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Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
JPS PACKAGING COMPANY
at
$7.86 NET PER SHARE IN CASH
by
JPS ACQUISITION, INC.,
A Wholly Owned Subsidiary of
PECHINEY PLASTIC PACKAGING, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON TUESDAY, NOVEMBER 28, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE IN CONNECTION WITH AN AGREEMENT AND PLAN OF MERGER,
DATED AS OF OCTOBER 13, 2000, BY AND AMONG PECHINEY PLASTIC PACKAGING, INC.
("PARENT"), JPS ACQUISITION, INC. (THE "PURCHASER") AND JPS PACKAGING COMPANY
(THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE ADVISABLE, FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, HAS APPROVED AND
HAS TAKEN ALL CORPORATE ACTION REQUIRED TO BE TAKEN BY THE BOARD OF DIRECTORS
TO AUTHORIZE THE CONSUMMATION OF THE TRANSACTIONS, INCLUDING THE OFFER AND THE
MERGER, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES
PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
MERGER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN)
THAT NUMBER OF SHARES (AS DEFINED HEREIN) WHICH, TOGETHER WITH THE SHARES
BENEFICIALLY OWNED BY PARENT OR THE PURCHASER, REPRESENTS AT LEAST A MAJORITY
OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE
ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14.
IMPORTANT
Any stockholder wishing to tender Shares must (1) complete and sign the
enclosed 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 the certificates representing the Shares or follow the
procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder.
Any stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person to
tender such Shares.
Any stockholder who wishes to tender Shares and cannot deliver certificates
representing such Shares and all other required documents to the Depositary
prior to the expiration of the Offer, or who cannot comply with the procedures
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3 of this Offer to
Purchase.
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. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other tender offer materials may be directed
to the Information Agent, the Dealer Manager or brokers, dealers, commercial
banks or trust companies.
The date of this Offer to Purchase is October 30, 2000.
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TABLE OF CONTENTS
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Page
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SUMMARY TERM SHEET........................................................ 1
INTRODUCTION.............................................................. 5
THE OFFER................................................................. 7
1.Terms of the Offer................................................... 7
2.Acceptance for Payment and Payment for Shares........................ 9
3.Procedures for Tendering Shares...................................... 10
4.Withdrawal Rights.................................................... 12
5.Certain United States Federal Income Tax Consequences................ 13
6.Price Range of Shares; Dividends..................................... 14
7.Certain Effects of the Offer......................................... 14
8.Certain Information Concerning the Company........................... 15
9.Certain Information Concerning Parent and Purchaser.................. 16
10.Source and Amount of Funds........................................... 17
11. Background of the Offer; Purpose of the Offer and the Merger;
The Merger Agreement and Certain Other Agreements............... 17
MERGER AGREEMENT.......................................................... 20
IRREVOCABLE PROXY AGREEMENT............................................... 27
12.Plans for the Company; Other Matters................................. 28
13.Dividends and Distributions.......................................... 29
14.Conditions to the Offer.............................................. 30
15.Certain Legal Matters................................................ 31
16.Fees and Expenses.................................................... 33
17.Miscellaneous........................................................ 34
SCHEDULE I--INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER...................................... I-1
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SUMMARY TERM SHEET
JPS Acquisition, Inc. is offering to purchase all of the outstanding common
stock of JPS Packaging Company for $7.86 per share in cash. The following are
some of the questions that you, as a stockholder of JPS Packaging Company, may
have and our answers to those questions. Additional important information is
contained in the remainder of this Offer to Purchase and the Letter of
Transmittal. We urge you to read carefully the entire Offer to Purchase and
the Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is JPS Acquisition, Inc. We are a Delaware corporation formed for
the purpose of making a tender offer for all of the common stock of JPS
Packaging Company. We have carried on no activities other than in connection
with the merger agreement by and among Pechiney Plastic Packaging, Inc., JPS
Acquisition, Inc. and JPS Packaging Company. We are a wholly owned subsidiary
of Pechiney Plastic Packaging, Inc., a Delaware corporation. Pechiney Plastic
Packaging is a North American producer of flexible packaging for the food,
meat, dairy, healthcare and specialty markets. See the "Introduction" and
Section 9 of 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 JPS
Packaging Company. See the "Introduction" and Section 1 of 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 $7.86 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 or nominee 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?
Pechiney Plastic Packaging, our parent company, will provide us with
sufficient funds 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. We anticipate that all of these funds
will be obtained from the existing resources and internally generated funds of
Pechiney Plastic Packaging. The offer is not conditioned upon any financing
arrangements. See Section 10 of this Offer to Purchase.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender your shares in the offer because the form of payment
consists solely of cash. Pechiney Plastic Packaging has arranged for all of
our funding to come from its existing resources and internally generated
funds. See Section 10 of this Offer to Purchase.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have until 5:00 p.m., New York City time, on Tuesday, November 28,
2000 to tender your shares in the offer. 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 Sections 1 and 3 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 may extend the offer without JPS
Packaging's consent in the following circumstances:
. If any of the conditions to the offer have not been satisfied or waived,
we may extend the offer in no less than 10-day increments, until such
time as they are satisfied or waived.
. For any period required by any statute or rule, regulation,
interpretation or position of the Securities and Exchange Commission or
its staff applicable to the offer.
. For any period required by applicable law in connection with an increase
in the consideration to be paid pursuant to the offer.
. If, immediately prior to the expiration date of the offer all conditions
to the offer have been satisfied or waived but less than 90% of the
outstanding shares of JPS Packaging have been validly tendered and not
properly withdrawn, we may extend the offer for up to ten (10) business
days.
. From time to time, the offer may be extended for an aggregate period of
not more than ten (10) business days beyond the latest expiration date
that would be permitted under the other circumstances described in this
section.
See Section 1 of this Offer to Purchase for more details on our ability to
extend the offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform UMB Bank, n.a. (which is the
depositary for the offer) of that fact and will make a public announcement of
the extension no 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 of this Offer to Purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
. We are not obligated to purchase any shares that are validly tendered
unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer represents at least a majority of the shares
outstanding on a fully diluted basis. We call this condition the "minimum
condition." For purposes of the offer, "on a fully diluted basis" means,
as of any time, on a basis that includes the number of shares of JPS
Packaging common stock that are actually issued and outstanding plus the
maximum number of such shares that JPS Packaging may be required to issue
under stock options, warrants and other rights or securities exercisable
or exchangeable for, or convertible into, shares of JPS Packaging common
stock, whether or not currently exercisable.
. We are not obligated to purchase shares that are validly tendered if
there is a material adverse change in JPS Packaging or its business.
. We are not obligated to purchase shares that are validly tendered if any
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act or foreign antitrust, investment or competition laws or
regulations has not expired or been terminated.
. We are not obligated to purchase shares if there is any threatened or
pending suit, action or proceeding by any government entity that limits
or challenges the offer or the merger.
. We are not obligated to purchase shares if there is any litigation,
arbitration or lawsuit outstanding that asserts any breach of duty or
lack of fairness relating to the merger agreement or related actions.
The offer is also subject to a number of other conditions. We can waive any
of the conditions to the offer without JPS Packaging's consent, other than the
minimum condition. See Sections 1 and 14 of this Offer to Purchase.
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HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal and any other
documents required by the Letter of Transmittal, to UMB Bank, n.a., the
depositary for the offer, no 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 are unable to deliver any
required document or instrument to the depositary by the expiration of the
tender offer, you may gain some extra time by having a broker, a bank or other
fiduciary that 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 New York Stock Exchange 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 of this Offer to
Purchase.
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the offer has expired and, if we
have not accepted your shares for payment by December 29, 2000, you may
withdraw them at any time after that date until we accept shares for payment.
This right to withdraw will not apply to the subsequent offering period
discussed in Section 1. See Section 4 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 of this Offer to
Purchase.
WHAT DOES THE JPS PACKAGING BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to the merger agreement, which has been
unanimously approved by the JPS Packaging board of directors. The board of
directors of JPS Packaging unanimously:
. determined that the terms of the merger agreement and the transactions
contemplated thereby, including the offer and the merger, are advisable,
fair to and in the best interests of JPS Packaging's stockholders,
. duly and validly approved and has taken all corporate action required to
be taken by the board of directors to authorize the consummation of the
transactions, including the offer and the merger,
. recommends that JPS Packaging's stockholders accept the offer, tender
their shares pursuant to the offer and approve and adopt the merger
agreement and the merger.
See the "Introduction" to this Offer to Purchase.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE JPS PACKAGING
SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least a majority of the shares
of JPS Packaging on a fully diluted basis, JPS Acquisition, Inc. will be
merged with and into JPS Packaging. If that merger takes place, Pechiney
Plastic Packaging will own all of the shares of JPS Packaging and all
remaining stockholders of JPS Packaging (other than JPS Acquisition, Inc. and
stockholders properly exercising dissenters' rights) will receive $7.86 per
share in cash (or any higher price per share that is paid in the offer). See
the "Introduction" and Section 11 of this Offer to Purchase.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL JPS
PACKAGING CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer, we expect to consummate
the merger. If the merger takes place, JPS Packaging no longer will be
publicly owned. Even if for some reason the merger does not take place,
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if we purchase all of the tendered shares, there may be so few remaining
stockholders and publicly held shares that JPS Packaging common stock will no
longer be eligible to be traded through the Nasdaq National Market or any
other securities exchange, there may not be a public trading market for JPS
Packaging common stock, and JPS Packaging may cease making filings with the
SEC or otherwise cease being required to comply with the SEC rules relating to
publicly held companies. See Section 7 of this Offer to Purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders 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, subject to any
dissenters' rights properly exercised under Delaware law. 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 and not have
dissenters' rights if you tender your shares. If, however, for some reason the
merger does not take place, the number of stockholders and the number of
shares of JPS Packaging that are still publicly held 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 JPS Packaging common stock.
Also, as described above, JPS Packaging may cease making filings with the SEC
or otherwise may not be required to comply with the SEC rules relating to
publicly held companies. See the "Introduction" and Section 7 of this Offer to
Purchase.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On September 29, 2000, the last full trading day before JPS Packaging
announced that it had been approached by a potential buyer, the last reported
closing sales price of JPS Packaging common stock as quoted on the Nasdaq
National Market was $4.625 per share. On October 13, 2000, the last full
trading day prior to the public announcement that JPS Packaging, Pechiney
Plastic Packaging and JPS Acquisition, Inc. had executed the merger agreement,
the last reported closing sales price of the JPS Packaging common stock as
quoted on the Nasdaq National Market was $6.00 per share. On October 27, 2000,
the last full trading day prior to the commencement of the offer, the last
reported closing sales price of JPS Packaging common stock as quoted on the
Nasdaq National Market was $7 23/32 per share. We encourage you to obtain a
recent quotation for shares of common stock in deciding whether to tender your
shares. See Section 6 of this Offer to Purchase.
WHAT ARE CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING
SHARES?
The receipt of cash for shares pursuant to the tender offer or the merger
will be a taxable transaction for United States federal income tax purposes
and possibly for state, local and foreign income tax purposes as well. In
general, a stockholder who sells shares pursuant to the tender offer or
receives cash in exchange for shares pursuant to the merger will recognize
gain or loss for United States federal income tax purposes equal to the
difference, if any, between the amount of cash received and the stockholder's
adjusted tax basis in the shares sold pursuant to the tender offer or
exchanged for cash pursuant to the merger. If the shares exchanged constitute
capital assets in the hands of the stockholder, such gain or loss will be
capital gain or loss. In general, capital gains recognized by an individual
will be subject to a maximum United States federal income tax rate of 20% if
the shares were held for more than one year, and if held for one year or less
they will be subject to tax at ordinary income tax rates. See Section 5 of
this Offer to Purchase.
TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call Morrow & Co., Inc. at (800) 607-0088 (toll free) or J.P.
Morgan Securities Inc. at (877) 576-7940 (toll free). Morrow & Co., Inc. is
acting as the information agent and J.P. Morgan Securities Inc. 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 Common Stock of
JPS Packaging Company:
INTRODUCTION
JPS Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Pechiney Plastic Packaging, Inc., a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
common stock, par value $0.01 per share (the "Shares"), of JPS Packaging
Company, a Delaware corporation (the "Company"), at a price of $7.86 per
Share, net to the seller in cash, without interest (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, as amended or supplemented
from time to time, collectively constitute the "Offer").
Tendering stockholders 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 set forth in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by the Purchaser pursuant to the Offer. Stockholders who hold their
Shares through a bank or broker should check with such institution as to
whether it charges any service fees. However, any tendering stockholder or
other payee who fails to complete and sign the Substitute Form W-9 that is
included in the Letter of Transmittal may be subject to a required federal
backup withholding tax of 31% of the gross proceeds payable to such
stockholder or other payee pursuant to the Offer. See Sections 3 and 5. The
Purchaser will pay all fees and expenses of J.P. Morgan Securities Inc., as
Dealer Manager (in such capacity, the "Dealer Manager"), UMB Bank, n.a., as
Depositary (the "Depositary"), and Morrow & Co., Inc., as Information Agent
(the "Information Agent"), incurred in connection with the Offer and in
accordance with the terms of the agreements entered into between the Purchaser
and/or Parent and each such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE ADVISABLE, FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, HAS APPROVED AND
HAS TAKEN ALL CORPORATE ACTION REQUIRED TO BE TAKEN BY THE BOARD OF DIRECTORS
TO AUTHORIZE THE CONSUMMATION OF THE TRANSACTIONS, INCLUDING THE OFFER AND THE
MERGER, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES
PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
MERGER.
George K. Baum & Company ("GKB"), the Company's financial advisor, has
delivered to the Company Board its written opinion, dated October 13, 2000, to
the effect that, as of such date and based upon and subject to certain
assumptions and matters stated therein, from a financial point of view, the
consideration to be received by the holders of Shares in the Offer and the
Merger is fair to such holders. A copy of GKB's written opinion is attached as
Appendix B to the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which has been filed by the Company with the
Securities and Exchange Commission (the "SEC") in connection with the Offer
and which is being mailed to holders of Shares concurrently herewith. Holders
of Shares are urged to, and should, read the full text of such opinion
carefully in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN)
THAT NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY
PARENT OR THE PURCHASER, REPRESENTS AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS
OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to Purchase, "on a
fully diluted basis" means, as of any time, on a basis that includes the
number of Shares that are actually issued and outstanding plus the maximum
number of Shares that the Company may be required to issue pursuant to
obligations under stock options, warrants and other rights and securities
exercisable or exchangeable for, or convertible into, Shares,
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whether or not currently exercisable. The Company has represented and
warranted to Parent and the Purchaser that, as of October 13, 2000, there were
(i) 5,558,505 Shares issued and outstanding and (ii) 233,100 Shares issuable
upon the exercise of options. Neither Parent, the Purchaser nor any person
listed on Schedule I hereto beneficially owns any Shares. The Merger Agreement
provides, among other things, that the Company will not, without the prior
written consent of Parent, issue any additional Shares (except upon the
exercise of outstanding options) or other securities convertible into, or
exercisable or exchangeable for, Shares. See Section 11. Based on the
foregoing and assuming the issuance of 233,100 Shares issuable upon the
exercise of outstanding options, the Purchaser believes that the Minimum
Condition will be satisfied if 2,901,595 Shares are validly tendered and not
withdrawn prior to the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 13, 2000 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. Pursuant to the Merger Agreement, as soon as
practicable after the completion of the Offer and satisfaction or waiver, if
permissible, of all conditions, including the approval and adoption of the
Merger Agreement by the stockholders of the Company (if required by applicable
law), the Purchaser will be merged with and into the Company (the "Merger")
and the Company will be the surviving corporation in the Merger (the
"Surviving Corporation"). At the effective time of the Merger (the "Effective
Time"), each Share then outstanding, other than Shares held by (1) the Company
as treasury stock, (2) Parent, the Purchaser, or any other wholly owned
subsidiary of Parent and (3) stockholders who properly perfect their
dissenters' rights under the Delaware General Corporation Law, as amended (the
"DGCL"), will be converted into the right to receive $7.86 in cash or any
higher price per Share paid in the Offer, without interest. The Merger
Agreement is more fully described in Section 11.
The Merger Agreement provides that, promptly upon the purchase of and
payment by Parent and/or Purchaser and/or or any of their subsidiaries which
represents at least a majority of the outstanding Shares (on a fully diluted
basis) pursuant to the Offer, Parent (directly or through the Purchaser, as
the case may be) shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board as is equal to the
product of the total of number of directors on such Company Board (giving
effect to the directors designated by Parent) multiplied by the percentage
that the aggregate number of Shares beneficially owned by the Purchaser,
Parent and any of their affiliates bears to the total number of Shares then
outstanding. The Company will, upon the request of Parent, use its best
efforts promptly to take all action necessary to cause such persons designated
by Parent to be appointed or elected to the Company Board, if necessary, by
increasing the size of the Company Board, amending the by-laws of the Company,
or securing resignations of incumbent directors or both.
Consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required, the approval and adoption of the
Merger Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares. If the Minimum Condition is satisfied, the Purchaser would
have sufficient voting power to approve the Merger without the affirmative
vote of any other stockholder. The Company has agreed, if required, to duly
call, give notice of, convene and hold a special meeting of its stockholders,
to be held as soon as reasonably practicable following the acceptance for
payment and purchase of Shares by the Purchaser pursuant to the Offer, for the
purpose of considering and taking action upon the approval and adoption of the
Merger Agreement. Parent has agreed to vote, or cause to be voted, the Shares
owned by Parent, the Purchaser and any other subsidiaries and affiliates of
Parent in favor of the approval of the Merger and adoption of the Merger
Agreement. See Section 12.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that the Purchaser acquires in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, then, at the election
of Parent, a short-form merger could be effected without any further approval
of the Company Board or the Company's stockholders. Even if the Purchaser does
not own 90% of the outstanding Shares following consummation of the Offer,
Parent or the Purchaser could seek to purchase additional Shares in the open
market or otherwise in order to reach the 90% threshold and employ a short-
form merger. The per Share consideration paid for any Shares so acquired in
open market purchases may be greater or less than the Offer Price.
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In addition, the Merger Agreement provides that if the Purchaser has
acquired less than 90% of the Shares, but not less than 50% of the Shares,
then the Company, the Purchaser and Parent will enter into a stock option
agreement, on customary terms, whereby the Company will grant to the Purchaser
an option to purchase that number of Shares that, when added to the Shares
owned by the Purchaser and its affiliates immediately following the Offer,
results in Purchaser owning 90% of the outstanding Shares on a fully diluted
basis for a per share price that is no higher than the Offer Price.
In connection with the Merger Agreement, George K. Baum Group, Inc. and its
affiliates, which collectively own approximately 36 percent of the outstanding
Shares, have agreed to vote in favor of the proposed transaction and to sell
their Shares to Purchaser under certain circumstances.
Parent presently intends to effect a short-form merger, if permitted to do
so under the DGCL, pursuant to which the Purchaser will be merged with and
into the Company. See Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with Section 4. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on Tuesday, November 28, 2000, unless and until the Purchaser, in
accordance with the terms of the Merger Agreement, has extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser (other than any extension with respect to the Subsequent Offering
Period described below), expires.
The acceptance for payment of Shares pursuant to the Offer, and payment
therefor, is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any
foreign antitrust, investment or competition laws or regulations, and the
other conditions set forth in Section 14. If such conditions are not satisfied
prior to the Expiration Date, the Purchaser reserves the right, subject to the
terms of the Merger Agreement and subject to complying with applicable rules
and regulations of the SEC, to (1) decline to purchase any Shares tendered in
the Offer and terminate the Offer and return all tendered Shares to the
tendering stockholders, (2) waive any or all conditions to the Offer (other
than the Minimum Condition) and, to the extent permitted by applicable law,
purchase all Shares validly tendered and not properly withdrawn, or (3) extend
the Offer and, subject to the right of stockholders to withdraw Shares until
the new Expiration Date, retain all Shares that have been tendered until the
expiration of the Offer as extended. The Merger Agreement provides that the
Purchaser will not decrease the Offer Price, change the form of consideration
payable in the Offer, decrease the number of Shares sought in the Offer, or
amend any other condition to the Offer in any manner adverse to the holders of
the Shares without the prior written consent of the Company.
The Merger Agreement requires the Purchaser to accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied or waived on the Expiration Date. If on
the initial scheduled Expiration Date of the Offer all conditions to the Offer
have not been satisfied or waived, then Purchaser may, in its sole discretion,
extend the Offer in no less than 10-day increments, until such time as the
conditions are satisfied or waived. Notwithstanding the foregoing, if,
immediately prior to the Expiration Date of the Offer (as it may be extended),
the Shares tendered and not withdrawn constitute less than 90% of the
outstanding Shares, the Purchaser may extend the Offer for up to ten (10)
business days.
7
<PAGE>
Pursuant to Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Purchaser may, subject to certain
conditions, provide a subsequent offering period following the expiration of
the Offer on the Expiration Date (a "Subsequent Offering Period"). A
Subsequent Offering Period is an additional period of time from three (3)
business days to twenty (20) business days in length, beginning after the
Purchaser purchases Shares tendered in the Offer, during which stockholders
may tender, but not withdraw, their Shares and receive the Offer Price.
The Merger Agreement provides that the Purchaser may, in its sole
discretion, commence a Subsequent Offering Period. Pursuant to Rule 14d-7
under the Exchange Act, no withdrawal rights apply to Shares tendered during 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. During a Subsequent Offering Period, the Purchaser will
promptly purchase and pay for all Shares tendered at the same price paid in
the Offer.
Subject to the applicable rules and regulations of the SEC and the
provisions of the Merger Agreement, the Purchaser also expressly reserves the
right, in its sole discretion, at any time or from time to time, on or prior
to the Expiration Date, (1) to terminate the Offer if any of the conditions
set forth in Section 14 have not been satisfied and (2) to waive any condition
to the Offer (other than the Minimum Condition) or otherwise amend the Offer
in any respect, in each case by giving oral or written notice of such
extension, termination, waiver or amendment to the Depositary and by making a
public announcement thereof. If the Purchaser accepts for payment any Shares
pursuant to the Offer, it will accept for payment all Shares validly tendered
prior to the Expiration Date and not properly withdrawn, and will promptly pay
for all Shares so accepted for payment.
The rights reserved by the Purchaser by the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 14. Any extension,
amendment or termination of the Offer will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date in accordance
with Rules 14d-4(d), 14d-6(c) and 14e-1(d) under the Exchange Act. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act. Without limiting the obligation of the Purchaser under
such Rules or the manner in which the Purchaser may choose to make any public
announcement, the Purchaser currently intends to make announcements by issuing
a press release to the Dow Jones News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of, or
payment for, Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability
of the Purchaser to delay the payment for Shares which the 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, holders of securities promptly after the
termination or withdrawal of such bidder's Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In the
SEC's view, an offer should remain open for a minimum of five (5) business
days from the date a material change is first published, sent or given to
stockholders and, if material changes are made with respect to information
that approaches the significance of price and the number of shares being
sought, a minimum of ten (10) business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension
8
<PAGE>
period that would be required because of such amendment. If, prior to the
Expiration Date, the Purchaser increases the consideration offered to holders
of Shares pursuant to the Offer, such increased consideration will be paid to
all holders whose Shares are purchased in the Offer whether or not such Shares
were tendered prior to such increase.
The Company has provided the Purchaser with the Company's stockholder lists
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 and will be furnished
to brokers, dealers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
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 extension or
amendment), the Purchaser will accept for payment and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates
for such Shares (or a timely Book-Entry Confirmation (as defined below) with
respect thereto), (2) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined below) in
lieu of the Letter of Transmittal, and (3) any other documents required by the
Letter of Transmittal. The per Share consideration paid to any holder of
Shares pursuant to the Offer will be the highest per Share consideration paid
to any other holder of such Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if, as and when the Purchaser gives oral or written notice
to the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
The Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. If the Purchaser is delayed in its
acceptance for payment of, or payment for, Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to the Purchaser's rights under the Offer (including such rights as
are set forth in Sections 1 and 14) (but subject to compliance with Rule 14e-
1(c) under the Exchange Act), the Depositary may, nevertheless, on behalf of
the Purchaser, retain tendered Shares, and such Shares may not be withdrawn
except to the extent tendering stockholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person
as the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined below)
pursuant to the procedures set forth in Section 3, such Shares will be
credited to such account maintained at the Book-Entry Transfer Facility as the
tendering stockholder shall
9
<PAGE>
specify in the Letter of Transmittal, as promptly as practicable following the
expiration, termination or withdrawal of the Offer. If no such instructions
are given with respect to Shares delivered by book-entry transfer, any such
Shares not tendered or not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility designated in the Letter of Transmittal as
the account from which such Shares were delivered.
The Purchaser reserves the right to assign, in its sole discretion, any or
all of its rights, interests and obligations hereunder to Parent or to any
direct or indirect wholly owned subsidiary of Parent, provided that Parent
shall guarantee the performance of any such subsidiary under the Merger
Agreement, but any such assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. Procedures for Tendering Shares.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (1) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date and either certificates evidencing
tendered Shares must be received by the Depositary at one of such addresses or
such Shares must be delivered to the Depositary pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (2)
the tendering stockholder must comply with the guaranteed delivery procedures
described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two (2) business days after the
date of this Offer to Purchase. Any financial institution that is a
participant in the Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing the Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Even though delivery of
Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, 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 stockholder
must comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account
at the Book-Entry Transfer Facility as described above is referred to herein
as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY 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.
10
<PAGE>
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of 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 therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal, or (2) 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 (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed by an Eligible Institution as provided in the Letter of
Transmittal. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(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 provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, are received by the Depositary within three (3) New
York Stock Exchange trading days after the date of execution of such Notice
of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram or facsimile or mailed 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 the Purchaser.
Upon the acceptance of Shares for payment pursuant to the Offer, the valid
tender of Shares pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
will irrevocably appoint designees of Parent as such stockholder's attorneys-
in-fact and proxies in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted
for payment by the Purchaser and with respect to any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect of such Shares on or after October 30, 2000 (collectively,
"Distributions"). All such powers of attorney and proxies will be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective if, as and when, and only to the extent that, the Purchaser accepts
for payment Shares tendered by such stockholder as provided herein. All such
powers of attorney and proxies will be irrevocable and will be deemed granted
in consideration of the acceptance for payment by the Purchaser of Shares
tendered in accordance with the terms of the Offer. Upon such appointment,
11
<PAGE>
all prior powers of attorney, proxies and consents given by such stockholder
with respect to such Shares (and any and all Distributions) will, without
further action, be revoked and no subsequent powers of attorney, proxies,
consents or revocations may be given by such stockholder (and, if given, will
not be deemed effective). The designees of Parent will thereby be empowered to
exercise all voting and other rights with respect to such Shares (and any and
all Distributions), including, without limitation, in respect of any annual or
special meeting of the Company's stockholders (and any adjournment or
postponement thereof), actions by written consent in lieu of any such meeting
or otherwise, as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the 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
stockholders.
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 the Purchaser, in its sole discretion,
which determination will be final and binding. The Purchaser reserves the
absolute right to reject any or all tenders of any Shares determined by it not
to be in proper form or the acceptance for payment of which, or payment for
which, may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right, in its sole discretion, to waive
any defect or irregularity in any tender of Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in
the case of other stockholders. No tender of Shares will be deemed to have
been validly made until all defects or irregularities relating thereto have
been cured or waived. None of the Purchaser, Parent, the 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. The Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31%
of the amount of any payments pursuant to the Offer. In order to avoid backup
withholding of United States federal income tax payments of the Offer Price
pursuant to the Offer, a stockholder surrendering Shares in the Offer must,
unless an exemption applies and is proven in a manner satisfactory to the
Depositary, provide the Depositary with such stockholder's correct taxpayer
identifying number ("TIN") on a Substitute Form W-9 and certify under penalty
of perjury that such TIN is correct and that such stockholder is not subject
to backup withholding. Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. If a stockholder does not provide its correct TIN or fails
to provide the certifications described above, the Internal Revenue Service
may impose a penalty on such stockholder and payment of the Offer Price to
such stockholder pursuant to the Offer may be subject to backup withholding.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proven in a manner satisfactory to the Depositary). Noncorporate
foreign stockholders should complete and sign the main signature form and a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See Instruction 10 to
the Letter of Transmittal.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after December 29, 2000.
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 of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn,
12
<PAGE>
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date, or during the Subsequent Offering Period, by again following
one of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the 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 any notice of withdrawal or incur any liability for
failure to give any such notification.
No withdrawal rights will apply to Shares tendered during 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.
5. Certain United States Federal Income Tax Consequences.
The following discussion is a summary of certain material United States
federal income tax consequences of the Offer and the Merger to holders of
Shares whose Shares are tendered and accepted for payment pursuant to the
Offer or whose Shares are converted into the right to receive cash in the
Merger. The discussion is for general information only and does not purport to
consider all aspects of United States federal income taxation that might be
relevant to holders of Shares. The discussion is limited to holders of Shares
who hold the Shares "as capital assets" within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"), which generally
includes property held for investment. The discussion set forth below does not
apply to certain categories of holders of Shares subject to special treatment
under the Code, such as foreign holders and holders who acquired such Shares
pursuant to the exercise of employee stock options or otherwise as
compensation. This summary is based upon laws, regulations, rulings and
interpretations currently in effect, all of which are subject to change,
retroactively or prospectively.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and may
also be a taxable transaction under applicable state, local and foreign income
and other tax laws. In general, a holder who sells Shares pursuant to the
Offer, or who receives cash in exchange for Shares pursuant to the Merger,
will recognize gain or loss for United States federal income tax purposes
equal to the difference, if any, between the amount of cash received and the
holder's adjusted tax basis in the Shares sold pursuant to the Offer or
surrendered for cash pursuant to the Merger.
The gain or loss recognized by a holder of Shares pursuant to the Offer or
the Merger will be capital gain or loss and if, as of the date of the tender
pursuant to the Offer or surrender for cash pursuant to the Merger, as the
case may be, the holder has held the Shares tendered or surrendered for more
than one year, such capital gain will be long-term. The amount of any gain or
loss recognized and its character as short-term or long-term will be
calculated and determined separately for each identifiable block of Shares
tendered pursuant to the Offer or surrendered for cash pursuant to the Merger.
In general, capital gains recognized by an individual upon a disposition of a
Share that has been held for more than one year will be subject to a maximum
United States federal income tax rate of 20% or, in the case of a Share that
has been held for one year or less, will be subject to tax at ordinary income
rates. Certain limitations apply to the tax treatment of a stockholder's
capital losses.
13
<PAGE>
Unless a stockholder complies with certain reporting and/or certification
procedures or is an exempt recipient under applicable provisions of the Code
and Treasury regulations promulgated thereunder, such stockholder may be
subject to a withholding tax of 31% with respect to any cash payments received
pursuant to the Offer and the Merger. See the discussion regarding backup
withholding in Section 3. Foreign stockholders should consult with their own
tax advisors regarding withholding taxes in general.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER IS URGED TO
CONSULT HIS, HER OR ITS OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL,
FOREIGN OR OTHER TAX CONSEQUENCES (INCLUDING ANY TAX RETURN FILING OR OTHER
TAX REPORTING REQUIREMENTS) OF THE OFFER AND THE MERGER.
6. Price Range of the Shares; Dividends.
The Shares are quoted on the Nasdaq National Market under the symbol
"JPSP." The following table sets forth, for each of the fiscal quarters
indicated, the high and low sales price per Share. Share prices are as
reported on the Nasdaq National Market based on published financial sources.
<TABLE>
<CAPTION>
High Low
------ -------
<S> <C> <C>
1998
First Quarter............................................ N/A N/A
Second Quarter........................................... N/A N/A
Third Quarter............................................ $5 1/8 $2 7/16
Fourth Quarter........................................... 4 3/8 3 1/4
1999
First Quarter............................................ $4 1/2 $3 9/16
Second Quarter........................................... 6 4 1/4
Third Quarter............................................ 6 4 1/4
Fourth Quarter........................................... 5 2 7/8
2000
First Quarter............................................ $4 3/4 $2 5/8
Second Quarter........................................... 3 1/4 2 1/4
Third Quarter............................................ 5 1/2 2 5/16
Fourth Quarter (through October 27, 2000)................ 7 3/4 5
</TABLE>
On September 29, 2000, the last full trading day before the Company
announced that it had been approached by a potential buyer, the last reported
closing sales price of the Shares as quoted on the Nasdaq National Market was
$4.625 per Share. On October 13, 2000, the last full trading day prior to the
public announcement that the Company, Parent and Purchaser had executed the
Merger Agreement, the last reported closing sales price of the Shares as
quoted on the Nasdaq National Market was $6.00 per Share. On October 27, 2000,
the last full trading day prior to the commencement of the Offer, the last
reported closing sales price of the Shares as quoted on the Nasdaq National
Market was $7 23/32 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
The Company has not paid any cash dividends on its Common Stock during
either of its two most recent fiscal years. Under the terms of the Merger
Agreement, the Company is not permitted to declare, set aside or pay dividends
with respect to the Shares without the prior written consent of Parent and
Parent does not intend to consent to any such declaration or payment.
7. Certain Effects of the Offer.
Market for the Shares. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade
publicly, could reduce the number of holders of Shares and, depending upon the
number of Shares so purchased, could adversely affect the liquidity and market
value of the remaining Shares held by the public.
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Nasdaq Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers, Inc. (the "NASD") for continued inclusion
on the Nasdaq National Market. According to the NASD's published guidelines,
the Shares would no longer be eligible for continued listing if, among other
things, the Company fails to have either (i) at least 750,000 publicly held
shares, held by at least 400 round-lot stockholders, with a market value of at
least $5,000,000, net tangible assets (total assets (excluding goodwill) minus
liabilities) of at least $4,000,000 and have a minimum bid price of $1, or
(ii) at least 1,100,000 publicly held shares, held by at least 400 round-lot
stockholders, with a market value of at least $15,000,000, have a minimum bid
price of $5 and have either (A) a market capitalization of at least
$50,000,000 or (B) total assets and revenues each of at least $50,000,000.
Shares held directly or indirectly by an officer or director of the Company or
by a beneficial owner of more than 10% of the Shares will ordinarily not be
considered as being publicly held for purposes of these standards. If the
Shares were no longer eligible for inclusion in the Nasdaq National Market,
they might nevertheless continue to be included in the Nasdaq SmallCap Market
unless, among other things, the public float is less than 500,000 shares, or
there are fewer than 300 stockholders (round lot holders) in total, or the
market value of public float is less than $1 million.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC 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 stockholders and to the SEC 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), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with stockholders' meetings and the related requirement of
furnishing an annual report to stockholders 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 or Rule 144A promulgated under the Securities Act of 1933, as
amended, may be impaired or eliminated.
Parent currently intends to cause the Company to delist the Shares from the
Nasdaq National Market as soon as reasonably practicable after consummation of
the Offer and the Merger. If the Nasdaq National Market were to cease to
publish quotations for the Shares, it is possible that the Shares would
continue to trade in the over-the-counter market and that price or other
quotations would be reported by other sources. The extent of the public market
for such Shares and the availability of such quotations would depend, however,
upon such factors as the number of stockholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act, as described below, and other factors.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status 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 stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. Certain Information Concerning the Company.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources. Although neither the Purchaser nor Parent
15
<PAGE>
has any knowledge that would indicate that any statements contained herein
based upon such reports and documents are untrue, none of Parent, the
Purchaser, the Dealer Manager, the Depositary or the Information Agent assumes
any responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to Parent, the Purchaser, the Dealer Manager, the Depositary or the
Information Agent.
The Company operates in the packaging industry as a manufacturer and
converter of flexible packaging and labeling products for use by customers in
the food and beverage industry and other niche markets. The Company sells a
broad variety of flexible packaging products, most of which are printed by the
Company, to both domestic and foreign customers. The Company's labeling
products for carbonated beverages, dairy beverages and juices are principally
manufactured at its Akron, Ohio facility. The Company also manufactures and
sells liquid novelty packaging, peelable lidding for single servings of
pudding, gelatin and cultured dairy products, and pouch packaging for dried
fruit and nut products, which are produced primarily at its San Leandro,
California facility. These products collectively accounted for approximately
75% of the Company's fiscal 1999 sales. The Company also produces and sells a
variety of other products, including packaging for single-serve condiments and
film-based products for the medical and construction industries. The Company
was originally incorporated in Ohio on November 1, 1990 and known as Sealright
Manufacturing-East, Inc. On March 24, 1998, Sealright Manufacturing-East, Inc.
was reincorporated in Delaware and thereafter changed its name to "JPS
Packaging Company." Prior to July 1, 1998, the Company was a subsidiary of
Sealright Co., Inc. ("Sealright"). On July 1, 1998 the Company ceased to exist
as a subsidiary of Sealright. The Company employs approximately 420 employees.
The Company is a Delaware corporation with its principal executive offices at
4200 Somerset Drive, Suite 208, Prairie Village, Kansas 66208. The telephone
number of the Company is (913) 381-0008.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and, in accordance therewith, is
required to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
stock options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the SEC. These reports, proxy statements
and other information should be available for inspection at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC 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 SEC by telephoning 1-800-
SEC-0330. Copies of these materials should be obtainable by mail, upon payment
of the SEC's customary fees, by writing to the SEC's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. 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. The SEC also maintains a website
on the Internet at http://www.sec.gov that contains reports, proxy statements
and other information relating to the Company.
9. Certain Information Concerning Parent and the Purchaser.
Parent and the Purchaser. Parent, a Delaware corporation, is a North
American producer of flexible packaging for the food, meat, dairy, healthcare
and specialty markets. It is also a major producer of multi-layer barrier
plastic bottles. Parent produces a wide range of single- and multi-layer plain
and printed films and laminations, pouches, lidstock and thermoformed trays.
The Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any
significant activities other than in connection with the Offer and the Merger.
All of the outstanding capital stock of the Purchaser is owned directly by
Parent. Until immediately prior to the time the Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in any significant activities
other than those incident to its formation and capitalization and the
transactions contemplated by the Offer and the Merger.
16
<PAGE>
The principal offices of Parent and the Purchaser are located at 8770 West
Bryn Mawr Avenue, Chicago, Illinois 60631-3542. The telephone number of Parent
and the Purchaser is (773) 399-8000.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and the executive
officers of Parent and the Purchaser are set forth on Schedule I hereto.
Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser nor, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto or any associate or majority owned
subsidiary of such persons beneficially owns or has any right to acquire,
directly or indirectly, any Shares, and none of Parent, the Purchaser nor, to
the best knowledge of Parent and the Purchaser, any of the other persons or
entities referred to above, nor any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in the Shares during the past sixty (60) days.
Except as provided in the Merger Agreement or as otherwise described in
this Offer to Purchase, neither Parent nor the Purchaser nor, to the best
knowledge of Parent and the Purchaser, any of the persons listed on Schedule I
hereto has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss, guarantees of profits, divisions
of profits or loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, neither Parent nor the
Purchaser nor, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto has had any business relationships or
transactions 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 SEC applicable to the Offer. Except as set forth in this Offer to
Purchase, there have been no contacts, negotiations or transactions between
Parent or the Purchaser, their respective subsidiaries, or, to the best
knowledge of Parent and the Purchaser, any of the persons listed on Schedule I
hereto, on the one hand, and the Company or its executive officers, directors
or affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets. See
Section 11.
During the past five years, neither Parent nor the Purchaser nor, to the
best knowledge of Parent and the Purchaser, any of the persons listed on
Schedule I hereto has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), nor has any of them, during the
past five years, been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or 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 Offer is not conditioned upon any financing arrangements. The total
amount of funds required by the Purchaser to purchase Shares pursuant to the
Offer and the Merger is estimated to be approximately $45 million. The
Purchaser will obtain all such funds from Parent. Parent will obtain such
funds from existing resources and internally generated funds.
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements.
Contacts with the Company; Background of the Offer.
The Company, formerly a wholly-owned subsidiary of Sealright, became an
independent company at the time of the merger of Sealright into a subsidiary
of Huhtamaki Oy in connection with Huhtamaki Oy's purchase of Sealright's
rigid packaging business. During the period prior to the merger of Sealright
into Huhtamaki Oy,
17
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Sealright considered a number of strategic alternatives, including a sale of
either the rigid packaging business and/or the flexible packaging business or
a sale of the entire company. Parent was one of the parties contacted in
connection with the sale of Sealright, but Parent did not make an offer for
any part of the Sealright business.
Following the approval of the merger of Sealright into Huhtamaki Oy, the
Company Board did not actively pursue, but remained open to possible strategic
alternatives for the Company. The Company Board remained open to potential
business combination transactions for a number of reasons, including
fragmentation and competition in the flexible packaging industry and the
potential cost-saving and revenue-enhancing effects of a business combination
with another industry participant, and more recently because of internal
considerations such as the resignation of the Company's Chief Executive
Officer in June 2000.
On June 26, 2000, Ilene Gordon, President of Parent, called G. Kenneth Baum, a
member of the Company Board, to discuss the possibility of a business
combination between the Company and Parent. During July 2000, telephone
conversations among the Company's senior management and members of Parent's
senior management were held to discuss a possible business combination.
On July 24, 2000, at the request of Ms. Gordon, Mr. Baum and Leo Benatar,
Chairman of the Company Board, met with Ms. Gordon and others in Chicago to
discuss possible strategic transactions between Parent and the Company.
On August 1, 2000, Mr. Benatar, Mr. John T. Carper, President and Chief
Financial Officer of the Company and a member of the Company Board, and Mr.
William D. Thomas, a member of the Company Board, met with senior management
of Parent in Atlanta, Georgia. At this meeting, the parties discussed the
operations and strategies of Parent and the Company and various alternative
transactions. No conclusions were reached at this meeting. Following this
meeting, Parent and the Company signed a customary confidentiality agreement.
Thereafter, Parent commenced a due diligence review of the Company, including
discussions with senior management and a review of documents made available at
the office of the Company's counsel.
During August 2000, representatives of Parent and the Company continued to
discuss various structures for potential strategic transactions between the
two companies.
On September 6, 2000, counsel for Parent provided a draft Agreement and Plan
of Merger to the Company and its counsel. From September 15 through October
13, 2000, the parties and their advisors negotiated the terms of the Merger
Agreement and related documents.
On September 7, 2000 and September 12, 2000, outside of business hours,
members of the Company's management met with members of management of Parent
at the Company's facilities in San Leandro, California and Akron, Ohio,
respectively.
On September 12, 2000, the Company Board held a meeting in which members of
GKB and Bryan Cave LLP, the Company's outside legal counsel, participated to
review the status of the Company's discussions with Parent, although the
Company had not received any definitive offer at the time of the meeting. At
that meeting, Bryan Cave LLP advised the members of the Company Board of their
fiduciary duties in connection with potential business combination
transactions. Members of senior management and representatives of GKB reviewed
the process undertaken in 1998 in connection with the Sealright transaction
and discussed with the Company Board factors that would be considered in its
evaluation of a transaction with Parent.
During the course of the Company's discussions with Parent, the Company was
also contacted by other parties who expressed an interest in a possible
business combination. In light of the Company's assessment of the range of
possible transactions with such parties and its discussions with Parent, among
other things, the Company determined not to pursue further discussions with
other potential parties at that time.
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<PAGE>
The Company issued a press release on October 2, 2000, announcing that it
had been approached by a potential buyer, but had not received an offer.
On October 3, 2000, Mr. Benatar and Ms. Gordon held a telephone conference
in which they discussed the proposed terms of a possible business combination,
including the method for determining the price per Share that Purchaser would
be willing to pay. Mr. Benatar later contacted Ms. Gordon and indicated that
the Company wished to proceed with the proposed transaction, subject to
agreement on the purchase price and negotiation of a definitive agreement.
On October 10, 2000, Mr. Benatar, Mr. Carper and Ms. Gordon and others met
at Parent's office to conduct final negotiations of the price and principal
terms of the proposed transaction. After such negotiations, Parent proposed a
purchase price of $7.86 per Share.
On October 11, 2000, a special meeting of the Company Board was held in
which representatives of GKB and Bryan Cave LLP participated. At that meeting,
GKB presented its valuation analyses regarding the Company and rendered an
oral opinion to the Company Board to the effect that as of October 11, 2000
the consideration of $7.86 per Share proposed to be paid in cash by Parent was
fair from a financial point of view to the holders of Shares. The GKB opinion
was subsequently confirmed in writing by delivery of a written opinion dated
October 13, 2000. After a full discussion, the Company Board unanimously
approved the proposed transaction with Parent, the Merger Agreement and
related matters, including the matters described in the introductory paragraph
of this Item 4, and authorized Mr. Benatar and Mr. Carper to negotiate any
final changes necessary to the Merger Agreement on behalf of the Company.
On October 13, 2000, the Company and Parent executed and delivered the
Merger Agreement.
On October 16, 2000, the Company and Parent issued a joint press release
before the opening of trading on the Nasdaq National Market announcing the
transaction and that the parties had entered into a definitive agreement.
Purpose of the Offer and the Merger.
The purpose of the Offer and the Merger is to enable Parent to acquire
control of, and the entire equity interest in, the Company. Upon consummation
of the Merger, the Company will become a wholly owned subsidiary of Parent.
The Offer is being made pursuant to the Merger Agreement and is intended to
increase the likelihood that the Merger will be effected.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 12. Similarly, after selling their Shares in the Offer or
the subsequent Merger, stockholders of the Company will not bear the risk of
any decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell
all of their Shares for cash at a price which represents a premium of
approximately 70% over the last reported closing sales price of the Shares on
September 29, 2000, the last full trading day before the Company announced
that it had been approached by a potential buyer, and a premium of
approximately 31% over the closing sales price of the Shares on October 13,
2000, the last full trading day prior to the public announcement that the
Company, Parent and Purchaser had executed the Merger Agreement.
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<PAGE>
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 the Purchaser with the SEC in
connection with the Offer (the "Schedule TO"). This summary is qualified in
its entirety by reference to the Merger Agreement, which is deemed to be
incorporated herein. The following summary may not contain all of the
information that is important to you. The Merger Agreement may be examined and
copies may be obtained from the SEC in the manner set forth in Section 8.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the satisfaction or waiver
of the conditions of the Offer, the Purchaser will purchase all Shares validly
tendered pursuant to the Offer. The obligation of the Purchaser to accept for
payment and pay for any Shares validly tendered prior to the expiration of the
Offer is conditioned upon satisfaction of the Minimum Condition and the
satisfaction or waiver of the conditions described in Annex A to the Merger
Agreement. See Section 14 of this Offer to Purchase.
The Merger Agreement provides that the Purchaser will not decrease the
Offer Price, change the form of consideration payable in the Offer, decrease
the number of Shares sought in the Offer, or amend any other condition to the
Offer in any manner adverse to the holders of the Shares without the prior
written consent of the Company. Notwithstanding the foregoing provisions, if
on the initial scheduled Expiration Date of the Offer (as it may be extended)
all conditions to the Offer have not been satisfied or waived, Purchaser may,
in its sole discretion, extend the Offer in no less than 10-day increments,
until such time as the conditions are satisfied or waived. In addition, the
Offer Price may be increased and the Offer may be extended to the extent
required by law in connection with such increase, in each case without the
consent of the Company.
Stock Option Agreement. The Merger Agreement provides that, if Purchaser
has acquired less than 90% of the Shares, but not less than 50% of the Shares,
then the Company, the Purchaser and Parent will enter into a stock option
agreement, on customary terms, whereby the Company will grant to the Purchaser
an option to purchase that number of Shares that, when added to the Shares
owned by the Purchaser and its affiliates immediately following expiration of
the Offer, results in Purchaser owning 90% of the outstanding Shares on a
fully diluted basis for a per share price that is no higher than the Offer
Price.
Designation of Directors. The Merger Agreement provides that, promptly upon
the purchase of and payment by Parent or any of its subsidiaries of at least a
majority of the Shares pursuant to the Offer, Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board as is equal to the product of the total number of directors
on such Company Board (giving effect to the directors designated by Parent)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by the Purchaser, Parent and any of their affiliates bears to the total
number of Shares then outstanding. The Company will, upon the request of
Parent, use its best efforts promptly to take all action necessary to cause
such persons designated by Parent to be appointed or elected to the Company
Board, if necessary, by increasing the size of the Company Board, amending the
by-laws of the Company, or securing resignations of incumbent directors or
both. The Company's obligation to elect or appoint Parent's designees to the
Company Board is subject to compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder.
The Merger Agreement further provides that in the event that Parent's
designees are elected to the Company Board, until the Effective Time, the
Company will cause the Company Board to have at least three directors who were
directors on October 13, 2000 (the "Independent Directors"), provided that if
any Independent Directors cannot serve due to death or disability, the
remaining Independent Directors (or Independent Director, if there is only one
remaining) are entitled to designate another person or persons who served as a
director on October 13, 2000 to fill such vacancies or, if no Independent
Director then remains, the other directors will designate three
20
<PAGE>
persons to fill such vacancies. Once Parent's designees constitute a majority
of the Company Board, after the acceptance for payment of Shares pursuant to
the Offer and prior to the Effective Time, the affirmative vote of a majority
of the Independent Directors is required to (1) amend or terminate the Merger
Agreement by the Company, (2) exercise or waive any of the Company's rights,
benefits or remedies under the Merger Agreement, or (3) take any other action
of the Company Board under or in connection with the Merger Agreement;
provided, that if there are no Independent Directors as a result of such
persons' deaths, disabilities or refusal to serve, such actions may be
effected by majority vote of the entire Company Board; provided however, that
the Merger Agreement may only be terminated by the Company as set forth
therein.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, the Purchaser will be merged with and into the Company,
with the Company continuing as the Surviving Corporation and a wholly owned
subsidiary of Parent. At the Effective Time, each issued and outstanding Share
(other than Shares owned by Parent, the Purchaser or any other wholly owned
subsidiary of Parent, Shares owned by the Company as treasury stock and Shares
held by holders who perfect any available dissenters rights under the DGCL)
will be converted into the right to receive the Offer Price, without interest
thereon, and each issued and outstanding share of common stock of the
Purchaser will be converted into and become one fully paid and nonassessable
share of common stock of the Surviving Corporation.
Treatment of Options. The Merger Agreement provides that Parent and the
Company shall take all actions necessary to provide that, as of the Effective
Time, each outstanding employee stock option, stock equivalent right or right
to acquire Shares which has been granted under the Company's Long-Term
Compensation Plan or any other stock option plan, and each outstanding non-
employee director option to purchase Shares granted under the Company's Long-
Term Compensation Plan or any other stock option plan (collectively, the
"Option Plans"), whether or not then exercisable or vested, will be cancelled.
In consideration of such cancellation, Parent will, or will cause the
Surviving Corporation to, pay to the holder of each option to purchase Shares,
whether or not then exercisable or vested, an amount equal to the product of
(A) the excess, if any, of the Offer Price over the exercise price of each
such Option (which, in the case of any stock equivalent right, shall be zero)
and (B) the number of Shares subject thereto (such payment, if any, to be net
of applicable withholding and excise taxes). As of the Effective Time, the
Option Plans shall terminate and all rights under any provision of any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be cancelled. The Merger Agreement provides that the
Company will take all action necessary so that, after the Effective Time, no
person shall have any right under the Option Plans or any other plan, program
or arrangement with respect to equity securities of the Surviving Corporation
or any subsidiary thereof.
Conditions. The respective obligations of each party to effect the Merger
are subject to the satisfaction on or prior to the closing of the Merger, of
each of the following conditions: (1) the Merger Agreement and the Merger
shall have been approved and adopted by the requisite vote of the holders of
Shares if required by the DGCL in order to consummate the Merger; (2) no
statute, rule, order, decree, regulation, executive order, ruling or temporary
or permanent injunction shall have been enacted, entered promulgated or
enforced by any Governmental Entity of competent jurisdiction which, as of the
Closing Date, prohibits the consummation of the Merger or otherwise materially
limits or restricts ownership or operation of the business of the Surviving
Corporation and all foreign or domestic governmental consents, orders and
approvals required for the consummation of the Merger and the transactions
contemplated by the Merger Agreement shall have been obtained and shall be in
effect at the Effective Time and shall not materially limit or restrict
ownership or the operation of the business of the Surviving Corporation; (3)
The Merger Agreement shall not have been terminated in accordance with its
terms; and (4) Parent, the Purchaser or their affiliates shall have purchased
Shares pursuant to the Offer, provided, that neither the Company nor the
Parent or Purchaser shall be entitled to invoke this condition if it shall
have been the cause of the failure to purchase shares so tendered and not
withdrawn in violation of the terms of the Offer. In addition, the Merger is
subject to other conditions similar to the ones described in Section 14 of
this Offer to Purchase.
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Stockholders' Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, (1) duly
call, give notice of, convene and hold a special meeting of its stockholders
as soon as reasonably practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement; (2) prepare and file
with the SEC a preliminary proxy or information statement relating to the
Merger and the Merger Agreement and will use its reasonable best efforts to
cause a definitive Proxy Statement to be mailed to
its stockholders; (3) subject to the applicable provisions of the Merger
Agreement, include in the Proxy Statement the recommendation of the Company
Board that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of the Merger Agreement; and (4) use its reasonable
best efforts to solicit from holders of Shares proxies in favor of the Merger
and take all other action reasonably necessary or advisable to secure the
stockholder approval required by the DGCL to effect the Merger. In the event
that Parent, the Purchaser or any other subsidiary of Parent acquires at least
90% of the outstanding Shares, pursuant to the Offer or otherwise, the parties
will take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
the Company's stockholders, in accordance with the DGCL.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including
representations by the Company as to, among other things (1) organization,
good standing and subsidiaries, (2) capitalization, (3) authorization,
validity of the Merger Agreement and all required Company action taken with
respect to the Offer and the Merger, (4) vote required to approve the Merger,
(5) no violations, and required consents or approvals, (6) no material
misstatements in filings made with the SEC or financial statements, (7)
absence of certain changes or events, (8) no undisclosed liabilities, (9) no
misstatements or omissions of a material fact in the Schedule 14D-9, Proxy
Statement or other filings with the SEC with respect to the Offer and the
Merger, (10) employee benefit plans and ERISA, (11) litigation, (12)
compliance with environmental laws and regulations, (13) tax returns and tax
liabilities, (14) labor and employment matters, (15) compliance with all laws,
(16) insurance, (17) material contracts, (18) title to properties, (19) all
necessary permits and licenses, (20) intellectual property, (21) major
customers, (22) receipt of fairness opinion from financial advisor, (23) full
disclosure, and (24) cash balances. In addition, the Merger Agreement contains
representations by Parent and the Purchaser as to, among other things, (1)
organization and good standing, (2) authorization, validity of the Merger
Agreement and all required Parent and Purchaser action taken with respect to
the Offer and the Merger, (3) no violations, and required consents or
approvals, (4) no misstatements or omissions of a material fact in the Offer
Documents, the Proxy Statement or other filings with the SEC with respect to
the Offer and the Merger, (5) financing the Offer and the Merger, and (6)
operations of the Purchaser.
Interim Operations. Pursuant to the Merger Agreement, the Company has
agreed that after the date of the Merger Agreement and prior to the Effective
Time, unless Parent otherwise agrees in writing or except as otherwise
contemplated by the Merger Agreement:
(a) the business of the Company and each of its subsidiaries will be
conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its subsidiaries preserve
intact its business organization and maintain its existing relations with
customers, suppliers, employees, creditors, business partners and others
having significant business dealings with them;
(b) the Company will not, and will not permit its subsidiaries to: (1)
amend its certificate of incorporation or by-laws or similar organizational
documents; (2) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock; (3)
issue, sell, transfer, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class or bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its subsidiaries, other than
Shares reserved for issuance pursuant to the exercise of stock options
outstanding on the date of the Merger Agreement; (4) split, combine or
reclassify the outstanding Shares or any outstanding capital stock of any
of its subsidiaries; or (5) redeem, purchase or otherwise acquire directly
or indirectly any shares of its capital stock or any instrument or security
which consists of or includes a right to acquire such shares;
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(c) the Company will not, and will not permit any of its subsidiaries
to, transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any assets other than in the ordinary and usual course of business
and consistent with past practice and other than sales of assets that do
not exceed $100,000 per transaction and $500,000 in the aggregate;
(d) the Company will not, and will not permit any of its subsidiaries
to, acquire or publicly propose to acquire or agree to acquire (1) by
merging or consolidating with, or by purchasing an equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof or (2) any assets outside of the
ordinary and usual course of business;
(e) the Company will not, and will not permit any of its subsidiaries to
(1) grant any increase in the compensation payable or to become payable,
except for increases in the ordinary and usual course of business
consistent with past practice and budgeted for in the 2000 budget of the
Company, to employees of the Company or its subsidiaries or any director or
executive officer of the Company or the Company's subsidiaries or (2) enter
into or adopt any new, or amend or otherwise increase or accelerate the
payment or vesting of or otherwise provide for any benefit or amount
payable or to become payable under, any bonus, incentive compensation,
deferred compensation, severance, profit sharing, stock option, stock
purchase, insurance, pension, retirement or other employee benefit plan, or
other contract, agreement, commitment, arrangement, plan, trust fund or
policy maintained or contributed to or entered into by the Company or any
of its subsidiaries; or (3) enter into any employment, deferred
compensation or severance agreement with or grant any severance or
termination pay to any officer, director or employee of the Company or any
of its subsidiaries;
(f) the Company will not, and will not permit any of its subsidiaries to
enter into, modify, amend, or renew any contract or agreement unless in the
ordinary course of business consistent with past practice, the contract may
be terminated upon forty-five (45) days notice, and the dollar value of
such new contract or agreement, or existing contract or agreement as so
amended, modified, or renewed, is or would be less than $150,000 (not to
exceed $500,000 in the aggregate);
(g) the Company will, and will cause each of its subsidiaries to,
maintain insurance coverage that in the aggregate is not materially
different from that which is currently in effect;
(h) the Company will not, and will not permit any of its subsidiaries
to: (1) incur or assume any long-term debt, individually or in the
aggregate, or incur or assume any short-term indebtedness or assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person; (2) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned subsidiaries
of the Company consistent with past practice); or (3) make any capital
expenditures which are not included in the year 2000 budget of the Company,
other than as set forth in subsection (k) herein;
(i) the Company will not, and will not permit any of its subsidiaries
to, change any of the accounting principles used by it except as required
by law, rule, regulation or United States generally accepted accounting
principles;
(j) the Company will not, and will not permit any of its subsidiaries
to, make any tax election other than in the ordinary course of business and
consistent with past practice, change any tax election already made, adopt
any accounting method relating to taxes unless required by GAAP, settle or
compromise any tax liability or consent to any waiver of the statute of
limitations for any such tax liability;
(k) neither the Company nor any of its subsidiaries shall pay,
discharge, satisfy or incur any claims, liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, except such
liabilities and obligations that (i) have been incurred in the ordinary
course of the Company's business, consistent with its regular practices as
in effect on June 30, 2000 and (ii) are consistent with the Company's
normal business terms as in effect on June 30, 2000 with respect to
employment terms, sales to customers, purchases from vendors or otherwise.
Notwithstanding the preceding sentence, the Company shall not make nor
commit to make to any capital expenditures that impose costs to the Company
in excess of $100,000
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per capital expenditure, or $500,000 in the aggregate, and which are not
expressly described in the 2000 budget or in the 1999 budget of the
Company, provided, however, that notwithstanding the foregoing, the Company
shall be entitled to pay on a timely basis all reasonable, documented
advisory fees and expenses related to the Merger Agreement and the
transactions contemplated thereby;
(l) the Company will not, and will not permit any of its subsidiaries
to, adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any of its subsidiaries (other than the Merger);
(m) the Company will not, and will not permit any of its subsidiaries
to, amend, renew, terminate or cause to be extended any lease, agreement or
arrangement relating to any of its leased properties or enter into any
lease, agreement or arrangement with respect to any real property except
for monthly renewals of leases that expire monthly;
(n) the Company will, and will cause each of its subsidiaries to
maintain in effect all of its existing permits;
(o) subject to certain other restrictions set forth in the Merger
Agreement, the Company will not, and will not permit any of its
subsidiaries to, enter into any agreement or arrangement with any of their
respective officers, directors, stockholders of the Company holding 2
percent or more of any class or series of capital stock of the Company
(including the Shares), or any persons affiliated with the foregoing, other
than such agreements and arrangements as are entered into in the usual,
ordinary and regular course of business, consistent with past practice and
which have been negotiated on an arm's-length basis and are no less
favorable to the Company or its subsidiaries than the Company or such
Subsidiary would have obtained from an unaffiliated third party, and
provided that the Company shall have scheduled such items pursuant to the
Merger Agreement or, if after the date of the Merger Agreement, the Company
shall receive Parent's consent in writing prior to entering into any such
affiliate transaction;
(p) the Company will not, and will not permit any of its subsidiaries
to, take, or agree to commit to take, any action that would impair the
ability of the Company, Parent or Purchaser to consummate the Offer or the
Merger in accordance with the terms of the Merger Agreement or delay such
consummation;
(q) the Company will not, and will not permit any of its subsidiaries
to, take any action that would make any representation or warranty, when
read without any exception or qualification to materiality or Company
Material Adverse Effect, of the Company under the Merger Agreement
inaccurate in any material respect at, or as of any time prior to, the
Effective Time; and
(r) the Company will not, and will not permit any of its subsidiaries
to, enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to publicly announce an intention to do any of the
foregoing.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that from the date of the Merger Agreement until the termination of the Merger
Agreement in accordance with its terms, neither it nor any of its subsidiaries
or affiliates will (and the Company will use its reasonable best efforts to
cause its and each of its subsidiaries' officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, solicit,
participate in, initiate, or knowingly encourage discussions or negotiations
with, provide any information to, or enter into any agreement with, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any merger, business
combination, tender offer, exchange offer, sale of all or substantially all of
its business, assets, capital stock or debt securities or any significant
equity or debt investment in the Company or any similar transactions involving
the Company (an "Acquisition Proposal"). The Company also agreed immediately
to cease any existing activities, discussions or negotiations with any other
persons with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the time of acceptance of Shares for payment pursuant to the Offer,
the Company may, directly or indirectly, provide access and furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to customary
confidentiality agreements, and may negotiate and participate in discussions
and negotiations with such entity or group if (x) such entity or group has
submitted an unsolicited bona fide written
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proposal to the Company Board relating to any such transaction, (y) such
proposal is not subject to any financing contingency, and (z) the Company
Board determines in good faith, after consultation with its independent
financial advisor, that such proposal is financially superior to the Offer
(taking into account all terms and conditions of the proposal, including any
break-up fees, expenses, conditions and financing) and the Merger. A proposal
meeting all of the criteria in the preceding sentence is referred to in the
Merger Agreement as a "Superior Proposal." The Merger Agreement does not
prohibit the Company or the Company Board from taking and disclosing to the
Company's stockholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
The Company has agreed immediately to notify Parent of any Superior Proposal,
or if an inquiry is made, to keep Parent fully apprised of all developments
with respect thereto, immediately to provide to Parent copies of any written
materials received by the Company in connection with any Superior Proposal,
discussion, negotiation or inquiry, and to identify the party making any
Superior Proposal, discussion, negotiation or inquiry and the identity of the
party making any Superior Proposal or inquiry or engaging in such discussion
or negotiation. The Company also has agreed promptly to provide to Parent any
non-public information concerning the Company provided to any other party
which was not previously provided to Parent. The Company has agreed not to
release any third party from, or waive any provisions of, any confidentiality
or standstill agreement to which the Company is a party. The Merger Agreement
provides that, only in connection with the valid termination of the Merger
Agreement in connection with a Superior Proposal, may the Company Board (1)
withdraw, or modify or change in a manner adverse to Parent or the Purchaser,
the approval or recommendation by the Company Board of the Offer, the Merger
Agreement or the Merger, or propose to do so, (2) approve or recommend any
Acquisition Proposal or propose to do so, or (3) enter into any agreement with
respect to any Acquisition Proposal.
Directors' and Offers' Indemnification and Insurance. The Merger Agreement
provides that the certificate of incorporation and bylaws of the Surviving
Corporation shall contain indemnification provisions that are substantially
the same as or superior to the indemnification provisions contained in the
current certificate of incorporation and bylaws of the Company. Such
indemnification provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years after the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were directors or officers of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement), unless such modification is required by law). The Parent shall
cause the Surviving Corporation to maintain a policy of officers' and
directors' liability insurance for acts and omissions occurring prior to the
Effective Time with coverage in amount and scope at least as favorable as the
Company's existing directors' and officers' liability insurance coverage for a
period of six years after the Effective Time.
Termination. The Merger Agreement provides that it may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) by the mutual consent of the Parent Board and the Company Board.
(b) by either of the Company Board or the Parent Board:
(1) if Shares have not been purchased pursuant to the Offer on or
prior to January 30, 2001; provided, that the right to terminate the
Merger Agreement pursuant to this paragraph is not available to any
party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, the failure of the
Purchaser to purchase Shares pursuant to the Offer on or prior to such
date; or
(2) if any Governmental Entity has issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action
the parties shall use their reasonable efforts to lift), in each case,
permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order,
decree, ruling or other action has become final and non-appealable.
(c) by the Company Board:
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(1) if, prior to the purchase of Shares pursuant to the Offer, the
Company Board has withdrawn, or modified or changed in a manner adverse
to Parent or the Purchaser, its approval or recommendation of the
Offer, the Merger Agreement or the Merger in order to approve and
permit the Company to execute a definitive agreement providing for a
Superior Proposal; provided that (A) at least three (3) business days
prior to terminating the Merger Agreement pursuant to this paragraph
the Company has provided Parent with written notice advising Parent
that the Company Board has received a Superior Proposal that it intends
to accept, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior
Proposal, and (B) the Company has caused its financial and legal
advisors to negotiate in good faith with Parent to make such
adjustments in the financial terms of a revised Merger Agreement that
are equal or superior to the financial terms of such Superior Proposal;
and further provided that simultaneously with any termination of the
Merger Agreement pursuant to this paragraph, the Company shall pay to
Parent the Termination Fee (as defined below); or
(2) if, prior to the purchase of Shares pursuant to the Offer,
Parent or the Purchaser breaches or fails in any material respect to
perform or comply with any of its covenants and agreements contained in
the Merger Agreement or breaches its representations and warranties; or
(3) if Parent or the Purchaser has terminated the Offer, or the
Offer has expired, without Parent or the Purchaser, as the case may be,
purchasing any Shares pursuant thereto; provided, that the Company may
not terminate the Merger Agreement pursuant to this paragraph if the
Company is in material breach of the Merger Agreement.
(d) by the Parent Board:
(1) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Section 14 below as of the expected initial
scheduled Expiration Date, Parent, the Purchaser, or any of their
affiliates has failed to commence the Offer on or prior to ten business
days following the date of the initial public announcement of the
Offer; provided that Parent may not terminate the Merger Agreement
pursuant to this paragraph if Parent or the Purchaser is in material
breach of the Merger Agreement; or
(2) if prior to the purchase of Shares pursuant to the Offer, the
Company Board has withdrawn, or modified or changed in a manner adverse
to Parent or the Purchaser, its approval or recommendation of the
Offer, the Merger Agreement or the Merger or has recommended an
Acquisition Proposal or offer, or has executed an agreement in
principle (or similar agreement) or definitive agreement providing for
a tender offer or exchange offer for any shares of capital stock of the
Company, or a merger, consolidation or other business combination with
a person or entity other than Parent, the Purchaser or their affiliates
(or the Company Board resolves to do any of the foregoing); or
(3) if Parent or the Purchaser has terminated the Offer, or the
Offer has expired without Parent or the Purchaser purchasing any Shares
thereunder; provided that Parent may not terminate the Merger Agreement
pursuant to this paragraph if Parent or the Purchaser is in material
breach of the Merger Agreement.
Effect of Termination; Termination Fee. The Merger Agreement provides that
in the event of termination, written notice thereof shall be given to the
other party or parties specifying the provision thereof pursuant to which such
termination is made, the Merger Agreement will forthwith become null and void,
except for certain provisions relating to confidentiality and fees and
expenses, each of which shall survive such termination, and there will be no
liability on the part of Parent, the Purchaser or the Company except (A) for
fraud or for breach of the Merger Agreement and (B) as described below with
respect to the payment of certain fees.
Set forth below are the circumstances under which a termination fee is
payable under the terms of the Merger Agreement. All references to paragraph
numbers refer to the section entitled "Termination" above.
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If (w) the Company Board terminates the Merger Agreement pursuant to
paragraph (c)(1) set forth above, (x) the Parent Board terminates the Merger
Agreement pursuant to paragraph (d)(2) set forth above, (y)(I) the Company
Board terminates the Merger Agreement pursuant to paragraphs (b)(1) or (c)(3)
set forth above and prior thereto there was publicly announced another
Acquisition Proposal or (II) the Parent Board terminates the Merger Agreement
pursuant to paragraphs (b)(1) or (d)(3) set forth above due to a failure to
satisfy the Minimum Condition or the conditions contained in paragraphs (h) or
(i) of Annex A to the Merger Agreement and set forth in Section 14 of this
Offer to Purchase and Parent reasonably determines that such failure is
attributable to there having been publicly announced another Acquisition
Proposal, or (z)(I) the Parent Board, due to a material breach by the Company
of certain specified covenants or agreements, including the no solicitation
covenant, terminates the Merger Agreement pursuant to paragraphs (d)(i) or
(d)(3) set forth above or (II)(A) the Parent Board, due to a material breach
by the Company of certain specified covenants or agreements, including the no
solicitation covenant, terminates the Merger Agreement pursuant to paragraphs
(d)(1) or (d)(3) set forth above and (B) within one hundred eighty (180) days
of such termination, the Company enters into a definitive agreement with
respect to an Acquisition Proposal (regardless of the timing of consummation
of such Acquisition Proposal) or an Acquisition Proposal has been otherwise
consummated, then in any such case as described in clause (w), (x), (y) or (z)
above, the Company is obligated to pay to Parent $1.8 million (the
"Termination Fee"). Such payment is due no later than two (2) business days
after such termination of the Merger Agreement, except in the case of any
termination by the Company pursuant to paragraph (c)(1) set forth above, in
which case, payment is due simultaneously with the termination, or in the case
of termination by the Parent in connection with the circumstances described in
clause (z) (II) set forth above, in which case, payment is due simultaneously
with the consummation of the Acquisition Proposal.
If the Company fails to promptly pay any amounts due under clauses (w),
(x), (y) or (z) above, it shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, taken to collect payment, together with
interest on any unpaid amounts at the publicly announced prime rate of nine
and one-half percent (9.5%) from the date such amount was required to be paid.
Fees and Expenses. The Merger Agreement provides that, except as set forth
above, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby will be paid by the party incurring
such expenses.
IRREVOCABLE PROXY AGREEMENT
As of October 13, 2000, George K. Baum Group, Inc., the G. Kenneth Baum
Revocable Trust dated February 28, 1989, as amended December 8, 1994, and the
William D. Thomas Trust dated July 9, 1996 (collectively, the "Stockholder
Group"), entered into an Irrevocable Proxy Agreement (the "Proxy Agreement"),
with Parent and Purchaser in connection with the Merger Agreement. As of
October 13, 2000, the Stockholder Group owned, of record and beneficially,
2,010,992 shares of common stock of the Company (together with all other
shares of common stock of the Company acquired or otherwise received by the
Stockholder Group on or after October 13, 2000, the "Proxy Shares"). As of
October 13, 2000, the Proxy Shares represented approximately 36% of the
outstanding common stock of the Company and approximately 36% of the voting
power of the Company.
Pursuant to the terms of the Proxy Agreement, the Stockholder Group granted
Ilene Gordon, President of Parent, and Mike Hoover, General Counsel of Parent,
an irrevocable proxy (the "Proxy") to vote all of the Proxy Shares at any time
prior to the termination of the Merger Agreement, as follows: (i) in favor of
the Merger and the Merger Agreement; (ii) against any actions or agreements
that would result in a breach by the Company of the Merger Agreement or the
Proxy Agreement; and (iii) against any of the following actions (other than
the Merger): (A) any extraordinary corporation transaction; (B) a sale, lease
or transfer of a material amount of assets of the Company or its subsidiaries,
or a reorganization, recapitalization, dissolution or liquidation of the
Company or its subsidiaries; (C)(1) any change in a majority of the persons
who constitute the board of directors
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of the Company; (2) any change in the Company's Bylaws; (3) any other material
change in the Company's corporate structure or business; or (4) any other
action involving the Company or its subsidiaries which is intended, or could
reasonably be expected to impede, delay or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement and the Proxy
Agreement.
12. Plans for the Company; Other Matters.
Plans for the Company. Parent is conducting a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances existing upon completion of the Offer.
Such changes could include, among other things, changes in the Company's
business, corporate structure, capitalization, management or dividend policy,
and the consolidation of Parent's business with the Company's business to
increase synergies, the expansion of facilities of Parent and the Company, the
changes in uses in the facilities of Parent and the Company, the disposal of
certain operations of the Company or Parent that are redundant and the
transfer of business and manufacturing operations among the Company and
Parent.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
neither Parent nor the Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of
a material amount of assets, involving the Company or its subsidiaries, or any
material changes in the Company's capitalization, corporate structure,
business or composition of its management or the Company Board.
Assuming the Minimum Condition is satisfied and the Purchaser purchases
Shares pursuant to the Offer, Parent intends promptly to exercise its rights
under the Merger Agreement to obtain majority representation on, and control
of, the Company Board. See "Merger Agreement -- Designation of Directors"
above. Parent will exercise such rights by causing the Company to elect to the
Company Board Messrs. Ilene S. Gordon, Mike J. Hoover, Robert J. Mosesian and
Igor Playner. Information with respect to such directors is contained in
Schedule I hereto. The Merger Agreement provides that, promptly upon the
purchase of and payment by Parent or any of its subsidiaries of at least a
majority of the Shares pursuant to the Offer, Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board as is equal to the product of the total of number of
directors on such Company Board (giving effect to the directors designated by
Parent) multiplied by the percentage that the aggregate number of Shares
beneficially owned by the Purchaser, Parent and any of their affiliates bears
to the total number of Shares then outstanding. See Section 11. The Merger
Agreement provides that the directors of the Purchaser and the officers of the
Company, in each case immediately prior to the Effective Time, will, from and
after the Effective Time, be the initial directors and officers, respectively,
of the Surviving Corporation.
Stockholder Approval. Under the DGCL, the approval of the Company Board and
the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of
the Company's capital stock which is necessary to approve the Merger Agreement
and the transactions contemplated thereby, including the Merger. Therefore,
unless the Merger is consummated pursuant to the short-form merger provisions
under the DGCL described below (in which case no further corporate action by
the stockholders of the Company will be required to complete the Merger), the
only remaining required corporate action of the Company will be the
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approval of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of a majority of the Shares. The Merger
Agreement provides that Parent will vote, or cause to be voted, all of the
Shares then owned by Parent, the Purchaser or any of Parent's other
subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of the Merger Agreement. In the event that Parent, the Purchaser and
Parent's other subsidiaries and affiliates acquire in the aggregate at least a
majority of the Shares entitled to vote on the approval of the Merger and the
Merger Agreement (which would be the case if the Minimum Condition is
satisfied and the Purchaser were to accept for payment Shares tendered in the
Offer), they would have the ability to effect the Merger without the
affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Parent, the Purchaser and any other subsidiaries of Parent acquire
in the aggregate at least 90% of the outstanding Shares, pursuant to the Offer
or otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the stockholders of the Company, subject to
compliance with the provisions of Section 253 of the DGCL. Even if Parent and
the Purchaser do not own 90% of the outstanding Shares following consummation
of the Offer, Parent and the Purchaser could seek to purchase additional
Shares in the open market or otherwise in order to reach the 90% threshold and
employ a short-form merger. The per Share consideration paid for any Shares so
acquired may be greater or less than that paid in the Offer. In addition, the
Merger Agreement provides that, if the Purchaser obtains 50% or more of the
issued and outstanding Shares in the Offer, but less than 90%, the Company
will grant to the Purchaser an option to purchase the number of Shares that,
when combined with the Shares beneficially owned by the Purchaser, would
result in the Purchaser owning 90% of the outstanding Shares. Parent and the
Purchaser presently intend to effect a short-form merger if permitted to do so
under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of
the Shares at the Effective Time will have certain rights pursuant to the
provisions of Section 262 of the DGCL, including the right to dissent and
demand appraisal of, and to receive payment in cash of the fair value of,
their Shares. Under Section 262 of the DGCL, dissenting stockholders of the
Company 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 thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the price per Share to be paid in the Merger or
the market value of the Shares. The value so determined could be more or less
than the price per Share to be paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
13. Dividends and Distributions.
As described above, the Merger Agreement provides that from the date of the
Merger Agreement until the Effective Time, without the prior written consent
of Parent, neither the Company nor any of its Subsidiaries will (1) amend its
certificate of incorporation or by-laws or similar organizational documents;
(2) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to its capital stock; (3) issue, sell,
transfer, pledge, dispose of or encumber any shares of, capital stock of any
class or Voting Debt of the Company or any of its subsidiaries, other than
Shares reserved for issuances pursuant to the exercise of options outstanding
on the date of the Merger Agreement and disclosed therein; (4) split, combine
or reclassify the outstanding Shares or any outstanding capital stock of any
subsidiary of the Company; or (5) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock or any instrument or security
which consists of or includes a right to acquire such capital stock.
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<PAGE>
14. Conditions to the Offer.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer in
its sole discretion (subject to the provisions of the Merger Agreement), the
Purchaser is not required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate the
Offer as to any Shares not then paid for, if (1) any applicable waiting period
under the HSR Act or any foreign antitrust, investment or competition law or
regulation has not expired or terminated, (2) the Minimum Condition has not
been satisfied, or (3) at any time on or after the date of the Merger
Agreement and on or before the expiration of the Offer any of the following
events shall occur or shall be determined by the Purchaser to have occurred:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity (1) seeking to prohibit or impose any
limitations on Parent's and/or the Purchaser's ownership or operation
(and/or that of any of their respective subsidiaries or affiliates) of all
or a material portion of their or the Company's businesses or assets, or to
compel Parent and/or the Purchaser or their respective subsidiaries and
affiliates to dispose of or hold separate any portion of the business or
assets of the Company or Parent and their respective subsidiaries, in each
case taken as a whole, (2) challenging the acquisition by Parent and/or the
Purchaser of any Shares under the Offer, seeking to restrain or prohibit
the making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by the Merger Agreement, or
seeking to obtain from the Company, Parent or the Purchaser any damages,
(3) seeking to impose limitations on the ability of the Purchaser, or
rendering the Purchaser unable, to accept for payment, pay for or purchase
some or all of the Shares pursuant to the Offer and the Merger, or (4)
seeking to impose limitations on the ability of the Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (1) through
(4) of paragraph (a) above;
(c) there shall have occurred and continue to exist (1) any general
suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchange not related to market conditions), or (2) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory);
(d) any of the representations and warranties of the Company set forth
in the Merger Agreement, when read without any exception or qualification
as to materiality or Company Material Adverse Effect, shall not be true and
correct, as if such representations and warranties were made at the time of
such determination (except as to any such representation and warranty which
speaks as of a specific date, which must be untrue or incorrect as of such
specific date), except where the failure to be so true and correct would
not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect;
(e) any litigation, arbitration or suit shall have commenced questioning
or challenging the validity of the Merger Agreement or an action to be
taken thereunder or in connection therewith or asserting any breach of duty
or lack of fairness relating to the Merger Agreement or any action to be
taken thereunder or in connection therewith; or seeking to enjoin any such
action;
(f) the Company shall have breached or failed to perform any material
obligation or to comply with any material agreement or covenant of the
Company to be performed or complied with by it under the Merger Agreement;
30
<PAGE>
(g) there shall have occurred any events or changes which have had or
which are reasonably likely to have or constitute, individually or in the
aggregate, a Company Material Adverse Effect;
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
(i) (1) it shall have been publicly disclosed or Parent or the Purchaser
shall have otherwise learned that any person, entity or "group" (as defined
in Section 13(d)(3) of the Exchange Act), other than Parent or its
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 10% or more of any class or series
of capital stock of the Company (including the Shares) (or any person
beneficially owning 5% or more of any class or series of capital stock of
the Company (including the Shares) on the date of the Merger Agreement
shall increase such person's beneficial ownership by 2% or more in excess
of such beneficial ownership as reported in an SEC filing publicly filed
prior to the date of the Merger Agreement), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted an
option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of 10% or more of any class or series of capital stock of the
Company (including the Shares) (or any person beneficially owning 5% or
more of any class or series of capital stock of the Company (including the
Shares) on the date of the Merger Agreement shall increase such person's
beneficial ownership by 2% or more in excess of such beneficial ownership
as reported in an SEC filing publicly filed prior to the date of the Merger
Agreement); or (2) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation or other business combination with the Company;
(j) the Company Board or any committee thereof (i) shall have withdrawn,
or modified or changed in a manner adverse to Parent or the Purchaser
(including by amendment of the Schedule 14D-9), its recommendation of the
Offer, the Merger Agreement, or the Merger, (ii) shall have recommended
another proposal or offer, (iii) shall have resolved to do any of the
foregoing or (iv) shall have taken a neutral position or made no
recommendation with respect to the transactions; or
(k) all holders of options shall have executed agreements under which
the options shall be deemed to be cancelled as of the Effective Time in
consideration of the holder receiving with respect to each option an amount
equal to the product of (i) the excess, if any, of the Offer Price over the
exercise price of each such option (which, in the case of any stock
equivalent right, shall be zero) and (ii) the number of Shares subject
thereto (such payment, if any, to be net of applicable withholding and
excise taxes);
which in the sole judgment of Parent or the Purchaser, in any such case,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be waived by Parent or the Purchaser, in whole or in part,
at any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
15. Certain Legal Matters.
General. Except as described in this Offer to Purchase, based on
information provided by the Company, neither the Purchaser nor Parent is aware
of (1) any license or regulatory permit that appears to be material to the
business of the Company and its Subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or the Purchaser
pursuant to the Offer or the Merger, or (2) any approval or other action by
any governmental, administrative or regulatory agency or authority, domestic
or foreign, that would be required prior to the acquisition of Shares by the
Purchaser pursuant to the Offer or the Merger. Should any such approval or
other action be required, the Purchaser and Parent presently contemplate that
such approval or other action would be sought. While, except as otherwise
described in this Offer to Purchase, the Purchaser does not presently intend
to delay the acceptance for payment of, or payment for, Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if
31
<PAGE>
needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result
in consequences adverse to the business of the Company or Parent or that
certain parts of the businesses of the Company or Parent might not have to be
disposed of, or other substantial conditions complied with, in the event that
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
actions are taken with respect to the matters discussed below, the Purchaser
could decline to accept for payment, or pay for, any Shares tendered. The
Purchaser's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions including conditions with respect to
governmental actions. See Section 14.
Antitrust. The Offer is subject to the HSR Act and the rules promulgated
thereunder, which provide that 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
Federal Trade Commission (the "FTC") and certain waiting period requirements
have been satisfied.
A Notification and Report Form with respect to the Offer was filed under
the HSR Act on October 24, 2000. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares pursuant to the Offer may not
be consummated until the expiration of a 15-calendar day waiting period
following the filing by Parent, unless the Antitrust Division and the FTC
terminate the waiting period prior thereto. Accordingly, the waiting period
under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York
City time, on November 7, 2000, unless, prior to the expiration or termination
of the waiting period, the FTC or the Antitrust Division extends the waiting
period by requesting additional information or documentary material. If such a
request is made, the waiting period will be extended and would expire at 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized
by the HSR Act. Thereafter, such waiting period may be extended only by court
order or with the consent of Parent. The Purchaser will not accept for payment
Shares tendered pursuant to the Offer unless and until the waiting period
requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws (as defined below) of transactions such as Purchaser's
acquisition of Shares pursuant to the Offer and the Merger. At any time before
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the Antitrust Laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or otherwise seeking divestiture of Shares
acquired by Purchaser or divestiture of substantial assets of Parent, the
Company or their respective affiliates. Private parties and state attorneys
general may also bring legal action under the Antitrust Laws under certain
circumstances.
Based upon an examination of information provided by the Company relating
to the businesses in which Parent and the Company are engaged, Parent and the
Purchaser believe that the acquisition of Shares by the Purchaser pursuant to
the Offer or Merger will not violate the Antitrust Laws. Nevertheless, there
can be no assurance that a challenge to the Offer or other acquisition of
Shares by the Purchaser on antitrust grounds will not be made or, if such a
challenge is made, what the result would be.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade.
Foreign Laws. Parent, the Company and certain of their subsidiaries conduct
business in several foreign countries, where regulatory filings or approvals
may be required or desirable in connection with the consummation of the Offer.
Certain of such filings or approvals, if required or desirable, may not be
made or obtained prior to the currently scheduled Expiration Date. The
Purchaser is seeking further information regarding applicability of any such
laws and currently intends to take such action as may be required or
desirable. Pursuant
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<PAGE>
to the Merger Agreement, if any such filings or approvals may not be made or
obtained prior to the currently scheduled Expiration Date, the Purchaser has
the right, in its sole discretion, to extend the Offer until such time as all
required or desirable filings and approvals may be made or obtained, provided
that the Offer may not be extended beyond the latest expiration date that
would be permitted under Section 1.1(a) of the Merger Agreement.
State Antitakeover Statutes. The Company is incorporated under the laws of
the State of Delaware. In general, Section 203 of the DGCL ("Section 203")
prevents an "interested stockholder" (including a person who has the right to
acquire 15% or more of the corporation's outstanding voting stock) from
engaging in a "business combination" (defined to include mergers and certain
other actions) with a Delaware corporation for a period of three years
following the date such person became an interested stockholder. The Company
Board approved for purposes of Section 203 the entering into by the Purchaser,
Parent and the Company of the Merger Agreement and the consummation of the
transactions contemplated thereby and has taken all appropriate action so that
Section 203, with respect to the Company, will not be applicable to Parent and
the Purchaser by virtue of such actions.
Other than as set forth above, Parent and the Purchaser do not believe that
the antitakeover laws and regulations of any state will by their terms apply
to the Offer and the Merger, and neither Parent nor the Purchaser has
attempted to comply with any state antitakeover statute or regulation. The
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer and nothing in this Offer to
Purchase or any action taken in connection with the Offer is intended as a
waiver of such right. If it is asserted that any state antitakeover statute is
applicable to the Offer and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer or may be delayed in
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment, or pay for, any Shares tendered pursuant to the Offer. See
Section 14.
16. Fees and Expenses.
J.P. Morgan Securities Inc. is acting as Dealer Manager in connection with
the Offer and is providing certain financial advisory services to the
Purchaser and Parent in connection with the Offer. Parent has agreed to pay
J.P. Morgan Securities Inc. customary fees for such services, Parent has also
agreed to reimburse J.P. Morgan Securities Inc. for its out of pocket
expenses, including the reasonable fees and expenses of its counsel and any
other advisor retained by J.P. Morgan Securities Inc. in connection with its
engagement, and to indemnify J.P. Morgan Securities Inc. and certain related
persons against certain liabilities and expenses, including certain
liabilities and expenses under the federal securities laws.
The Purchaser and Parent have retained Morrow & Co., Inc. to serve as the
Information Agent and UMB Bank, n.a. to serve as the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by
personal interview, mail, telephone, telex, telegraph and other methods of
electronic communication and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities in connection with their services, including certain liabilities
and expenses under the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker or dealer or other person or entity in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding the Offer materials to their customers.
33
<PAGE>
17. Miscellaneous.
The 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 the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of the Shares pursuant thereto, the
Purchaser shall make a good faith effort to comply with such statute or seek
to have 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 any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the
Dealer Manager or one or more registered brokers or dealers which are licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE 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.
The Purchaser and Parent have filed with the SEC a Tender Offer Statement
on Schedule TO pursuant to Rule 14d-3 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
SEC a Solicitation/Recommendation Statement on Schedule 14D-9, together with
exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection, and copies should be obtainable in the same manner set forth
in Section 9 of this Offer to Purchase (except that such material will not be
available at the regional offices of the SEC).
JPS Acquisition, Inc.
October 30, 2000
34
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
Directors and Executive Officers of Parent and the Purchaser. Set forth
below is the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent and the Purchaser. Each such
person is a citizen of the United States of America, with the exception of
Christel Bories, Alain Pasquier and Igor Playner who are citizens of France.
Unless otherwise indicated, the current business address of each such person
is c/o Pechiney Plastic Packaging, Inc., 8770 West Bryn Mawr Avenue, Mail
Suite 06H, Chicago, Illinois 60631-3542. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at
Parent, or the organization indicated, for the past five years. Directors of
Parent or the Purchaser, as the case may be, are identified by an asterisk.
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
<TABLE>
<CAPTION>
Present Principal Occupation Or Employment;
Name Material Positions Held During The Past Five Years
---- --------------------------------------------------
<S> <C>
Christel Bories*................ Ms. Bories (age 36) has served as the Chief Executive
7, place du Chancelier Adenauer Officer of Parent since May 1999. She has also served as
75218 Paris Cedex 16 Senior Executive Vice President, Packaging Sector of
France Parent's French parent, Pechiney, since December 1998. From
April 1995 through December 1998, she served as Senior
Executive Vice President, Strategy and Control of Pechiney.
Ilene S. Gordon*................ Ms. Gordon (age 47) has served as the President of Parent
since July 1999. She has also served as Senior Vice
President of Pechiney since June 1999. From March 1997 to
June 1999, she was employed at Tenneco Packaging as Vice
President & General Manager, Folding Carton Division. From
April 1994 to February 1997, she was employed at Tenneco
Packaging as Vice President of Operations.
Mike J. Hoover*................. Mr. Hoover (age 52) has served as Vice President, General
Counsel & Secretary of Parent since July 1999. From March
1997 to June 1999, he served as Vice President, Legal
Affairs, Flexible Packaging of American National Can
Company. From September 1989 to February 1997, he served as
Assistant General Counsel, International of American
National Can Company.
Robert J. Mosesian.............. Mr. Mosesian (age 50) has served as Chief Financial Officer
and Vice President, Finance of Parent since July 1999. From
July 1994 to June 1999, he served as Vice President Finance,
Flexible Packaging, of American National Can Company.
Alain Pasquier*................. Mr. Pasquier (age 51) has served as a director of Parent
7, place du Chancelier Adenauer since July 1999. He has also served as Senior Vice
75218 Paris Cedex 16 President, International and Government Affairs of Parent's
France French parent, Pechiney, since June 2000. From October 1999
through June 2000, he served as Acting Chief Finance Officer
of Pechiney. From 1997 through October 1999, he served as
Senior Vice President, Corporate Finance of Pechiney.
Previous to that time, he served as Group General Secretary
of Pechiney.
Igor Playner.................... Mr. Playner (age 33) has served as Vice President, Strategy
and Business Development of Parent since July 1999. From
April 1998 to June 1999, he served as Director of Strategy,
Flexible Packaging at American National Can Company. From
April 1994 to March 1998, he served as Manager, Corporate
Strategy of Parent's French parent, Pechiney.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation Or Employment;
Name Material Positions Held During The Past Five Years
---- --------------------------------------------------
<S> <C>
Jean-Pierre Rodier*..... Mr. Rodier (age 53) has served as Chairman of Parent since
7, place du Chancelier July 1999. He has also served as Chairman and Chief
Adenauer Executive Officer of Parent's French parent, Pechiney, since
75218 Paris Cedex 16 July 1994.
France
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
<CAPTION>
Present Principal Occupation Or Employment;
Name Material Positions Held During The Past Five Years
---- --------------------------------------------------
<S> <C>
Ilene S. Gordon*........ Ms. Gordon (age 47) has served as President of Purchaser
since its inception in October 2000, and has served as
President of Parent since July 1999. She has also served as
Senior Vice President of Pechiney since June 1999. From
March 1997 to June 1999, she was employed at Tenneco
Packaging as Vice President & General Manager, Folding
Carton Division. From April 1994 to February 1997, she was
employed at Tenneco Packaging as Vice President of
Operations.
Mike J. Hoover*......... Mr. Hoover (age 52) has served as Secretary of Purchaser
since its inception in October 2000, and has served as Vice
President, General Counsel & Secretary of Parent since July
1999. From March 1997 to June 1999, he served as Vice
President, Legal Affairs, Flexible Packaging of American
National Can Company. From September 1989 to February 1997,
he served as Assistant General Counsel, International of
American National Can Company.
Robert J. Mosesian*..... Mr. Mosesian (age 50) has served as Vice President of
Purchaser since its inception in October 2000, and has
served as Chief Financial Officer and Vice President,
Finance of Parent since July 1999. From July 1994 to June
1999, he served as Vice President Finance, Flexible
Packaging, of American National Can Company.
Igor Playner*........... Mr. Playner (age 33) has served as Vice President of
Purchaser since its inception in October 2000, and has
served as Vice President, Strategy and Business Development
of Parent since July 1999. From April 1998 to June 1999, he
served as Director of Strategy, Flexible Packaging at
American National Can Company. From April 1994 to March
1998, he served as Manager, Corporate Strategy of Parent's
French parent, Pechiney.
</TABLE>
I-2
<PAGE>
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
stockholder of the Company or his or her 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:
UMB Bank, n.a.
By Mail: By Hand: By Overnight:
Securities Transfer Securities Transfer Division Securities Transfer
Division 928 Grand Boulevard, 13th Floor Division
P.O. Box 410064 Kansas City, MO 64106 928 Grand Boulevard, 13th
Kansas City, MO 64141 Floor
Kansas City, MO 64106
By Facsimile Transmission:
(For Eligible Institutions Only)
(816) 860-3963
Confirm Facsimile Transmission
By Telephone Only:
(816) 860-7782
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification on Substitute Form
W-9 may be directed to the Information Agent or the Dealer Manager at the
addresses and telephone numbers set forth below. Stockholders may also contact
their broker, dealer, commercial bank or trust company for assistance
concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms Call: (800) 654-2468
Shareholders Please Call: (800) 607-0088
The Dealer Manager for the Offer is:
[Logo for J.P. Morgan & Co.]
60 Wall Street
New York, New York 10260-0060
Call Toll Free: (877) 576-7940
