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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
BLESSINGS CORPORATION
(Name of Subject Company)
BLESSINGS CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, $.71 PAR VALUE
(Title of Class of Securities)
093532109
(CUSIP Number of Class of Securities)
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ELWOOD M. MILLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BLESSINGS CORPORATION, INC.
200 ENTERPRISE DRIVE
NEWPORT NEWS, VA 23603
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person(s) filing statement)
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WITH COPIES TO:
JOHN M. PARIS, JR., ESQ.
CLARK & STANT, P.C.
900 ONE COLUMBUS CENTER
VIRGINIA BEACH, VIRGINIA 23462
(757) 499-8800
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Blessings Corporation, a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 200 Enterprise Drive, Newport News, Virginia 23603. The title of
the class of equity securities to which this Statement relates is the Common
Stock, par value $.71 per share of the Company (the "Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to the tender offer by VA Acquisition Corp., a
Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Huntsman
Packaging Corporation, a Utah corporation ("Parent"), disclosed in a Tender
Offer Statement on Schedule 14D-1, dated April 14, 1998 (the "Schedule 14D-1"),
to purchase all outstanding shares of Common Stock (the "Shares") at a price of
$21 per share (the "Offer Price"), net to the seller in cash, without interest,
on the terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase, dated April 14, 1998 (the "Offer to Purchase") and the related Letter
of Transmittal (which together, with any amendments or supplements thereto,
constitute the "Offer"). The principal executive offices of Parent and the
Purchaser are located at 500 Huntsman Way, Salt Lake City, Utah 84108.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
April 7, 1998 (the "Merger Agreement"), by and among Parent, the Purchaser, and
the Company. A copy of the Merger Agreement is filed as Exhibit (c)(1) to this
Schedule 14D-9, and is incorporated herein by reference. The Merger Agreement
provides, among other things, that, as promptly as practicable after the
satisfaction of the consummation of the Offer and satisfaction or waiver of all
other conditions to the Merger (a) the Purchaser will be merged with and into
the Company (the "Merger") and the separate corporate existence of the Purchaser
will thereupon cease, (b) each outstanding Share (other than Shares then held by
the Company, Parent, or any wholly-owned direct or indirect subsidiary of the
Company or Parent and other than Shares held by stockholders, if any, who
perfect their appraisal rights under the Delaware Law) will be converted into
the right to receive the Offer Price, without interest (the "Merger
Consideration"), (c) except as qualified below, the Company will be the
successor or surviving corporation in the Merger (sometimes referred to as the
"Surviving Corporation") and will continue to be governed by the laws of the
State of Delaware, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers, and franchises will continue
unaffected.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, the person filing this
Statement, is set forth in Item 1, above.
(b) Each material contract, agreement, arrangement, and understanding, and
actual or potential conflict of interest, between the Company or its affiliates
and (i) its executive officers, directors, or affiliates and (ii) Parent or the
Purchaser and their respective executive officers, directors, or affiliates is
described in the attached Schedule I or set forth below.
The summary of the Merger Agreement, contained in the Offer to Purchase,
filed with the Securities and Exchange Commission (the "Commission"), a copy of
which is enclosed with this Schedule 14D-9, is incorporated herein by reference.
Such summary should be read in its entirety for a more complete description of
the terms and provisions of the Merger Agreement. This summary is qualified in
its entirety by reference to the Merger Agreement which is incorporated herein
by reference and a copy of which has been filed with the Commission as an
Exhibit (c)(l) to this Schedule 14D-9. The Merger Agreement may be examined and
copies may be obtained at the Commission's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also is available for inspection and copying at the
regional offices of the Commission located at Seven World Trade Center, New
York, New York 10048 and Northwestern Atrium Center, 500
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West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may also be obtained by mail, on payment of the Commission's customary
fees, from the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains an internet web site at
http:// www.sec.gov that contains reports, proxy statements and other
information. Copies should also be available at the offices of the NASD, 1735 K
Street, N.W. Washington, D.C. 20006. The following summarizes certain portions
of the Merger Agreement (undefined capitalized terms have the meanings ascribed
to them in the Merger Agreement).
THE OFFER. The Merger Agreement provides for the commencement of the Offer,
in connection with which Parent and the Purchaser have expressly reserved the
right to increase the Offer Price for the Shares payable in the Offer or waive
certain conditions of the Offer. However, without the prior written consent of
the Company, Parent and the Purchaser have agreed not to (i) decrease the Offer
Price or change the form of consideration payable in the Offer, (ii) decrease
the number of Shares sought pursuant to the Offer or (iii) impose additional
conditions to the Offer or broaden the scope of the Offer; PROVIDED, HOWEVER,
that, except as set forth above, the Purchaser may waive any other condition to
the Offer in its sole discretion; and provided, further, that the Purchaser may
extend the Offer (a) if at the scheduled expiration date of the Offer any of the
conditions to the Offer shall not have been satisfied or waived for one or more
periods not to exceed sixty (60) days in the aggregate, until such time as such
conditions are satisfied or waived, (b) for one or more periods, not to exceed
thirty (30) days, if required by any rule, regulation, interpretation or
position of the Commission or (c) on one occasion for an aggregate period of not
more than 10 Business Days beyond the latest expiration date that would
otherwise be permitted under clause (a) or (b) of this sentence if on such
expiration date there shall not have been tendered that number of shares of
Common Stock which would equal more than 90% of the issued and outstanding
shares of Common Stock. The Purchaser agrees that if all of the conditions to
the Offer are not satisfied on any expiration date of the Offer, then, PROVIDED
that all such conditions are then reasonably capable of being satisfied within
10 Business Days, the Purchaser shall extend the Offer for a period of not less
than 10 days in the aggregate if requested to do so by the Company; PROVIDED
that the Company shall be entitled to make only one such request.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase by the Purchaser of Shares pursuant to the Offer, and from time to time
thereafter, Parent or the Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number (but in no event more than one
less than the total number of directors on the Board of Directors of the Company
(the "Board") as will give Parent, subject to compliance with Section 14(f) of
the Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being the "Board Percentage"). The Company has agreed,
upon request of Parent, to promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board and in each case to cause Parent's
designees to be promptly elected. Following the election or appointment of
Parent's designees pursuant to the Merger Agreement and prior to the Effective
Time (as defined below) of the Merger, any amendment or termination of the
Merger Agreement, extension for the performance or waiver of the obligations or
other acts of Parent or the Purchaser or waiver of the Company's rights
thereunder, shall require the concurrence of a majority of the directors of the
Company then in office who were directors on the date the Merger Agreement and
who voted to approve the Merger Agreement.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that
subject to the terms and conditions set forth in the Merger Agreement, the
Purchaser will be merged with and into the Company, the separate existence of
the Purchaser shall cease and the Company shall continue as the surviving
corporation in the Merger (the "Surviving Corporation"), as a wholly-owned
subsidiary of Parent. Notwithstanding anything to the contrary in the Merger
Agreement, Parent, at its option, may prior to the
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date and time of filing of the appropriate certificate of merger with the
Secretary of State of Delaware (the "Effective Time"), elect, instead of merging
the Purchaser into the Company as hereinabove provided, to merge the Company
into the Purchaser or another direct or indirect wholly-owned subsidiary of
Parent, with the Purchaser or such other subsidiary of Parent as the surviving
corporation. In such event, the parties have agreed to execute an appropriate
amendment to the Merger Agreement in order to reflect the foregoing change.
In the Merger at the Effective Time, each Share then issued and outstanding
(other than Shares then held by the Company, Parent, the Purchaser, or any
wholly-owned direct or indirect subsidiary of the Company or Parent, and other
than Shares held by stockholders, if any, who perfect their appraisal rights
under the Delaware Law) shall be converted into and represent the right to
receive a cash payment per Share, without interest, equal to the Offer Price
(the "Merger Consideration") upon the surrender of the certificate representing
such Share. Each share of the capital stock of the Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation. Each Share held by the
Company (as treasury stock or otherwise) or held by Parent, the Purchaser or any
wholly-owned direct or indirect subsidiary of Parent, the Purchaser or the
Company shall be canceled, retired and cease to exist, and no consideration
shall be delivered with respect thereto.
The Merger Agreement provides that the closing of the Merger shall take
place at a time and date to be specified by the parties to the Merger Agreement
but no later than the fifth Business Day after which the last of the conditions
to the Merger set forth in the Merger Agreement is satisfied or waived.
STOCK OPTIONS. Pursuant to the Merger Agreement the Company has confirmed
that the applicable plans and instruments (collectively, the "Option Plans")
governing all outstanding options to purchase shares of Common Stock (each a
"Company Stock Option") provide for the acceleration of the exercisability of
each such option in connection with the transactions contemplated by the Merger
Agreement. Pursuant to the Merger Agreement, the Company has agreed to take all
actions necessary prior to the Effective Time to assure that, at the Effective
Time: (i) each Company Stock Option shall be canceled in exchange for an amount
(the "Option Payment") in cash equal to the Offer Price less the applicable
exercise price of such Company Stock Option, subject to applicable withholding
taxes; and (ii) each stock appreciation right will be canceled in exchange for
an amount in cash (the "SAR Payment") equal to the Offer Price less the exercise
price of the Company Stock Option to which it is linked, subject to applicable
withholding taxes. The surrender of a Company Stock Option in exchange for the
Option Payment and of a stock appreciation right in exchange for the SAR Payment
shall be deemed a release of any and all rights the holder had or may have had
in such Company Stock Option or under such Option Plan. Effective as of the
Effective Time, the Company shall take all action as is necessary prior to the
Effective Time to terminate all Option Plans so that on and after the Effective
Time no current or former employee director, consultant or other person shall
have any option to purchase Shares or any other equity interests in the Company
under any Option Plan. The Merger Agreement provides that in lieu of making
awards of "Restricted Stock" (as defined in the Plan) under the Company's 1993
Restricted Stock Plan for Non-Employee Directors and certain key employees
scheduled to be made at the annual meeting of Company stockholders in May of
1998, the Company will pay to the participants in such plan (not individually
but in the aggregate) $121,800 in cash at the earlier of May 20, 1998 or the
Effective Time.
SHAREHOLDERS MEETING. The Merger Agreement provides that, if a vote of the
Company's stockholders is required by law, the Company will, as promptly as
practicable following the acceptance for payment of Shares by the Purchaser
pursuant to the Offer, take, in accordance with applicable law and its
Certificate of Incorporation and Bylaws, all action necessary to convene a
meeting of holders of Shares (the "Shareholders Meeting") to consider and vote
upon the approval of the Merger Agreement. In connection with such Shareholders
Meeting, the Company will prepare and file with the Commission a proxy statement
for the solicitation of a vote of holders of Shares approving the Merger (the
"Proxy Statement"), which shall include the recommendation of the Company's
Board that stockholders of the Company vote
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in favor of the approval and adoption of the Merger Agreement and the written
opinion of the financial advisor referred to herein that the cash consideration
to be received by the stockholders of the Company pursuant to the Merger is fair
to such stockholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the Commission as
promptly as practicable after such filing, and promptly thereafter mail the
Proxy Statement to the shareholders of the Company. The Company shall also use
its best efforts to obtain all necessary state securities law or "blue sky"
permits and approvals required in connection with the Merger and to consummate
the other transactions contemplated by the Merger Agreement and will pay all
expenses incidental thereto. Notwithstanding the foregoing, if Parent, the
Purchaser and/or any other subsidiary of Parent shall acquire at least 90% of
the Shares pursuant to the Offer, the parties shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a Shareholders Meeting in
accordance with Delaware Law. Parent and the Purchaser have agreed to cause all
Shares purchased pursuant to the Offer and all other Shares owned by Parent, the
Purchaser or any subsidiary of Parent to be voted in favor of the Merger.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to (i) due
incorporation, existence, good standing, corporate power and authority or
qualifications of the Company and subsidiaries of the Company; (ii)
capitalization of the Company, including the number of shares of capital stock
of the Company outstanding, the number of shares reserved for issuance on the
exercise of options and similar rights to purchase shares; (iii) no equity
interests in any corporation, partnership, limited liability company, trust or
similar business entity and that each of the Company's subsidiaries (the
"Subsidiaries") is a corporation or limited liability company, each duly
organized, validly existing and in good standing under the laws of its
jurisdiction; (iv) the authorization, execution, delivery and performance of the
Merger Agreement and the consummation of transactions contemplated thereby, and
the validity and enforceability thereof; (v) subject to certain exceptions, the
absence of consents and approvals necessary for consummation by the Company of
the Merger, and the absence, except as disclosed, of any violations, breaches or
defaults which would result from compliance by the Company with any provision of
the Merger Agreement; (vi) the absence of any suit, proceeding or investigation
pending or threatened against the Company or any of its Subsidiaries or any of
their respective properties or assets which is reasonably likely to have a
material adverse effect on the business, assets, prospects, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect") or would prevent or
delay the consummation of the transactions contemplated by the Merger Agreement;
(vii) compliance in all material respects with the Securities Act and the
Exchange Act, in connection with the SEC Reports (as defined in the Merger
Agreement) filed by the Company with the Commission; (viii) compliance with
applicable law; (ix) the absence of certain changes and events which would
constitute a Material Adverse Effect; (x) certain employee benefit and ERISA
matters; (xi) certain labor matters; (xii) certain matters related to real
property; (xiii) certain intellectual property matters; (xiv) certain tax
matters; (xv) certain environmental matters; (xvi) the valid and binding
obligations of the Company or a Subsidiary with respect to Contracts (as defined
in the Merger Agreement), except such Contracts which if not so valid and
binding would not have a Material Adverse Effect; (xvii) liabilities or other
obligations which would have been required to be recorded on a balance sheet or
which would have a Material Adverse Effect; (xviii) certain matters related to
the Company's relationships with its customers; and (xix) certain matters
relating to affiliate transactions.
Parent and the Purchaser have also made certain representations and
warranties, including with respect to (i) due incorporation, existence, good
standing, corporate power and authority or qualifications of Parent and the
Purchaser; (ii) the authorization, execution, and delivery of the Merger
Agreement and the consummation of transactions contemplated thereby, and the
validity and enforceability thereof; and (iii) assuming that the Commitments (as
defined in the Merger Agreement) are received, Parent has or will have, prior to
the expiration of the Offer, sufficient funds available to purchase all of the
Shares
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outstanding on a fully diluted basis and to pay all related fees and expenses
pursuant to the Offer and the Merger Agreement.
INTERIM OPERATIONS. The Company has agreed that during the period from the
date of the Merger Agreement to Effective Time except as specifically
contemplated in the Merger Agreement, (i) the businesses of the Company and each
of its Subsidiaries shall be conducted only in the ordinary and usual course of
business consistent with past practice; and (ii) the Company and its
Subsidiaries shall use their commercially reasonable efforts to preserve the
business organization of the Company and each Subsidiary. The Company has also
agreed that prior to the Effective Time, the Company will not, without the prior
written consent of Parent or the Purchaser and will not permit any of its
Subsidiaries to: (a) amend its charter or bylaws; (b) amend or modify (except as
contemplated in the Merger Agreement) the terms of any benefit or stock option
plan or authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver any stock of any class or any other securities or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights), except for the sale of shares of Common Stock pursuant to
the Company Stock Options issued and outstanding on the date of the execution of
the Merger Agreement; (c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution in respect
of its capital stock, or redeem or otherwise acquire any Company Securities (as
defined in the Merger Agreement) or any securities of the Company's
Subsidiaries; (d) (i) incur or assume any long-term or short-term debt or issue
any debt securities, except for borrowings under existing lines of credit in the
ordinary course of business; (ii) except as described in the Merger Agreement
assume, guarantee, endorse or otherwise become liable or responsible for the
obligations of any other person, except in the ordinary course of business
consistent with past practice; (iii) except for short-term investments in the
ordinary course of business, make any loans, advances or capital contributions
to, or investments in, any other person other than intercompany loans between
any wholly-owned Subsidiary and the Company and the Company or another
wholly-owned Subsidiary; (iv) pledge or otherwise encumber shares of capital
stock of the Company or its Subsidiaries; or (v) mortgage or pledge any of its
assets, tangible or intangible, or create or suffer to exist any lien thereupon
except for liens securing indebtedness not exceeding $1,000,000 in the
aggregate; (e) except as described in the Merger Agreement enter into, adopt or
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee in any manner, or (except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or its Subsidiaries), increase
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect on the date of the Merger Agreement (including, without limitation, the
granting of stock appreciation rights or performance units); (f) except with the
consent of Parent or the Purchaser, which consent will not be unreasonably
withheld, acquire, sell, lease, license, transfer or dispose of any assets
outside the ordinary course of business; (g) except as may be required as a
result of a change in law or in generally accepted accounting principles, change
any of the accounting principles or practices used by it, including tax
accounting policies and procedures; (h) except as described in the draft of the
Joint Venture Agreement between the Company and Canguru Embalagens Criciuma
Ltda., a subsidiary of Servinec Industria e Servicos Mecanicos Ltda., a limited
liability corporation, under the laws of Brazil (which the Company agrees not to
execute without the prior consent of Parent), (i) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof or any equity interest therein;
(ii) authorize or make any new capital expenditure or expenditures other than
those already included in the Company's 1998 capital expenditure budget
previously provided to Parent or the Purchaser; or (iii) enter into or amend any
contract, agreement, commitment or arrangement providing for the taking of any
action that would be prohibited under the Merger Agreement; (i) make any tax
election or settle or compromise any material income tax liability; (j)
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pay, discharge or satisfy any claims, liabilities or obligations other than the
payment, discharge or satisfaction of liabilities in the ordinary course of
business consistent with past practice reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company and its Subsidiaries at December 31, 1997; (k) settle or compromise
any suit, action or claim or threatened suit, action or claim where the amount
involved is greater than $500,000; (l) other than the ordinary course of
business and consistent with past practice, (i) waive any rights of substantial
value, (ii) cancel or forgive any material indebtedness owed to the Company or
any of its Subsidiaries, or (iii) make any payment, direct or indirect, of any
material liability of the Company or any of its Subsidiaries before the same
come due in accordance with its terms; (m) permit any insurance policy naming
the Company or any of its Subsidiaries as a beneficiary or a loss payee to be
canceled or terminated, except in the ordinary course of business consistent
with past practice; or (n) take, or agree in writing or otherwise to take, any
of the actions described in subparagraph (a) through (m) above or any action
which would make any of the representations or warranties of the Company
contained in the Merger Agreement untrue or incorrect as of the date when made.
ADDITIONAL AGREEMENTS. The Merger Agreement provides that upon reasonable
notice the Company shall, and shall cause each of the Subsidiaries to, afford
Parent and the Purchaser and their respective officers, employees and authorized
representatives reasonable access during normal business hours throughout the
period prior to the Effective Time to all of its properties, books, contracts,
commitments, records, tax records and accountants' working papers.
NO SOLICITATION. The Merger Agreement provides that neither the Company nor
any of its Subsidiaries nor any of its and their respective officers, directors,
employees, representatives, agents and affiliates ("Representatives") shall,
directly or indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a merger,
liquidation, recapitalization, reorganization, share exchange, consolidation or
similar transaction involving it, or any purchase of, or tender offer for, any
equity securities of it or any of its Subsidiaries or 15% or more of its and its
subsidiaries' assets (based on the fair market value thereof) taken as a whole
(any such proposal or offer being hereinafter referred to as an "Acquisition
Proposal"). The Company further agrees that neither it nor any of its
subsidiaries nor any of the Representatives or Subsidiaries shall, directly or
indirectly, have any discussions with or provide any non-public information or
data to any person relating to an Acquisition Proposal or engage in any
negotiations concerning an Acquisition Proposal, or otherwise facilitate any
effort to attempt to make or implement an Acquisition Proposal or enter into any
agreement or understanding requiring it to abandon, terminate, delay or fail to
consummate the Merger or any other transactions contemplated by the Merger
Agreement; provided, however, that nothing contained in the Merger Agreement
shall prevent the Company or the Board from complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal; and
further provided, however, that nothing contained in the Merger Agreement shall
prohibit the Company or any Representative from furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited written, bona fide Acquisition Proposal (i) that involves all
cash consideration and contains no express financing contingency; and (ii) that
the Company's Board concludes in good faith is reasonably capable of being
completed, taking into account all legal, financial, regulatory and other
aspects of the Acquisition Proposal and the person making the Acquisition
Proposal, and that would, if consummated, result in a transaction more favorable
to the Company's stockholders from a financial point of view than the
transaction contemplated by the Merger Agreement (any such more favorable
Acquisition Proposal being referred to herein as a "Superior Proposal") if, and
only to the extent that, (A) prior to taking such action, the Company (x)
provides reasonable notice to Parent to the effect that it is taking such
action, and (y) receives from such person or entity an executed confidentiality
agreement in reasonably customary form, and (B) the Company promptly advises
Parent as to all of the relevant details relating to, and all material aspects,
of any such discussions or negotiations. At any time after 48 hours following
notification to Parent of the Company's intent to accept the Superior Proposal
and if the Company has otherwise complied with the terms of the Merger
Agreement, the Board may withdraw or modify its approval or
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recommendation of the Offer, terminate the Merger Agreement and cause the
Company to enter into any agreement with respect to a Superior Proposal,
provided it shall concurrently with entering into such agreement pay or cause to
be paid to Purchaser the Termination Fee (as defined below). If the Company
shall have notified Parent of its intent to enter into an agreement with respect
to a Superior Proposal in compliance with the preceding sentence and has
otherwise complied with such sentence, the Company may enter into an agreement
with respect to such Superior Proposal (with the bidder and on terms no less
favorable than those specified in such notification to Parent) after the
expiration of such 48 hour period. The Company agrees that it, its Subsidiaries
and their respective officers, directors, employees, representatives and agents
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. The Company also agrees that it will promptly
request each Person that has executed a confidentiality agreement in connection
with its consideration of any Acquisition Proposal to return all confidential
information furnished to such person by or on behalf of it or any of its
Subsidiaries.
FEES AND EXPENSES. In the event that the Merger Agreement shall have been
terminated (a) pursuant to certain provisions in the Merger Agreement or (b) as
a result of a willful breach of any representation, warranty, covenant or
agreement of the Company and, within 12 months thereafter, the Company enters
into an agreement with respect to a Third Party Acquisition (as defined below)
or a Third Party Acquisition occurs involving any party (or any affiliate
thereof) (x) with whom the Company (or its agents) had discussions with a view
to a Third Party Acquisition, (y) to whom the Company (or its agents) furnished
information with a view to a Third Party Acquisition or (z) who had submitted a
proposal or expressed an interest in a Third Party Acquisition, in the case of
each of clauses (x), (y) and (z) after the date of the execution of the Merger
Agreement and prior to such termination; the Company shall pay to Parent in the
case of (a) not later than two Business Days after termination of the Merger
Agreement and in the case of (b), upon the consummation of the Third Party
Acquisition referred to therein, a fee equal to $13,000,000 (the "Termination
Fee") immediately upon such a termination. "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) or entity other than Parent,
the Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition
by a Third Party of 30% of the total assets of the Company and its Subsidiaries,
taken as a whole; or (iii) the acquisition by a Third Party of 30% or more of
the outstanding Shares (excluding an acquisition of Shares by a wholly-owned
subsidiary of Williamson-Dickie Manufacturing Company ("Williamson-Dickie")
permitted by the Tender Agreement).
Upon the termination of the Merger Agreement pursuant to certain provisions
therein, the Company shall reimburse Parent, the Purchaser and their affiliates
(not later than 10 Business Days after submission of statements therefor) for
all actual documented out-of-pocket fees and expenses, not to exceed $500,000,
actually and reasonably incurred by any of them or on their behalf in connection
with the Merger and the consummation of all transactions contemplated by the
Merger Agreement. If Parent or the Purchaser shall have submitted a request for
reimbursement under the Merger Agreement, Parent will provide the Company with
invoices or other reasonable evidence of such expenses upon request. The Company
shall in any event pay the amount requested (not to exceed $500,000) within 10
Business Days of such request, subject to the Company's right to demand a return
of any portion as to which invoices are not received in due course. Upon the
termination of the Merger Agreement pursuant to certain provisions therein,
Parent shall reimburse the Company and its affiliates (not later than 10
Business Days after submission of statements therefor) for all actual documented
out-of-pocket fees and expenses, not to exceed $500,000, actually and reasonably
incurred by any of them or on their behalf in connection with the Merger and the
consummation of all transactions contemplated by the Merger Agreement. If the
Company shall have submitted a request for reimbursement under the Merger
Agreement, the Company will provide Parent in due course with invoices or other
reasonable evidence of such expenses upon request. Parent shall in any event pay
the amount requested (not to exceed $500,000) within 10 Business Days of such
request, subject to Parent's right to demand a return of any portion as to which
invoices are not received in due course.
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CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the obligations
of each party to the Merger Agreement to consummate the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions: (i) the approval of the stockholders of the Company as referred to
in the Merger Agreement shall have been obtained, if required by applicable law,
(ii) no applicable statute, rule, regulation, judgment, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any Governmental Entity (as defined in the Merger Agreement) which prohibits,
restrains, enjoins or restricts the consummation of the Merger or has the effect
of making the purchase of the Shares illegal, (iii) any applicable waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
and the Mexican Federal Law of Economic Competition ( the "FLEC") shall have
expired or been terminated and any other governmental or regulatory notices or
approvals required with respect to the transactions contemplated by the Merger
Agreement shall have been filed or received, and (iv) the Purchaser will have
purchased the Shares pursuant to the Offer.
TERMINATION. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time (a) by the mutual written consent of Parent,
the Purchaser and the Company; (b) by Parent, the Purchaser or the Company if
any Governmental Entity shall have issued, enacted, entered, promulgated or
enforced any final order, judgment, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, judgment, decree, ruling or other action is or shall have become
nonappealable; (c) by Parent and the Purchaser if (A) due to an occurrence or
circumstance which would result in a failure to satisfy any of the conditions to
the Offer (it being understood that if such occurrence or circumstance is
curable by the Company through the exercise of its reasonable best efforts prior
to the next scheduled Expiration Date of the Offer, and for so long as the
Company continues to exercise such reasonable best efforts prior to such
Expiration Date, the Purchaser may not terminate the Offer prior to such
Expiration Date) the Purchaser shall have (i) terminated the Offer or (ii)
failed to pay for shares of Common Stock pursuant to the Offer (but only
following the expiration of the 10-day extension contemplated which the Company
may request under the Merger Agreement) or (B) the Offer shall not have been
consummated on or before July 31, 1998; PROVIDED, HOWEVER, that the right to
terminate the Merger Agreement pursuant to this clause (c) shall not be
available to Parent or the Purchaser if (X) either of them has breached in any
material respect its obligations under the Merger Agreement in any manner that
shall have proximately contributed to the failure referenced in this clause (c)
or (Y) during the up to 10-day extension of the Offer permitted pursuant to the
Merger Agreement if 90% of the outstanding Shares shall not have been tendered;
(d) by the Company if the Purchaser shall have failed to commence the Offer
pursuant to the Merger Agreement, or if the Offer shall not have been
consummated by July 31, 1998; PROVIDED, HOWEVER, that the right to terminate the
Agreement pursuant to this clause (d) shall not be available to the Company if
it has breached in any material respect its obligations under the Merger
Agreement in any manner that shall have proximately contributed to the failure
referenced in this clause (d); (e) by the Company prior to the purchase of
Shares pursuant to the Offer (i) if there shall have been a breach of any
representation or warranty on the part of Parent or the Purchaser set forth in
the Merger Agreement, or if any representation or warranty of Parent or the
Purchaser shall have become untrue, in either case which materially adversely
affects (or materially delays) the consummation of the Offer; (ii) if there
shall have been a breach on the part of Parent or the Purchaser of any of their
respective covenants or agreements under the Merger Agreement or materially
adversely affecting (or materially delaying) the consummation of the Offer
(including the payment for Shares), and Parent or the Purchaser, as the case may
be, has not cured such breach prior to the earlier of (A) 10 days following
notice by the Company thereof and (B) two Business Days prior to the date on
which the Offer expires, PROVIDED that with respect to clauses (i) and (ii) the
Company has not breached in any material respect any of its obligations under
the Merger Agreement in any manner that shall have proximately contributed to
the breaches referenced in this clause (e) or (iii) pursuant to the provisions
of the Merger Agreement described above under "No Solicitation"; or (f) by
Parent or the Purchaser prior to the purchase of shares of Common Stock pursuant
to the Offer if (i) the Company's Board or any committee thereof (A) withdraws
or modifies in a manner adverse to
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Parent or the Purchaser its approval or favorable recommendation of the Offer or
the approval or recommendation of the Merger or (B) approves or recommends an
Acquisition Proposal by a person other than Parent or the Purchaser or (C)
resolves to do any of the foregoing; (ii) (X) the Company enters into an
agreement with respect to an Acquisition Proposal or a Third Party Acquisition
or (Y) except for a transaction described in the following clause (Z), a
transaction contemplated by an Acquisition Proposal (other than such a
transaction without the consent or approval of the Company which results in a
Third Party acquiring less than 10% of the outstanding Shares and does not
otherwise constitute an Acquisition Proposal) or a Third Party Acquisition
occurs or (Z) a transaction contemplated by an Acquisition Proposal occurs
without the consent or approval of the Company which results in a Third Party
acquiring from 10% to 20% of the outstanding Shares that does not otherwise
constitute an Acquisition Proposal (excluding for purposes of this clause
(f)(ii) an acquisition of Shares by a wholly-owned subsidiary of the
Williamson-Dickie permitted by the Tender Agreement); (iii) there shall have
been a breach of any representation or warranty on the part of the Company set
forth in the Merger Agreement, or any representation or warranty of the Company
shall have become untrue, in either case if the respects in which the
representations and warranties made by the Company are inaccurate would in the
aggregate have a material adverse effect on the Company or materially adversely
affect (or delay) the consummation of the Offer or the Merger; or (iv) there
shall have been a breach on the part of the Company of its covenants or
agreements under the Merger Agreement having a material adverse effect on the
Company or materially adversely affecting (or materially delaying) the
consummation of the Offer and, with respect to clauses (iii) and (iv) above
(other than with respect to any breach or the provisions of the Merger Agreement
described above under "No Solicitation" or the Company's obligation to file with
the Commission a Schedule 14D-9), the Company has not cured such breach prior to
the earlier of (A) 10 days following notice by Parent or the Purchaser thereof
and (B) two Business Days prior to the date on which the Offer expires, PROVIDED
that, with respect to clauses (iii) and (iv) above, neither Parent nor the
Purchaser has breached in any material respect any of their respective
obligations under the Merger Agreement in any manner that shall have proximately
contributed to the failure referenced in this clause (f).
INDEMNIFICATION. The Merger Agreement provides that after the Effective
Time, or such earlier date as Parent acquires control of the Company, Parent and
the Purchaser agree that all rights to indemnification or exculpation now
existing in favor of the directors, officers, employees and agents of the
Company and its Subsidiaries as provided in their respective charters or bylaws
or otherwise in effect as of the date of the Merger Agreement with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect for a period of not less than six years
following the Effective Time. To the maximum extent permitted by Delaware Law,
such indemnification shall be mandatory rather than permissive. Parent shall
cause the Surviving Corporation to maintain in effect for not less than six
years from the Effective Time the policies of the directors' and officers'
liability and fiduciary insurance most recently maintained by the Company with
respect to matters occurring prior to the Effective Time; provided, that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less beneficial to the
beneficiaries of the existing policies in effect on the date hereof; provided,
further, that during the last three years of the six year period following the
Effective Time, the Surviving Corporation shall not be obligated to pay an
annual premium in excess of 200% of the most recent annual premium paid by
Company prior to the date of the Merger Agreement (which the Company has
represented to have been $80,000).
WAIVER AND AMENDMENT. The Merger Agreement provides that (i) any
inaccuracies in the representations and warranties may be waived by the other
party; and (ii) compliance by the other parties with any of the agreements or
conditions contained in the Merger Agreement may also be waived by the other
party. Subject to certain sections in the Merger Agreement, the Merger Agreement
may be amended by action taken by the Company, Parent and the Purchaser at any
time before or after any required approval of the Merger by the shareholders of
the Company but, after any such approval, no amendment shall be made which
requires the approval of such shareholders under applicable law without such
approval.
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THE TENDER AGREEMENT
The following is a summary of the material terms of the Tender Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Tender Agreement may be
examined, and copies thereof may be obtained, as set forth in Item 3 above.
TENDER OF SHARES. The Tender Agreement provides that certain stockholders,
including Williamson-Dickie, Leonard Birnbaum, Michael C. Carlson, Wayne A.
Durboraw, Joseph J. Harkins, James P. Luke, John W. McMackin, Elwood M. Miller,
Manuel G. Villareal and Robert E. Weber (collectively, the "Stockholders") will
validly tender and sell, pursuant to and in accordance with the terms of the
Offer, (i) not later than the seventh day after the commencement of the Offer
pursuant to the Merger Agreement, 5,925,072 shares of Common Stock (the
"Existing Shares"), and (ii) any Shares acquired by the Stockholders after the
execution date of the Tender Agreement and prior to the termination of the
Tender Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise (the Stockholders shall promptly
provide written notice to the Purchaser upon consummation of any such
acquisition and the term "Shares" shall include such shares), provided that the
Offer Price pursuant to the Offer shall be no less than the Per Share Price (as
defined in the Merger Agreement). The Stockholders acknowledge and agree that
Parent's and the Purchaser's obligation to accept for payment and pay for Shares
in the Offer, including the Shares owned by the Stockholders, are subject to the
terms and conditions of the Offer. The Tender Agreement allows for termination
of the Tender Agreement if the Merger Agreement terminates for any reason.
REPRESENTATIONS AND WARRANTIES. The Tender Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Stockholders with respect to (i) the
requisite power and authority to enter into the Tender Agreement and to
consummate the transactions contemplated by the Tender Agreement; (ii) the
execution and delivery of the Tender Agreement and the consummation of
transactions contemplated thereby; (iii) the valid and binding obligation of the
Stockholders with respect to the Tender Agreement; (iv) no conflict with or
default under any provision of any agreement, loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such Stockholder or to such
Stockholder's property or assets; (v) the absence of any consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary by any Stockholder with respect
to the execution and delivery of the Tender Agreement or the consummation of the
transactions contemplated thereby; (vi) that each Stockholder has good and
marketable title to a certain number of Existing Shares; (vii) that each
Stockholder has no record ownership of shares of Common Stock other than the
Existing Shares; (viii) except pursuant to the Tender Agreement, no voting trust
agreements or other contracts, agreements, arrangements, commitments or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Existing Shares; and (ix) no limitations, qualifications
or restrictions on rights, subject to applicable securities laws and the terms
of the Tender Agreement, with respect to the Existing Shares.
Parent and the Purchaser have also made certain representations and
warranties, including with respect to (i) corporate power and authority to enter
into the Tender Agreement and to consummate the transactions contemplated
thereby; (ii) the authorization, execution, and delivery of the Tender Agreement
and the consummation of transactions contemplated thereby; (iii) the valid and
binding obligation of Parent and the Purchaser with respect to the Tender
Agreement; (iv) no conflict with or default under any provision of any
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or the Purchaser or to Parent's or the Purchaser's
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property or assets; and (v) no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, necessary for the consummation by Parent or the Purchaser of the
transactions contemplated by the Tender Agreement.
COVENANTS OF THE STOCKHOLDERS. Pursuant to the Tender Agreement, the
Stockholders severally agree not to (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
with respect to the sale, transfer, pledge, assignment or other disposition of,
any of the Shares to any person other than the Purchaser or the Purchaser's
designee; provided, however, that (x) a Stockholder may transfer Shares to a
charitable organization, provided that such charitable organization agrees to be
bound by the terms and provisions of the Tender Agreement applicable to such
Stockholder and (y) Williamson-Dickie may transfer its Shares to a wholly-owned
subsidiary of Williamson-Dickie, provided that such subsidiary agrees to be
bound by the terms and provisions of the Tender Agreement applicable to
Williamson-Dickie and, provided, further, in the case of clauses (x) and (y)
above the transferring Stockholder shall continue to be bound by the terms and
provisions of the Tender Agreement; (ii) deposit any Shares into a voting trust
or grant a proxy or enter into a voting agreement with respect to any Shares
except as provided in the Tender Agreement; or (iii) solicit, facilitate,
initiate, encourage or take any other action to facilitate any Acquisition
Proposal, the acquisition of any shares of Common Stock or the acquisition of
all or substantially all the assets of the Company by any person other than
Parent or the Purchaser, except in connection with any actions permitted under
the Merger Agreement.
Each Stockholder agrees to notify the Purchaser promptly and to provide all
details requested by the Purchaser if such Stockholder shall be approached or
solicited, directly or indirectly, by any person with respect to any matter
described in clause (iii) immediately above.
Each Stockholder agrees that at any annual or special meeting of the
stockholders of the Company and in any action by written consent of the
stockholders of the Company, such Stockholder will (i) vote the Shares in favor
of the Merger and the Merger Agreement and (ii) vote the Shares against any
action or agreement which could result in a breach of any representation,
warranty or covenant of the Company in the Merger Agreement or which could
otherwise impede, delay, prevent, interfere with or discourage the Offer or the
Merger including, without limitation, any Acquisition Proposal.
IRREVOCABLE PROXY. The Tender Agreement provides that each Stockholder
irrevocably appoints the Purchaser as the attorney and proxy of such
Stockholder, with full power of substitution, to vote, and otherwise act (by
written consent or otherwise) with respect to all Shares that such Stockholder
is entitled to vote at any meeting of stockholders of the Company or consent in
lieu of any such meeting or otherwise, to vote such Shares as set forth in the
immediately preceding paragraph; PROVIDED, that in any such vote or other action
pursuant to such proxy, the Purchaser shall not have the right to vote to reduce
the Per Share Price or the Merger Consideration or to otherwise modify or amend
the Merger Agreement to reduce the rights or benefits of the Company or any
stockholders of the Company (including the Stockholders) under the Offer or the
Merger Agreement or to reduce the obligations of Purchaser thereunder; and
PROVIDED FURTHER, that the proxy shall irrevocably cease to be in effect at any
time that (x) the Offer shall have expired or terminated without any shares of
Common Stock being purchased thereunder in violation of the terms of the Offer,
(y) the Purchaser shall be in violation of the terms of the Tender Agreement or
(z) the Merger Agreement shall have been terminated in accordance with its
terms. The proxy and power of attorney is irrevocable and coupled with an
interest. Under the Tender Agreement, the Stockholders shall revoke, effective
upon the execution and delivery of the Merger Agreement by the parties thereto
all other proxies and powers of attorney with respect to the Shares that such
Stockholder may have previously appointed or granted, and no subsequent proxy or
power of attorney (except in furtherance of such Stockholder's obligations under
the immediately preceding paragraph) shall be given or written consent executed
(and if given or executed, shall not be effective) by such Stockholder with
respect thereto so long as the Tender Agreement remains in effect. Each
Stockholder will forward to the Purchaser any proxy cards that such Stockholder
receives with respect to the Offer or the Merger Agreement.
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WAIVER OF APPRAISAL RIGHTS. As set forth in the Tender Agreement, each
Stockholder will waive any rights of appraisal or rights to dissent from the
Merger that such Stockholder may have on the terms set forth in the Merger
Agreement as in effect on the date thereof with such changes which do not
adversely affect such Stockholder.
OTHER MATTERS
APPRAISAL RIGHTS. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the Delaware Law to dissent
and demand appraisal of, and payment in cash for the fair value of, their
Shares. Such rights, if the statutory procedures are complied with, could lead
to a judicial determination of the fair value (excluding any element of value
arising from accomplishment or expectation of the Merger) required to be paid in
cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than and in addition to the Offer Price and the market value of the
Shares, including asset values and the investment value of the Shares. The value
so determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the
Delaware Law fails to perfect, or effectively withdraws or loses his right to
appraisal, as provided in the Delaware Law, the shares of such holder will be
converted into the Merger Consideration in accordance with the Merger Agreement.
A stockholder may withdraw his demand for appraisal by delivery to Parent of a
written withdrawal of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the Delaware Law for
perfecting appraisal rights may result in the loss of such rights.
GOING PRIVATE TRANSACTIONS. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. The Company does not believe that Rule
13e-3 will be applicable to the Merger unless, among other things, the Merger is
completed more than one year after termination of the Offer. If applicable, Rule
13e-3 would require, among other things, that certain financial information
regarding the Company and certain information regarding the fairness of the
Merger and the consideration offered to minority stockholders be filed with the
Commission and disclosed to minority stockholders prior to consummation of the
Merger.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors.
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby and unanimously recommends that all holders of
Shares tender such Shares pursuant to the Offer.
(b) Background: Reasons for the Recommendation.
Beginning in March 1996, the Company began receiving unsolicited contacts
from various investment bankers regarding its interest in evaluating strategic
alternatives. These contacts were made primarily with John W. McMackin, who is
the Chairman of the Board of the Company and a director of Williamson-Dickie,
the owner of approximately 54% of the Common Stock.
In the latter half of September 1996, Mr. McMackin was contacted by an
investment banker who advised that representatives of Parent wished to meet with
representatives of Williamson-Dickie to explore a possible acquisition of the
Company by Parent.
On October 15, 1996, a meeting was held. Participants included Richard P.
Durham, Parent's current President and Chief Executive Officer, and N. Brian
Stevenson, President of the Plastics Division, of
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Parent, representatives of Parent's financial advisor and Philip C. Williamson,
Chief Executive Officer of Williamson-Dickie, J. Donovan Williamson (both
directors of both the Company and Williamson-Dickie) and Mr. McMackin.
Mr. Stephenson indicated Parent's intention to increase the revenues of its
Plastics Division and, that to accomplish this goal, Parent was considering
acquisitions. To evaluate a possible offer, Mr. Stephenson advised that Parent
would need additional information. The Williamson-Dickie representatives
requested that Parent prepare a list of the required information.
Several weeks later, Mr. McMackin received Parent's list, which amounted to
a full due diligence review of the Company. Mr. McMackin forwarded the list to
Dr. Elwood M. Miller, President and Chief Executive Officer of the Company. The
Company determined that, for strategic reasons, it would not comply with
Parent's request, even subject to a confidentiality agreement.
Mr. McMackin called a representative of Parent's financial advisor and
advised that the Company would not furnish the information, but inquired about a
potential per share price based on an estimate of the Company's 1997 earnings
per share. The representative contacted Parent and then called Mr. McMackin and
advised that Parent had indicated a price of approximately $15 per share was
possible. No further contact with Parent occurred until December 1997.
Between May and October 1997, the Company received informational inquiries
from a number of potential acquirers engaged in a wide range of businesses. In
response to these inquiries, the Company supplied information, all of which was
subject to various confidentiality and nondisclosure agreements.
In September 1997, the Company was advised by an industrial packaging firm
that it was prepared to offer the Company's public shareholders $17.50 per share
in stock or cash and Williamson-Dickie $16.50 per share in stock in a tax-free
transaction. Under this proposal Williamson-Dickie would also be indemnified by
the firm against certain adverse tax consequences that Williamson-Dickie's
stockholders might incur during the nine-year period following the consummation
of the transaction. During a Board meeting held on September 23, 1997, the
Chairman of the Board and Chief Executive Officer of the industrial packaging
firm was invited to describe his firm's business and to offer his reasons why a
merger between it and the Company would be beneficial to both companies.
At the conclusion of the presentation, the Board established a Special
Committee comprised of independent members of the Board to consider the
proposal. The Special Committee was authorized to engage counsel and an
investment adviser.
Following the meeting, the Special Committee contacted the law firm of
Gibson, Dunn & Crutcher and the investment banking firm of Bowles Hollowell
Conner & Co. ("BHC") to assist in the evaluation of the proposal.
On October 15, 1997, the Company formally retained BHC and soon thereafter
retained Gibson, Dunn & Crutcher.
At the October 23, 1997 Board meeting, BHC presented its preliminary
analysis of the value of the Company and the industrial packing firm's
acquisition proposal. It also outlined alternative courses of action available
to the Company. During the meeting, the Board also established certain required
criteria to guide its negotiators regarding an acquisition by the industrial
packaging firm.
On October 24, 1997, BHC advised the industrial packaging firm that the
Company required that the acquisition price for non-Williamson-Dickie
stockholders be increased to $19 in cash or stock. Negotiations and due
diligence reviews continued through December 1997. Thereafter, Williamson-Dickie
instructed BHC to inform the representatives of the industrial packaging firm
that Williamson-Dickie considered the firm's proposal unacceptable unless all
stockholders, including W-D received $19 per share in cash. Shortly thereafter,
the firm made a counter-proposal that the Company deemed unacceptable.
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In December 1997, Mr. Durham contacted Mr. McMackin to inquire whether the
Company would be interested in exploring a transaction with Parent at that time.
Mr. McMackin indicated that he was then unable to discuss a transaction with
Parent.
During a meeting on January 15, 1998, the Board considered the latest
developments concerning the industrial packaging firm's acquisition proposal and
other options available to the Company. Counsel to the Special Committee, who
was connected telephonically to the meeting, then rendered advice concerning the
proposal, the legal aspects of potential merger opportunities, and related
public disclosure requirements. The Board authorized BHC to make direct contacts
with a number of parties to assess their interest in an acquisition of the
Company. The Board authorized management to monitor developments in the trading
of the Common Stock and to publicly announce the Company's evaluation of
strategic alternatives should circumstances suggest the release of such
disclosure.
From mid-January 1998 through March 1998, the Company entered into
confidentiality agreements with a number of parties. Parent executed its
confidentiality agreement with the Company on January 22, 1998.
On February 17, 1998, the Company determined that circumstances warranted
the publication of a press release that disclosed that it was engaged in an
evaluation of strategic alternatives to optimize stockholder value and that it
had retained BHC to assist in this evaluation. BHC subsequently responded to
inquiries from various parties and, where appropriate, engaged such parties in
substantive discussions concerning a possible acquisition of the Company.
Between February 18, 1998 and March 13, 1998, having executed
confidentiality agreements, three parties visited the Company's facilities, met
with management, conducted plant tours, and performed other due diligence
investigations. The parties included a manufacturer of non-woven materials (the
"Manufacturer"), a manufacturing conglomerate and Parent.
On February 19, 1998, certain members of Parent's management met with
certain members of the Company's management and their advisors. At this meeting,
the Company's management presented an overview of the Company's operations and
answered general due diligence questions concerning the Company. Following this
meeting, Parent initiated a comprehensive legal and financial due diligence
review of the Company that included, among other things, plant tours, management
meetings and a review of certain legal matters.
At a February 26, 1998, Board meeting, BHC reported on the status of its
activities.
On March 4, 1998, BHC mailed a letter to the three parties that had met with
management inviting them to submit an offer for the acquisition of the Company,
along with procedures and guidelines for the submission of such offer. The
guidelines provided that all offers were to be received by 12:00 noon (EST) on
Friday, March 20, 1998. BHC also furnished the parties with a proposed form of
merger agreement for the acquisition of the Company, which was to be submitted
to the Company with proposed modifications together with the party's offer.
Between March 12, 1998 and March 20, 1998, BHC received offers from Parent
and the Manufacturer. Each party supplied proposed revisions to the form of
merger agreement.
By letter dated March 12, 1998, the Manufacturer offered to acquire the
Company for $282 million, which was calculated, at the time, to be equal to
approximately $22.92 per share in cash pursuant to a tender offer to be
commenced after the execution of a merger agreement. The proposal included
several due diligence contingencies, including having a satisfactory meeting
with the Company's largest customer.
By letter dated March 20, 1998, Parent submitted a proposal to acquire the
Company at a cash per share price of $21 pursuant to a tender offer to be
commenced after the execution of a merger agreement. The tender offer was
conditioned on the agreement by Williamson-Dickie to execute a stock option
agreement in favor of Parent. The proposal included several due diligence
contingencies, including having
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a satisfactory meeting with the Company's largest customer. Parent's proposal
indicated that it would only remain open through 5:00 p.m. EST March 27, 1998.
At a Board meeting on March 23, 1998, BHC provided a detailed review of a
strategic alternatives available to the Company as a result of its
investigations. Representatives of BHC described the two proposals received in
this regard and a general discussion was held concerning the proposals, the
possible reaction of the principal customers of the Company to a combination
with either of these two firms, and various legal and contractual matters.
During that meeting, the directors established a negotiating committee with the
responsibility of determining final negotiations and contractual matters
pertaining to the acquisition investigations undertaken by BHC.
On March 24, 1998, representatives of the Company met with executives of the
Company's largest customer. The purpose of the meeting was to review with the
customer the reasons behind the consideration for the possible sale of the
Company and to discuss views of the customer concerning future business
relationships with the Manufacturer as it had submitted the higher bid. The
customer's representative expressed concern regarding the Manufacturer due to,
among other reasons, the level of sales this firm was making to the customer's
principal competitor. The representative noted that such sales conflicted with
the customer's general preference for excluding suppliers of its competitors
from its strategic development efforts.
On March 25, 1998, Dr. Miller had a telephone conversation with one of the
customer's executives, who repeated the customer's concerns with the prospect of
a merger between the Company and the Manufacturer. This representative indicated
that, if the merger with the Manufacturer were consummated, the relationship
between the Company and the customer could well be irreversibly damaged. Dr.
Miller indicated that he had expressed these reservations to the representative
of the Manufacturer, but that the representative stated that he would still like
to meet with the customer. The customer agreed to a meeting, but indicated that
any potential meeting would be unproductive. Dr. Miller relayed the customer's
views to representatives of Williamson-Dickie and members of the Board.
On Saturday, March 28, 1998, Parent offered to extend its proposal through
11:59 p.m. EDT April 5, 1998, but only if the Company agreed to immediately
cease negotiations with other bidders and refrain from any activities with any
other potential acquirers.
Based on these factors and consideration of certain elements of the revised
merger agreement, the Company entered into exclusive negotiations with Parent on
March 30, 1998.
On March 30, 1998, before entering into exclusive negotiations with Parent,
representatives of BHC had a conversation with representatives of the
Manufacturer during which they conveyed Williamson-Dickie's and the Board's
conclusion that any meetings between the Manufacturer and the customer were
almost certain to prove fruitless and could be damaging to the continuing
relationships between the Company and the customer. The BHC representatives
asked if the Manufacturer would be willing to enter into a merger agreement with
the Company prior to any discussions with the Company's largest customer and
provided that such merger agreement would deny the Manufacturer termination
rights associated with any objections of the customer to the merger. The
representatives of the Manufacturer stated that they were not willing to enter
into such a merger agreement.
Following this conversation, Dr. Miller notified members of the Board of his
discussions and then contacted a representative of the customer to advise him
that the Company had decided to postpone the meeting of the customer with the
Manufacturer. The Board asked the negotiating committee to continue negotiations
with Parent because both Williamson-Dickie and the Board had concluded it was
unlikely that a merger between the Company and the Manufacturer would ever be
consummated. The Company then executed the extension letter.
On March 31, 1998, a special telephonic meeting of the Board occurred. The
purposes of the meeting were to review in detail with investment and legal
advisors the status of the two acquisition proposals, and,
16
<PAGE>
to advise the full Board of the various contacts made between the
representatives of the Company and representatives of its customer. Those
contacts were described in detail by the participants. During this meeting the
Board supported the decision to continue negotiations with Parent.
On April 2 and 3, 1998, BHC, the Company's legal advisers, and
Williamson-Dickie's legal adviser met with Parent's general counsel and its
legal advisers to negotiate the terms of the merger agreement and the proposed
stock option agreement. During these discussions, Parent agreed to drop its
demand for the stock option agreement, agreeing instead to accept a tender
agreement and irrevocable proxy from Williamson-Dickie and the members of the
Board and management who owned more than 10,000 Shares of Common Stock. The
parties continued negotiating over the weekend of April 4 and 5, 1998. On
Sunday, April 5, 1998, Parent extended its proposal until Wednesday April 8,
1998. Negotiations continued throughout April 6, 1998.
On Tuesday, April 7, 1998, the Board convened to consider the terms of the
proposed transaction and to review, in detail, the merger agreement and tender
agreement. At the meeting, BHC presented its views on the fairness, from a
financial point of view, to the stockholders of the Parent proposal. The
Company's legal advisors described in detail the terms of the merger agreement,
the tender agreement, and the transactions contemplated thereby. The Board
discussed in depth the reservations expressed by the Company's principal
customer regarding the proposal of the Manufacturer. Dr. Miller reviewed the
various reasons why the principal customer objected to the Manufacturer as a
Company merger partner. The Board then reflected on the risks associated with
continuing discussions with and entering into a merger agreement with the
Manufacturer given the Board's concerns regarding potentially damaging its
relationship with its principal customer, which represented approximately 44% of
its 1997 sales, and its view that it was unlikely this merger would ever be
consummated. The Board then analyzed and discussed the Offer, the merger
agreement, and the tender agreement. After considerable discussion, the Board
unanimously resolved to recommend the acceptance of the Offer and the approval
and adoption of the merger agreement by the Company's stockholders (if such
approval is required by applicable law). The Board also approved the transaction
contemplated by the tender agreement for purposes of Section 203 of the Delaware
General Corporation Law.
In approving the Merger Agreement and the transaction contemplated thereby
and recommending that all holders of Shares tender their Shares pursuant to the
Offer, the Board considered a number of factors, including:
(i) the terms of the Merger Agreement and the fact that the Company will
continue as an independent division of Parent following the Merger;
(ii) presentations by the President and Chief Executive Officer of the
Company and the Company's financial advisor regarding the financial condition,
results of operation, business, and prospects of the Company, including the
prospects of the Company if it were to remain independent;
(iii) the results of research undertaken to identify third parties with
respect to a purchase of the Company;
(iv) that the $21 per Share Offer Price represents a premium of
approximately 17% over the closing price for the Shares on the American Stock
Exchange on April 7, 1998 (the last trading day before the public announcement
of the execution of the Merger Agreement), and a premium of 34.7% over the
closing price for the shares on the American Stock Exchange on February 13,
1998, (the last full trading day before the release of its announcement
regarding its evaluation of strategic alternatives);
(v) the terms of the Tender Agreement, which provides that the Stockholders
would receive the same consideration per Share as would all other holders of
Shares, insuring that the public shareholders would participate in any control
premium realized in connection with the Offer and the Merger and which allows
the Tender Agreement to be terminated if the Merger Agreement is terminated;
17
<PAGE>
(vi) the opinion of BHC to the effect that, as of the date of such opinion,
the $21 per Share cash consideration to be offered to the holders of Shares in
the Offer and the Merger is fair to such holders, from a financial point of
view. A copy of the opinion of BHC is attached as Attachment I and incorporated
by reference. Shareholders are urged to read carefully the opinion of BHC in its
entirety;
(vii) that the Merger Agreement permits the Company to furnish nonpublic
information to and participate in discussions and negotiations with any third
party that has submitted an Acquisition Proposal to the Company that involves
all cash consideration and contains no express financing contingency and that
the Company's Board of Directors concludes in good faith is reasonably capable
of being completed, taking into account all legal, financial, regulatory and
other aspects of the Acquisition Proposal and that would, if consummated, result
in a Superior Proposal;
(viii) the termination provisions of the Merger Agreement, which were a
condition to Parent's proposal, providing that Parent would be entitled to a fee
of $13 million and reimbursement of expenses of up to $500,000 on the
termination of the Merger Agreement under certain circumstances, including the
modification or withdrawal of the Board's recommendation with respect to the
Offer and the Merger in connection with another Acquisition Proposal; and
(ix) the ability of the Purchaser to consummate the Offer and the Merger,
including its ability to so consummate the Offer and the Merger without
conditioning the Offer on obtaining any specific financing commitments.
The Board did not assign relative weights to these factors or determine that
any factor was of particular importance. Rather, the Board reviewed its position
and recommendations as being based on the totality of the information presented
to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
BHC has been retained by the Company to act as independent financial advisor
to the Company with respect to the Offer, the Merger, and all related matters.
Under a letter agreement, dated October 15, 1997, between the Company and BHC if
the Offer and the Merger are consummated, the Company has agreed to pay BHC an
aggregate fee of approximately $2,500,000 for acting as financial advisor in
connection with the transaction, including rendering its opinion. BHC was paid
$100,000 of this fee on delivery of its written opinion, to be credited against
the aggregate fee to be paid to BHC by the Company under the letter agreement.
The Company has also agreed to reimburse BHC for all reasonable out-of-pocket
expenses, including reasonable fees and expenses of its counsel, and to
indemnify BHC for certain liabilities, arising out of the rendering of its
opinion, including liabilities arising under the federal securities laws.
Except as disclosed herein neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) No transactions in the Shares have been effected during the past 60 days
by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company currently intends to tender all Shares
over which he or she has sole dispositive power to the Purchaser.
18
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Statement, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in: (i) an
extraordinary transaction, such as a merger or reorganization involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
any tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
(b) Except as set forth herein, there are no transactions, Board's
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to in
Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached as Schedule I is being furnished in
connection with the possible designation by the Parent, under the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's shareholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Purchaser's Offer to Purchase, dated April 14, 1998 (incorporated by
reference to Exhibit 99(a)(1) of the Schedule 14D-1 of VA Acquisition Corp. and
Huntsman Packaging Corporation filed with the Commission on April 14, 1998 (the
"Schedule 14D-1")).
(a)(2) Text of Press Release, dated April 8, 1998 (incorporated by reference
to Exhibit 99(a)(8) of the Schedule 14D-1).
(a)(3) Opinion of Bowles, Hollowell, Conner & Co. dated April 7, 1998,
included as Attachment I.
(a)(4) Letter to Shareholders of the Company.
(c)(1) Agreement and Plan of Merger, dated as of April 7, 1998, by and among
Parent, the Purchaser and the Company (incorporated by reference to Exhibit
99(c)(1) of the Schedule 14D-1).
(c)(2) Tender Agreement and Irrevocable Proxy, dated as of April 7, 1998, by
and among Parent, the Purchaser, Williamson-Dickie Manufacturing Company and the
individuals named therein (incorporated by reference to Exhibit 99(c)(2) of the
Schedule 14D-1).
(c)(3) Confidentiality Agreement, dated as of January 22, 1998 from Parent
for the benefit of the Company (incorporated by reference to Exhibit 99(c)(3) of
the Schedule 14D-1).
(c)(4) Bid letter, dated as of March 20, 1998, from Parent to the Company
(incorporated by reference to Exhibit 99(c)(4) of the Schedule 14D-1).
(c)(5) Exclusivity Letter, dated as of March 29, 1998, by and between Parent
and the Company (incorporated by reference to Exhibit 99(c)(5) of the Schedule
14D-1).
(c)(6) Extension to Exclusivity Letter, dated as of April 5, 1998, by and
between Parent and the Company (incorporated by reference to Exhibit 99(c)(6) of
the Schedule 14D-1).
(d)(1) Second Amendment to June 21, 1993 letter agreement between Elwood M.
Miller and the Company, dated April 6, 1998.
(d)(2) Master Amendment to Key Executive Severance, dated July 10, 1990, and
other agreements, between the Company and James P. Luke, dated April 6, 1998.
(d)(3) Agreement between John W. McMackin, dated March 23, 1998.
19
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
accurate.
<TABLE>
<S> <C> <C>
BLESSINGS CORPORATION
By: /s/ ELWOOD M. MILLER
-----------------------------------------
Elwood M. Miller
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Date: April 14, 1998
20
<PAGE>
SCHEDULE I
BLESSINGS CORPORATION
200 Enterprise Drive
Newport News, VA 23603
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about April 14, 1998 as a
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Blessings Corporation (the "Company") to the holders of
record of shares (the "Shares") of Common Stock, par value $.71 per share, of
the Company (the "Common Stock") at the close of business on or about, April 14,
1998. You are receiving this Information Statement in connection with the
possible election of persons designated by the Parent (as defined below) on the
Board of Directors of the Company (the "Board").
On April 7, 1998, the Company, Huntsman Packaging Corporation, a Utah
corporation ("Parent"), and VA Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent (the "Purchaser"), entered into an Agreement
and Plan of Merger (the "Merger Agreement") in accordance with the terms and
subject to the conditions of which (i) the Purchaser, on behalf of Parent, will
commence a tender offer (the "Offer") to purchase all outstanding Shares at a
price of $21 per Share, net to the seller in cash (the "Offer Price"), without
interest thereon, and (ii) the Purchaser will be merged with and into the
Company (the "Merger"). In addition, on April 7, 1998, certain Stockholders of
the Company entered into a Tender Agreement and Irrevocable Proxy among Parent,
the Purchaser and the Stockholders named therein (the "Tender Agreement")
providing, among other things, that all such Stockholders will tender their
Shares pursuant to the Offer, will vote in favor of the Merger, and will grant a
proxy to the Parent for that purpose. As a result of the Offer and the Merger,
the Company will become a wholly-owned subsidiary of Parent.
The Merger Agreement requires the Company to use all reasonable efforts to
cause Parent's designees (the "Parent Designees")to be elected to the Board
under the circumstances described in the Merger Agreement. This Information
Statement is required by Section 14(f) of the Securities Exchange Act of 1934
(the "Exchange Act") and Rule 14f-1 thereunder. See "Board of Directors and
Executive Officers--Right to Designate Directors; the Parent Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on April
14, 1998. The Offer is scheduled to expire at 5:00 p.m., New York City time, on
May 11, 1998, unless the Offer is extended.
The information contained in this Information Statement concerning the
Purchaser and Parent has been furnished to the Company by the Purchaser and
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information.
21
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of April 7, 1998, there were 10,126,857
Shares outstanding. The Board currently consists of 11 members. At each annual
meeting of stockholders, directors are elected to serve for one-year terms.
RIGHT TO DESIGNATE DIRECTORS; THE PARENT DESIGNEES
BOARD REPRESENTATION. The Merger Agreement provides that, promptly upon the
purchase by the Purchaser of Shares pursuant to the Offer, and from time to time
thereafter, Parent or the Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number (but in no event more than one
less than the total number of directors on the Board) as will give Parent,
subject to compliance with Section 14(f) of the Exchange Act of 1934, as amended
(the "Exchange Act"), representation on the Board equal to the product of (x)
the number of directors on the Board (giving effect to any increase in the
number of directors pursuant to the Merger Agreement) and (y) the percentage
that such number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being the "Board Percentage"). The Company has agreed,
upon request of Parent, to promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board and in each case cause Parent's designees
to be promptly elected. Following the election or appointment of Parent's
designees pursuant to the Merger Agreement and prior to the Effective Time (as
defined below) of the Merger, any amendment or termination of the Merger
Agreement, extension for the performance or waiver of the obligations or other
acts of Parent or the Purchaser or waiver of the Company's rights thereunder,
shall require the concurrence of a majority of the directors of the Company then
in office who were directors on the date the Merger Agreement and who voted to
approve the Merger Agreement.
None of the Parent Designees (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any of the
directors or executive officers of the Company or (iii) to the best knowledge of
the Company, beneficially owns any securities (or rights to acquire any
securities) of the Company. The Company has been advised by Parent that, to the
best of Parent's knowledge, none of the Parent Designees has been involved in
any transactions with the Company or any of its directors, executive officers or
affiliates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission"), except
as may be disclosed herein or in the Schedule 14D-9.
It is expected that the Parent Designees may assume office at any time
following the purchase by the Purchaser of Shares under the Offer, which
purchase cannot be earlier than May 11, 1998.
RICHARD P. DURHAM became President and Chief Executive Officer of Parent in
March 1997. Mr. Durham is a Director of Parent and also is a Director of
Huntsman Corporation. Mr. Durham has been with the Huntsman organization in
various positions since 1985. Most recently, Mr. Durham served as Co-President
and Chief Financial Officer of Huntsman Corporation, where in addition to being
responsible for accounting, treasury, finance, tax, legal, human resources,
public affairs, purchasing, research and development, and information systems,
he also was responsible for Parent. Mr. Durham attended Columbia College and
graduated from the Wharton School of Business at the University of Pennsylvania.
Mr. Durham is 33 years old.
JACK E. KNOTT became Executive Vice President and Chief Operating Officer of
Parent on September 1, 1997. Prior to joining Parent, Mr. Knott was a member of
the Board of Directors of Rexene Corporation from April 1996 until August 1997
and held the position of Executive Vice President of Rexene Corporation and
President of Rexene Products from March 1995 to August 1997. Mr. Knott was
22
<PAGE>
Executive Vice President of Sales and Market Development of Rexene Corporation
from March 1992 to March 1995, Executive Vice President of Rexene Corporation
from January 1991 to March 1992, and President of CT Film, a division of Rexene
Corporation, from February 1989 to January 1991. Prior to joining Rexene
Corporation, Mr. Knott worked for American National Can. Mr. Knott received a
B.S. degree in Chemical Engineering and an M.B.A. degree from the University of
Wisconsin and holds nine patents. Mr. Knott is 43 years old.
SCOTT K. SORENSEN recently joined Parent as Executive Vice President and
Chief Financial Officer. Prior to joining Parent, Mr. Sorensen was Chief
Financial Officer of the Power Generation Division of Westinghouse Electric
Corporation. Prior to joining Westinghouse in 1996, Mr. Sorensen spent two years
as Director of Business Development and Planning at Phelps Dodge Industries and
over four years as an Associate with McKinsey & Company. Mr. Sorensen received
an M.B.A. degree from Harvard Business School and a B.S. degree in Accounting
from the University of Utah. Mr. Sorensen is 36 years old.
N. BRIAN STEVENSON became Parent's Senior Vice President and General
Manager, Packaging Division on September 1, 1997. Mr. Stevenson joined Parent in
April 1992 as Executive Vice President and Chief Operating Officer. He has 27
years of operating and management experience in the flexible packaging industry.
Prior to joining Parent, Mr. Stevenson held numerous management positions at
James River and Crown Zellerbach, including Plant and Divisional Controller,
Eastern Regional Sales Manager, Eastern General Manager and, most recently, Vice
President of James River's Flexible Packaging Division. In 1990, he left James
River to become President of Packaging Industries. Mr. Stevenson holds a B.S.
degree in Accounting and an M.B.A. degree from the University of Utah. Mr.
Stevenson is 53 years old.
DOUGLAS W. BENGTSON joined Parent on September 15, 1997 as Senior Vice
President and General Manager, Performance Films Division. Mr. Bengtson has 24
years of experience in sales, marketing and senior management. Most recently,
Mr. Bengtson was Vice President, Sales and Marketing for Food Packaging at
American National Can, where Mr. Bengtson was responsible for the sales and
marketing of flexible packaging to the food industry segment. His former
positions include Vice President, Sales and Marketing at CT Film and Vice
President, Sales and Marketing, Rexene Products Division. Mr. Bengtson holds a
B.S. degree in Business/Marketing from Colorado State University. Mr. Bengston
is 50 years old.
RONALD G. MOFFITT joined Parent in 1997, after serving as Vice President and
General Counsel of Huntsman Chemical Corporation. Prior to joining Huntsman in
1994, Mr. Moffitt was a partner and director in the Salt Lake City law firm of
Van Cott, Bagley, Cornwall & McCarthy, with which he had been associated since
1981. Mr. Moffitt holds a B.A. degree in Accounting, a Master of Professional
Accountancy degree, and a J.D. degree from the University of Utah. Mr. Moffitt
is 45 years old.
STANLEY B. BIKULEGE joined Parent in 1992 and was appointed Vice President
Stretch Films, Packaging Division in 1997. Mr. Bikulege's prior positions with
Parent include General Manger of Castflex in 1997, Managing Director-Europe from
1996 to 1997, Managing Director PVC Films-Europe from 1995 to 1996, Director of
Manufacturing from 1993 to 1995, and Plant Manager in 1992. Prior to joining
Huntsman, Mr. Bikulege held numerous positions in Goodyear's Wingfoot Films. Mr.
Bikulege received a B.S. degree in chemical Engineering from Youngstown State
University and an M.B.A. degree from Georgia State University. Mr. Bikulege is
34 years old.
DALE A. BROCKMAN joined Parent in February 1993 as the plant manager of the
newly-acquired Huntsman Design Products plant in Rochester, New York and later
that year was appointed to the position of Director of Operations. In 1994 he
became Vice President Operations and in 1995 became responsible for numerous
plants. He was appointed Vice President Manufacturing, Packaging Division in
September 1997 and was appointed Vice President, Performance Films Division on
November 24, 1997. He has 24 years of experience in the flexible packaging
industry. He has held numerous engineering and management positions at Crown
Zellerbach and James River, including General Manager/Bakery Business Unit
23
<PAGE>
Manager. Mr. Brockman holds a B.S. degree in Mechanical Technology from Indiana
State University. Mr. Brockman is 47 years old.
DARREN G. COTTLE joined the Huntsman organization in 1989 and held various
positions at Huntsman Chemical Corporation, including Plant Controller. Mr.
Cottle joined Parent in July 1992 as the Assistant Controller, was named
Controller in March 1997, and became Vice President and Controller on November
24, 1997. Prior to joining Huntsman, Mr. Cottle was employed by the
international accounting firm of Deloitte & Touche. Mr. Cottle is a Certified
Public Accountant and received a B.A. and a masters degree in Professional
Accountancy from Weber State University. Mr. Cottle is 35 years old.
THORNTON L. HILL joined Parent as Vice President Sales in July 1992 and
became Vice President Sales and Marketing National Accounts on November 24,
1997. Prior to that time, Mr. Hill was General Sales Manager of Goodyear's Film
Products Division and worked for Goodyear for 29 years in various sales and
marketing positions, including Executive Vice President and Chief Operating
Officer of Goodyear's Wingfoot Films. He holds a B.A. degree in Education from
Morehead State University and has attended executive management programs at Kent
State University and Northwestern University. Mr. Hill is 60 years old.
GARY J. PENNA became Vice President Sales and Marketing Converter Films,
Performance Films Division on September 1, 1997. Mr. Penna joined Parent in 1996
as a result of Parent's acquisition of Deerfield Films. Mr. Penna had been with
Deerfield since 1994, as Vice President of Sales for Converter Films. Prior to
joining Deerfield, Mr. Penna served a variety of management positions at Exxon
Corporation. Mr. Penna has a degree in Chemical Engineering from Princeton
University and an M.B.A. degree from The Amos Tuck School at Dartmouth College.
Mr. Penna is 50 years old.
EDWIN W. STRANBERG joined Parent in February 1993 as Vice President of
Operations and became Vice President, PVC Films, Packaging Division on November
24, 1997. He has 25 years of experience in the flexible packaging industry. He
held various manufacturing, technical and sales management positions with Crown
Zellerbach and James River prior to joining Parent. Prior to James River, he was
Vice President and General Manager of Sealright Co. Inc. Mr. Stranberg holds a
B.S. degree in Industrial Engineering from New Mexico State University. Mr.
Stranberg is 47 years old.
Biographical information concerning each of the Company's current directors
and executive officers is presented on the following pages.
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPLE OCCUPATION DIRECTOR
FOR THE LAST FIVE YEARS SINCE
- -------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Leonard Birnbaum, 79, private investor and former President and Chief Executive Officer of Peartree
Imports, Inc., New York, New York. Mr. Birnbaum is Chairman of the Long Range Planning Committee and a
member of the Compensation and Audit Committees of the Board of Directors............................. 1952
Joseph J. Harkins, 66, Executive Vice President, Retired, The Chase Manhattan Bank, N.A., New York, New
York; a director of Mutual Fund Group, New York, New York. Mr. Harkins is also a director of Jefferson
Insurance Company, New York, New York and Monticello Insurance Company, New York, New York. Mr.
Harkins is Chairman of the Audit Committee and a member of the Compensation, Long Range Planning and
Nominating Committees of the Board of Directors....................................................... 1972
John M. Hogg, 65, President, Chief Executive Officer and a director of the Sid Richardson Carbon & Gas
Co., Fort Worth, Texas; and a director of Williamson-Dickie Manufacturing Company, Fort Worth, Texas.
Mr. Hogg is a member of Audit, Long Range Planning and Nominating Committees of the Board of
Directors............................................................................................. 1997
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPLE OCCUPATION DIRECTOR
FOR THE LAST FIVE YEARS SINCE
- -------------------------------------------------------------------------------------------------------- -----------
<S> <C>
James P. Luke, 55, Executive Vice President, Chief Financial Officer and Secretary of Blessings
Corporation. Mr. Luke joined Blessings in 1975 and has served in a variety of executive positions
since that time. Mr. Luke is a member of the Executive, Long Range Planning and Investor Relations
Committees of the Board of Directors.................................................................. 1988
John W. McMackin, 67, Shareholder in the law firm of Decker, Jones, McMackin, McClane, Hall & Bates,
Fort Worth, Texas, and a director of Williamson-Dickie Manufacturing Company, Fort Worth, Texas. Mr.
McMackin is Chairman of the Board of Directors of Blessings Corporation and Chairman of the Executive
Committee of the Board of Directors................................................................... 1977
Elwood M. Miller, 53, President and Chief Executive Officer of Blessings Corporation. Dr. Miller joined
Blessings in 1993. Prior to that Dr. Miller was employed by the General Electric Corporation for 21
years in a variety of executive positions. Dr. Miller is a member of the Executive, Long Range
Planning and Investor Relations Committees of the Board of Directors.................................. 1993
Richard C. Patton, 35, President of Woodmont Capital LLC. Mr. Patton was a former portfolio manager for
Fidelity Investments, Boston, Massachusetts. Mr. Patton attended Harvard Graduate School of Business
Administration 1990 to 1992. Mr. Patton is a member of the Long Range Planning Committee and Chairman
of the Investor Relations Committee of the Board of Directors......................................... 1994
Manuel Villarreal G., 44, President and Chief Executive Officer of Nacional de Envases PlAsticos, S.A.
De C.V. (NEPSA), Mexico, a wholly-owned subsidiary of the Company. Mr. Villarreal joined NEPSA in 1976
and has served in a variety of executive functions since that time. Sr. Villarreal is a member of the
Executive Committee of the Board of Directors......................................................... 1994
Robert E. Weber, 66, Chairman and Retired Chief Executive Officer of Osmose Wood Preserving, Inc.,
Buffalo, New York. Mr. Weber is a member of the Executive Committee and Chairman of the Compensation
and Organization Development Committees of the Board of Directors..................................... 1989
J. Donovan Williamson, 61, Consultant to and Director of Williamson-Dickie Manufacturing Company, Fort
Worth, Texas; Vice President and a Director of Williamson Industries, Ltd.; President of JDW, Inc., an
investment company, Fort Worth, Texas. Mr. Williamson is Vice Chairman of the Executive Committee and
Chairman of the Nominating Committee of the Board of Directors........................................ 1973
Philip C. Williamson, 35, Chairman, President, Chief Executive Officer and a director of
Williamson-Dickie Manufacturing Company, Fort Worth, Texas. Mr. Williamson is a member of the
Executive, Long Range Planning, Compensation and Organization Development Committees of the Board of
Directors............................................................................................. 1990
</TABLE>
THE BOARD OF DIRECTORS
The Board has the responsibility for establishing broad corporate policies
and for the overall performance of the Company, although it is not involved in
day-to-day operating details. Members of the Board are kept informed by various
reports and documents sent to them each month, as well as by operating and
financial reports made at Board and committee meetings. There were 11 meetings
of the board and 10 meetings of committees of the Board in the fiscal year ended
December 31, 1997. The overall attendance at these meetings was 97%. All members
of the Board attended at least 75% of the meetings of the board and committees
on which they served.
25
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The board has seven standing committees: the Executive Committee, the
Nominating Committee, the Audit Committee, the Compensation Committee, the
Organization Development Committee, the Long Range Planning Committee and the
Investor Relations Committee. The committee on which each nominee serves is
shown in the table above. The following is a description of the functions of
each committee:
EXECUTIVE COMMITTEE
The Executive Committee consists of seven members, four of whom are
non-employee directors. The Executive Committee meets on-call and has authority
to act on matters during the intervals between Board meetings. The committee did
not meet during the fiscal year ended December 31, 1997.
NOMINATING COMMITTEE
The Nominating Committee consists of three members, all of whom are
non-employee directors. The Nominating Committee considers and recommends
nominations for directors of the corporation and other matters as may, from time
to time, be deemed appropriate. The committee met once during the fiscal year
ended December 31, 1997.
AUDIT COMMITTEE
The Audit Committee is comprised of three members, all of whom are
independent directors for purposes of the rules of the American Stock Exchange.
The Audit Committee reviews the results, findings and recommendations resulting
from audits performed by independent certified public accountants, significant
accounting policies, the audit fees to be paid and the nature of non-audit
services performed. It meets with appropriate officers and financial personnel
and independent certified public accountants in connection with these reviews.
The committee recommends to the Board the appointment of independent certified
public accountants to serve as auditors for the following fiscal year. The Audit
Committee met two times during the fiscal year ended December 31, 1997.
COMPENSATION COMMITTEE
The Compensation Committee consists of four members, all of whom are
"non-employee directors" for purposes of Rule 16b - 3 of the Exchange Act and
"Outside Directors" for purposes of Section 162 (m) of the Internal Revenue Code
(the "Code"). The committee reviews and approves the salary and incentive
compensation recommendations made by the CEO for all senior officers and key
employees of the company. The committee determines the salary and incentive
actions appropriate for the CEO and makes reports and recommendations to the
Board with respect to all compensation and employee benefit matters. In carrying
out its responsibilities, the committee from time to time engages independent
compensation consultants to provide data on compensation trends and practices to
insure that the company maintains an equitable and competitive compensation
profile.
The committee also administers the following incentive and stock plans of
the Company:
-- Blessings Corporation 1991 Stock Option Plan ("1991 Option Plan").
-- Blessings Corporation 1993 Annual Incentive Plan for Key Employees
("1993 Incentive Plan").
-- 1993 Restricted Stock Plan for Non-Employee and Certain Other Directors
of Blessings Corporation ("1993 Director Restricted Stock Plan").
-- Blessings Corporation 1993 Restricted Stock Plan for Key Employee ("1993
Key Employee Restricted Stock Plan").
26
<PAGE>
-- 1995 Non-Employee Directors Stock Option Plan ("1995 DSOP").
-- 1997 Long-Term Incentive Plan ("1997 Long-Term Plan").
The Committee met six times during fiscal year ended December 31, 1997.
ORGANIZATION DEVELOPMENT COMMITTEE
The Organization Development Committee consists of two members, each of whom
is a non-employee director. The committee periodically reviews the organization
structure of the corporation and its operating divisions to ensure effective
organizational function and to ensure that replacements for key positions are
identified and provided for. The committee did not meet during the fiscal year
ended December 31, 1997.
LONG RANGE PLANNING COMMITTEE
The Long Range Planning Committee is comprised of seven members, five of
whom are non-employee directors. The committee reviews the long-range objectives
of the Company. The committee meets with key members of management and outside
consultants to conduct examinations of each activity of the Company and to
recommend a long-term growth and development plan for the Company. The committee
met once during the fiscal year ended December 31, 1997.
INVESTOR RELATIONS COMMITTEE
The Investor Relations Committee is comprised of three members, one of whom
is a non-employee director and chairman of the committee. The role of the
committee is to assess the effectiveness of shareholder relations and
communications and to make recommendations with regard to improving overall
shareholder value. The committee did not meet during the fiscal year ended
December 31, 1997.
COMPENSATION OF MEMBERS OF THE BOARD OF DIRECTORS AND COMMITTEES
-- Non-employee directors not receiving other compensation are each paid an
annual retainer of $15,000 and a fee of $900 for each Board and committee
meeting attended. In the event two or more meetings are held on the same
date, the fee for the first meeting is $900 and the fee for any
subsequent meetings on the same date is $450. Committee chairmen receive
an additional fee which varies depending on the committee served as
follows: Compensation Committee, $4,000 per year; Audit Committee, $2,000
per year; Nominating Committee, $1,000 per year; Long Range Planning
Committee, $1,000 per year; Organization Development Committee and
Investor Relations Committee, $500 per meeting not to exceed $3,000 per
year. Non-employee directors of the Company are also eligible for limited
life and accidental death and dismemberment insurance and to participate
in the Company's medical benefit program. No additional compensation is
paid to employees for performance of their duties as directors.
Mr. McMackin, in his dual role as Chairman of the Board and Chairman of
the Executive Committee, receives annual compensation in the amount of
$100,000 and was granted a $60,000 bonus by the Board at its meeting on
May 20, 1997. Compensation for the Vice Chairman of the Executive
Committee has been set by the Board at an annual rate of $60,000.
1993 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE AND CERTAIN OTHER DIRECTORS OF THE
COMPANY
-- With the advice and assistance of nationally recognized independent
compensation consultants, the Compensation Committee of the Board
undertook the consideration of a restricted stock plan for non-employee
and certain other directors of the Company. At the Annual Meeting held on
May 17, 1994, stockholders approved the adoption of the 1993 Director
Restricted Stock Plan
27
<PAGE>
as recommended by the committee to the Board. The Compensation Committee
believes that the 1993 Director Restricted Stock Plan serves to promote
the Company's interests and those of its stockholders by permitting
grants of shares of Common Stock to non-employee and certain other
directors, subject to restrictions, in order to compensate such directors
and reward them for long-term performance, and increase their ownership
of Common Stock.
On December 2, 1997, the Board extended the term of the 1993 Director
Restricted Stock Plan for one additional year to July 9, 1998. No
additional shares were authorized under the plan because 20,200 shares
remain undistributed.
On March 23, 1998, the Company amended the 1993 Director Restricted Stock
Plan to provide that unvested stock grants shall immediately vest on a change of
control of the Company.
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
-- At its meeting on May 17, 1995, the Board approved, subject to the
approval of stockholders, the 1995 DSOP. At the Annual Meeting of
stockholders held on May 21, 1996, stockholders approved the 1995 DSOP as
recommended by the Board. In accordance with the provisions of the 1995
DSOP, each non-employee director will be granted an option to acquire 500
shares of Common Stock on the first business day after the date of each
Annual Meeting. Except for certain conditions relating to death,
disability or retirement, each option expires five years from the date of
grant. The Company believes the 1995 DSOP promotes the interests of the
Company and its stockholders by strengthening the Company's ability to
attract, motivate and retain directors of training, experience and
ability, and encourages the highest level of directors' performance by
providing directors with a proprietary interest in the Company's
financial success and growth.
1997 LONG-TERM INCENTIVE PLAN
-- At the Annual Meeting held on May 20, 1997, the stockholders voted to
approve the adoption of the 1997 Long-Term Plan. The objective of the
plan is to attract and retain dedicated and loyal employees and directors
of outstanding ability, to stimulate the efforts of such persons in
meeting the Company's objectives and to encourage ownership of the
Company's Common Stock by employees and directors.
The plan is administered by the Compensation Committee who may grant
either Incentive Stock Options or Non-Qualified Stock Options, both of
which cannot be less than 100% of the fair market value on the date the
option is granted and must be exercised during a term not to exceed 10
years. An aggregate of 150,000 shares of Common Stock has been reserved
for issuance upon exercise of options granted under the plan.
DIRECTORS' STOCK OWNERSHIP GUIDELINES
-- At its meeting in April 1995, the Board adopted the following guidelines
for Common Stock ownership by directors of the Company:
<TABLE>
<S> <C>
Three years of service 3,000
shares
Five years of service 5,000
shares
Eight years of service 8,000
shares
</TABLE>
28
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Shares as of April 7, 1998, of (i) each of the
Company's directors and executive officers who own Shares; (ii) each person (or
group of affiliated persons) known by the Company to own beneficially more than
5% of the Shares; and (iii) all of the Company's directors and current executive
officers as a group. The number of Shares beneficially owned by each person
shown in the table below is determined under the rules of the Commission and
such information is not necessarily indicative of beneficial ownership for any
other purpose.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP (2)(3) CLASS (4)
- ----------------------- --------------------------------------------------------- ---------------- --------------
<S> <C> <C> <C>
Common Stock
Dimensional Fund Advisors, Inc........................... 680,502 6.7(5)
Royce & Associates Inc................................... 535,200 5.3(5)
Williamson-Dickie Manufacturing Company.................. 5,496,096 54.3(6)
Williamson, J. Donovan................................... 5,501,628 54.3(6)
Williamson, Philip C..................................... 5,501,596 54.3(7)
Birnbaum, Leonard........................................ 79,238 *
Carlson, Michael C....................................... 10,000 *
Durboraw, Wayne A........................................ 13,147 *
Harkins, Joseph J........................................ 12,134 *
Hogg, John M............................................. 3,400
Luke, James P............................................ 69,490 *
McMackin, John W......................................... 24,542 *
Miller, Elwood M......................................... 87,812 *(8)
Patton, Richard C........................................ 4,600 *
Villarreal G., Manuel.................................... 396,613 3.4(9)
Weber, Robert E.......................................... 12,000 *
Directors and executive officers as a group (18
persons)(9).............................................. 6,260,033 61.1
</TABLE>
- ------------------------
* Less than 1% of issued and outstanding shares of common stock of the
Company.
(1) Unless otherwise indicated, the address of the person named is the Company's
address.
(2) Each person has sole voting and investment power with respect to the Shares
listed unless otherwise indicated.
(3) Amounts shown include Shares subject to options that are exercisable within
60 days for the named directors and executive officers and directors and
executive officers as a group as follows: Mr. Birnbaum, 1,500; Mr. Carlson
8,000; Mr. Durboraw, 9,700; Mr. Harkins, 1,500; Mr. Hogg, 500; Mr. Luke,
25,400; Mr. McMackin, 1,500; Dr. Miller, 37,000; Mr. Patton, 1,500; Mr.
Weber, 1,500; Mr. J.D. Williamson, 1,500; Mr. P.C. Williamson, 1,500 all
directors and executive officers as a group (18 persons), 127,800.
(4) Except for the percentages of certain parties that are based on presently
exercisable options which are indicated in Note (3) above, the percentages
indicated are based on 10,126,857 Shares of Common Stock issued and
outstanding on March 31, 1998. In the case of parties holding presently
exercisable options, the percentage ownership is calculated on the
assumption that the shares presently purchasable, or purchasable within the
next 60 days, underlying such options are outstanding.
30
<PAGE>
(5) The Company has received Notices of Filing with the Commission on Schedule
13G of beneficial ownership of Shares of in excess of 5% of total Shares
outstanding from Royce & Associates Inc. ("Royce") and Dimensional Fund
Advisors, Inc. ("Dimensional") Royce's address is 1414 Avenue of the
Americas, New York, New York 10019. Dimensional Fund Advisors, Inc., a
registered investment advisor, is deemed to have sole dispositive power over
of 680,502 and sole voting power over 444,190 Shares as of December 31,
1997, all of which Shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, for all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares. Dimensional's address is 1299 Ocean Avenue,
11th Floor, Santa Monica, CA 40401.
(6) Williamson-Dickie owns 5,496,096 Shares. Mr. J. Donovan Williamson owns
4,032 Shares in addition to the Shares owned beneficially through his
interest in the Williamson-Dickie. Williamson-Dickie's address is 319
Lipscomb Street, Fort Worth, Texas 76104.
(7) Williamson-Dickie owns 5,496,096 Shares. Philip C. Williamson owns 4,000
Shares in addition to the Shares owned beneficially through his interest in
the Williamson-Dickie.
(8) Includes 800 Shares held as custodian for a child and two grandchildren of
which the reporting person disclaims beneficial ownership.
(9) Includes 276,000 Shares held by father and brother of which the reporting
person disclaims beneficial ownership.
31
<PAGE>
EXECUTIVE COMPENSATION
The following information is set forth with respect to compensation paid by
the Company during each of the last three fiscal years to the Chief Executive
Officer and the other four most highly-compensated executive officers of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------------
AWARDS
ANNUAL COMPENSATION --------------------------- PAYOUTS
RESTRICTED --------------------------
---------------------- STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (1) ($) (#) ($) ($) (2)
- ---------------------------------- --------- --------- ----------- ------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael C. Carlson(3)............. 1997 $ 168,967 $ 51,413 -0- 5,000/0 -0- $ 4,570
President, Edison Plastics 1996 38,076 30,000 -0- 3,000/900 -0- -0-
1995 -0- -0- -0- -0- -0- -0-
Wayne A. Durboraw................. 1997 115,825 42,396 -0- 3,000/0 1,988 24,930
Controller 1996 111,500 43,173 -0- 1,500/450 540 13,922
1995 105,200 50,370 -0- -0- 4,708 12,032
James P. Luke..................... 1997 244,852 98,535 -0- 5,000/0 10,238 51,681
Executive Vice President 1996 237,600 82,799 -0- 25,000/0 1,120 31,707
Chief Financial Officer 1995 219,100 94,414 -0- 5,000/1,500 9,817 25,922
Elwood M. Miller.................. 1997 305,770 123,156 -0- 8,000/0 46,846 69,898
President and 1996 289,000 100,711 -0- 25,000/0 107,163 65,381
Chief Executive Officer 1995 262,500 113,116 -0- 10,000/3,000 136,744 67,586
Manuel Villarreal G............... 1997 140,601 60,200 -0- -0- -0- -0-
President and 1996 147,885 92,500 -0- -0- -0- -0-
Chief Executive Officer, NEPSA 1995 96,272 74,000 -0- -0- -0- -0-
</TABLE>
- ------------------------------
(1) Cash amounts awarded under the 1993 Incentive Plan for the respective fiscal
years.
(2) Amounts included in all other compensation for fiscal years 1997, 1996, and
1995 respectively include Company matching contributions to the 401(k)
savings plan: in 1997 of: $4,750 for Mr. Carlson; $4,589 for Mr. Durboraw;
$4,589 for Mr. Luke; $4,589 for Dr. Miller; in 1996 of $4,500 for Mr.
Durboraw; $4,500 for Mr. Luke; $4,500 for Dr. Miller; in 1995 of $4,620 for
Mr. Durboraw; $4,620 for Mr. Luke; $4,620 for Dr. Miller. The remaining
amounts for the named officers represent accruals to the Supplemental
Executive Retirement Plan.
(3) Mr. Carlson joined the Company effective October 7, 1996.
32
<PAGE>
The following table sets forth the details of options granted to the
individuals listed in the Summary Compensation Table during fiscal 1997 and the
value of exercised and unexercised options.
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN THE YEAR ENDED 12/31/97
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS
---------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS/SARS APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERMS
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR $/SHARE DATE 5%-$ 10%-$
- --------------------------------------------- --------------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Carlson........................... 5,000/0 8.3/0 10.50 05/19/02 14,505 32,052
Wayne A. Durboraw............................ 3,000/0 5.0/0 10.50 05/19/02 8,703 19,231
James P. Luke................................ 5,000/0 8.3/0 10.50 05/19/02 14,505 32,052
Elwood M. Miller............................. 8,000/0 13.3/0 10.50 05/19/02 23,208 51,283
</TABLE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
$ VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT 12/31/97 OPTIONS/SARS AT 12/31/97
SHARES ACQUIRED VALUE ------------------------------ -------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- --------------- ------------- ----------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Carlson.............. -0- -0- 8,000/900 -0- 36,439/4,557 -0-
Wayne A. Durboraw............... -0- -0- 9,700/2,010 -0- 32,749/6,000 -0-
James P. Luke................... -0- -0- 25,400/6,120 -0- 75,684/16,330 -0-
Elwood M. Miller................ -0- -0- 37,000/8,700 -0- 75,250/12,375 -0-
</TABLE>
The Blessings Corporation Employees' Pension Trust Plan (the "Pension
Plan"), the Cost Recovery Supplemental Retirement Income Plan (the "SERP"), the
Supplemental Restoration Plan (the "Restoration Plan"), and the Employees'
Defined Contribution 401(k) Savings Plan (the "401(k) Plan") are available only
to domestic United States employees of the Company and its divisions, and not to
employees of its NEPSA subsidiary.
EMPLOYEE PENSION TRUST PLAN
The Pension Plan is a defined benefit plan and the amount of the
contribution with respect to a specified person cannot be readily calculated by
the regular actuaries of the plan. The Pension Plan defines annual earnings as
taxable earnings plus any 401(k) deferrals of the employee. While the Pension
Plan formula does not incorporate a direct social security offset, service
credits are earned at the rate of 1% of the social security wage base and 1.3%
of earnings in excess of the social security wage base for each participant. The
Company maintains the Restoration Plan which is designed to restore pension
benefits otherwise provided by the Pension Plan, but which have become limited
as a result of changes in the Code. The Restoration Plan covers all Company
employees who are participants in the Pension Plan and whose retirement income
benefits are limited, directly or indirectly, by the provisions of Code Section
401(a) (17) or Code Section 415. In no event will benefits payable under the
Restoration Plan, when added to the benefits earned under the Pension Plan
exceed total benefits calculated under the Pension Plan as if no limitations had
been imposed.
33
<PAGE>
The following table shows estimated annual benefits payable under both plans
(assuming payments made on the normal life annuity basis and not under any of
the various survivor options) to an employee at normal retirement age, i.e., age
65, after selected periods of service with respect to varying levels of
remuneration covered by the plan. The Company recently amended the Pension Plan
to add five years to service and five years to age for certain eligible
participants in the event of a Change of Control of the Company.
<TABLE>
<CAPTION>
ANNUAL BENEFIT UPON RETIREMENT
WITH YEARS OF SERVICE INDICATED
AVERAGE ANNUAL EARNINGS DURING THE HIGHEST FIVE ----------------------------------------------------------
CONSECUTIVE YEARS OF THE FINAL TEN YEARS OF SERVICE 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ----------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$100,000............................................. $ 18,104 $ 24,138 $ 30,172 $ 36, 209 $ 42,242
200,000............................................. 37,605 50,138 62,671 75,211 87,743
300,000............................................. 57,106 76,138 95,170 114,212 133,244
400,000............................................. 76,607 102,138 127,669 153,214 178,745
500,000............................................. 96,108 128,138 160,168 192,216 224,246
600,000............................................. 115,609 154,138 192,667 231,218 269,747
</TABLE>
The credited years of service for persons named above at their normal
retirement dates are as follows: Mr. Durboraw, 30 years; Mr. Hudson, 21 years;
Mr. Luke, 32 years; and Dr. Miller, 16 years. Sr. Villarreal is not a
participant in the Pension Plan.
COST RECOVERY SUPPLEMENTAL RETIREMENT INCOME PLAN
Effective January 1, 1980, the Company established the SERP which is an
unfunded, non-qualified plan and is not subject to the Employee Retirement
Income Security Act of 1974, as amended. The plan covers Messrs. Durboraw, Luke
and Miller.
The SERP is designed to provide for covered executives a retirement benefit
of 60% of compensation less 100% of primary social security benefits, 100% of
benefits payable under the Pension Plan, and 100% of benefits payable under the
Restoration Plan. Benefits are payable for ten years following retirement.
Should the executive not live to receive 10 years of payments, his beneficiary
will receive the balance. In addition, the SERP provides a pre-retirement death
benefit of 30% of compensation minus $7,500 annually for 10 years not to exceed
$50,000 per year per individual. These death and retirement payments are paid
from the general funds of the corporation. The Company purchases "key-man"
insurance to be used to recover the net after-tax cost of the deferred
compensation benefits and the net outlay for the insurance. The SERP is designed
so that, if the assumptions made as to mortality experience, policy dividends
and other factors are realized, the Company will recover substantially all of
its payments plus a portion of the interest paid or imputed for the use of its
money. Estimated annual payments for 10 years after retirement stated at current
value are as follows: Mr. Durboraw, $24,033; Mr. Luke, $58,511; and Dr. Miller,
$141,499.
EMPLOYEES' DEFINED CONTRIBUTION 401(K) SAVINGS PLAN
The Company maintains the 401(k) Plan for all employees. Under the terms of
the 401(k) Plan, each employee may elect to participate through the deferral of
from 1% to 15% of his or her earnings not to exceed an annual limitation
established by the Internal Revenue Service which was $9,500 during 1997. To
encourage and assist its employees in saving for their retirement, the Company
has established an employer contribution amounting to $.50 for each $1.00
deferred by the employee into the 401(k) Plan with the Company's contribution
not to exceed a maximum of 3% of the employee's earnings. The 401(k) Plan
further provides that all employee and Company-matching contributions are 100%
vested by the employee at all times. Each individual may select on a quarterly
basis the type of investment account in which he or she would choose to have the
funds of the account invested: equity fund, guaranteed fixed income fund,
balanced fund, small company fund, intermediate bond fund and international
equity fund.
34
<PAGE>
For the year ended December 31, 1997, the Company's matching contributions to
the 401(k) Plan totaled $435,069. The Company's aggregate contributions under
the 401(k) Plan for the three most recent fiscal years with respect to the
persons named in the summary compensation table, all current executive officers
as a group and all other employees, excluding executive officers as a group,
were as follows: Mr. Carlson, $4,750; Mr. Durboraw; $13,709; Mr. Luke; $13,709;
Dr. Miller, $13,709; all current executive officers as a group, $97,298; and all
other employees, excluding current executive officers as a group, $1,053,948.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Pursuant to the provisions of the 1991 Option Plan and further subject to
the provisions of the Blessings Corporation 1996 Executive Stock Loan Purchase
Program (the "1996 Program"), the Company has guaranteed personal loans in the
amount of $231,250 each, undertaken by Dr. Miller and Mr. Luke with a major
financial institution with interest at the prime rate minus 0.25% in order for
them to exercise stock options for 25,000 Shares each of Common Stock granted on
February 23, 1996. The guarantees are for a term not to exceed five years. The
agreement provides that the loans may be "interest only" for no more than three
years with amortization in full over the fourth and fifth years, if not sooner.
The Company has undertaken this arrangement to facilitate the purchase of
Common Stock by its senior executives in order to align their financial rewards
with the financial rewards realized by all other holders of Common Stock. The
following table shows the outstanding balance of personal loans with a
concomitant Company guarantee as of February 2, 1998:
<TABLE>
<CAPTION>
FEBRUARY 2,
EXECUTIVE OFFICER 1998
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Elwood M. Miller, President & CEO............................................ $ 231,250
James P. Luke, Executive Vice President & CFO................................ $ 231,250
</TABLE>
On February 9. 1998, the Company acquired the remaining 40% of its
subsidiary in Mexico, Nacional de Envases Plasticos, S. A. de C. V. ("NEPSA")
and its associated companies. Sr. Manuel Villarreal G., received $1,283,415 on
the closing date for the sale of his interest as a minority stockholder in the
NEPSA companies.
The Company recently: (a) established a Key Employee Retention Program that
established bonus agreements with 11 key employees, (b) revised its termination
of employment policy, (c) modified the 1993 Annual Incentive Plan to cause the
full payment of the pro-rata portion of participants' annual bonuses to be paid
in the event of a Change of Control, and (d) established an early retirement
pension benefit incentive program.
EMPLOYMENT AGREEMENTS
The Company has an agreement with Dr. Miller providing that, in the event of
a Change of Control (as defined by the agreement), the Company will pay to Dr.
Miller an amount equal to the present value of the total amounts of money that
would have been paid to him during the period beginning on the date of the
Change of Control and ending on a date two years after the Change of Control. In
addition, Dr. Miller will receive $100,000 for each $1 the stock of the Company
sells for in excess of $12.50 per share. In no event may the total of the
present value of the above payments, plus any other payments received by him
from the Company and contingent on a Change of Control, exceed 2.99 times the
base amount of his compensation (as defined by the agreement).
The Company has an agreement with Mr. Luke which provides that, in the event
of a Change of control of the Company (as defined in the agreement) and on
termination of his employment with the Company for any reason other than cause,
death, or disability, Mr. Luke has the right to receive as severance pay an
amount equal to the present value of the total amounts of salary and benefits
payable to the earlier of the date of his 65th birthday or three years from the
date of termination. The Company and Mr. Luke entered into an agreement that
provides that in no event may the total of the present value of
35
<PAGE>
payments made under this agreement as well as any other Company plan or benefit
by reason of a change of control exceed 2.99 times his average annual
compensation over a relevant period.
The Company has an agreement with Mr. McMackin providing that, in the event
of a Change of Control (as defined in the agreement), Mr. McMackin will be
entitled to receive from the Company the lesser of (a) the sum of $500,000 or
(b) an amount not to exceed 2.99 times his average annual compensation for the
two fiscal years of the Company preceding the fiscal year in which the Change of
Control occurs.
The Company has agreed to indemnify the employees against any losses they
may suffer if the 2.99 times limit is unintentionally exceeded.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Birnbaum, Weber, Harkins and
Phillip Williamson, none of whom are current or former officers or employees of
the Company or any of its subsidiaries. There are no Compensation Committee
interlocks.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL PRINCIPLES:
The guiding principle of the Executive Compensation Program of the Company
as supervised by the Compensation Committee of the Board is to provide incentive
to senior managers which will align their financial interests closely with those
of stockholders.
Following this overriding principle, the compensation program:
-- Seeks to provide competitive annual compensation consistent with the
attainment of established return on asset and growth in earnings
performance objectives to create a results oriented environment;
-- Provides longer-term incentive for the appreciation of stockholder value
by offering equity ownership in the Company through the stock award
component of the 1993 Incentive Plan, through stock option awards from
the 1997 Long-Term Plan and through the Executive Stock Loan Purchase
Program which encourages key employees to purchase Common Stock.
-- Attracts and retains key executives critical to the long-term success of
the Company.
Key Elements:
-- A basic element of the Executive Compensation Program is to set
compensation target levels around the fiftieth percentile of industry
practices for comparable companies.
-- Salary increases for the five highest paid executives are determined
through evaluation of performance and individual position within
established salary grade and compensation range criteria as established
by the Compensation Committee based upon competitive market analysis
provided by a nationally recognized independent compensation consultant.
During 1997, the Compensation Committee engaged its independent
consultant to reevaluate the most senior management positions to ensure
that appropriately competitive compensation levels are maintained. These
studies concluded that, of the positions evaluated, all were essentially
commensurate with competitive positions. The recommendations contained in
the studies were adopted by the Compensation Committee, and have provided
the basis for compensation decisions throughout the ensuing year.
On May 18, 1993, stockholders approved the 1993 Incentive Plan for Key
Employees (the 1993 Incentive Plan"). The 1993 Incentive Plan adopted an
incentive compensation formula based on a Return-
36
<PAGE>
On-Assets (ROA) measure of performance under which actual three-year weighted
return on assets performance is measured against a pre-determined return on
asset target for the Edison Plastics Division or for the Company as appropriate
for each individual executive. Eligible executives can earn bonus cash
compensation up to a maximum of 50% of annual salary by achieving the
pre-determined ROA target. Performance below the pre-determined ROA target
results in less cash bonus and performance in excess thereof is compensated for
in shares of the Common Stock at a market price representing the average price
during the three last trading days of the particular fiscal year. Such incentive
stock is held in Treasury by the Company pending satisfaction of a three-year
vesting requirement by each award recipient. In the case of Dr. Miller and Mr.
Luke, a secondary measure, growth in annual profit, is also applied as a
modifier to awards earned under the basic formula. Under this performance
modifier, growth in annual profit contribution of 0% or less results in a 10%
reduction in the award earned. Profit contribution growth of between 0% and 8%
results in no modification of the calculated award; growth of more than 8% in
annual profit contribution results in a 10% addition to the award otherwise
earned. In each of the fiscal years 1995 and 1996, application of the
performance modifier reduced, and in 1997 increased, the awards otherwise earned
by Dr. Miller and Mr. Luke by 10%.
In 1995, the Compensation Committee authorized the introduction of a
discretionary component to the 1993 Incentive Plan formula. This modification
provides for a 25% increase or decrease of individual cash bonuses at the
discretion of the President & CEO (with the exception of his own which is set by
the Compensation Committee), subject to the approval of the Compensation
Committee and to the limitation that the net amount of all such discretionary
increases or decreases will not exceed the total cash award for all participants
if calculated solely in accordance with the return on assets formula.
In May 1997, stockholders approved the 1997 Long-Term Plan providing for the
award of Common Stock options to senior executives, non-employee directors, and
other key employees of the Company designated by senior management and approved
by the Compensation Committee. The 1997 Long-Term Plan is designed to recognize
and reward key employee and director performance, to enhance the interest of key
employees and directors in the Company's long-term success by providing them a
proprietary interest in the Company and to enable the Company to maintain a
competitive position in attracting and retaining superior key personnel
necessary for its success and development. The Company has never repriced stock
options. In 1997, 60,000 option shares were granted under the 1997 Long-Term
Plan.
Other:
Regarding the Compensation Committees' 1993 agreement with Dr. Miller for
compensation forfeited on leaving his former employer (1993 Key Employee
Restricted Stock Plan), Dr. Miller was issued 25,094 shares (after taking into
account a 2 for 1 stock split paid in December 1994), of which 11,050 shares
vested in November 1994, 7,938 shares vested in November 1995, 4,488 shares
vested in November 1996 and 1,618 shares vested in November 1997.
CEO COMPENSATION
The parameters used in determining the salary and total compensation of the
Chief Executive Officer were established in accordance with the results of an
extensive analysis of competitive compensation undertaken by independent
compensation consultants engaged by the Committee. These studies, established
salary grade and incentive ranges for the CEO and other senior corporate
officers, based upon published competitive survey data from numerous sources to
establish a market match for companies with similar characteristics (e.g.,
freestanding, public manufacturing corporations with annual sales of
approximately $200 million).
The CEO's current compensation level is in the middle of the range of
competitive industry analysis and, based on future performance and contribution
to the attainment of the goals established by the Board, he will have the
opportunity to advance to the highest level of the competitive range.
37
<PAGE>
The CEO's salary increase in fiscal year 1997 was based on the Compensation
Committee's evaluation of his performance. It was the opinion of the
Compensation Committee that Dr. Miller has been instrumental since assuming his
CEO responsibilities in May 1994, in initiating programs designed to lead the
Company into new market directions for the enhancement of long term growth and
profitability. During the year the Company entered into a Change of Control
agreement with Dr. Miller (see above). The Board considers it essential to the
best interests of the stockholders of the Company to foster the continued
employment of Dr. Miller during a period of assessment of strategic alternatives
to optimize stockholder value. The agreement is intended to ease the uncertainty
and distraction that such an assessment may induce and to ensure his undivided
dedication and efforts without undue concern for his financial security.
All recommendations of the Compensation Committee are submitted to the full
Board for approval prior to implementation. All members of the Compensation
Committee are non-employee directors of the Company.
This report has been provided by the members of the Compensation Committee
of the Board of Directors of Blessings Corporation: Leonard Birnbaum; Joseph J.
Harkins; Robert E. Weber (Chairman); Philip C. Williamson.
SHARE PRICE PERFORMANCE
The following chart compares the cumulative total return to stockholders on
the Common Stock with the cumulative total return of the American Stock Exchange
Market Index and a Plastics Industry Peer Group comprised of 68 public companies
identified by SIC Codes 3080-3089 with annual sales of less than $1 billion.
Interested stockholders may obtain a copy of the listing of this Plastic
Industry Peer Group by contacting the Controller, Blessings Corporation. The
comparison assumes $100 was invested on December 31, 1992, in the Common Stock
arid, in each of the foregoing indices, and assumes reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BLESSINGS AMERICAN PLASTICS
<S> <C> <C> <C>
Corporation Exchange Market Peer Group
1992 $100 $100 $100
1993 $135 $120 $106
1994 $164 $109 $110
1995 $123 $137 $134
1996 $115 $146 $156
1997 $182 $171 $187
</TABLE>
<TABLE>
<CAPTION>
1992 1993 1994 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
Blessings Corporation................................................... 100 135 164 123
American Exchange Market................................................ 100 120 109 137
Plastics Peer Group..................................................... 100 106 110 134
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Blessings Corporation................................................... 115 182
American Exchange Market................................................ 146 171
Plastics Peer Group..................................................... 156 187
</TABLE>
THE PRECEDING "STOCK PERFORMANCE CHART" AND "COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION" SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR TO
BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR
INCORPORATED BY REFERENCE IN ANY DOCUMENTS SO FILED.
38
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under the provisions of the 1991 Option Plan and further subject to the
provisions of the 1996 Program, the Company has guaranteed personal loans in the
amount of $231,250 each, undertaken by Dr. Miller and Mr. Luke with a major
financial institution with interest at the prime rate minus 0.25% for them to
exercise stock options for 25,000 Shares each of Common Stock granted in
February 1996. The guarantees are for a term not to exceed five years. The
agreement provides that the loans may be "interest only" for no more than three
years with amortization in full over the fourth and fifth years, if not sooner.
The Company has undertaken this arrangement to facilitate the purchase of
Common Stock by its senior executives to align their financial rewards with the
financial rewards realized by all other holders of Common Stock. The following
table shows the outstanding balance of personal loans with a concomitant company
guarantee as of February 2, 1998:
<TABLE>
<CAPTION>
FEBRUARY 2,
EXECUTIVE OFFICER 1998
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Elwood M. Miller, President & CEO............................................ $ 231,250
James P. Luke, Executive Vice President & CFO................................ $ 231,250
</TABLE>
In February 1998, the Company acquired the remaining 40% of its subsidiary
in Mexico, Nacional cle Envases Plasticos, S. A. de C. V. ("NEPSA") and its
associated companies. Sr. Villarreal received $1,283,415 on the closing date for
the sale of his interest as a minority stockholder in the NEPSA companies.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors, officers and persons
who beneficially own more than 10% of a registered class of stock of the Company
to file initial reports of ownership (Form 3) and reports of changes in
beneficial ownership (Forms 4 and 5) with the Commission and the American Stock
Exchange. Such persons are also required under the rules and regulations
promulgated by the Commission to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that all directors, officers and greater than 10%
beneficial owners have complied with the Commission interpretations regarding
applicable Section 16(a) filing requirements.
39
<PAGE>
ATTACHMENT I
BOWLES HOLLOWELL CONNER & CO.
INVESTMENT BANKERS
April 7, 1998
The Board of Directors
Blessings Corporation
299 Enterprise Drive
Newport News, VA 23603
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders (the "Shareholders") of Common Stock, par value $0.71 per
share (the "Shares") of Blessings Corporation (the "Company") of the
Consideration (as defined below) to be received pursuant to the Agreement and
Plan of Merger dated April 7, 1998 (the "Agreement") among the Company, Huntsman
Packaging Corporation ("Huntsman"), and VA Acquisition Corp., a wholly-owned
subsidiary of Huntsman ("Acquisition"). Pursuant to the Agreement, Acquisition
will commence a tender offer (the "Offer") to purchase any and all of the
outstanding Shares at price of $21.00 per Share in cash. Following consummation
of the Offer and subject to certain closing conditions, Acquisition will be
merged with and into the Company (the "Merger") and each outstanding Share
(other than Shares owned by the Company, Huntsman, or Acquisition) will be
converted into the right to receive $21.00 per Share in cash. The cash
consideration to be paid pursuant to the Offer and the Merger is referred to
herein as the "Consideration."
In arriving at our opinion, we have, among other things:
(i) reviewed the financial terms and conditions of the Agreement;
(ii) reviewed certain publicly available business and financial
information relating to the Company;
(iii) conducted discussions with the senior management of the Company
with respect to its business and prospects;
(iv) reviewed certain financial and operating information relating to
the Company, including certain projections provided to us by the management
of the Company, and discussed such projections with the senior management of
the Company;
(v) reviewed the recent reported prices and trading activity for the
Shares and compared such information and certain financial information of
the Company with similar information for certain other companies engaged in
businesses that we considered comparable to those of the Company;
(vi) reviewed the terms, to the extent publicly available, of certain
comparable acquisition transactions; and
(vii) performed such other analyses and examined and considered such
other information, financial studies, analyses and investigations, and
financial and economic market data as we deemed relevant.
We have not independently verified any of the information concerning the
Company that we considered in connection with our review of the Offer and the
Merger and, for the purpose of the opinion set forth herein, we have assumed and
relied upon the accuracy and completeness of all such information. In arriving
at our opinion, we have conducted only a limited physical inspection of the
property and facilities of the Company. We have not prepared or obtained any
independent evaluation or appraisal of any of the assets or liabilities of the
Company. With respect to the financial forecasts and projections made
40
<PAGE>
available to us and used in our analysis, we have assumed that they reflect the
best currently available estimates and judgments of expected future financial
performance of the Company.
Our opinion is necessarily based upon market, economic, financial and other
conditions as they exist as of the date of this letter and any change in such
conditions would require a reevaluation of this opinion. In rendering our
opinion, we have assumed that the Offer and the Merger will be consummated on
the terms described in the Agreement that we have reviewed, without any waiver
of any material terms or conditions by the Company. Although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion to reflect such developments.
Bowles Hollowell Conner & Co., as part of its investment banking business,
is continually engaged in the valuation of businesses and their securities in
connection with mergers, acquisitions, tender offers, divestitures, leveraged
buyouts, and private placements of debt and equity securities.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the Offer and Merger. We have received an advisory fee from
the Company and will receive an additional fee for our services which is
contingent upon the consummation of the Offer and the Merger. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out of
the rendering of this opinion.
Our engagement and opinion expressed herein are for the benefit of the Board
of Directors of the Company. This opinion does not constitute a recommendation
to any Shareholder as to how such Shareholder should respond to the Offer or
vote at any Shareholders' meeting which might be held in connection with the
Merger. It is understood that this letter may be included in its entirety in a
Schedule 14D-1 or a Schedule 14D-9 relating to the Offer or a proxy statement
relating to the Merger or as may otherwise be required by law or by a court of
competent jurisdiction.
Based upon our analysis and subject to the foregoing, it is our opinion
that, as of the date hereof, the value of the Consideration to be received by
the Shareholders pursuant to the Offer and the Merger is fair to the
Shareholders from a financial point of view.
Very truly yours,
BOWLES HOLLOWELL CONNER & CO.
41
<PAGE>
[LOGO]
April 14, 1998
To Our Shareholders:
On behalf of the Board of Directors of Blessings Corporation (the
"Company"), we wish to inform you that the Company has entered into an Agreement
and Plan of Merger dated as of April 7, 1998 (the "Merger Agreement"), with
Huntsman Packaging Corporation and VA Acquisition Corp., its wholly owned
subsidiary ("Purchaser"), pursuant to which Purchaser has today commenced a cash
tender offer (the "Offer") to purchase all of the outstanding shares of Common
Stock of the Company (the "Shares") at a price of $21.00 per Share. Under the
Merger Agreement, the Offer will be followed by a merger (the "Merger") in which
any remaining Shares will be converted into the right to receive $21.00 per
Share. Consummation of the Offer and the Merger is subject to certain
conditions, as more fully described in the enclosed materials.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR AND IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS,
AND HAS APPROVED THE OFFER AND THE MERGER. THE BOARD OF DIRECTORS RECOMMENDS
THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the enclosed Schedule 14D-9 that is
being filed today with the Securities and Exchange Commission, including, among
other things, the opinion of Bowles Hollowell Connor & Co., the Company's
financial advisor, that the consideration to be received by the holders of
Shares in the Offer and the Merger is fair to such holders from a financial
point of view. The Schedule 14D-9 contains other important information relating
to the Offer, and you are encouraged to read the Schedule 14D-9 carefully.
In addition to the enclosed Schedule 14D-9, also enclosed is the Purchaser's
Offer to Purchase dated April 14, 1998, together with related materials,
including a Letter of Transmittal, to be used for tendering your Shares in the
Offer. These documents state the terms and conditions of the Offer and provide
instructions as to how to tender your Shares. We urge you to read these
documents carefully in making your decision with respect to tendering your
Shares pursuant to the Offer.
On behalf of the Board of Directors
[SIGNATURE]
Dr. Elwood M. Miller
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
SECOND AMENDMENT
TO JUNE 21, 1993 LETTER AGREEMENT
THIS SECOND AMENDMENT to the June 21, 1993 letter agreement, as amended
(the "Second Amendment") is entered into as of this 6th day of April, 1998,
by and between BLESSINGS CORPORATION, a Delaware corporation (the "Company"),
and ELWOOD M. MILLER (the "Key Executive").
WHEREAS, the Board of Directors of the Company (the "Board") has
heretofore provided certain severance benefits as outlined in a letter
agreement dated June 21, 1993, as amended, and provided certain other stock
options and payments to the Key Executive, with the specific intent of both
the Company and the Key Executive that, in the event of a change in control
of the Company, the payments and benefits to the Key Executive would not
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code.
Therefore, the parties hereby agree to implement a procedure to avoid
any payments to the Key Executive which could be considered an excess
"parachute payment" for purposes of said Section 280G of the Internal Revenue
Code. The parties agree to modify all existing employment agreements and
benefits to which the Key Executive is entitled. Accordingly, and
notwithstanding any other provision of the referenced agreements and/or any
other agreement, plan or entitlements to which the Key Executive is entitled,
it is agreed that in no event shall the present value of all contract
benefits payable to the Key Executive exceed 2.99 times the base amount of
the average annual compensation, as determined under Section 280G of the
Internal Revenue Code and the regulations thereunder, and the Key Executive
shall be afforded the discretion as to which of the benefits to which he is
entitled may be waived or reduced so as to
<PAGE>
ensure that the payments received by the Key Executive, in the aggregate, do
not constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code.
All determinations required to be made under this Agreement, including
whether payments would be excess "parachute payments" and the assumptions to
be utilized in arriving at such determinations, shall be made by the public
accounting firm that serves as the Company's auditors (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Company and Key Executive within fifteen (15) business days after the Change
in Control, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, the Key
Executive shall designate another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
The Company reaffirms all of the other provisions and terms of all the
other employment agreements heretofore in existence, except as modified
herein.
WITNESS the following signatures and seals this 6th day of April, 1998.
BLESSINGS CORPORATION
By: (SEAL)
--------------------------
John W. McMackin
Chairman, Board of Directors
2
<PAGE>
KEY EXECUTIVE:
(SEAL)
--------------------------
Elwood M. Miller
3
<PAGE>
THIS MASTER AMENDMENT to the Key Executive Severance Agreement dated
July 10, 1990, as amended April 18, 1995; the Key Executive Severance
Agreement Stock Supplement dated July 10, 1990; and the Key Executive
Severance Pension and SERP Supplement dated July 10, 1990 (the "Amendment")
is entered into as of this 6th day of April, 1998, by and between BLESSINGS
CORPORATION, a Delaware corporation (the "Company"), and JAMES P. LUKE (the
"Key Executive").
WHEREAS, the Board of Directors of the Company (the "Board") has
heretofore provided certain severance benefits as outlined in the Key
Executive Severance Agreement dated July 10, 1990, as amended April 18, 1995;
the Key Executive Severance Agreement Stock Supplement dated July 10, 1990;
and the Key Executive Severance Pension and SERP Supplement dated July 10,
1990, and provided certain other stock options and payments to the Key
Executive, with the specific intent of both the Company and the Key Executive
that, in the event of a change in control of the Company, payments and
benefits to the Key Executive would not constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code.
Therefore, the parties hereby agree to implement a procedure to avoid
any payments to the Key Executive which could be considered an excess
"parachute payment" for purposes of said Section 280G of the Internal Revenue
Code. The parties agree to modify all existing severance, employment
agreements and benefits to which the Key Executive is entitled. Accordingly,
and notwithstanding any other provision of the referenced agreements and/or
any other agreement, plan or entitlements to which the Key Executive is
entitled, it is agreed that in no event shall the present value of all
contract benefits payable to the Key Executive exceed
<PAGE>
2.99 times the base amount of the average annual compensation, as determined
under Section 280G of the Internal Revenue Code and the regulations
thereunder, and the Key Executive shall be afforded the discretion as to
which of the benefits to which he is entitled may be waived or reduced so as
to ensure that the payments received by the Key Executive, in the aggregate,
do not constitute "parachute payments" within the meaning of Section 280G of
the Internal Revenue Code.
All determinations required to be made under this sectionAgreement,
including whether payments would be excess "parachute payments" and the
assumptions to be utilized in arriving at such determinations, shall be made
by the public accounting firm that serves as the Company's auditors (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and Key Executive within fifteen (15) business days after the
Change in Control, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, the Key
Executive shall designate another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
The Company reaffirms all of the other provisions and terms of all the
other employment agreements heretofore in existence, except as modified
herein.
2
<PAGE>
WITNESS the following signatures and seals this 6th day of April, 1998.
BLESSINGS CORPORATION
By: (SEAL)
-------------------------
John W. McMackin
Chairman, Board of Directors
KEY EXECUTIVE:
(SEAL)
-----------------------------
James P. Luke
3
<PAGE>
This Agreement (the "Agreement") is entered into as of this 23rd day of
March, 1998, by and between Blessings Corporation, a Delaware corporation
(the "Company") and John W. McMackin (the "Key Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board"), in
recognition of the valued contributions of John W. McMackin as Chairman of
the Board of Directors of Blessings Corporation, and in this connection the
Board recognizes that the possibility of a sale of the company or a merger
exists; and
WHEREAS, the Board has determined that a severance agreement is
appropriate for John W. McMackin given his valued direction and efforts to
the Company.
NOW, THEREFORE, in order to fulfill the above purposes, the Company
agrees as follows:
ARTICLE ONE
DEFINITIONS
As used in this Agreement, the following words and phrases shall have
the following respective meanings unless the context clearly indicates
otherwise.
1.1 COMPANY: Blessings Corporation.
1.2 BOARD: The Board of Directors of Blessings Corporation.
1.3 KEY EXECUTIVE: John W. McMackin, the Chairman of the Board of
Directors of Blessings Corporation.
1.4 COMPENSATION: The amount the Key Executive is entitled to receive
as base compensation as Chairman of the Board and Chairman of the Executive
Committee, plus the
<PAGE>
annual bonus plus the restricted stock grant as a non-employee director, but
shall not refer to any other direct or indirect compensation received by the
Key Executive, including, without limitation, any awards of stock options,
long-term incentive payouts or benefits.
1.5 CHANGE IN CONTROL: A "Change in Control" shall be deemed to occur
if, within two (2) years from the date hereof:
(a) The Company's shareholders approve of a sale, a merger or
disposition of all or substantially all of the Company's assets or a plan of
liquidation or dissolution of the Company; or
(b) There is a change of fifty percent (50%) or more in the
composition of the members of the Board in any twelve (12) consecutive months.
1.6 PAYMENT BENEFITS: The benefits payable in accordance with Article
Three of this Agreement.
ARTICLE TWO
TERM
2.1 TERM OF AGREEMENT: This Agreement shall commence on March 1, 1998,
and shall continue in effect through March 1, 1999, when it shall terminate.
ARTICLE THREE
PAYMENT BENEFITS
3.1 RIGHT TO PAYMENT BENEFITS: The Key Executive shall be entitled to
receive from the Company Payment Benefits in the amount provided in Section
3.2 if (a) this Agreement has not previously expired under the provisions
contained in Section 2 above and (b) a Change in Control has occurred; except
that, notwithstanding the foregoing provisions, no Payment Benefits
2
<PAGE>
under this Agreement will be payable should the Key Executive's death occur
before a Change in Control has occurred.
3.2 AMOUNT OF PAYMENT BENEFITS:
(a) If there is a Change in Control within the term of this
Agreement, then the Key Executive shall be entitled to payment under this
Agreement and any other agreement, arrangement, plan or entitlement with the
Company or any of its subsidiaries, of an amount no greater than two and
ninety-nine one-hundredths (2.99) times the aggregate of (i) his annual
salary as Chairman of the Board and as Chairman of the Executive Committee,
plus (ii) his annual bonus prorated to the portion of the year completed
prior to the next annual meeting, plus (iii) his annual restricted stock
grant; provided that the Key Executive shall not be entitled to receive more
than the sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00) gross
from the Company under this Agreement. Any payments made under this
paragraph shall be subject to the limitation set forth in paragraph 3.3 below
and shall be payable in a lump sum within thirty (30) days after the date on
which a Change in Control occurs.
(b) The Key Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to the Key Executive in any subsequent
employment.
3.3 LIMITATION ON PAYMENT BENEFITS: As it is the intention of the
parties that the Company's payments under this Agreement and all other
agreements, arrangements, plans and entitlements to or for the benefit of the
Key Executive shall not constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code, in no event shall the present
3
<PAGE>
value of all contract benefits in Section 3.2(a), or otherwise, exceed two
and ninety-nine one-hundredths (2.99) times the Key Executive's compensation.
The compensation and the present value of the benefits shall be determined in
accordance with Section 280G of the Internal Revenue Code of 1986 and the
regulations promulgated thereunder. The Key Executive shall be afforded the
discretion to waive or reduce any benefit to which he is entitled to ensure
that the computation of benefits paid in the aggregate does not constitute
parachute payments within the meaning of Section 280G of the Internal Revenue
Code.
3.4 DETERMINATION OF MAXIMUM PAYMENTS: All determinations required to
be made under Sections 3.2 and 3.3 of this Agreement, including whether
payments would be excess "parachute payments" and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that serves as the Company's auditors (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Company and Key Executive within fifteen (15) business days after the Change
in Control, or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, the Key
Executive shall designate another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
ARTICLE FOUR
SUCCESSORS TO CORPORATION
This Agreement shall bind any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all, or substantially
all, of the business and/or assets of
4
<PAGE>
the Company in the same manner and to the same extent that the Company would
be obligated under this Agreement if no succession had taken place. The
Company shall require any successor by merger or otherwise to expressly and
unconditionally assume and agree to perform the Company's obligations under
this Agreement in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place
ARTICLE FIVE
MISCELLANEOUS
5.1 AMENDMENT: Any alteration to this Agreement shall be a signed
written instrument signed by both parties to this Agreement.
5.2 INDEMNIFICATION: If the Key Executive is required to institute a
legal action to enforce this Agreement, or is required to defend in any legal
action, the validity or enforceability of any right or benefit provided by
this Agreement and the Key Executive is the prevailing party in any such
legal action, the Company will pay reasonable legal fees and expenses
incurred by the Key Executive.
5.3 VALIDITY AND SEVERABILITY: The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
5.4 GOVERNING LAW: The validity, interpretation, construction and
performance of this Agreement shall in all respects be governed by the laws
of the Commonwealth of Virginia.
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<PAGE>
BLESSINGS CORPORATION
By:
-----------------------------
KEY EXECUTIVE
---------------------------------
John W. McMackin
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