parent, the Purchaser and the Company
agreed to execute and deliver the Merger Agreement on January 21, and the
Stockholders and Parent and the Purchaser agreed to execute and deliver the
Support Agreements on January 21. All such agreements were executed and
delivered on January 21. Also on January 21, 2000, an Organizational
Transition Plan providing for, among other things, employment arrangements
with employees of the Company was signed by the Company, Parent and Messrs.
Wolfe, Thomas Flahie, Richard Lamb and Thomas Davidson. Thereafter the Company
and Parent issued a joint press release announcing the transaction.
On January 28, 2000, in accordance with the Merger Agreement, Parent
commenced the Offer.
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12. The Merger Agreement; Other Arrangements.
The Merger Agreement
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Tender Offer
Statement on Schedule TO filed by Parent and Purchaser pursuant to Rule 14d-3
of the General Rules and Regulations under the Exchange Act with the
Commission in connection with the Offer (the "Schedule TO"). The summary is
qualified in its entirety by reference to the Merger Agreement, which is
deemed to be incorporated by reference herein.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction or waiver of the Minimum
Condition and certain other conditions that are described in Section 17--
"Certain Conditions of the Offer." Pursuant to the Merger Agreement, without
the consent of the Company, Parent may not extend the Offer beyond April 30,
2000, except for a 10 day extension if at least 90% of the Shares have not
been tendered and can also elect a Subsequent Offering Period following
acceptance of Shares for purchase to the extent permitted by Rule 14d-11 of
the Exchange Act. In addition, if at any scheduled expiration date the
conditions of the Offer have not been satisfied or waived by Parent, but are
capable of being satisfied, Parent will from time to time extend the Offer
until such conditions are satisfied or waived, provided that Purchaser is not
required to extend the Offer beyond April 30, 2000. Subject to the foregoing
restrictions, Parent has the right (but is not obligated), in its sole
discretion, to extend the period during which the Offer is open by giving oral
or written notices of extension to the depositary in such offer by making a
public announcement of such extension.
Neither Parent nor Purchaser will, without the prior consent of the
Company, decrease the Offer Price or the number of Shares sought pursuant to
the Offer, or otherwise amend or add any term or condition of or to the Offer,
except as otherwise expressly permitted in or contemplated by the Merger
Agreement. The Company will not unreasonably withhold consent to a change in
the expiration date of the Offer. Parent can waive any other condition to the
Offer in its discretion.
For information concerning directors of the Company prior to consummation
of the Merger, see Section 13--"Purpose of the Offer; Plans for the Company."
Directors. The Merger Agreement provides that effective upon the acceptance
for payment of Shares, Parent shall be entitled to designate at least such
number of directors, rounded up to the next whole number, on the Company Board
that equals the product of (i) the total number of directors on the Company
Board (determined after giving effect to the directors elected pursuant to
this sentence) and (ii) the percentage that the aggregate number of Shares
beneficially owned by Parent or its affiliates (including Shares accepted for
payment pursuant to the Offer) bears to the total number of Shares then
outstanding and the Company will, upon request of Parent promptly take all
actions necessary to cause Parent's designees to be so elected, including, if
necessary, seeking the resignations of one or more existing directors;
provided, however, that before the Effective Time, the Board will always have
at least two members who are neither officers, directors, shareholders or
designees of Parent or any of its affiliates (the "Parent Insiders").
Following the election or appointment of the Parent's designees and before the
Effective Time, any amendment or termination of the Merger Agreement by the
Company, or any extension by the Company of the time for the performance of
any of the obligations or other acts of Parent or Purchaser or waiver of any
of the Company's rights thereunder, will require the concurrence of a majority
of the directors of the Company then in office who are not Parent Insiders, if
such amendment termination, extension, waiver or action would have an adverse
effect on the minority shareholders of the Company.
Equity Derivatives. As of the Effective Time, the outstanding options to
purchase Shares, warrants, calls, and other rights to acquire Shares,
including securities convertible into or exchangeable for Shares
(collectively, "Equity Derivatives"), will be canceled, redeemed or
repurchased by the Company, and each holder of Equity Derivatives will receive
the aggregate Merger Consideration that such holder would have received
pursuant to this Offer if the holder had tendered the Shares underlying such
Equity Derivatives, less the aggregate exercise or purchase price of such
underlying Shares (subject to any applicable withholding tax).
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The Merger. The Merger Agreement provides that as soon as practicable after
the satisfaction or waiver of each of the conditions to the Merger set forth
therein, Purchaser will be merged with and into the Company. Following the
Merger, the separate existence of Purchaser will cease, and the Company will
continue as the Surviving Company, wholly owned by Parent.
If required by the DGCL, the Company shall call and hold a meeting of its
shareholders (the "Company Shareholders' Meeting") promptly following
consummation of the Offer for the purpose of voting upon the approval of the
Merger Agreement. At any such meeting all outstanding Shares then owned by
Parent or Purchaser or any subsidiary of Parent shall be voted in favor of
approval of the Merger.
Pursuant to the Merger Agreement, each Share outstanding immediately before
the Effective Time (other than Shares owned beneficially or of record by
Parent or any subsidiary of Parent or held in the treasury of the Company, all
of which will be cancelled, and other than Shares which are held by
shareholders, if any, who properly exercise their appraisal rights under the
DGCL) will be converted into the right to receive the Merger Consideration
except as described below. Shareholders who perfect their right to appraisal
of their Shares under the DGCL shall be entitled to the amounts determined
pursuant to such proceedings. See Section 13--"Purpose of the Offer; Plans for
the Company."
Representations and Warranties. The Merger Agreement contains customary
representations and warranties of the parties thereto, including
representations by the Company as to its corporate existence and power,
capitalization, corporate authorizations, subsidiaries, Commission filings,
financial statements, absence of certain changes (including any material
adverse effect in the business, assets, operations, conditions (financial or
otherwise), results of operations, properties, earnings, customer and supplier
relations (including co-packers), or contractual rights considered as a whole,
or employee or sales representative relations, considered as a whole, that
would be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect (as defined in the Merger Agreement) on the
Company), absence of undisclosed liabilities, government authorizations,
absence of litigation, compliance with laws, employee matters, labor matters,
certain contracts, taxes, intellectual property, brokers, the opinion of the
Company's financial advisor, noncontravention, title to properties, insurance,
affiliated transactions, required shareholder vote and state takeover laws.
Company Covenants. The Merger Agreement contains various customary
covenants of the parties thereto. A description of certain of these covenants
follows:
Conduct of Business. Prior to the Effective Time, except as otherwise set
forth in the Merger Agreement or the Disclosure Schedule thereto, or approved
by Parent, the Company will:
(1) conduct its business in the ordinary course and such that, as of the
Effective Time, the closing conditions set forth in the Merger Agreement
will be met;
(2) use commercially reasonable efforts to (a) maintain, preserve and
renew all customer and supplier relationships, material contracts,
licenses, authorizations and permits necessary to the conduct of its
business, (b) retain key employees, (c) preserve the goodwill of its
business and (d) otherwise satisfy its contractual obligations;
(3) continue its insurance policies in full force;
(4) pay and discharge all taxes and material claims (unless contested in
good faith) and refrain from making any material tax election;
(5) comply with (a) all other obligations the Company has or incurs
pursuant to material contracts, as such obligations become due (unless
contested in good faith) and (b) all applicable laws;
(6) not engage in an extraordinary corporate transaction;
(7) not (a) incur indebtedness other than under the Company's existing
credit line, (b) make any loans, advances or capital contributions to, or
investments in, any person or entity, subject to limited exceptions, (c)
enter into, terminate or amend any material contract other than in
accordance with past practice or (d) make any capital expenditure in excess
of $250,000 that is not currently budgeted;
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(8) not amend its certificate of incorporation or bylaws;
(9) not (a) authorize, issue or provide for the issuance of capital
stock or Equity Derivatives, (b) enter into any contract with respect to
the purchase or voting of capital stock or Equity Derivatives, (c) adjust,
split, combine, reclassify or amend any material term of the Shares or (d)
make any other change in its capital structure;
(10) not declare, set aside or pay dividends or purchase or redeem any
capital stock or Equity Derivative;
(11) maintain its accounting policies in accordance with past practice
and generally accepted accounting principles;
(12) not settle or compromise any suit or claim for an amount which
would exceed $1 million; and
(13) not take any action or fail to take action that would result in a
breach of any representation or warranty in the Merger Agreement.
No Solicitation. The Company will not directly or indirectly (1) solicit,
initiate or encourage any Acquisition Proposal, (2) engage in negotiations or
substantive discussions concerning, provide any non-public information to any
third party relating to, or take any other actions to facilitate an
Acquisition Proposal or (3) enter into any agreement relating to an
Acquisition Proposal. The term "Acquisition Proposal" is defined in the Merger
Agreement to mean any inquiry or proposal that constitutes or would reasonably
be expected to lead to a proposal or offer for a merger or certain other
extraordinary transactions. The foregoing will not prohibit the Company from
complying with Rule 14e-2 under the Exchange Act.
Notwithstanding the foregoing, the Company may furnish, at any time before
the closing of the Offer, non-public information to, or enter discussions with
respect to any unsolicited bona fide written proposal for an Acquisition
Proposal, but only to the extent (1) the Company Board determines after
consultation with counsel that doing so is required by its fiduciary duties
and, (2)(a) the Acquisition Proposal identifies a price or range of values and
(b) the Acquisition Proposal constitutes a Superior Proposal and (3) before
taking action on such Acquisition Proposal the Company receives an executed
confidentiality and standstill agreement no less favorable to the Company than
the agreement executed by Parent. The term "Superior Proposal" means an
Acquisition Proposal that is reasonably capable of being completed on
substantially the terms proposed and would result in greater value to
shareholders than the transaction contemplated by the Merger Agreement.
The Company has agreed to notify Purchaser promptly, and in any event
within 24 hours, after receiving an Acquisition Proposal.
Parent Covenants, Indemnification and Insurance. The Merger Agreement
provides that after the Effective Time, Parent will cause the Surviving
Company to indemnify and hold harmless each present and former director and
officer of the Company from liabilities for acts or omissions occurring at or
prior to the Effective Time to the fullest extent required under applicable
law and the Company's certificate of incorporation and bylaws. In addition,
the Merger Agreement provides that for six years after the Effective Time, the
Surviving Company will maintain directors' and officers' liability insurance
covering those persons who are currently covered by the Company's existing
directors' and officers' liability insurance policy on terms substantially no
less advantageous to such persons than such existing insurance provided that
the Surviving Company will not be obligated to pay more than 200% of the
current annual premiums.
Employees, Employee Benefits. The Merger Agreement contains certain
covenants relating to the treatment of employees of the Company after
consummation of the Offer. Parent (1) intends to cause the Surviving Company
to provide benefits to employees of the Surviving Company that are no less
favorable than those in effect on the date of the Merger Agreement; (2) will
honor all legally imposed obligations relating to employment matters; (3) will
pay 1999 annual bonuses under the Company's 1999 Bonus plan; and (4) will
recognize time served with the Company for determination of eligibility and
vesting under benefit plans of the Surviving Company (but not for level or
accrual of benefits).
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Conditions to the Merger. The obligations of Parent, Purchaser and the
Company to consummate the Merger are subject to the satisfaction of the
following conditions at or prior to the Effective Time:
(1) if required by the DGCL, the approval of the Merger Agreement by
the shareholders of the Company in accordance with such law; and
(2) the absence of any injunction, order, statute, regulation, rule
order or judgment that shall prohibit consummation of the Merger.
In addition, the obligations of Parent and Purchaser to consummate the
Merger are further subject to the satisfaction of following conditions at or
prior to the Effective Time:
(1) performance by the Company in all material respects of the covenants
and agreements set forth in the Merger Agreement;
(2) the truth and correctness in all material respects of the
representations and warranties of the Company set forth in the Merger
Agreement;
(3) the absence of a material adverse change in the condition (financial
or otherwise), results of operations, business, prospects or contractual
rights of the Company, except for such changes resulting from compliance
with the Merger Agreement or the Offer;
(4) the absence of any action commenced after completion of the Offer
deemed likely to succeed, that seeks an injunction, restraining order or
other order to prohibit, restrain, invalidate or set aside consummation of
the Merger or would have, if successful, a Material Adverse Effect (as
defined in the Merger Agreement) on the Company;
(5) the absence of any condition or event that has resulted in, or would
reasonably be expected to result in a Material Adverse Effect;
(6) the Company shall have obtained all material consents, waivers,
approvals, authorizations or waivers;
(7) the Company shall have taken all action for the cancellation,
redemption or repurchase of Equity Derivatives; and
(8) delivery by the Company of an officer's certificate as to the
Company's satisfaction of the foregoing conditions.
The obligations of the Company to consummate the Merger are further subject
to the satisfaction of the following conditions at or prior to the Effective
Time:
(1) performance by the Parent and Purchaser in all material respects of
the covenants and agreements set forth in the Merger Agreement;
(2) the truth and correctness in all material respects of the
representations and warranties of Purchaser and Parent set forth in the
Merger Agreement; and
(3) delivery by Purchaser and Parent of an officer's certificate as to
their satisfaction of the foregoing conditions.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time:
(1) by consent of Purchaser, Parent and the Company;
(2) by either Parent or the Company if there has been any material
breach of any representation, warranty, covenant or agreement on the part
of the non-terminating party, which breach will cause any condition to the
obligation of the terminating party to consummate the Merger not to be
satisfied, and the same is not cured within five days after notice to the
party in breach;
(3) by either Parent or the Company, if the Merger shall not have been
consummated by June 30, 2000 (provided that the right to terminate shall
not be available to any party whose failure to fulfill any obligation under
the Merger Agreement has caused or resulted in the failure of the Merger to
occur on or before such date);
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(4) by either Parent or the Company, if any governmental entity
prohibits the transaction by final, nonappealable order, decree or ruling;
(5) by the Company before closing of the Offer, upon notice to Parent,
if the Company Board withdraws or adversely modifies its approval or
recommendation of the Merger Agreement, or Merger, or the Company executes
an agreement relating to a Superior Proposal, and is not in violation of
the nonsolicitation provisions of the Merger Agreement;
(6) by Parent, upon notice to the Company, if the Company Board has
failed to recommend or withdrawn or modified or publicly announced an
intention to take any one of the foregoing actions in a manner materially
adverse to Parent or the Company Board approves, recommends or enters into
any Acquisition Proposal or publicly announces its intention to do so;
(7) by Parent, if another person or group acquires beneficial ownership
of more than 50% of the Shares;
(8) by Parent, if it is not in breach of the Merger Agreement and, as a
result of the failure of the conditions to the Offer, as described in
Section 17 of this Offer to Purchase, has: (a) failed to commence the Offer
within the time required by Regulation 14D under the Exchange Act, (b)
terminated the Offer without purchasing Shares or (c) failed to accept
payment for the Shares before April 30, 2000, which date may be extended
upon certain events;
(9) by Parent, if the Offer terminates due to the failure of the Minimum
Condition;
(10) by Parent, if the shareholders of the Company fail to approve the
Merger and the Merger Agreement;
(11) by Parent, if the Company or any of its affiliates materially and
knowingly breach the nonsolicitation covenants; and
(12) by the Company, if the Company is not in material breach under the
Merger Agreement, and Parent has: (a) failed to commence the Offer within
the time required by Regulation 14D under the Exchange Act, (b) terminated
the Offer without purchasing Shares or (c) failed to accept for payment
Shares pursuant to the Offer before April 30, 2000, which date may be
extended upon certain events.
If the Merger Agreement is terminated, it will become void and there will
be no liability on the part of the Company, Parent or Purchaser, except for
obligations regarding confidentiality and press releases and certain fees and
expenses payable pursuant to the Merger Agreement (see "Fees and Expenses"),
provided, however, that no such termination shall relieve any party from
liability for any willful breach of the Merger Agreement.
Fees and Expenses. Except as otherwise specified in the following sentence,
all costs and expenses incurred in connection with the Merger Agreement and
the transactions contemplated thereby shall be paid by the party incurring
such cost or expense.
If this Agreement is terminated as set forth below, the Company will within
two business days of such termination pay to Parent, by wire transfer in
immediately available funds, a fee of $5 million (the "Termination Fee") and
an amount (not to exceed $1 million) to reimburse Parent for its documented
out of pocket expenses incurred in connection with the Transactions (the
"Expense Payment"). The Termination Fee and Expense Payment apply where the
Merger Agreement is terminated:
(1) as a result of the Company's intentional and willful breach;
(2) as a result of (a) the Company Board failing to recommend or
withdrawing or modifying in a manner materially adverse to the Parent, its
approval or recommendation as to the Merger Agreement, the Offer or the
Merger as a result of an Acquisition Proposal or a Superior Proposal or (b)
termination of the Merger Agreement by the Company Board concurrently with
the execution of an Acquisition Agreement in connection with a Superior
Proposal in the manner permitted by the terms of the Merger Agreement;
(3) As a result of the acquisition by another person or group of
beneficial ownership of Shares representing more than 50% of the Shares;
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(4) as a result of any of the following in the event that the Minimum
Condition is not satisfied and either an Acquisition Proposal has been
publicly announced or the Company Board has failed to recommend or has
withdrawn, or modified in a manner materially adverse to the Parent,
approval or recommendation by the Company Board of this Agreement, the
Offer or the Merger:
(a) failure of any of the conditions to the Offer, as described in
Section 17 of this Offer to Purchase has resulted in Parent's failure
to commence the Offer within the time required by Regulation 14D under
the Exchange Act, termination of the Offer without purchasing Shares
pursuant to the Offer, or failure to accept payment for the Shares
pursuant to the Offer before April 30, 2000, subject to extension in
certain events.
(b) failure of the Offer due to the failure of the Minimum
Condition; or
(c) failure of the shareholders of the Company to approve the Merger
and the Merger Agreement; or
(5) as a result of a material and knowing breach by the Company or any
of its affiliates of the non-solicitation covenants contained in the Merger
Agreement.
Notwithstanding the foregoing, the Company will within two business days of
termination pay only the Expense Payment to Parent by wire transfer in
immediately available funds if the Merger Agreement is terminated by the
Company's material breach (where such breach is neither intentional nor
wilful). The Company will pay Parent the Termination Fee and the Expense
Payment if within one year of termination by Parent due to failure of the
conditions to the Offer described in Section 17 of this Offer to Purchase an
Acquisition Agreement that would constitute an Acquisition Proposal is entered
into or consummated.
Amendments and Waivers. Any provision of the Merger Agreement may be
amended or waived at any time; provided, however, that after adoption of the
Merger Agreement by the shareholders of the Company, no amendment may be made
which decreases the Offer Price or in any other way materially and adversely
affects the rights of such shareholders (other than termination in accordance
with its terms) without the approval of such shareholders.
The Support Agreements.
The following is a summary of the material provisions of the Support
Agreements, the form of which is filed as an exhibit to the Schedule TO. The
summary is qualified in its entirety by reference to the form of Support
Agreement, which is deemed incorporated herein by reference. On January 21,
2000, Parent entered into Support Agreements with each of Thomas R. Davidson,
James A. Wolfe, Richard G. Lamb and any entities controlled by Messrs.
Davidson, Wolfe and Lamb (collectively, the "Sellers"), with respect to the
6,999,718 Shares owned by the Sellers representing approximately 54% of the
outstanding Shares (approximately 51% on a fully-diluted basis) (the "Tender
Shares"). Pursuant to the Support Agreements the Sellers agreed to tender and
not withdraw their shares (or cause the record owner of such shares to validly
tender), pursuant to and in accordance with the terms of the Offer, as soon as
practicable after commencement of the Offer but in no event later than five
business days after the date of commencement of the Offer. The Sellers further
agreed that, until the Expiration Date (defined below), at any meeting of the
shareholders of the Company (or in any written consent in lieu thereof), they
will each:
(1) vote the Tender Shares in favor of the Merger;
(2) vote the Tender Shares against any action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and
(3) vote the Tender Shares against any action or agreement (other than
the Merger Agreement or the transactions contemplated thereby) that would
impede, interfere with, delay, postpone or attempt to discourage the Merger
or the Offer.
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With respect to each Support Agreement, the term "Expiration Date" means the
first to occur of
(1) the Effective Time,
(2) termination or withdrawal of the Offer by Parent or Purchaser, and
(3) written notice of termination of the Support Agreement by Parent to
Seller.
In order to facilitate the commitment of the Sellers provided above, each
Seller granted to Parent an irrevocable proxy to vote all Tender Shares with
respect to all matters on which the Tender Shares are entitled to vote at all
times from the execution of the Support Agreement through the Expiration Date.
Each Seller agreed that, except as contemplated by the Support Agreement, he
shall not:
(1) transfer or consent to any transfer of, any or all of the Tender
Shares or any interest therein;
(2) enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of the Tender Shares or any
interest therein;
(3) grant any proxy, power-of-attorney or other authorization in or with
respect to the Tender Shares;
(4) deposit the Tender Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Tender Shares; or
(5) take any other action that would in any way restrict, limit or
interfere with the performance of Seller's obligations under the Support
Agreement or the transactions contemplated hereby or by the Merger
Agreement or which would make any representation or warranty of Seller
under the Support Agreement untrue or incorrect; provided that Seller may
transfer the Tender Shares to one or more affiliates or one or more members
of Seller's immediate family, or a trust, the sole beneficiaries of which
are members of Seller's immediate family, if any such transferee agrees in
writing (in form and substance reasonably satisfactory to Purchaser) to be
bound by the terms of the Support Agreement.
Each Seller agreed that during the term of their Support Agreement, he will
comply with the non-solicitation provisions of Sections 6.6(a)-(c) and 6.6.1 of
the Merger Agreement as though such provisions by their terms applied to Seller
and his affiliates and advisors.
Pursuant to the Support Agreements each Seller waived any rights of
appraisal or rights to dissent from the Merger that he may have. The Support
Agreements contained customary representations and warranties of the Sellers
including representations relating to title and ownership of the Tender Shares,
power to enter into the Support Agreement and noncontravention.
Organizational Transition Plan. Representatives of Parent have discussed
with senior management of the Company their continued employment with the
Company. On January 21, 2000, Parent agreed to employment terms with certain
officers of the Company. These employment terms are discussed more fully in the
Organizational Transition Plan, which was filed as Exhibit 19 to the Parent's
Schedule TO, dated January 28, 2000, and is incorporated by reference herein.
13. Purpose of the Offer; Plans for the Company
Purpose of the Offer. The purpose of the Offer is to acquire control of, and
the entire equity interest in, the Company. The purpose of the Merger is to
acquire all outstanding Shares not tendered and purchased pursuant to the
Offer. If the Offer is successful, Purchaser intends to consummate the Merger
as promptly as practicable.
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The Company Board has approved the Merger and adopted the Merger Agreement.
Depending upon the number of Shares purchased by Purchaser pursuant to the
Offer, the Company Board may be required to submit the Merger Agreement to the
Company's shareholders for approval at a shareholder's meeting convened for
that purpose in accordance with Delaware Law. If shareholder approval is
required, the Merger Agreement must be approved by a majority of all votes
entitled to be cast at such meeting.
If the Minimum Condition is satisfied, Purchaser will have sufficient
voting power to approve the Merger Agreement at the shareholders' meeting
without the affirmative vote of any other shareholder. If Purchaser acquires
at least 90% of the Shares pursuant to the Offer, the Merger may be
consummated without a shareholders' meeting and without the approval of the
Company's shareholders. The Merger Agreement provides that Purchaser will be
merged into the Company and that the certificate of incorporation and bylaws
of Purchaser will be the certificate of incorporation and bylaws of the
Surviving Company following the Merger provided that, at the Effective Time,
such certificate of incorporation shall be amended to provide that the name of
the corporation shall be "Balance Bar Company."
Under the DGCL, holders of Shares do not have appraisal rights as a result
of the Offer. In connection with the Merger, however, shareholders of the
Company may have the right to dissent and demand appraisal of their Shares
under the DGCL. Dissenting shareholders who comply with the applicable
statutory procedures under the DGCL will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash. Any such judicial determination of
the fair value of the Shares could be based upon considerations other than or
in addition to the price per Share paid in the Merger and the market value of
the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated,
among other things, that "proof of value by any techniques or methods which
are generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in an appraisal proceeding.
Shareholders should recognize that the value so determined could be higher or
lower than the price per Share paid pursuant to the Offer or the consideration
per Share to be paid in the Merger. Moreover, Purchaser may argue in an
appraisal proceeding that, for purposes of such a proceeding, the fair value
of the Shares is less than the price paid in the Offer or the Merger.
In addition, several decisions by Delaware courts have held that, in
certain circumstances a controlling shareholder of a company involved in a
merger has a fiduciary duty to other shareholders which requires that the
merger be fair to such other shareholders. In determining whether a merger is
fair to minority shareholders, Delaware courts have considered, among other
things, the type and amount of consideration to be received by the
shareholders and whether there was fair dealing among the parties. The
Delaware Supreme Court stated in Weinberger and Rabkin v. Philip A. Hunt
Chemical Corp. that although the remedy ordinarily available to minority
shareholders in a cash-out merger is the right to appraisal described above, a
damages remedy or injunctive relief may be available if a merger is found to
be the product of procedural unfairness, including fraud, misrepresentation or
other misconduct.
Plans for the Company. Pursuant to the terms of the Merger Agreement,
effective upon the acceptance for payment of Shares pursuant to the Offer,
Parent currently intends to seek maximum representation on the Company Board,
subject to the Company's right to maintain through the Effective Time at least
two directors who are not officers or affiliates of Purchaser, Parent or any
of their respective subsidiaries. Purchaser currently intends, as soon as
practicable after consummation of the Offer, to consummate the Merger.
In connection with its consideration of the Offer, Purchaser and Parent
have made a preliminary review of various potential business strategies that
they intend to pursue in the event that Purchaser acquires control of the
Company. Such strategies are expected to include a significant expansion of
the sales of the existing products as well as the launch of new products
currently under development. In addition, the Parent will explore potential
reporting relationships, including alignment of activities of the Company with
the Parent's Beverages and Desserts Division.
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Except as described above or elsewhere in this Offer to Purchase, Purchaser
and Parent have no present plans that would relate to or result in an
extraordinary corporate transaction involving the Company or any of their
respective subsidiaries (such as a merger, reorganization, liquidation,
relocation of any operations or sale or other transfer of a material amount of
assets), any sale or transfer of a material amount of assets of the Company or
any of its subsidiaries, any change in the Company Board or management, any
material change in the Company's capitalization or dividend policy or any
other material change in the Company's corporate structure or business.
14. Certain Effects of the Offer
Market for the Shares. 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, which could adversely affect the liquidity and
market value of the remaining Shares held by shareholders other than
Purchaser. 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
such reduction would cause future market prices to be greater or less than the
Offer Price.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued inclusion
in the Nasdaq National Market. If, as a result of the purchase of Shares
pursuant to the Offer, the Shares no longer meet the criteria for continuing
inclusion in the Nasdaq National Market, the market for the Shares could be
adversely affected. According to the Nasdaq's National Market's published
guidelines, the Shares would not be eligible for continued listing if, among
other things, the number of Shares publicly held falls below 750,000, the
number of beneficial holders of Shares falls below 400 (round lot holders) or
the aggregate market value of such publicly-held Shares does not exceed $5
million. If the Shares were no longer eligible for inclusion in the Nasdaq
National Market, they may nevertheless continue to be included in the Nasdaq
SmallCap Market unless, among other things, the public float was less than
500,000 Shares, or there were fewer than 300 shareholders (round lot holders)
in total, or the market value of public float was less than $1 million. If the
Shares are no longer eligible for inclusion in the Nasdaq National Market or
the Nasdaq SmallCap Market, the Shares might still be quoted on the OTC
Bulletin Board. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of such Shares remaining at such time, the interest in maintaining a
market in such Shares on the part of securities firms, the possible
termination of registration of such Shares under the Exchange Act as described
below, and other factors.
Margin Regulations. The Shares are currently "margin securities" under the
Regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding the market for the
Shares and stock 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.
Exchange Act Registration. The Shares are currently registered under
Section 12(g) of the Exchange Act. Such registration 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 such
securities pursuant to Rule 144 promulgated under the Securities
27
<PAGE>
Act of 1933, as amended, may be impaired or eliminated. If registration of the
Shares under the Exchange Act were terminated, the Shares would no longer be
"margin securities" or be eligible for inclusion on the Nasdaq National
Market. Parent and Purchaser currently intend to seek to cause the Company to
terminate the registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration
are met.
15. Dividends and Distributions.
The Merger Agreement provides that from the date of the Merger Agreement to
the Effective Time, without the prior approval of Parent, the Company will not
declare, set aside, pay or make any dividend or other distribution or payment
(whether in cash, stock or property) with respect to, or purchase or redeem,
any capital stock or Equity Derivatives.
16. Extension of Tender Period; Termination; Amendment.
Purchaser cannot, without the Company's consent, extend the Offer beyond
April 30, 2000, except that Purchaser can extend the Offer for up to ten
business days if, as of such date, there have not been tendered at least
ninety percent of the outstanding Shares. In addition, if at any scheduled
expiration date any of the conditions of the Offer have not been satisfied or
waived by Purchaser, but are capable of being satisfied, Purchaser will from
time to time extend the Offer until such conditions are satisfied or waived,
provided that Purchaser will not be required to extend the Offer beyond April
30, 2000. Subject to the foregoing restrictions, Purchaser has the right (but
is not obligated), in its sole discretion, to extend the period during which
the Offer is open by giving oral or written notices of extension to the
depositary in such offer and by making a public announcement of such
extension.
Neither Purchaser nor Parent will, without the prior consent of the
Company, decrease the Offer Price or the number of Shares sought pursuant to
the Offer, or otherwise amend or add any term or condition of or to the Offer,
except as otherwise expressly permitted in or contemplated by the Merger
Agreement. The Company will not unreasonably withhold consent to a change in
the Expiration Date of the Offer. Purchaser can waive any other condition to
the Offer in its discretion.
If, with the Company's consent, Purchaser decreases the percentage of
Shares being sought or increases or decreases the consideration to be paid for
Shares pursuant to the Offer and the Offer is scheduled to expire at any time
before the expiration of a period of 10 business days from, and including, the
date that notice of such increase or decrease is first published, sent or
given in the manner specified below, the Offer will be extended until the
expiration of such period of 10 business days. If Purchaser makes a material
change in the terms of the Offer (other than a change in price or percentage
of securities sought) or in the information concerning the Offer, or waives a
material condition of the Offer, Purchaser will extend the Offer, if required
by applicable law, for a period sufficient to allow the Company's shareholders
to consider the amended terms of the Offer. In a published release, the
Commission has stated that in its view an offer must remain open for a minimum
period of time following a material change in the terms of such offer and that
the waiver of a condition such as the Minimum Condition is a material change
in the terms of an offer. The release states that an offer should remain open
for a minimum of five business days from the date the material change is first
published, sent or given to security holders, and that if material changes are
made with respect to information that approaches the significance of price and
share levels, a minimum of 10 business days may be required to allow adequate
dissemination and investor response.
Purchaser also reserves the right, in its sole discretion, in the event any
of the conditions specified in Section 17--"Certain Conditions to the Offer"
shall not have been satisfied and so long as Shares have not theretofore been
accepted for payment, to delay (except as otherwise required by applicable
law) acceptance for payment of or payment for Shares or, except as described
above, to terminate the Offer and not accept for payment or pay for Shares.
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<PAGE>
If Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may,
on behalf of Purchaser, retain all Shares tendered, and such Shares may not be
withdrawn except as otherwise provided in Section 4--"Withdrawal Rights." The
reservation by Purchaser of the right to delay acceptance for payment of or
payment for Shares is subject to applicable law, which requires that Purchaser
pay the consideration offered or return the Shares deposited by or on behalf
of shareholders promptly after the termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which Purchaser may choose to make any public announcement,
Purchaser will have no obligation (except as otherwise required by applicable
law) to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service. In
the case of an extension of the Offer, Purchaser will make a public
announcement of such extension no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
17. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, Parent and Purchaser will
not be required to accept for payment of or pay for any Shares tendered
pursuant to the Offer and may, subject to the terms of the Merger Agreement,
terminate the Offer, because:
(1) the Minimum Condition has not been satisfied or waived pursuant to
the Merger Agreement by the scheduled expiration date;
(2) any applicable waiting period under the HSR Act has not expired or
been terminated before the expiration of the Offer;
(3) there shall have occurred, and continued to exist, (i) a declaration
of a general banking moratorium or any general suspension of payments in
respect of banks in the United States, (ii) a commencement of war, armed
hostilities or other national or international crisis directly or
indirectly involving the United States, (iii) any limitation by any
Governmental Entity on, or any other event which materially and adversely
affects, the extension of credit by banks or other lending institutions in
the United States, or (iv) in the case of any of the foregoing clauses (i)
through (iii) existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof (but in each case, other than
any occurrence, acceleration or worsening which does not (A) have a
Material Adverse Effect on the Company or (B) have a Material Adverse
Effect on the ability of Purchaser to acquire the Shares);
(4) at any time on or after the date of the Merger Agreement, and before
the expiration of the Offer, any of the following conditions exist:
(a) the Company has breached, or failed to comply with, any of its
obligations under the Merger Agreement where such breach or failure to
comply would have a Material Adverse Effect on the Company; or
(b) any representation or warranty of the Company in the Merger
Agreement that is qualified as to materiality was incorrect when made
or has since ceased to be true and correct or any representation or
warranty that is not so qualified was incorrect in any material respect
when made or has since ceased to be true and correct in all material
respects (in each case, except for such representations and warranties
made as of a specific date, which must be true and correct as of such
date); and
(c) which breach in either clause (a) or (b) has not been cured
before the earlier of (A) fifteen days following notice of such breach
and (B) two business days before the date on which the Offer expires;
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<PAGE>
(5) there has been any Action (as defined in the Merger Agreement)
commenced by or before any federal, state or local court or Government
Entity (as defined in the Merger Agreement) or other regulatory body, or
threatened by any court or federal, state or local Government Entity, that
has a reasonable likelihood of success and that, if decided adversely to
the Company, would reasonably be expected to have a Material Adverse Effect
on the Company or, if decided adversely to Parent, would have the effect
of:
(a) making the purchase of, or payment for, some or all of the
Shares pursuant to the Offer or the Merger or otherwise, illegal, or
resulting in a material delay in the ability of Parent or Purchaser to
accept for payment or pay for some or all of the Shares,
(b) seeking to prohibit Parent's or Purchaser's ownership or
operation of all or any material portion of the Company's business or
assets, or to compel Parent or Purchaser to dispose of or hold
separately all or any material portion of the Company's or Parent's
business or assets,
(c) otherwise preventing consummation of the Offer or the Merger,
(d) imposing limitations on the ability of Parent or Purchaser
effectively (A) to acquire, hold or operate the business of the Company
taken as a whole or (B) to exercise full rights of ownership of the
Shares acquired by it, including, but not limited to, the right to vote
the Shares purchased by it on all matters properly presented to the
shareholders of the Company, which, in either case, would effect a
material diminution in the value of the Company or the Shares or
Parent's or Purchaser's control of the Company;
(6) the Agreement has been terminated in accordance with its terms, or
Parent or Purchaser has reached an agreement or understanding in writing
with the Company providing for termination or amendment of the Offer;
(7) any Person or Group, other than Parent, Purchaser or any of their
affiliates, has (i) become the beneficial owner of 50% or more of the
outstanding Shares or (ii) entered into a definitive agreement or an
agreement in principle with the Company with respect to an Acquisition
Proposal; or
(8) the Company's Board has publicly (including by amendment of its
Schedule 14D-9) withdrawn or adversely modified its recommendation of
acceptance of the Offer or has resolved to do so or publicly stated its
intention to do so.
Except as expressly set forth in the Merger Agreement, the foregoing
conditions are for the sole benefit of Parent and Purchaser and may be
asserted by Parent or Purchaser regardless of the circumstances giving rise to
any such condition and, subject to the terms of the Merger Agreement, may be
waived by Parent or Purchaser in whole or in part, at any time and from time
to time, in the sole discretion of Parent or Purchaser.
18. Certain Legal Matters; Regulatory Approvals.
General. Purchaser is not aware of any material pending legal proceeding
relating to the Offer. Based on its examination of publicly available
information filed by the Company with the Commission and other publicly
available information concerning the Company, Purchaser is not aware of any
governmental license or regulatory permit that appears to be material to the
Company's business that might be adversely affected by Purchaser's acquisition
of Shares as contemplated herein or, except as set forth below, of any
approval or other action by any government or governmental administrative or
regulatory authority or agency, domestic or foreign, that would be required
for the acquisition or ownership of Shares by Purchaser or Parent as
contemplated herein. Should any such approval or other action be required,
Purchaser currently contemplates that, except as described below under "State
Takeover Statutes", such approval or other action will be sought. 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 if such
approvals were not obtained or such other actions were not taken, adverse
consequences might not result to the Company's business, or certain parts of
the Company's business might not have to be disposed of, any of which could
cause Purchaser to elect to terminate the Offer without the purchase of Shares
thereunder under certain conditions. See Section 17--"Certain Conditions of
the Offer."
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State Takeover Statutes. A number of states have adopted laws which
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or which have substantial assets, shareholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws. Except as
described herein, Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger or any other business
combination between Purchaser or any of its affiliates and the Company, and
has not complied with any such laws. To the extent that certain provisions of
these laws purport to apply to the Offer or the Merger or other business
combination, Purchaser believes that there are reasonable bases for contesting
such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
could, as a matter of corporate law, constitutionally disqualify a potential
acquiror from voting shares of a target corporation without the prior approval
of the remaining shareholders where, among other things, the corporation is
incorporated in, and has a substantial number of shareholders in, the state.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District
Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional
insofar as they apply to corporations incorporated outside Oklahoma in that
they would subject such corporations to inconsistent Regulations. Similarly,
in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee
ruled that four Tennessee takeover statutes were unconstitutional as applied
to corporations incorporated outside Tennessee. This decision was affirmed by
the United States Court of Appeals for the Sixth Circuit.
If any government official or third party should seek to apply any state
takeover law to the Offer or the Merger or other business combination between
Purchaser or any of its affiliates and the Company, Purchaser will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is
applicable to the Offer or the Merger and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities or holders of Shares,
and Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer
or the Merger. In such case, Purchaser may not be obligated to accept for
payment or pay for any tendered Shares. See Section 16--"Extension of Tender
Period; Termination; Amendment" and Section 17--"Certain Conditions of the
Offer."
Antitrust in the United States. Under the HSR Act and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the FTC and certain waiting period
requirements have been satisfied. The purchase of Shares pursuant to the Offer
is subject to such requirements.
Pursuant to the requirements of the HSR Act, Purchaser expects to file a
Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on or about January 28, 2000. As a result, the
waiting period applicable to the purchase of Shares pursuant to the Offer is
scheduled to expire at 11:59 p.m., New York City time, 15 days after such
filing. However, prior to such time, the Antitrust Division or the FTC may
extend the waiting period by requesting additional information or documentary
material relevant to the Offer from Purchaser. If such a request is made, the
waiting period will be extended until 11:59 p.m., New York City time, on the
tenth day after substantial compliance by Purchaser with such request.
Thereafter, such waiting period can be extended only by court order.
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<PAGE>
A request is being made pursuant to the HSR Act for early termination of
the waiting period applicable to the Offer. There can be no assurance,
however, that the applicable 15-day HSR Act waiting period will be terminated
early. Shares will not be accepted for payment or paid for pursuant to the
Offer until the expiration or early termination of the applicable waiting
period under the HSR Act. See Section 17--"Certain Conditions of the Offer."
Any extension of the waiting period will not give rise to any withdrawal
rights not otherwise provided for by applicable law. See Section 4--
"Withdrawal Rights." If Purchaser's acquisition of Shares is delayed pursuant
to a request by the Antitrust Division or the FTC for additional information
or documentary material pursuant to the HSR Act, the Offer will be extended in
certain circumstances. See Section 16--"Extension of Tender Period;
Termination; Amendment" and Section 17--"Certain Conditions of the Offer."
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any
such transactions, the Antitrust Division or the FTC could take such action
under the antitrust laws of the United States as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of the Shares so acquired
or divestiture of substantial assets of Parent or the Company. Private parties
(including individual States) may also bring legal actions under the antitrust
laws of the United States. Purchaser does not believe that the consummation of
the Offer will result in a violation of any applicable antitrust laws.
However, 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, what the result will
be. See Section 17--"Certain Conditions of the Offer", including conditions
with respect to litigation and certain governmental actions and Section 12--
"The Merger Agreement; Other Arrangements" for certain termination rights.
19. Appraisal Rights.
If the Merger is consummated, shareholders of the Company may have the
right to dissent and demand appraisal of their Shares under the DGCL. See
Section 13--"Purpose of the Offer; Plans for the Company." Under Delaware Law,
dissenting shareholders who comply with the applicable statutory procedures
will be entitled to receive a judicial determination of the fair value of
their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) and to receive payment of such
fair value in cash, together with a fair rate of interest, if any. Any such
judicial determination of the fair value of the Shares could be based upon
considerations other than or in addition to the Offer Price, the consideration
per Share to be paid in the Merger and the market value of the Shares,
including asset values and the investment value of the Shares. Shareholders
should recognize that the value so determined could be higher or lower than
the price per Share paid pursuant to the Offer or the consideration per Share
to be paid in the Merger.
20. Fees and Expenses.
Credit Suisse First Boston is acting as the Dealer Manager in connection
with the Offer and as financial advisor to Philip Morris Management Corp., an
affiliate of Parent, in connection with Parent's proposed acquisition of the
Company. Credit Suisse First Boston will receive reasonable and customary
compensation for its services relating to the Offer and will be reimbursed for
certain out-of-pocket expenses. Parent and Purchaser have agreed to indemnify
Credit Suisse First Boston and certain related persons against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws.
Parent and Purchaser have retained D.F. King & Co., Inc. to be the
Information Agent and American Stock Transfer & Trust Company to be the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telecopy, telegraph and personal
interview and may request banks, brokers, dealers and other nominees to
forward materials relating to the Offer to beneficial owners of Shares.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.
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None of Parent or Purchaser will pay any fees or commissions to any broker
or dealer or to any other person (other than to the Dealer Manager, the
Depositary and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks
and trust companies will, upon request, be reimbursed by the Purchaser for
customary mailing and handling expenses incurred by them in forwarding
offering materials to their customers.
21. 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. However, Purchaser may, in its discretion, take such action
as it may deem necessary to make the Offer in any such jurisdiction and extend
the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER 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.
Purchaser has filed with the Commission a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, together with exhibits furnishing certain additional
information with respect to the Offer, and may file amendments thereto. In
addition, the Company has filed with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9, together with
exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendations of the Company Board with respect to the Offer and the reasons
for such recommendations and furnishing certain additional related
information. A copy of such documents, and any amendments thereto, may be
examined at, and copies may be obtained from, the Commission (but not the
regional offices of the Commission) in the manner set forth under Section 7--
"Certain Information Concerning the Company" above.
BB Acquisition, Inc.
January 28, 2000
33
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. Directors and Executive Officers of Parent.
The name, business address, business phone number, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of Parent are set forth below. All directors
and executive officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
Present Principal Occupation or
Name, Age and Business Employment; Material Positions
Address Held During the Past Five Years
---------------------- -------------------------------
<S> <C>
Robert A. Eckert........ Director, President & Chief Executive Officer (10/23/97
Kraft Foods, Inc. to present); Group Vice President, Kraft Foods North
Three Lakes Drive America (7/29/96 to 10/22/97); President, Oscar Mayer
Northfield, IL 60093 (8/23/93 to 7/28/96).
Betsy D. Holden......... Executive Vice President Kraft Foods North America;
Kraft Foods, Inc. (12/14/98 to present); Executive Vice President Kraft
One Kraft Court Cheese (11/17/97 to 12/13/98); Executive Vice President
Glenview, IL 60025 & General Manager Kraft Cheese (7/10/95 to 11/16/97);
President Pizza (1/1/95 to 7/9/95); President
Tombstone/Jack's Pizza (1/1/94 to 12/31/94).
Calvin J. Collier....... Director, Senior Vice President, General
Kraft Foods, Inc. Counsel/Corporate Affairs & Secretary (1/1/95 to
Three Lakes Drive present).
Northfield, IL 60093
Roger K. Deromedi....... Director; President & Chief Executive Officer Kraft Foods
Kraft Foods Inc. International (4/99 to Present); Group Vice President
800 Westchester Avenue Kraft Foods International & President Asia Pacific
Rye Brook, NY 10573 (12/98 to 4/99); President Western Europe (12/95 to
1/98); Executive Vice President & Area Director
France/Iberia/Benelux (1/95 to 12/95).
Edward J. Moy........... Director; Senior Vice President & General Counsel Kraft
Foods International (12/99 to Present); Senior Vice
President, General Counsel & Corporate Affairs Kraft
Foods International (7/98 to 12/99); Senior Vice
President & General Counsel Kraft Foods International
(8/95 to 4/98); Vice President, Chief Legal Counsel
(5/89 to 8/95).
James P. Dollive........ Senior Vice President Finance & Information Systems
Kraft Foods, Inc. (8/1/98 to present); Vice President Finance & Strategy
Three Lakes Drive (5/1/97 to 7/31/98); Senior Vice President Strategy,
Northfield, IL 60093 Kraft Food North America (7/29/96 to 4/30/97); Vice
President Financial Planning & Analysis (1/1/95 to
7/28/96); Vice President Finance/Systems (3/6/94 to
1/1/95).
Terry M. Faulk.......... Senior Vice President, Human Resources (1/1/95 to
Kraft Foods, Inc present; 2/14/94 to 1/1/95).
Three Lakes Drive
Northfield, IL 60093
Lance A. Friedmann...... Senior Vice President, Marketing Services (9/1/99 to
Kraft Foods, Inc. present); Vice President Marketing/Strategy &
Three Lakes Drive Development (5/27/97 to 8/31/99); Vice President
Northfield, IL 60093 Marketing Information Services (4/1/96 to 5/26/97);
Business Director--Dinners (1/1/95 to 3/31/96).
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Name, Age and Business Employment; Material Positions
Address Held During the Past Five Years
---------------------- -------------------------------
<S> <C>
Lawrence J. Gundrum..... Senior Vice President, Operations (6/17/96 to present);
Kraft Foods, Inc. Senior Vice President, Logistics (3/13/95 to 6/16/96);
Three Lakes Drive Executive Vice President/General Manager Customer
Northfield, IL 60093 Service (6/20/94 to 3/12/95).
Alene M. Korby.......... Senior Vice President, Procurement (9/1/99 to present);
Kraft Foods, Inc. Vice President Purchasing (2/23/98 to 8/31/99); Vice
Three Lakes Drive President Operations--Dinners (3/25/96 to 2/22/98); Vice
Northfield, IL 60093 President Manufacturing/Food Service Co-Packing (10/9/95
to 3/24/96); Director Food Service Co-Packing (1/16/95
to 10/8/95).
David G. Owens.......... Senior Vice President Strategy Kraft Foods North America
Kraft Foods, Inc. (8/1/97 to present); Vice President Business Planning
Three Lakes Drive (1/1/97 to 7/31/97); Founder, President (Owens Strategy
Northfield, IL 60093 Group, Inc.) (7/1/85 to 12/31/96).
Phillip F. Pellegrino... Senior Vice President Sales & Customer Service (2/13/95
Kraft Foods, Inc. to present); Executive Vice President Catalog Sales
Three Lakes Drive Management; (5/16/94 to 2/12/95); Vice President KUSA
Northfield, IL 60093 Field Sales (1/1/94 to 5/15/94).
John Ruff............... Senior Vice President, R&D and Quality (12/26/99 to
Kraft Foods, Inc. present); Senior Vice President, Kraft Food North
Three Lakes Drive America Technology (10/7/96 to 12/27/97); Senior Vice
Northfield, IL 60093 President Food International Technology & Scientific
Research (8/31/95 to 10/6/96).
Todd C. Brown........... Executive Vice President & President Kraft Food Services
Kraft Foods, Inc. (4/20/98 to present); Executive Vice President & General
One Kraft Court Manager Desserts & Snacks (8/26/96 to 4/19/98); Vice
Glenview, IL 60025 President & General Manager--Pollio Cheese (2/28/94 to
8/25/96).
Ann M. Fudge............ Executive Vice President Kraft Foods North America &
Kraft Foods, Inc. President Maxwell House and Post (12/28/97 to present);
555 S. Broadway Executive Vice President Kraft Foods North America--
Tarrytown, NY 10591 President Coffee/Cereals (9/9/97 to 12/27/97); Executive
Vice President & General Manager (2/21/94 to 9/8/97).
Marla C. Gottschalk..... Executive Vice President & General Manager Post Cereals
Kraft Foods, Inc. (effective 1/30/00); Vice President Advertising Strategy
One Kraft Court (2/28/99 to 1/30/00); Vice President Financial Planning
Glenview, IL 60025 & Analysis (8/1/97 to 2/7/99); Vice President Finance &
Systems (11/18/96 to 2/16/97); Vice President Finance,
Sales/Customer Service (1/16/95 to 11/17/96).
Mary Kay Haben.......... Executive Vice President & President Kraft Cheese
Kraft Foods, Inc. (12/14/98 to present); Executive Vice President Kraft
One Kraft Court Foods (11/17/97 to 12/13/98); Executive Vice President &
Glenview, IL 60025 General Manager--Enhancers (3/5/97 to 11/16/97);
President Pizza (7/10/95 to 3/4/97); Vice President
Strategy & Development--Enhancers (1/1/95 to 7/9/95).
Bridgett P. Heller...... Executive Vice President & General Manager Coffee
Kraft Foods, Inc. (effective 1/31/00); General Manager Gevalia Kaffe
800 Westchester (5/19/97 to 1/31/00); Category Business Director
Avenue Rye Brook, NY (8/28/95 to 4/14/96); Category Development Manager
10573 (12/26/94 to 8/27/95).
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Name, Age and Business Employment; Material Positions
Address Held During the Past Five Years
---------------------- -------------------------------
<S> <C>
David S. Johnson........ Executive Vice President & President Beverages and
Kraft Foods, Inc. Desserts (12/14/98 to present); Vice President Category
One Kraft Court Sales Management/Strategy (7/29/96 to 3/4/97); Vice
Glenview, IL 60025 President Strategy (4/1/96 to 7/28/96); Vice President
Marketing/Strategy/Development (4/27/92 to 3/31/96).
M. Carl Johnson, III.... Executive Vice President & President New Meals (11/17/97
Kraft Foods, Inc. to present); Executive Vice President & General
One Kraft Court Manager--Meals (8/23/93 to 11/16/97).
Glenview, IL 60025
Kevin D. Ponticelli..... Executive Vice President & General Manager Pizza (1/17/00
Kraft Foods, Inc. to present); Vice President Category Sales Management &
One Kraft Court Strategy (9/22/98 to 1/16/00); Vice President Marketing
Glenview, IL 60025 & Strategy (4/1/96 to 9/21/98); Vice President Marketing
(4/26/93 to 3/31/96).
Irene B. Rosenfeld...... Executive Vice President & President Kraft Canada
Kraft Canada Inc. (8/26/96 to present); Executive Vice President & General
95 Moatfield Drive Manager--Desserts and Snacks (11/14/94 to 8/25/96).
Don Mills, ON M3B 3L6
Canada
Kevin R. Scott.......... Executive Vice President & General Manager Boca (1/17/00
Kraft Foods, Inc. to present); Executive Vice President & General Manager
One Kraft Court Pizza (12/14/98 to 1/16/00); Vice President Marketing &
Glenview, IL 60025 Strategy (1/13/97 to 12/13/98); Director Strategy &
Development (3/11/96 to 1/12/97); Director Strategy/GM
Jacks (5/9/94 to 3/10/96).
Richard G. Searer....... Executive Vice President & President Oscar Mayer and
Kraft Foods, Inc. Pizza (12/14/98 to present); Executive Vice President &
Three Lakes Drive President Oscar Mayer (7/29/96 to 12/13/98); Executive
Northfield, IL 60093 Vice President Catalog Sales Management, Strategy &
Customer Service (2/13/95 to 7/18/96); Executive Vice
President Catalog Sales Management (1/1/95 to 2/13/95).
Paula A. Sneed.......... Executive Vice President & President E-Commerce (9/6/99
Kraft Foods, Inc. to present); Chief Marketing Officer (5/17/99 to
Three Lakes Drive 9/5/99); Senior Vice President Marketing Services
Northfield, IL 60093 (1/1/95 to 5/16/99); Executive Vice President & General
Manager D&E (11/14/94 to 12/31/94).
</TABLE>
36
<PAGE>
2. Directors and Executive Officers of Philip Morris Companies Inc.
The name, business address, present principal occupation or employment of
each of the directors and executive officers of Philip Morris Companies Inc.
are set forth below. All directors and executive officers listed below are
citizens of the United States. All executive officers listed below have been
employed by Philip Morris Companies Inc. in various capacities during the past
five years. The business address of each of the individuals listed below is
Philip Morris Companies Inc., 120 Park Avenue, New York, NY 10017.
<TABLE>
<CAPTION>
Name, Age and Business Present Principal Occupation
Address or Employment
---------------------- ----------------------------
<S> <C>
Geoffrey C. Bible....... Chairman of the Board and Chief Executive Officer;
Director--Philip Morris International Inc. (1994 to
present); Director of The News Corporation Limited, the
New York Stock Exchange, Inc., Lincoln Center for the
Performing Arts, Inc., and the International Tennis Hall
of Fame; Chairman of the Executive, Finance, Affirmative
Action and Diversity, Corporate Contributions and
Management Committees.
Elizabeth E. Bailey..... Director--Philip Morris International Inc. (1989 to
present); John C. Howar Professor of Public Policy &
Management, The Wharton School of the University of
Pennsylvania, Philadelphia, PA; Director of the College
Retirement Equities Fund, CSX Corporation, Honeywell
Inc.; Trustee of The Brookings Institution, the National
Bureau of Economic Research and Bancroft NeuroHealth;
Member of the Audit, Executive, Nominating and Corporate
Governance, and Public Affairs and Social Responsibility
Committees.
Harold Brown............ Director--Philip Morris International Inc. (1983 to
present); Counselor, Center for Strategic and
International Studies, Washington, DC; Partner, Warburg
Pincus & Co.; Chairman of the Foreign Policy Institute
of the School of Advanced International Studies, the
Johns Hopkins University; Director of Cummins Engine
Company, Inc., Evergreen Holdings, Inc., and Mattel,
Inc.; Chairman of the Nominating and Corporate
Governance Committee; Member of the Compensation,
Corporate Employee Plans Investment, Finance, and Public
Affairs and Social Responsibility Committees.
William H. Donaldson.... Director--Philip Morris International Inc. (1979 to
present); Co-founder and Senior Advisor, Donaldson,
Lufkin & Jenrette, New York, NY, investment banking
firm; Director of Aetna Inc., Bright Horizons Family
Solutions Inc., Mail.com Inc., NEC Corporation
(International Advisory Board), Council for Excellence
in Government, Lincoln Center for the Performing Arts,
Inc., Foreign Policy Association; Trustee for the Marine
Corps University Foundation, Carnegie Endowment for
International Peace, and the New York City Police
Foundation; Chairman of the Yale School of Management
Advisory Board; Chairman of the Corporate Employee Plans
Investment Committee; Member of the Audit, Executive,
Finance, and Nominating and Corporate Governance
Committees.
Jane Evans.............. Director--Philip Morris International Inc. (1981 to
present); President and Chief Executive Officer,
SmartTV, Burbank, CA, portable interactivity and
electronic commerce; Director of Georgia-Pacific
Corporation, Kaufman and Broad Home Corporation, Main
St., and Main, and Pets Mart, Inc.; Board of Trustees,
Vanderbilt University; Chair of the Committee on Public
Affairs and Social Responsibility; Member of the
Corporate Employee Plans Investment, Affirmative Action
and Diversity and Nominating and Corporate Governance
Committees.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Business Present Principal Occupation
Address or Employment
---------------------- ----------------------------
<S> <C>
J. Dudley Fishburn...... Director--Philip Morris International Inc. (1999 to
present); Director of Household International
Corporation and Chairman of its British subsidiary, HFC
Bank; Treasurer of Britain's largest charity, the
National Trust; Associate Editor of The Economist,
United Kingdom; Director of Euclidian plc, Cordiant plc,
and a fund, backed by the World Bank, that makes
investments in Russia; Chairman of the trustees of the
Open University in the United Kingdom; Trustee of the
Prison Reform Trust, the Liver Research Trust, and the
Notting Hall Housing Association; Member of the Finance
and Public Affairs and Social Responsibility Committees.
Robert E. R. Huntley.... Director--Philip Morris International Inc. (1976 to
present); Chairman of the Audit Committee; Member of the
Compensation, Finance, and Public Affairs and Social
Responsibility Committee.
Rupert Murdoch.......... Director--Philip Morris International Inc. (1989 to
present); Chairman and Chief Executive of the News
Corporation Limited, New York, NY, publishing, motion
pictures and television; The News Corporation Limited
(the interests of which include Fox Entertainment Group,
Inc., Twentieth Century Fox Film Corporation and Fox
Broadcasting Company in the United States and The Times
and Sunday Times in the United Kingdom); A director of
Fox Entertainment Group, Inc. and British Sky
Broadcasting Group pic.; Member of the Executive
Committee.
John D. Nichols......... Director--Philip Morris International Inc. (1992 to
present); Director of Grand Eagle Companies Inc.,
Household International Corporation, Rockwell
International Corporation, and Junior Achievement of
Chicago; Trustee of the Chicago Community Trust, the
Lyric Opera of Chicago, the Museum of Science and
Industry, and the Chicago Symphony Orchestra; Member of
the Board of Overseers for Harvard University; Chairman
of the Art Institute of Chicago; Member of the Corporate
Employee Plans Investment, Finance, Nominating and
Corporate Governance, and Public Affairs and Social
Responsibility Committees.
Lucio A. Noto........... Director--Philip Morris International Inc. (1998 to
present); Chairman and Chief Executive Officer of Mobil
Corporation, Fairfax, VA.; Member of the Audit and
Finance Committees.
Richard D. Parsons...... Director--Philip Morris International Inc. (1990 to
present); President, Time Warner, Inc., New York, NY,
media and entertainment.
John S. Reed............ Director--Philip Morris International Inc. (1975 to
present); Chairman and CO-CEO Citigroup Inc., New York,
NY; Mr. Reed is a Co-Chairman of Citigroup Inc., which
controls Solomon Smith Barney, the investment bank that
represented the Company in the auction process leading
to this transaction. Citigroup may have certain accounts
which contain Shares, however, Mr. Reed disclaims
beneficial ownership of such Shares.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Business Present Principal Occupation
Address or Employment
---------------------- ----------------------------
<S> <C>
Carlos Slim Helu........ Director--Philip Morris International Inc. (1997 to
present); Chairman Emeritus of Grupo Carso, S.A. de
C.V.; Chairman of the Board Telefonce de Mexico, S.A. de
C.V., Mexico; Member of the Corporate Employment Plans
Investment and Finance Committees.
Stephen M. Wolf......... Director--Philip Morris International Inc. (1993 to
present); Chairman of US Airways Group, Inc., and US
Airways, Inc., Arlington, VA; Member of the Audit,
Compensation, Nominating & Corporate Governance and
Public Affairs & Social Responsibility Committees.
Billie Jean King........ Director--Philip Morris International Inc. (8/25/99 to
present); Board of the Elton John AIDS Foundation and
the National Aids Fund; Member of the International
Tennis Hall of Fame and the National Women's Hall of
Fame; Member of the Public Affairs & Social
Responsibility Committee.
Murray H. Bring......... Vice Chairman, External Affairs & General Counsel;
Director--Philip Morris International Inc. (1988 to
present); Senior Vice President and General Counsel in
July 1988, Executive Vice President, External Affairs,
and General Counsel in December 1994; A director of the
Whitney Museum of American Art, the New York University
Law Center Foundation, the William J. Brennan Center for
Justice and The New York City Opera; A member of the
Committee on Public Affairs and Social Responsibility.
Bruce S. Brown.......... Vice President, Taxes.
Louis C. Camilleri...... Senior Vice President and Chief Financial Officer.
Nancy J. De Lisi........ Vice President Finance and Treasurer.
Roger K. Deromedi....... President and Chief Executive officer of Kraft Foods
International, Inc.
Robert A. Eckert........ President and Chief Executive Officer of Kraft Foods,
Inc.
Paul W. Hendrys......... President and Chief Executive Officer of Philip Morris
International Inc.
G. Penn Holsenbeck...... Vice President, Associate General Counsel and Corporate
Secretary.
John D. Bowlin.......... Chairman and Chief Executive Officer of Miller Brewing
Company.
Steven C. Parrish....... Senior Vice President, Corporate Affairs.
Timothy A. Sompolski.... Senior Vice President, Human Resources and
Administration.
Michael E. Szymanczyk... President and Chief Executive Officer of Philip Morris
Incorporated.
Joseph A. Tiesi......... Vice President and Controller.
William H. Webb......... Chief Operating Officer.
Charles R. Wall......... General Counsel and Senior Vice President (effective
2/1/00).
</TABLE>
39
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, 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, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By mail: By Overnight Courier: By Hand:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, NY 10005 New York, NY 10005 New York, NY 10005
Attn: Reorganization
Department
By Facsimile Transmission for For Confirmation by Telephone:
Eligible Institutions and
Confirmation: (212) 936-5100
(718) 234-5001
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager, at the addresses and telephone numbers set forth
below. Additional copies of this Offer to Purchase, the Letter of Transmittal,
the Notice of Guaranteed Delivery and related materials may be obtained from
the Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at Purchaser's expense. Shareholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D. F. King & Co., Inc.
77 Water Street, 20th Floor
New York, NY 10005
Banks and Brokers call collect: (212) 269-5550
All others call Toll Free: (800) 628-8510
The Dealer Manager for the Offer is:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll Free: (800) 646-4543
<PAGE>
Letter of Transmittal
to Tender Shares of Common Stock
of
Balance Bar Company
Pursuant to the Offer to Purchase dated January 28, 2000
by
BB Acquisition, Inc.
a wholly owned indirect subsidiary of
Kraft Foods, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Overnight Courier: By Hand:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, N.Y. 10005 New York, N.Y. 10005 New York, N.Y. 10005
Attn: Reorganization
Department
By Facsimile Transmission for For Confirmation by Telephone:
Eligible Institutions and (212) 936-5100
Confirmation:
(718) 234-5001
DESCRIPTION OF SHARES TENDERED
<TABLE>
- ---------------------------------------------------------------------------------------------
<CAPTION>
Share Certificate(s) and Share(s) Tendered
(Please attach additional signed list, if necessary)
- ---------------------------------------------------------------------------------------------
Name(s) and Address(es) of Total Number of
Registered Holder(s) Share Certificate Shares Represented Number of Shares
(Please fill in, if blank) Number(s)(1) by Certificate(s) Tendered(2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
<CAPTION>
Total Shares Tendered
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by shareholders who deliver Shares by book-entry
transfer ("Book-Entry Shareholders").
(2) Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
[_]CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE INSTRUCTION
11.
The names and addresses of the registered holders of the tendered Shares
should be printed, if not already printed above, exactly as they appear on the
Share Certificates tendered hereby.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE
PROVIDED THEREFOR BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE
THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by shareholders of Balance Bar
Company, (the "Company") if certificates for Shares (as defined below) are to
be forwarded herewith or, unless an Agent's Message (as defined in Section 3
of the Offer to Purchase) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by the Depositary at the Book-
Entry Transfer Facility (as defined in Section 2 of the Offer of Purchase and
pursuant to the procedures set forth in Section 3 thereof).
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, or who cannot complete the
procedure for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to the Depositary prior to the Expiration Date (as
defined of the Offer to Purchase), must tender their Shares according to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
TENDER OF SHARES
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (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 Holder(s): _________________________________________
Window Ticket Number (if any): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Eligible Institution that Guaranteed Delivery: ___________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to BB Acquisition, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Kraft Foods, Inc.,
a Delaware corporation ("Kraft"), the above-described shares of common stock,
par value $0.01 per share (the "Shares"), of Balance Bar Company, a Delaware
corporation (the "Company"), pursuant to Purchaser's offer to purchase all
outstanding Shares, at a purchase price of $19.40 per Share, net to the seller
in cash (the "Offer Price"), without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated January 28,
2000, and in this Letter of Transmittal (which together with any amendments or
supplements thereto or hereto, collectively constitute the "Offer"). Receipt
of the Offer is hereby acknowledged.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), and
effective upon acceptance for payment of the Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to or upon the order of Purchaser all right, title and interest
in and to all the Shares that are being tendered hereby (and any and all
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect thereof on or after the date hereof (collectively,
"Distributions")) and irrevocably constitutes and appoints American Stock
Transfer & Trust Company (the "Depositary") the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and all
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
certificates for such Shares (and any and all Distributions), or transfer
ownership of such Shares (and any and all Distributions) on the account books
maintained by the Book-Entry Transfer Facility, together, in any such case,
with all accompanying evidences of transfer and authenticity, to or upon the
order of Purchaser, (ii) present such Shares (and any and all Distributions)
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints William Eichar and Theodore Banks in their respective capacities as
officers or directors of Purchaser, and any individual who shall thereafter
succeed to any such office of Purchaser, and each of them, and any other
designees of Purchaser, the attorneys-in-fact and proxies of the undersigned,
each with full power of substitution, to vote at any annual or special meeting
of the Company's shareholders or any adjournment or postponement thereof or
otherwise in such manner as each such attorney-in-fact and proxy or his or her
substitute shall in his or her sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-
fact and proxy or his or her substitute shall in his or her sole discretion
deem proper with respect to, and to otherwise act as each such attorney-in-
fact and proxy or his or her substitute shall in his or her sole discretion
deem proper with respect to, all of the Shares (and any and all Distributions)
tendered hereby and accepted for payment by Purchaser. This appointment will
be effective if and when, and only to the extent that, Purchaser accepts such
Shares for payment pursuant to the Offer. 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 any prior powers of attorney and
proxies granted by the undersigned at any time with respect to such Shares
(and any and all Distributions), and no subsequent powers of attorney,
proxies, consents or revocations may be given by the undersigned with respect
thereto (and, if given, will not be deemed effective). Purchaser reserves the
right to require that, in order for Shares or other securities to be deemed
validly tendered, immediately upon Purchaser's acceptance for payment of such
Shares, Purchaser must be able to exercise full voting, consent and other
rights with respect to such Shares (and any and all Distributions), including
voting at any meeting of the Company's shareholders.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that, when the same are accepted for payment by the Purchaser, Purchaser
will acquire good, marketable and unencumbered title thereto and to all
Distributions free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby 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.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above 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 for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
-----------------------------------
-----------------------------------
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares for the purchase price of Shares
accepted for payment of accepted for payment and/or
certificates representing Shares certificates representing Shares
not tendered or accepted for not tendered or accepted for
payment are to be issued in the payment are to be sent to someone
name of someone other than the other than the undersigned or to
undersigned. the undersigned at an address
other than that shown under
"Description of Shares Tendered."
Issue: [_] Check [_] Certificate(s)
to
Name: _____________________________
(Please Print) Mail: [_] Check [_] Certificate(s)
Address: __________________________ to
----------------------------------- Name: _____________________________
(Include Zip Code) (Please Print)
Address: __________________________
-----------------------------------
(Taxpayer Identification or Social -----------------------------------
Security Number)
(Also complete Substitute Form W-9 (Include Zip Code)
below)
5
<PAGE>
IMPORTANT
SHAREHOLDER: SIGN HERE
(Complete Substitute Form W-9 Included)
_____________________________________________________________________________
_____________________________________________________________________________
(Signature(s) of Owner(s))
Name(s) _____________________________________________________________________
_____________________________________________________________________________
Capacity (Full Title) _______________________________________________________
(See Instructions)
Address: ____________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Include Zip Code)
-----------------------------------------------------------------------------
Area Code and Telephone Number ______________________________________________
Taxpayer Identification or Social Security Number ___________________________
(See Substitute Form W-9)
Dated: ___________________________, 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please set forth full title and
see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(If required--See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature(s) _____________________________________________________
Name ________________________________________________________________________
Name of Firm ________________________________________________________________
Address _____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number ______________________________________________
Dated: __________________________ , 2000
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter or Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears
on a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all
other cases, all signatures on this Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed by
shareholders if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if tenders are to be made pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Share Certificates evidencing tendered Shares, or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of Shares
into the Depositary's account at the Book-Entry Transfer Facility, as well as
this Letter of Transmittal (or a facsimile hereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other documents required by
this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in Section
1 of the Offer to Purchase). Shareholders whose Share Certificates are not
immediately available, or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis or who cannot deliver all other required
documents to the Depositary 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 3
of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be
made by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made
available by the Purchaser, must be received by the Depositary prior to the
Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) evidencing all tendered Shares, in proper form for transfer, in
each case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market trading days after the date of
execution of such Notice of the Guaranteed Delivery. If Share Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal must accompany each such delivery.
The method of delivery of this Letter of Transmittal, Share Certificates
and all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and the risk of the tendering shareholder
and the delivery will be deemed made only when actually received by the
Depositary (including, in the case of book-entry transfer, by book-entry
confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
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 a 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 and any other required
information should be listed on a separate signed schedule attached hereto.
7
<PAGE>
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share Certificate are
to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shared Tendered." In this case, new Share Certificates
for the Shares that were evidenced by your old Share Certificates, but were
not tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after
the Expiration Date. All Shares represented by Share Certificates delivered to
the Depositary will be deemed to have been tendered unless indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the 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.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to 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 and transmitted hereby, no
endorsements of certificates or separate stock powers are required unless
payment to be made or certificates for Shares not tendered or not accepted for
payment are to be issued in the name of a person other than the registered
holder(s). Signatures on any such Share Certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s)
appear(s) on the certificate(s). Signature(s) on any such Share Certificates
or stock powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer
and sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for
Shares not tendered or not accepted for payment are to be registered in the
name of, any person other than the registered holder(s), or if tendered
certificate(s) 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 other person)
payable on account of the transfer to such other person will be deducted from
the purchase price of such Shares purchased unless evidence satisfactory to
Purchaser of the payment of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) evidencing the Shares
tendered hereby.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of
this Letter of Transmittal or if a check and/or such certificates are to be
returned to a person other than the person(s) signing this Letter of
Transmittal or to an address other than that shown in this Letter of
Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed.
8
<PAGE>
8. Substitute Form W-9. A tendering shareholder is required to provide the
Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 which is provided under "Important Tax Information" below, and to
certify whether the shareholder is subject to backup withholding of Federal
income tax. If a tendering shareholder is subject to backup withholding, the
shareholder must cross out item (2) of the Certification Box of the Substitute
Form W-9. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to Federal income tax withholding of 31% of
any payments made to the shareholder, but such withholdings will be refunded
if the tendering shareholder provides a TIN within 60 days.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate 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 the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
9. Requests for Assistance of Additional Copies. Questions and requests for
assistance or 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 may be
directed to the Information Agent or Dealer Manager at the addresses and phone
numbers set forth below, or from brokers, dealers, commercial banks or trust
companies.
10. Waiver of Conditions. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), Purchaser reserves the right,
in its sole discretion, to waive, at any time or from time to time, any of the
specified conditions of the Offer, in whole or in part, in the case of any
Shares tendered.
11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the shareholder should promptly
notify American Stock Transfer & Trust Company, in its capacity as transfer
agent for the shares, via facsimile at (212) 936-5100. The shareholder will
then be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates
have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS,
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY
WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
shareholder's correct TIN on the Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's Social Security
Number. If a tendering shareholder is subject to backup withholding, such
shareholder must cross out item (2) of the Certification box on the Substitute
Form W-9. If the Depositary is not provided with the correct TIN, the
shareholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such shareholder may be
subject to backup withholding of 31%.
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, such individual must submit a statement, signed under penalties of
perjury, attesting
9
<PAGE>
to that individual's exempt status. Such statements may be obtained from the
Depositary. Exempt shareholders, other than foreign individuals, should
furnish their TIN, write "Exempt" on the face of the Substitute Form W-9 below
and sign, date and return the Substitute Form W-9 to the Depositary. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to withholding
will be reduced by the amount of tax withheld. If backup withholding results
in an overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares and Rights purchased pursuant to the Offer, the
shareholder is required to notify the Depositary of such shareholder's correct
TIN by completing the form below certifying that the TIN provided on
Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN).
What Number to Give the Depositary
The shareholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record holder of the Shares.
If the Shares are in more than one name, or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for
the TIN in Part I, and sign and dated the Substitute Form W-9. If "Applied
For" is written in Part I, the Depositary will withhold 31% of payments made
for the shareholder, but such withholdings will be refunded in the tendering
shareholder provides a TIN within 60 days.
10
<PAGE>
PAYOR'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
- --------------------------------------------------------------------------------
Name ____________________________________________________
SUBSTITUTE Address _________________________________________________
_________________________________________________________
Form W-9 (Number and Street)
Department of the Treasury
_________________________________________________________
Internal Revenue Service
(Zip Code) (City) (State)
Part 1(a)--PLEASE
PROVIDE YOUR TIN IN THE
BOX AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW
Payor's Request for TIN __________________________
Taxpayer -------------------------------------------------------------
------------------------------
Identification (Social Security Number or
Number ("TIN") Employer Identification
and Certification Number)
-------------------------------------------------------------
Part 1(b)--PLEASE CHECK THE BOX AT RIGHT IF YOU HAVE
APPLIED FOR, AND ARE AWAITING RECEIPT OF YOUR TIN
Sign Here (right arrow)
[_]
-------------------------------------------------------------
Part 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE
WRITE "EXEMPT" HERE (SEE INSTRUCTIONS)
-------------------------------------------------------------
Part 3--CERTIFICATION UNDER PENALTIES OF PERJURY, I
CERTIFY THAT (X) The number shown on this form is my
correct TIN (or I am waiting for a number to be issued
to me), and (Y) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or (b)
I have not been notified by the Internal Revenue Service
(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 witholding.
SIGNATURE _______________________________________________
DATE ____________________________________________________
Certification of Instructions--You must cross out Item (Y) of Part 3 above
if you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such Item (Y).
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(b) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and that (1) I mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to
the Payor by the time of payment, 31 percent of all reportable payments
made to me pursuant to this Offer will be withheld.
------------------------------------- -------------------------------------
Signature Date
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.
11
<PAGE>
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, COMMERCIAL BANK, TRUST COMPANY
OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE
FIRST PAGE.
Questions and requests for assistance or for additional copies of the Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
other tender offer materials may be directed to the Information Agent or the
Dealer Manager at their respective telephone numbers and locations listed
below, and will be furnished promptly at Purchaser's expense. You may also
contact your broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co, Inc.
77 Water Street
New York, NY 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 628-8510
The Dealer Manager for the Offer is:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 646-4543
12
<PAGE>
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
Balance Bar Company
to
BB Acquisition, Inc.
a wholly owned subsidiary of
Kraft Foods, Inc.
(Not to be used for signature guarantees)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
for Shares (as defined below) are not immediately available, if the procedure
for book-entry transfer cannot be completed on a timely basis, or if time will
not permit all required documents to reach American Stock Transfer & Trust
Company (the "Depositary") on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase). This form may be delivered by hand,
transmitted by facsimile transmission or mailed (to the Depositary). See
Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By mail: By Overnight Courier: By Hand:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, NY 10005 New York, NY 10005 New York, NY 10005
Attn: Reorganization
Department
By Facsimile For Confirmation by
Transmission for Telephone:
Eligible Institutions (212) 936-5100
and
Confirmation:
(718) 234-5001
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER
THAN THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY
TO THE DEPOSITARY.
THIS NOTICE OF GUARANTEED DELIVERY TO THE DEPOSITARY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO
BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" (AS DEFINED IN THE OFFER TO
PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEES MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF
TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in the Offer to Purchase) and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to BB Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Kraft Foods, Inc., a Delaware
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated January 28, 2000 (the "Offer to Purchase") and the
related Letter to Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), receipt of which is hereby
acknowledged, the number of shares of common stock, par value $0.01 per share
(the "Shares"), of Balance Bar Company, a Delaware corporation (the
"Company"), set forth below, pursuant to the guaranteed delivery procedures
set forth in the Offer to Purchase.
Number of Shares Tendered: __________ SIGN HERE
Certificate No(s) (if available): Name(s) of Record Holder(s)
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
[_]Check if securities will be (Please Print)
tendered by book-entry transfer
Address(es):
Name of Tendering Institution:
-------------------------------------
- -------------------------------------
-------------------------------------
Account No.: ________________________ (Zip Code)
Dated: _______________________ , 2000 Area Code and Telephone No(s):
-------------------------------------
Signature(s):
-------------------------------------
-------------------------------------
<PAGE>
GUARANTEE
(Not to be used for signature guarantees)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program, (a) represents that the above named person(s)
"own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents
that such tender of Shares complies with Rule 14e-4 and (c) guarantees to
deliver to the Depositary either the certificates evidencing all tendered
Shares, in proper form for transfer, or to deliver Shares pursuant to the
procedure for book-entry transfer into the Depositary's account at The
Depositary Trust Company (the "Book-Entry Transfer Facility"), in either case
together with the Letter of Transmittal (or a facsimile thereof) properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in the case of a book-
entry delivery, and any other required documents, all within three Nasdaq
National Market trading days after the date hereof.
Name of Firm: _______________________ -------------------------------------
(Authorized Signature)
Address: ____________________________
Title: ______________________________
- -------------------------------------
Zip Code Name: _______________________________
-------------------------------------
Area Code and Telephone Number: _____ (Please type or print)
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
Dated: _______________________ , 2000
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Balance Bar Company
by
BB Acquisition, Inc.
a wholly owned subsidiary of
Kraft Foods, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS
EXTENDED.
January 28, 2000
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by BB Acquisition, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Kraft Foods, Inc., a Delaware
corporation ("Kraft") to act as Dealer Manager in connection with the
Purchaser's offer to purchase all outstanding shares of common stock, par value
$0.01 per share (the "Shares"), of Balance Bar Company, a Delaware corporation
(the "Company") at a purchase price of $19.40 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 January 28, 2000 (the "Offer to
Purchase") and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer")
enclosed herewith.
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, who cannot complete the
procedures for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to American Stock Transfer & Trust Company (the
"Depositary") prior to the Expiration Date (as defined in the Offer to
Purchase) must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
The Offer is conditioned upon, among other things, (i) there being validly
tendered in accordance with the terms of the Offer and not withdrawn prior to
the Expiration Date of the Offer a number of Shares which, together with the
Shares owned by Kraft or Purchaser represents more than 50% of the outstanding
Shares and (ii) the expiration or termination of any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The
Offer is also subject to the satisfaction of certain other conditions. See
Section 17--"Certain Conditions of the Offer" of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
1. Offer to Purchase dated January 28, 2000
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients (manually signed
facsimile copies of the Letter of Transmittal may be used to tender
Shares);
[LOGO OF CREDIT SUISSE/FIRST BOSTON APPEARS HERE]
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if Share
Certificates are not immediately available or if such certificates and all
other required documents cannot be delivered to the Depositary, or if the
procedures for book-entry transfer cannot be complete on a timely basis;
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. The Letter to shareholders of the Company from James A. Wolfe, the
President 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, which includes
the recommendation of the Board of Directors of the Company (the "Board of
Directors") that shareholders accept the Offer and tender their Shares to
Purchaser pursuant to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
The Board of Directors has unanimously approved the Merger Agreement (as
defined below), the Offer and the Merger (as defined below) and determined
that the Offer and the Merger are fair to, and in the best interests of the
Company and its shareholders. The Board of Directors recommends that the
Company's shareholders tender their shares pursuant to the Offer and approve
and adopt the Merger Agreement.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 21, 2000 (the "Merger Agreement"), among Kraft, Purchaser and
the Company. The Merger Agreement provides for, among other things, the making
of the Offer by Purchaser, and further provides that Purchaser will be merged
with and into the Company (the "Merger") as soon as practicable following the
satisfaction or waiver of each of the conditions to the Merger set forth in
the Merger Agreement. Following the Merger, the Company will continue as the
surviving corporation, wholly owned by Kraft, and the separate corporate
existence of Purchaser will cease.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Depositary and (ii) Share Certificates representing the tendered Shares
should be delivered to the Depositary, or such Shares should be tendered by
book-entry transfer into the Depositary's account maintained at the Book-Entry
Transfer Facility (as described in the Offer to Purchase), all in accordance
with the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents prior to the
Expiration Date or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Information Agent and the Dealer
Manager as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
you for customary mailing and handling costs incurred by you in forwarding the
enclosed materials to your customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover of the Offer to Purchase.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF KRAFT, PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT, THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Balance Bar Company
by
BB Acquisition Corp.
a wholly owned subsidiary of
Kraft Foods, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is the Offer to Purchase dated January 28,
2000 (the "Offer to Purchase") and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the offer by BB Acquisition Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Kraft Foods,
Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of
common stock, par value $0.01 per share (the "Shares"), of Balance Bar
Company, a Delaware corporation (the "Company") at a purchase price of $19.40
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 and in the
Letter of Transmittal enclosed herewith.
We are the holder of record of Shares 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 enclosed 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 us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is invited to
the following:
1. The offer price is $19.40 per Share, net to you in cash, without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of January 20, 2000 (the "Merger Agreement"), among Parent,
Purchaser and the Company. The Merger Agreement provides, among other
things, that Purchaser will be merged with and into the Company (the
"Merger") following the satisfaction or waiver of each of the conditions to
the Merger set forth in the Merger Agreement.
4. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger and determined that the Offer
and the Merger are fair to, and in the best interests of, the Company and
its shareholders. The Board of Directors of the Company recommends that you
tender your Shares pursuant to the Offer and approve and adopt the Merger
Agreement.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, February 25, 2000 (the "Expiration Date") unless
the Offer is extended.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
<PAGE>
The Offer is conditioned upon, among other things, (i) there being a
validly tendered in accordance with the terms of the Offer and not withdrawn
prior to the Expiration Date of the Offer a number of Shares which, together
with the Shares owned by Kraft or Purchaser, represents more than 50% of the
outstanding Shares and (ii) the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended. The Offer is also subject to the satisfaction of certain other
terms and conditions. See Section 17--"Certain Conditions to the Offer" in the
Offer to Purchase.
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 shall make a good faith
effort to comply with such state statute or seek to have the such statute
declared inapplicable to the Offer. If, after such good faith effort, the
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state. In those jurisdictions where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser by Credit Suisse First Boston
Corporation in its capacity as Dealer Manager for the Offer or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is also enclosed. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions 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.
<PAGE>
Instructions with Respect to the
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Balance Bar Company
by
BB Acquisition Corp.
a wholly owned subsidiary of
Kraft Foods, Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated January 28, 2000 and the related Letter of Transmittal
of BB Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary
of Kraft Foods, Inc., a Delaware corporation, to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), of Balance
Bar Company at a purchase price of $19.40 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 and the related Letter of Transmittal.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) that are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to Be Tendered:* _____
Account No.: __________________________
Dated: _________________________ , 2000
SIGN HERE
_______________________________________
_______________________________________
Signature(s)
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Print Name(s) and Address(es)
_______________________________________
_______________________________________
_______________________________________
Area Code and Telephone Number(s)
_______________________________________
Taxpayer Identification or Social
Security Number(s)
*Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE
(YOU) TO GIVE THE PAYER. Social security numbers have nine digits separated by
two hyphens: i.e., 000-00-0000. Employee 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. All "Section" references are to
the Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
- ------------------------------------- -------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of SOCIAL SECURITY
account: number of --
- --------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account (1)
3. Custodian account of The minor (2)
a minor (Uniform
Gift to Minors Act)
4.a.The usual revocable The grantor-trustee
savings trust (1)
account (grantor
is also trustee)
b.So-called trust The actual owner
account that is (1)
not a legal or
valid trust under
state law
5. Sole proprietorship The owner (3)
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of IDENTIFICATION
account: number of --
<S> <C>
6. Sole proprietorship The owner (3)
7. A valid trust, The legal entity
estate, or pension (4)
trust
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational, or
other tax-exempt
organization account
10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------- -------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
Page 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Card, at the local
Social Security Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
. An organization exempt from tax under Section 501(a), an individual
retirement account (IRA) or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(2).
. The United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
. An international organization or any agency or instrumentality thereof.
. A foreign government and any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
. A corporation.
. A financial institution.
. A dealer in securities or commodities required to register in the United
States, the District of Columbia, 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 entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
. A futures commission merchant registered with the Commodity Futures Trading
Commission.
. A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
. 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 that have at least one nonresident alien partner. Payments of
patronage dividends not paid in money. Payments made by certain foreign
organizations. Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more 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.
. Mortgage interest paid to you.
. Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under Sections 6041,
6041A, 6042, 6044, 6045, 6049, 6050A and 6050N.
Exempt payees described above must file Form W-9 or a substitute Form W-9 to
avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 3 OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS,
OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE--Section 6109 requires you to provide your correct taxpayer
identification number to payers, who must report the payments to the IRS. The
IRS uses the number for identification purposes and may also provide this
information to various government agencies for tax enforcement or litigation
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to the payee who does not
furnish a taxpayer identification number to payer. Certain penalties may also
apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty
of $50 for each such failure unless your failure is due to reasonable cause
and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully 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>
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
only by the Offer to Purchase, dated January 28, 2000 and the related Letter of
Transmittal and any amendments or supplements thereto, and is being made to all
holders of Shares. 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
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
(as defined below) may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction. In those jurisdictions where securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by Credit Suisse
First Boston Corporation ("Credit Suisse First Boston" or the "Dealer Manager")
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
Balance Bar Company
at
$19.40 Net Per Share
by
BB Acquisition, Inc.
a wholly owned subsidiary of
Kraft Foods, Inc.
BB Acquisition, Inc., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of Kraft Foods, Inc., a Delaware corporation ("Parent"), is
offering to purchase all of the outstanding shares of common stock, par value
$0.01 per share (the "Shares"), of Balance Bar Company, a Delaware corporation
(the "Company"), at a price of $19.40 per Share, net to the seller in cash (less
any required withholding taxes), without interest thereon, on the terms and
subject to the conditions set forth in the Offer to Purchase, dated January 28,
2000 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"). Tendering shareholders who have Shares registered in their names and
who tender directly to American Stock Transfer & Trust Company (the
"Depositary") will not be charged brokerage fees or commissions or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer. Shareholders who hold their Shares through a
broker or bank should consult such institution as to whether it charges any
service fees. Purchaser will pay all charges and expenses of the Dealer Manager,
the Depositary, and the D.F. King & Co., Inc., which is acting as the
information agent (the "Information Agent"), incurred in connection with the
Offer. Following the consummation of the Offer, the Purchaser intends to effect
the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of certain conditions, including (1) there being validly tendered in
accordance with the terms of the Offer and not withdrawn prior to the expiration
date of the Offer a number of Shares which, together with the Shares then owned
by Parent or the Purchaser, represents more than 50% of the Shares outstanding
(the "Minimum Condition") and (2) the expiration or termination of any waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. The Offer is also subject to the satisfaction of certain other
conditions. See Section 17 of the Offer to Purchase.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of January 21, 2000 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The purpose of the Offer is for Parent, through the Purchaser, to
acquire a majority voting interest in the Company as the first step in a
business combination. The
<PAGE>
Merger Agreement provides that, among other things, the Purchaser will make the
Offer and that as promptly as practicable after the purchase of Shares pursuant
to the Offer and the satisfaction or waiver of the other conditions set forth in
the Merger Agreement and in accordance with relevant provisions of the General
Corporation Law of the State of Delaware (the "DGCL"), the Purchaser will be
merged with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the Effective
Time (other than Shares owned beneficially or of record by Parent or any
subsidiary of Parent or held in the treasury of the Company, all of which shall
be cancelled, and other than Shares which are held by shareholders, if any, who
properly exercise their appraisal rights under the DGCL) will be cancelled and
converted into the right to receive $19.40 in cash, or any higher price that is
paid in the Offer (less any required withholding taxes), without interest
thereon.
Certain shareholders of the Company have entered into Support Agreements
pursuant to which such shareholders have agreed, among other things, to tender
pursuant to the Offer, and not to withdraw, all of their Shares, which together
represent approximately 55% of all outstanding Shares (approximately 51% on a
fully diluted basis). The Board of Directors of the Company has unanimously
approved the Merger Agreement, the Offer and the Merger and determined that the
Offer and the Merger are fair to and in the best interests of the Company and
its shareholders. The Board of Directors of the Company recommends that the
Company's shareholders tender their Shares pursuant to the Offer and approve and
adopt the Merger Agreement.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. In all cases, on the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting such payment to tendering shareholders. Under no circumstances
will interest on the purchase price of Shares be paid by the Purchaser because
of any delay in making any payment. Payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation of a book-
entry transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in the Offer to Purchase), pursuant to the
procedures set forth in the Offer to Purchase, (ii) a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
all required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase), and (iii) any other
documents required by the Letter of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Purchaser's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on February 25, 2000 (or any other time then set
as the Expiration Date), the Purchaser may, subject to the Merger Agreement as
described below, elect to, (i) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the Offer,
as extended, (ii) subject to complying with applicable rules and regulations of
the Securities and Exchange Commission, accept for payment all Shares so
tendered and not extend the Offer, or (iii) terminate the Offer and not accept
for payment any Shares and return all tendered Shares to tendering shareholders.
The term "Expiration Date" means 12:00 Midnight, New York City time, on February
25, 2000, unless the Purchaser shall have extended the period of time for which
the Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by the Purchaser shall
expire. The Purchaser does not expect to make a subsequent offering period
available following the Expiration Date pursuant to Rule 14d-11 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), although it
reserves the right to do so in its sole discretion.
Subject to the terms and conditions set forth in the Offer to Purchase and
the Merger Agreement and the applicable rules and regulations of the Securities
and Exchange Commission, the Purchaser reserves the right (but will not be
obligated), at any time or from time to time in its sole discretion, (i) to
extend the period during which the Offer is open or (ii) to amend the Offer in
any other respect by giving oral or written notice of such extension or
amendment to the Depositary and by making a public announcement of such
extension or amendment. Except to the extent required by the Merger Agreement,
there can be no assurance that the Purchaser will exercise its right to extend
or amend the Offer. Any extension of the period during which the Offer is open
and will be followed, as promptly as practicable, by public announcement
thereof, such announcement to be issued not later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
During any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer, subject to the rights of a tendering shareholder to
withdraw such shareholder's Shares.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment pursuant to the
Offer, also may be withdrawn at any time after Monday, March 27, 2000. Except as
otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made
pursuant to the Offer are irrevocable. For a withdrawal of Shares tendered
pursuant to the Offer to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase. Any notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name in which the
certificates representing such shares are registered if different from that of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such certificates
have been tendered by an Eligible Institution (as defined in the Offer to
Purchase), the signature on the
<PAGE>
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer as set
forth in the Offer to Purchase, any notice of withdrawal must also specify the
name and number of the account of the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. 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, and its determination will be final and
binding on all parties.
The receipt of cash in exchange for Shares pursuant to the Offer (or the
Merger) will be a taxable transaction for U.S. federal income tax purposes and
may also be a taxable transaction under applicable state, local or foreign tax
laws. Generally, a shareholder who receives cash in exchange for Shares pursuant
to the Offer (or the Merger) will recognize gain or loss for U.S. federal income
tax purposes equal to the difference between the amount of cash received and
such shareholder's adjusted tax basis in the Shares exchanged therefor. Provided
that such Shares constitute capital assets in the hands of the shareholder, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if the holder has held the Shares for more than one year at the time of
sale. The maximum U.S. federal income tax rate applicable to individual
taxpayers on long-term capital gain is 20%, and the deductibility of capital
losses is subject to limitations. All shareholders should consult with their own
tax advisors as to the particular tax consequences of the Offer and the Merger
to them, including the applicability and effect of the alternative minimum tax
and any state, local or foreign income and other tax laws and of changes in such
tax laws. For a more complete description of certain U.S. federal income tax
consequences of the Offer and the Merger, see Section 5 of the Offer to
Purchase.
The information required to be disclosed by Paragraph (d)(1) of Rule 14d-6 of
the General Rules and Regulations under the Exchange Act, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has provided to the Purchaser its list of shareholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
mailed to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance and copies of the Offer to Purchase,
the Letter of Transmittal and all other tender offer materials may be directed
to the Information Agent or the Dealer Manager at their respectable addresses
and telephone numbers set forth below, and will be furnished promptly at the
Purchaser's expense. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 549-6650
The Dealer Manager for the Offer is:
Credit Suisse
First Boston
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 646-4543
January 28, 2000
<PAGE>
EXHIBIT C (1)
AGREEMENT AND PLAN OF MERGER
AMONG
Balance Bar Company
(a Delaware Corporation)
Kraft Foods, Inc.,
(a Delaware corporation)
and its
wholly owned
subsidiary
BB Acquisition, Inc.,
(a Delaware corporation)
January 21, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. DEFINED TERMS....................................................... 1
2. THE OFFER........................................................... 2
2.1 The Offer.................................................... 2
2.1.1 Commencement.......................................... 2
2.1.2 Waiver of Conditions.................................. 2
2.1.3 SEC Filings........................................... 3
2.2 Company Actions................................................ 4
2.2.1 Approval of Transactions.............................. 4
2.2.2 Company SEC Filings................................... 4
2.2.3 Company Information................................... 4
2.2.4 Directors............................................. 5
3. THE MERGER.......................................................... 6
3.1 The Merger................................................... 6
3.2 Stockholder Meeting.......................................... 6
3.2.1 Special Meeting....................................... 6
3.2.2 Recommendation........................................ 6
3.2.3 Proxy Statement....................................... 6
3.2.4 Short Form Merger..................................... 7
3.3 Consummation of the Merger................................... 7
3.3.1 Effects of the Merger................................. 7
3.3.2 Certificate of Incorporation and Bylaws............... 7
3.3.3 Directors and Officers................................ 7
3.3.4 Conversion of Shares.................................. 8
3.3.5 Equity Derivatives.................................... 8
3.3.6 Conversion of Merger Sub Common Stock................. 8
3.4 Dissenting Shares............................................ 8
3.5 Payment for Shares........................................... 9
3.5.1 Paying Agent.......................................... 9
3.5.2 Surrender of Certificates............................. 9
3.5.3 Payment of Merger Consideration....................... 9
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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<S> <C>
3.5.4 No Transfers.......................................... 9
3.5.5 Unclaimed Merger Consideration........................ 10
3.5.6 Tax on Merger Consideration........................... 10
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 10
4.1 Organization and Corporate Power............................. 11
4.2 Capital Stock and Related Matters............................ 11
4.3 Subsidiaries; Partnerships................................... 12
4.4 Authorization; No Breach..................................... 12
4.4.1 Authority............................................. 12
4.4.2 Board Approval........................................ 12
4.4.3 Financial Advisor Opinion............................. 12
4.4.4 Noncontravention...................................... 13
4.5 Financial Statements; SEC Filings............................ 13
4.5.1 SEC Filings........................................... 13
4.5.2 Financial Statements.................................. 14
4.5.3 Absence of Undisclosed Liabilities.................... 14
4.5.4 No Material Adverse Change............................ 14
4.6 Title........................................................ 15
4.7 Tax Matters.................................................. 15
4.8 Contracts and Commitments.................................... 15
4.8.1 Company Material Contracts............................ 16
4.8.2 No Default............................................ 17
4.9 Trademarks, Patents.......................................... 17
4.10 Litigation, Etc.............................................. 17
4.11 Insurance Coverage........................................... 18
4.12 Labor Relations.............................................. 18
4.13 Compliance with Laws......................................... 18
4.13.1 General.............................................. 18
4.13.2 Environmental and Safety Matters..................... 18
4.13.3 Governmental Authorizations and Regulations.......... 18
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
4.14 Affiliated Transactions...................................... 19
4.15 Brokers...................................................... 19
4.16 ERISA; Employee Benefits..................................... 19
4.17 Required Vote of Company Stockholders........................ 21
4.18 State Takeover Laws.......................................... 21
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER......................... 21
5.1 Organization................................................. 21
5.2 Authority.................................................... 21
5.3 Effect of Agreement.......................................... 21
5.4 Financing.................................................... 22
6. COVENANTS........................................................... 22
6.1 Conduct of Business of the Company........................... 22
6.1.1 Ordinary Course; Preserve Relationships............... 22
6.1.2 Insurance............................................. 23
6.1.3 Taxes and Liens....................................... 23
6.1.4 Contracts and Laws.................................... 23
6.1.5 Acquisition; Consolidation; Reorganization; Sale of
Assets................................................ 23
6.1.6 Limitations on Indebtedness; Investments; Contracts;
etc................................................... 23
6.1.7 Amendment to the Company's Certificate of
Incorporation and Bylaws.............................. 24
6.1.8 Equity Issuances...................................... 24
6.1.9 Dividends............................................. 24
6.1.10 Accounting Policies................................... 24
6.1.11 Litigation............................................ 24
6.1.12 Other Actions......................................... 25
6.2 Access and Information....................................... 25
6.2.2 Confidential Information.............................. 25
6.3 Certain Filings, Consents and Arrangements................... 25
6.3.1 Consents.............................................. 25
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
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Page
<S> <C>
6.3.2 Filings............................................... 25
6.4 Hart-Scott-Rodino............................................ 26
6.5 Press Releases............................................... 26
6.6 Non-Solicitation............................................. 26
6.6.1 Notice of Acquisition Proposal........................ 27
6.6.2 Board Approval........................................ 27
6.6.3 Board Recommendation.................................. 28
6.6.4 Other Confidential Agreements......................... 28
6.7 Notice of Claims............................................. 28
6.8 Additional Agreements........................................ 29
7. PURCHASER COVENANTS................................................. 29
7.1.1 Indemnification....................................... 29
7.1.2 Insurance............................................. 30
7.1.3 Survival.............................................. 30
7.2.1 Purchaser Will Honor.................................. 30
7.2.2 Audit of 1999 Plan.................................... 31
7.2.3 Years of Credit....................................... 31
7.2.4 Cooperation........................................... 31
8. CONDITIONS.......................................................... 31
8.1 Conditions to the Obligations of Purchaser, Merger Sub and
the Company.................................................. 31
8.1.1 Stockholder Approval.................................. 31
8.1.2 No Injunction......................................... 31
8.2 Conditions to the Obligations of Purchaser and Merger Sub.... 32
8.2.1 Performance by the Company............................ 32
8.2.2 Representations and Warranties........................ 32
8.2.3 Material Adverse Change............................... 32
8.2.4 No Injunction, Etc.................................... 32
8.2.5 No Material Adverse Effect............................ 32
8.2.6 Consents.............................................. 32
</TABLE>
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(continued)
<TABLE>
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Page
<S> <C>
8.2.7 Equity Derivatives.................................... 33
8.2.8 Company Certificate................................... 33
8.3 Condition to the Company's Obligation........................ 33
8.3.1 Performance by Purchaser's Merger Sub................. 33
8.3.2 Representations and Warranties........................ 33
8.3.3 Purchaser and Merger Sub Certificates................. 33
9. TERMINATION; PAYMENTS............................................... 33
9.1 Mutual Consent............................................... 34
9.2 By Purchaser or Company...................................... 34
9.2.1 Material Breach....................................... 34
9.2.2 Expiration............................................ 34
9.2.3 Governmental Prohibition.............................. 34
9.2.4 Company Directors Withdrawal of Approval.............. 34
9.3 By Purchaser................................................. 35
9.3.1 Other Ownership....................................... 35
9.3.2 Failure to Meet Offer Conditions...................... 35
9.3.3 Minimum Condition..................................... 35
9.3.4 Failure of Stockholder Vote........................... 35
9.3.5 Breach of Section 6.6................................. 35
9.4 By the Company............................................... 35
9.5 Termination Fees and Expense Payment......................... 36
9.5.1 Immediate Payment..................................... 36
9.5.2 Deferred Payment...................................... 36
9.6 Effect of Termination........................................ 37
10. MISCELLANEOUS....................................................... 37
10.1 Expenses Generally........................................... 37
10.2 Survival..................................................... 37
10.3 Additional Documents and Acts................................ 37
10.4 Waiver and Amendment......................................... 37
10.5 Complete Agreement........................................... 37
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
10.6 Governing Law................................................ 38
10.7 Waiver of Right to Jury Trial................................ 38
10.8 Notices, etc................................................. 38
10.9 Counterparts................................................. 39
10.10 Certain Rules of Construction and Interpretation............. 39
10.10.1 Headings............................................ 39
10.10.2 No Presumption...................................... 39
10.10.3 Interpretation...................................... 39
10.11 Attorneys' Fees and Costs.................................... 40
10.12 Parties in Interest; Assignment.............................. 40
10.13 Specific Performance......................................... 40
10.14 Severability................................................. 40
</TABLE>
-vi-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of January 21, 2000 among Kraft Foods,
Inc., a Delaware corporation ("Purchaser"), BB Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Purchaser ("Merger Sub"), and
Balance Bar Company, a Delaware corporation (the "Company").
BACKGROUND
----------
A. The Company and Purchaser have each determined that it is in their
respective best interests for Purchaser to acquire the Company as set forth
in this Agreement.
B. Purchaser, through Merger Sub, proposes to make a tender offer (as it may
be amended or extended from time to time as permitted under this Agreement,
the "Offer") to purchase all of the outstanding shares of common stock of
the Company (the "Shares") for $19.40 in cash, net to the stockholder (the
"Per Share Amount"), upon the terms and subject to the conditions set forth
in this Agreement. The Offer will be followed by merger of the Company and
Merger Sub under the Laws of the State of Delaware, as contemplated by this
Agreement (the "Merger"), with the Company surviving the Merger, all upon
the terms and subject to the conditions of this Agreement and in accordance
with the provisions of the Delaware General Corporation Law, as amended
(the "DGCL").
C. The Company's Board has determined that the Transactions (including the Per
Share Amount) are fair to the holders of the Shares and has adopted
resolutions approving the Offer and recommending that the Company's
stockholders accept the Offer and tender their respective Shares pursuant
to the Offer.
D. Contemporaneous with the execution of this Agreement each of Thomas R.
Davidson, Richard G. Lamb and James A. Wolfe have executed and delivered to
Purchaser and Merger Sub a Support Agreement in the form attached as
Exhibit C (the "Support Agreements").
E. Purchaser has, through appropriate corporate action, approved the
Transactions. The Offer, the Merger and the other transactions
contemplated by this Agreement are referred to collectively in this
Agreement as the "Transactions."
1. Defined Terms
-------------
The definitions in Exhibit A apply to and are a part of this Agreement.
<PAGE>
2. The Offer
---------
2.1 The Offer.
---------
2.1.1 Commencement. Provided that none of the events set forth in Exhibit
------------
B has occurred and is continuing, and subject to the conditions set forth
on Exhibit B:
(a) Commence Offer. As promptly as practicable (but not later than five
--------------
business days after the date of this Agreement), Merger Sub will, and
Purchaser will cause Merger Sub to, commence, (within the meaning of
Rule 14d-2 under the Exchange Act) an Offer to purchase for cash all
of the Shares at a net price per share not less than the Per Share
Amount, and Purchaser will, subject to the terms and conditions of
this Agreement and the Offer, use all reasonable efforts to consummate
the Offer.
(b) Waiver of Conditions. Notwithstanding clause (a), Purchaser cannot,
--------------------
without the Company's consent, extend the Offer beyond April 30, 2000,
except that Purchaser can extend the Offer for up to ten business days
if, as of such date, there have not been tendered at least ninety
percent of the outstanding Shares, and can also extend the Offer
following acceptance of Shares for purchase to the extent permitted
under Rule 14d-11, if available. In addition, if at any scheduled
expiration date any of the conditions of the Offer has not been
satisfied or waived by Purchaser, but are capable of being satisfied,
Purchaser will from time to time extend the Offer until such
conditions are satisfied or waived, provided that Purchaser will not
be required to extend the Offer beyond April 30, 2000. Subject to the
foregoing restrictions, Purchaser has the right, (but is not
obligated), in its sole discretion, to extend the period during which
the Offer is open by giving oral or written notices of extension to
the depository in such offer and by making a public announcement of
such extension.
(c) Payment. Subject to the conditions of the Offer, Merger Sub will, and
-------
Purchaser will cause Merger Sub to, accept for payment and pay for the
Shares that are tendered pursuant to the Offer as soon as permitted
after the Offer commences.
2.1.2 Waiver of Conditions.
--------------------
(a) Consent Required. Neither Purchaser nor Merger Sub will, without the
----------------
prior consent of the Company, decrease the Per Share Amount or the
number of Shares sought pursuant to the Offer, or otherwise amend or
add any term or condition of or to the Offer, except as otherwise
expressly permitted in or contemplated by this Agreement. The Company
will not unreasonably withhold consent to a change in the
2
<PAGE>
expiration date of the Offer. Purchaser can waive any other condition
to the Offer in its discretion.
2.1.3 SEC Filings. Purchaser and Merger Sub will file timely with the SEC
-----------
a Tender Offer Statement on Schedule 14D-1 or successor form pursuant to
the Exchange Act with respect to the Offer (together with any amendments,
supplements and exhibit the "Schedule 14D-1"). It will contain an offer to
purchase and a related letter of transmittal. Such Schedule 14D-1 and the
documents included therein pursuant to which the Offer will be made,
together with any supplements, amendments and exhibits thereto, are the
"Offer Documents". Purchaser will assure that the Offer Documents will
comply as to form in all material respects with the requirements of the
Exchange Act and that they will not contain, on the date filed with the SEC
and when first published, sent or given to the Company's stockholders, 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. Purchaser will, however, have no such obligation with respect
to information supplied by or on behalf of the Company expressly for
inclusion in the Offer Documents. The Company will assure that none of the
information supplied by the Company for inclusion in the Offer Documents
will contain, on the date filed with the SEC and when first published, sent
or given to the Company's stockholders, 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. The Company and
Purchaser each agrees to correct promptly any information provided by it
for use in the Offer Documents if and to the extent that such information
becomes false or misleading in any material respect. Purchaser further
agrees to take all steps necessary to amend or supplement the Offer
Documents and to cause the Offer Documents as so amended or supplemented to
be filed with the SEC and to be disseminated to the Company's stockholders,
in each case as and to the extent required by applicable Laws. The Company
and its counsel will be given a reasonable opportunity to review and
comment upon the Offer Documents and all amendments and supplements thereto
before their filing with the SEC or dissemination to stockholders of the
Company. Purchaser will inform the Company and its counsel of any comments
Purchaser, Merger Sub or their counsel receives from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such
comments, and will give the Company and its counsel an opportunity to
participate in the response of Purchaser and/or Merger Sub to such
comments.
2.2 Company Actions.
---------------
2.2.1 Approval of Transactions. The Company approves of and consents to
------------------------
the Offer and has made representations with respect thereto in Section 4.4.
3
<PAGE>
2.2.2 Company SEC Filings. The Company will timely file with the SEC a
-------------------
statement on Schedule 14D-9 pursuant to the Exchange Act (together with any
amendments, supplements and exhibits the "Schedule 14D-9") with respect to
the Offer containing the recommendation described in Section 2.2.1 and will
mail the Schedule 14D-9 to the stockholders of the Company. The Company
will assure that the Schedule 14D-9 will comply as to form in all material
respects with the requirements of the Exchange Act and that it will not
contain on the date filed with the SEC and when first published, sent or
given to the Company's stockholders, 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. The Company will,
however, have no such obligation with respect to information supplied by or
on behalf of Purchaser or Merger Sub expressly for inclusion in the
Schedule 14D-9. The Company and Purchaser each agrees to correct promptly
any information provided by it for use in the Schedule 14D-9 if and to the
extent that such information becomes false or misleading in any material
respect. The Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended
or supplemented to be filed with the SEC and to be disseminated to the
Company's stockholders, in each case as and to the extent required by
applicable Laws. Purchaser and its counsel will be given a reasonable
opportunity to review and comment upon the Schedule 14D-9 and all
amendments and supplements thereto before their filing with the SEC or
dissemination to stockholders of the Company. The Company will inform
Purchaser and its counsel of any comments the Company or its counsel
receives from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments, and will give Purchaser and
its counsel an opportunity to participate in the response of the Company to
such comments.
2.2.3 Company Information. In connection with the Offer, the Company
-------------------
will, or will cause its transfer agent to, furnish, not more than three
days after the date of this Agreement, to Purchaser: (a) a list, as of the
most recent practicable date, of the record holders of Shares and their
addresses; (b) mailing labels containing the names and addresses of all
record holders of Shares; and (c) lists of security positions of Shares
held in stock depositories. The Company will furnish Purchaser with such
additional or updated information and such other assistance as Purchaser or
its agents reasonably request in communicating the Offer to the record and
beneficial holders of Shares.
2.2.4 Directors.
---------
(a) Purchaser Designation of Directors. Subject to compliance with
----------------------------------
applicable law, promptly upon the payment by the Purchaser or Merger
Sub for Shares pursuant to the Offer, and from time to time
thereafter,
4
<PAGE>
Purchaser will be entitled to designate at least such number of
directors, rounded up to the next whole number, on the Company's Board
as is equal to the product of the total number of directors on the
Company's Board (determined after giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Purchaser or its
affiliates bears to the total number of Shares then outstanding, and
the Company will, upon request of Purchaser promptly take all actions
necessary to cause Purchaser's designees to be so elected, including,
if necessary, seeking the resignations of one or more existing
directors; provided, however, that before the Effective Time, the
-------- -------
Board will always have at least two members who are neither officers,
directors, stockholders or designees of the Purchaser or any of its
affiliates ("Purchaser Insiders"). In the event of any vacancy in one
of the directorships to be held by persons who are not Purchaser
Insiders (whether due to death, disability, resignation or other
reasons), the remaining director who is not a Purchaser Insider will
be entitled to fill such vacancy with a person who is not a Purchaser
Insider.
(b) Section 14(f) and Rule 14f-1. The Company's obligations to appoint
---------------------------
Purchaser's designees to the Board will be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. The Company will promptly
take all actions required pursuant to such Section and Rule in order
to fulfill its obligations under this Section 2.2.4 and, to the extent
reasonably practicable, will include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors
as is required under such Section and Rule in order to fulfill its
obligations under this Section 2.2.4. Purchaser will supply any
information with respect to itself and its officers, directors and
affiliates required by such Section and Rule to the Company.
(c) Continuing Directors. Following the election or appointment of
--------------------
Purchaser's designees pursuant to this Section 2.2.4 and before the
Effective Time, any amendment or termination of this Agreement by the
Company, any extension by the Company of the time for the performance
of any of the obligations or other acts of the Purchaser or Merger Sub
or waiver of any of the Company's rights hereunder, or any other
action taken by the Company's Board in connection with this Agreement,
will require the concurrence of a majority of the directors of the
Company then in office who are not Purchaser Insiders if such
amendment, termination, extension, waiver or action would have an
adverse effect on the minority stockholders of the Company.
5
<PAGE>
3. The Merger
----------
3.1 The Merger. Merger Sub will be merged with and into the Company as soon as
----------
practicable following the satisfaction or waiver of each of the conditions
set forth in Section 8. Following the Merger, the Company will continue as
the Surviving Corporation, wholly-owned by Purchaser, and the separate
corporate existence of Merger Sub will cease.
3.2 Stockholder Meeting. If required by applicable Law to consummate the
-------------------
Merger, the Company, acting through the Company's Board, will take the
following steps:
3.2.1 Special Meeting. It will duly call, give notice of, convene and
---------------
hold the Special Meeting as soon as practicable following the expiration of
the Offer to approve and adopt this Agreement. At the Special Meeting, all
of the Shares then owned of record or beneficially by Purchaser, Merger Sub
or any other subsidiary of Purchaser will be voted in favor of the adoption
of this Agreement.
3.2.2 Recommendation. It will include in the Proxy Statement the
--------------
recommendation of the Company's Board that its stockholders vote in favor
of the adoption of this Agreement.
3.2.3 Proxy Statement. It will use its commercially reasonable efforts
---------------
to: (a) obtain and furnish the information required to be included by it in
the Proxy Statement; (b) respond promptly to any comments made by the SEC
with respect to the Proxy Statement and any preliminary version of it after
consultation with the Purchaser; (c) cause the Proxy Statement to be mailed
to the Company's stockholders at the earliest practicable time following
the expiration of the Offer; and (d) obtain any necessary adoption of this
Agreement by the Company's stockholders. The Company will assure that the
Proxy Statement complies as to form in all material respects with the
requirements of the Exchange Act and that it does not contain on the date
filed with the SEC and when first published, sent or given to the Company's
stockholders, 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. The Company will, however, have no such obligation
with respect to information supplied by or on behalf of Purchaser or Merger
Sub expressly for inclusion in the Proxy Statement. The Company and
Purchaser each agrees to correct promptly any information provided by it
for use in the Proxy Statement if and to the extent that such information
becomes false or misleading in any material respect. The Company further
agrees to take all steps necessary to amend or supplement the Proxy
Statement and to cause the Proxy Statement as so amended or supplemented to
be filed with the SEC and to be disseminated to the Company's stockholders,
in each case as and
6
<PAGE>
to the extent required by applicable Laws. Purchaser and its counsel will
be given a reasonable opportunity to review and comment upon the Proxy
Statement and all amendments and supplements thereto before their filing
with the SEC or dissemination to stockholders of the Company. The Company
will inform Purchaser and its counsel of any comments the Company or its
counsel receives from the SEC or its staff with respect to the Proxy
Statement promptly after the receipt of such comments, and will give
Purchaser and its counsel an opportunity to participate in the response of
the Company to such comments.
3.2.4 Short Form Merger. Notwithstanding the foregoing, if Purchaser,
-----------------
Merger Sub and/or any other subsidiary of Purchaser acquires at least
ninety percent (90%) of the outstanding Shares of the Company, the Company
and Purchaser will take all necessary and appropriate action to cause the
Merger to become effective, in accordance with Section 253 of the DGCL, as
soon as reasonably practicable after such acquisition.
3.3 Consummation of the Merger. As soon as practicable after consummation of
--------------------------
the Offer, and, if required by applicable Law, after the vote of the
requisite number of Shares in favor of the adoption of this Agreement has
been obtained, the Company (and/or Purchaser or Merger Sub, if appropriate)
will execute and deliver to the Delaware Secretary of State a Merger
Certificate.
3.3.1 Effects of the Merger. The Merger will have the effects set forth
---------------------
in the DGCL. As of the Effective Time, the Company will become a wholly
owned subsidiary of Purchaser.
3.3.2 Certificate of Incorporation and Bylaws. As of the Effective Time,
---------------------------------------
the Certificate of Incorporation and Bylaws of Merger Sub will become the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
3.3.3 Directors and Officers. The Board of Directors of Merger Sub at the
----------------------
Effective Time will become the Board of Directors of the Surviving
Corporation, and the officers of Merger Sub at the Effective Time will
continue as the officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed.
3.3.4 Conversion of Shares. Each Share outstanding immediately before the
--------------------
Effective Time (other than Shares owned beneficially or of record by
Purchaser or any subsidiary of Purchaser or held in the treasury of the
Company, all of which will be cancelled, and Shares owned by any Dissenting
Stockholder) will, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive the Per
Share Amount.
7
<PAGE>
3.3.5 Equity Derivatives. Equity Derivatives that have not been
------------------
cancelled as of the Effective Time, whether or not then exercisable or
vested, will be cancelled, redeemed or repurchased by the Company, and each
holder of any such Equity Derivative will be entitled to receive, and will
receive, in settlement thereof a cash payment from the Company in an
amount, if any (subject to any applicable withholding Tax), equal to (a)
the Per Share Amount minus (b) the exercise or purchase price per Share
specified in the Equity Derivative multiplied by the number of shares of
Company common stock covered by such Equity Derivative.
3.3.6 Conversion of Merger Sub Common Stock. All of the shares of common
-------------------------------------
stock of Merger Sub issued and outstanding immediately before the Effective
Time will, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and exchangeable for one newly issued
share of common stock of the Surviving Corporation.
3.4 Dissenting Shares. Notwithstanding anything in this Agreement to the
-----------------
contrary, Shares that are issued and outstanding immediately before the
Effective Time and that are held by stockholders who have (a) not voted
such Shares in favor of the Merger (or consented thereto in writing), (b)
delivered a written objection to the Merger and a demand for appraisal of
such Shares in accordance with Section 262 of the DGCL (insofar as such
Section is applicable to the Merger and provides for appraisal rights with
respect to it) and (c) not failed to perfect or have not effectively
withdrawn or lost their rights to appraisal and payment under the DGCL (the
"Dissenting Shares"), will not be converted into the right to receive the
Per Share Amount as provided in Section 3.3.4. Instead, ownership of such
Shares will entitle the holder thereof to receive the consideration
determined pursuant to Section 262 of the DGCL; provided, however, that if
such holder fails to perfect or effectively withdraws such holder's right
to appraisal and payment under the DGCL, each of such Shares will thereupon
be deemed to have been converted, at the Effective Time, into the right to
receive the Per Share Amount, without any interest thereon, upon surrender
of the Certificate or Certificates in the manner provided in Section 3.5.2.
The Company will give Purchaser (d) prompt notice (and in any event within
24 hours) of any demands (or withdrawals of demands) for appraisal received
by the Company pursuant to the applicable provisions of the DGCL and any
other instruments served pursuant to the DGCL and received by the Company
and (e) the opportunity to participate in all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company will not,
except with the prior consent of Purchaser (which consent will not be
unreasonably withheld), make any payment with respect to any such demands
for appraisal or offer to settle, or settle, any such demands.
8
<PAGE>
3.5 Payment for Shares.
------------------
3.5.1 Paying Agent. Before the Effective Time, Purchaser will designate a
------------
United States bank or trust company to act as Paying Agent in the Merger
(the "Paying Agent"). At or before the Effective Time, Purchaser will
deposit, or cause Merger Sub to deposit, in trust with the Paying Agent
immediately available funds (the "Funds") in an amount necessary to make
the payments for Shares and Equity Derivatives required by this Agreement
on a timely basis.
3.5.2 Surrender of Certificates. Promptly after the Effective Time,
-------------------------
Purchaser and the Surviving Corporation will cause the Paying Agent to mail
and/or make available to each record holder, as of the Effective Time,
(other than Purchaser or Merger Sub) of a certificate or certificates that
immediately before the Effective Time represented Shares (the
"Certificates"), a notice and letter of transmittal and instructions in
standard form for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
3.5.3 Payment of Merger Consideration. Upon surrender to the Paying Agent
-------------------------------
of a Certificate, together with such letter of transmittal duly executed
and completed, the holder of such Certificate will receive the Merger
Consideration attributable to the number of Shares represented by such
Certificate, and such Certificate will be cancelled. Until surrendered in
accordance with the provisions of this Section 3.5, each Certificate (other
than Certificates representing Shares owned by Dissenting Stockholders)
will represent for all purposes only the right to receive the Merger
Consideration.
3.5.4 No Transfers. After the Effective Time, there will 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 will be cancelled and exchanged for the Merger
Consideration as provided in Section 3.5.5.
3.5.5 Unclaimed Merger Consideration.
------------------------------
(a) Transfer to Surviving Corporation. Any portion of the Merger
---------------------------------
Consideration that remains unclaimed by the stockholders of the
Company 180 days after the Effective Time will be transferred to the
Surviving Corporation. Any stockholder of the Company who has not
theretofore complied with Section 3.5.2 will thereafter look only to
the Surviving Corporation for payment of such stockholder's claim for
the Merger Consideration. The Paying Agent will be authorized, at the
request of Purchaser, to invest any Funds held by it in investment
grade money market instruments having maturities not to exceed thirty
days as designated by Purchaser, with any interest earned thereon
being paid to
9
<PAGE>
Purchaser at the earlier of (i) payment in full of the Merger
Consideration to all stockholders and (ii) 180 days after the
Effective Time.
(b) No Escheat of Remaining Funds. None of Purchaser, Merger Sub, the
-----------------------------
Company or the Paying Agent will be liable to any Person in respect of
any cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificates have
not been surrendered before seven years after the Effective Time (or
immediately before such earlier date on which any payment pursuant to
this Section 3.5.5 would otherwise escheat to or become the property
of any Government Entity), the Merger Consideration in respect of such
Certificate will, unless otherwise provided by applicable Law, become
the property of the Surviving Corporation, free and clear of all
claims or interest of any Person previously entitled thereto.
3.5.6 Tax on Merger Consideration. The right of any stockholder to
---------------------------
receive the Merger Consideration will be subject to and reduced by the
amount of any required Tax withholding obligation.
4. Representations And Warranties Of The Company
---------------------------------------------
The Company represents and warrants that, except as expressly disclosed in
the applicable corresponding section of the disclosure schedule delivered to
Purchaser concurrently herewith (the "Disclosure Schedule") or except where such
disclosure is either cross-referenced to an applicable corresponding section of
the Disclosure Schedule or the substance and applicability of such disclosure to
another section of the Disclosure Schedule or the Agreement is reasonably
evident from such disclosure and its context, the following statements are true
and correct; provided that no disclosure on the Disclosure Schedule will be
deemed to modify the representation contained in the first sentence of Section
4.2. Unless the context otherwise requires, the term "Company" in this Section
4 refers to the Company together with its wholly owned subsidiary, JC Holdings,
Inc., a Delaware corporation.
4.1 Organization and Corporate Power. The Company: (a) is a corporation duly
--------------------------------
organized, validly existing and in good standing under the Laws of the
State of Delaware; (b) is qualified to do business in every jurisdiction in
which its ownership of property or conduct of business requires it to
qualify, except where the failure to so qualify would not reasonably be
expected to have a Material Adverse Effect on the Company; and (c) has the
requisite corporate power and authority and the legal right to (i) own,
pledge, mortgage or otherwise encumber and operate its properties, (ii)
lease the property it operates under lease, (iii) conduct its business as
now conducted and as presently proposed to be conducted, and (iv) enter
into this Agreement, perform its obligations hereunder and carry out the
Transactions. The Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and the Company's Bylaws
(the "Bylaws") on
10
<PAGE>
file with the SEC as of the date of this Agreement are true and correct and
no further amendments have been made to them. The minute books of the
Company accurately reflect in all material respects all material corporate
actions held or taken since December 31, 1998 of its stockholders and its
Board (including committees of the Board).
4.2 Capital Stock and Related Matters. The authorized capital stock of the
---------------------------------
Company consists of (a) 24,000,000 shares of common stock, of which
12,646,296 shares are issued and outstanding, and 1,186,942 shares are
reserved for issuance upon exercise of the Company's outstanding Equity
Derivatives; and (b) 12,000,000 shares of Series A Convertible Preferred
Stock, of which no shares are issued and outstanding. All of the Shares are
duly authorized and validly issued, fully paid and nonassessable. The
Disclosure Schedule sets forth a list of all Equity Derivatives as of the
date of this Agreement. The Company does not have outstanding any other
Equity Derivative or any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any of its capital stock. There are no
statutory or contractual stockholders' preemptive rights with respect to
any securities of the Company. As of the date of this Agreement, no shares
of the Company's Common Stock or Preferred Stock are reserved for issuance,
except for 1,186,942 shares of Common Stock reserved for issuance in
connection with the Equity Derivatives set forth on the Disclosure
Schedule. Since December 31, 1998, the Company has not issued any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than in connection with the Equity
Derivatives granted before such date. In no event will the aggregate number
of shares of the Company's Common Stock outstanding at the Effective Time
exceed 12,646,296 shares other then through the exercise of stock options
listed on the Disclosure Schedule. The authorized capital stock of JC
Holdings, Inc. consists of 1,000 shares of common stock, of which ten
shares are issued and outstanding, and no shares are reserved for issuance
upon exercise of outstanding Equity Derivatives. The Company owns, directly
or indirectly, all of the issued and outstanding shares of capital stock of
JC Holdings, Inc., free and clear of any Liens, and all of such shares are
duly authorized and validly issued and are fully paid and nonassessable. JC
Holdings, Inc. does not have outstanding any Equity Derivative or any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its capital stock. There are no statutory or contractual
stockholders' preemptive rights with respect to any securities of JC
Holdings, Inc.
4.3 Subsidiaries; Partnerships. The Company has no Subsidiaries, is not a
--------------------------
partner in any partnership, and holds no stock in any other Person.
11
<PAGE>
4.4 Authorization; No Breach.
------------------------
4.4.1 Authority. The Company has duly authorized by all necessary
---------
corporate action (a) the execution, delivery and performance of this
Agreement and (b) the Transactions, and no other corporate proceeding on
its part is necessary to authorize the execution, delivery or performance
of this Agreement by Company. This Agreement constitutes a valid and
binding obligation of the Company.
4.4.2 Board Approval. This Agreement, the Offer and the Merger have been
--------------
unanimously approved by the Company's Board. The Company's Board and any
appropriate Committee has adopted resolutions: (a) determining that the
Offer and Merger are fair to the holders of the Shares and in the best
interests of the Company and such holders; (b) approving this Agreement,
the Support Agreements and the Offer and Merger; (c) determining that this
Agreement is advisable, in accordance with the DGCL; (d) directing that the
Agreement be submitted to holders of Shares for their adoption and
approval, to the extent required under applicable Law; (e) recommending
acceptance of the Offer, the approval and adoption of this Agreement and
approval of the Merger by the holders of the Shares; and (f) taking such
action with respect to the Company's Equity Derivatives as is necessary to
achieve the results contemplated by Section 3.3.5. The Company consents
to the inclusion in the Offer Documents of the recommendation of the
Company's Board. Other than as contemplated herein, no other corporate
proceeding on the part of the Company, its Board or the holders of Shares
is necessary to approve and adopt this Agreement and to consummate the
Transactions contemplated hereby.
4.4.3 Financial Advisor Opinion. Salomon Smith Barney Inc. ("SSB"), the
-------------------------
Company's financial advisor, has rendered an opinion to the Company's Board
(subject to the qualifications and assumptions set forth therein) to the
effect that, as of the date of this Agreement, the Per Share Amount to be
received in the Offer and the Merger, taken together, by the holders of the
Shares is fair, from a financial point of view.
4.4.4 Noncontravention. The execution and delivery by the Company of this
----------------
Agreement, and the fulfillment of and compliance with the respective terms
hereof by the Company, and the consummation of the Transactions, do not and
will not: (a) conflict with or result in any breach of any provision of
the Certificate of Incorporation or Bylaws; (b) 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 Lien) under, any of the provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company is a party; or (c)
violate any Law applicable to the Company, except, in the case of clauses
(b) or (c), for violations, breaches or defaults
12
<PAGE>
that either individually or in the aggregate would not have a Material
Adverse Effect on the Company. The consummation by the Company of the
Transactions will not require the consent or approval of or filing with any
Government Entity or other Third Party, except for: (i) applicable
requirements, if any, of the Exchange Act, the Securities Act and the
securities Laws of the various jurisdictions in which holders of Shares
reside; (ii) the filing of the Merger Certificate and related requirements
pursuant to the DGCL; (iii) any filings and approvals required under the
HSR Act; and (iv) applicable requirements, if any, of the Code and state,
local and foreign Tax Laws. In addition, the foregoing sentence is
qualified to the extent that the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not: (w) prevent or delay consummation of the
Transactions in any material respect; (x) otherwise prevent the Company
from performing its obligations under this Agreement in any material
respect; (y) reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on the Company; or (z) materially
hinder or make materially more burdensome the consummation of the
Transactions.
4.5 Financial Statements; SEC Filings.
---------------------------------
4.5.1 SEC Filings. From the date the Company first became registered
-----------
under the Exchange Act, the Company has filed with the SEC all Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, proxy materials, registration statements and other filings
required to be filed by it pursuant to the federal securities laws,
(collectively, the "SEC Filings"). The SEC Filings did not (as of their
respective filing dates, mailing dates or effective dates, as the case may
be) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. The Company Material Contracts filed as
exhibits to the SEC Filings are complete and correct, except where portions
have been redacted pursuant to a request for confidentiality.
4.5.2 Financial Statements. The audited and unaudited consolidated
--------------------
financial statements of the Company included in the SEC Filings and the
unaudited consolidated financial statements of the Company for the calendar
year period ending December 31, 1999 and as of December 31, 1999 included
in the Disclosure Schedule were each prepared in accordance with GAAP
applied on a consistent basis (except as stated in such financial
statements) and fairly present in all material respects the financial
position of the Company as of the respective dates thereof and the results
of its operations and cash flow for the respective periods covered by such
financial statements. The foregoing sentence is subject, in the case of
the unaudited financial statements, to normal year-end audit adjustments
that, in the case of the 1999 unaudited financial statements will not
result in a material change in the Company's financial condition or results
of operations.
13
<PAGE>
4.5.3 Absence of Undisclosed Liabilities. The Company has no liabilities
----------------------------------
(whether accrued, absolute, contingent, unliquidated or otherwise, whether
due or to become due and regardless of when asserted) other than: (a)
liabilities adequately reserved or provided for in the Balance Sheet; (b)
liabilities entered into in the ordinary course of business that are not
required to be accounted for in the Balance Sheet under GAAP; and (c)
liabilities that have arisen, and obligations under agreements entered
into, after the date of the Balance Sheet in the ordinary course of
business.
4.5.4 No Material Adverse Change. Since the date of the Balance Sheet,
--------------------------
the Company has operated its business in the ordinary course and there has
not been: (a) any change in the business, assets, operations, condition
(financial or otherwise), results of operations, properties, earnings,
customer and supplier relations (including co-packers), considered as a
whole, or employee or sales representative relations of the Company,
considered as a whole, that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company;
(b) any damage, destruction or loss, whether covered by insurance or not,
that would reasonably be expected to have a Material Adverse Effect on the
Company; (c) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) with respect to the capital stock of
the Company; (d) any new employment agreement calling for aggregate annual
compensation in excess of $100,000; (e) any increase in the compensation
payable by the Company to its directors or executive officers outside the
ordinary course of the Company's business, except as required by contracts
or plans set forth on the Disclosure Schedule; (f) any new severance,
termination of employment, bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any such
executive officers or key employees, except for (i) salary increases,
effective January 1, 2000, for all employees other than executive officers;
(ii) benefit plan modifications, effective January 1, 2000, for all
employees, excluding bonus plans; and (iii) payments required by the
Company's 1999 Bonus Plan in the approximate amount set forth on the
Disclosure Schedule; (g) any incurrence of any material liability or
obligation (indirect, direct or contingent), or any new material oral or
written agreement or other transaction, that is not in the ordinary course
of business or that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company;
or (h) any preparation or filing of any Tax Return inconsistent in any
material respect with past practice or, on any such Tax Return, the taking
of any position, the making of any election, or the adoption of any method
that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods.
4.6 Title. Except for: (a) properties and assets disposed of in the ordinary
-----
course of business since the date of the Balance Sheet; (b) Liens disclosed
on the Balance Sheet; or (c) assets used or held under license or similar
14
<PAGE>
arrangements with third parties, the Company has good and marketable title
to, or a valid leasehold interest in, the properties and assets shown on
the Balance Sheet or acquired thereafter, and all assets necessary for the
conduct of its businesses as presently conducted, free and clear of all
Liens, except for equipment leases that aggregate less than $25,000.
4.7 Tax Matters. The Company has filed all Tax Returns that it is required to
-----------
file with any Tax Authority, and all such Tax Returns are complete and
correct in all material respects; the Company has paid all Taxes due and
owing by it, and has not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency. No Tax audits are pending or being conducted with respect
to the Company, no information related to Tax matters has been requested by
any Tax Authority, and no notice indicating an intent to open an audit or
other review has been received by the Company from any Tax Authority. The
Company has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
4.8 Contracts and Commitments.
-------------------------
4.8.1 Company Material Contracts The Disclosure Schedule sets forth a
--------------------------
complete and accurate list of (and, other than documents filed as exhibits
to the SEC Filings, Purchaser has been provided complete and correct copies
of) any of the following contracts to which the Company is a party or by
which the Company is bound (each, a "Company Material Contract"):
(a) all written management, compensation, employment or other contracts
entered into with any executive officer, director or key employee of
the Company;
(b) all contracts under which the Company has any outstanding
indebtedness, obligation or liability for borrowed money or the
deferred purchase price of property or has the right or obligation to
incur any such indebtedness, obligation or liability, in each case in
an amount greater than $100,000 and in the aggregate more than
$1,000,000;
(c) all bonds or agreements of guarantee or indemnification under which
the Company acts as surety, guarantor or indemnitor with respect to
any obligation (fixed or contingent) in an individual amount or
potential amount greater than $100,000 or in the aggregate more than
$1,000,000;
(d) all noncompete or similar agreements;
(e) all partnership and joint venture agreements;
15
<PAGE>
(f) all agreements relating to material acquisitions or dispositions of
any business or product line;
(g) all insurance policies currently in effect and covering the Company,
its operations or personnel;
(h) all bonus, profit sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or
other employee benefit agreements, trusts, plans, funds or other
arrangements for the benefit or welfare of any director, officer or
employee of the Company;
(i) all agreements pursuant to which the Company has agreed to pay any
rebates;
(j) all private label agreements with any of the Company's customers;
(k) all supply agreements with any of the Company's suppliers including
co-packers, together with any modification thereof or subsequent
agreement related thereto; and
(l) all agreements, together with any modification thereof or subsequent
agreement related thereto, pursuant to which the Company has licensed
from, or to, a third party any product formulations, inventions, trade
secrets, know-how, trademarks, trademark registrations, trade names,
copyrights or other intellectual property that are material,
individually or in the aggregate, to the Company.
The term Company Material Contract does not include any purchase
orders having a duration of one year or less for products, services or
inventory issued or received in the ordinary course of business.
4.8.2 No Default. The Company is not in default under the terms of any
----------
Company Material Contract in a manner that permits the other party to
adversely alter or terminate any rights of the Company or to collect
damages, that would either individually or in the aggregate, have a
Material Adverse Effect on the Company. To the Knowledge of the Company,
(a) no other party thereto is in default in any material respect under the
terms of any Company Material Contract and (b) each Company Material
Contract is valid, binding and enforceable in accordance with its terms.
The Company has not assigned any of its rights or obligations under any
Company Material Contract, nor received any notice of termination with
respect to any Company Material Contract.
4.9 Trademarks, Patents. The Company owns all material product formulations,
-------------------
inventions, trade secrets, know-how, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights and
other
16
<PAGE>
intellectual property necessary for the conduct of its business, including
any of the foregoing described in its Annual Report on Form 10-K for the
year ended December 31, 1998, as supplemented in the Disclosure Schedule.
The Company has not received any notice of, and has no Knowledge of, any
infringement of or conflict with the Company's rights by third parties with
respect to any product formulations, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights or other intellectual
property. The Company has not received any notice of, and has no Knowledge
of, any infringement of or conflict with rights of third parties with
respect to any product formulations, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights or other intellectual
property that, either individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would be material to the
business of the Company.
4.10 Litigation, Etc. There are no Actions pending or, to the Company's
----------------
Knowledge, threatened against the Company with respect to the Company's
business that if adversely determined, would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on
the Company. The Company is not subject to any judgment, order or decree
of any Government Entity that in any of such cases would reasonably be
expected to have, either individually or in the aggregate, a Material
Adverse Effect on the Company.
4.11 Insurance Coverage. The Company has in full force and effect the insurance
------------------
policies listed in the Disclosure Schedule. Such policies will not
terminate or otherwise materially be affected solely as a result of
consummation of the Transactions.
4.12 Labor Relations. There is no pending or, to the Company's Knowledge,
---------------
threatened strike, slowdown, work stoppage, lockout or other collective
labor action affecting the Company or efforts to unionize the Company's
employees.
4.13 Compliance with Laws.
--------------------
4.13.1 General. The Company has not violated any Laws, which violation
-------
has had or would reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on the Company, and the Company
has no Knowledge of any such violation.
4.13.2 Environmental and Safety Matters. Neither the Company nor, to
--------------------------------
Company's Knowledge, any Third Party, has disposed of, released or caused
any contamination by any Hazardous Materials on or about any properties at
any time owned, leased or occupied by the Company that in any of such cases
would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on the Company. To the Company's
Knowledge, it
17
<PAGE>
has not disposed of any materials at any site that could be expected to
require remediation or that is being investigated or remediated for
contamination or possible contamination of the environment. To the
Company's Knowledge, it has conducted its business in compliance with all
applicable Environmental and Safety Requirements. Company has no Knowledge
of any notice of any investigation, claim or proceeding against Company
relating to any Environmental and Safety Requirements or to Hazardous
Materials and, to the Company's Knowledge, the Company has not taken any
action that would reasonably be expected to involve Company in any
environmental litigation, proceeding, investigation or claim or impose any
environmental liability upon Company.
4.13.3 Governmental Authorizations and Regulations. The Company holds all
-------------------------------------------
governmental licenses, permits and other authorizations necessary for its
business, except where the failure to hold the same would not reasonably be
expected to have, either individually or in the aggregate, a Material
Adverse Effect on the Company. Such governmental licenses, permits and
other authorizations are valid and sufficient in all material respects for
all business presently carried on by the Company, and, to the Company's
Knowledge, there is no threatened suspension, cancellation or invalidation
of any such license, permit or other authorization, that, if suspended,
cancelled or invalidated, would reasonably be expected, either individually
or in the aggregate, to have a Material Adverse Effect on the Company.
4.14 Affiliated Transactions. To the Company's Knowledge, and except as
-----------------------
disclosed in the SEC Filings, no Affiliate of the Company or any director,
officer or key employee of the Company, or any individual related by blood
or marriage to any such Person, or any entity in which, to the Company's
Knowledge, any such Person, directly or indirectly, owns any material
beneficial interest, is a party to any material contract, transaction or
proposed transaction with the Company or has any material interest in any
property necessary for the Company's operations.
4.15 Brokers. The Company has not employed any broker or finder or incurred any
-------
liability for any brokerage fees, commissions, or finder's fees in
connection with the Transactions, except that SSB has been employed as
financial advisor to the Company.
4.16 ERISA; Employee Benefits.
------------------------
(a) Type of Employee Benefit Plans. Except as set forth on the Disclosure
------------------------------
Schedule, the Company neither maintains, contributes to nor has any
liability or potential liability with respect to (i) any employee
benefit plan (as defined in Section 3(3) of ERISA), or (ii) any other
plan, program, policy, practice, arrangement or contract providing
benefits or payments to current or former employees (or to their
beneficiaries or dependents) of
18
<PAGE>
the Company, including any bonus plan, plan for deferred compensation,
nonqualified retirement plan, equity or stock-based incentive plan,
severance plan, employee health or other welfare benefit plan or other
arrangement. For purposes of this Section 4.16(a), the "Company" will
be deemed to include any entity required to be aggregated in a
controlled group or affiliated service group with the Company for
purposes of ERISA or the Code (including under Section 414(b), (c),
(m) or (o) of the Code or Section 4001 of ERISA), at any relevant
time. For purposes of this Agreement, each such item listed on the
Disclosure Schedule is a "Benefit Plan".
(b) Qualified Plans. Each Benefit Plan that is intended to be qualified
---------------
within the meaning of Section 401(a) of the Code (i) has received a
determination from the Internal Revenue Service (the "IRS") that such
Benefit Plan is qualified under Section 401(a) of the Code, and, to
the Knowledge of the Company, nothing has occurred since the date of
such determination that could adversely affect the qualification of
such Benefit Plan, or (ii) is within the remedial amendment period for
requesting such determination letter.
(c) No Liability, etc. The Company has no liability or potential
------------------
liability with respect to (i) any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) that is subject to
Section 302 of ERISA and Section 412 of the Code or (ii) any Multi-
Employer Plan. The Company has complied in all material respects with
the health care continuation requirements of Part 6 of Subtitle B of
Title I of ERISA and Section 4980B of the Code ("COBRA"); and the
Company has no obligation under any Benefit Plan or otherwise to
provide post employment health or life insurance benefits to current
or former employees of the Company or to any other person, except as
specifically required by COBRA. No Benefit Plan provides severance
benefits to any current or former employees.
(d) Change in Control Payments. None of the Benefit Plans obligates the
--------------------------
Company to pay any separation, severance, termination or similar
benefit, or accelerate any option or vesting schedule, solely as a
result of a change of control or ownership within the meaning of any
Benefit Plan or Section 280G of the Code. All change-in-control
payments are listed on the Disclosure Schedule.
(e) Compliance With Laws. Each Benefit Plan and any related trust,
--------------------
insurance contract or fund has been maintained, funded and
administered in compliance in all material respects with its
respective terms and with all applicable Laws including ERISA and the
Code. There are no pending or, to the Knowledge of the Company,
threatened actions, suits, investigations or claims with respect to
any Benefit Plan.
19
<PAGE>
No employee of the Company is a "leased employee" as defined in
Section 414(n) of the Code.
(f) Payments Made. With respect to each Benefit Plan, all required or
-------------
recommended (in accordance with historical practices) payments,
premiums, contributions, reimbursements or accruals for all prior
periods (or partial periods) have been made or properly accrued. None
of the Benefit Plans has any unfunded liabilities which have not been
property accrued.
(g) Disability; Leaves of Absence. No current or former employee of the
-----------------------------
Company (i) is eligible for long-term disability or short-term
disability benefits, (ii) is on an approved leave of absence or (iii)
is receiving or has filed a claim for workers' compensation benefits.
The Disclosure Schedule includes all material claims for worker's
compensation benefits.
4.17 Required Vote of Company Stockholders The affirmative vote of the holders
-------------------------------------
of a majority of the outstanding shares of the Company's Common stock is
required to adopt this Agreement. No other vote of the stockholders of the
Company is required by law, the Certificate of Incorporation or By-Laws or
otherwise in order for the Company to consummate the Merger and the
Transactions.
4.18 State Takeover Laws. The Company's Board has, to the extent such statute
-------------------
is applicable, taken all action (including appropriate approvals of the
Company's Board) necessary to exempt the Purchaser and Merger Sub and their
respective affiliates, the Merger, this Agreement, the Transactions, and
the Support Agreements from Section 203 of the DGCL. To the Knowledge of
the Company, no other state takeover statutes are applicable to the Merger,
this Agreement, or the Transactions.
5. Representations And Warranties Of Purchaser
-------------------------------------------
Purchaser represents and warrants to the Company as follows:
5.1 Organization. Purchaser is a corporation duly organized, validly existing,
------------
and in good standing under the Laws of the State of Delaware. Merger Sub
is a corporation duly organized, validly existing, and in good standing
under the Laws of the State of Delaware.
5.2 Authority. Each of Purchaser and Merger Sub has the requisite corporate
---------
power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by
Purchaser and Merger Sub of this Agreement and the Transactions have been
duly authorized by all necessary corporate action and no other corporate
proceedings on either of their part are necessary to authorize the
execution,
20
<PAGE>
delivery or performance of this Agreement by Purchaser or Merger Sub. This
Agreement constitutes the valid and binding agreement of Purchaser.
5.3 Effect of Agreement. The execution, delivery and performance of this
-------------------
Agreement and the consummation of the Transactions, including the making of
the Offer by Purchaser and Merger Sub, will not constitute a breach or
violation of or a default under (a) the charter documents or the bylaws of
Purchaser or Merger Sub; (b) any applicable Law; (c) any judgment, decree,
order, governmental permit or license binding on Purchaser or Merger Sub;
or (d) any indenture, agreement or instrument to which Purchaser or Merger
Sub is subject, other than, in the case of (a) through (d) above, a breach,
violation or default that would not reasonably be expected to prevent,
materially hinder or make materially more burdensome the consummation by
Purchaser or Merger Sub of the Transactions. The consummation by Purchaser
and Merger Sub of the Transactions will not require the consent or approval
of or filing with any Government Entity or other Third Party, except for
(i) applicable requirements, if any, of the Exchange Act, the Securities
Act and the securities Laws of the various jurisdictions in which holders
of Shares reside, (ii) the filing of the Merger Certificate and related
requirements pursuant to the DGCL, (iii) any filings and approvals required
under the HSR Act, and (iv) applicable requirements, if any, of the Code
and state, local and foreign Tax Laws. In addition, the foregoing sentence
is qualified to the extent that the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not (w) prevent or delay consummation of the
Transactions in any material respect, (x) otherwise prevent Purchaser from
performing its obligations under this Agreement in any material respect,
(y) reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on Purchaser, or (z) the failure to
obtain such consent or approval or make such filing would prevent,
materially hinder or make materially more burdensome the consummation of
the Transactions.
5.4 Financing. Purchaser has adequate liquid resources to pay the Merger
---------
Consideration and the amounts necessary to cancel the Equity Derivatives as
contemplated by this Agreement without recourse to Third Party financing
(other than existing definitive financial arrangements that are not
conditional upon due diligence by such Third Parties with respect to the
Company).
6. Covenants
---------
6.1 Conduct of Business of the Company. During the period from the date of
----------------------------------
this Agreement to the Effective Time, except as specifically contemplated
by this Agreement or as described on the Disclosure Schedule, or as
otherwise approved by Purchaser, the Company will at all times (a) conduct
its business in a manner such that at the Effective Time, the closing
conditions in Section 8 will be met, including the continued truth and
accuracy of the
21
<PAGE>
representations and warranties set forth herein, and (b) comply at all
times with the following covenants.
6.1.1 Ordinary Course; Preserve Relationships. The Company will conduct
---------------------------------------
its business only in the usual and ordinary course and in compliance with
this Agreement, and use commercially reasonable efforts to: (a) maintain,
preserve and renew all customer and supplier (including co-packer)
relationships, material contracts, licenses, authorizations and permits
necessary to the conduct of its business; (b) keep available the services
of key employees; (c) preserve the goodwill of those having business
relationships with it; and (d) pay and otherwise satisfy its obligations
within the time periods required by the Company's contractual obligations.
6.1.2 Insurance. The Company will continue the Insurance Policies in
---------
full force.
6.1.3 Taxes and Liens. The Company will pay and discharge when payable
---------------
all (a) Taxes imposed upon its properties or upon the income or profits
therefrom (in each case before the same becomes delinquent and before
penalties accrue thereon) and (b) material claims for labor, materials or
supplies that if unpaid might by Law become a Lien upon any of its
property, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with GAAP) have been established on its books with
respect thereto. The Company will not and will not agree to commit or make
any material Tax election or take any position on any Tax Return filed on
or after the date of this Agreement or adopt any method therefore that is
inconsistent with elections made, positions taken or methods used in
preparing or filing similar Tax Returns in prior periods in each case
without the prior consent of Purchaser, such consent not to be unreasonably
withheld.
6.1.4 Contracts and Laws. The Company will (a) comply with all other
------------------
obligations that it presently has and all other obligations that it incurs
pursuant to any Company Material Contract, as such obligations become due,
unless and to the extent that the same are being contested in good faith
and by appropriate proceedings and adequate reserves (as determined in
accordance with GAAP) have been established on its books with respect
thereto and (b) comply in all material respects with all applicable Laws.
6.1.5 Acquisition; Consolidation; Reorganization; Sale of Assets. The
----------------------------------------------------------
Company will not and will not agree or commit to: (a) merge or consolidate
with any Person or acquire, directly or indirectly through Subsidiaries,
assets (other than in the ordinary course of business); (b) liquidate,
dissolve or effect a reorganization in any form of transaction; or (c)
sell, lease, transfer or otherwise dispose of any of its properties or
assets, except in the ordinary
22
<PAGE>
course of business consistent with past practice or, in the case of events
described under clauses (a), (b) or (c) above, as permitted under Section
6.6.
6.1.6 Limitations on Indebtedness; Investments; Contracts; etc. The
--------------------------------------------------------
Company will not: (a) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any other Person,
other than under the Company's existing credit line listed in the
Disclosure Schedule; (b) make any loans, advances, or capital contributions
to, or investments in any other Person (other than advances to employees,
and the maintenance of its cash reserves, in the ordinary course of
business consistent with past practice); (c) enter into any contract that
would be a Company Material Contract other than in the ordinary course of
business consistent with past practice; (d) make any capital expenditures
or purchases of fixed assets that are not currently budgeted and that in
the aggregate exceeds $250,000; (e) terminate or amend in any material
respect any Company Material Contract other than as required in the
Company's ordinary course of business; or (f) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited hereunder.
6.1.7 Amendment to the Company's Certificate of Incorporation and Bylaws.
------------------------------------------------------------------
The Company will not amend its Certificate of Incorporation or Bylaws in
any manner.
6.1.8 Equity Issuances. Except as expressly contemplated by this
----------------
Agreement, the Company will not (a) authorize, issue or enter into any
contract providing for the issuance (contingent or otherwise) of, any
capital stock or other Equity Derivatives; (b) enter into any contract with
respect to the purchase or voting of shares of its capital stock or Equity
Derivatives; (c) adjust, split, combine, reclassify or amend any material
term of its Shares; or (d) make any other changes in its capital structure.
6.1.9 Dividends. The Company will not declare, set aside, pay or make any
---------
dividend or other distribution or payment (whether in cash, stock or
property) with respect to, or purchase or redeem, any capital stock or
Equity Derivatives.
6.1.10 Accounting Policies. The Company will not take, agree or commit to
-------------------
take or fail to take any action with respect to accounting policies or
procedures that are inconsistent with past practice (other than in the
ordinary course of business or as required by changes in GAAP.
6.1.11 Litigation. The Company will not, without the consent of Purchaser
----------
settle or compromise, or agree or commit to settle or compromise, any suit
or claim or threatened suit or claim (including any claim of the type
referred to in Section 3.4) for an amount that individually or when
aggregated with all
23
<PAGE>
settlements occurring during the term of this Agreement would exceed $1
million.
6.1.12 Other Actions. The Company will not take, agree or commit to take
-------------
or fail to take any action that would result in any of the representations
and warranties of the Company contained herein being untrue or any of the
Company's covenants to be breached (a) as of the date of such action or
inaction or (b) as of the Effective Time.
6.2 Access and Information.
----------------------
6.2.1 Company Records. Subject to applicable Laws and fiduciary and
---------------
privacy obligations, the Company will permit Purchaser, Merger Sub and
their respective representatives to have reasonable access during normal
business hours, upon reasonable notice, to all of the Company's properties,
books, records, Tax Returns, and all other information with respect to the
Company's business as Purchaser may from time to time reasonably request,
and to discuss the Company's business with the Company's directors,
officers, employees, accountants, counsel, suppliers (including co-
packers), customers, and creditors, as Purchaser reasonably considers
necessary or appropriate in connection with the Transactions. Any such
investigation will be conducted in such manner as not to interfere
unreasonably with the operation of the business of the Company. No
investigation pursuant to this Section 6.2.1 or otherwise will affect or be
deemed to modify any representations or warranties made in this Agreement
or the conditions to the obligations of the parties to consummate the
Merger.
6.2.2 Confidential Information. Notwithstanding any provision in this
------------------------
Agreement to the contrary, all Confidential Information will be treated by
each of Purchaser, Merger Sub and the Company as set forth in the
Confidentiality Agreement, which will remain in full force and effect.
6.3 Certain Filings, Consents and Arrangements.
------------------------------------------
6.3.1 Consents. Purchaser, Merger Sub and the Company will use their
--------
commercially reasonable efforts to obtain any necessary consents, permits,
authorizations, approvals and waivers to permit the consummation of the
Transactions.
6.3.2 Filings. Purchaser, Merger Sub and the Company will cooperate with
-------
one another (a) in promptly determining whether any filings are required to
be made or consents, approvals, permits or authorizations are required to
be obtained under any Law from other parties in connection with the
consummation of the Transactions and (b) in promptly making any such
filings, furnishing information required in connection therewith and
seeking timely to obtain any such consents, permits, authorizations,
approvals or waivers.
24
<PAGE>
6.4 Hart-Scott-Rodino. Each party will as promptly as practicable and
-----------------
in any event within five business days from the date of this Agreement make
all filings necessary under the HSR Act to obtain any required regulatory
approvals of the Transactions. Each party will use its commercially
reasonable efforts to resolve such objections, if any, as the Anti-Trust
Division of the Department of Justice or the Federal Trade Commission
assert with respect to the Transactions. Notwithstanding any other
provision of this Agreement, in connection with seeking any approval of a
Governmental Entity relating to this Agreement or the consummation of the
Transactions, without the other party's prior written consent, neither
party will, and neither party will be required to, commit to any
divestiture transaction, agree to sell or hold separate, before or after
the Effective Time, any of its businesses, product lines, properties or
assets, in any such case, if such divestiture or such restrictions in the
operation of such businesses, product lines, properties or assets, would,
individually or in the aggregate, be reasonably expected to affect any
material portion of the Company's business or assets after giving effect to
the Merger or give rise to any of the effects described in Section 4(b) of
Exhibit B.
6.5 Press Releases. Each of the parties agrees that it will not, nor will any
--------------
of its respective Affiliates, issue or cause the publication of any press
release or other public announcement with respect to the Offer, the Merger,
this Agreement or the Transactions without the prior approval of the other
party, except such disclosure as may be required by Law or by any listing
agreement with NASDAQ or the New York Stock Exchange. If any such
disclosure is so required, such disclosure will not be made without a good
faith effort to confer with the other parties to this Agreement in advance
of, and with respect to the substance of, such disclosure.
6.6 Non-Solicitation. The Company will not, directly or indirectly, through
----------------
any subsidiary, officer, director, employee, financial advisor,
representative or agent
(a) solicit, initiate, or encourage any Acquisition Proposal;
(b) except as permitted by clause (c) below, engage in negotiations or
substantive discussions with any Third Party concerning, provide any
non-public information to any person or entity relating to, or take
any other action to facilitate inquiries or the making or any proposal
that constitutes, an Acquisition Proposal; or
(c) enter into any agreement with respect to any Acquisition Proposal;
provided, however, that nothing contained in this Section 6.6 will
-----------------
prevent the Company or the Company's Board from furnishing, at any
time before the closing of the Offer, non-public information to, or
entering into discussions or negotiations with, any Third Party in
connection with an
25
<PAGE>
unsolicited bona fide written proposal for an Acquisition Proposal by
such Third Party, if and only to the extent that the Company Board
determines after consultation with counsel that doing so is required
by its fiduciary duties to its stockholders, and
(i) such Third Party has made a written proposal to the Company's
Board to consummate an Acquisition Proposal, which proposal identifies
a price or range of values to be paid for the outstanding securities
or substantially all of the assets of the Company,
(ii) the Company's Board determines in good faith, after consultation
with its advisors (including SSB), that such Acquisition Proposal is
reasonably capable of being completed on substantially the terms
proposed, and would, if consummated, result in a transaction that
would provide greater value to the holders of the Shares than the
transaction contemplated by this Agreement (and any revised proposal
made by Purchaser, if any) (a "Superior Proposal"), and
(iii) before furnishing such non-public information to, or entering
into discussions or negotiations with, such person or entity, the
Company's Board receives from such Person an executed confidentiality
and standstill agreement with material terms in the aggregate no less
favorable to such person than those contained in the Confidentiality
Agreement.
6.6.1 Notice of Acquisition Proposal. The Company will notify Purchaser
------------------------------
promptly, and in any event within twenty-four hours, after receipt by the
Company, or to the Company's Knowledge, the receipt by any of its advisors,
of any Acquisition Proposal or any request for non-public information in
connection with an Acquisition Proposal or for access to the properties,
books or records of the Company by any Person that informs such party that
it is considering making or has made an Acquisition Proposal. The Company
will keep Purchaser informed on a current basis of the status of any such
Acquisition Proposal or request for non-public information.
6.6.2 Board Approval.
--------------
(a) Company Prohibitions. Except as permitted by clause (b) below,
--------------------
neither the Company's Board nor any committee thereof will: (a)
withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Purchaser, the approval or recommendation by the Company's
Board or any such committee of this Agreement or the Merger; (b)
approve or cause the Company to enter into an Acquisition Agreement;
or (c) approve or recommend, or propose to publicly approve or
recommend, any Acquisition Proposal.
26
<PAGE>
(b) Exception for Superior Proposal. Notwithstanding anything to the
-------------------------------
contrary appearing in this Agreement, if the Company has received a
Superior Proposal, the Company's Board may, to the extent that the
Company's Board determines, after consultation with counsel, that
doing so is required by its fiduciary duties to its stockholders,
before the closing of the Offer terminate this Agreement pursuant to
Section 9.2.4, but only at a time that is more than five days
following receipt by Purchaser of written notice advising Purchaser
that the Company's Board is prepared to accept such Superior Proposal,
specifying the material terms and conditions of such Superior
Proposal, and identifying the Third Party making such Superior
Proposal.
6.6.3 Board Recommendation. Nothing contained in this Section 6 will
--------------------
prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Securities
Exchange Act or from making any disclosure to the Company's stockholders if
such disclosure is required by the Company's Board's fiduciary duties to
its stockholders, as concluded by the Company's Board in good faith after
consultation with its advisors.
6.6.4 Other Confidential Agreements. During the period from the date of
-----------------------------
this Agreement through the Effective Time, the Company shall not terminate,
amend, modify or waive any provision of any confidentiality, standstill or
similar agreement to which it or any of its Subsidiaries is a party and
which relates to any transaction that could constitute an Acquisition
Proposal or that has as a counterparty any Person making an Acquisition
Proposal.
6.7 Notice of Claims. The Company shall promptly notify Purchaser of any
----------------
actions, suits, claims, investigations or proceedings commenced or, to the
Knowledge of the Company, threatened against, relating to or involving or
otherwise affecting the Company which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 4.10 or which relate to the consummation of the Transactions. In
addition, the Company shall promptly notify Purchaser of (a) (i) it
becoming aware of any fact or event which would be reasonably likely to
demonstrate that any of its representations or warranties contained in this
Agreement was or is untrue or inaccurate in any material respect as of the
date of this Agreement or (ii) the occurrence of non-occurrence of any fact
or event which would be reasonably likely to cause any material covenant,
condition or agreement of the Company under this Agreement not to be
complied with or satisfied in all material respects and (b) the Company's
failure to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder in any material respect;
provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the
obligations of any party hereunder.
27
<PAGE>
6.8 Additional Agreements. Each party will take, or cause to be taken, all
---------------------
actions and promptly to do, or cause to be done, all things reasonably
necessary, proper or advisable to consummate the Transactions.
7. Purchaser Covenants
-------------------
7.1 Indemnification and Insurance.
-----------------------------
7.1.1 Indemnification. From and after the Effective Time, Purchaser will
---------------
cause the Surviving Corporation to indemnify, defend and hold harmless, to
the fullest extent that the Company would be required under its presently
existing Certificate of Incorporation, presently existing bylaws and any
applicable Laws, each Person who is now or was before the date hereof an
officer or director of the Company (individually, an "Indemnified Party"
and collectively, the "Indemnified Parties"), against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees),
judgments, fines, penalties and amounts paid in settlement in connection
with any Action arising out of or pertaining to acts or omissions, or
alleged acts or omissions, by them in their capacities as such occurring at
or before the Effective Time. Any Indemnified Party wishing to claim
indemnification will promptly notify the Surviving Corporation thereof
(provided that failure to so notify the Surviving Corporation will not
affect the obligations of the Surviving Corporation except to the extent
that the Surviving Corporation is materially prejudiced as a result of such
failure). With respect to any Action for which relief under this Section
7.1.1 is requested, the Surviving Corporation will be entitled to
participate therein at its own expense and, except as otherwise provided
below, to the extent that it may wish, the Surviving Corporation may assume
the defense thereof, with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Surviving Corporation to the
Indemnified Party of its election to assume the defense of an Action, the
Surviving Corporation will not, during the period that such defense is
being actively maintained, be liable to the Indemnified Party for any legal
or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof, other than as provided below. The
Surviving Corporation will not settle any Actions without the consent of
the Indemnified Party where such settlement includes an admission of civil,
criminal or administrative liability, or censure or sanction on behalf of
an Indemnified Party or requires any payment to be made by the Indemnified
Party. The Indemnified Party will have the right to employ counsel in any
Action, but the fees and expenses of such counsel incurred after notice
from the Surviving Corporation of its assumption of the defense thereof
will be at the expense of the Indemnified Party unless (a) the employment
of counsel by the Indemnified Party has been authorized by the Surviving
Corporation in writing; (b) the Indemnified Party has reasonably concluded
upon the advice of counsel that there may be a conflict of interest between
the Indemnified Party and the Surviving Corporation in the conduct of the
defense of an Action; or (c) the Surviving Corporation has not in fact
employed counsel to assume
28
<PAGE>
the defense of an Action. In each of the foregoing cases the reasonable
fees and expenses of counsel selected by the Indemnified Party will be at
the expense of the Surviving Corporation. Notwithstanding the foregoing,
the Surviving Corporation will not be liable for any settlement effected
without its written consent, which will not be unreasonably withheld,
conditioned or delayed, and the Surviving Corporation will not be obligated
pursuant to this Section 7.1.1 to pay the fees and disbursements of more
than one counsel (in addition to any local counsel) for all Indemnified
Parties in any single Action, except to the extent two or more of such
Indemnified Parties have conflicting interests in the outcome of such
action.
7.1.2 Insurance. For a period of six years after the Effective Time, the
---------
Surviving Corporation will maintain officers' and directors' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's existing officers' and directors' liability insurance policies on
terms substantially no less advantageous to the Indemnified Parties than
such existing insurance. The Surviving Corporation will not, however, be
required, in order to maintain or procure such coverage, to pay premiums on
an annualized basis in excess of 200% of the current annual premium paid by
the Company for its existing coverage (the "Cap"). If equivalent coverage
cannot be obtained, or can be obtained only by paying an annual premium in
excess of the Cap, the Surviving Corporation will only be required to
obtain as much coverage as can be obtained by paying premiums on an
annualized basis equal to the Cap.
7.1.3 Survival. The provisions of this Section 7.1 will survive the
--------
consummation of the Merger and expressly are intended to benefit each of
the Indemnified Parties. They are in addition to, and not in replacement or
waiver of, any other rights or remedies any Indemnified Person may have
under Law, contract, or otherwise.
7.2 Employee Compensation Arrangements.
----------------------------------
7.2.1 Purchaser Will Honor. Purchaser and Merger Sub will honor all
--------------------
legally imposed obligations relating to employment matters. Purchaser and
Merger Sub intend to cause the Surviving Corporation to provide benefits to
employees of the Surviving Corporation that are no less favorable in the
aggregate to such employees than those in effect on the date hereof and
listed on the Disclosure Schedule (other than the stock based compensation
plans). Nothing herein will obligate Purchaser to provide such employees
with any stock based compensation (including stock options or stock
appreciation rights) after the Effective Time. The foregoing will not limit
or restrict the right of the Surviving Corporation to terminate the
employment of such employees or subsequently to modify the benefits or
other terms of employment of such employees, to the extent permitted by
applicable Law.
29
<PAGE>
7.2.2 Audit of 1999 Plan. Purchaser will engage Arthur Andersen, the
------------------
Company's independent accountants, to conduct an audit of the Company's
financial statements (in accordance with GAAP) for the fiscal year ending
December 31, 1999 for purposes of calculating payments owing under the 1999
Bonus Plan, as in effect and disclosed on the Disclosure Schedule (the
"Plan"). Purchaser will pay the Company's employees 1999 annual bonuses as
soon as possible after such accountants deliver their audit opinion
regarding the Company's 1999 financial statements based upon such financial
statements.
7.2.3 Years of Credit. All service credited to each employee by the
---------------
Company through the Effective Time will be recognized by Purchaser for
purposes of eligibility and vesting (but not for level or accrual of
benefits) under any employee benefit plan provided by the Surviving
Corporation or Purchaser for the benefit of employees in which such
employees of the Company participate.
7.2.4 Cooperation. The Company and Purchaser will cooperate in good faith
-----------
in (a) communicating with Company employees with regard to the Merger and
any personnel or employee benefits matters related thereto and (b)
facilitating any necessary transitions in connection with the Merger with
respect to Company benefit plans, payroll administration, or similar
matters.
8. Conditions
----------
8.1 Conditions to the Obligations of Purchaser, Merger Sub and the Company.
----------------------------------------------------------------------
The obligations of Purchaser, Merger Sub and the Company to consummate the
Merger are subject to the satisfaction, at or before the Effective Time, of
each of the following conditions:
8.1.1 Stockholder Approval. The stockholders of the Company must have
--------------------
duly adopted this Agreement and approved the Merger, if required by
applicable Law.
8.1.2 No Injunction. The consummation of the Merger must not have been
-------------
precluded by any order or injunction of a court of competent jurisdiction,
and there must not have been any Law enacted, promulgated or deemed
applicable to the Merger by any Government Entity, that makes consummation
of the Merger illegal.
8.2 Conditions to the Obligations of Purchaser and Merger Sub. The obligations
---------------------------------------------------------
of Purchaser and Merger Sub to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of the following additional
conditions:
30
<PAGE>
8.2.1 Performance by the Company. The Company must have performed in all
--------------------------
material respects the covenants and agreements set forth herein to be
performed by it at or before the Effective Time.
8.2.2 Representations and Warranties. The representations and warranties
------------------------------
of the Company in this Agreement that are qualified as to materiality must
be true and correct and representations and warranties that are no so
qualified, taken together, must be true and correct in all material
respects, in each case, as though made on the Effective Date (except for
such representations and warranties made as of a specific date, which must
be true and correct as of such date) with the same force and effect as
though made on and as of such date.
8.2.3 Material Adverse Change. There must not have occurred after the
-----------------------
completion of the Offer any material adverse change in the condition
(financial or otherwise), results of operations, business, prospects or
contractual rights of the Company, except for such changes that are caused
by the Company's compliance with the terms of this Agreement and the Offer
or that are contemplated hereby.
8.2.4 No Injunction, Etc. No Action shall have been commenced after
-------------------
completion of the Offer that (a) in the opinion of Purchaser's counsel is
more likely than not to be successful, and (b) either (i) seeks an
injunction, a restraining order or any other order seeking to prohibit,
restrain, invalidate or set aside consummation of the Merger or (ii) if
successful, would reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on the Company, Purchaser or the
Surviving Corporation.
8.2.5 No Material Adverse Effect. From the date of this Agreement through
--------------------------
the Effective Time, there shall not have been any condition, event or
occurrence that has resulted in, or that would reasonably be expected to
result in, either individually or in the aggregate, a Material Adverse
Effect on the Company.
8.2.6 Consents. The Company must have obtained all material consents,
--------
waivers, approvals, authorizations or orders and made all filings required
in connection with the authorization, execution and delivery of this
Agreement by the Company and the consummation by it of the Transactions,
and all applicable notice periods shall have expired.
8.2.7 Equity Derivatives. The Company must have taken any action
------------------
necessary to provide that Equity Derivatives will be treated as provided in
Section 3.3.5.
8.2.8 Company Certificate. The Company must have delivered to Purchaser
-------------------
and Merger Sub a certificate, as of the Effective Time, executed by
31
<PAGE>
a senior executive officer of the Company, to the effect that to the best
of such officer's Knowledge the conditions set forth in Section 8.1 have
been fulfilled.
8.3 Condition to the Company's Obligation. The obligation of the Company to
-------------------------------------
consummate the Merger is subject to the satisfaction, at or before the
Effective Time, of the following additional conditions:
8.3.1 Performance by Purchaser's Merger Sub. Purchaser and Merger Sub
-------------------------------------
must have performed in all material respects the covenants and agreements
set forth herein to be performed by them at or before the Effective Time.
8.3.2 Representations and Warranties. The representations and warranties
------------------------------
of Purchaser and Merger Sub set forth in this Agreement that are qualified
as to materiality must be true and correct and representations and
warranties that are not so qualified, taken together, must be true and
correct in all material respects, in each case, as though made on the
Effective Date (except for such representations and warranties made as of a
specific date, which must be true and correct as of such date) with the
same force and effect as though made on and as of such date.
8.3.3 Purchaser and Merger Sub Certificates. Purchaser and Merger Sub
-------------------------------------
must have each delivered to the Company a certificate, dated the date of
the Effective Time and executed in each case by, a senior executive officer
thereof, to the effect that to the best of such officer's Knowledge the
conditions set forth in this Section 8 required to be met by such officer's
corporation have been fulfilled.
9. Termination; Payments
---------------------
This Agreement can be terminated before the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company), only as
set forth in this Section 9.
9.1 Mutual Consent. By the mutual consent of Purchaser, Merger Sub and the
--------------
Company.
9.2 By Purchaser or Company.
-----------------------
9.2.1 Material Breach. By Purchaser or the Company if there has been any
---------------
material breach of any representation, warranty, covenant or agreement set
forth in this Agreement on the part of the non-terminating party, which
breach will cause the conditions set forth in Section 8.1 or Section 8.3
(in the case of the Company) Section 8.1 or Section 8.2 (in the case of
Purchaser) not to be satisfied, and the same shall not have been cured (if
reasonably capable of cure) within five days after notice to the party in
breach.
32
<PAGE>
9.2.2 Expiration. By Purchaser or the Company if the Merger has not been
----------
consummated by June 30, 2000 (but this Section 9.2.2 will not be available
to any party whose breach results in failure of the Merger to be
consummated by such time).
9.2.3 Governmental Prohibition. By Purchaser or the Company if any
------------------------
Government Entity has issued a final order, decree or ruling or taken any
other final action restraining, enjoining or otherwise prohibiting the
consummation of the Offer or the Merger and such order, decree or ruling or
other action has become nonappealable.
9.2.4 Company Directors Withdrawal of Approval.
----------------------------------------
(a) By the Company. By the Company at any time before the closing of the
--------------
Offer, upon notice to Purchaser, if:
(i) under the circumstances permitted by Section 6.6 the Company's
Board has withdrawn, or modified in a manner materially adverse to
the Purchaser, approval or recommendation by the Company's Board of
this Agreement, the Offer or the Merger; or
(ii) concurrently with the execution of an Acquisition Agreement
under the circumstances permitted by Section 6.6 in connection with
a Superior Proposal, provided that such termination under this
clause (ii) will not be effective unless the Company and its Board
have complied with their obligations under Section 6.6 in connection
with such Superior Proposal.
(b) By Purchaser. By Purchaser upon notice to Company, if:
------------
(i) the Company's Board has failed to recommend or withdrawn, or
modified or publicly announced an intention to withdraw or modify in
a manner materially adverse to the Purchaser, approval or
recommendation by Company's Board of this Agreement, the Offer or
the Merger; or
(ii) the Company's Board approves, recommends or enters into any
Acquisition Proposal (including any Superior Proposal) or publicly
announced its intention to do so.
9.3 By Purchaser.
------------
9.3.1 Other Ownership. By Purchaser if another Person or Group acquires
---------------
beneficial ownership of Shares representing more than fifty percent of the
Shares.
9.3.2 Failure to Meet Offer Conditions. By Purchaser if it is not in
--------------------------------
breach of this Agreement and, because of a failure of any of the conditions
set forth on
33
<PAGE>
Exhibit B, Purchaser has: (a) failed to commence the Offer within the time
required by Regulation 14D under the Exchange Act; (b) terminated the Offer
without purchasing and Shares pursuant to the Offer; or (c) failed to
accept payment for the Shares pursuant to the Offer before April 30, 2000;
provided further that the applicable date pursuant to this Section 9.3.2
will also be extended to the extent that the Expiration Date of the Offer
is required to be extended by any rule, regulation, interpretation or
position of the SEC or its staff applicable to a modification to the Offer
by Purchaser in response to a Superior Proposal.
9.3.3 Minimum Condition. By Purchaser if the Offer terminates due to the
-----------------
failure of the Minimum Condition.
9.3.4 Failure of Stockholder Vote. By Purchaser if the stockholders of
---------------------------
the Company fail to approve the Merger and this Agreement at the Special
Meeting.
9.3.5 Breach of Section 6.6. By Purchaser if the Company or any of its
---------------------
Affiliates shall have materially and knowingly breached the covenants
contained in Section 6.6.
9.4 By the Company. By the Company, if the Company has not materially breached
--------------
any of its representations, warranties, covenants or agreements under this
Agreement, and Purchaser has: (a) failed to commence the Offer within the
time required by Regulation 14D under the Exchange Act; (b) terminated the
Offer without purchasing any Shares pursuant to the Offer; or (c) failed to
accept for payment Shares pursuant to the Offer before April 30, 2000;
provided further that the applicable date pursuant to this Section 9.4 will
also be extended to the extent that the Expiration Date of the Offer is
required to be extended by any rule, regulation, interpretation or position
of the SEC or its staff applicable to a modification to the Offer by
Purchaser in response to the Superior Proposal.
9.5 Termination Fees and Expense Payment.
------------------------------------
9.5.1 Immediate Payment.
-----------------
(a) Termination Fee and Expense Payment. If this Agreement is terminated
-----------------------------------
as contemplated by any of the items enumerated in this Section
9.5.1(a), the Company will within two business days of such
termination pay to Purchaser, by wire transfer in immediately
available funds, a fee of $5 million (the "Termination Fee") and an
amount (not to exceed $1 million to reimburse Purchaser for its
documented out of pocket expenses incurred in connection with the
Transactions (the "Expense Payment"). Terminations subject to this
Section 9.5.1(a) are under:
34
<PAGE>
(i) Section 9.2.1, if the Company has intentionally and willfully
committed a breach as contemplated thereby;
(ii) Section 9.2.4(a);
(iii) Section 9.2.4(b),
(iv) Section 9.3.1;
(v) Section 9.3.2, 9.3.3, or 9.3.4 if the Minimum Condition has not
been satisfied and either an Acquisition Proposal has been publicly
announced or the Company's Board has failed to recommend or has
withdrawn, or modified in a manner materially adverse to the Purchaser,
approval or recommendation by the Company's Board of this Agreement,
the Offer or the Merger; and
(vi) Section 9.3.5.
(b) Expense Payment Only. If Purchaser terminates this Agreement under
--------------------
Section 9.2.1 other than as contemplated by Section 9.5.1(a), the
Company will within two business days of such termination pay the
Expense Payment to Purchaser by wire transfer in immediately available
funds.
9.5.2 Deferred Payment. If this Agreement is terminated pursuant to
----------------
Section 9.3.2 because of a failure of any of the conditions set forth in
Sections 4(c), (d) or (e) of Exhibit B, and within one year of such
termination an Acquisition Agreement that would constitute an Acquisition
Proposal is entered into or consummated and if entered into such
transaction is subsequently consummated, the Company will pay Purchaser the
Termination Fee and the Expense Payment on the date such transaction is
consummated.
9.6 Effect of Termination. If this Agreement is terminated and abandoned, this
---------------------
Agreement, except for the provisions of Sections 6.2.2, 6.5, 9.5, 9.6,
10.1, 10.11, 10.13 and 10.14, will become void and have no effect, without
any liability on the part of any party or its affiliates, directors,
officers or stockholders. No termination of this Agreement will relieve
any party to this Agreement of liability for breach of this Agreement.
10. Miscellaneous
-------------
10.1 Expenses Generally. Except as provided in Sections 9 and 10.11, all costs
------------------
and expenses incurred in connection with this Agreement and the
Transactions will be paid by the party incurring such expenses, whether or
not the Offer or the Merger is consummated.
35
<PAGE>
10.2 Survival. The representations, warranties and agreements in this Agreement
--------
will survive any investigation made by any party, and the execution of
this Agreement but, other than those in Section 7, will not survive the
Merger.
10.3 Additional Documents and Acts. Each party will sign and deliver additional
-----------------------------
documents and instruments, and perform additional acts, as are
commercially reasonable and necessary to perform its obligations in this
Agreement.
10.4 Waiver and Amendment. Any provision of this Agreement can be waived at any
--------------------
time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement can be amended or supplemented at any
time, except that after adoption by the stockholders of the Company, no
amendment will be made that decreases the Per Share Amount or that in any
other way materially and adversely affects the rights of such stockholders
(other than a termination of this Agreement in accordance with terms)
without the approval of such stockholders.
10.5 Complete Agreement. Except for the Confidentiality Agreement, this
------------------
Agreement is the complete and exclusive statement of agreement of the
parties as to matters covered by it. It replaces and supersedes all prior
written or oral agreements or statements by and among the parties with
respect to the matters covered by it. No representation, statement,
condition or warranty not contained in this Agreement is binding on the
parties.
10.6 Governing Law. This Agreement is to be construed and enforced in
-------------
accordance with the internal Laws of the State of Delaware.
10.7 Waiver of Right to Jury Trial. EACH PARTY ON BEHALF OF ITSELF, ITS
-----------------------------
SUCCESSORS AND ASSIGNS, WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TRIAL BY JURY in any Action with respect to, in connection with, or
arising out of this Agreement or the validity, protection, interpretation,
collection or enforcement thereof. Notwithstanding anything contained in
this Agreement to the contrary, no claim may be made against any party for
any special, indirect or consequential damages in respect of any breach or
wrongful conduct (other than willful misconduct constituting actual fraud)
in connection with, arising out of or in any way related to this Agreement
or any of the Transactions, or any act, omission or event occurring in
connection therewith; and each party hereby waives, releases and agrees
not to sue upon any such claim for any such damages. THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND EACH PARTY ACKNOWLEDGES
THAT THE OTHER PARTIES WOULD NOT ENTER INTO THIS AGREEMENT IF THIS SECTION
WERE NOT PART OF THIS AGREEMENT.
10.8 Notices, etc. All notices, consents, waivers, supplements and amendments
------------
(including other communications required or permitted) under this
Agreement
36
<PAGE>
must be in writing. Deliveries required under this Agreement can be made
only as follows: (a) in Person; (b) by registered, express, certified
mail, postage prepaid, return receipt requested; (c) by a generally
recognized courier or messenger service that provides written
acknowledgement of receipt by the addressee; or (d) by facsimile or other
generally accepted means of electronic transmission with a verification of
delivery in all cases to the following addresses:
If to the Company to: With a copy to:
Balance Bar Company O'Melveny & Myers LLP
1015 Mark Avenue 1999 Avenue of the Stars
Carpinteria, California 93013 Los Angeles, California 90067-6035
Attention: James A. Wolfe Attention: Kent V. Graham
Telecopier: (805) 556-0235 Telecopier: 310/246-6779
If to Merger Sub or Purchaser to: With a copy to:
Kraft Foods, Inc. Kirkland & Ellis
Three Lakes Drive 200 East Randolph Drive
Northfield, Illinois 60093 Chicago, Illinois 60601
Attention: Theodore Banks Attention: Michael Timmers
Telecopier: (847) 646-4431 Telecopier: (312) 861-2200
Notices are deemed delivered when actually delivered to, or when delivery
is refused at, the address for notices. Any party can furnish, from time
to time, other addresses for notices to it.
10.9 Counterparts. This Agreement is being signed in several counterparts. Each
------------
of them is an original and all of them constitute one agreement.
10.10 Certain Rules of Construction and Interpretation.
------------------------------------------------
10.10.1 Headings. The headings in this Agreement are only for convenience
--------
and ease of reference and are not to be considered in construction or
interpretation. All exhibits, schedules and appendices attached to this
Agreement are an integral part of it.
10.10.2 No Presumption. The parties have participated jointly in the
--------------
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if
drafted jointly by the parties, and no presumption or burden of proof will
arise favoring
37
<PAGE>
or disfavoring any party because it or its representatives drafted any of
the provisions of this Agreement.
10.10.3 Interpretation. Unless the context otherwise requires: (a) a term
--------------
has the meaning assigned to it; (b) "or" is not exclusive; (c) words in
the singular include the plural, and words in the plural include the
singular; (d) "amended," with reference to a Law, charter or bylaws, is
deemed to be followed by "from time to time"; (e) "herein," "hereof" and
other words of similar import refer to this Agreement as a whole and not
to any particular Section, subsection, paragraph, clause, or other
subdivision; (f) all references to "Section," "Schedule" or "Exhibit",
refer to the particular Section in, or Schedule or Exhibit attached to,
this Agreement; and (g) "including" and "includes," when following any
general provision, sentence, clause, statement, term or matter, will be
deemed to be followed by ", but not limited to," and, "but is not limited
to," respectively.
10.11 Attorneys' Fees and Costs. If any Action is brought to enforce or
-------------------------
interpret this Agreement or matters relating to it, the substantially
prevailing party will be entitled to recover from the other party
reasonable attorneys' fees and other costs incurred in such Action, in
addition to any other relief to which the prevailing party is entitled.
10.12 Parties in Interest; Assignment. This Agreement is binding upon and is
-------------------------------
solely for the benefit of the parties and their respective successors and
assigns except that Section 7.1 is for the express benefit of the
Indemnified Parties. Purchaser and Merger Sub have the right to: (a)
assign to one or more direct or indirect wholly owned subsidiaries of
Purchaser any and all rights and obligations of Merger Sub under this
Agreement, including the right to substitute in Merger Sub's place such a
subsidiary as one of the constituent corporations in the Merger (if such
subsidiary assumes all of the obligations of Merger Sub in connection with
the Merger); (b) transfer to one or more direct or indirect wholly owned
subsidiaries of Purchaser the right to purchase Shares tendered pursuant
to the Offer; and (c) restructure the Transaction to provide for the
merger of the Company with and into Merger Sub or any such other
corporation as provided above, in all cases only if such action would not
have any material and adverse effect on the Company's stockholders or
change adversely the tax consequences of the Transactions. If Purchaser or
Merger Sub exercise their right to so restructure the Transaction, the
Company will promptly enter into appropriate agreements to reflect such
restructuring. In any such event the amounts to be paid to holders of
Shares will not be reduced nor will there be any material delay of the
Effective Time.
10.13 Specific Performance. It might be impossible to measure in money the
--------------------
damage to a party if another party breaches this Agreement. If any such
breach occurs, the party damaged might not have an adequate remedy at law
or in damages. Therefore, each party consents to the issuance of an
38
<PAGE>
injunction or other appropriate interim relief, and the enforcement of
other equitable remedies, against it to compel performance of this
Agreement, in addition to such other legal or equitable relief as a court
awards.
10.14 Severability. Any term or provision of this Agreement that is invalid or
------------
unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision will be interpreted to be only so broad as is enforceable.
[Remainder of Page Intentionally Left Blank]
39
<PAGE>
Kraft Foods, Inc.
By________________________________________
Name: William Eichar
Title: Vice President, Mergers &
Acquisitions
BB Acquisition, Inc.
By________________________________________
Name: William Eichar
Title: President
Balance Bar Company
By________________________________________
Name: James A. Wolfe
Title: President and Chief Executive
Officer
40
<PAGE>
EXHIBIT A
Defined Terms
-------------
Acquisition Agreement means a letter of intent, agreement in principle or any
legally binding acquisition agreement or similar agreement relating to any
Acquisition Proposal.
Acquisition Proposal means any inquiry or proposal that constitutes, or would
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, sale of substantial assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement.
Action means any civil, criminal or administrative action, claim, lawsuit,
litigation, proceeding, labor dispute, arbitration, governmental audit, inquiry,
investigation or unfair labor practice, charge or complaint, whether at law, in
equity, or otherwise.
Affiliate means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, 10% or more of the Stock having ordinary voting power in the
election of directors of, or 10% or more of the common equity of, such Person,
(b) each Person that controls, is controlled by or is under common control with,
such Person or any Affiliate of such Person, and (c) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person means the possession, directly or indirectly,
of the power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or otherwise.
Agreement means this Agreement and Plan of Merger dated as of January 18, 2000.
Balance Sheet means the consolidated balance sheet of the Company as at
September 30, 1999, including any notes thereto.
Benefit Plans is defined in Section 4.16(a).
Bylaws is defined in Section 4.1.
Cap is defined in Section 7.1.2.
CERCLA means the Comprehensive Environmental Response, Compensation and
Liability Act, as amended from time to time.
Certificates is defined in Section 3.5.2.
Certificate of Incorporation is defined in Section 4.1.
Code means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
A-1
<PAGE>
Company is defined in the Introduction.
Company's Board means, the Board of Directors of the Company, as constituted
from time to time.
Company Material Contract is defined in Section 4.8.
Confidential Information is defined in the Confidentiality Agreement.
Confidentiality Agreement means the Confidentiality Agreement between Purchaser
and the Company.
DGCL is defined in the Background.
Disclosure Schedule is defined in Section 4
Dissenting Shares is defined in Section 3.4.
Effective Time means time of the filing of the Merger Certificate with the
Secretary of State of Delaware.
Environmental and Safety Requirements means all Laws, all contractual
obligations and all common law, concerning public health and safety, pollution
or protection of the environment (including, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, Release,
threatened Release, control or cleanup of any Hazardous Materials, noise or
radiation).
Equity Derivative means any subscription, option, warrant, call, convertible or
exchangeable security, or other commitment, agreement or right, whether or not
presently exercisable, giving any Person the right to receive any equity
securities from the Company.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations promulgated thereunder.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Financing means all amounts necessary to pay the Merger Consideration pursuant
to this Agreement, the amounts necessary to cancel the Equity Derivatives as
contemplated by this Agreement, and all fees, costs and expenses incurred by
Purchaser in connection with the consummation of the Transactions.
Funds is defined in Section 3.5.1.
A-2
<PAGE>
GAAP means generally accepted accounting principles in the United States as in
effect from time to time, as consistently applied by the Company in the
preparation of its audited financial statements referred to in Section 4.5.2.
Government Entity means the United States of America or any other nation, any
state, province or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government, including any Tribunal.
Group has the meaning given such term in Section 13(d)(3) of the Exchange Act.
Hazardous Materials means anything that is a "hazardous substance" pursuant to
CERCLA, anything that is a "hazardous waste" or "solid waste" pursuant to RCRA,
and any other pollutant, contaminant, toxic chemical, petroleum product or by-
product, asbestos or polychlorinated biphenyl.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
Indemnified Party is defined in Section 7.1.1.
Insurance Policies means the insurance policies set forth on the Disclosure
Schedule.
IRS means the United States Internal Revenue Service.
Knowledge means, with respect to a Person other than a natural Person, the
actual knowledge, after due inquiry, of any of the following officers of such
Person, as applicable: (a) the Chief Executive Officer; (b) the Chief Financial
Officer; and (c) the Executive Vice President, and, with respect to a natural
person, Knowledge means the actual knowledge of such person after due inquiry.
Laws means all statutes, laws, ordinances, regulations, rules, orders,
judgments, writs, injunctions, acts or decrees of any Government Entity.
Lien means any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind, including any conditional sale or other title retention agreement,
any lease in the nature thereof and including any lien or charge arising by Law,
that secures the payment of a debt (including any Tax) or the performance of an
obligation. Liens do not include (a) any encumbrance arising, expressly created
by contracts that are listed in the Disclosure Schedule; (b) liens for Taxes,
assessments, governmental charges or levies not due or payable as of the
Effective Time; (c) material men's, mechanics', carriers', warehousemen's,
landlords', workmen's, repairmen's, employees' or other similar liens arising in
the ordinary course of business; (d) any restrictions on transfer imposed by
applicable Law; or (e) any imperfections of title, liens, security interest,
claims, and other charges and encumbrances the existence of which do not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
A-3
<PAGE>
Material Adverse Effect means, with respect to any Person, a material adverse
effect in the business, assets, operations, condition (financial or otherwise),
results of operations, properties, earnings, customer and supplier relations
(including co-packers), or contractual rights, considered as a whole, or
employee or sales representative relations, considered as a whole, of such
Person and its subsidiaries. For purposes of this Agreement, a Material Adverse
Effect does not include a material adverse effect on the business, financial
condition, results of operations or properties of such Person as a result of:
(a) the transactions contemplated hereby or the public announcement hereof; or
(b) changes that are generally consistent with or caused by general economic
conditions or general changes affecting the food business.
Merger Certificate means a duly executed and verified certificate of merger or
certificate of ownership and merger as permitted or required by applicable Law.
Merger is defined in the Background.
Merger Consideration means the total amount that a stockholder is entitled to
receive for such stockholders Shares in the Merger equal to the result of
multiplying the Per Share Price times the aggregate number of Shares represented
by Certificates submitted by such Stockholder pursuant to Section 3.5, without
any interest.
Merger Sub is defined in the Introduction.
Minimum Condition means that there must have been validly tendered in accordance
with the terms of the Offer, before the expiration date of the Offer, and not
withdrawn, a number of Shares that, together with the Shares then owned by
Parent or Merger Sub, represents more than 50% of the Shares outstanding.
Multi-Employer Plan means a "multi-employer plan" as defined in Section 3(37) of
ERISA.
NASDAQ means the National Association of Securities Dealers Automated
Quotation/National Market.
Offer Documents is defined in Section 2.1.3.
Offer is defined in the Background.
Paying Agent is defined in Section 3.5.1.
Per Share Amount is defined in the Background, and includes such higher amount
as may be paid in the Offer.
Person means an individual, a corporation (including any non-profit
corporation), a partnership, a limited liability company, a joint venture, an
association, a trust, an unincorporated association or any other entity or
organization, including a Government Entity.
A-4
<PAGE>
Proxy Statement means the proxy statement with respect to the Special Meeting
filed pursuant to Regulation 14A under the Exchange Act or, if proxies are not
solicited in connection with the Special Meeting, the Information Statement
distributed to Stockholders under Regulation 14C under the Exchange Act.
Purchaser is defined in the Introduction.
RCRA means Resource Conservation and Recovery Act, as amended from time to time.
Release means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, depositing, injecting, escaping, leaching, migrating, duping or
disposing of any Hazardous Materials into the environment.
Schedule 14D-1 is defined in Section 2.1.3.
Schedule 14D-9 is defined in Section 2.2.2.
SEC Filings is defined in Section 4.5.1.
SEC means the Securities and Exchange Commission.
Shares is defined in the Background.
Special Meeting means the special meeting of the stockholders of the Company
called for the purpose of approving and adopting this Agreement and approving
the Merger and the other transactions contemplated hereby.
SSB is defined in Section 4.4.3.
Subsidiary means any Person more than 50% of whose outstanding voting securities
are directly or indirectly owned by the Company. For purposes hereof, the
Company will be deemed to have a majority ownership interest in a partnership,
association or other business entity if the Company is in the operative
documents allocated a majority of partnership, association or other business
entity gains or losses or is in control the managing director or general partner
of such partnership, association or other business entity.
Superior Proposal is defined in Section 6.6.
Support Agreements is defined in background.
Surviving Corporation means the Company as the surviving corporation following
the Merger.
Tax Authority means the IRS and any other domestic or foreign Government Entity
responsible for the administration of any Taxes.
A-5
<PAGE>
Tax means any federal, state, local, provincial, or foreign income, gross
receipts, license, payroll, employment, excise, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, unemployment, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum, or
other Tax, fee, assessment or charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
Tax Returns means all federal, state, local and foreign tax returns,
declarations, statements, reports, schedules, forms and information returns
(including any amendments thereto) relating to Taxes.
Third Party means any Person, entity or Group, other than Purchaser, Merger Sub,
the Company or any of their respective Affiliates.
Transactions is defined in the Background.
Tribunal means any government, arbitration panel, court or governmental
department, commission, board, bureau, agency or instrumentality of the United
States of America, Canada or any state, province, commonwealth, nation,
territory, possession, county, parish, town, township, village, municipality or
other governmental entity, whether now or hereafter constituted and/or existing.
A-6
<PAGE>
EXHIBIT B
Conditions of the Offer
-----------------------
Notwithstanding any other provision of the Offer, Purchaser and Merger Sub
will not be required to accept for payment of or pay for any Shares, and may
terminate or extend the Offer (subject to the provisions of the Agreement)
because:
1. the Minimum Condition (as defined in the Agreement) has not been satisfied
or waived pursuant to the Agreement by the scheduled expiration date;
2. any applicable waiting period under the HSR Act has not expired or been
terminated before the expiration of the Offer;
3. there shall have occurred, and continued to exist, (i) a declaration of a
general banking moratorium or any general suspension of payments in respect
of banks in the United States, (ii) a commencement of a war, armed
hostilities or other national or international crisis directly or
indirectly involving the United States, (iii) any limitation by any
Governmental Entity on, or any other event which materially and adversely
affects, the extension of credit by banks or other lending institutions in
the United States, or (iv) in the case of any of the foregoing clauses (i)
through (iii) existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof (but in each case, other than
any occurrence, acceleration or worsening which does not (A) have a
Material Adverse Effect on the Company or (B) have a Material Adverse
Effect on the ability of Purchaser to acquire the Shares);
4. at any time on or after the date of the Agreement, and before the
expiration of the Offer, any of the following conditions exist:
(a)
(i) the Company has breached, or failed to comply with, any of
its obligations under the Agreement where such breach or failure to
comply would have a Material Adverse Effect on the Company; or
(ii) any representation or warranty of the Company in the
Agreement that is qualified as to materiality was incorrect when made
or has since ceased to be true and correct or any representation or
warranty that is not so qualified was incorrect in any material
respect when made or has since ceased to be true and correct in all
material respects (in each case, except for such representations and
warranties made as of a specific date, which must be true and correct
as of such date);
and
B-1
<PAGE>
(iii) which breach in either clause (i) or (ii) has not been
cured before the earlier of (A) fifteen days following notice of such
breach and (B) two business days before the date on which the Offer
expires;
(b) there has been any Action commenced by or before any federal,
state or local court or Government Entity or other regulatory
body, or threatened by any court or federal, state or local
Governmental Entity, that has a reasonable likelihood of success
and that, if decided adversely to the Company, would reasonably
be expected to have a Material Adverse Effect on the Company or,
if decided adversely to Purchaser, would have the effect of:
(i) making the purchase of, or payment for, some or all of
the Shares pursuant to the Offer or the Merger or otherwise,
illegal, or resulting in a material delay in the ability of
Purchaser or Merger Sub to accept for payment or pay for some or
all of the Shares,
(ii) seeking to prohibit Purchaser's or Merger Sub's
ownership or operation of all or any material portion of the
Company's business or assets, or to compel Purchaser or Merger
Sub to dispose of or hold separately all or any material portion
of the Company's or Purchaser's business or assets,
(iii) otherwise preventing consummation of the Offer or the
Merger,
(iv) imposing limitations on the ability of Purchaser or
Merger Sub effectively (A) to acquire, hold or operate the
business of the Company taken as a whole or (B) to exercise full
rights of ownership of the Shares acquired by it, including, but
not limited to, the right to vote the Shares purchased by it on
all matters properly presented to the stockholders of the
Company, which, in either case, would effect a material
diminution in the value of the Company or the Shares or
Purchaser's or Merger Sub's control of the Company;
(c) the Agreement has been terminated in accordance with its terms,
or Purchaser or Merger Sub has reached an agreement or
understanding in writing with the Company providing for
termination or amendment of the Offer;
(d) any Person or Group, other than Purchaser, Merger Sub or any of
their affiliates has (i) become the beneficial owner of fifty
percent or more of the outstanding Shares or (ii) entered into a
definitive agreement or an agreement in principle with the
Company with respect to an Acquisition Proposal; or
(e) the Company's Board has publicly (including by amendment of its
Schedule 14D-9) withdrawn or adversely modified its
recommendation of
B-2
<PAGE>
acceptance of the Offer or has resolved to do so or publicly
stated its intention to do so.
Except as expressly set forth in the Agreement, the foregoing
conditions are for the sole benefit of Purchaser and Merger Sub and
may be asserted by Purchaser or Merger Sub regardless of the
circumstances giving rise to any such condition and, subject to the
terms of the Agreement, may be waived by Purchaser or Merger Sub, in
whole or in part, at any time and from time to time, in the sole
discretion of Purchaser or Merger Sub.
B-3
<PAGE>
Exhibit C(2)
SUPPORT AGREEMENT
SUPPORT AGREEMENT (this "Agreement"), dated as of January 21, 2000 by
and between Kraft Foods, Inc., a Delaware corporation ("Purchaser"), and the
person or entity named on the signature page of this Agreement ("Seller").
WHEREAS, concurrently herewith, Purchaser, BB Acquisition, Inc., a
Delaware corporation and a subsidiary of Purchaser ("Merger Sub"), and Balance
Bar Company, a Delaware corporation (the "Company"), are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement;
WHEREAS, pursuant to the Merger Agreement, the Purchaser has agreed to
make a tender offer (the "Offer") for all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of the Company, at $19.40 per share net
to the seller in cash, to be followed by a merger (the "Merger") of the Merger
Sub with and into the Company;
WHEREAS, as of the date hereof, Seller is the beneficial owner of the
number of Shares listed on the signature page to this Agreement (the "Owned
Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement and make the Offer, Purchaser and the Merger Sub have required that
Seller agree, and Seller hereby agrees, (i) to tender pursuant to the Offer the
Owned Shares, together with any Shares acquired after the date hereof and prior
to the termination of the Offer, whether upon the exercise of options,
conversion of convertible securities or otherwise (collectively with the Owned
Shares, the "Tender Shares") on the terms and subject to the conditions provided
for in this Agreement and (ii) to enter into the other agreements set forth
herein.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Tender and Vote.
----------------------------
1.1 Tender. Seller hereby agrees to tender (or cause the record
------
owner of such shares to validly tender), pursuant to and in accordance with the
terms of the Offer, as soon as practicable after commencement of the Offer but
in no event later than five business days after the date of commencement of the
Offer, the Tender Shares by physical delivery of the certificates therefor and
to not withdraw such Tender Shares, except following termination of this
Agreement pursuant to Section 2 hereof. Seller hereby acknowledges and agrees
that Purchaser's and Merger Sub's obligation to accept for payment and pay for
the Tender Shares is subject to the terms and conditions of the Offer. Seller
hereby permits Purchaser and Merger Sub to publish and disclose in the Offer
Documents and, if approval of the Company's stockholders is requested under
applicable law, the Proxy Statement (including all documents and schedules filed
with the Securities and Exchange Commission) the Seller's identity and
<PAGE>
ownership of the Tender Shares and the nature of the Seller's commitments,
arrangements and understandings under this Agreement. In addition, Seller hereby
agrees that, if Purchaser shall so request, Seller shall as promptly as
practicable following such request, and in any event prior to the termination of
the Offer, take all action and do all things that are necessary in order to (i)
exercise all options to purchase common stock of the Company held by Seller that
are then exercisable and (ii) tender all shares obtained upon exercise of such
options as Tender Shares hereunder.
1.2 Voting. Seller hereby agrees that, until the Expiration Date (as
------
defined below), at any meeting of the shareholders of the Company, however
called (or in any written consent in lieu thereof), Seller shall (a) vote the
Tender Shares in favor of the Merger (b) vote the Tender Shares against any
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (c) vote the Tender Shares against any action or
agreement (other than the Merger Agreement or the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer, including, but not limited to: (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries; (ii) a
sale or transfer of any assets of the Company (other than as permitted in the
Merger Agreement) or any of its subsidiaries or a reorganization,
recapitalization or liquidation of the Company and its subsidiaries; (iii) any
change in the management or board of directors of the Company, except as
otherwise agreed to in writing by the Purchaser; (iv) any change in the present
capitalization or dividend policy of the Company (other than as permitted in the
Merger Agreement); or (v) any other change in the Company's corporate structure
or business (other than as permitted in the Merger Agreement). In order to
facilitate the commitment of the Seller provided above, the Seller hereby grants
to Purchaser a proxy to vote all Tender Shares with respect to all matters on
which the Tender Shares are entitled to vote at all times from the execution of
this Agreement through the Expiration Date (as defined below). Seller agrees
that this proxy shall be irrevocable during the term of this Agreement and is
coupled with an interest. Each of Seller and Purchaser agrees to take such
further action and to execute such other documentation or instruments as may be
necessary to effectuate the intent of this proxy. Seller hereby revokes any
proxy previously granted by him with respect to the Tender Shares.
1.3 No Inconsistent Arrangements. Seller hereby covenants and agrees
----------------------------
that, except as contemplated by this Agreement it shall not (i) transfer (which
term shall include, without limitation, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of the Tender Shares or
any interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of the Tender Shares or
any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to the Tender Shares, (iv) deposit the Tender
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to the Tender Shares or (v) take any other action that would in any way
restrict, limit or interfere with the performance of Seller's obligations
hereunder or the transactions contemplated hereby or by the Merger Agreement or
which would make any representation or warranty of Seller hereunder untrue or
incorrect; provided that Seller may transfer the Tender Shares to one or more
affiliates or one or more members of Seller's immediate family, or a trust, the
sole beneficiaries of which are members of Seller's immediate family, if any
such transferee agrees in writing (in form and substance reasonably satisfactory
to Purchaser) to be bound by the terms of this Agreement.
-2-
<PAGE>
1.4 No Solicitation. During the term of this Agreement, Seller shall
---------------
comply with the provisions of Sections 6.6(a)-(c) (without giving effect to the
proviso thereto) and 6.6.1 of the Merger Agreement as though such provisions by
their terms applied to Seller and his affiliates and advisors.
1.5 Reasonable Efforts. Subject to the terms and conditions of this
------------------
Agreement, Seller hereby agrees to use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Merger
Agreement. Seller shall promptly consult with Purchaser and provide any
necessary information and material with respect to all filings made by Seller
with any Government Entity in connection with this Agreement and Merger
Agreement and the transactions contemplated hereby and thereby.
1.6 Waiver of Appraisal Rights. Seller hereby waives any rights of
--------------------------
appraisal or rights to dissent from the Merger that he may have.
1.7 Seller's Capacity. Seller makes no agreement or understanding
-----------------
hereby in his capacity as a director or officer of the Company. Seller enters
into this Agreement solely in his capacity as the owner of the Owned Shares, and
the covenants and agreements set forth herein shall in no way restrict Seller in
the exercise of his fiduciary duties as a director or officer of the Company.
2. Expiration. This Agreement and Seller's obligation to tender and
----------
vote the Tender Shares as provided herein shall terminate on the Expiration
Date. As used herein, the term "Expiration Date" means the first to occur of (a)
the Effective Time, (b) termination or withdrawal of the Offer by Purchaser or
the Merger Sub, and (c) written notice of termination of this Agreement by
Purchaser to Seller.
3. Representations and Warranties. Seller hereby represents and
------------------------------
warrants to Purchaser as follows:
(a) Title. Seller has good and valid title to the Tender Shares,
-----
free and clear of any lien, pledge, charge, encumbrance or claim of
whatever nature (excluding any encumbrances arising out of applicable
federal or state securities law), provided however, as to 790,578
Tender Shares Seller has pledged such Tender Shares to Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") to secure a margin
loan. Seller has not in any manner impaired Seller's right to cause
the Tender Shares to be tendered pursuant to the Offer and will,
promptly following execution of this Agreement, give appropriate
instructions to DLJ to tender such Tender Shares in a timely manner.
Seller hereby represents and warrants that the aggregate amount of
margin loans referenced above does not exceed $1,600,000 on the date
hereof and Seller covenants that he will not take any action to
increase the amount of such margin loan (other than the normal accrual
of interest thereon) or, other than to tender the Tender Shares
pursuant to the Offer, take any action to reduce the value of
securities in the referenced account if such action would increase the
risk of any margin call with respect to
-3-
<PAGE>
the margin loan. Upon the purchase of the Tender Shares, Purchaser
will acquire good and valid title to the Tender Shares, free and clear
of any lien, charge, encumbrance or claim of whatever nature
(excluding any encumbrances arising out of applicable federal or state
securities law).
(b) Ownership of Shares. On the date hereof, the Owned Shares
-------------------
are owned of record or beneficially by Seller and, on the date hereof,
the Owned Shares constitute all of the Shares owned of record or
beneficially by Seller. Seller has sole voting power and sole power of
disposition with respect to all of the Owned Shares, with no
restrictions, subject to applicable federal and state securities laws,
on Seller's rights of disposition pertaining thereto.
(c) Power; Binding Agreement. Seller has the legal capacity,
------------------------
power and authority to enter into and perform all of Seller's
obligations under this Agreement. If Seller is not a natural person,
this Agreement and the transactions contemplated hereby have been duly
authorized by all necessary action of Seller, its governing body and
its security holders, in each case, to the extent required, and no
other proceeding on its part is necessary to authorize the execution,
delivery or performance of this Agreement by Seller. The execution,
delivery and performance of this Agreement by Seller will not violate
any other agreement to which Seller is a party including, without
limitation, any voting agreement, stockholders agreement or voting
trust. This Agreement has been duly and validly executed and delivered
by Seller and constitutes a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms.
(d) No Conflicts. Other than in connection with or in compliance
------------
with the provisions of the Exchange Act and the HSR Act, no
authorization, consent or approval of, or filing with, any court or
any public body or authority is necessary for the consummation by
Seller of the transactions contemplated by this Agreement.
4. Additional Shares. Seller hereby agrees, while this Agreement
-----------------
is in effect, to promptly notify Purchaser of the number of any new Shares
acquired by Seller, if any, after the date hereof.
5. Miscellaneous.
--------------
5.1 Non-Survival. The representations and warranties made herein
------------
shall terminate upon Seller's sale of the Tender Shares to the Purchaser in the
Offer, other than Seller's representation and warranty in Section 3(a), which
shall survive the sale of the Tender Shares and the termination of this
Agreement following such sale.
5.2 Entire Agreement; Assignment. This Agreement (i) constitutes the
----------------------------
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise, provided that Purchaser
may assign its rights and obligations hereunder to any direct or indirect
wholly-
-4-
<PAGE>
owned subsidiary of Purchaser, but no such assignment shall relieve Purchaser of
its obligations hereunder if such assignee does not perform such obligations.
5.3 Amendments. This Agreement may not be modified, amended, altered
----------
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
5.4 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given by hand
delivery, telegram, telex or telecopy or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
If to Seller: In accordance with the notice instructions set forth on the
signature page to this Agreement
If to Purchaser:
Kraft Foods, Inc.
Three Lakes Drive
Northfield, IL 60093
Fax: (847) 646-7081
Attention: William Eichar
Theodore Banks
copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Fax: (312) 861-2200
Attention: Michael Timmers
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
5.5 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws.
5.6 Specific Performance. Seller recognizes and acknowledges that a
--------------------
breach by him of any covenants or agreements contained in this Agreement will
cause Purchaser to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore Seller agrees that in the event
of any such breach Purchaser shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
-5-
<PAGE>
5.7 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
5.8 Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
5.9 Severability. Whenever possible, each provision or portion of
------------
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
-6-
<PAGE>
IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to
be duly executed as of the day and year first above written.
KRAFT FOODS, INC.
By:___________________________
Name:
Title:
[SELLER]
______________________________
[Name]
Address for notice:
______________________________
______________________________
______________________________
Facsimile:______________________
-7-
